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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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)
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EXEL LIMITED
EXEL ACQUISITION LTD.
(Bidders)
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ORDINARY SHARES, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
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G3774N 10 0
(CUSIP Number of Class of Securities)
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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)
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COPY TO:
IMMANUEL KOHN, ESQ.
CAHILL GORDON & REINDEL
80 PINE STREET
NEW YORK, NEW YORK 10005
(212) 701-3000
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This Amendment No. 1 amends and supplements the Tender Offer Statement on
Schedule 14D-1 originally filed on May 14, 1997, with the Securities and
Exchange Commission (the "Schedule14D-1") 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 were filed with the 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. Unless the context otherwise
requires, capitalized terms not otherwise defined herein have the meaning
ascribed to them in the Schedule 14D-1 and the Offer to Purchase.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 4 is hereby amended and supplemented by adding thereto the following:
(a)-(b) Certain of Parent's subsidiaries are entering into a Short Term
Revolving Credit Agreement (the "Short Term Credit Agreement") between X.L.
Insurance Company, Ltd. and X.L. Reinsurance Company, Ltd., subsidiaries of
Parent, as Borrowers (the "Borrowers"); the Banks parties thereto from time to
time (the "Banks"); and Mellon Bank, N.A., as Agent (the "Agent"), and a
Revolving Credit Agreement between the Borrowers; the Banks; and the Agent (the
"Revolving Credit Agreement" and, collectively, the "Credit Agreements").
The Credit Agreements will provide that, subject to the terms thereof, the
Borrowers may borrow funds in an aggregate amount under each of the Credit
Agreements not to exceed U.S. $250,000,000. The commitments of the Banks under
the Short Term Credit Agreement terminate in June 1998, and the commitments of
the Banks under the Revolving Credit Agreement terminate in June 2002. Loans
under the facilities will bear interest, at the Borrowers' option, based upon
the Alternate Base Rate or Eurodollar Rate. As security for Borrowers'
obligations under the Credit Agreements, including payment of principal and
interest, each Borrower will sign a Promissory Note to each Bank. The Credit
Agreements each contain customary representations and warranties; conditions;
affirmative and negative financial and other covenants; and events of default.
It is anticipated that borrowings under the Credit Agreements will generally be
repaid from funds generated internally by Borrowers, and from other sources
which may include other bank financings.
There can be no assurance that the terms set forth above will be contained
as described in the definitive documentation, and such documentation may include
provisions in addition to those described.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented by adding thereto the following:
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(a)(9) -- Amended Offer to Purchase, dated June 5, 1997.
</TABLE>
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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
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Name: Brian M. O'Hara
Title: President and Chief Executive
Officer
Dated: June 5, 1997
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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: June 5, 1997
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EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
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(a)(9) -- Amended Offer to Purchase, dated June 5, 1997.
</TABLE>
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EXHIBIT (a)(9)
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.
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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.
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THE DEALER MANAGER FOR THE OFFER IS:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
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June 5, 1997
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TABLE OF CONTENTS
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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>
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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
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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
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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 prior to the Expiration Date, or upon the occurrence of any event
specified in Section 14, prior to the Expiration Date, 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
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period is required to allow for adequate dissemination to shareholders and
investor response. Accordingly, 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 Expiration Date. 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 necessary 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
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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.
8
<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>
9
<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
11
<PAGE>
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.
12
<PAGE>
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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<PAGE>
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, if
(i) the Minimum Condition shall not have been satisfied, prior to the Expiration
Date, or (ii) any of the following shall exist or occur, prior to the Expiration
Date:
(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,
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<PAGE>
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 warranties expressly made as of a specific other date),
except for such failures which, individually or in the
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<PAGE>
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 Purchaser in connection with the Acquisition
for which it will receive reasonable and customary fees. In
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<PAGE>
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.
June 5, 1997
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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>
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<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>
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<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>
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<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.
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<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
