<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------
GCR HOLDINGS LIMITED
(Name of Subject Company)
--------------------------
EXEL LIMITED
EXEL ACQUISITION LTD.
(Bidders)
--------------------------
ORDINARY SHARES, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
--------------------------
G3774N 10 0
(CUSIP Number of Class of Securities)
--------------------------
PAUL S. GIORDANO, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
EXEL LIMITED
CUMBERLAND HOUSE
ONE VICTORIA STREET
HAMILTON HM 11, BERMUDA
(441) 292-8515
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidders)
--------------------------
COPY TO:
IMMANUEL KOHN, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- -------------------------------------------------- --------------------------------------------------
$635,586,885 $127,117.38
<S> <C>
</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of 23,540,255 Ordinary Shares of the Subject Company at $27.00
net per share in cash. Such number of shares represents all outstanding
shares as of May 13, 1997 (excluding shares owned by the Bidders).
** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of
the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the aggregate value of cash offered by Bidders for such number of
Shares.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: Not Applicable Filing Not Applicable
Party:
Form of Registration Not Applicable Date Filed: Not Applicable
No.:
</TABLE>
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Exhibit Index begins on Page 9
(Page 1 of 9 Pages)
<PAGE>
CUSIP No. G3774N 10 0
<TABLE>
<CAPTION>
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<S> <C>
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
EXEL Limited I.R.S. No. 98-0058718
- -----------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(See Instructions) (a) / /
(b) / /
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3. SEC Use Only
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4. Sources of Funds (See Instructions)
BK, WC, OO
- -----------------------------------------------------------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f) / /
- -----------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Cayman Islands
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7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,226,000
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8. Check if the Aggregate Amount in Row (7)
Excludes Certain Shares (See Instructions) / /
- -----------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Approximately 4.75% of the shares outstanding as of May 8, 1997,
on a fully diluted basis.
- -----------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
</TABLE>
Exhibit Index begins on Page 9
(Page 2 of 9 Pages)
<PAGE>
CUSIP No. G3774N 10 0
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Exel Acquisition Ltd. I.R.S. No. (pending)
- -----------------------------------------------------------------------------------------------------------------------
2. Check the Appropriate Box if a Member of Group
(See Instructions) (a) / /
(b) / /
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3. SEC Use Only
- -----------------------------------------------------------------------------------------------------------------------
4. Sources of Funds (See Instructions)
BK, WC, OO
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5. Check if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f) / /
- -----------------------------------------------------------------------------------------------------------------------
6. Citizenship or Place of Organization
Cayman Islands
- -----------------------------------------------------------------------------------------------------------------------
7. Aggregate Amount Beneficially Owned by Each Reporting Person
1,226,000
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8. Check if the Aggregate Amount in Row (7)
Excludes Certain Shares (See Instructions) / /
- -----------------------------------------------------------------------------------------------------------------------
9. Percent of Class Represented by Amount in Row (7)
Approximately 4.75% of the shares outstanding as of May 8, 1997,
on a fully diluted basis.
- -----------------------------------------------------------------------------------------------------------------------
10. Type of Reporting Person (See Instructions)
CO
</TABLE>
Exhibit Index begins on Page 9
(Page 3 of 9 Pages)
<PAGE>
This Schedule 14D-1 relates to the offer by EXEL ACQUISITION LTD. (the
"Purchaser"), a Cayman Islands company and a wholly owned subsidiary of EXEL
LIMITED, a Cayman Islands company ("Parent"), to purchase all of the outstanding
Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS
LIMITED, a Cayman Islands company (the "Company"), at a purchase price of $27.00
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated May 14,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"), which are annexed to and filed with this Schedule 14D-1 as Exhibits
(a)(1) and (a)(2). The item numbers and responses thereto below are in
accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is GCR HOLDINGS LIMITED. The address of
its principal executive offices is Sofia House, 48 Church Street, Hamilton HM
12, Bermuda.
(b) The equity securities to which this Schedule 14D-1 relates are the
Shares. Reference is hereby made to the information set forth in the
"Introduction" and Section 1 ("Terms of the Offer") of the Offer to Purchase,
which is incorporated herein by reference.
(c) Reference is hereby made to the information set forth in Section 6
("Price Range of the Shares; Dividends") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)--(d) Reference is hereby made to the information set forth in the
"Introduction," Section 8 ("Certain Information Concerning the Purchaser and
Parent") and Schedule I ("Directors and Executive Officers of Parent and the
Purchaser") of the Offer to Purchase, which is incorporated herein by reference.
(e)--(f) During the last five years, neither Parent nor the Purchaser, nor,
to their knowledge, any of their respective executive officers and directors
listed in Schedule I ("Directors and Executive Officers of Parent and the
Purchaser") of the Offer to Purchase has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which any such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
(g) Reference is hereby made to the information set forth in Schedule I
("Directors and Executive Officers of Parent and the Purchaser") of the Offer to
Purchase, which is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE
SUBJECT COMPANY.
(a)--(b) Reference is hereby made to the information set forth in the
"Introduction," Section 8 ("Certain Information Concerning the Purchaser and
Parent"), Section 9 ("Background of the Offer; Contacts with the Company") and
Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition,
Appraisal Rights and Other Matters") of the Offer to Purchase, which is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)--(b) Reference is hereby made to the information set forth in Section 11
("Source and Amount of Funds") of the Offer to Purchase, which is incorporated
herein by reference.
(c) Not applicable.
Exhibit Index begins on Page 9
(Page 4 of 9 Pages)
<PAGE>
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER.
(a)--(g) Reference is hereby made to the information set forth in the
"Introduction," Section 9 ("Background of the Offer; Contacts with the
Company"), Section 10 ("Acquisition Agreement; Purpose of the Offer and the
Acquisition, Appraisal Rights and Other Matters"), Section 12 ("Possible Effects
of the Offer on the Market for Shares; Nasdaq National Market; Exchange Act
Registration; Margin Regulations") and Section 13 ("Dividends and
Distributions") of the Offer to Purchase, which is incorporated herein by
reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a)--(b) Reference is hereby made to the information set forth in (i) the
"Introduction," Section 8 ("Certain Information Concerning the Purchaser and
Parent"), Section 9 ("Background of the Offer; Contacts with the Company"),
Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition,
Appraisal Rights and Other Matters") and Schedule I ("Directors and Executive
Officers of Parent and the Purchaser") of the Offer to Purchase and (ii) the
Acquisition Agreement, each of which is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
Reference is hereby made to the information set forth in (i) the
"Introduction," Section 8 ("Certain Information Concerning the Purchaser and
Parent"), Section 9 ("Background of the Offer; Contacts with the Company") and
Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition,
Appraisal Rights and Other Matters") of the Offer to Purchase and (ii) the
Acquisition Agreement, each of which is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Reference is hereby made to the information set forth in Section 16
("Certain Fees and Expenses") of the Offer to Purchase, which is incorporated
herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not Applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Reference is hereby made to the information set forth in Section 10
("Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal
Rights and Other Matters") of the Offer to Purchase, which is incorporated
herein by reference.
(b)--(c) Reference is hereby made to the information set forth in Section 15
("Certain Legal Matters; Required Regulatory Approvals") of the Offer to
Purchase, which is incorporated herein by reference.
(d) Reference is hereby made to the information set forth in Section 12
("Possible Effects of the Offer on the Market for the Shares; Nasdaq National
Market; Exchange Act Registration; Margin Regulations") of the Offer to
Purchase, which is incorporated herein by reference.
(e) To the best knowledge of Parent and the Purchaser, no such proceedings
are pending or have been instituted.
(f) Reference is hereby made to the entire text of the Offer to Purchase and
the related Letter of Transmittal, which is incorporated herein by reference.
Exhibit Index begins on Page 9
(Page 5 of 9 Pages)
<PAGE>
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C> <C>
(a)(1) -- Offer to Purchase, dated May 14, 1997.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) -- Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) -- Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) -- Text of joint press release issued by Parent and the Company on May 8, 1997.
(a)(8) -- Form of Summary Advertisement, dated May 14, 1997.
(b) -- Not applicable.
(c) -- Agreement and Plan of Amalgamation dated as of May 8, 1997, among Parent, the
Purchaser and the Company.
(d) -- Not applicable.
(e) -- Not applicable.
(f) -- Not applicable.
</TABLE>
Exhibit Index begins on Page 9
(Page 6 of 9 Pages)
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
EXEL LIMITED
By: /s/ BRIAN M. O'HARA
-----------------------------------------
Name: Brian M. O'Hara
Title: President and Chief Executive
Officer
Dated: May 14, 1997
Exhibit Index begins on Page 9
(Page 7 of 9 Pages)
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
EXEL ACQUISITION LTD.
By: /s/ BRIAN M. O'HARA
-----------------------------------------
Name: Brian M. O'Hara
Title: President
Dated: May 14, 1997
Exhibit Index begins on Page 9
(Page 8 of 9 Pages)
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- --------- -------------------------------------------------------------------------------- ---------------
<S> <C> <C> <C>
(a)(1) -- Offer to Purchase, dated May 14, 1997.
(a)(2) -- Letter of Transmittal.
(a)(3) -- Notice of Guaranteed Delivery.
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) -- Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(6) -- Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) -- Text of joint press release issued by Parent and the Company on May 8, 1997.
(a)(8) -- Form of Summary Advertisement, dated May 14, 1997.
(b) -- Not applicable.
(c) -- Agreement and Plan of Amalgamation dated as of May 8, 1997 among Parent, the
Purchaser and the Company.
</TABLE>
Exhibit Index begins on Page 9
(Page 9 of 9 Pages)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING ORDINARY SHARES
OF
GCR HOLDINGS LIMITED
AT
$27.00 NET PER SHARE
BY
EXEL ACQUISITION LTD.
A WHOLLY OWNED SUBSIDIARY OF
EXEL LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JUNE 11, 1997, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF GCR HOLDINGS LIMITED (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND THE AMALGAMATION DESCRIBED HEREIN, HAS
DETERMINED THAT EACH OF THE OFFER AND THE AMALGAMATION IS FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, AND RECOMMENDS THAT
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER AND ADOPT AND APPROVE THE AMALGAMATION.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY EXEL LIMITED AND ITS
SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN
OUTSTANDING CALCULATED ON A FULLY DILUTED BASIS. SEE THE INTRODUCTION AND
SECTIONS 1, 14 AND 15.
------------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Ordinary Shares, par value $.10 per share, of the Company (the "Shares") should
either (a) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) representing tendered Shares to the
Depositary (as hereinafter defined) or tender such Shares pursuant to the
procedures for book-entry transfer set forth in Section 3 or (b) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such shareholder. A shareholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such shareholder desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent (as hereinafter defined) or the Dealer Manager (as hereinafter defined) at
their respective addresses and telephone numbers set forth on the back cover of
this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter
of Transmittal, the Notice of Guaranteed Delivery and other related materials
may be obtained from the Information Agent or from brokers, dealers, commercial
banks and trust companies.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
------------------
May 14, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
INTRODUCTION............................................................................................... 1
1. Terms of the Offer..................................................................................... 3
2. Acceptance for Payment and Payment for Shares.......................................................... 4
3. Procedures for Accepting the Offer and Tendering Shares................................................ 5
4. Withdrawal Rights...................................................................................... 8
5. Certain United States Federal Tax Consequences......................................................... 8
6. Price Range of the Shares; Dividends................................................................... 9
7. Certain Information Concerning the Company............................................................. 10
8. Certain Information Concerning the Purchaser and Parent................................................ 10
9. Background of the Offer; Contacts with the Company..................................................... 12
10. Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal Rights and Other Matters.... 13
11. Source and Amount of Funds............................................................................. 23
12. Possible Effects of the Offer on the Market for the Shares; Nasdaq National Market; Exchange Act
Registration; Margin Regulations....................................................................... 23
13. Dividends and Distributions............................................................................ 24
14. Certain Conditions of the Offer........................................................................ 24
15. Certain Legal Matters; Required Regulatory Approvals................................................... 26
16. Certain Fees and Expenses.............................................................................. 26
17. Miscellaneous.......................................................................................... 27
Schedule I - Directors and Executive Officers of Parent and the Purchaser
Schedule II - Sections 85, 86 and 87 of the Cayman Islands Companies Law (1995 Revision)
</TABLE>
i
<PAGE>
To: All Holders of Ordinary Shares of GCR Holdings Limited:
INTRODUCTION
EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser") and a
wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"),
hereby offers to purchase all of the outstanding Ordinary Shares, par value $.10
per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company
("GCR" or the "Company"), at a purchase price of $27.00 per Share, net to the
seller in cash, without interest thereon (the "Price Per Share"), upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. However, any tendering shareholder or other payee who
fails to complete and sign the Substitute Form W-9 that is included in the
Letter of Transmittal may be subject to a required backup federal income tax
withholding of 31% of the gross proceeds payable to such shareholder or other
payee pursuant to the Offer. See Section 3. The Purchaser will pay all charges
and expenses of Donaldson, Lufkin & Jenrette Securities Corporation, as Dealer
Manager (the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., as
Depositary (the "Depositary"), and Georgeson & Company Inc., as Information
Agent (the "Information Agent"), in each case incurred in connection with the
Offer. See Section 16. Shareholders will not possess any appraisal rights with
respect to the Offer and the consummation of the Offer will not require their
approval. See Section 10.
THE BOARD OF DIRECTORS OF GCR (THE "BOARD") HAS UNANIMOUSLY APPROVED THE
OFFER AND THE AMALGAMATION DESCRIBED HEREIN, HAS DETERMINED THAT EACH OF THE
OFFER AND THE AMALGAMATION IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND ITS SHAREHOLDERS, AND RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND ADOPT AND APPROVE THE
AMALGAMATION.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY PARENT AND ITS
SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN
OUTSTANDING CALCULATED ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). SEE
SECTIONS 1, 14 AND 15.
On April 25, 1997, the Company declared a quarterly dividend of $0.62 per
Share, payable on May 27, 1997, to shareholders of record on May 14, 1997.
Tendering Shares pursuant to the Offer will not affect the right of shareholders
of record on May 14, 1997, to receive this dividend.
The Offer is being made pursuant to an Agreement and Plan of Amalgamation,
dated as of May 8, 1997 (the "Acquisition Agreement"), among Parent, the
Purchaser and the Company. The purpose of the Offer is for the Purchaser to
acquire control of, and the entire equity interest in, the Company. As used
herein, the "Acquisition" means the acquisition by the Purchaser of the entire
equity interest in the Company. The Offer is intended to increase the likelihood
that the Acquisition will be effected. The Purchaser currently does not intend
to permit the Company to continue to pay dividends on the Shares until the
Acquisition has been consummated, except that the Company may pay the $0.62 per
Share dividend declared on April 25, 1997, and payable on May 27, 1997, to
holders of record as of May 14, 1997. Upon consummation of the Offer, the
Company will become a subsidiary of the Purchaser. See Section 10.
The Acquisition Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the
1
<PAGE>
Acquisition Agreement and in accordance with the relevant provisions of the
Companies Law (1995 Revision) of the Cayman Islands (the "Cayman Law"), it is
the intention of the Purchaser to be amalgamated with and into the Company under
a scheme of arrangement under the Cayman Law (the "Amalgamation"). Following
consummation of the Amalgamation, the Company will continue as the surviving
company (the "Surviving Company") and will become a wholly owned subsidiary of
Parent. At the effective time of the Amalgamation (the "Effective Time"), each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares owned by the Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent), will be canceled and entitle the holder to receive the
Price Per Share. The Acquisition Agreement is more fully described in Section
10.
The Acquisition Agreement provides that, after giving effect to the purchase
by Parent and/or the Purchaser of such number of Shares that, together with the
number of Shares then beneficially owned by Parent and its subsidiaries,
represents a majority of the outstanding Shares, and from time to time
thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number but in no event more than one less than the
total number of directors, on the Board as will give Parent representation on
the Board equal to the product of the number of directors on the Board and the
percentage that such number of Shares so purchased and the number of Shares
owned by the Purchaser and its affiliates prior to the Offer bears to the total
number of Shares then outstanding. See Section 10 for a description of the
membership of the Board, including Independent Directors (as defined herein). In
the Acquisition Agreement, the Company has agreed to take all actions necessary
to cause Parent's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors or both. The Acquisition Agreement also provides that, subject to
certain conditions, if at any time Parent's designees constitute a majority of
the Board, Parent shall be entitled to designate all of the members of the board
of directors of each subsidiary of Parent, including Global Capital Reinsurance
Limited.
The consummation of the Amalgamation is subject to the satisfaction or
waiver of certain conditions, including, if required by law, the approval and
adoption of the Amalgamation by the requisite vote of the shareholders of the
Company. See Section 10. Under the Cayman Law, except as otherwise described
below, upon an application to the Cayman Islands Court by the Company or the
Purchaser, the Court may order a meeting of the shareholders of the Company to
approve and adopt the Amalgamation. At such meeting, the affirmative vote of the
holders of seventy-five percent (75%) of each class of the Shares eligible to
vote thereon is required to approve and adopt the Amalgamation pursuant to
Sections 85 and 86 of the Cayman Law, which are set forth in their entirety in
Schedule II hereto. Upon a subsequent application to the Court, the adopted and
approved Amalgamation shall, if sanctioned by the Court, be binding on all
shareholders of the Company. The Court may make provisions for such incidental,
consequential, and supplemental matters as are necessary to secure that the
Amalgamation is fully and effectively carried out. See Section 10.
If the Purchaser succeeds in acquiring at least ninety percent (90%) of the
Shares within four months after commencement of the Offer, then, subject to and
in accordance with Cayman Law, the Purchaser currently intends to give notice to
all holders of the then outstanding Shares (other than Shares held by the
Purchaser) that the Purchaser intends to acquire compulsorily (the "Compulsory
Acquisition") such Shares at the Per Share Price, pursuant to Section 87 of the
Cayman Law, which is set forth in its entirety in Schedule II hereto. See
Section 10.
The Company has advised the Purchaser that as of May 8, 1997, 24,766,255
Shares were issued and outstanding and that (i) no Shares were held by the
subsidiaries of the Company and (ii) 997,925 Shares were subject to issuance
upon the exercise of outstanding options and 26,273 restricted Shares have been
granted and are subject to issuance upon satisfaction of vesting requirements.
The Company has advised the Purchaser that since May 8, 1997, the date of the
Acquisition Agreement, the Company has not issued any Shares or any options to
purchase Shares. As of the date hereof, Parent, the Purchaser, and all other
subsidiaries of Parent and the Purchaser own 1,226,000 Shares, which constitute
4.9% of the outstanding
2
<PAGE>
number of Shares. As a result, as of the date of this Offer to Purchase, the
Minimum Condition would be satisfied if the Purchaser acquired pursuant to the
Offer 18,116,840 Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), the Purchaser will accept for payment and
thereby purchase all Shares validly tendered and not withdrawn in accordance
with the procedures set forth in Section 4 on or prior to the Expiration Date
(as hereinafter defined). The term "Expiration Date" means 12:00 Midnight, New
York City time, on Wednesday, June 11, 1997, unless and until the Purchaser, in
its sole discretion (but subject to the terms of the Acquisition Agreement),
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the time and date at which the
Offer, as so extended by the Purchaser, shall expire.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend the Offer for any reason, including the
occurrence of any of the events specified in Section 14, by giving oral or
written notice thereof to the Depositary and by making a public announcement
thereof, as described below. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer and subject to the
right of a tendering shareholder to withdraw such shareholder's Shares. See
Section 4.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission (the "Commission"), the Purchaser also expressly reserves
the right, in its sole discretion, at any time or from time to time, to (i)
terminate the Offer if any condition referred to in Section 14 has not been
satisfied or upon the occurrence of any event specified in Section 14 and (ii)
postpone the acceptance for payment of or payment for tendered Shares or waive
any condition or otherwise amend the Offer in any respect, in each case, by
giving oral or written notice of such termination, waiver or amendment to the
Depositary and by making a public announcement thereof, as described below. See
Section 10 for a full description of the Purchaser's ability to amend the Offer.
The rights reserved by the Purchaser in this paragraph are in addition to the
Purchaser's rights pursuant to Section 14.
Any such extension, termination, waiver or amendment will be followed as
promptly as practicable by a public announcement thereof, such announcement, in
the case of an extension, to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-6(d) and 14e-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) and without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release or other public announcement.
If the Purchaser makes a material change in the terms of the Offer, or if it
waives a material condition of the Offer, the Purchaser will disseminate
additional tender offer materials and will extend the Offer to the extent
required by Rule 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or information concerning the Offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the changed terms or information. In the Commission's view, an offer should
generally remain open for a minimum of five business days from the date a
material change is first published, sent or given to shareholders. With respect
to a change in price or a change in percentage of securities sought (other than
an increase in the number of Shares sought not in excess of 2% of the
outstanding Shares), a minimum ten business day period is required to allow for
adequate dissemination to shareholders and investor response. Accordingly,
3
<PAGE>
if, prior to the Expiration Date, the Purchaser should increase or decrease the
number of Shares being sought or increase or decrease the consideration being
offered in the Offer, such increase or decrease in the number of Shares being
sought or such increase or decrease in the consideration being offered will be
applicable to all shareholders whose Shares are accepted for payment pursuant to
the Offer and if, at the time notice of any such increase or decrease in the
number of Shares being sought or such increase or decrease in the consideration
being offered is first published, sent or given to holders of such Shares
(except in respect of an increase in the number of Shares not in excess of 2% of
the outstanding Shares), the Offer is scheduled to expire at any time earlier
than the period ending on the tenth business day, from and including the date
that such notice is first so published, sent or given, the Offer will be
extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of the Offer as so extended and amended) the
Purchaser will purchase, by accepting for payment, and will pay for, all Shares
validly tendered and not withdrawn (as permitted by Section 4) prior to the
Expiration Date promptly after the later to occur of (i) the Expiration Date and
(ii) the satisfaction or waiver of the conditions to the Offer set forth in
Section 14. In addition, subject to applicable rules of the Commission, the
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares pending receipt of any regulatory or governmental approvals
specified in Section 15 in order to comply in whole or in part with any other
applicable law.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares ("Share Certificates") or timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, The Midwest Securities
Trust Company or The Philadelphia Depository Trust Company (collectively, the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance of such Shares for payment pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from the Purchaser
and
4
<PAGE>
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PRICE PER
SHARE BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR OF
ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering shareholder (or, in the case of
Shares tendered by book-entry transfer into the Depositary's account at a
Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3,
such Shares will be credited to an account maintained at such Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED
CONSIDERATION WILL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT
TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN
CONSIDERATION.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of the Purchaser's subsidiaries or
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER OF SHARES. In order for Shares to be validly tendered pursuant
to the Offer, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message in connection with a book-entry delivery of Shares, and any
other documents required by the Letter of Transmittal must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date and either (i) Share Certificates
representing tendered Shares must be received by the Depositary, or Shares must
be tendered pursuant to the procedure for book-entry transfer set forth below
and Book-Entry Confirmation must be received by the Depositary, in each case on
or prior to the Expiration Date, or (ii) the guaranteed delivery procedures set
forth below must be complied with.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
5
<PAGE>
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish
accounts with respect to the Shares at each of the Book-Entry Transfer
Facilities for purposes of the Offer within two business days after the date of
this Offer to Purchase. Any financial institution that is a participant in the
system of any Book-Entry Transfer Facility may make book-entry delivery of
Shares by causing such Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account at such Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message and any other required
documents must, in any case, be transmitted to and received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase prior
to the Expiration Date, or the guaranteed delivery procedure set forth below
must be complied with. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY
IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Signatures on the Letter of Transmittal must be
guaranteed by a firm that is a member in good standing of the Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution,"
as such term is defined in Rule 17Ad-15 under the Exchange Act (each, an
"Eligible Institution"), unless the Shares tendered thereby are tendered (i) by
a registered holder of Shares who has not completed either the box labeled
"Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder(s), then the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the Share
Certificates, with the signatures guaranteed by an Eligible Institution. See
Instructions 1, 5 and 7 of the Letter of Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit the Share Certificates and all other required
documents to reach the Depositary prior to the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
Shares may nevertheless be tendered if all of the following guaranteed delivery
procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, prior to the Expiration Date;
and
(iii) the Share Certificates for (or a Book-Entry Confirmation with
respect to) all tendered Shares, in proper form for transfer together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees (or, in the case of a book-
entry transfer of Shares, an Agent's Message) and any other documents
required by the Letter of Transmittal are received by the Depositary within
three Nasdaq National Market ("Nasdaq") trading days after the date of
execution of the form of Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery.
6
<PAGE>
Notwithstanding any other provisions hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer of
Shares, an Agent's Message) and any other documents required by the Letter of
Transmittal. Accordingly, payment might not be made to all tendering
shareholders at the same time, and will depend upon when Share Certificates are
received by the Depositary or Book-Entry Confirmations of such Shares are
received into the Depositary's account at a Book-Entry Transfer Facility.
DETERMINATION OF VALIDITY. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any or all tenders determined by
it not to be in proper form or the acceptance of or payment for which may, in
the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves
the absolute right to waive any of the conditions of the Offer or any defect or
irregularity in any tender of Shares of any particular shareholder whether or
not similar defects or irregularities are waived in the case of other
shareholders.
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed to have been validly made until
all defects and irregularities with respect to such tender have been cured or
waived by the Purchaser. None of Parent, the Purchaser or any of their
respective affiliates or assigns, the Dealer Manager, the Depositary, the
Information Agent or any other person or entity will be under any duty to give
any notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
APPOINTMENT AS PROXY. By executing the Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of the Purchaser, and each of them,
as such shareholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser (and with respect to any
and all other Shares and other securities issued or issuable in respect of such
Shares on or after May 8, 1997). All such powers of attorney and proxies shall
be considered irrevocable and coupled with an interest in the tendered Shares.
Such appointment will be effective upon the acceptance for payment of such
Shares by the Purchaser in accordance with the terms of the Offer. Upon such
acceptance for payment, all other powers of attorney and proxies given by such
shareholder with respect to such Shares (and such other Shares and securities)
prior to such payment will be revoked, without further action, and no subsequent
powers of attorney and proxies may be given, or written consents executed, by
such shareholder (and, if given or executed, will not be deemed effective). The
designees of the Purchaser will, with respect to the Shares (and such Shares and
other securities for which such appointment is effective), be empowered to
exercise all voting and other rights of such shareholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
shareholders, or any adjournment or postponement thereof, or by consent in lieu
of any such meeting or otherwise.
OTHER REQUIREMENTS. The Purchaser's acceptance for payment of Shares
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering shareholder and the Purchaser upon the
terms and subject to the conditions of the Offer.
UNDER THE UNITED STATES FEDERAL INCOME TAX LAWS, THE DEPOSITARY MAY BE
REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN
SHAREHOLDERS PURSUANT TO THE OFFER. TO PREVENT BACKUP UNITED STATES FEDERAL
INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENTS MADE PURSUANT TO THE OFFER,
7
<PAGE>
EACH TENDERING SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT
SUBJECT TO BACKUP WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN
THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time prior to the Expiration Date and, unless theretofore accepted for
payment as provided herein, may also be withdrawn at any time after July 13,
1997 (or such later date as may apply in case the Offer is extended).
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares and such Shares
may not be withdrawn except to the extent that the tendering shareholder is
entitled to and duly exercises withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn, and (if Share Certificates have
been tendered) the name of the registered holder of the Shares as set forth in
the Share Certificates, if different from that of the person who tendered such
Shares. If Share Certificates have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such Share Certificates, the
tendering shareholder must submit the serial numbers shown on the particular
Share Certificates evidencing the Shares to be withdrawn and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution, except
in the case of Shares tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry transfer set
forth in Section 3, the notice of withdrawal must specify the name and number of
the account at the appropriate Book-Entry Transfer Facility to be credited with
the withdrawn Shares, in which case a notice of withdrawal will be effective if
delivered to the Depositary by any method of delivery described in the first
sentence of this paragraph. Withdrawals of Shares may not be rescinded. Any
Shares properly withdrawn will be deemed not validly tendered for purposes of
the Offer, but may be retendered at any subsequent time prior to the Expiration
Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of Parent, the
Purchaser or any of their respective affiliates or assigns, the Dealer Manager,
the Depositary, the Information Agent or any other person or entity will be
under any duty to give any notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
5. CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES. The receipt of cash for
Shares pursuant to the Offer or the Amalgamation will be a taxable transaction
for United States federal income tax purposes and may also be a taxable sale or
exchange under applicable state, local and foreign tax laws. For United States
federal income tax purposes, each selling or exchanging shareholder would
generally recognize gain or loss equal to the difference between the amount of
cash received and such shareholder's adjusted tax basis for the sold or
exchanged Sharess. Subject to the discussion below of the potential application
of the "related person insurance income" rules to a sale or exchange of the
Shares, such gain or loss will be capital gain or loss (assuming the Shares are
held as capital assets) and any such capital gain or loss will be long term if,
as of the date of sale or exchange, the Shares were held for more than one year
or will be short term if, as of such date, the Shares were held for one year or
less.
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<PAGE>
Special rules applicable to "related person insurance income" ("RPII")
provide that if a shareholder who is a U.S. person diposes of shares in a
foreign insurance corporation that has RPII and that is 25% or more owned by
U.S. persons, directly or by application of attribution rules, any gain from the
disposition will generally be treated as ordinary income to the extent of the
shareholder's share of the corporation's undistributed earnings and profits that
were accumulated during the period that the shareholder owned the shares
(whether or not such earnings and profits are attributable to RPII). In
addition, such a shareholder will be required to comply with certain reporting
requirements, regardless of the amount of shares owned by the shareholder. These
rules should not apply to a sale or exchange of Shares pursuant to the Offer or
the Amalgamation because the Company is not itself directly engaged in the
insurance business and because proposed U.S. Treasury Regulations should be
interpreted as applying only to dispositions of shares of corporations that are
directly engaged in the insurance business. There can be no assurance, however,
that the Internal Revenue Service will interpret the proposed regulations in
this manner or that the proposed regulations will not be promulgated in final
form in a manner that would cause these rules to apply to the sale or exchange
of Shares.
The foregoing discussion does not address the tax consequences that may be
relevant to shareholders with special tax status, including shareholders who own
(or who owned at any time during the five-year period ending on the date of sale
or exchange) 10% or more of the Shares, directly or by attribution (under
section 958 of the Internal Revenue Code), shareholders who acquired Shares
pursuant to the exercise of employee stock options or otherwise as compensation,
individuals who are not citizens or residents of the United States and foreign
corporations, insurance companies, financial institutions, dealers in
securities, tax-exempt entities and regulated investment companies.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. EACH SHAREHOLDER IS
URGED TO CONSULT SUCH SHAREHOLDER'S OWN TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO SUCH SHAREHOLDER OF THE OFFER AND AMALGAMATION, INCLUDING UNITED
STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS. The Shares are listed and traded
on Nasdaq under the symbol "GCREF." The following table (which has been provided
to the Purchaser by the Company) sets forth, for the calendar periods indicated,
the high and low Nasdaq sale prices per Share, as reported in published
financial sources, plus any cash dividends declared, since public trading
commenced on December 19, 1995.
<TABLE>
<CAPTION>
CASH
HIGH LOW DIVIDENDS
--------- --------- -----------
<S> <C> <C> <C>
Calendar 1995
Fourth Quarter (commencing December 19, 1995).................................. $ 23.000 $ 19.875 $ --
Calendar 1996
First Quarter.................................................................. 25.750 21.500 0.62
Second Quarter................................................................. 27.125 24.250 0.62
Third Quarter.................................................................. 26.875 21.500 0.62
Fourth Quarter................................................................. 25.375 21.875 0.62
Calendar 1997
First Quarter.................................................................. 24.625 22.000 0.62
Second Quarter (through May 13, 1997).......................................... 27.375 20.250 0.62
</TABLE>
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<PAGE>
On May 7, 1997, the last full day of trading prior to the announcement of
the Offer, the reported Nasdaq closing sales price of the Shares was $22.375 per
share. On May 13, 1997, the last full trading day prior to the date of this
Offer to Purchase, the reported Nasdaq closing sales price of the Shares was
$26.625 per share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION
FOR THE SHARES.
On April 25, 1997, the Company declared a quarterly dividend of $0.62 per
Share, payable on May 27, 1997, to shareholders of record on May 14, 1997.
Tendering Shares pursuant to the Offer will not affect the right of shareholders
of record on May 14, 1997, to receive this dividend. The Company has agreed in
the Acquisition Agreement that prior to the Amalgamation it will not declare,
set aside for payment or pay any other dividends, except that the Company may
pay the $0.62 per Share dividend declared on April 25, 1997 and payable on May
27, 1997, to holders of record as of May 14, 1997.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Cayman
Islands company with its principal executive offices located at Sofia House, 48
Church Street, Hamilton HM 12, Bermuda. The Company was established in 1993 and
provides property catastrophe, property risk excess-of-loss, property pro rata,
marine, energy, satellite and financial products reinsurance to insurers on a
worldwide basis through its principal wholly owned subsidiary, Global Capital
Reinsurance Limited ("Global").
The Company is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning the Company's business, principal physical
properties, capital structure, material pending legal proceedings, operating
results, financial condition, directors and officers (including their
remuneration and the stock options granted to them), the principal holders of
the Company's securities, any material interests of such persons in transactions
with the Company and certain other matters is required to be disclosed in proxy
statements and annual reports distributed to the Company's shareholders and
filed with the Commission. Such reports, proxy statements and other information
may be inspected and copied at the Commission's public reference facilities at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also
be available for inspection at the following regional offices of the Commission:
7 World Trade Center, New York, New York 10048; and 500 West Madison Street,
Chicago, Illinois 60661-2511; and copies may be obtained by mail at prescribed
rates from the principal office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains an Internet site on the
world wide web at http://www.sec.gov that contains reports, proxy statements and
other information.
All information contained in this Offer to Purchase or incorporated herein
by reference concerning the Company or its subsidiaries and affiliates, or
actions or events with respect to any of them, was provided by the Company, and
the Purchaser and Parent take no responsibility for the accuracy or completeness
of such information or for any failure by such entities to disclose events or
circumstances that may have occurred and may affect the significance,
completeness or accuracy of any such information.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT. The Purchaser
is a newly incorporated Cayman Islands company organized in connection with the
Offer and the Amalgamation and has not carried on any activities other than in
connection with the Offer and the Amalgamation. The principal offices of the
Purchaser are located at c/o EXEL Limited, Cumberland House, One Victoria
Street, Hamilton HM 11, Bermuda. The Purchaser is a wholly owned subsidiary of
Parent.
Until immediately prior to the time that the Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and
10
<PAGE>
the Acquisition Agreement. Because the Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding the
Purchaser is available.
Parent is a Cayman Islands company with its principal executive offices
located at Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda.
Parent and its wholly owned subsidiary X.L. Insurance Company, Ltd., a
Bermuda company ("X.L."), were incorporated in 1986. These entities were formed
in response to a shortage of high excess liability underwriting capacity in the
insurance industry. In 1990, X.L. Europe Insurance, a subsidiary of X.L., was
organized in the Republic of Ireland to serve the European Community. On
November 1, 1995, X.L. Reinsurance Company, Ltd. was incorporated under the laws
of Bermuda as a wholly owned subsidiary of X.L. and commenced operations
effective December 1, 1995.
Parent, through its subsidiaries, provides excess liability insurance
coverage to industrial, commercial and other enterprises, directors and officers
of such enterprises, professional firms, high excess property coverage, and the
assumption of tailored reinsurance contracts on a worldwide basis.
Except as described in this Offer, including Schedule I hereto, (i) to the
knowledge of the Purchaser and Parent, none of the persons listed in Schedule I
to this Offer to Purchase, or any associate or majority-owned subsidiary of the
Purchaser, Parent or any of the persons so listed, beneficially owns or has any
right to acquire, directly or indirectly, any Shares, and (ii) neither the
Purchaser nor Parent nor, to the knowledge of the Purchaser and Parent, any of
the persons or entities referred to above, nor any director, executive officer
or subsidiary of any of the foregoing, has effected any transaction in the
Shares during the past 60 days.
Except as provided in the Acquisition Agreement and as otherwise described
in this Offer (including Schedule I hereto), none of the Purchaser, Parent nor,
to the knowledge of the Purchaser and Parent, any of the persons listed in
Schedule I to this Offer to Purchase, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guaranties or loans, guaranties against loss, guaranties of
profits, division of profits or loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, neither the Purchaser nor Parent
nor, to the knowledge of the Purchaser and Parent, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, there
have been no contacts, negotiations or transactions between any of the
Purchaser, Parent or any of their respective subsidiaries or, to the knowledge
of the Purchaser and Parent, any of the persons listed in Schedule I to this
Offer to Purchase, on the one hand, and the Company or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, and election of directors or a sale or other
transfer of a material amount of assets. See Section 9.
The name, business address, citizenship, present principal occupation and
employment history for the past five years of each of the directors and
executive officers of Parent and the Purchaser are set forth in Schedule I of
this Offer to Purchase.
The insurance subsidiaries of the Company and Parent, in the ordinary course
of their respective insurance businesses, have entered into insurance and
insurance-related transactions with one another.
Parent is subject to the information and reporting requirements of the
Exchange Act and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Certain information, as of
particular dates, concerning Parent's business, principal physical properties,
capital structure, material pending legal proceedings, operating results,
financial condition, directors and officers (including their
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remuneration and stock options granted to them), the principal holders of
Parent's securities, any material interests of such persons in transactions with
Parent and certain other matters is required to be disclosed in proxy statements
and annual reports distributed to Parent's shareholders and filed with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the Commission's public reference facilities and should
also be available for inspection in the same manner as set forth with respect to
the Company in Section 8.
9. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. Parent periodically
explores potential acquisition and investment opportunities and, in that regard,
Parent has, from time to time, considered the acquisition of a Bermuda-based
property catastrophe reinsurance company.
In April 1997, Parent engaged Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") to act as its financial advisor in connection with a
potential acquisition of the Company.
On April 22, 1997, DLJ presented its preliminary analysis of a transaction
to the Parent's Board of Directors, and DLJ was authorized to communicate to
Goldman, Sachs & Co., the Company's financial advisor, Parent's preliminary
ideas regarding a potential transaction.
On April 24, 1997, Parent, through DLJ, submitted an oral initial indication
of interest in acquiring the Company. The Executive Committee of the Board
decided to raise for consideration by the full Board Parent's preliminary ideas
regarding a potential transaction.
On April 25, 1997, the Board met to consider the range of alternatives
available to the Company, including the oral indication of interest it received
from Parent. The Board, with the assistance of the Company's legal advisors and
Goldman, Sachs & Co., reviewed strategic alternatives for the Company, including
an analysis of different acquisition partners, the possibility of a sale of the
Company or a merger-of-equals, the Company's prospects if the Company were to
remain independent and other measures affecting the Company's capital base. The
Board appointed a Special Committee consisting of three non-employee directors
to consider these matters further, authorized the Special Committee to continue
discussions with Parent, and authorized Goldman, Sachs & Co. to solicit in the
market preliminary indications of interest from a limited number of other
parties identified by the Board in consultation with Goldman, Sachs & Co.
regarding a potential transaction involving the Company. Thereafter Parent was
invited to conduct a due diligence investigation of the Company and to finalize
an acquisition proposal to be submitted to the Company.
During the week of April 28, 1997, Goldman, Sachs & Co. contacted a limited
number of third parties with respect to a potential transaction involving the
Company, as authorized by the Board.
On May 3, 1997, a confidentiality agreement was executed and on May 3 and 4,
1997, various meetings, discussions and due diligence sessions occurred among
Parent, the Company and their respective financial and legal advisors.
On May 5, 1997, Parent and its legal and financial advisors met with
representatives of the Company and its legal and financial advisors to negotiate
the terms of the proposed Acquisition Agreement. Goldman, Sachs & Co. suggested
that Parent consider improving the consideration offered in Parent's initial
oral indication of interest.
Discussions among the parties and their respective advisors continued
through May 7, 1997.
On May 8, 1997, the Board of Directors of Parent authorized Parent to enter
into the Acquisition Agreement for the acquisition of all of the outstanding
Shares for $27.00 per Share in cash.
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On May 7 and 8, 1997, the Board held meetings to review, with the advice and
assistance of the Company's legal advisors and Goldman, Sachs & Co., the
proposed Acquisition Agreement and the transactions contemplated thereby,
including the Offer and the Amalgamation. At such meetings, counsel to the
Company reviewed the terms of the Acquisition Agreement and Goldman, Sachs & Co.
reviewed with the Board the range of alternatives available to the Company
previously discussed on April 25, 1997, including the results of Goldman, Sachs
& Co.'s inquiries to other parties regarding a potential transaction involving
the Company. Following a number of questions from, and discussion among, the
directors of the Company, the Board, at the meeting held May 8, unanimously (i)
approved the Acquisition Agreement and the transactions contemplated thereby,
(ii) determined that the Acquisition Agreement and the transactions contemplated
thereby are fair to and in the best interests of the Company and the Company's
shareholders, and (iii) recommended that the Company's shareholders tender their
Shares in the Offer and approve and adopt the Amalgamation.
Immediately following the conclusion of the board meetings held on May 8,
1997, the parties thereto executed the Acquisition Agreement. The Company and
Parent issued a joint press release on May 8, 1997. The Purchaser commenced the
Offer on May 14, 1997.
Reference is made to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 for a description of the matters considered by the Board in
connection with its actions regarding the Acquisition Agreement and the Offer.
10. ACQUISITION AGREEMENT; PURPOSE OF THE OFFER AND THE ACQUISITION,
APPRAISAL RIGHTS AND OTHER MATTERS.
THE ACQUISITION AGREEMENT. The following is a summary of the Acquisition
Agreement, a copy of which has been filed as an Exhibit to the Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") filed by the Purchaser and
Parent with the Commission in connection with the Offer. Such summary is
qualified in its entirety by reference to the Acquisition Agreement.
THE OFFER. The Acquisition Agreement provides for the commencement of the
Offer as promptly as practicable, but in no event later than five business days
after the date of the initial public announcement of the execution and delivery
of the Acquisition Agreement. The obligation of Parent and the Purchaser to
consummate the Offer and to accept for payment and to pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 14 hereof. The
Purchaser and Parent have agreed that, without the prior written consent of the
Company, no change in the Offer may be made which decreases the Price Per Share
payable in the Offer, reduces the number of Shares subject to the Offer, imposes
any additional conditions to the Offer, reduces the percentage amount of the
Minimum Condition to less than a majority of the outstanding Shares, changes the
form of consideration payable in the Offer, or which amends or alters any other
term of the Offer in a manner materially adverse to the holders of the Shares.
The Company agrees that no Shares held by the Company or any of its subsidiaries
will be tendered pursuant to the Offer.
THE AMALGAMATION. The Acquisition Agreement provides that, upon the terms
and subject to the conditions thereof, and in accordance with the Cayman Law, at
the Effective Time, the Purchaser shall be amalgamated with and into the
Company. As a result of the Amalgamation, the separate corporate existence of
the Purchaser will cease and the Company will continue as the Surviving Company
and will become a wholly owned subsidiary of Parent. Upon consummation of the
Amalgamation, (i) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares owned by the Company or any of its
subsidiaries, which shall be canceled) shall be cancelled, and the holder
thereof shall be entitled to receive the Price Per Share and (ii) each option to
acquire Shares ("Company Options") under the Share option plans of the Company
(the "Company Plans") outstanding immediately prior to the Effective Time shall
be canceled, and the holder thereof shall be entitled to receive an amount in
cash
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equal to (x) the product of the number of Shares covered by such Company Option
multiplied by the Price Per Share minus (y) the option exercise price payable
upon exercise of such option.
Pursuant to the Acquisition Agreement, all ordinary shares, par value $.01
per share, of the Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and become at the Effective time such
number of newly issued shares of the Surviving Company.
The Acquisition Agreement provides that the directors of the Purchaser and
any additional individuals designated by Parent at the Effective Time shall be
the initial directors of the Surviving Company and that the officers of the
Surviving Company shall be the individuals then designated by Parent, each to
hold offices in accordance with the applicable provisions of the Memorandum and
Articles of Association of the Surviving Company and until their respective
successors are duly elected or appointed and duly qualified. Except as may be
designated by the Parent, immediately prior to the Effective Time, the current
directors of the Company shall cease to be directors of the Company and shall
not be directors of the Surviving Company. The Acquisition Agreement provides
that the Memorandum and Articles of Association of the Company shall become the
Memorandum and the Articles of Association of the Surviving Company and
thereafter may be amended as provided by law.
SPECIAL MEETING. The Acquisition Agreement provides that, if required by
applicable law in order to consummate the Amalgamation, the Company, acting
through the Board, shall, upon consummation of the Offer, in accordance with
applicable law, (i) duly call, give notice of, convene and hold a special
meeting (the "Special Meeting") of its shareholders as soon as practicable
following the consummation of the Offer for the purpose of considering and
taking action with respect to the Amalgamation; (ii) if required, file with the
Commission under the Exchange Act a letter to shareholders, notice of meeting,
proxy statement and form of proxy, or an information statement, as the case may
be, to be distributed to shareholders in connection with the Amalgamation,
including any schedules required to be filed with the Commission in connection
therewith (the "Disclosure Statement") and use its best efforts to obtain and
furnish the information required to be included by it in the Disclosure
Statement and, after consultation with Parent, respond promptly to any comments
made by the Commission with respect to the Disclosure Statement and any
preliminary version thereof and cause the Disclosure Statement to be mailed to
its shareholders at the earliest practicable time following the consummation of
the Offer or at such other time as Parent shall direct following consultation
with the Company; and (iii) include in the Disclosure Statement that the Board
unanimously (a) has approved the Offer and the Amalgamation, (b) has determined
that the Offer and the Amalgamation taken together are fair and in the best
interests of the Company and its shareholders, and (c) recommends that
shareholders of the Company accept the Offer and tender their Shares pursuant to
the Offer and adopt and approve the Amalgamation. Parent has agreed that, at the
Special Meeting, all of the Shares then owned by Parent and the Purchaser will
be voted in favor of the Amalgamation.
COMPULSORY ACQUISITION OF MINORITY SHARES. The Acquisition Agreement
provides that, in the event that, following the purchase of Shares pursuant to
the Offer, Parent, the Purchaser and any other subsidiary of Parent shall own an
aggregate of at least ninety percent (90%) of the outstanding Shares, at the
request of Parent or the Purchaser, the Company, Parent and the Purchaser will
take all necessary and appropriate action to effect the Compulsory Acquisition
of those outstanding Shares not owned by Parent, Purchaser or any subsidiary of
Parent, in accordance with Cayman Law.
DESIGNATION OF DIRECTORS. The Acquisition Agreement provides that, promptly
upon purchase by Parent or the Purchaser of such number of Shares that, together
with the number of Shares currently owned by Parent or the Purchaser, represents
at least a majority of the outstanding Shares and from time to time thereafter
prior to the Effective Time, (i) Parent shall be entitled to designate such
number of directors, rounded up to the next whole number but in no event more
than one less than the total number of directors, on the Board as will give
Parent, subject to compliance with Section 14(f) of the Exchange Act and Rule
14f-1 thereunder, representation on the Board equal to the product of the number
of directors
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on the Board and the percentage that such number of purchased Shares and Shares
currently owned bears to the number of Shares outstanding, and (ii) the Company
shall, upon request by Parent, promptly increase the size of the Board to the
extent permitted by its Memorandum and Articles of Association and/ or exercise
its best efforts to secure the resignations of such number of directors as is
necessary to enable Parent's designees to be elected to the Board and shall
cause Parent's designees to be so elected; PROVIDED, HOWEVER, that until the
Effective Time (or termination of the Acquisition Agreement) (x) the two members
of the Board not otherwise affiliated with Parent or the Purchaser and not
employees of the Company or any of its subsidiaries, who shall be designated by
the Company, the Purchaser and Parent, or (y) any successor of either of them
reasonably satisfactory to Parent and the Purchaser designated by such directors
then in office (the "Independent Directors") shall be members of the Board, each
of whom shall resign at the Effective Time or such termination; PROVIDED,
FURTHER, that if a successor is not so designated after an Independent Director
resigns or otherwise leaves office, Parent shall be entitled to designate a
successor who meets the requirements of clause (x). At the request of Parent,
the Company has agreed to take, at its expense, all action necessary to effect
any such election, including mailing to its shareholders the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
Pursuant to the Acquisition Agreement, at any time Parent's designees constitute
a majority of the Board, Parent shall be entitled to designate all of the
members of the Board of Directors of each subsidiary of the Parent, subject to
Bermuda law. Prior to the Effective Time, following the election or appointment
of Parent's designees, any amendment to the Acquisition Agreement, any
termination of the Acquisition Agreement by the Company, any extension by the
Company of the time for performance of any acts or obligations of Parent or the
Purchaser, and any waiver of any of the Company's rights under the Acquisition
Agreement requires the concurrence of the Independent Directors then in office.
CONDUCT OF BUSINESS OF THE COMPANY. Pursuant to the Acquisition Agreement,
the Company has covenanted and agreed that except as expressly contemplated by
the Acquisition Agreement, during the period from the date of the Acquisition
Agreement to the Effective Time, the Company will, and will cause its
Subsidiaries to, conduct its operations according to their ordinary course of
business consistent with past practice, and shall use all reasonable best
efforts to preserve intact its business organization, to keep available the
services of its officers and employees, to maintain all permits, licenses, and
franchises from governmental entities required to conduct their businesses as
now being conducted and to maintain satisfactory relationships with producers,
brokers, insureds, suppliers, distributors, customers and others having business
relationships with them and shall take no action which would materially
adversely affect the ability of the Company, Parent or the Purchaser to
consummate the transactions contemplated by the Acquisition Agreement (it being
understood that the Company will discuss with Parent the implementation of the
joint venture with Capital Re Corporation and the writing of any insurance
thereby or thereunder). The Acquisition Agreement provides that, without
limiting the generality of the foregoing, and except as otherwise expressly
provided therein, prior to the Effective Time, the Company shall not nor shall
it permit any of its subsidiaries to, without the prior written consent of
Parent, directly or indirectly: (a) amend the Memorandum or Articles of
Association of the Company or any organizational document of any of its
subsidiaries; (b) authorize for issuance, issue, sell, deliver, grant any
options for, or otherwise agree or commit to issue, sell or deliver any
securities of the Company or any of its subsidiaries, except pursuant to and in
accordance with the terms of any Company Options outstanding on the date of the
Acquisition Agreement; (c) split, combine or reclassify any shares of the
Company or any of its subsidiaries, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of any such shares or purchase, redeem or otherwise acquire
any shares other than the dividend payable on May 27, 1997; (d) (i) create,
incur, assume, maintain or permit to exist any long-term debt or any short-term
debt for borrowed money except pursuant to the Company's existing credit
agreements in the ordinary course of the property catastrophe business to the
extent required to pay properly documented claims, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any person except in the
ordinary course of its reinsurance business, consistent with past practices
(except customary letters of credit issued
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in the ordinary course of business consistent with past practices), or (iii)
make any loans, advances or capital contributions to, or investments in, any
person; (e) (i) increase in any manner (including bonuses) the compensation of
any director, officer or other employee of the Company or any of its
subsidiaries; (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required, or enter into or agree to enter into any
agreement or arrangement with any such director, officer or employee, whether
past or present, relating to any such pension, retirement allowance or other
employee benefit; (iii) grant any severance or termination pay to, or enter into
any employment or severance agreement with, any such director, officer or other
employee; or (iv) become obligated under any new pension plan, welfare plan,
multi-employer plan, employee benefit plan, benefit arrangement, or similar plan
or arrangement, not in existence on the date of the Acquisition Agreement,
including any bonus, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay, retirement or
other benefit plan, agreement or arrangement, or employment or consulting
agreement with or for the benefit of any person, or amend any of such plans or
any of such agreements in existence on the date thereof; (f) except as required
by the Acquisition Agreement, authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter into, any agreement in
principle or any agreement with respect to any plan of liquidation or
dissolution, any acquisition of a material amount of assets or securities, any
sale, transfer, lease, license, pledge, mortgage, or other disposition or
encumbrance of any assets or securities or any change in the capitalization of
the Company or any of its subsidiaries (other than upon exercise of the Company
Options outstanding on the date of the Acquisition Agreement) or, except for
reinsurance agreements entered into in the ordinary course of business,
consistent with past practice, any other material agreements, commitments or
contracts or any amendment or modification thereof or any release or
relinquishment of any material rights thereunder; (g) knowingly undertake any
act, or suffer to exist any condition, causing any insurance policy naming it as
a beneficiary or a loss payee to be canceled or terminated; (h) enter into any
hedging, option, derivative or other similar transaction, except in the ordinary
course of business consistent with past practices and following written notice
to Parent; or (i) agree to do any of the foregoing.
ACCESS TO INFORMATION; CONFIDENTIALITY. The Acquisition Agreement provides
that, from the date of the Acquisition Agreement until the Effective Time, the
Company shall (x) give Parent and its authorized representatives (including
counsel, consultants, financial advisors, accountants and auditors) reasonable
access during normal business hours to all facilities, personnel and operations
and to all books and records of it and its subsidiaries, (y) permit Parent to
make such inspections as it may reasonably require and (z) cause its officers
and those of its subsidiaries to furnish Parent with such financial and
operating data and other information with respect to its business and properties
as Parent may from time to time reasonably request. Also, pursuant to the
Acquisition Agreement, each of the Company, Parent and the Purchaser will hold
and will use its best efforts to cause all of its employees and representatives
and the employees and representatives of its subsidiaries to hold in strict
confidence pursuant to the Confidentiality Agreement, dated as of April 28,
1997, between Parent and the Company (the "Confidentiality Agreement)" all
documents and information furnished to the other in connection with the
transactions contemplated by the Acquisition Agreement as if each such employee
or representative were a party thereto.
ACQUISITION PROPOSALS. Pursuant to the Acquisition Agreement, the Company
has represented and warranted to, and covenanted and agreed with, Parent and the
Purchaser that neither the Company nor any of its subsidiaries has any
agreement, arrangement or understanding with any potential acquiror that,
directly or indirectly, would be violated, or require any payments, by reason of
the execution, delivery and/ or consummation of the Acquisition Agreement. The
Acquisition Agreement provides that the Company shall, and shall cause its
subsidiaries and use its best efforts to cause its and their officers,
directors, employees, investment bankers, attorneys and other agents and
representatives, to (a) immediately cease any existing discussions or
negotiations with any person other than Parent or the Purchaser, (b) not
solicit, initiate, continue, facilitate or encourage (including by way of
furnishing or disclosing non-public information), directly or indirectly, any
inquiries, proposals or offers from any such person relating to any
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acquisition or purchase of a material portion of the assets or business of, or
any significant equity interest in (including by way of tender offer), or any
amalgamation, merger, consolidation or business combination with, or any
recapitalization or restructuring, or any similar transaction involving, the
Company or any of its subsidiaries (collectively, an "Acquisition Transaction"),
or (c) not negotiate, explore or otherwise communicate in any way, directly or
indirectly, with any person other than Parent or the Purchaser with respect to
any Acquisition Transaction or not enter into, approve or recommend any
agreement, arrangement or understanding requiring the Company to abandon,
terminate or fail to consummate the Offer and/ or the Amalgamation or any other
transaction contemplated by the Acquisition Agreement. The Acquisition Agreement
provides, however, notwithstanding the foregoing, that prior to the purchase of
Shares pursuant to the Offer, the Company may, in response to an unsolicited
written proposal with respect to an Acquisition Transaction involving the
acquisition of all of the Shares (or all or substantially all of the assets of
the Company and its subsidiaries) from a person other than the Purchaser or
Parent (which proposal (I) is not subject to a financing condition and is from a
person that Goldman, Sachs & Co. or another nationally recognized investment
bank advises in writing is financially capable of consummating such proposal or
(II) is subject to financing, but is from a person that Goldman, Sachs & Co. or
another nationally recognized investment bank advises in writing is financially
capable of achieving such financing to consummate such proposal), (i) furnish or
disclose non-public information to such person and (ii) negotiate, explore or
otherwise communicate with such person, in each case only if and to the extent
that (a) the Board determines reasonably and in good faith by a majority vote
(after receipt of written advice of the Company's outside legal counsel that
failing to take such action would, in all likelihood, constitute a breach of the
fiduciary duties of the Board to the Company's shareholders under applicable
law) that taking such action would, in all likelihood, lead to an Acquisition
Transaction that, based upon the written advice of Goldman, Sachs & Co., is more
favorable to the Company's shareholders than the Offer and Amalgamation and that
failing to take such action would, in all likelihood, constitute a breach of
fiduciary duties of the Board to the Company's shareholders under applicable law
(the proposal with respect to an Acquisition Transaction meeting the
requirements of the parenthetical clause immediately preceding clause (i) and
this clause (a), a "Superior Proposal"), (b) prior to furnishing or disclosing
any non-public information to, or entering into discussions or negotiations
with, such person, the Company receives from such person an executed
confidentiality agreement with terms no less favorable to the Company than those
contained in the Confidentiality Agreement, but which confidentiality agreement
shall not provide for any exclusive right to negotiate with the Company or any
payments and (c) the Company advises Parent of all such non-public information
delivered to such person concurrently with such delivery; PROVIDED, HOWEVER,
that the Company shall not, and shall cause its affiliates not to, enter into a
definitive agreement with respect to a Superior Proposal unless (x) the Company
concurrently terminates the Acquisition Agreement in accordance with the terms
hereof and pays any amounts required thereunder and (y) such agreement permits
the Company to terminate it if it receives a Superior Proposal, such termination
and related provisions to be on terms no less favorable to the Company,
including as to fees and reimbursement of expenses, as those contained in the
Acquisition Agreement. The Company shall promptly (but in any event within one
day of the Company becoming aware of same) advise Parent of the receipt by the
Company, any of its subsidiaries or any of the Company's or any subsidiary's
officers, directors, employees, investment bankers, attorneys or other agents or
representative of any inquires or proposals relating to an Acquisition
Transaction and any action taken pursuant thereto. The Company shall promptly
provide Parent with a copy of any such inquiry or proposal in writing and a
written statement with respect to any such inquiries or proposals not in
writing, which statement shall include the identity of the parties making such
inquiries or proposal and the terms thereof. The Company shall, from time to
time, promptly inform Parent of the status and content of any discussions
regarding any Acquisition Transaction with a person other than Parent or the
Purchaser. For the avoidance of doubt, the Company agrees that it will not enter
into any agreement with respect to a Superior Proposal unless and until Parent
has been given at least five business days notice prior to the entering into
such agreement to match the terms of such agreement. The Company has obtained
the agreement of each member of its Board of Directors and the board of
directors of each of its subsidiaries and of its executive officers and
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investment bankers that each such person will comply with such provisions set
forth herein as if it were a party to the Acquisition Agreement.
EFFECT ON COMPANY OPTIONS AND AGREEMENTS. The Acquisition Agreement
provides that the Company will use its best efforts (including, to the extent
possible, by way of amendment to the Company Plans) so that, upon consummation
of the Offer, each outstanding Company Option shall be canceled in exchange for
an amount of cash equal to (x) the product of the number of Shares covered by
such Company Option multiplied by the Price Per Share minus (y) the option
exercise price payable upon exercise of such option.
INDEMNIFICATION. Pursuant to the Acquisition Agreement, Parent shall cause
the Surviving Company to indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
subsidiaries (the "Indemnified Parties") against all losses, obligations,
claims, damages, expenses or liabilities arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time
(including, without limitation, in connection with the transactions contemplated
by the Acquisition Agreement) to the same extent and on the same terms and
conditions provided for in the Company's Memorandum and Articles of Association
in effect at the date of the Acquisition Agreement, to the extent permitted
under applicable law (which terms and conditions shall not be amended in any
manner which adversely affects any Indemnified Party for a period of six years,
including provisions relating to advances of expenses incurred in the defense of
any action or suit; PROVIDED, that in the event any claim or claims are asserted
or made within such six-year period, all rights to indemnification (and to
advancement of expenses) in respect of each such claim shall continue until
final disposition of such claim). For a period of six years after the Effective
Time, Parent shall cause to be maintained in effect the current policies of
directors' and officers' liability insurance maintained by the Company (provided
that Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous) with
respect to claims arising from facts or events which occurred before the
Effective Time; PROVIDED, HOWEVER, that Parent or the Surviving Company shall
not be obligated to incur any annual premium in excess of 200% of the last
annual aggregate premium paid prior to the date of the Acquisition Agreement,
for all current directors' and officers' liability insurance policies maintained
by the Company, which the Company represents and warrants to be $604,000 (the
"Current Premium"). If such premiums for such insurance would at any time exceed
200% of the Current Premium, then the Surviving Company shall cause to be
maintained policies of insurance which, in the Surviving Company's good faith
determination, provide the maximum coverage available at an annual premium equal
to 200% of the Current Premium. If the Surviving Company or any of its
respective successors or assigns (i) reorganizes or consolidates with or merges
into any other person and is not the resulting, continuing or surviving
corporation or entity of such reorganization, consolidation or merger or (ii)
liquidates, dissolves or transfers all or substantially all of its properties
and assets to any person or persons, then, and in such case, proper provision
will be made so that the successors and assigns of the Surviving Company assumes
all of the obligations of the Surviving Company, as the case may be, set forth
herein.
REASONABLE BEST EFFORTS. The Acquisition Agreement provides that, subject
to its terms and conditions and applicable law, each of the Company, Parent and
the Purchaser shall use reasonable best efforts promptly to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate (including obtaining all material consents and
making all material filings) under applicable laws and regulations to consummate
and make effective the transactions contemplated by the Acquisition Agreement.
REPRESENTATIONS AND WARRANTIES. In the Acquisition Agreement, the Company
has made customary representations and warranties to Parent and the Purchaser
with respect to, among other things, its organization, capitalization,
authority, financial statements, public filings, employees, brokers' fees, state
antitakeover statutes, compliance with laws, legal proceedings, taxes, consents
and approvals, and the absence of certain changes with respect to the Company
since March 31, 1997.
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CONDITIONS TO THE AMALGAMATION. The Acquisition Agreement provides that the
respective obligations of the Company, Parent and the Purchaser to effect the
transactions contemplated therein shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions: (a) the
Purchaser shall have purchased all Shares duly tendered and not withdrawn,
pursuant to the terms of the Offer and subject to the terms thereof; (b) the
Amalgamation shall have been approved by the affirmative vote of the Company's
shareholders by the requisite vote in accordance with the Cayman Law and
pursuant to the appropriate order of the court on the application of Company;
(c) the Amalgamation shall have been sanctioned by the court in accordance with
the Cayman Law on the petition of the Court by the Company; (d) any required
approval of the Minister of Finance under the Insurance Act 1978 of Bermuda and
of the Registrar under the Cayman Law shall have been obtained; (e) there shall
not be in effect any order, decree or ruling or other action restraining,
enjoining or otherwise prohibiting the Amalgamation, which order, decree, ruling
or action shall have been issued or taken by any court of competent jurisdiction
or other governmental body located or having jurisdiction within the Cayman
Islands, Bermuda or the United States; and (f) a copy of the order of the Court
sanctioning the Amalgamation shall have been delivered to the Registrar for
registration in accordance with the Cayman Law.
TERMINATION; FEES. The Acquisition Agreement provides that:
(a) The Acquisition Agreement may be terminated, and the Offer and
Amalgamation abandoned, at any time prior to the Effective Time, (i) by mutual
written consent of Parent, the Purchaser and the Company; (ii) by Parent and the
Purchaser or the Company (x) if any court of competent jurisdiction in the
Cayman Islands, Bermuda or the United States or other Cayman Islands, Bermuda or
United States governmental body shall have issued an order, decree or ruling or
taken any other action restraining, enjoining, not approving or otherwise
prohibiting the Offer or the Amalgamation and such order, decree, ruling or
other action is or shall have become final and nonappealable; PROVIDED, HOWEVER,
that the party seeking to so terminate the Acquisition Agreement shall have used
reasonable best efforts to remove or lift such order, decree or ruling or (y) if
the conditions to consummation of the Amalgamation are not satisfied by March
31, 1998; (iii) by Parent and the Purchaser if the Purchaser shall have (x)
failed to commence the Offer within five business days following the date of the
initial public announcement of the Offer, (y) terminated the Offer or (z) failed
to pay for Shares pursuant to the Offer by December 31, 1997 (unless, in any
such case, such failure or termination results from a breach of any
representation, warranty, covenant or agreement of Parent or the Purchaser);
(iv) by the Company if (A) the Purchaser shall have (x) failed to commence the
Offer within five business days following the date of the initial public
announcement of the Offer, (y) terminated the Offer, or (z) failed to pay for
Shares pursuant to the Offer by December 31, 1997 (unless, in any such case,
such failure or termination results from a breach of any representation,
warranty, covenant or agreement of the Company), or (B) prior to the purchase of
Shares pursuant to the Offer, Company shall, in compliance with "--ACQUISITION
PROPOSALS" above, concurrently be entering into a definitive agreement with
respect to a Superior Proposal; (v) by Parent and the Purchaser prior to the
purchase of Shares pursuant to the Offer, if (A) there shall have been a breach
of any representation or warranty (without giving effect to any materiality or
similar qualifications contained therein) on the part of the Company having a
Material Adverse Effect (as defined in the Acquisition Agreement), (B) there
shall have been a breach of any covenant or agreement on the part of the Company
resulting in a Material Adverse Effect which breach shall not have been cured
within ten (10) days following written notice to the Company of such breach, (C)
the Company shall engage in negotiations (in violation of the Acquisition
Agreement) with any person other than Parent or the Purchaser that has proposed
an Acquisition Transaction, (D) the Board shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to Parent or
the Purchaser its approval or recommendation of the Offer, the Acquisition
Agreement or the Amalgamation or shall have recommended a proposal with respect
to an Acquisition Transaction, or shall have adopted any resolution to effect
any of the foregoing, or (E) the Minimum Condition shall not have been satisfied
by the Expiration Date and a third party shall have made and not withdrawn a
proposal (information concerning which has been or is made publicly available)
with respect to an Acquisition Transaction; or (vi) by the Company if
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(x) there shall have been a breach of any representations or warranty (without
giving effect to any materiality or similar qualifications contained therein) on
the part of Parent or the Purchaser having a material adverse effect on the
ability of Parent or the Purchaser to consummate the Offer or the Amalgamation
or (y) there shall have been a breach of any covenant or agreement on the part
of Parent or the Purchaser resulting in a material adverse effect on the ability
of Parent or the Purchaser to consummate the Offer or the Amalgamation, which
breach shall not have been cured within ten (10) days following written notice
to Parent and the Purchaser of such breach.
(b) In the event of the termination and abandonment of the Acquisition
Agreement as described above, the Acquisition Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
affiliates, directors, officers or shareholders, other than with respect to the
Confidentiality Agreement and as described herein and in (c) below.
(c) (i) Upon the termination of the Acquisition Agreement for any reason
prior to the purchase of Shares by the Purchaser pursuant to the Offer (other
than pursuant to (a)(i), (a)(ii) or (a)(vi) above), the Company shall reimburse
Parent, the Purchaser and their affiliates (not later than one business day
after request therefor) for all out-of-pocket fees and expenses (subject to a
maximum amount of $2,000,000) reasonably incurred by any of them or on their
behalf in connection with the Offer and the Amalgamation and the consummation of
all other transactions contemplated by the Acquisition Agreement (including fees
payable to financing sources, investment bankers, counsel to any of the
foregoing and accountants); (ii) if (A) the Acquisition Agreement is terminated
for any reason (other than pursuant to (a)(i), (a)(ii) or (a)(vi) above) and,
not later than the first anniversary of such termination, the Company enters
into an agreement with respect to an Acquisition Transaction, or an Acquisition
Transaction occurs involving any person (or any affiliate thereof) other than
Parent or the Purchaser (x) with whom the Company (or any of its agents or
representatives) had communications with a view to an Acquisition Transaction,
(y) to whom the Company (or any of its agents or representatives) furnished
information with a view to an Acquisition Transaction or (z) who had submitted a
proposal or expressed an interest in an Acquisition Transaction, in any such
case, prior to such termination or (B) Company terminates the Acquisition
Agreement pursuant to (a)(iv)(B) above, the Company shall pay to Parent and the
Purchaser, upon such entry into or such occurrence of an Acquisition Transaction
in the case of (c)(ii)(A) above and immediately upon such termination in the
case of (c)(ii)(B) above, a fee of $7,500,000 in cash, however, that the Company
in no event shall be obligated to pay more than one such $7,500,000 fee with
respect to all such agreements and occurrences and such termination; and (iii)
except as specifically provided above, each party shall bear its own expenses in
connection with the Acquisition Agreement and the transactions contemplated
thereby, including the preparation, execution and performance of the Acquisition
Agreement and the transactions contemplated thereby, and all fees and expenses
of their respective investment bankers, finders, brokers, agents,
representatives, counsel and accountants.
PURPOSE OF THE OFFER AND THE ACQUISITION, APPRAISAL RIGHTS AND OTHER
MATTERS.
PURPOSE OF THE OFFER. The purpose of the Offer is for the Purchaser to
acquire control of, and the entire equity interest in, the Company. The Offer is
intended to increase the likelihood that the Acquisition will be effected. The
Purchaser currently does not intend to permit the Company to continue to pay
dividends on the Shares until the Acquisition has been consummated, except that
the Company may pay the $0.62 per Share dividend declared on April 25, 1997 and
payable on May 27, 1997, to holders of record as of May 14, 1997. Upon
consummation of the Offer, the Company will become a subsidiary of the
Purchaser. For other related matters, see "--Other" below.
COMPULSORY ACQUISITION. If, following the consummation of the Offer, the
Purchaser has acquired at least ninety percent (90%) of the Shares then, subject
to and in accordance with Cayman Law, the Purchaser currently intends, promptly
and in no event later than two months after the expiration of four months from
the commencement of the Offer, to give notice to each shareholder that has not
tendered his or her Shares to the Purchaser pursuant to the Offer (a "Dissenting
Shareholder") that it desires to
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acquire such Dissenting Shareholder's Shares pursuant to a Compulsory
Acquisition, and if no Order (as defined herein under APPRAISAL RIGHTS) is
obtained to the contrary, to acquire such Shares. A Compulsory Acquisition will
not require any approval by the other shareholders of the Company. The Purchaser
is making the Offer because the Purchaser believes that it is the means by which
it will most likely be able to effect the Acquisition, while at the same time
affording all other shareholders an equal opportunity to sell their Shares at
the cash Price Per Share offered in the Offer. Schedule II sets forth, in their
entirety, relevant provisions of Caymans Law.
ACQUISITION THROUGH AMALGAMATION. If the Purchaser is not able to acquire
all remaining Shares pursuant to a Compulsory Acquisition for any reason, then
depending upon the results of the Offer and other relevant factors, the
Purchaser currently intends to proceed with an Amalgamation under Section 85 of
the Cayman Law, subject to receiving the necessary shareholder, regulatory and
Court approvals in which case each Share would be converted into the right to
receive the same Price Per Share in cash as those paid in the Offer. Under
Section 85 of the Cayman Law, except as otherwise described below, upon an
application to the Cayman Islands Court by the Company and/or the Purchaser, the
Court may order a meeting of the shareholders of the Company to approve and
adopt the Amalgamation. At such meeting, the affirmative vote of the holders of
seventy-five percent (75%) of each class of the Shares eligible to vote thereon
is required to approve and adopt the Amalgamation. Upon a subsequent application
to the Court, the adopted and approved the Amalgamation shall, if sanctioned by
the Court, be binding on all shareholders of the Company. The Court may make
provisions for such incidental, consequential, and supplemental matters as are
necessary to secure that the Amalgamation is fully and effectively carried out.
Under the Acquisition Agreement, the Purchaser will be obligated to vote its
Shares in favor of the Amalgamation. Schedule II sets forth, in their entirety,
relevant provisions of Caymans Law.
OTHER. If the Purchaser (a) is not able to acquire all remaining Shares
pursuant to a Compulsory Acquisition for any reason, and (b) is not able to
effect the Amalgamation for any reason, the Purchaser will explore other
alternatives to complete the Acquisition, including any or all of the following:
the Purchaser may seek to acquire either additional Shares or the entire
remaining equity interest in the Company, and the Purchaser may seek to pursue
other transactions with the Company and/or its subsidiaries, which may include
extraordinary corporate transactions such as a reorganization, liquidation,
reincorporation to a jurisdiction that permits mergers or amalgamations, reverse
stock split, or sale or transfer of some or all of the Company's assets,
including the capital stock of Global.
Although the Purchaser currently has no plans or proposals with respect to
such other means, future Share acquisitions may be by means of open market or
privately negotiated purchases, or otherwise. Such transactions might involve
the exchange of cash or securities of the Purchaser and/or Parent, or some
combination of cash and securities, and may be on terms and at prices more or
less favorable than those of the Offer.
The Purchaser and/or Parent may also choose to purchase some or all of the
assets of the Company, including the capital stock of Global. Such purchase may
require a vote of the Board and, if necessary, a vote of the shareholders of the
Company. The Purchaser, as a holder of a majority of Shares at such a meeting,
may be able, on its own, to effect such shareholder approval, if such approval
is necessary or is otherwise sought. Such a proposed transaction may have the
effect of reorganizing the Company in a manner similar to the Amalgamation.
The decision to enter into such future transactions and the forms they might
take will depend upon whether such transactions are in the best interests of
Parent and relevant legal considerations and circumstances then existing,
including the financial resources of the Purchaser and Parent and the business,
tax and accounting objectives of the Purchaser and Parent, the performance of
the Shares in the market, if any, the availability and alternative uses of
funds, money market and stock market conditions and general economic conditions.
The Purchaser and/or Parent also may engage in certain of such transactions
during the period following the expiration or termination of the Offer and prior
to any Compulsory Acquisition.
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The Purchaser and Parent intend to continue to evaluate the business and
operations of the Company on an ongoing basis and may determine to engage in one
or more of the foregoing or other transactions with the Company in the future.
Upon the conclusion of the Offer, the Purchaser intends to seek to remove,
or cause the Company to seek resignations from, members of the current Board,
have persons designated by the Purchaser elected or appointed to the Board, and
may reduce or increase the size of the Board. The Purchaser currently does not
intend to permit the Company to continue to pay dividends on the Shares until
the Acquisition has been consummated, except that the Company may pay the $0.62
per Share dividend declared on April 25, 1997 and payable on May 27, 1997, to
holders of record as of May 14, 1997. See Section 10.
It is the present intention of the Purchaser to seek to cause the Company to
make a certification to effect termination of registration of the Shares under
the Exchange Act as soon as practicable after the consummation of the Offer. It
is also the present intention of the Purchaser to cause the Company to seek to
delist the Shares from Nasdaq as soon as practicable after the consummation of
the Offer. If the Company does terminate registration under the Exchange Act
and/or delist the Shares from trading on Nasdaq, the liquidity of the Shares
will be severely and adversely affected. See Section 12.
If the Acquisition is consummated, the shareholders of the Company other
than the Purchaser and its affiliates will no longer have an equity interest in
the Company and therefore will not share in the Company's future earnings and
growth, if any. Additionally, Parent will, in effect, have a 100% interest in
the net book value and net earnings of the Company, and be entitled to all
benefits resulting from such interest. These benefits include complete
management and investment discretion regarding the future conduct of the
Company's business, all income generated by the Company's operations and any
future increase in the Company's value. Similarly, Parent also will, in effect,
bear the risk of any losses incurred by the Company's operations or any decrease
in the value of the Company.
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Amalgamation. However, Rule 13e-3 would be
inapplicable if the Amalgamation is consummated within one year after the
purchase of the Shares pursuant to the Offer. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning the
fairness of the proposed transaction and the consideration offered to minority
shareholders in such transaction be filed with the Commission and disclosed to
shareholders prior to the consummation of the transaction.
APPRAISAL RIGHTS. None of the Cayman Law, the Company's Articles of
Association, the Company's Memorandum of Association, nor the Offer provides for
appraisal rights or other similar rights. Appraisal rights will not be
voluntarily provided by the Company or the Purchaser.
Under Section 86(1)(e) of the Cayman Law, if the Company has made an
application to the Cayman Islands Court for the sanctioning of the Amalgamation,
and it is shown to the Court that the Amalgamation has been proposed for the
purpose of an amalgamation of the Purchaser and the Company, and that under the
Amalgamation all of the property of the Company is to be transferred to the
Surviving Company, the Court may make provision for any person who, within such
time and such manner as the Court directs, dissents from the Amalgamation.
Under Section 87(1) of the Cayman Law, if the Purchaser acquires (or
receives unconditional acceptances of the Offer in respect of) at least ninety
percent (90%) of the Shares within four months after the commencement of the
Offer, then it may give notice (the "Notice") at any time within two months
following the expiration of the four-month period to any Dissenting Shareholder
that it desires to acquire the Shares held by such Dissenting Shareholder, on
the same terms as the Offer. Each Dissenting Shareholder will then have one
month to make an application to the Cayman Islands Court for an order (an
"Order") preventing the Purchaser from so acquiring his Shares. If such
application is not timely made or if an Order is not obtained by such Dissenting
Shareholder, then the Purchaser would become entitled
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to acquire such Dissenting Shareholder's Shares upon transmission of a copy of
the Notice to the Company and payment of the Per Share Price to the Company, at
which point the Company would be required to register the Purchaser as the
holder of those Shares. Any sums paid to the Company in respect of Shares to be
acquired from Dissenting Shareholders pursuant to a Compulsory Acquisition under
Section 87 are required to be held by the Company in trust for such Dissenting
Shareholders.
11. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the
Purchaser to purchase all of the Shares (other than Shares owned by Parent and
its subsidiaries) pursuant to the Offer and the Amalgamation and to pay related
fees and expenses is estimated to be approximately $656.3 million. The Purchaser
expects to obtain such funds from Parent. Parent will obtain such funds from a
combination of cash on hand, liquidation of certain investments and bank
borrowings. The consummation of the Offer and Amalgamation is not conditioned on
obtaining financing.
12. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ
NATIONAL MARKET; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS. The purchase of
Shares pursuant to the Offer will reduce the number of holders of Shares and the
number of Shares that might otherwise trade publicly. Consequently, depending
upon the number of Shares purchased and the number of remaining holders of
Shares, the purchase of Shares pursuant to the Offer may adversely affect the
liquidity and market value of the remaining Shares held by the public.
The extent of the public market for the Shares and, according to the
published guidelines of the National Association of Securities Dealers, Inc.,
the continued trading of the Shares on Nasdaq, after commencement of the Offer,
will depend upon the number of holders of Shares remaining at such time, the
interest in maintaining a market in such Shares on the part of securities firms,
the possible termination of registration of such Shares under the Exchange Act,
as described below, and other factors. If, as a result of the purchase of Shares
pursuant to the Offer or otherwise, trading of the Shares on Nasdaq is
discontinued, the liquidity of and market for the Shares would be adversely
affected. Parent and the Purchaser cannot predict whether or to what extent the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for or marketability of the
Shares or whether it would cause future prices to be greater or less than the
Price Per Share.
The Shares are currently registered under Section 12(g) of the Exchange Act.
Registration of the Shares under the Exchange Act may be terminated upon
application by the Company to the Commission if the Shares are neither listed on
a national securities exchange nor held by 300 or more holders of record.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its shareholders and to the Commission and could make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in
connection with shareholders' meetings and the related requirement of furnishing
an annual report to shareholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to "going private" transactions. Furthermore, the
ability of "affiliates" of the Company and persons holding "restricted
securities" of the Company to dispose of such securities pursuant to Rule 144 or
144A promulgated under the Securities Act of 1933, as amended, may be impaired
or eliminated.
The Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. If registration
of the Shares is not terminated prior to the Amalgamation, the registration of
the Shares under the Exchange Act will be terminated following consummation of
the Amalgamation.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
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described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for quotation on Nasdaq.
13. DIVIDENDS AND DISTRIBUTIONS. The Acquisition Agreement provides that
the Company shall not, between the date of the Acquisition Agreement and the
Effective Time of the Amalgamation, without the prior written consent of Parent,
(a) authorize for issuance, issue, sell, deliver, grant any options for, or
otherwise agree or commit to issue, sell or deliver any shares of any class of
capital stock of the Company or any securities convertible into shares of any
class of capital stock of the Company, except pursuant to and in accordance with
the terms of currently outstanding options; or (b) split, combine or reclassify
any shares of capital stock of the Company, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of capital stock of the Company or purchase,
redeem or otherwise acquire any shares of the Company's capital stock or that of
any of the Company's subsidiaries, except that the Company may set aside for
payment, and pay a quarterly dividend of $0.62 per Share on May 27, 1997, to
shareholders of record on May 14, 1997. See Sections 6 and 10. If, however, the
Company should, while the Offer is outstanding, (i) split, combine or otherwise
change the Shares or its capitalization, (ii) acquire or otherwise cause a
reduction in the number of outstanding Shares or (iii) issue or sell any
additional Shares (other than pursuant to outstanding options to purchase
Shares), shares of any other class or series of capital stock, other voting
securities or any securities convertible into, or options, rights, or warrants,
conditional or otherwise, to acquire, any of the foregoing, then, without
prejudice to Purchaser's rights under Section 14, Purchaser may (subject to the
provisions of the Acquisition Agreement) make such adjustments to the purchase
price and other terms of the Offer (including the number and type of securities
to be purchased) as it deems appropriate to reflect such split, combination or
other change, acquisition, reduction, issuance or sale.
If, on or after May 8, 1997, the Company should declare or pay any dividend
on the Shares or make any other distribution (including the issuance of
additional shares of capital stock pursuant to a stock dividend or stock split,
the issuance of other securities or the issuance of rights for the purchase of
any securities) with respect to the Shares that is payable or distributable to
shareholders of record on a date prior to the transfer to the name of Purchaser
or its nominee or transferee on the Company's stock transfer records of the
Shares purchased pursuant to the Offer (other than a quarterly dividend of $0.62
per Share for which the Company may set aside payment, and pay, on May 27, 1997,
to shareholders of record on May 14, 1997) then, without prejudice to
Purchaser's rights under Section 14, (i) the Price Per Share payable by
Purchaser pursuant to the Offer will be reduced (subject to the Acquisition
Agreement) to the extent any such dividend or distribution is payable in cash
and (ii) any non-cash dividend, distribution or right shall be received and held
by the tendering shareholder for the account of Purchaser and will be required
to be promptly remitted and transferred by each tendering shareholder to the
Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance and subject to applicable
law, Purchaser will be entitled to all the rights and privileges as owner of any
such non-cash dividend, distribution or right and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer and in addition to (and not in limitation of) the Purchaser's rights
to extend and amend the Offer at any time in its sole discretion, the Purchaser
shall not be required to accept for payment or pay for any tendered Shares, and
may postpone the acceptance for payment of or payment for tendered Shares and
may terminate or amend the Offer if in the Purchaser's judgment (i) the Minimum
Condition shall not have been satisfied, or (ii) any of the following shall
exist or occur:
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(a) (x) there shall be instituted or pending any action or proceeding, or
any statute, rule, regulation, legislation, interpretation, judgment, order or
injunction shall be enacted, promulgated, entered, enforced, amended or made
applicable to the Purchaser or Parent or any of their affiliates or to the Offer
or the Amalgamation by or before any Cayman Islands, Bermuda, United States or
other government or governmental, regulatory or administrative authority or
agency or by or before any court or tribunal, (i) challenging or restricting the
acquisition by the Purchaser or any affiliate of the Purchaser, in whole or in
part, of the Shares, seeking, directly or indirectly, to restrain, materially
delay or prohibit the making or consummation of the Offer or seeking to obtain
any material damages or otherwise, directly or indirectly, relating to the
transactions contemplated by the Offer or the Amalgamation, (ii) seeking to
prohibit, restrict or limit the ownership or operation by the Purchaser or
Parent or any of their affiliates of all or any material portion of its or the
Company's business or assets, or to compel the Purchaser or Parent or any of
their affiliates to dispose of or hold separate all or any material portion of
its or the Company's business or assets as a result of the Offer or the
Amalgamation, (iii) making the purchase of, or payment for, some or all of the
Shares illegal, (iv) seeking to impose limitations on the ability of the
Purchaser or Parent or any of their affiliates effectively to acquire, hold or
exercise rights of ownership of any Shares now owned or hereafter purchased or
to be purchased, including the right to vote with respect to, such Shares on any
matter properly presented to the shareholders of the Company, (v) imposing any
material limitations on the ability of the Purchaser or Parent or any of their
affiliates effectively to acquire, operate or hold, or require Parent, the
Purchaser or the Company or any of the respective subsidiaries to dispose of or
hold separate, in any material respect the business and operations of the
Company, or (vi) restricting any material future business activity by Parent,
the Purchaser or the Company or any of their respective subsidiaries or (y) any
necessary approvals by any government or governmental, regulatory or
administrative authority or agency necessary to consummate the Offer shall not
have been obtained;
(b) any fact or circumstance exists or will have occurred that has a
material adverse effect on the business, operations, assets, condition
(financial or other), prospects or results of operations of the Company and its
subsidiaries taken as a whole;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange, or on
Nasdaq or otherwise in the over-the-counter market, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States, (iv) any material limitation (whether or not mandatory) by any
governmental authority or agency, or any other event which would significantly
affect the extension of credit by banks or other lending institutions in the
United States, (v) any imposition of currency controls in the United States or a
material change in exchange rates or a suspension of, or material limitation on,
the markets therefor, or (vi) in the case of any of the foregoing existing at
the time of commencement of the Offer, any material worsening or acceleration
thereof;
(d) it shall have been publicly disclosed after the date of the Acquisition
Agreement or Parent or the Purchaser shall have learned or become aware that any
person (including the Company or any of its subsidiaries or affiliates), or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired
(including by the formation of any groups) 5.0% or more of any class or series
of shares of the Company (including the Shares) or its subsidiaries or shall
have been granted any option or right to acquire 5.0% or more of any class or
series of shares of the Company (including the Shares) or its subsidiaries,
other than acquisitions of Shares for bona fide arbitrage positions, and such
person or group shall not have tendered (and not withdrawn) all of the Shares
owned beneficially or of record by it at or prior to the Expiration Date;
(e) the representations and warranties (without giving effect to any
materiality or similar qualifications contained therein) made by the Company in
the Acquisition Agreement shall have failed to be true and correct on the date
of the Acquisition Agreement or on the Expiration Date as though such
representations and warranties had been made at and on such dates (other than
representations and
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warranties expressly made as of a specific other date), except for such failures
which, individually or in the aggregate, would not have a material adverse
effect on the business, operations, assets, condition (financial or other),
prospects or results of operations of the Company and its subsidiaries taken as
a whole; or
(f) the Acquisition Agreement shall be terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser or Parent or any of their affiliates
or may be waived by any of them in whole or in part at any time and from time to
time in their sole discretion. See Section 10 for a full description of the
Purchaser's ability to amend the Offer. The failure to exercise any of the
foregoing rights shall not be deemed a waiver of any right, and each right shall
be deemed a continuing right which may be asserted at any time and from time to
time for so long as such right exists.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as set
forth in this Offer to Purchase, based on its review of publicly available
filings by the Company with the Commission and other publicly available
information regarding the Company, neither Parent nor the Purchaser is aware of
any licenses or regulatory permits that appear to be material to the business of
the Company and its subsidiaries, taken as a whole, and that might be adversely
affected by the Purchaser's acquisition of Shares (and the indirect acquisition
of the stock of the Company's subsidiaries) as contemplated herein, or any
filings, approvals or other actions by or with any domestic, foreign or
supranational governmental authority or administrative or regulatory agency that
would be required for the acquisition or ownership of the Shares (or the
indirect acquisition of the stock of the Company's subsidiaries) by the
Purchaser pursuant to the Offer as contemplated herein, except for certain
approvals necessary under the laws and regulations of Bermuda applicable to the
direct or indirect acquisition of Global.
Should any such approval or other action be required, it is presently
contemplated such approval or other action would be sought. Should any such
approval or other action be required there can be no assurance that any such
approval or action, if needed, would be obtained without substantial conditions
or that adverse consequences might not result to the Company's or its
subsidiaries' businesses, or that certain parts of the Company's, Parent's, the
Purchaser's or any of their respective subsidiaries' businesses might not have
to be disposed of or held separate or other substantial conditions complied with
in order to obtain such approval or action or in the event that such approvals
were not obtained or such actions were not taken. The Purchaser's obligation to
purchase and pay for Shares is subject to certain conditions, including
conditions with respect to litigation and governmental actions. See the
Introduction and Section 14 for a description thereof.
TAKEOVER LAWS. For a discussion of the Cayman Law provisions to be used in
the Amalgamation, see Section 10. The Purchaser does not believe that any state
takeover statutes apply to the Offer or the Amalgamation and has not attempted
to comply with any state takeover statutes in connection with the Offer or the
Amalgamation. The Purchaser reserves the right to challenge the validity or
applicability of any state law allegedly applicable to the Offer or the
Amalgamation and nothing in this Offer to Purchase nor any action taken in
connection herewith is intended as a waiver of that right. In the event that it
is asserted that one or more takeover statutes apply to the Offer or the
Amalgamation, and it is not determined by an appropriate court that such statute
or statutes do not apply or are invalid as applied to the Offer or the
Amalgamation, as applicable, the Purchaser may be required to file certain
documents with, or receive approvals from, the relevant state authorities, and
the Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer. In
such case, the Purchaser may not be obligated to accept for purchase, or pay
for, any Shares tendered. See Section 14.
16. CERTAIN FEES AND EXPENSES. Donaldson, Lufkin & Jenrette Securities
Corporation is acting as the Dealer Manager in connection with the Offer and as
financial advisor to Parent and the
26
<PAGE>
Purchaser in connection with the Acquisition for which it will receive
reasonable and customary fees. In addition, Parent has agreed to reimburse the
Dealer Manager for its reasonable expenses, and has agreed to indemnify the
Dealer Manager against certain liabilities and expenses, including certain
liabilities under the federal securities laws. The Dealer Manager has in the
past provided investment banking services to Parent, for which it has received
customary fees.
Georgeson and Company Inc. has been retained by the Purchaser as Information
Agent in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee shareholders to forward material
relating to the Offer to beneficial owners of Shares. The Purchaser will pay the
Information Agent reasonable and customary compensation for all such services in
addition to reimbursing therewith. The Purchaser has agreed to indemnify the
Information Agent against certain liabilities and expenses in connection with
the Offer, including certain liabilities under the federal securities laws.
In addition, ChaseMellon Shareholder Services, L.C.C. has been retained as
the Depositary. The Purchaser will pay the Depositary reasonable and customary
compensation for its services in connection with the Offer, will reimburse the
Depositary for its reasonable out-of-pocket expenses in connection therewith and
will indemnify the Depositary against certain liabilities and expenses in
connection therewith, including certain liabilities under the federal securities
laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person (other than the
Information Agent and the Dealer Manager) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
and other nominees will, upon request, be reimbursed by Parent or the Purchaser
for customary clerical and mailing expenses incurred by them in forwarding
offering materials to their customers.
17. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Shares in any jurisdiction in which
the making of the Offer or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. However, the Purchaser may, in its
discretion, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to holders of Shares in such jurisdictions.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
Parent and the Purchaser have filed with the Commission a Schedule 14D-1,
together with exhibits, pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. Such Schedule 14D-1 and any amendments thereto,
including exhibits, may be examined and copies may be obtained from the office
of the Commission in the same manner as described in Section 7 with respect to
information concerning the Company, except that they will not be available at
the regional offices of the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to the
Offer shall, under any circumstances, create any implication that there has been
no change in the affairs of Parent, the Purchaser, the Company or any of their
respective subsidiaries since the date as of which information is furnished or
the date of this Offer to Purchase.
EXEL ACQUISITION LTD.
May 14, 1997
27
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND THE PURCHASER
PARENT
Set forth below are the name, business address and present principal
occupation or employment, and material occupations, positions, offices or
employments for the past five years, of each director and executive officer of
Parent. Except as otherwise noted, the business address of each such person is
EXEL Limited, Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda. In
addition, except as otherwise noted, each director and executive officer of
Parent (a) is a United States citizen and (b) has been employed in his or her
present principal occupation listed below during the last five years. Directors
of Parent are indicated by an asterisk.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR
NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE YEARS, SHARE OWNERSHIP, CITIZENSHIP
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Michael P. Esposito, Jr.*.............. Chairman of the Board since April 1995 and a Director of Parent since
1986. Mr. Esposito has been a partner of Inter-Atlantic Securities
Corporation since June 1995. Mr. Esposito served as Chief Corporate
Compliance, Control and Administration Officer of The Chase Manhattan
Corporation from 1991 to 1995, having previously served as Executive
Vice President and Chief Financial Officer from 1987 to 1991. Mr.
Esposito serves as a director of Mid Ocean Limited, Risk Capital
Holdings, Inc. and Forest City Enterprises. Mr. Esposito beneficially
owns 16,500 Shares.
Brian M. O'Hara*....................... President and Chief Executive Officer of Parent since 1994 and a
Director of Parent since 1986, having previously served as Vice Chairman
of Parent from 1987 to 1994. He has also served as Chairman and Chief
Executive Officer of X.L. Insurance Company, Ltd. since December 1995,
having served as Chairman, President and Chief Executive Officer from
1994, as President and Chief Executive Officer from 1992, and as
President and Chief Operating Officer from 1986. Mr. O'Hara also serves
as a director of Mid Ocean Limited.
Robert Clements*....................... Director of Parent since 1986. Mr. Clements served as Chairman of Marsh
& McLennan Risk Capital Corp. from 1994 to 1996. He served as President
of Marsh & McLennan Companies, Inc. from 1992 to 1994 and has been a
director of Marsh & McLennan Companies, Inc. since 1981. He previously
served as President and Chairman of the Board of Marsh and McLennan,
Incorporated from 1985 and 1988, respectively. Mr. Clements also serves
as Chairman and a director of Risk Capital Holdings, Inc., the parent
company of Risk Capital Reinsurance Company. Taracay Investors Company,
of which Mr. Clements is the managing partner, beneficially owns 10,700
Shares.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR
NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE YEARS, SHARE OWNERSHIP, CITIZENSHIP
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Gilbert Gould*......................... Director of Parent since 1987. Mr. Gould has served as Manager of
Financial Services for Southern California Edison Company since 1993. He
previously served as Manager of Insurance for Southern California Edison
Company from 1984 to 1993.
Ian R. Heap*........................... Director of Parent since 1987 and was Chairman of the Board of Parent
from 1988 to 1992. He was President and Chief Executive Officer of
Parent and X.L. Insurance Company, Ltd. from 1987 to 1988. From 1992 to
1993 he served as President and Chief Executive Officer of Mid Ocean
Reinsurance Company Ltd. Mr. Heap also serves as a director of Risk
Capital Holdings, Inc.
John Loudon*........................... Director of Parent since 1992. Mr. Loudon has been Chairman of
Caneminster Ltd., a British investment company, since 1991 and
previously served as Chairman of Warrior International Limited from 1988
to 1991. Mr. Loudon also serves as a director of Tambrands Inc.,
Heineken N.V., Derby Trust plc, BNB Resources plc, Ocean Group plc, and
Alex. Brown & Sons (Holdings) Ltd. Mr. Loudon is a citizen of The
Netherlands.
Robert S. Parker*...................... Director of Parent since 1991. Dr. Parker has been Dean of the School of
Business Administration at Georgetown University since 1986. Dr. Parker
also serves as a director of Back Bay Restaurant Group, Inc.
Cyril Rance*........................... Director of Parent since 1990. Mr. Rance served as President and Chief
Executive Officer of the Bermuda Fire & Marine Insurance Co. Ltd. from
1985 to 1990. Mr. Rance is a citizen of Bermuda.
Alan Z. Senter*........................ Director of Parent since 1986. Mr. Senter served as Executive Vice
President and Chief Financial Officer of Nynex Corporation from 1994 to
1996. Mr. Senter served as Principal of Senter Associates, a financial
advisory company, from 1993 to 1994. Mr. Senter served as a director and
Executive Vice President and Chief Financial Officer of International
Specialty Products and GAF Corporation from 1992 to 1993. Mr. Senter
previously served as the Vice President and Senior Financial Officer of
Xerox Corporation from 1990 to 1992.
John T. Thornton*...................... Director of Parent since 1988. Mr. Thornton has served as Executive Vice
President and Chief Financial Officer of Norwest Corporation since 1987.
Ellen E. Thrower*...................... Director of Parent since December 1995. Dr. Thrower has been President
and Chief Executive Officer of The College of Insurance since 1988.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR
NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE YEARS, SHARE OWNERSHIP, CITIZENSHIP
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
John Weiser*........................... Director of Parent since 1986. Mr. Weiser served as Senior Vice
President and director of Bechtel Group, Inc. from 1980 to 1996 and
continues as a director thereof. Mr. Weiser also served as President of
Bechtel Enterprises, Inc. from 1988 to 1992 and as General Counsel of
Bechtel Group, Inc. from 1980 to 1988 and from 1992 to 1994.
James J. Ansaldi....................... Senior Vice President of X.L. Insurance Company, Ltd. since 1988.
K. Bruce Connell....................... Executive Vice President and Chief Underwriting Officer of X.L.
Reinsurance Company, Ltd. since December 1995, having previously served
as Senior Vice President of X.L. Insurance Company, Ltd. from 1990 to
1995.
Robert J. Cooney....................... Executive Vice President of Parent since March 1995 and President and
Chief Operating Officer of X.L. Insurance Company, Ltd. since December
1995, having previously served as Executive Vice President and Chief
Underwriting Officer of X.L. Insurance Company, Ltd. from 1992, and as a
Senior Vice President from 1987.
Paul S. Giordano....................... Senior Vice President and General Counsel of Parent since 1997. Prior to
joining Parent, Mr. Giordano was in private practice in New York and
London with the law firms of Clifford Chance from 1993 to 1996 and
Cleary, Gottlieb, Steen & Hamilton from 1990 to 1993.
Brian G. Walford....................... Executive Vice President of Parent and X.L. Insurance Company, Ltd.
since 1991 and Chief Financial Officer of Parent since 1990. Mr. Walford
has been Secretary of Parent since 1991 and X.L. Insurance Company, Ltd.
since 1990. Mr. Walford previously served as Chief Financial Officer of
X.L. Insurance Company, Ltd. from 1990 to 1996 and as Senior Vice
President of Parent and X.L. Insurance Company, Ltd. from 1988 to 1991.
Mr. Walford beneficially owns Shares. Mr. Walford is a citizen of the
United Kingdom.
</TABLE>
I-3
<PAGE>
THE PURCHASER
Set forth below are the name, business address and present position with the
Purchaser, principal occupation or employment, and material occupations,
positions, offices or employments for the past five years, of each director and
executive officer of the Purchaser. Each such person is a United States citizen.
Except as otherwise noted, the business address of each such person is Exel
Acquisition Ltd., c/o EXEL Limited, Cumberland House, One Victoria Street,
Hamilton HM 11, Bermuda. In addition, except as otherwise noted, each director
and executive officer of the Purchaser (a) is a United States citizen and (b)
has been employed in his or her present principal occupation listed below during
the last five years. Directors of the Purchaser are indicated by an asterisk.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND MATERIAL
OCCUPATIONS, POSITIONS, OFFICES OR
NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE-YEARS, SHARE OWNERSHIP, CITIZENSHIP
- --------------------------------------- ------------------------------------------------------------------------
<S> <C>
Brian M. O'Hara*....................... Director and President of the Purchaser since its inception. President
and Chief Executive Officer of Parent since 1994 and a Director of
Parent since 1986, having previously served as Vice Chairman of Parent
from 1987 to 1994. He has also served as Chairman and Chief Executive
Officer of X.L. Insurance Company, Ltd. since December 1995, having
served as Chairman, President and Chief Executive Officer from 1994, as
President and Chief Executive Officer from 1992, and as President and
Chief Operating Officer from 1986. Mr. O'Hara also serves as a director
of Mid Ocean Limited.
Brian G. Walford*...................... Director and Secretary of the Purchaser since its inception. Executive
Vice President of Parent and X.L. Insurance Company, Ltd. since 1991 and
Chief Financial Officer of Parent since 1990. Mr. Walford has been
Secretary of Parent since 1991 and X.L. Insurance Company, Ltd. since
1990. Mr. Walford previously served as Chief Financial Officer of X.L.
Insurance Company Ltd. from 1990 to 1996 and as Senior Vice President of
Parent and X.L. Insurance Company, Ltd. from 1988 to 1991. Mr. Walford
beneficially owns Shares. Mr. Walford is a citizen of the United
Kingdom.
Michael P. Esposito, Jr.*.............. Director of the Purchaser since its inception. Chairman of the Board
since April 1995 and a Director of Parent since 1986. Mr. Esposito has
been a partner of Inter-Atlantic Securities Corporation since June 1995.
Mr. Esposito served as Chief Corporate Compliance, Control and
Administration Officer of The Chase Manhattan Corporation from 1991 to
1995, having previously served as Executive Vice President and Chief
Financial Officer from 1987 to 1991. Mr. Esposito serves as a director
of Mid Ocean Limited, Risk Capital Holdings, Inc. and Forest City
Enterprises. Mr. Esposito beneficially owns 16,500 Shares.
</TABLE>
I-4
<PAGE>
SCHEDULE II
CAYMAN ISLANDS COMPANIES LAW (1995 REVISION)
SECTION 85.
(1) Where a compromise or arrangement is proposed between a company and its
creditors or any class of them, or between the company and its members or any
class of them, the Court may, on the application of the company or of any
creditor or member of the company, or where a company is being wound up, of the
liquidator, order a meeting of the creditors or class of creditors, or of the
members of the company or class of members, as the case may be, to be summoned
in such manner as the Court directs.
(2) If a majority in number representing seventy-five percent in value of
the creditors or class of creditors, or members or class of members, as the case
may be, present and voting either in person or by proxy at the meeting, agree to
any compromise or arrangement, the compromise or arrangement shall, if
sanctioned by the Court, be binding on all the creditors or the class of
creditors, or on the members or class of members, as the case may be, and also
on the company or, where a company is in the course of being wound up, on the
liquidator and contributories of the company.
(3) An order made under subsection (2) shall have no effect until a copy of
the order has been delivered to the Registrar for registration, and a copy of
every such order shall be annexed to every copy of the memorandum of association
of the company issued after the order has been made, or, in the case of a
company not having a memorandum, of every copy so issued of the instrument
constituting or defining the constitution of the company.
(4) If a company makes default in complying with subsection (3), the company
and every officer of the company who is in default shall be liable to a fine of
two dollars for each copy in respect of which default is made.
(5) In this section the expression "company" means any company liable to be
wound up under this Law and the expression "arrangement" includes a
reorganisation of the share capital of the company by the consolidation of
shares of different classes or by the division of shares into shares of
different classes or by both those methods.
SECTION 86.
(1) Where an application is made to the Court under section 85 for the
sanctioning of a compromise or arrangement proposed between a company and any
such persons as are specified in that section, and it is shown to the Court that
the compromise or arrangement has been proposed for the purpose of or in
connection with a scheme for the reconstruction of any company or companies or
the amalgamation of any two or more companies, and that under the scheme the
whole or any part of the undertaking or the property of any company concerned in
the scheme (in this section referred to as "a transferor company") is to be
transferred to another company (in this section referred to as "the transferee
company") the Court, may either by the order sanctioning the compromise or
arrangement or by any subsequent order make provision for--
(a) the transfer to the transferee company of the whole or any part of
the undertaking and of the property or liabilities of any transferor
company;
(b) the allotting or appropriation by the transferee company of any
shares, debentures, policies, or other like interests in that company which
under the compromise or arrangement are to be allotted or appropriated by
that company to or for any person;
(c) the continuation by or against the transferee company of any legal
proceedings pending by or against any transferor company;
(d) the dissolution, without winding up, of any transferor company;
II-1
<PAGE>
(e) the provisions to be made for any person who within such time and in
such manner as the Court directs dissent from the compromise or arrangement;
and
(f) such incidental, consequential and supplemental matters as are
necessary to secure that the reconstruction or amalgamation is fully and
effectively carried out.
(2) Where an order under this section provides for the transfer of property
or liabilities, that property shall, by virtue of the order, be transferred to
and vest in, and those liabilities shall, by virtue of the order, be transferred
to and become the liabilities of, the transferee company, and any such property
shall, if the order so directs, be freed from any charge which is, by virtue of
the compromise or arrangement, to cease to have effect.
(3) Where an order is made under this section, every company in relation to
which the order is made shall cause a copy thereof to be delivered to the
Registrar for registration within seven days after the making of the order, and
if default is made in complying with this subsection, the company and every
officer of the company who is in default shall be liable to a default fine.
(4) In this section--
"property" includes property, rights and powers of every description;
"liabilities" includes duties; and
"transferee company" means any company or body corporate established in
the Islands or in any other jurisdiction.
SECTION 87.
(1) Where a scheme or contract involving the transfer of shares or any class
of shares in a company (in this section referred to as "the transferor company")
to another company, whether a company within the meaning of this Law or not (in
this section referred to as "the transferee company") has, within four months
after the making of the offer in that behalf by the transferee company, been
approved by the holders of not less than ninety percent in value of the shares
affected, the transferee company may, at any time within two months after the
expiration of the said four months, give notice in the prescribed manner to any
dissenting shareholder that it desires to acquire his shares, and where such a
notice is given the transferee company shall, unless on an application made by
the dissenting shareholder within one month from the date on which the notice
was given, the Court thinks fit to order otherwise, be entitled and bound to
acquire those shares on the terms on which under the scheme or contract the
shares of the approving shareholders are to be transferred to the transferee
company.
(2) Where a notice has been given by the transferee company under this
section and the Court has not, on an application made by the dissenting
shareholder, ordered to the contrary, the transferee company shall, on the
expiration of one month from the date on which the notice has been given or, if
an application to the Court by the dissenting shareholder is then pending, after
that application has been disposed of, transmit a copy of the notice to the
transferor company and pay or transfer to the transferor company the amount or
other consideration representing the price payable by the transferee company for
the shares which by virtue of this section that company is entitled to acquire,
and the transferor company shall thereupon register the transferee company as
the holder of those shares.
(3) Any sums received by the transferor company under this section shall be
paid into a separate bank account, and any such sums and any other consideration
so received shall be held by that company on trust for the several persons
entitled to the shares in respect of which the said sum or other consideration
were respectively received.
(4) In this section--
"dissenting shareholder" includes a shareholder who has not assented to
the scheme or contract and any shareholder who has failed or refused to
transfer his shares to the transferee company, in accordance with the scheme
or contract.
II-2
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand: By Mail: Overnight Delivery:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
120 Broadway P.O. Box 3301 85 Challenger Road
13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Dept.
</TABLE>
OUR FAX NUMBER IS: 201-329-8936
OUR FAX CONFIRMATION NUMBER IS: 201-296-4860
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or the Dealer Manager as set forth below,
and will be furnished promptly at the Purchaser's expense. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[Georgeson LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokerage Firms, Call Toll-Free (800) 445-1790
All Others Call Toll-Free (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 PARK AVENUE
NEW YORK, NEW YORK 10172
CALL COLLECT (212) 892-7700
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER ORDINARY SHARES
OF
GCR HOLDINGS LIMITED
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 14, 1997, BY
EXEL ACQUISITION LTD.
A WHOLLY OWNED SUBSIDIARY OF
EXEL LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 11, 1997,
UNLESS THE OFFER IS EXTENDED
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
BY HAND: BY MAIL: OVERNIGHT DELIVERY:
<S> <C> <C>
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
120 Broadway P.O. Box 3301 85 Challenger Road
13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Dept.
</TABLE>
OUR FAX NUMBER IS: 201-329-8936
OUR FAX CONFIRMATION NUMBER IS: 201-296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase dated May 14,
1997 (the "Offer to Purchase")) is utilized, if tenders of Shares are to be made
by book-entry transfer to an account maintained by ChaseMellon Shareholder
Services, L.L.C. (the "Depositary") at The Depository Trust Company ("DTC"),
Midwest Securities Trust Company ("MSTC") or Philadelphia Depository Trust
Company ("PDTC") (each a "Book-Entry Transfer Facility" and collectively
referred to as the "Book Entry Transfer Facilities"), pursuant to the procedures
set forth in Section 3 of the Offer to Purchase. Shareholders who tender Shares
by book-entry transfer are referred to herein as "Book-Entry Shareholders".
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
If a shareholder desires to tender Shares pursuant to the Offer and
certificates evidencing such shareholder's Shares (the "Share Certificates") are
not immediately available or time will not permit Share Certificates and all
other required documents to reach the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase), or the procedures for
book-entry transfer cannot be completed on a timely basis, such shareholder must
tender his Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase. See Instruction 2.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
<PAGE>
<TABLE>
<CAPTION>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY
THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
<S> <C>
Name of Tendering Institution:
Check Box of Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: Transaction Code Number:
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY
SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution which Guaranteed Delivery:
If delivered by Book-Entry Transfer, check box of applicable Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: Transaction Code Number:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
<S> <C> <C> <C>
<CAPTION>
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED NUMBER OF
CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
TOTAL SHARES
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by certificates delivered
to the Depositary are being tendered. See Instruction 4.
</TABLE>
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to EXEL ACQUISITION LTD. (the "Purchaser"), a
Cayman Islands company and a wholly owned subsidiary of EXEL LIMITED, a Cayman
Islands company ("Parent"), the above described Ordinary Shares, par value $.10
per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the
"Company"), at a price of $27.00 per Share net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which together
with the Offer to Purchase and, together with any amendment or supplement hereto
and thereto, collectively constitute the "Offer"). The undersigned understands
that the Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of the Purchaser's subsidiaries or
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all dividends and distributions (including, without
limitation, the issuance of additional Shares pursuant to a stock dividend or
stock split, the issuance of other securities or the issuance of rights for the
purchase of any securities) declared, paid or distributed with respect to the
tendered Shares on or after May 8, 1997, and is payable or distributable to
shareholders of record on a date prior to the transfer into the name of the
Purchaser or its nominees or transferees on the Company's stock transfer records
of the Shares purchased pursuant to the Offer (collectively, "Distributions"),
and irrevocably appoints the Depositary the true and lawful agent,
attorney-in-fact and proxy of the undersigned to the full extent of the
undersigned's rights with respect to such Shares (and any Distributions), with
full power of substitution (such power of attorney and proxy being deemed to be
an irrevocable power coupled with an interest), to (a) deliver Share
Certificates (and any Distributions), or transfer ownership of such Shares (and
any Distributions), on the account books maintained by the Book-Entry Transfer
Facilities, together in either such case with all accompanying evidences of
transfer and authenticity, to, or upon the order of, the Purchaser, (b) present
such Shares (and any Distributions) for transfer on the books of the Company and
(c) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any Distributions), all in accordance with the
terms in the Offer. On April 25, 1997, the Company declared a quarterly dividend
of $0.62 per Share, payable on May 27, 1997, to shareholders of record on May
14, 1997. Notwithstanding anything else contained herein, tendering Shares
pursuant to the Offer will not affect the right of shareholders of record on May
14, 1997, to receive this dividend.
The undersigned hereby irrevocably appoints Michael P. Esposito, Jr., Brian
M. O'Hara or Brian G. Walford, or any other designees of the Purchaser, and each
of them, as attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to the full extent of the undersigned's rights with respect to the
Shares tendered hereby, to exercise all voting and other rights of such
shareholder as each, in his sole discretion may deem proper at any annual or
special meeting of the Company's shareholders, or any adjournment or
postponement thereof, or by consent in lieu of any such meeting or otherwise.
This power of attorney and proxy is coupled with an interest in the Shares and
is irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares by the Purchaser in accordance with the
terms of the Offer. Such acceptance for payment shall revoke, without further
action, any other power of attorney or proxy granted by the undersigned at any
time with respect to such Shares (and any Distributions) and no subsequent
powers of attorney or proxies will be given or written consent executed (and if
given or executed will be deemed not to be effective) with respect thereto by
the undersigned. The undersigned understands that in order for Shares to be
deemed validly tendered, immediately upon the Purchaser's acceptance for payment
of such Shares, the Purchaser must be able to exercise full voting rights with
respect to such Shares (and any Distributions), including voting at any meeting
of shareholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any Distributions) and that, when the same are accepted for payment
by the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and none of the Shares (and any Distributions) will be subject to
any adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any Distributions). In addition, the undersigned shall
promptly remit and transfer to the Depositary for the account of the Purchaser
any and all other Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer and, pending such
remittance or appropriate assurance thereof, the Purchaser shall be entitled to
all rights and privileges as owner of any such Distributions, and may withhold
the entire purchase price or deduct from the purchase price of Shares tendered
hereby the amount or value thereof, as determined by the Purchaser in its sole
discretion.
<PAGE>
All authority herein conferred or herein agreed to be conferred shall not be
affected by, and shall survive, the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, legal representatives, successors and assigns of the
undersigned.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the Offer.
The Purchaser's acceptance of such Shares for payment will constitute a binding
agreement between the undersigned and the Purchaser upon the terms and subject
to the conditions set forth in the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Share
Certificates not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing above under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and return any Share Certificates
not tendered or accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that both the "Special
Delivery Instructions" and the "Special Payment Instructions" are completed,
please issue the check for the purchase price and return any Share Certificates
not tendered or accepted for payment in the name(s) of, and deliver said check
and return certificates to, the person or persons so indicated. The undersigned
recognizes that the Purchaser has no obligation pursuant to the "Special Payment
Instructions" to transfer any Shares from the name of the registered holder
thereof if the Purchaser does not accept for payment any of such Shares.
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the To be completed ONLY if Share Certificates
purchase price of Shares purchased and/or not tendered or not purchased and/or the
Share Certificates not tendered or not check for the purchase price of Shares
purchased are to be issued in the name of purchased are to be sent to someone other
someone other than the undersigned. than the undersigned, or to the undersigned
at an address other than that shown under
"Description of Shares Tendered."
Issue check and/or certificates to: Mail check and/or certificates to:
Name: Name:
(PLEASE PRINT) (PLEASE PRINT)
Address: Address:
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON BACK COVER)
</TABLE>
<PAGE>
IMPORTANT
SHAREHOLDERS SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
______________________________________________________________________________
______________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
DATED: ________________________ , 1997
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
the Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the necessary
information. See Instruction 5.)
Name(s): _____________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title): _______________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ______________________________________________
Tax Identification or Social Security No.: ___________________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ________________________________________________________
Name: ________________________________________________________________________
(PLEASE PRINT)
Title: _______________________________________________________________________
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ______________________________________________
Dated: ________________________ , 1997
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must
be guaranteed by a firm that is a member in good standing of the Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution,"
as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended (each, an "Eligible Institution"), unless the Shares tendered
hereby are tendered (i) by a registered holder of Shares who has not completed
either the box labeled "Special Payment Instructions" or the box labeled
"Special Delivery Instructions" on this Letter of Transmittal or (ii) for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if tenders are to be made pursuant to the procedures for tender by
book-entry transfer set forth in Section 3 of the Offer to Purchase. Share
Certificates evidencing all physically tendered Shares, or timely confirmation
(a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in the case of a
book-entry delivery, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase). If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit the Share Certificates and all other required
documents to reach the Depositary prior to the Expiration Date, or the
procedures for book-entry transfer cannot be completed on a timely basis, such
shareholder may tender Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by the Purchaser, must be received by the Depositary prior
to the Expiration Date; and (iii) the Share Certificates evidencing all
physically tendered Shares, in proper form for transfer, or a Book-Entry
Confirmation for all Shares tendered by book-entry transfer, in each case with a
properly completed and duly executed Letter of Transmittal (or a facsimile
hereof), with any required signature guarantees (or, in the case of a book-entry
delivery, an Agent's Message) and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three Nasdaq National
Market trading days after the date of execution of such Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate schedule attached hereto and
separately signed on each page thereof in the same manner as this Letter of
Transmittal is signed.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares evidenced by any certificate submitted
are to be tendered, fill in the number of Shares which are to be tendered in the
box entitled "Number of Shares Tendered". In such case, new certificate(s) for
the remainder of the Shares that were evidenced by your old certificate(s) will
be sent to you, unless otherwise provided in the appropriate box marked "Special
Payment Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal, as soon as practicable after the Expiration Date. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
<PAGE>
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any Shares tendered hereby are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity for
the registered holders, such persons should so indicate when signing, and proper
evidence satisfactory to the Purchaser of their authority so to act must be
submitted.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or purchased are to be issued in, the name
of a person other than the registered owner(s). Signatures on such certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered owner(s) of the Shares listed, the certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner(s) appear(s) on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder, or if tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder or such person) payable on account of
the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of and/or certificates for unpurchased Shares are to be returned to a
person other than the signer of this Letter of Transmittal or if a check is to
be sent and/or such certificates are to be returned to someone other than the
signer of this Letter of Transmittal or to an address other than that shown in
the box entitled "Description of Shares Tendered," the appropriate boxes on this
Letter of Transmittal should be completed.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at its address set forth below.
Requests for additional copies of the Offer to Purchase and this Letter of
Transmittal may be directed to the Information Agent or to brokers, dealers,
commercial banks or trust companies.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9; FORM W-8. Each tendering
shareholder is required to provide the Depositary with a correct Taxpayer
Identification Number ("TIN") on the Substitute Form W-9 which is provided under
"Important Tax Information" below, and to certify, under penalties of perjury,
that such number is correct and that such shareholder is not subject to backup
withholding of federal income tax. If a tendering shareholder has been notified
by the Internal Revenue Service that such shareholder is subject to backup
withholding, such shareholder must cross out item (2) of the Certification box
of the Substitute Form W-9, unless such shareholder has since been notified by
the Internal Revenue Service that such shareholder is no longer subject to
backup withholding. Failure to provide the information on the Substitute Form
W-9 may subject the tendering shareholder to 31% backup federal income tax
withholding on the payment of the purchase price of all Shares purchased from
such shareholder. If the tendering shareholder has not been issued a TIN and has
applied for one or intends to apply for one in the near future, such shareholder
should check the box in Part III of the Substitute Form W-9 and sign and date
both the Substitute Form W-9 and the "Certificate of Awaiting Taxpayer
Identification." If the box in Part III for "Awaiting TIN" is checked and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% on all payments of the purchase price to such shareholder until a
TIN is provided to the Depositary. In order for a foreign individual to qualify
as an exempt recipient, that shareholder must submit a statement on IRS Form
W-8, signed under penalties of perjury, attesting to that individual's exempt
status. Forms for such statements can be obtained from the Depositary. See the
enclosed Guidelines for Certificates of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
<PAGE>
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary. The shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost, destroyed or stolen certificates have been followed.
11. DELAY, TERMINATION OR AMENDMENT OF OFFER. Subject to the terms of the
Acquisition Agreement (as defined in the Offer to Purchase) and the applicable
regulations of the Securities and Exchange Commission, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time, to
(i) delay acceptance for payment of or, regardless of whether such Shares were
theretofore accepted for payment, payment for any Shares pending receipt of any
regulatory or governmental approvals specified in Section 15 of the Offer to
Purchase, (ii) terminate the Offer (whether or not any Shares have theretofore
been accepted for payment) if any condition referred to in Section 14 of the
Offer to Purchase has not been satisfied or upon the occurrence of any event
specified in Section 14 of the Offer to Purchase and (iii) waive any condition
or otherwise amend the Offer in any respect, in each case, by giving oral or
written notice of such delay, termination, waiver or amendment to the Depositary
and by making a public announcement thereof.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN
AGENT'S MESSAGE TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON
OR PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a shareholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such shareholder's correct TIN on Substitute Form W-9 below. If such shareholder
is an individual, the TIN is his social security number. If the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the shareholder should so indicate on the
Substitute Form W-9. See Instruction 9. If the Depositary is not provided with
the correct TIN, the shareholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to the shareholder
with respect to Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding in an amount equal to 31% of the gross proceeds
resulting from the Offer.
Certain shareholders (including, among others, certain corporations and
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing "exempt" across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that shareholder must
submit a statement on IRS Form W-8, signed under penalties of perjury, attesting
to that individual's exempt status. Forms for such statements can be obtained
from the Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding with respect to payment of the purchase price
for Shares purchased pursuant to the Offer, a shareholder must provide the
Depositary with such shareholder's correct TIN by completing the Substitute Form
W-9 below, certifying that the TIN provided on Substitute Form W-9 is correct
(or that the shareholder is awaiting a TIN) and that (1) the shareholder is
exempt from backup withholding, (2) the shareholder has not been notified by the
Internal Revenue Service that he is subject to backup withholding as a result of
a failure to report all interest or dividends, or (3) the Internal Revenue
Service has notified the shareholder that he is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the Social Security
Number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<PAGE>
TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<S> <C> <C>
PAYER'S NAME:
SUBSTITUTE FORM W-9 PART 1--PLEASE PROVIDE SOCIAL SECURITY NUMBER
DEPARTMENT OF THE TREASURY YOUR TIN IN THE BOX AT OR EMPLOYEE ID NUMBER
INTERNAL REVENUE SERVICE RIGHT AND CERTIFY BY ---------------------------------
PAYER'S REQUEST FOR SIGNING AND DATING BELOW
TAXPAYER IDENTIFICATION
NUMBER ("TIN")
PART 2--CERTIFICATES--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for
a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b)
I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that
you are currently subject to backup withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to backup withholding, do not
cross out such item (2).
SIGNATURE DATE PART 3
AWAITING TIN / /
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS
MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to
me, and either (1) I have mailed or delivered an application to receive a taxpayer identification
number to the appropriate Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to
me will be withheld, but that such amounts will be remitted to the IRS as backup withholding if I do
not provide my Taxpayer Identification Number within sixty (60) days.
Signature: Date:
</TABLE>
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
BY HAND: BY MAIL: OVERNIGHT DELIVERY:
<S> <C> <C>
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
120 Broadway P.O. Box 3301 85 Challenger Road
13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Dept.
</TABLE>
Our FAX number is: 201-329-8936
Our FAX Confirmation number is: 201-296-4860
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other related materials may
be obtained from the Information Agent or the Dealer Manager as set forth below,
and will be furnished promptly at the Purchaser's expense. You may also contact
your broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[GEORGESON LOGO]
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS & BROKERAGE FIRMS CALL TOLL-FREE (800) 445-1790
ALL OTHERS CALL TOLL-FREE (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 PARK AVENUE
NEW YORK, NEW YORK 10172
CALL COLLECT (212) 892-7700
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ORDINARY SHARES
OF
GCR HOLDINGS LIMITED
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Offer (as defined below) if certificates representing
Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS
LIMITED, a Cayman Islands company (the "Company"), are not immediately available
or time will not permit such certificates and all other required documents to
reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior to the
Expiration Date (as defined in the Offer), or the procedures for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<CAPTION>
BY HAND: BY MAIL: OVERNIGHT DELIVERY:
<S> <C> <C>
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
120 Broadway P.O. Box 3301 85 Challenger Road
13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
Attn: Reorganization Dept.
</TABLE>
Our FAX Number is: 201-329-8936
Our FAX Confirmation number is: 201-296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO
A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to EXEL ACQUISITION LTD., a Cayman Islands
company (the "Purchaser"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of each of
which is hereby acknowledged, the number of Shares indicated below pursuant to
the guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase.
Number of Shares: ________________________ Shares
Certificate No(s). (if available): _____________________________________________
________________________________________________________________________________
________________________________________________________________________________
If Share(s) will be tendered by book-entry transfer, check one box.
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number: ________________________________________________________________
Date: __________________________________________________________________________
Name(s) of Record Holder(s): ___________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Address(es): ___________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number(s): _____________________________________________
Signature(s): __________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
2
<PAGE>
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member in good standing of the Medallion
Signature Guarantee Program or is an "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees to deliver to the Depositary, at one of its addresses
set forth above, the certificates representing all Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer
to Purchase), together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees, or,
in the case of book-entry delivery of Shares, an Agent's Message (as defined in
the Offer to Purchase), and any other documents required by the Letter of
Transmittal within three Nasdaq National Market trading days after the date of
execution of this Notice of Guaranteed Delivery.
Name of Firm: __________________________________________________________________
Address: _______________________________________________________________________
_______________________________________
Area Code and Telephone Number: ________________________________________________
________________________________________________________________________________
(Authorized Signature)
Title: _________________________________________________________________________
Name: __________________________________________________________________________
________________________________________________________________________________
(Please type or print)
Date: __________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE>
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING ORDINARY SHARES
OF
GCR HOLDINGS LIMITED
AT
$27.00 NET PER SHARE
BY
EXEL ACQUISITION LTD.
A WHOLLY OWNED SUBSIDIARY OF
EXEL LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JUNE 11, 1997,
UNLESS THE OFFER IS EXTENDED.
May 14, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by EXEL ACQUISITION LTD., a Cayman Islands company
(the "Purchaser"), and EXEL LIMITED, a Cayman Islands company, to act as Dealer
Manager in connection with the Purchaser's offer to purchase all outstanding
Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS
LIMITED, a Cayman Islands company (the "Company"), at a purchase price of $27.00
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated May 14,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY EXEL LIMITED AND ITS
SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN
OUTSTANDING, CALCULATED ON A FULLY DILUTED BASIS. SEE THE INTRODUCTION AND
SECTIONS 1, 14 AND 15 OF THE OFFER TO PURCHASE.
<PAGE>
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase dated May 14, 1997;
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients;
3. A letter to the shareholders of the Company from the Chairman of the
Board of Directors of the Company, together with the
Solicitation/Recommendation Statement on Schedule 14D-9;
4. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if certificates representing Shares are not immediately available
or time will not permit such certificates and all other required documents
to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior
to the Expiration Date as defined in the Offer to Purchase or if the
procedure for book-entry transfer cannot be completed on a timely basis;
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
The Board of Directors of the Company has unanimously approved the Offer and
the Amalgamation (as described in the Offer to Purchase), has determined that
each of the Offer and the Amalgamation is fair to, and in the best interests of,
the shareholders of the Company, and recommends that the shareholders of the
Company accept the Offer and tender their Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of the Offer as so
extended and amended) the Purchaser will purchase, by accepting for payment, and
will pay for, all Shares validly tendered and not withdrawn (as permitted by
Section 4 of the Offer to Purchase) prior to the Expiration Date promptly after
the later to occur of (i) the Expiration Date and (ii) the satisfaction or
waiver of the conditions to the Offer set forth in Section 14 of the Offer to
Purchase. In addition, subject to applicable rules of the Securities and
Exchange Commission, the Purchaser expressly reserves the right to delay
acceptance for payment of, or payment for, Shares pending receipt of any
regulatory or governmental approvals specified in Section 15 of the Offer to
Purchase or in order to comply in whole or in part with any other applicable
law.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the certificates
evidencing such Shares (the "Share Certificates") or timely confirmation of the
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company, Midwest Securities Trust Company or Philadelphia
Depository Trust Company (collectively, the "Book-Entry Transfer Facilities")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 11, 1997, UNLESS THE OFFER
IS EXTENDED. In order to accept the Offer, an appropriate, duly executed and
properly completed Letter of Transmittal and any required signature guarantees,
or an Agent's Message in connection with a book-entry delivery of Shares and any
other required documents should be sent to the Depositary and either Share
2
<PAGE>
Certificates representing the tendered Shares should be delivered to the
Depositary or the Shares should be tendered by book-entry transfer into the
Depositary's account maintained at one of the Book-Entry Transfer Facilities,
all in accordance with the instructions set forth in the Letter of Transmittal
and the Offer to Purchase.
Neither EXEL LIMITED nor the Purchaser will pay any fees or commissions to
any broker, dealer or other person (other than the Information Agent and the
Dealer Manager as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. You will, upon request, be reimbursed by EXEL
LIMITED or the Purchaser for customary clerical and mailing expenses incurred by
you in forwarding offering materials to your customers.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed material may be obtained from, the Dealer
Manager or the Information Agent, at their respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
Donaldson, Lufkin & Jenrette
Securities Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEALER MANAGER, THE COMPANY,
THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE OFFER TO
PURCHASE AND THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING ORDINARY SHARES
OF
GCR HOLDINGS LIMITED
AT
$27.00 NET PER SHARE
BY
EXEL ACQUISITION LTD.
A WHOLLY OWNED SUBSIDIARY OF
EXEL LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JUNE 11, 1997,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated May 14,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by EXEL ACQUISITION LTD., a Cayman Islands
company (the "Purchaser") and a wholly owned subsidiary of EXEL LIMITED, a
Cayman Islands company ("Parent"), to purchase all outstanding Ordinary Shares,
par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman
Islands company (the "Company"), at a purchase price of $27.00 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all Shares held by us for your account pursuant to
the terms and conditions set forth in the Offer.
Please note the following:
1. The tender price is $27.00 per Share, net to you in cash, without
interest thereon.
2. The Board of Directors of the Company has unanimously approved the
Offer and the Amalgamation (as described in the Offer to Purchase), has
determined that each of the Offer and the Amalgamation is fair to, and in
the best interests of, the Company and its shareholders, and recommends that
the shareholders of the Company accept the Offer and tender their Shares
pursuant to the Offer.
3. The Offer is being made for all Shares.
4. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which, together with Shares beneficially owned by Parent
and its subsidiaries, shall be not less than seventy-five percent of the
Shares then outstanding, calculated on a fully diluted basis. See the
Introduction and Sections 1, 14 and 15 of the Offer to Purchase.
<PAGE>
5. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Purchaser pursuant to the Offer.
6. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on June 11, 1997, unless the Offer is extended.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form set forth on the back page of this letter. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the back page of this letter. An envelope to return your
instructions to us is enclosed. Your instructions should be forwarded to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal, and is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
In any jurisdiction where the securities, blue-sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Purchaser by Donaldson, Lufkin & Jenrette Securities
Corporation, or one or more other registered brokers or dealers that are
licensed under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL ORDINARY SHARES
OF
GCR HOLDINGS LIMITED
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated May 14, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer") in connection with the offer by
EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser") and a wholly
owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"), to
purchase all outstanding Ordinary Shares, par value $.10 per share (the
"Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the "Company"), at
a purchase price of $27.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number of Shares To Be Tendered(*): ______________ Shares
Dated: ___________________ , 1997
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s) ___________________________________________________________________
(Print Name(s)) ________________________________________________________________
(Address(es)) __________________________________________________________________
(Area Code and Telephone Number(s)) ____________________________________________
(Taxpayer Identification or
Social Security Number(s)) _____________________________________________________
- ------------------------
* Unless otherwise indicated, it will be assumed that you instruct us to
tender all Shares held by us for your account.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent
committee for a person(3)
designated ward,
minor, or
incompetent person
7. a. The usual The
revocable savings grantor-trustee(1)
trust account
(grantor is also
trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
State law
8. Sole proprietorship The owner(4)
account
- -----------------------------------------------------
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<S> <C> <C>
- -----------------------------------------------------
9. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045 and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1998, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES.
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated an being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit 99(a)(7)
EXEL Limited to Acquire GCR Holdings Limited
Hamilton, Bermuda, May 8 - - EXEL LIMITED (NYSE:XL) ("EXEL") and
GCR HOLDINGS LIMITED (Nasdaq:GCREF) ("GCR") announced today that EXEL has
signed a definitive agreement with GCR to acquire all of the outstanding shares
of GCR.
Under the terms of the agreement, EXEL will pay GCR shareholders $27.00 per
share in cash, or a total of $637 million, for the approximately 23.6 million
outstanding shares of GCR which it does not already own. EXEL currently owns
1.2 million shares, or 4.9 percent, of GCR's 24.8 million shares outstanding.
EXEL will commence a cash tender offer for all of GCR's shares no later than May
14, 1997. The tender offer will be subject to several conditions, including the
tender and non-withdrawal of at least 75 percent of GCR's shares, and various
regulatory approvals. The boards of directors of both companies have
unanimously approved the acquisition.
GCR, which is headquartered in Bermuda, was established in 1993 and provides
property catastrophe, property risk excess-of-loss, property pro rata, marine,
energy, satellite and financial products reinsurance to insurers on a worldwide
basis through its principal wholly owned subsidiary, Global Capital Reinsurance
Limited.
For the six months ended March 31, 1997, GCR had gross premiums written of $70.1
million. At march 31, 1997, GCR's total assets were $532.9 million and
shareholders' equity was $426.3 million. Book value per share at March 31, 1997
was $17.21.
"GCR has established itself as a leading reinsurer with a disciplined approach
to underwriting," stated Brian M. O'Hara, president and chief executive officer
of EXEL Limited. "GCR's philosophy to underwrite for a profit rather than
premium volume matches our own. The combination of GCR's relatively short
tailed lines of business and EXEL's predominately longer tailed liability book
provides the combined organization with further spread of risk and
diversification. Additionally, the amalgamation of the two companies should be
accretive to 1997 earnings and result in increased shareholder value."
Lawrence S. Doyle, president and chief executive officer of GCR Holdings
Limited, noted, "I am delighted that our organization will become part of EXEL.
The combined resources of the two companies will be able to offer a
significantly wider array of products and services to our customers than either
organization could on its own. Our shareholders should be pleased with the
total return that we have created for them over the relatively short period
since GCR has been in business."
Upon completion of the transaction, it is expected that Mr. Doyle will become an
executive vice president of EXEL and serve as president and chief operating
officer of GCR. Mr. O'Hara will assume the titles of chairman and chief
executive officer of GCR.
Donaldson, Lufkin & Jenrette Securities Corporation has acted as financial
advisor to EXEL in connection with the acquisition and Goldman, Sachs & Co. has
acted for GCR.
<PAGE>
EXEL Limited, through X.L. Insurance Company, Ltd., X.L. Europe Insurance and
X.L. Reinsurance Company, Ltd., is a leading provider of general liability,
directors and officers liability, employment practices and professional
liability, excess property insurance and reinsurance coverages to industrial,
commercial and professional service firms, insurance organizations and other
enterprises on a worldwide basis.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation
of an offer to sell Shares (as defined below). The Offer (as defined below) is
made solely by the Offer to Purchase dated May 14, 1997, and the related Letter
of Transmittal, and is not being made to, nor will tenders be accepted from or
on behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser (as defined below) by Donaldson,
Lufkin & Jenrette Securities Corporation or one or more other registered brokers
or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Ordinary Shares
of
GCR HOLDINGS LIMITED
at
$27.00 Net Per Share
by
EXEL ACQUISITION LTD.
a wholly owned subsidiary of
EXEL LIMITED
EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser")
and a wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company
("Parent"), is offering to purchase all outstanding Ordinary Shares, par
value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman
Islands company ("GCR" or the "Company"), at a purchase price of $27.00 per
Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated May
14, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"). Following the Offer, the Purchaser intends to effect
the Amalgamation described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON JUNE 11, 1997, UNLESS
THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF GCR HAS
UNANIMOUSLY APPROVED THE OFFER AND THE AMALGAMATION, HAS
<PAGE>
-2-
DETERMINED THAT EACH OF THE OFFER AND THE AMALGAMATION IS FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, AND RECOMMENDS THAT
SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER AND ADOPT AND APPROVE THE AMALGAMATION.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER
OF SHARES WHICH, TOGETHER WITH ALL SHARES BENEFICIALLY OWNED BY PARENT AND ITS
SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN
OUTSTANDING, CALCULATED ON A FULLY DILUTED BASIS.
The Offer is being made pursuant to an Agreement and Plan of
Amalgamation, dated as of May 8, 1997 (the "Acquisition Agreement"), among
Parent, the Purchaser and the Company. The Acquisition Agreement provides
that, among other things, as soon as practicable after the purchase of Shares
pursuant to the Offer and the satisfaction of the other conditions set forth
in the Acquisition Agreement and subject to the relevant provisions of the
Cayman Islands Companies Law (1995 Revision) (the "Cayman Law"), the
Purchaser and the Company will be amalgamated under a scheme of arrangement
under the Cayman Law (the "Amalgamation"). At the effective time of the
Amalgamation (the "Effective Time"), each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by the
Purchaser, Parent or any direct or indirect subsidiary of any of them will be
canceled and the holder thereof will be entitled to receive $27.00 in cash,
or any higher price that may be paid per Share in the Offer, without interest.
If, however, the Purchaser succeeds in acquiring at least ninety
percent (90%) of the Shares, then, subject to and in accordance with the
Cayman Law, the Purchaser currently intends to give notice
to all holders of the then outstanding Shares (other than Shares held by the
Purchaser) that the Purchaser intends to acquire compulsorily such Shares at
$27.00 per share in cash, or any higher price that may be paid per Share in the
Offer, without interest.
On April 25, 1997, the Company declared a quarterly dividend of
$.62 per Share, payable on May 27, 1997, to shareholders of record on May 14,
1997. Tendering Shares pursuant to the Offer will not affect the right of
shareholders of record on May 14, 1997, to receive this dividend.
<PAGE>
-3-
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment (and thereby purchased) Shares validly tendered and not
properly withdrawn as, if and when the Purchaser gives oral or written notice to
ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of the Purchaser's
acceptance of such Shares for payment pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering shareholders for the
purpose of receiving payments from the Purchaser and transmitting such payments
to tendering shareholders whose Shares have been accepted for payment. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. In all cases, payment for Shares purchased pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (the "Share Certificates") or timely confirmation (a
"Book-Entry Confirmation") of the book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined in
Section 2 of the Offer to Purchase) pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in Section 2 of the
Offer to Purchase) in connection with a book-entry transfer and (iii) any other
documents required by the Letter of Transmittal.
Subject to the terms of the Acquisition Agreement, the Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, to extend the period during which the Offer is open for any reason,
including the occurrence of any event specified in Section 14 of the Offer to
Purchase, by giving oral or written notice of such extension to the Depositary.
There can be no assurance that the Purchaser will exercise its right to extend
the Offer. Any such extension will be followed as promptly as practicable by a
public announcement thereof, such announcement to be made no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date (as defined below). During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer
and subject to the right of a tendering shareholder to withdraw such
shareholder's Shares.
<PAGE>
-4-
Subject to the terms of the Acquisition Agreement and the applicable
regulations of the Securities and Exchange Commission, the Purchaser also
expressly reserves the right, in its sole discretion, at any time and from time
to time, to (i) delay acceptance of any Shares tendered for payment, (ii)
terminate the Offer and (iii) waive any condition or otherwise amend the Offer
in any respect (other than to reduce the amount of consideration payable in
the Offer), in each case, by giving oral or written notice of such delay,
termination, waiver or amendment to the Depositary and by making a public
announcement thereof.
Tenders of Shares made pursuant to the Offer are irrevocable,
except that Shares tendered pursuant to the Offer may be withdrawn at any
time on or prior to 12:00 Midnight, New York City time, on Wednesday, June 11,
1997 (or such later date as may apply in case the Offer is extended) (the
"Expiration Date"), and, unless theretofore accepted for payment as provided
in the Offer to Purchase, may also be withdrawn at any time after July 13,
1997 (or such later date as may apply in case the Offer is extended). For a
withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn, and (if Share Certificates
have been tendered) the name of the registered holder of the Shares as set
forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
Share Certificates, the tendering shareholder must submit the serial numbers
shown on the particular Share Certificates evidencing the Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by
an Eligible Institution (as defined in Section 3 of the Offer to Purchase),
except in the case of Shares tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase, the
notice of withdrawal must specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares. Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3
of the Offer to Purchase. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be
<PAGE>
-5-
determined by the Purchaser, in its sole discretion, whose determination shall
be final and binding.
The information required to be disclosed pursuant to Rule
14d-6(e)(1)(vii) under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
The Company has provided the Purchaser with the Company's
shareholder list and security position listings for the purpose of disseminating
the Offer to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers set forth below and copies will be
furnished promptly at the Purchaser's expense. No fees or commissions will be
payable by the Purchaser to any broker, dealer or other person (other than the
Information Agent and the Dealer Manager) for soliciting tenders of Shares
pursuant to the Offer.
<PAGE>
-6-
The Information Agent for the Offer is:
[Logo of Georgeson & Company Inc.]
Wall Street Plaza
New York, New York 10005
Banks and Brokerage Firms,
Call Toll-Free: (800) 445-1790
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
[Logo of Donaldson, Lufkin & Jenrette
Securities Corporation]
277 Park Avenue
New York, New York 10172
Call: (212) 892-7700 (Call Collect)
May 14, 1997
<PAGE>
AGREEMENT AND PLAN
OF
AMALGAMATION
among
GCR HOLDINGS LIMITED
and
EXEL LIMITED
and
EXEL ACQUISITION LTD.
Dated as of May 8, 1997
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
------- ----
ARTICLE I.
THE OFFER
SECTION 1.1 The Offer............................................... 1
SECTION 1.2 Company Actions......................................... 3
SECTION 1.3 Directors; Section 14(f)................................ 4
ARTICLE II.
THE AMALGAMATION; DISPOSITION OF SHARES
SECTION 2.1 The Amalgamation........................................ 5
SECTION 2.2 Effect of the Amalgamation.............................. 5
SECTION 2.3 Memorandum of Association and Articles of
Association of the Amalgamated Company;
Registration Number............................................ 5
SECTION 2.4 Directors and Officers of the Amalgamated
Company........................................................ 5
SECTION 2.5 Further Assurances...................................... 6
SECTION 2.6 Effect on Shares of Newco and Company................... 6
SECTION 2.7 Company Option Plans and Agreements..................... 7
SECTION 2.8 Payment for Shares...................................... 7
SECTION 2.9 Transfers............................................... 8
SECTION 2.10 Special Meeting........................................ 8
SECTION 2.11 Compulsory Acquisition of Minority
Shares......................................................... 9
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF COMPANY
SECTION 3.1 Organization............................................ 10
SECTION 3.2 Capitalization.......................................... 11
SECTION 3.3 Authority............................................... 11
SECTION 3.4 Voting Requirements..................................... 11
SECTION 3.5 No Violations; Consents and Approvals................... 12
SECTION 3.6 SEC Documents; Financial Statements..................... 12
SECTION 3.7 Absence of Certain Changes.............................. 14
SECTION 3.8 Legal Proceedings....................................... 14
SECTION 3.9 Compliance with Laws and Agreements..................... 14
SECTION 3.10 Schedule 14D-9 and Disclosure Statement;
Other Information.............................................. 15
SECTION 3.11 State Antitakeover Statutes............................ 15
SECTION 3.12 Broker's Fees.......................................... 15
SECTION 3.13 Opinion of Financial Advisor........................... 16
SECTION 3.14 Taxes.................................................. 16
SECTION 3.15 Employees.............................................. 17
SECTION 3.16 Disclosure............................................. 18
- i -
<PAGE>
SECTION PAGE
------- ----
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
SECTION 4.1 Organization............................................ 19
SECTION 4.2 Authority............................................... 19
SECTION 4.3 No Violations........................................... 19
SECTION 4.4 Offer Documents; Other Information...................... 20
SECTION 4.5 Financial Ability to Perform............................ 20
ARTICLE V.
COVENANTS
SECTION 5.1 Conduct of Business of Company.......................... 20
SECTION 5.2 Public Announcements.................................... 22
SECTION 5.3 Acquisition Proposals................................... 22
SECTION 5.4 Access to Information................................... 25
SECTION 5.5 Board Recommendation.................................... 25
SECTION 5.6 Reasonable Best Efforts; Other Actions.................. 25
SECTION 5.7 Notification of Certain Matters......................... 25
SECTION 5.8 Indemnification......................................... 26
SECTION 5.9 Termination of Share Plans.............................. 27
SECTION 5.10 Certain Change in Control Matters...................... 27
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE AMALGAMATION
SECTION 6.1 Conditions to Each Party's Obligation to
Effect the Amalgamation............................... 27
ARTICLE VII.
CLOSING
SECTION 7.1 Time and Place.......................................... 28
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination............................................. 28
SECTION 8.2 Effect of Termination................................... 30
SECTION 8.3 Certain Payments; Expenses.............................. 30
ARTICLE IX.
DEFINITIONS
SECTION 9.1 Definitions............................................. 31
SECTION 9.2 Terms Defined in the Agreement.......................... 32
- ii -
<PAGE>
SECTION PAGE
------- ----
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendment and Modification............................. 33
SECTION 10.2 Waiver of Compliance; Consents......................... 34
SECTION 10.3 Survival............................................... 34
SECTION 10.4 Notices................................................ 34
SECTION 10.5 Assignment............................................. 35
SECTION 10.6 Governing Law.......................................... 35
SECTION 10.7 Counterparts........................................... 35
SECTION 10.8 Severability........................................... 35
SECTION 10.9 Interpretation......................................... 36
SECTION 10.10 Entire Agreement...................................... 36
- iii -
<PAGE>
AGREEMENT AND PLAN OF AMALGAMATION
AGREEMENT AND PLAN OF AMALGAMATION, dated as of May 8, 1997 (the
"Agreement"), by and among GCR HOLDINGS LIMITED, a Cayman Islands limited
liability company ("Company"), EXEL LIMITED, a Cayman Islands limited liability
company ("Parent"), and EXEL ACQUISITION LTD., a Cayman Islands limited
liability company and a wholly owned subsidiary of Parent ("Newco"). Company and
Newco are hereinafter sometimes collectively referred to as the "Constituent
Companies," and Company, Parent and Newco are hereinafter sometimes collectively
referred to as the "Parties."
WHEREAS, the Board of Directors of Company (the "Board") has
unanimously determined that it is fair to, and in the best interests of, Company
and its shareholders for Parent to acquire Company upon the terms and subject to
the conditions hereinafter set forth, and recommends that shareholders of
Company accept the Offer and tender their Shares pursuant to the Offer and adopt
and approve the Amalgamation;
WHEREAS, in furtherance of such acquisition, it is proposed that
Parent shall cause Newco to make a tender offer (the "Offer") to acquire all the
issued and outstanding ordinary shares, par value $.10 per share, of Company
(the "Shares") for $27.00 in cash per Share, net to the seller (such amount, or
any higher amount as may be paid for Shares pursuant to the Offer, being
hereinafter referred to as the "Amalgamation Consideration"), upon the terms and
subject to the conditions of this Agreement and the Offer; and
WHEREAS, the Boards of Directors of each of Parent, Newco and
Company have approved the amalgamation of Newco with and into Company (the
"Amalgamation") following consummation of the Offer, upon the terms and subject
to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
Parties agree as follows:
ARTICLE I.
THE OFFER
SECTION 1.1 The Offer. (a) As promptly as practicable (but in no
event later than five business days after the date of the initial public
announcement of the execution and delivery of this Agreement), Newco shall, and
Parent shall cause Newco to, commence (within the meaning of Rule 14d-2 under
the United States Securities Exchange Act of 1934, as amended (collectively with
the rules and regulations promulgated thereunder, the "Exchange Act")), the
Offer and, subject to the conditions of the
<PAGE>
- 2 -
Offer, shall use commercially reasonable efforts to consummate the Offer as
promptly as permitted by law. The obligation of Parent and Newco to consummate
the Offer, to accept for payment and to pay for any Shares tendered pursuant to
the Offer (i) shall be subject to the condition that the number of Shares
validly tendered and not withdrawn prior to the expiration date of the Offer
(the "Expiration Date"), together with all Shares beneficially owned by Parent
or any of its subsidiaries on such date (the "Parent Owned Shares"), shall be
not less than 75% of the Shares then outstanding, calculated on a fully diluted
basis (the "Minimum Condition"), and (ii) shall be subject to the other
conditions set forth in Annex A.
(b) Parent and Newco expressly reserve the right to increase the
price per Share payable in the Offer or to make any other changes in the terms
and conditions of the Offer; provided, however, that neither Parent nor Newco
will, without the prior written consent of Company, decrease the consideration
payable in the Offer, reduce the number of Shares subject to the Offer, impose
any additional conditions to the Offer, change the form of consideration payable
in the Offer or amend or alter any other term of the Offer in any manner
materially adverse to the holders of Shares. Company agrees that no Shares held
by Company or any of its subsidiaries will be tendered pursuant to the Offer.
Notwithstanding any other provision of this Agreement, the conditions of the
Offer are for the sole benefit of Parent and Newco and may be asserted by Parent
and Newco regardless of the circumstances giving rise to any such conditions or
may be waived by Parent and Newco in whole at any time or in part from time to
time in their sole and absolute discretion (except that, without Company's
consent, Newco may not reduce the percentage amount of the Minimum Condition to
less than majority).
(c) As soon as practicable on the date of commencement of the Offer,
Parent and Newco shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer which will contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments thereto,
collectively referred to herein as the "Offer Documents"). Parent and Newco
shall give Company and its counsel a reasonable opportunity to review the Offer
Documents prior to their being filed with the SEC or disseminated to the
shareholders of Company. Parent and Newco will furnish Company and its counsel
in writing any comments that Parent, Newco or their counsel may receive from the
SEC or its staff with respect to the Offer Documents, promptly after receipt of
such comments, and the proposed responses thereto. Each of Parent and Newco (and
Company with respect to information supplied by it specifically for use in the
Offer Documents) agrees to promptly correct the Offer Documents if and to the
extent that they shall have become false or misleading in any material respect,
and Parent and Newco
<PAGE>
- 3 -
shall take all steps reasonably necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to Company's
shareholders, in each case as and to the extent required by applicable United
States federal securities laws.
(d) Parent shall provide or cause to be provided to Newco on a
timely basis the funds sufficient to accept for payment, and Parent shall cause
Newco to pay for, any and all Shares that Newco becomes obligated to accept for
payment pursuant to the Offer.
SECTION 1.2 Company Actions. Company hereby consents to the Offer
and represents that (a) the Board (at a meeting duly called and held) has
unanimously (i) determined that the Offer and the Amalgamation are fair to, and
in the best interests of, Company and its shareholders, (ii) approved this
Agreement and the Offer and the transactions contemplated hereby, including the
Offer and the Amalgamation, and (iii) resolved to recommend acceptance of the
Offer and approval of the Amalgamation by Company's shareholders, and (b)
Goldman, Sachs & Co. have advised, and delivered their written opinion to, the
Board that as of the date hereof, the cash consideration to be received by
Company's shareholders in the Offer and the Amalgamation is, based upon and
subject to the matters set forth therein, fair to such shareholders. Company
hereby agrees to file with the SEC contemporaneously with the commencement of
the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") containing such recommendations in favor of the Offer and the
Amalgamation. Company (and Newco and Parent, with respect to information
supplied by either of them specifically for use in the Schedule 14D-9) agrees
promptly to correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect, and Company shall take all
steps reasonably necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and to be disseminated to Company's shareholders, in each
case as and to the extent required by applicable United States federal
securities laws. Company hereby consents to the inclusion in the Offer Documents
of the representation in the first sentence of this paragraph. In connection
with the Offer, Company will promptly furnish Newco with mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of Shares as of a recent date, and
shall furnish Newco with such information and assistance as Newco or its agents
may reasonably request in communicating the Offer to Company's shareholders,
such information to be subject, to the extent applicable, to the Confidentiality
Agreement.
SECTION 1.3 Directors; Section 14(f). (a) Promptly upon the purchase
by Parent or Newco of such number of Shares that, together with the number of
Parent Owned Shares, represents
<PAGE>
- 4 -
at least a majority of the outstanding Shares, and from time to time thereafter
prior to the Effective Time, (i) Parent shall be entitled to designate such
number of directors, rounded up to the next whole number but in no event more
than one less than the total number of directors, on the Board as will give
Parent, subject to compliance with Section 14(f) of the Exchange Act and Rule
14f-1 thereunder, representation on the Board equal to the product of the number
of directors on the Board and the percentage that such number of purchased
Shares and Parent Owned Shares bears to the number of Shares outstanding, and
(ii) Company shall, upon request by Parent, promptly (x) increase the size of
the Board to the extent permitted by its Organization Documents and/or (y)
exercise its best efforts to secure the resignations of such number of directors
as is necessary to enable Parent's designees to be elected to the Board and
cause Parent's designees to be so elected; provided, however, that until the
Effective Time (or termination of this Agreement) the Board will have at least
two Independent Directors, each of whom shall resign at the Effective Time or
such termination. At the request of Parent, Company shall take, at its expense,
all action necessary to effect any such election, including mailing to its
shareholders the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 thereunder. Parent and Newco will supply to Company in writing and
shall be solely responsible for any information with respect to any of them and
their nominees, officers, directors and affiliates required by such Section
14(f) and Rule 14f-1. At any time Parent's designees constitute a majority of
the Board, Parent shall be entitled to designate all of the members of the board
of directors of each subsidiary of Parent, subject to any applicable
restrictions under the Insurance Act 1978 of Bermuda (the "Insurance Act") and
any rules and regulations of the Bermuda Minister of Finance (the "Minister")
thereunder. The provisions of this Section 1.3 are in addition to and shall not
limit any rights that Newco, Parent or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
"Independent Director" means (x) the two members of the Board not
otherwise affiliated with Parent or Newco and not employees of Company or any of
its subsidiaries, who shall be designated by Company, Newco and Parent, or (y)
any successor of either of them reasonably satisfactory to Parent and Newco
designated by the Independent Directors then in office; provided, however, that
if a successor is not so designated after an Independent Director resigns or
otherwise leaves office, Parent shall be entitled to designate a successor who
meets the requirements of clause (x).
(b) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time (or termination of
this Agreement), (i) any amendment to
<PAGE>
- 5 -
this Agreement, (ii) any termination of this Agreement by Company, (iii) any
extension by Company of the time for the performance of any of the obligations
or other acts of Parent or Newco and (iv) any waiver of any of Company's rights
under this Agreement will require the concurrence of the Independent Directors
then in office.
ARTICLE II.
THE AMALGAMATION; DISPOSITION OF SHARES
SECTION 2.1 The Amalgamation. In accordance with the provisions of
this Agreement and the Companies Law (1995 Revision) of the Cayman Islands (the
"Companies Law"), at the Effective Time, Newco and Company shall be amalgamated.
At and after the Effective Time, Company shall continue in the form of the
amalgamated company and shall operate under the name "GCR Holdings Limited" (the
"Amalgamated Company").
SECTION 2.2 Effect of the Amalgamation. The Amalgamation shall have
the effects set forth in Sections 85 and 86 of the Companies Law.
SECTION 2.3 Memorandum of Association and Articles of Association of
the Amalgamated Company; Registration Number. The memorandum of association of
Company shall become the memorandum of association of the Amalgamated Company
and thereafter may be amended as provided therein and by law. The articles of
association of Company shall become the articles of association of the
Amalgamated Company and thereafter may be amended as provided therein and by
law. The registration number of the Amalgamated Company in the Cayman Islands
after the Effective Time shall be the same registration number as that of
Company immediately prior to the Effective Time.
SECTION 2.4 Directors and Officers of the Amalgamated Company. At
the Effective Time, the then current directors of Newco and any additional
individuals designated by Parent shall be the initial directors of the
Amalgamated Company, each of such directors to hold office in accordance with
the applicable provisions of the memorandum and articles of association of the
Amalgamated Company and until their successors shall be elected or appointed and
shall duly qualify. Except as may be designated by Parent, immediately prior to
the Effective Time, the current directors of Company shall cease to be directors
of Company and shall not be directors of the Amalgamated Company. After giving
effect to the Amalgamation, the officers of the Amalgamated Company shall be the
individuals then designated by Parent, each to hold office in accordance with
the applicable provisions of the memorandum and articles of association of the
Amalgamated Company and until their respective successors are duly elected or
appointed and qualified.
<PAGE>
- 6 -
SECTION 2.5 Further Assurances. If, at any time after the Effective
Time, the Amalgamated Company shall consider or be advised that any deeds, bills
of sale, assignments, assurances, or any other actions or things (including an
order of the court under Section 86 of the Companies Law) are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Amalgamated
Company its right, title or interest in, to or under any of the rights,
properties or assets of either of the Constituent Companies acquired or to be
acquired by the Amalgamated Company as a result of, or in connection with, the
Amalgamation or otherwise to carry out this Agreement, the officers and
directors of the Amalgamated Company shall be authorized to execute and deliver,
in the name and on behalf of each of the Constituent Companies or otherwise, all
such deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of the Constituent Companies or otherwise, all such
other actions and things as may be necessary or desirable (including an
application to the court under Section 86 of the Companies Law) to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Amalgamated Company or otherwise to carry out this
Agreement and the transactions contemplated hereby.
SECTION 2.6 Effect on Shares of Newco and Company. As of the
Effective Time, by virtue of the Amalgamation and without any action on the part
of the holders thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (except for Shares owned by Company or any of its
subsidiaries) shall be canceled, and the holder thereof shall be entitled
to receive in cash the Amalgamation Consideration.
(b) Each Company Option outstanding immediately prior to the
Effective Time shall be canceled, and the holder thereof shall be entitled
to receive an amount in cash equal to (x) the product of the number of
Shares covered by such Company Option multiplied by the Amalgamation
Consideration minus (y) the option exercise price payable upon exercise of
such option.
(c) All ordinary shares, par value $.01 per share, of Newco issued
and outstanding immediately prior to the Effective Time shall, by virtue
of the Amalgamation and without any action on the part of the holder
thereof, be converted into and become at the Effective Time ordinary
shares of the Amalgamated Company.
(d) Each Share owned by Company or any of its subsid-
iaries shall be canceled.
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(e) At and after the Effective Time, each certificate representing
Shares shall represent only the right to receive the Amalgamation
Consideration payable in exchange for such Shares upon the surrender of
such certificate for payment in accordance with Section 2.8. At and after
the Effective Time, each holder of a certificate or certificates that
represented issued and outstanding Shares immediately prior to the
Effective Time ("Certificates") shall cease to have any rights as a
shareholder of Company.
SECTION 2.7 Company Options. The Company will use its best efforts
(including, to the extent possible, by way of amendment to the Company Plans) so
that, upon consummation of the Offer, each outstanding Company Option shall be
canceled in exchange for an amount of cash equal to (x) the product of the
number of Shares covered by such Company Option multiplied by the Amalgamation
Consideration minus (y) the option exercise price payable upon exercise of such
option.
SECTION 2.8 Payment for Shares. (a) Prior to the Effective Time,
Parent shall designate a bank or trust company reasonably satisfactory to
Company to act as paying agent in the Amalgamation (the "Paying Agent"). At or
prior to the Effective Time, Parent will take all steps necessary to enable and
cause the Amalgamated Company to provide the Paying Agent funds necessary to
make the payments contemplated by Sections 2.6 and 2.7. Any funds remaining with
the Paying Agent three months after the Effective Time shall be released and
repaid by the Paying Agent to the Amalgamated Company, after which time persons
entitled thereto may look, subject to applicable escheat and other similar laws,
only to the Amalgamated Company for payment thereof.
(b) As soon as practicable after the Effective Time, Parent shall
cause the Paying Agent to mail to each record holder of Certificates, as of the
Effective Time, a form letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the Certificates for payment
therefor. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor an amount equal to the product of
the number of Shares represented by such Certificate and the Amalgamation
Consideration, and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. If payment is to be made to a person other than the person in
whose name the Certificate surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other
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Taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of the
Amalgamated Company that such Tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.8, each
Certificate (other than Certificates representing Shares held by Company or any
subsidiary of Company) shall represent for all purposes the right to receive the
Amalgamation Consideration in cash multiplied by the number of Shares evidenced
by such Certificate, without any interest thereon.
(c) The Amalgamated Company shall pay all charges and expenses,
including those of the Paying Agent, in connection with the exchange of cash for
Shares.
SECTION 2.9 Transfers. From and after the Effective Time, there
shall be no transfers of Shares of Company or the Amalgamated Company. If, after
the Effective Time, Certificates are presented to the Amalgamated Company, they
shall be canceled and exchanged as provided in this Article II.
SECTION 2.10 Special Meeting. (a) If required by applicable law in
order to consummate the Amalgamation, Company, acting through the Board, shall,
upon consummation of the Offer, in accordance with applicable law and subject to
the applicable provisions of this Agreement:
(i) duly call, give notice of, convene and hold a special meeting
(the "Special Meeting") of its shareholders as soon as practicable
following the consummation of the Offer for the purpose of considering and
taking action with respect to the Amalgamation; and
(ii) if required, file with the SEC under the Exchange Act, a
Disclosure Statement and use its best efforts to obtain and furnish the
information required to be included by it in the Disclosure Statement and,
after consultation with Parent, to respond promptly to any comments made
by the SEC with respect to the Disclosure Statement and any preliminary
version thereof and cause the Disclosure Statement to be mailed to its
shareholders at the earliest practicable time following the consummation
of the Offer or at such other time as Parent shall direct following
consultation with Company.
(b) Parent will provide Company with the information regarding
Parent and Newco required to be included in the Disclosure Statement. Parent
further agrees that, at the Special Meeting, all of the Shares then owned by
Parent and Newco will be voted in favor of the Amalgamation.
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(c) The Disclosure Statement shall state that the Board unanimously
(i) has approved the Offer and the Amalgamation, (ii) has determined that the
Offer and the Amalgamation taken together are fair and in the best interests of
the Company and its shareholders, and (iii) recommends that shareholders of
Company both accept the Offer and tender their Shares pursuant to the Offer and
adopt and approve the Amalgamation. Company shall give Parent, Newco and their
counsel a reasonable opportunity to review the Disclosure Statement prior to
their being filed with the SEC or disseminated to the shareholders of Company.
Company will furnish Parent, Newco and its counsel any comments that Company or
its counsel may receive from the SEC or its staff with respect to the Disclosure
Statement, promptly after receipt of such comments, and the proposed responses
thereto.
"Disclosure Statement" means the letter to shareholders, notice of
meeting, proxy statement and form of proxy, or the information statement, as the
case may be, to be distributed to shareholders in connection with the
Amalgamation, including any schedules required to be filed with the SEC in
connection therewith.
SECTION 2.11 Compulsory Acquisition of Minority Shares. In the event
that, following the purchase of Shares pursuant to the Offer, Parent, Newco and
any other subsidiary of Parent shall own an aggregate of at least 90% of the
outstanding Shares, the Parties agree, at the request of Parent or Newco, to
take all necessary and appropriate action to effect the compulsory acquisition
of those outstanding Shares not owned by Parent, Newco or any other subsidiary
of Parent in accordance with Section 87 of the Companies Law.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Newco that, except as
specifically disclosed in the Disclosure Schedule, dated the date hereof, being
delivered confidentially by Company to Parent and Newco concurrently herewith
(the "Disclosure Schedule"):
SECTION 3.1 Organization. Company and each of its subsidiaries is a
company duly organized, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Company and each of its subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned,
<PAGE>
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leased or operated by it or the nature of the business conducted by it makes
such qualification, license or good standing necessary, except where the failure
to be so duly qualified or licensed or be in good standing would not,
individually or in the aggregate, (x) have a material adverse effect on the
business, operations, assets, condition (financial or other), prospects or
results of operations of Company and its subsidiaries taken as a whole or (y)
prevent or materially delay the consummation of the Offer or the Amalgamation on
the terms contemplated hereby (each, a "Material Adverse Effect"). Except as and
to the extent set forth in the SEC Documents, Company owns directly or
indirectly all of the outstanding capital stock of each of its subsidiaries.
Neither Company nor any of its subsidiaries is required to be authorized,
qualified, licensed or domesticated under any federal, state or local law in the
United States. Company has furnished to Parent and Newco complete and correct
copies of the Organizational Documents of Company and each of its subsidiaries
as in effect on the date hereof. Such Organizational Documents are in full force
and effect and no other Organizational Documents are applicable to or binding
upon Company or any of its subsidiaries.
"Organizational Documents" means, with respect to any person, the
articles of association, memorandum of association, bye-laws and similar
documents (including any shareholders and similar agreement) of such person.
SECTION 3.2 Capitalization. Company's authorized capital consists of
50,000,000 Shares (of which 1,040,283 Shares have been repurchased by Company
and retired) and 25,000,000 other shares, par value $.10 per share ("Other
Shares"). As of the date hereof and after giving effect to the Second Quarter
Dividend, there are 24,766,255 Shares issued and outstanding, 26,278 restricted
Shares (all of which shall vest upon consummation of the Offer) and no Other
Shares issued and outstanding. Neither Company nor any of its subsidiaries holds
any Shares. As of the date hereof, there were reserved under the share option
plans of Company (the "Company Plans"), all of which are described in the SEC
Documents, 997,925 Shares for issuance upon exercise of outstanding options to
acquire Shares ("Company Options"). Except for the options to acquired such
Shares under Company Plans, the restricted Shares described above and for the
5,283 Shares to be issued as a dividend on certain Shares in connection with the
Second Quarter Dividend, there are not now, and at the Effective Time there will
not be, any existing options, warrants, calls, subscriptions, or other rights,
agreements or commitments obligating Company or any of its subsidiaries to
issue, transfer or sell any share capital of Company or any of its subsidiaries
or any other securities convertible into or evidencing the right to subscribe
for any such share capital. All issued and outstanding Shares are duly
<PAGE>
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authorized and validly issued, fully paid and non-assessable and free of
preemptive rights with respect thereto.
SECTION 3.3 Authority. Company has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, subject, in the case of the Amalgamation, to
approval of Company's shareholders (if required by applicable law) as described
in Section 3.4. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by its Board of Directors, and no corporate proceedings
on the part of the Company are necessary to authorize this Agreement or the
consummation of the transactions contemplated hereby, subject, in the case of
the Amalgamation, to approval of Company's shareholders (if required by
applicable law) as described in Section 3.4. This Agreement has been duly and
validly executed and delivered by Company and (assuming this Agreement
constitutes a valid and legally binding agreement of Parent and Newco)
constitutes a valid and legally binding agreement of Company, enforceable
against Company in accordance with its terms.
SECTION 3.4 Voting Requirements. The requisite shareholder vote
under Sections 85 and 86 of the Companies Law approving the Amalgamation is the
only vote of the holders of any securities of Company necessary in connection
with the Amalgamation.
SECTION 3.5 No Violations; Consents and Approvals. (a) Neither the
execution and delivery of this Agreement nor the consummation by Company of the
transactions contemplated hereby nor compliance by Company with any of the
provisions hereof will (i) be subject, in the case of the Amalgamation, to
obtaining the approval of its shareholders as described in Section 3.4 and, if
required under applicable law, to approval by a court of competent jurisdiction,
violate any provision of its Organization Documents, (ii) result in a violation
or breach of, or constitute (with or without due notice or lapse of time or
both) a default, or give rise to any right of termination, cancellation or
acceleration or any right which becomes effective upon the occurrence of a
merger, consolidation or change in control, under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture or other instrument of, or
document governing, indebtedness for money borrowed or any license, franchise or
permit or any other agreement to which Company or any of its subsidiaries is a
party, or by which Company or any of its subsidiaries or any of their respective
properties is bound, or (iii) violate any statute, rule, regulation, order or
decree of any public body or authority by which Company or any of its
subsidiaries or any of its respective properties is bound, except in the case of
clause (ii) or (iii), such as would not, individually or in the aggregate, have
a Material Adverse Effect.
<PAGE>
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(b) No filing or registration with, notification to, or
authorization, consent or approval of, any governmental entity is required by
Company or any of its subsidiaries in connection with the execution and delivery
of this Agreement or the consummation by Company of the transactions
contemplated hereby, except (i) the approval of the Minister under the Insurance
Act, (ii) in connection, or in compliance, with the provisions of the Exchange
Act or any other foreign or state securities or "blue sky" laws, (iii) the
registration of the Amalgamated Company with the Registrar and (iv) filings with
the Nasdaq National Market System and the SEC with respect to the deregistration
of Shares.
SECTION 3.6 SEC Documents; Financial Statements. (a) Company has
provided to Parent and Newco a list of each registration statement, report,
proxy statement or information statement, including all exhibits and schedules
thereto, heretofore filed by it with the SEC (the "SEC Documents"). As of their
respective dates, the SEC Documents complied as to form in all material respects
with the applicable requirements of the United States Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, as the case may be. None
of the SEC Documents contained any untrue statement of material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Board consists of the directors identified in
Company's proxy statement for the annual general meeting of shareholders held on
December 19, 1996 (the "1996 Proxy Statement"). Company agrees that all SEC
Documents, other than those specifically identified in writing by Company as
excluded documents, are deemed to have been provided to Parent and Newco by
Company specifically for use in the Offer Documents.
(b) The consolidated financial statements included in Company's SEC
Documents complied, as of their respective dates, in all material respects with
then applicable accounting requirements and the rules and regulations of the SEC
with respect thereto, were prepared in accordance with United States generally
accepted accounting principles ("GAAP"), applied on a consistent basis during
the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present, in all material respects, the consolidated
financial position, results of operations, cash flows and changes in
shareholders' equity of Company and its subsidiaries at the dates and for the
periods presented (subject, in the case of unaudited statements, to the lack of
footnotes thereto, to normal year-end audit adjustments (consisting only of
normal recurring accruals) and to any other adjustments described therein).
(c) Company has provided to Parent and Newco copies of each annual
statutory financial return filed by Global Capital Reinsurance Limited with the
Bermuda Registrar of Companies (the
<PAGE>
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"Bermuda Registrar") for the years ended September 30, 1995 and 1996. The
statutory financial statements included in such returns were prepared in
accordance with statutory accounting practices prescribed by the Insurance Act
and the rules and regulations of the Bermuda Registrar thereunder and fairly
present the admitted assets, liabilities, capital and surplus and results of
operations and cash flows of Global Capital Reinsurance Limited at the dates and
for the periods presented.
(d) Neither Company nor any of its subsidiaries, nor any of their
respective assets, businesses or operations, is as of the date of this Agreement
a party to, or is bound or affected by, or receives benefits under any contract
or agreement or amendment thereto, that in each case would be required to be
filed as an exhibit to a Form 10-K as of the date of this Agreement that has not
been filed as an exhibit to an SEC Document filed prior to the date hereof.
(e) The SEC Documents include (i) consolidated balance sheets of
Company as of September 30, 1996 and March 31, 1997 and (ii) consolidated
statements of income of Company for the years ended September 30, 1995 and 1996
and the six months ended March 31, 1996 and 1997. The foregoing consolidated
audited balance sheet as of September 30, 1996 is sometimes herein referred to
as the "Balance Sheet." The foregoing consolidated unaudited balance sheet as of
March 31, 1997 is sometimes herein referred to as the "Interim Balance Sheet."
(f) There are no liabilities or obligations of Company or any of its
subsidiaries accrued, absolute, or contingent and whether due or to become due,
other than liabilities or obligations (i) reflected, or adequately reserved
against, in the Interim Balance Sheet or (ii) that, individually or in the
aggregate, would not have a Material Adverse Effect.
(g) No dividends have been declared or paid on any Shares since
March 31, 1997 except for the Second Quarter Dividend.
SECTION 3.7 Absence of Certain Changes. Since the date of the
Interim Balance Sheet, Company has not (a) suffered any event, condition or
occurrence, that individually or in the aggregate, would have a Material Adverse
Effect or (b) implemented any change in accounting methods, principles or
practices except as required by GAAP.
SECTION 3.8 Legal Proceedings. Except as specifically disclosed in
the SEC Documents filed prior to the date hereof, there is no (i) claim, action,
suit or proceeding pending or, to Company's best knowledge, threatened, against
or relating to it or any of its subsidiaries or any of their respective assets
before any court or governmental or regulatory authority or body
<PAGE>
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or arbitration tribunal or (ii) outstanding judgment, order, writ, injunction or
decree, or application, request or motion therefor, of any court governmental
agency or arbitration tribunal in a proceeding to which Company or any of its
subsidiaries is a party, except any such claim, action, suit or proceeding or
judgment, order, writ, injunction, decree, application, request or motion which
if adversely determined, individually or in the aggregate, would not have a
Material Adverse Effect.
SECTION 3.9 Compliance with Laws and Agreements. Neither Company nor
any of its subsidiaries is (i) in violation of or noncompliance with any
statute, law, ordinance, regulation, rule or order of any foreign, federal,
state or local government or any other governmental department or agency, or any
judgment, decree or order of any court, applicable to its business or operations
or (ii) in violation, breach or default (with or without due notice or lapse of
time or both) under any of the terms, conditions or provisions of any agreement
to which it is a party, or by which any of its properties is bound, except where
any such violations or failures to comply or breaches or defaults would not,
individually or in the aggregate, have a Material Adverse Effect. Company and
its subsidiaries have all permits, licenses and franchises from governmental
agencies required to conduct their businesses as now being conducted, except for
such permits, licenses and franchises the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.10 Schedule 14D-9 and Disclosure Statement; Other
Information. The Schedule 14D-9 and, if a Disclosure Statement is required for
the consummation of the Amalgamation under applicable law, the Disclosure
Statement will each comply as to form in all material respects with the
requirements of the Exchange Act. The Schedule 14D-9 will not, at the time it is
filed with the SEC or is first published, sent or given to Company's
shareholders, and any such Disclosure Statement will not, at the time it is
filed with the SEC, is first published, sent or given to Company's shareholders,
or at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of circumstances under
which they were made, not misleading; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement or omission was
made by Company in reliance upon and in conformity with information furnished to
Company by Parent or Newco specifically for use in the Schedule 14D-9 and
Disclosure Statement, as the case may be. The information supplied or to be
supplied by Company specifically for use in the Offer Documents will not, at the
time they are filed with the SEC or are first published, sent or given to
Company's shareholders, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements
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therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 3.11 State Antitakeover Statutes. No "business combination,"
"moratorium," "control share" or other anti-takeover statute or regulation (x)
prohibits or restricts Company's ability to perform its obligations under this
Agreement or its ability to consummate the transactions contemplated hereby, (y)
would have the effect of invalidating or voiding this Agreement, or any material
provision hereof, or (z) would subject Parent or Newco to any material
impediment or condition in connection with the exercise of any of their
respective rights under this Agreement or with respect to Company or the
Amalgamated Company.
SECTION 3.12 Broker's Fees. Except for the engagement of Goldman,
Sachs & Co. by Company, neither Company nor any of its subsidiaries nor any of
their respective directors or officers has employed any broker, finder or
financial advisor or incurred any liability for any broker's fees, commissions,
or financial advisory or finder's fees in connection with any of the
transactions contemplated by this Agreement. Company has provided to Parent
copies of Company's engagement letter with Goldman, Sachs & Co. in connection
with this Agreement and the transactions contemplated hereby.
SECTION 3.13 Opinion of Financial Advisor. Company has received the
opinion of Goldman, Sachs & Co., dated the date hereof, to the effect that, as
of such date, the consideration to be received in the Offer and the Amalgamation
by the shareholders of Company is fair to such shareholders, a copy of which
opinion has been delivered to Parent.
SECTION 3.14 Taxes. (a) Neither Company nor any of its subsidiaries
has, or has had, any income which is, or has been, subject to the United States
federal income tax as income effectively connected with the conduct of a trade
or business within the United States, within the meaning of Sections 842 or
882(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"). Global
Capital Reinsurance Limited is and has been predominantly engaged in the active
conduct of an insurance business within the meaning of Section 1296(b) of the
Code. Company and its subsidiaries have prepared and timely filed or will timely
file with the appropriate governmental agencies all Tax (as hereinafter defined)
returns, information returns and reports (collectively, "Tax Returns") required
to be filed for any period on or prior to the Effective Time, taking into
account any extension of time to file granted to or obtained on behalf of
Company and/or its subsidiaries which, if not filed, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, and
all such Tax Returns as filed are or will be accurate and complete in all
material respects; all Taxes
<PAGE>
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of Company and its subsidiaries (including taxes withheld from employees'
salaries and other withholding taxes and obligations) shown to be due on such
Tax Returns have been paid in full to the proper authorities or fully accrued
for with respect to fiscal periods for which there are publicly available
financial statements in such statements and otherwise on the books of Company,
other than such Taxes as are being contested in good faith by appropriate
proceedings and are adequately reserved for in accordance with GAAP. All
material written assessments of Taxes due and payable by or on behalf of Company
or any of its subsidiaries have either been paid or adequately reserved for in
accordance with GAAP.
(b) Company has not for any taxable year (or portion thereof) ended
on or prior to September 30, 1996, reported to its shareholders that the Company
or any of its subsidiaries had incurred, in such taxable year (or portion
thereof), and does not expect to have for the period commencing October 1, 1996
and ending on the date hereof (treating such period as if it were a taxable
year), "related person insurance income" within the meaning of Section 953(c)(2)
of the Code in excess of the amount determined under Section 953(c)(3)(B) of the
Code.
(c) There are no deficiencies that have been asserted in writing by
a tax authority for Taxes that, individually or in the aggregate, would have a
Material Adverse Effect. Neither Company nor any of its subsidiaries has any
liability for any material Cayman Islands, Bermuda, United Kingdom or United
States federal, state, local, foreign or other Taxes of any corporation or
entity other than Company and its subsidiaries. There is no action, suit,
proceeding, investigation, audit or claim now pending or, to the knowledge of
Company or its subsidiaries, threatened in writing by any authority regarding
any Taxes relating to Company or any of its subsidiaries that, individually or
in the aggregate, would have a Material Adverse Effect.
(d) There are no liens or security interests on any of the assets of
Company or any of its subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Taxes that, individually or in the aggregate, would
have a Material Adverse Effect.
"Tax" or "Taxes" shall mean all Cayman Islands, Bermuda, United
Kingdom and United States federal, state, local and foreign taxes, duties,
levies, charges and assessments of any nature, including social security
payments and deductibles relating to wages, salaries and benefits and payments
to subcontractors (to the extent required under applicable Tax law), and also
including all interest, penalties and additions imposed with respect to such
amounts.
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SECTION 3.15 Employees. (a) Section 3.15 of the Disclosure Schedule
lists (i) all Employee Benefit Plans, (ii) all employment contracts and similar
arrangements between Company or any of its subsidiaries and its employees, and
(iii) all plans and arrangements pursuant to which Company or any of its
subsidiaries is, or may be or become, obligated to make any payment to confer
any benefit upon or accelerate the vesting or exercisability of any benefit for
any officer, director, employee or agent of Company as a result of or in
connection with any of the transactions contemplated by this Agreement or any
transaction or transactions resulting in a change of control of Company. Company
is not aware that any officer, director, executive or key employee of Company or
any of its subsidiaries or any group of employees of Company or any of its
subsidiaries has any plans to terminate his, her or its employment. (i) Company
and its subsidiaries have complied with all laws relating to the employment of
labor, including provisions thereof relating to wages, hours, equal opportunity,
and collective bargaining except where the failure so to comply could not
reasonably be expected to have a Company Material Adverse Effect, (ii) no labor
dispute with employees of Company exists or, to the knowledge of Company, is
threatened, except as could not reasonably be expected to have a Company
Material Adverse Effect, (iii) each Employee Benefit Plan conforms in all
material respects to, and its administration is in conformity in all material
respects with, all applicable laws, no material liability has been or is
expected to be incurred by Company with respect to any Employee Benefit Plan
except for benefits payable or contributions due under the terms of such plans,
and full payment has been made of all amounts that Company is required to have
paid as contributions to each Employee Benefit Plan, (iv) Company has provided
Parent with a true and correct copy of each of the Employee Benefit Plans and
all contracts relating thereto, or to the funding thereof, (v) all Employee
Benefit Plans intended to satisfy applicable tax qualification requirements or
other requirements necessary to secure favorable tax or other legal treatment
comply in all material respects with such requirements, and (vi) adequate
accruals for all obligations under the Employee Benefit Plans are reflected in
the financial statements of Company. Neither Company nor any of its subsidiaries
nor any of their ERISA Affiliates has incurred or expect to incur any liability
under Title IV of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Neither Company nor any of its subsidiaries has ever
maintained, contributed to or had any liability with respect to an employee
benefit plan subject to Title IV of ERISA. All contributions to employee benefit
plans required to be made by Company, its subsidiaries or any of their ERISA
Affiliates in accordance with the terms of the plans, any applicable collective
bargaining agreement and, when applicable, Section 302 of ERISA or Section 412
of the Code, have been timely made.
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"Employee Benefit Plan" shall mean each benefit plan maintained or
contributed to by Company or any of its subsidiaries or with respect to which
Company or any of its subsidiaries may have any liability which provides (or is
intended to provide) benefits to the employees of Company or any of its
subsidiaries (or other service providers to Company or any of its subsidiaries),
including each pension, retirement or deferred compensation plan, incentive
compensation plan, stock plan, unemployment compensation plan, vacation pay,
severance pay, bonus or benefit arrangement, insurance, medical or
hospitalization program, sickness, accident, disability or death benefit program
or any other fringe benefit.
"ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is or has been a member of any group of persons described in
Section 414(b), (c), (m) or (o) of the Code, including Company or one of its
subsidiaries.
(b) There are no pending or, to the knowledge of Company, threatened
claims for indemnification by Company or any of its subsidiaries in favor of
directors, officers, employees and agents of Company or any of its subsidiaries.
SECTION 3.16 Disclosure. No representation or warranty by Company
and no statement or information relating to Company or any of its subsidiaries
contained herein, or in any certificate furnished by or on behalf of Company to
Parent or Newco in connection herewith, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco hereby jointly and severally represent and warrant
to Company as follows:
SECTION 4.1 Organization. Each of Parent and Newco is a company duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Each of Parent and Newco is duly qualified or
licensed to conduct business and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification, license or good standing necessary,
except where the failure to be so duly qualified or licensed or be in good
<PAGE>
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standing would not have a material adverse effect on Parent's or Newco's ability
to consummate the transactions contemplated hereby. Newco is a wholly owned
subsidiary of Parent.
SECTION 4.2 Authority. Each of Parent and Newco has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by the respective Boards of Directors of Parent
and Newco and by Parent as the sole shareholder of Newco, and no other corporate
proceedings on the part of Parent or Newco are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent and
Newco and (assuming this Agreement constitutes a valid and legally binding
agreement of Company) constitutes a valid and legally binding agreement of
Parent and Newco, enforceable against each of them in accordance with its terms.
SECTION 4.3 No Violations. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby nor
compliance by Parent and Newco with any of the provisions hereof will violate
any provision of their respective memorandum and articles of association.
SECTION 4.4 Offer Documents; Other Information. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act. The Offer Documents will not, at the time they are filed with the
SEC or first published, sent or given to Company's shareholders, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement or omission was made by Parent or Newco in reliance upon
and in conformity with information furnished to Parent or Newco by Company
specifically for use in the Offer Documents. The information supplied or to be
supplied by Parent or Newco specifically for use in the Schedule 14D-9 or in the
Disclosure Statement will not, at the time the Schedule 14D-9 or the Disclosure
Statement, as the case may be, is filed with the SEC or is first published, sent
or given to Company's shareholders or, in the case of the Disclosure Statement,
at the time of the Special Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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SECTION 4.5 Financial Ability to Perform. Parent and Newco presently
have, and at all times up to and including the Expiration Date and the Effective
Time will have, the financial resources necessary on the part of Parent and
Newco to consummate the transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS
SECTION 5.1 Conduct of Business of Company. Except as expressly
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, Company will, and will cause its subsidiaries
to, conduct their operations according to their ordinary course of business
consistent with past practice, and will use all reasonable best efforts to
preserve intact their business organization, to keep available the services of
their officers and employees, to maintain all permits, licenses and franchises
from governmental entities required to conduct their businesses as now being
conducted and to maintain satisfactory relationships with producers, brokers,
insureds, suppliers, distributors, customers and others having business
relationships with it and will take no action which would materially adversely
affect the ability of the Parties to consummate the transactions contemplated by
this Agreement (it being understood that Company will discuss with Parent the
implementation of the joint venture with Capital Re Corporation and the writing
of any insurance thereby or thereunder). Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement, prior
to the Effective Time, Company will not, and will not permit any of its
subsidiaries to, without the prior written consent of Parent, directly or
indirectly:
(a) amend the Organizational Documents of Company or any of its
subsidiaries;
(b) authorize for issuance, issue, sell, deliver, grant any options
for, or otherwise agree or commit to issue, sell or deliver any securities
of Company or any of its subsidiaries, except pursuant to and in
accordance with the terms of any Company Options outstanding on the date
hereof;
(c) split, combine or reclassify any shares of Company or any of its
subsidiaries, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of any such shares or purchase, redeem or otherwise acquire any such
shares, except that the Company may pay the dividend of $0.62 per Share
declared on April 25, 1997 payable on
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May 27, 1997 to shareholders of record on May 14, 1997 (the "Second
Quarter Dividend");
(d) (i) create, incur, assume, maintain or permit to exist any
long-term debt or any short-term debt for borrowed money, except pursuant
to Company's existing credit agreements in the ordinary course of the
property catastrophe business to the extent required to pay properly
documented claims, (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for
the obligations of any person except in the ordinary course of its
reinsurance business, consistent with past practices (except customary
letters of credit issued in the ordinary course of business consistent
with past practices), or (iii) make any loans, advances or capital
contributions to, or investments in, any person;
(e) (i) increase in any manner the compensation (including bonuses)
of any director, officer or other employee of Company or any of its
subsidiaries; (ii) pay or agree to pay any pension, retirement allowance
or other employee benefit not required, or enter into or agree to enter
into any agreement or arrangement with any such director, officer or
employee, whether past or present relating to any such pension, retirement
allowance or other employee benefit; (iii) grant any severance or
termination pay to, or enter into any employment or severance agreement
with, any such director, officer or other employee; or (iv) become
obligated under any new pension plan, welfare plan, multi-employer plan,
employee benefit plan, benefit arrangement, or similar plan or
arrangement, which was not in existence on the date hereof, including any
bonus, incentive, deferred compensation, stock purchase, stock option,
stock appreciation right, group insurance, severance pay, retirement or
other benefit plan, agreement or arrangement, or employment or consulting
agreement with or for the benefit of any person, or amend any of such
plans or any of such agreements in existence on the date hereof;
(f) except as required by this Agreement, authorize, recommend,
propose or announce an intention to authorize, recommend or propose, or
enter into, any agreement in principle or any agreement with respect to
any plan of liquidation or dissolution, any acquisition of a material
amount of assets or securities, any sale, transfer, lease, license,
pledge, mortgage, or other disposition or encumbrance of any assets or
securities or any change in the capitalization of Company or any of its
subsidiaries (other than upon exercise of Company Options outstanding on
the date hereof), or, except for reinsurance agreements entered into in
the ordinary course of business, consistent with past practice, (i) any
other material agreements, commitments or contracts,
<PAGE>
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(ii) any amendment or modification thereof or (iii) any release or
relinquishment of any material rights thereunder;
(g) knowingly undertake any act, or suffer to exist any condition,
causing any insurance policy naming it as a beneficiary or a loss payee to
be canceled or terminated;
(h) enter into any hedging, option, derivative or other similar
transaction, except in the ordinary course of business consistent with
past practices and following written notice to Parent; or
(i) agree to do any of the foregoing.
SECTION 5.2 Public Announcements. No party hereto shall issue any
press release or otherwise make any public statements with respect to this
Agreement or the transactions contemplated hereby without the approval of the
other party (which shall not be unreasonably withheld or delayed) as to the
wording, timing and media for such press release or statement.
SECTION 5.3 Acquisition Proposals. (a) Company represents and
warrants to, and covenants and agrees with, Parent and Newco that neither
Company nor any of its subsidiaries has any agreement, arrangement or
understanding with any potential acquiror that, directly or indirectly, would be
violated, or require any payments, by reason of the execution, delivery and/or
consummation of this Agreement. Company shall, and shall cause its subsidiaries
and use its best efforts to cause its and their officers, directors, employees,
investment bankers, attorneys and other agents and representatives to,
immediately cease any existing discussions or negotiations with any person
(including a "person" as defined in Section 13(d)(3) of the Exchange Act) other
than Parent or Newco (a "Third Party") heretofore conducted with respect to any
Acquisition Transaction. Company shall not, and shall cause its subsidiaries and
use its best efforts to cause its and their officers, directors, employees,
investment bankers, attorneys and other agents and representatives not to,
directly or indirectly, (x) solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries, proposals or offers with respect to, or that could reasonably be
expected to lead to, any acquisition or purchase of a material portion of the
assets or business of, or any significant equity interest in (including by way
of a tender offer), or any amalgamation, merger, consolidation or business
combination with, or any recapitalization or restructuring, or any similar
transaction involving, Company or any of its subsidiaries (the foregoing being
referred to collectively as an "Acquisition Transaction"), or (y) negotiate,
explore or otherwise communicate in any way with any Third Party with respect to
any Acquisition Transaction or enter into, approve or recommend any agreement,
arrangement or
<PAGE>
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understanding requiring Company to abandon, terminate or fail to consummate the
Offer and/or the Amalgamation or any other transaction contemplated hereby.
Notwithstanding anything to the contrary in the foregoing, Company may, prior to
the purchase of Shares pursuant to the Offer, in response to an unsolicited
written proposal with respect to an Acquisition Transaction involving the
acquisition of all of the Shares (or all or substantially all of the assets of
Company and its subsidiaries) from a Third Party (which proposal (I) is not
subject to a financing condition and is from a person that Goldman, Sachs & Co.
or another nationally recognized investment bank advises in writing is
financially capable of consummating such proposal or (II) is subject to
financing, but is from a person that Goldman, Sachs & Co. or another nationally
recognized investment bank advises in writing is financially capable of
achieving such financing to consummate such proposal, (i) furnish or disclose
non-public information to such Third Party and (ii) negotiate, explore or
otherwise communicate with such Third Party, in each case only if and to the
extent that (a) the Board determines reasonably and in good faith by a majority
vote (after receipt of written advice of Company's outside legal counsel that
failing to take such action would, in all likelihood, constitute a breach of the
fiduciary duties of the Board to Company's shareholders under applicable law),
that taking such action would, in all likelihood, lead to an Acquisition
Transaction that, based upon the written advice of Goldman, Sachs & Co., is more
favorable to Company's shareholders than the Offer and the Amalgamation and that
failing to take such action would, in all likelihood, constitute a breach of the
fiduciary duties of the Board to Company's shareholders under applicable law
(the proposal with respect to an Acquisition Transaction meeting the
requirements of the parenthetical clause immediately preceding clause (i) and
this clause (a), a "Superior Proposal"), (b) prior to furnishing or disclosing
any non-public information to, or entering into discussions or negotiations
with, such Third Party, Company receives from such Third Party an executed
confidentiality agreement with terms no less favorable to Company than those
contained in the Confidentiality Agreement, but which confidentiality agreement
shall not provide for any exclusive right to negotiate with Company or any
payments and (c) Company advises Parent of all such non-public information
delivered to such Third Party concurrently with such delivery; provided,
however, that Company shall not, and shall cause its affiliates not to, enter
into a definitive agreement with respect to a Superior Proposal unless (x)
Company concurrently terminates this Agreement in accordance with the terms
hereof and pays any amounts required under Article VIII and (y) such agreement
permits Company to terminate it if it receives a Superior Proposal, such
termination and related provisions to be on terms no less favorable to Company,
including as to fees and reimbursement of expenses, as those contained herein.
<PAGE>
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(b) Company shall promptly (but in any event within one day of
Company becoming aware of same) advise Parent of the receipt by Company, any of
its subsidiaries or any of Company's or any subsidiary's officers, directors,
employees, investment bankers, attorneys or other agents or representatives of
any inquiries or proposals relating to an Acquisition Transaction and any
actions taken pursuant to Section 5.3(a). Company shall promptly provide Parent
with a copy of any such inquiry or proposal in writing and a written statement
with respect to any such inquiries or proposals not in writing, which statement
shall include the identity of the parties making such inquiries or proposal and
the terms thereof. Company shall, from time to time, promptly inform Parent of
the status and content of any discussions regarding any Acquisition Transaction
with a Third Party. For the avoidance of doubt, Company agrees that it will not
enter into any agreement with respect to a Superior Proposal unless and until
Parent has been given at least five business days prior to the entering into
such agreement to match the terms of such agreement.
(c) Company has obtained the agreement of each member of the Board
and the board of directors of each of its subsidiaries and of its executive
officers and investment bankers that each such person will comply with the
provisions of this Section 5.3 as if it were a party hereto (to the extent that
it would be otherwise applicable thereto).
SECTION 5.4 Access to Information. (a) From the date of this
Agreement until the Effective Time, Company will (x) give Parent and its
authorized representatives (including counsel, consultants, financial advisors,
accountants and auditors) reasonable access during normal business hours to all
facilities, personnel and operations and to all books and records of it and its
subsidiaries, (y) permit Parent to make such inspections as it may reasonably
require and (z) cause its officers and those of its subsidiaries to furnish
Parent with such financial and operating data and other information with respect
to its business and properties as Parent may from time to time reasonably
request.
(b) Each of the Parties will hold and will use its best efforts to
cause all of the employees and representatives of such Party and its
subsidiaries to hold in strict confidence pursuant to the Confidentiality
Agreement dated as of April 28, 1997 between Parent and Company (the
"Confidentiality Agreement") all documents and information furnished to the
other in connection with the transactions contemplated by this Agreement as if
each such employee or representative were a party thereto.
SECTION 5.5 Board Recommendation. Company shall, through the Board,
recommend, and continue to recommend, to its shareholders that they tender all
of their Shares in the Offer
<PAGE>
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and approve the Amalgamation; provided, however, that the taking of a position
by Company pursuant to Rule 14e-2(a)(2) or (3) solely in respect of any proposal
with respect to an Acquisition Transaction shall not be deemed a withdrawal,
modification, or a proposal to do either, of its position with respect to the
Offer or the Amalgamation for purposes hereof; provided, however, that the Board
may withdraw, modify or change its recommendations to Company's shareholders
only in the event that this Agreement has been terminated in accordance with its
terms and any payments required under Article VIII have been made.
SECTION 5.6 Reasonable Best Efforts; Other Actions. Subject to the
terms and conditions herein provided and applicable law, the Parties shall use
reasonable best efforts promptly to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
appropriate (including obtaining all material consents and making all material
filings) under applicable laws and regulations or otherwise to consummate and
make effective the transactions contemplated by this Agreement.
SECTION 5.7 Notification of Certain Matters. Each of Company and
Parent shall give prompt notice to the other of (i) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, (ii) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (iii) any failure of Company, Parent or Newco, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.07 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 5.8 Indemnification. (a) Parent shall cause the Amalgamated
Company to indemnify, defend and hold harmless the present and former officers,
directors, employees and agents (collectively, "Indemnified Parties") of Company
and its subsidiaries from and against all losses, obligations, claims, damages,
expenses or liabilities arising out of actions or omissions or alleged actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, in connection with the transactions contemplated by this Agreement)
to the same extent and on the same terms and conditions provided for in
Company's Organizational Documents in effect at the date hereof, to the extent
permitted under applicable law (which terms and conditions shall not be amended
in any manner which adversely affects any Indemnified Party for a period of six
years, including provisions relating to advances of expenses incurred in
<PAGE>
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the defense of any action or suit; provided that in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification (and to advancement of expenses) in respect of each such claim
shall continue until final disposition of such claim).
(b) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by Company (provided that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous) with respect to
claims arising from facts or events which occurred before the Effective Time;
provided, however, that nothing contained herein shall require Parent or the
Amalgamated Company to incur any annual premium in excess of 200% of the last
annual aggregate premium paid prior to the date of this Agreement for all
current directors' and officers' liability insurance policies maintained by
Company, which Company represents and warrants to be $604,000 (the "Current
Premium"). If such premiums for such insurance would at any time exceed 200% of
the Current Premium, then the Amalgamated Company shall cause to be maintained
policies of insurance which, in the Amalgamated Company's good faith
determination, provide the maximum coverage available at an annual premium equal
to 200% of the Current Premium.
(c) This Section 5.8 is intended for the benefit of the Indemnified
Parties and each of the Indemnified Parties shall be entitled to enforce the
covenants contained herein.
(d) If the Amalgamated Company or any of their respective successors
or assigns (i) reorganizes or consolidates with or merges into any other person
and is not the resulting, continuing or surviving corporation or entity of such
reorganization, consolidation or merger, or (ii) liquidates, dissolves or
transfers all or substantially all of its properties and assets to any person or
persons, then, and in such case, proper provision will be made so that the
successors and assigns of the Amalgamated Company assumes all of the obligations
of the Amalgamated Company, as the case may be, set forth in this Section 5.8.
SECTION 5.9 Termination of Share Plans. Prior to the consummation of
the Offer, the Board (or, if appropriate, any committee thereof) shall adopt
such resolutions or take such other actions as are required to ensure that,
following the Effective Time, no participant in any share, share option, share
appreciation or other benefit plan of Company or any of its subsidiaries or any
holder of any Company Option shall have any right thereunder to acquire any
shares of the Amalgamated Company or any subsidiary thereof.
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SECTION 5.10 Certain Change in Control Matters. Company shall use
best efforts to exempt the transactions contemplated by this Agreement from, or
if necessary challenge the validity or applicability of, any applicable takeover
or change in control law, and otherwise act to eliminate or minimize the effects
of any applicable takeover or change in control law. Company will not revoke, or
attempt to revoke, any approvals, exemptions and agreements described in Section
3.11.
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE AMALGAMATION
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Amalgamation. The respective obligation of each Party to effect the Amalgamation
is subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Newco shall have purchased all Shares duly tendered and not
withdrawn, pursuant to the terms of the Offer and subject to the terms
thereof;
(b) the Amalgamation shall have been approved by the affirmative
vote of Company's shareholders by the requisite vote in accordance with
the Companies Law and pursuant to the appropriate order of the court on
the application of Company;
(c) the Amalgamation shall have been sanctioned by the court in
accordance with the Companies Law on the petition of the court by Company;
(d) any required approval of the Minister under the Insurance Act
and of the Registrar under the Companies Law shall have been obtained;
(e) there shall not be in effect any order, decree or ruling or
other action restraining, enjoining or otherwise prohibiting the
Amalgamation, which order, decree, ruling or action shall have been issued
or taken by any court of competent jurisdiction or other governmental body
located or having jurisdiction within the Cayman Islands, Bermuda or the
United States; and
(f) a copy of the order of the court sanctioning the Amalgamation
shall have been delivered to the Registrar for registration in accordance
with the Companies Law.
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ARTICLE VII.
CLOSING
SECTION 7.1 Time and Place. Subject to the provisions of Article VI,
the closing of the Amalgamation (the "Closing") shall take place at a mutually
agreeable location, as soon as practicable but in no event later than 9:00 a.m.,
on the date that is two business days after the later of (x) the day of the
Special Meeting, if required by law, or (y) the day on which the last of the
conditions set forth in Article VI shall have been satisfied or waived by the
Parties, or at such other place, at such other time or on such other date as
Parent and Company may mutually agree. The date on which the Closing actually
occurs is herein referred to as the "Closing Date" and the time thereof is
herein referred to as the "Effective Time."
ARTICLE VIII.
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Offer and the Amalgamation may be abandoned at any time prior to the Effective
Time:
(a) by mutual written consent of Parent, Newco and Company;
(b) by Parent and Newco or Company (x) if any court of competent
jurisdiction in the Cayman Islands, Bermuda or the United States or other
Cayman Islands, Bermuda or United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining, not approving or otherwise prohibiting the Offer or the
Amalgamation and such order, decree, ruling or other action is or shall
have become final and nonappealable; provided, however, that the Party
seeking to terminate this Agreement under this paragraph (b) shall have
used reasonable best efforts to remove or lift such order, decree or
ruling or (y) if the conditions to consummation of the Amalgamation are
not satisfied by March 31, 1998;
(c) by Parent and Newco if Newco shall have (x) failed to commence
the Offer within five business days following the date of the initial
public announcement of the Offer, (y) terminated the Offer or (z) failed
to pay for Shares pursuant to the Offer by December 31, 1997 (unless, in
any such case, such failure or termination results from a breach of any
representation, warranty, covenant or agreement of Parent or Newco);
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(d) by Company if (i) Newco shall have (x) failed to commence the
Offer within five business days following the date of the initial public
announcement of the Offer, (y) terminated the Offer or (z) failed to pay
for Shares pursuant to the Offer by December 31, 1997 (unless, in any such
case, such failure or termination results from a breach of any
representation, warranty, covenant or agreement of Company) or (ii) prior
to the purchase of Shares pursuant to the Offer, Company shall, in
compliance with Section 5.3(a) (including the last proviso thereof),
concurrently be entering into a definitive agreement with respect to a
Superior Proposal;
(e) by Parent and Newco prior to the purchase of Shares pursuant to
the Offer, if (i) there shall have been a breach of any representation or
warranty (without giving effect to any materiality or similar
qualifications contained therein) on the part of Company having a Material
Adverse Effect, (ii) there shall have been a breach of any covenant or
agreement on the part of Company resulting in a Material Adverse Effect,
which breach shall not have been cured within 10 days following written
notice to Company of such breach, (iii) Company shall engage in
negotiations (in violation of this Agreement) with any Third Party that
has proposed an Acquisition Transaction, (iv) the Board shall have
withdrawn or modified (including by amendment of the Schedule 14D-9) in a
manner adverse to Parent or Newco its approval or recommendation of the
Offer, this Agreement or the Amalgamation, or shall have recommended a
proposal with respect to an Acquisition Transaction, or shall have adopted
any resolution to effect any of the foregoing or (v) the Minimum Condition
shall not have been satisfied by the Expiration Date and a Third Party
shall have made and not withdrawn a proposal (information concerning which
has been or is made publicly available) with respect to an Acquisition
Transaction; or
(f) by Company if (i) there shall have been a breach of any
representation or warranty (without giving effect to any materiality or
similar qualifications contained therein) on the part of Parent or Newco
having a material adverse effect on the ability of Parent or Newco to
consummate the Offer or the Amalgamation or (ii) there shall have been a
breach of any covenant or agreement on the part of Parent or Newco
resulting in a material adverse effect on the ability of Parent or Newco
to consummate the Offer or the Amalgamation, which breach shall not have
been cured within 10 days following written notice to Parent and Newco of
such breach.
SECTION 8.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to
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Section 8.1, this Agreement shall forthwith become void and have no effect,
without any liability on the part of any Party or its affiliates, directors,
officers or shareholders, other than the provisions of this Section 8.2 and
Sections 8.3 and 5.4(b). Nothing contained in this Section 8.2 or Section 8.3
shall relieve any party from liability for any breach of this Agreement.
SECTION 8.3 Certain Payments; Expenses. (a) Upon the termination of
this Agreement for any reason prior to the purchase of Shares by Newco pursuant
to the Offer (other than pursuant to Section 8.1(a), 8.1(b) or 8.1(f)), Company
shall reimburse Parent, Newco and their affiliates (not later than one business
day after request therefor) for all out-of-pocket fees and expenses (subject to
a maximum amount of $2,000,000) reasonably incurred by any of them or on their
behalf in connection with the Offer and the Amalgamation and the consummation of
all other transactions contemplated by this Agreement (including fees payable to
financing sources, investment bankers, counsel to any of the foregoing and
accountants).
(b) If
(i) this Agreement is terminated for any reason (other than pursuant
to Section 8.1(a), 8.1(b) or 8.1(f)) and, not later than the first
anniversary of such termination, Company enters into an agreement with
respect to an Acquisition Transaction, or an Acquisition Transaction
occurs, involving any Third Party (or any affiliate thereof) (x) with whom
Company (or any of its agents or representatives) had communications with
a view to an Acquisition Transaction, (y) to whom the Company (or any of
its agents or representatives) furnished information with a view to an
Acquisition Transaction or (z) who had submitted a proposal or expressed
an interest in an Acquisition Transaction, in any such case, prior to such
termination; or
(ii) Company terminates this Agreement pursuant to 8.1(d)(ii),
Company shall pay to Parent and Newco, upon such entry into or such occurrence
of an Acquisition Transaction in the case of clause (i) and immediately upon any
such termination in the case of clause (ii), a fee of $7,500,000 in cash,
however, that Company in no event shall be obligated to pay more than one such
$7,500,000 fee with respect to all such agreements and occurrences and such
termination.
(c) Except as specifically provided in this Section 8.3, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby, includ-
<PAGE>
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ing the preparation, execution and performance of this Agreement and the
transactions contemplated hereby, and all fees and expenses of their respective
investment bankers, finders, brokers, agents, representatives, counsel and
accountants.
(d) Company acknowledges that the agreements contained in this
Section 8.3 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent and Newco would not enter
into this Agreement.
ARTICLE IX.
DEFINITIONS
SECTION 9.1 Definitions. As used in this Agreement, the following
terms have the meanings set forth below:
(i) "affiliate" of a person shall mean a person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person.
(ii) "business day" shall mean any day other than a Saturday,
Sunday, United States federal holiday or a holiday in the Cayman Islands
or Bermuda.
(iii) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management policies of a person, whether through the ownership of
interests, as trustee or executor, by contract or credit arrangement or
otherwise.
(iv) "person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(v) "subsidiary" of any specified person shall mean any person of
which a majority of the outstanding securities having ordinary voting
power to elect a majority of the board of directors are, directly or
indirectly, owned by such specified person or any other person of which a
majority of the equity interests therein are directly or indirectly, owned
by such specified person.
SECTION 9.2 Terms Defined in the Agreement. The following
capitalized terms used herein shall have the meanings ascribed in the indicated
sections.
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Acquisition Transaction.............................. 5.3
Agreement............................................ Preamble
Amalgamated Company.................................. 2.1
Amalgamation......................................... Recitals
Amalgamation Consideration........................... Recitals
Balance Sheet........................................ 3.6
Bermuda Registrar.................................... 3.6
Board................................................ Recitals
Certificates......................................... 2.6
Closing.............................................. 7.1
Closing Date......................................... 7.1
Code................................................. 3.14
Companies Law........................................ 2.1
Company.............................................. Preamble
Company Options...................................... 3.2
Company Plans........................................ 3.2
Confidentiality Agreement............................ 5.4
Constituent Companies................................ Preamble
Current Premium...................................... 5.8
Disclosure Schedule.................................. 3.0
Disclosure Statement................................. 2.10
Effective Time....................................... 7.1
Employee Benefit Plan................................ 3.15
ERISA................................................ 3.15
ERISA Affiliate...................................... 3.15
ERISA Benefit Plan................................... 3.15
Exchange Act......................................... 1.1
Expiration Date...................................... 1.1
GAAP................................................. 3.6
Indemnified Parties.................................. 5.8
Independent Director................................. 1.3
Insurance Act........................................ 1.3
Interim Balance Sheet................................ 3.6
Material Adverse Effect.............................. 3.1
Newco................................................ Preamble
Minimum Condition.................................... 1.1
Minister............................................. 1.3
October Options...................................... 2.7
Offer................................................ Recitals
Offer Documents...................................... 1.1
Organizational Documents............................. 3.1
Other Shares......................................... 3.2
Parent............................................... Preamble
Parent Options....................................... 2.7
Parent Owned Shares.................................. 1.1
Parties.............................................. Preamble
Paying Agent......................................... 2.8
1996 Proxy Statement................................. 3.6
Schedule 14D-9....................................... 1.2
SEC.................................................. 1.1
SEC Documents........................................ 3.6
Second Quarter Dividend.............................. 5.1
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Securities Act....................................... 3.6
Shares............................................... Recitals
Special Meeting...................................... 2.10
Superior Proposal.................................... 5.3
Tax.................................................. 3.14
Tax Returns.......................................... 3.14
Third Party.......................................... 5.3
ARTICLE X.
MISCELLANEOUS
SECTION 10.1 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by written agreement of the Parties at
any time prior to the Effective Time with respect to any of the terms contained
herein; provided, however, that, after the Amalgamation is approved by the
shareholders of Company, no such amendment or modification shall reduce the
amount or change the form of the Amalgamation Consideration or in any way
adversely affect the rights of the holders of Shares without the further
approval of such holders; provided, further, that from and after the date that
Parent's designees to the Board constitute a majority of the Board and prior to
the consummation of the Amalgamation, any amendment or modification of this
Agreement and any material deviation in the performance of this Agreement shall
require the approval of the Independent Directors.
SECTION 10.2 Waiver of Compliance; Consents. Any failure of Parent
and Newco or Company to comply with any obligation, covenant, agreement or
condition herein may be waived only by a written instrument signed by the Party
granting such waiver, but such waiver or failure to insist upon compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 10.02.
SECTION 10.3 Survival. The respective representations and warranties
of the Parties contained herein or in any certificates or other documents
delivered prior to or at the Closing shall not be deemed waived or otherwise
affected by any investigation made by any party hereto and shall not survive the
Closing. The covenants and agreements herein shall survive in accordance with
their respective terms.
SECTION 10.4 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally, by express courier or
mailed by registered or certi-
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fied mail (return receipt requested), first class postage pre-paid, or
telecopied with confirmation of receipt, to the Parties at the addresses
specified below (or at such other address for a Party as shall be specified by
like notice; provided, however, that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, one day after delivery to a
courier for next-day delivery, or three days after mailing, if deposited in the
mail, first class postage prepaid.
(a) if to Company, to
GCR Holdings Limited
Sofia House
48 Church Street
Hamilton HM12 Bermuda
Telecopy: (441) 292-4338
Attention: Secretary
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Attention: James C. Scoville, Esq.
(b) if to Parent or Newco, to
EXEL Limited
Cumberland House
One Victoria Street
P.O. Box HM 2245
Hamilton HM JX Bermuda
Telecopy: (441) 292-8515
Attention: Paul Giordano, Esq.
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Telecopy: (212) 269-5420
Attention: Immanuel Kohn, Esq.
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SECTION 10.5 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the Parties without the prior written consent of the other Parties, nor is this
Agreement intended to confer any rights or remedies hereunder upon any other
person except the parties hereto and, with respect to Section 5.08, the
officers, directors and employees of Company.
SECTION 10.6 Governing Law. Except as the laws of the Cayman Islands
are by their terms applicable, this Agreement shall be governed by the laws of
the State of New York (regardless of the laws that might otherwise govern under
applicable New York principles of conflicts of law) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
SECTION 10.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 10.8 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a Party, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such Party in the specific jurisdiction where such judgment shall be
made.
SECTION 10.9 Interpretation. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the Parties and shall not in any way affect the meaning
or interpretation of this Agreement. This Agreement has been negotiated by the
Parties and is their mutual product; accordingly, no rule of strict construction
against Parent or Newco shall be applied in the interpretation of this
Agreement. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Unless the context shall otherwise require, all references herein
to (i) Articles, Sections, Annexes and Exhibits shall be deemed references to
Articles and Sections of, and Annexes and Exhibits to, this Agreement, (ii)
persons include their respective permitted successors and assigns or, in the
case of governmental persons, persons succeeding to the relevant functions of
such persons, (iii) statutes and related regulations include any
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amendments of same and any successor statutes and regulations, and (v) time
shall be deemed to be to New York City time.
SECTION 10.10 Entire Agreement. This Agreement, including the
schedules and exhibits hereto and the documents and instruments referred to
herein and therein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements and the understandings between the parties with respect to
such subject matter, except for the Confidentiality Agreement, which shall
remain in full force and effect. There are no representations, promises,
warranties, covenants, or undertakings, other than those expressly set forth or
referred to herein and therein.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be signed by a duly authorized officer as of the date first above written.
EXEL LIMITED
By: /s/ Brian M. O'Hara
--------------------------------------
Name: Brian M. O'Hara
EXEL ACQUISITION LTD.
By: /s/ Michael P. Esposito, Jr.
--------------------------------------
Name: Michael P. Esposito, Jr.
GCR HOLDINGS LIMITED
By: /s/ Frederick W. Deichmann
--------------------------------------
Name: Frederick W. Deichmann
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ANNEX A
to Agreement
and Plan of
Amalgamation
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer and in addition to
(and not in limitation of) Newco's rights to extend and amend the Offer at any
time in its sole discretion, and in addition to the Minimum Condition, Newco
shall not be required to accept for payment or pay for any tendered Shares, and
may postpone the acceptance for payment of or payment for tendered Shares and
may terminate or amend the Offer if, at or before the acceptance of such Shares
for payment or the payment therefor pursuant to the Offer, or, in Newco's
judgment, any of the following shall exist or occur:
(a) (x) there shall be instituted or pending any action or
proceeding, or any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, promulgated, entered,
enforced, amended or made applicable to Newco or Parent or any of their
affiliates or to the Offer or the Amalgamation by or before any Cayman
Islands, Bermuda, United States or other government or governmental,
regulatory or administrative authority or agency or by or before any court
or tribunal, (i) challenging or restricting the acquisition by Newco or
any affiliate of Newco, in whole or in part, of the Shares, seeking,
directly or indirectly, to restrain, materially delay or prohibit the
making or consummation of the Offer or seeking to obtain any material
damages or otherwise, directly or indirectly, relating to the transactions
contemplated by the Offer or the Amalgamation, (ii) seeking to prohibit,
restrict or limit the ownership or operation by Newco or Parent or any of
their affiliates of all or any material portion of its or Company's
business or assets, or to compel Newco or Parent or any of their
affiliates to dispose of or hold separate all or any material portion of
its or Company's business or assets as a result of the Offer or the
Amalgamation, (iii) making the purchase of, or payment for, some or all of
the Shares illegal, (iv) seeking to impose limitations on the ability of
Newco or Parent or any of their affiliates effectively to acquire, hold or
exercise rights of ownership of any Shares now owned or hereafter
purchased or to be purchased, including the right to vote with respect to,
such Shares on any matter properly presented to the shareholders of
Company, (v) imposing any material limitations on the ability of Newco or
Parent or any of their affiliates effectively to acquire, operate or hold,
or require Parent, Newco or Company or any of the respective subsidiaries
to dispose of or hold separate, in any material respect the business and
operations of Company, or (vi) restricting any material future business
activity by Parent, Newco or Company or any of their respective
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subsidiaries or (y) any necessary approvals by any government or
governmental, regulatory or administrative authority or agency necessary
to consummate the Offer shall not have been obtained;
(b) any fact or circumstance exists or will have occurred that has a
material adverse effect on the business, operations, assets, condition
(financial or other), prospects or results of operations of Company and
its subsidiaries taken as a whole;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange, or on NASDAQ or otherwise in the over-the-counter market, (ii)
the declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) the commencement of a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any material limitation
(whether or not mandatory) by any governmental authority or agency, or any
other event which would significantly affect the extension of credit by
banks or other lending institutions in the United States, (v) any
imposition of currency controls in the United States or a material change
in exchange rates or a suspension of, or material limitation on, the
markets therefor, or (vi) in the case of any of the foregoing existing at
the time of commencement of the Offer, any material worsening or
acceleration thereof;
(d) it shall have been publicly disclosed after the date of the
Agreement or Parent or Newco shall have learned or become aware that any
person (including Company or any of its subsidiaries or affiliates) or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have
acquired (including by the formation of any groups) 5.0% or more of any
class or series of shares of Company (including the Shares) or its
subsidiaries or shall have been granted any option or right to acquire
5.0% or more of any class or series of shares of Company (including the
Shares) or its subsidiaries, other than acquisitions of Shares for bona
fide arbitrage positions, and such person or group shall not have tendered
(and not withdrawn) all of the Shares owned beneficially or of record by
it at or prior to the Expiration Date; or
(e) the representations and warranties (without giving effect to any
materiality or similar qualifications contained therein) made by Company
in the Agreement shall have failed to be true and correct on the date of
the Amalgamation Agreement or on the Expiration Date as though such
representations and warranties had been made at and on such dates (other
than representations and warranties expressly made as of a specific other
date), except for such failures which, individually or in the aggregate,
would not
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have a material adverse effect on the business, operations, assets,
condition (financial or other), prospects or results of operations of
Company and its subsidiaries taken as a whole; or
(f) the Agreement shall be terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Parent and
Newco and may be asserted by Parent or Newco or any of their affiliates or may
be waived by any of them in whole or in part at any time or from time to time in
their sole discretion. The failure to exercise any of the foregoing rights shall
not be deemed a waiver of any right, and each right shall be deemed a continuing
right which may be asserted at any time and from time to time for so long as
such right exists.
