Exhibit 99.1
TRANSFER AND PURCHASE AGREEMENT
by and among
TRENWICK GROUP LTD.
LASALLE RE LIMITED
(the "Seller Parties")
and
ENDURANCE SPECIALTY INSURANCE LTD.
(the "Purchaser")
dated as of May 16, 2002
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................1
Section 1.1 Definitions..................................................1
Section 1.2 Interpretation...............................................4
ARTICLE II SALE AND PURCHASE OF TRANSFER OF ASSETS............................5
Section 2.1 Sale and Purchase of Transferred Assets......................5
Section 2.2 Assignment of Contracts......................................5
Section 2.3 Employees....................................................5
Section 2.4 Retrocession Agreement.......................................5
Section 2.5 Administrative Services Agreement............................6
Section 2.6 Assignment of Recoverables...................................6
Section 2.7 Purchase Price...............................................6
Section 2.8 Closing Statement of Business................................7
Section 2.9 No Liabilities...............................................8
Section 2.10 Post-Closing Adjustments.....................................8
Section 2.11 Closing Date.................................................8
Section 2.12 Proceedings at Closing.......................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES..............8
Section 3.1 Organization and Good Standing...............................8
Section 3.2 Authorization of Agreement...................................9
Section 3.3 Governmental Authorization...................................9
Section 3.4 Conflicts; Consents of Third Parties.........................9
Section 3.5 Absence of Certain Changes..................................10
Section 3.6 Contracts...................................................11
Section 3.7 Litigation..................................................11
Section 3.8 Compliance with Laws........................................11
Section 3.9 Properties and Assets.......................................11
Section 3.10 Regulatory Filings..........................................12
Section 3.11 Employee Matters............................................12
Section 3.12 Reinsured Contracts.........................................12
Section 3.13 Books and Records...........................................13
Section 3.14 Certain Fees................................................13
Section 3.15 Solvency; Adequate Capitalization; Ability to Pay Debts.....13
Section 3.16 No Other Representations or Warranties......................13
Section 3.17 Disclosure..................................................13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...................13
Section 4.1 Organization and Good Standing..............................13
Section 4.2 Authorization of Agreement..................................13
Section 4.3 Governmental Authorization..................................14
Section 4.4 Conflicts; Consents of Third Parties........................14
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Section 4.5 Litigation..................................................14
Section 4.6 Certain Fees................................................14
Section 4.7 Solvency; Adequate Capitalization; Ability to Pay Debts.....15
Section 4.8 Financial Ability...........................................15
Section 4.9 Data Room...................................................15
ARTICLE V COVENANTS OF THE SELLER PARTIES....................................15
Section 5.1 Noncompetition; Nonsolicitation.............................15
Section 5.2 Confidentiality.............................................17
Section 5.3 Public Announcements........................................17
Section 5.4 Office Space/Lease..........................................17
ARTICLE VI COVENANTS OF THE PURCHASER........................................18
Section 6.1 Confidentiality.............................................18
Section 6.2 Public Announcements........................................18
Section 6.3 Office Space................................................18
ARTICLE VII CLOSING DELIVERIES...............................................18
Section 7.1 Deliveries by the Closing Parties to the Purchaser..........18
Section 7.2 Deliveries by the Purchaser to the Seller Parties...........19
ARTICLE VIII SURVIVAL; INDEMNIFICATION.......................................19
Section 8.1 Survival....................................................19
Section 8.2 Indemnification.............................................20
Section 8.3 Procedures for Third Party Claims...........................21
Section 8.4 Procedures for Direct Claims................................21
Section 8.5 Exclusive Remedy............................................22
ARTICLE IX MISCELLANEOUS PROVISIONS..........................................22
Section 9.1 Entire Agreement............................................22
Section 9.2 Governing Law...............................................22
Section 9.3 Specific Performance........................................22
Section 9.4 Expenses....................................................22
Section 9.5 Offset......................................................22
Section 9.6 Jurisdiction................................................23
Section 9.7 Notices.....................................................23
Section 9.8 Severability and Validity...................................24
Section 9.9 Assignment..................................................25
Section 9.10 Amendments..................................................25
Section 9.11 Counterparts................................................25
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INDEX OF EXHIBITS
Exhibit A - Quota Share Retrocession Agreement
Exhibit B - Bill of Sale and Assignment Agreement
Exhibit C - Administrative Services Agreement
Exhibit D - Assignment of Reinsurance Recoverables and Other Receivables
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INDEX OF SCHEDULES
Schedule 1.1(a) Reinsurance Contracts
Schedule 1.1(b) Retained Assets
Schedule 1.1(c) Transferred Assets
Schedule 2.2 Contracts
Schedule 2.3 Transferred Employees
Schedule 2.8 Closing Statement of Business
Schedule 3.2 Authorization and Performance - Exceptions
Schedule 3.4(a) Consents, Approvals and Waivers
Schedule 3.4(b) Permits, Waivers, Declarations, Filings and Notifications
Schedule 3.5 Changes to Business
Schedule 3.6 Contract Liabilities
Schedule 3.8 Governmental Notices and Violations of Law
Schedule 3.10(b) Authorized Jurisdictions
Schedule 3.11 Employment Contracts
Schedule 3.12(a) Reinsurance Contract Breaches
Schedule 3.12(b) Reinsurance Contract Disputes
Schedule 4.4(a) Consents Approvals and Waivers
Schedule 4.4(b) Permits, Waivers, Declarations, Filings and Notifications
Schedule 5.1(e) Amendment No. 2 to Employment Agreement
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TRANSFER AND PURCHASE AGREEMENT
This Transfer and Purchase Agreement (this "Agreement"), dated as of
May 16, 2002, is entered into by and among Trenwick Group Ltd., a company
organized under the laws of Bermuda ("Trenwick"), LaSalle Re Limited, a company
organized under the laws of Bermuda ("LaSalle Re" and together with Trenwick,
the "Seller Parties"), and Endurance Specialty Insurance Ltd., a company
organized under the laws of Bermuda (the "Purchaser").
RECITALS:
WHEREAS, the Purchaser desires to acquire from the LaSalle Re and
LaSalle Re desires to sell to the Purchaser the exclusive right to renew certain
contracts constituting the Business (as defined herein); and
WHEREAS, in connection therewith, (i) LaSalle Re desires to transfer
to the Purchaser and the Purchaser desires to acquire from LaSalle Re, certain
assets relating to the Business, (ii) the Purchaser desires to hire all of the
LaSalle Re employees set forth on Schedule 2.3 and (iii) LaSalle Re and the
Purchaser desire to enter into the Quota Share Retrocession Agreement, the Bill
of Sale and Assignment Agreement, the Administrative Services Agreement and the
Assignment of Reinsurance Recoverables and Other Receivables, attached hereto as
Exhibits A, B, C and D, respectively.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements set forth herein
and in the Related Documents (as defined herein), the parties hereto hereby
agree as follows.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions The following terms, when used in this
Agreement, shall have the meanings set forth in this Section 1.1. The terms
defined below shall be deemed to refer to the singular or plural, as the context
requires.
"Activity Report" has the meaning set forth in Section 2.8.
"Administrative Services Agreement" shall mean the Administrative
Services Agreement in the form attached hereto as Exhibit C.
An "Affiliate" of any Person shall mean another Person that directly
or indirectly controls, is controlled by, or is under common control with, such
first Person, where "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise.
"Agreement" shall mean this Transfer and Purchase Agreement,
together with the exhibits and the disclosure schedules hereto.
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"Assignment of Recoverables" shall mean the Assignment of
Reinsurance Recoverables and Other Receivables in the form attached hereto as
Exhibit D.
"Bill of Sale and Assignment Agreement" shall mean the Bill of Sale
and Assignment Agreement in the form attached hereto as Exhibit B.
"Books and Records" shall mean the originals or copies of all
contracts, instruments, filings, customer lists and data (including, without
limitation, data relating to Business Customers renewals and contract
expirations and information concerning Business Customer identities, Business
Customer performance, marketing and rating methodology), lists of all agents and
brokers, administrative and pricing manuals, records (including, without
limitation, claim records, sales records and underwriting records), and other
materials relating to the Business, whether or not (i) stored in hardcopy form
or on magnetic, optical or other media or (ii) in the possession of LaSalle Re;
provided, however, that material in which LaSalle Re does not have sufficient
proprietary right or interest that is in the possession of non-affiliated third
parties shall not be deemed "Books and Records."
"Business" shall mean the Reinsured Contracts and all of LaSalle
Re's right, title and interest in the expiration and renewals of the Reinsured
Contracts.
"Business Customers" shall mean Reinsureds of the Reinsured
Contracts, as set forth in Schedule 1.1(a).
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in Bermuda or in the State of New York in the
United States of America are authorized or required by law to be closed.
"Closing" and "Closing Date" have the meanings set forth in Section
2.11.
"Closing Statement of Business" has the meaning set forth in Section
2.8.
"Confidentiality Agreement" shall mean the Confidentiality Agreement
between LaSalle Re and the Purchaser dated March 22, 2002.
"Contract" shall have the meaning set forth in Section 2.2.
"Damages" shall have the meaning set forth in Section 8.2.
"GAAP" shall mean generally accepted accounting principles as in
effect in the United States of America (as such principles may change from time
to time).
"Governmental Body" shall mean any governmental, judicial or
regulatory agency or entity or subdivision thereof with jurisdiction over the
Seller Parties and any of the transactions contemplated by this Agreement.
"Indemnified Party" and "Indemnifying Party" shall have the meanings
set forth in Section 8.3.
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"Knowledge" or "knowledge" shall mean (i) an individual will be
considered to have "Knowledge" of a fact or matter if the individual is actually
aware of the fact or matter; (ii) an entity will be considered to have
"Knowledge" of a fact or matter if any individual who is serving, or who has at
any time served, as a senior executive of such entity has, or at any time had,
Knowledge of the fact or matter.
"LaSalle Re" has the meaning set forth in the recitals to this
Agreement.
"Lease" has the meaning set forth in Section 5.4.
"Lien" shall mean any mortgage, lien, security interest, pledge,
lease or other charge or encumbrance of any kind, including, without limitation,
the lien or retained security interest of a purchase money creditor or
conditional vendor, and any easement, right of way or other encumbrance on title
to real property, and any agreement to give any of the foregoing.
"Material Adverse Change" or "Material Adverse Effect" shall mean,
with respect to the Seller Parties, any change, effect, event, condition or
development, occurrence or state of facts that has a material adverse effect on
the Business or the ability of the Seller Parties to perform their obligations
under this Agreement; provided, however, that any change, effect, event,
condition or development, occurrence or state of facts resulting from or arising
in connection with (i) this Agreement or the transactions contemplated hereby or
the public announcement thereof, (ii) changes generally affecting the insurance
or reinsurance industry, (iii) changes in economic or market conditions
generally, (v) changes in laws, regulations, accounting principles, or
regulations or policies of general applicability or (vi) changes resulting from
actions or omissions of a party hereto taken with the prior written consent of
the other parties in contemplation of this Agreement or the transactions
contemplated by this Agreement shall not constitute a Material Adverse Effect
for purposes of this Agreement.
"Order" shall mean any applicable order, law, statute, regulation,
rule, pronouncement, ordinance, bulletin, writ, injunction, directive, judgment,
decree, principle of common law, constitution or treaty enacted, promulgated,
issued, enforced or entered by any Governmental Body applicable to the parties
hereto, or any of their respective businesses, properties or assets.
"Permit" means any approval, authorization, consent, registration,
franchise, license, permit or certificate by any Governmental Body.
"Person" shall mean any individual, company, corporation, estate,
limited liability company, partnership, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof or other entity.
"Preliminary Closing Statement of Business" has the meaning set
forth in Section 2.8.
"Protected Business" shall mean property catastrophe reinsurance for
Business Customers.
"Purchaser" has the meaning set forth in the recitals to this
Agreement.
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"Reinsured Contracts" shall mean the Reinsured Contracts as set
forth on Schedule 1.1 (a) attached hereto.
"Reinsured" shall mean each named reinsured who is a party to an
Reinsured Contract.
"Related Documents" has the meaning set forth in Section 3.2.
"Retained Assets" shall mean the assets listed on Schedule 1.1(b).
"Retrocession Agreement" shall mean the Quota Share Retrocession
Agreement in the form attached hereto as Exhibit A.
"Sale Transaction" has the meaning set forth in Section 3.2.
"Seller Parties" has the meaning set forth in the recitals to this
Agreement.
"Third Party Claims" shall have the meaning set forth in Section
8.3.
"Transferred Assets" shall mean (i) the Business; (ii) the Books and
Records; and (iii) the assets listed on Schedule 1.1(c) attached hereto;
provided, however, that in no event shall "Transferred Assets" consist of any
Retained Assets.
"Transferred Employee" shall have the meaning set forth in Section
2.3.
"Trenwick" has the meaning set forth in the recitals to this
Agreement.
Section 1.2 Interpretation. When a reference is made in this
Agreement to an Article, Section, Exhibit, or Schedule, such reference shall be
to an Article or Section of, or an Exhibit, or Schedule to, this Agreement
unless otherwise indicated. The Article and Section headings and table of
contents contained in this Agreement are solely for the purpose of reference,
are not part of the agreement of the parties and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
words "hereof", "herein" and "hereunder" and the words or similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes. References to a Person are also to its permitted
successors and assigns.
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ARTICLE II
SALE AND PURCHASE OF TRANSFER OF ASSETS
Section 2.1 Sale and Purchase of Transferred Assets. At the Closing,
LaSalle Re shall sell, assign, transfer, convey and deliver to the Purchaser,
and the Purchaser shall purchase, acquire, accept and take assignment and
delivery of, from LaSalle Re, all of the right, title and interest of LaSalle Re
in and to the Transferred Assets. The sale, assignment and transfer of the
Transferred Assets shall be effected by the Bill of Sale and Assignment
Agreement, attached hereto as Exhibit B.
Section 2.2 Assignment of Contracts. At the Closing, LaSalle Re
shall assign and transfer to Purchaser all of LaSalle Re's right, title and
interest in and to, and Purchaser shall take assignment of and assume, all
leases of real property, equipment, machinery and other personal property and
all licenses and/or other agreements with respect to software as set forth on
Schedule 2.2 (each, a "Contract"). The Seller Parties shall cooperate with the
Purchaser after the Closing to obtain any consents required for the assignment
of a Contract to the Purchaser. Responsibility for all amounts due under the
Contracts relating to time shall be allocated between LaSalle Re and the
Purchaser based on days elapsed and all amounts due under the Contracts relating
to use shall be allocated between LaSalle Re and the Purchaser based on use, in
both cases through the Closing Date. Amounts based on time shall be settled at
the Closing and amounts based on use shall be settled when billed by the lessor.
Section 2.3 Employees. At the Closing, the Purchaser shall extend
offers of employment to all employees of LaSalle Re listed on Schedule 2.3 at
salaries at least equal to their current salaries as set forth on Schedule 2.3,
together with such other terms and conditions which the Purchaser deems
appropriate. Such offer of employment shall begin on the Closing Date. Each
employee who actually transfers to employment with the Purchaser on the Closing
Date is hereafter referred to as a "Transferred Employee." As of the Closing
Date, Transferred Employees shall become eligible to participate in the
Purchaser's employee benefit plan. The Seller Parties shall remain responsible
for all benefits and obligations under LaSalle Re's employee benefit plan with
respect to the period prior to the Closing Date including severance, retirement,
pension, vacation and other employee obligations and, shall retain all
liabilities and obligations with respect to employees who are not Transferred
Employees and any existing agreements between employees and LaSalle Re not
contemplated by this Section 2.3, including, but not limited to, retention,
deferred compensation, bonus and incentive agreements.
Section 2.4 Retrocession Agreement. Concurrently with the execution
and delivery of this Agreement, LaSalle Re and the Purchaser shall execute and
deliver the Retrocession Agreement, attached hereto as Exhibit A. The premium to
be paid for such reinsurance, less the applicable ceding commission shall be as
set forth in the Retrocession Agreement and shall be payable at the Closing by
LaSalle Re to the Purchaser in U.S. dollars by wire transfer of immediately
available funds to the bank account specified by Purchaser to the Seller
Parties.
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Section 2.5 Administrative Services Agreement. Concurrently with the
execution and delivery of this Agreement, LaSalle Re and the Purchaser shall
execute and deliver the Administrative Services Agreement, attached hereto as
Exhibit C.
Section 2.6 Assignment of Recoverables. Concurrently with the
execution and delivery of this Agreement, LaSalle Re and Purchaser shall execute
and deliver the Assignment of Recoverables, attached hereto as Exhibit D.
Section 2.7 Purchase Price. (a) The purchase price to be paid by the
Purchaser to the Seller Parties in consideration of the transfer by the Seller
Parties to the Purchaser of the Transferred Assets and the transfer by the
Seller Parties and the assumption by the Purchaser of the Leases shall be:
(i) a cash amount of three hundred fifty five thousand U.S. dollars
($355,000) representing the depreciated book value of the assets listed on
Schedule 1.1(c) to be paid at the Closing;
(ii) the Ceding Commission described in Section 4.1 of the
Retrocession Agreement, entitled "Ceding Commission," to be paid and/or
payable as set forth in Retrocession Agreement;
(iii) the Renewal Commission described in Section 4.2 of the
Retrocession Agreement, entitled "Renewal Commission," to be paid and/or
payable as set forth in the Retrocession Agreement;
(iv) the Profit-Sharing Commission described in Section 4.3 of the
Retrocession Agreement, entitled "Profit-Sharing Commission," to be paid
and/or payable as set forth in the Retrocession Agreement; and
(v) a cash amount of five hundred thousand U.S. dollars ($500,000)
to be paid in two (2) equal annual installments subject to and in
accordance with the terms and conditions of the amended Employment
Agreement referred to in Section 5.1 (e) (together with the amounts set
forth in Section 2.7 (a) (i), (ii), (iii) and (iv), the "Purchase Price").
(b) The portion of the Purchase Price to be paid by the Purchaser to
the Seller Parties at the Closing shall consist of:
(i) three hundred fifty five thousand U.S. dollars ($355,000) for
the depreciated book value of the assets as set forth in Section 2.7 (a)
(i);
(ii) an advanced payment of eight million U.S. dollars ($8,000,000)
to be applied against payments of Renewal Commissions described in Section
4.2 of the Retrocession Agreement, as set forth in Section 2.7 (a) (iii);
(iii) two hundred fifty thousand U.S. dollars ($250,000) for the
first annual installment subject to and in accordance with the terms and
conditions of the amended Employment Agreement as set forth in Section 2.7
(a) (v).
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The amounts set forth above in this Section 2.7 (b) shall be paid in
U.S. dollars by wire transfer of immediately available funds to the bank account
specified by the Seller Parties to the Purchaser. The portion of the Purchase
Price to be paid pursuant to Section 2.7 (a) (ii), (iii), (iv) and (v) shall be
paid on the dates indicated in the relevant documents.
(c) The portion of the Purchase Price to be paid by the Purchaser to
the Seller Parties on May 30, 2002 shall consist of the Ceding Commission
payable pursuant to Section 4.1 of the Retrocession Agreement as set forth in
Section 2.7 (a) (ii), which amount shall be equal to twenty-five percent (25%)
of the difference between premiums collected and retrocessional premiums paid
less advance for prepaid insurance as set forth in the Activity Report, attached
hereto as part of Schedule 2.8, as revised by the Seller Parties, to be paid in
U.S. dollars by wire transfer of immediately available funds to the bank account
specified by the Seller Parties to the Purchaser.
Section 2.8 Closing Statement of Business. (a) At the Closing,
the Seller Parties shall deliver to the Purchaser a preliminary statement
setting forth on a preliminary basis the unearned premium and other assets as
well as liabilities of the Business being transferred to the Purchaser as of
April 1, 2002 (the "Preliminary Closing Statement of Business"). The Preliminary
Closing Statement of Business is attached hereto as Schedule 2.8. On May 17,
2002, the Seller Parties shall deliver to the Purchaser a preliminary statement
setting forth on an estimated basis the premiums collected, losses paid,
retrocessional premiums paid and retrocessional losses collected related to the
Reinsured Liabilities during the period April 1, 2002 through May 17, 2002 (the
"Activity Report"). The Activity Report is attached hereto as part of Schedule
2.8. The Seller Parties shall be entitled to revise the Preliminary Closing
Statement of Business and the Activity Report, but must deliver the Preliminary
Closing Statement of Business and the Activity Report as revised on or before
May 30, 2002 (at which time they shall become, the "Closing Statement of
Business"). Concurrently with the delivery by the Seller Parties to the
Purchaser of the Closing Statement of Business the Seller Parties will pay the
Purchaser an amount equal to the premiums collected less (x) retrocessional
premiums paid, (y) losses paid and (z) the appropriate Ceding Commissions.
(b) The Closing Statement of Business shall be binding and
conclusive upon, and deemed accepted by, the Purchaser unless the Purchaser
shall have notified the Seller Parties in writing within forty-five (45) days
after the Closing. Any notice to the Seller Parties under this Section 2.8 (b)
shall specify the items in the Closing Statement of Business which are being
disputed. Any items not so disputed by the Purchaser shall be deemed agreed to
by Purchaser.
(c) If a notice of objection shall have been delivered to the Seller
Parties pursuant to Section 2.8 (b), senior executives of the Purchaser and the
Seller Parties shall, during the twenty (20) days following such delivery, use
their reasonable best efforts to reach agreement on the disputed items. If they
reach agreement, the Closing Statement of Business as agreed between them shall
be the Closing Statement of Business for the purposes of Section 2.10 and the
parties shall upon agreement make the transfers and payments called for by
Section 2.10. In the event that any item relating to the Closing Statement of
Business remain in dispute between the Purchaser and the Seller Parties
following the end of such period, an independent accounting firm mutually
agreeable to the Purchaser and the Seller Parties (the "Third Party Accountant")
shall review the Closing Statement of Business, the accounting records and any
other materials
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prepared and presented by each of the Purchaser and the Seller Parties thereon
and render a report thereon to the Purchaser and the Seller Parties. Based on
such materials and determination, the Third Party Accountant shall prepare and
deliver to the Purchaser and the Seller Parties an accounting of the net change
to the Business as shown in the Closing Statement of Business that results from
its review. Such accounting and determination by the Third Party Accountant
shall be in writing and shall be binding and conclusive on the parties. The
fees, costs and expenses of the Third Party Accountant shall be shared equally
by the Purchaser and the Seller Parties.
Section 2.9 No Liabilities. The parties hereby agree that,
notwithstanding any other provision in this Agreement, the Retrocession
Agreement, the Administrative Services Agreement or the Assignment of
Recoverables to the contrary, unless the Closing Statement of Business lists the
liabilities to be assumed by the Purchaser, all liabilities of the Business
(other than Reinsured Liabilities, any liabilities arising under the Contracts
on or after the Closing Date and those set forth on the Closing Statement of
Business) remain with the Seller Parties and are the sole responsibility of the
Seller Parties.
Section 2.10 Post-Closing Adjustments. Within five (5) days of the
delivery by the Third Party Accountant to the Purchaser and the Seller Parties
of its determination of the Closing Statement of Business, the Seller Parties
and the Purchaser shall each make such transfers and payments to the other under
Sections 2.7 (b) and (c) as would have been required on the Closing Date with
respect to Section 2.7(a)(i) and on May 30, 2002 with respect to Sections
2.7(a)(ii), (iii), (v) and (iv) had the Closing Statement of Business as
determined by the Third Party Accountant been delivered on the Closing Date by
the Seller Parties. The payment of any such amount shall be with interest from
and including the Closing Date or May 30, 2002 as the case may be, up to but not
including the date of payment accrued at the 90-Day Treasury Rate. The
provisions of Section 8.2 (a) (x) shall not apply to such amounts.
Section 2.11 Closing Date. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Baker & McKenzie 805 Third Avenue, New York, New York 10022 on May 16, 2002
or at such other place and at such other time and date as may be mutually agreed
upon by the Purchaser and the Seller Parties. The date of the Closing is
referred to in this Agreement as the "Closing Date."
Section 2.12 Proceedings at Closing. All proceedings to be taken and
all documents to be executed and delivered by all parties at the Closing shall
be deemed to have been taken and executed and delivered simultaneously, and no
proceedings shall be deemed taken nor any documents executed or delivered until
all have been taken, executed and delivered.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
The Seller Parties hereby represent and warrant to the Purchaser as
follows:
Section 3.1 Organization and Good Standing. Each of the Seller
Parties (i) is a corporation duly organized, validly existing and in good
standing under the laws of the
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jurisdiction of its incorporation, (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted, (iii) has all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted and (iv) is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, or is duly licensed to do business and is in good
standing in each jurisdiction where such licensing is necessary, as the case may
be, except, in the case of each of the clauses (i) through (iv), as would not
have a Material Adverse Effect on the Business. Each of the Seller Parties has
heretofore delivered or made available to the Purchaser true and complete copies
of its certified charter and bylaws as in effect on the date hereof. No Seller
Party is in violation of any of the provisions of its charter or bylaws with
respect to the conduct of the Business.
Section 3.2 Authorization of Agreement. Each of the Seller Parties
has the requisite corporate power and authority to execute and deliver this
Agreement and each other agreement, document, instrument or certificate
contemplated by this Agreement to be executed by it, in connection with the
consummation of the transactions contemplated hereby (all such other agreements,
documents, instruments and certificates being hereinafter referred to,
collectively, as the "Related Documents," and the transaction contemplated by
this Agreement and the Related Documents being hereinafter referred to,
collectively, as the "Sale Transaction") and, except as set forth on Schedule
3.2, to perform fully its obligations hereunder and thereunder. The execution,
delivery and performance by each of the Seller Parties of this Agreement and of
each Related Document to be executed by it has been duly authorized by all
necessary corporate action on the part of the Seller Parties. This Agreement and
each of the Related Documents has been duly executed and delivered by the Seller
Parties, as applicable, and this Agreement and each of the Related Documents
constitutes valid and legally binding obligations of each Seller Party signatory
thereto, enforceable against it in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws relating to or affecting creditors' rights
generally and to general principles of equity (regardless of whether considered
in a proceeding at law or in equity).
Section 3.3 Governmental Authorization. The execution, delivery and
performance by the Seller Parties of this Agreement and the Related Documents to
which such Seller Party is a party requires no action by or in respect of, or
filing with, any Governmental Body on the part of the Seller Parties or any
Affiliate thereof.
Section 3.4 Conflicts; Consents of Third Parties. (a) Subject to
receipt of the consents, approvals and waivers set forth on Schedule 3.4(a), the
execution, delivery and performance by the Seller Parties of this Agreement and
of the Related Documents and the consummation of the Sale Transaction will not
(i) conflict with or violate any provision of the certificate of incorporation
or bye-laws (or equivalent organizational documents) of any Seller Party, (ii)
conflict with, violate, result in the breach or termination of, or (after the
giving of notice or the lapse of time or both) constitute a default or give rise
to any right of termination or acceleration or right to increase the obligations
or otherwise modify the terms under any Contract, Permit or Order to which any
Seller Party is a party or by which it or any of its properties or assets is
bound or subject, (iii) create or impose any Lien upon any of the Transferred
Assets or (iv) constitute a violation of any law, except in the cases of (ii),
(iii) or (iv)
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for any conflict, violation, breach, default, termination, acceleration,
modification or Lien which would not reasonably be expected to materially impair
the ability of the Seller Parties to effect the Closing.
(b) No Permit or waiver of, declaration or filing with or
notification to any Governmental Body is required on the part of the Seller
Parties in connection with the execution, delivery or performance of this
Agreement or of the Related Documents or the consummation of the Sale
Transaction except for the Permits, waivers, declarations, filings and
notifications set forth on Schedule 3.4(b).
Section 3.5 Absence of Certain Changes. Except as disclosed in
Schedule 3.5 or to Purchaser in writing on or prior to the date hereof, since
December 31, 2001 the Business has been conducted in the ordinary course
consistent in all material respects with past practices (including, without
limitation, with regard to underwriting, pricing and actuarial policies,
practices and standards generally) and, to the extent relating to the Business,
there has not been:
(i) any event, claim, occurrence, development or state of
circumstances of facts which has had or would reasonably be expected to
have a Material Adverse Effect on the Business;
(ii) any transaction or commitment made, or any contract or
agreement entered into, by LaSalle Re (including the acquisition or
disposition of any assets) or any relinquishment by LaSalle Re of any
contract or other right, other than transactions and commitments in the
ordinary course of business consistent in all material respects with past
practices;
(iii) any transaction by LaSalle Re involving the Transferred Assets
other than in the ordinary course of business consistent in all material
respects with past practice;
(iv) (A) any entering into of any facultative reinsurance contract
or (B) any commutation of any facultative reinsurance contract, or (C) any
entering into or any commutation of any reinsurance treaty, by LaSalle Re,
in any such case, other than in the ordinary course of business consistent
in all material respects with past practice;
(v) any material insurance transaction by LaSalle Re other than in
the ordinary course of business consistent with past practice;
(vi) any significant change by LaSalle Re in the compensation
structure of, or benefits available to, any agent under a material agent
contract or with respect to agent generally;
(vii) any investment made in any assets of the Business which are
Transferred Assets other than in the ordinary course of the Business
consistent in all material respects with past practice; and
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(viii) any agreement or commitment (contingent or otherwise) by
LaSalle Re to do any of the foregoing.
Section 3.6 Contracts. Except as disclosed in Schedule 3.6 and
except as provided in this Agreement, LaSalle Re has no liability pursuant to
the Contracts other than as set forth in Schedule 3.6 and LaSalle Re is current
on its payment obligations in connection with such Contracts. Each of the
Contracts is in full force and effect and enforceable in accordance with its
terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other similar laws now or hereafter in effect relating
to or affecting creditors' rights generally and the rights of creditors of
insurance companies generally and (ii) general principles of equity (regardless
of whether considered in a proceeding at law or in equity); no Seller Party has
received any written notice or, to the Knowledge of the Seller Parties, oral
notice, of cancellation or termination of, or any expression or indication of an
intention or desire to cancel or terminate, any of the Contracts; no Contract is
the subject of, or, to the Knowledge of the Seller Parties, has been threatened
to be made the subject of, any arbitration, suit or other legal proceeding; with
respect to any Contract which by its terms will terminate as of a certain date
unless renewed or unless an option to extend such Contract is exercised, no
Seller Party has received any written notice or, to the Knowledge of the Seller
Parties, oral notice, or otherwise has any Knowledge, that any such Contract
will not be so renewed or that any such extension option will not be exercised;
and there exists no material event of default or occurrence, condition or act on
the part of a Seller Party or, to the Knowledge of the Seller Parties, on the
part of the other parties to the Contracts, which constitutes or would
constitute (with notice or lapse of time or both) a material breach of or
material default under any of the Contracts.
Section 3.7 Litigation. There is no Legal Proceeding pending or, to
the Knowledge of the Seller Parties, threatened (i) against or affecting the
properties of LaSalle Re as regards the Business or the Transferred Assets, or
(ii) that questions the validity of this Agreement, any Related Document or any
action taken or to be taken by the Seller Parties in connection with, or which
seeks to enjoin or obtain monetary damages in respect of, the Sale Transaction
or which would reasonably be expected to materially impair the Seller Parties'
ability to effect the Closing.
Section 3.8 Compliance with Laws. Except as set forth on Schedule
3.8 or disclosed in writing to the Purchaser on or prior to the date hereof: (i)
LaSalle Re has not received any written notice since January 1, 2001 from any
Governmental Body alleging any material violation of any applicable law in the
conduct of the Business or directing LaSalle Re to take any remedial action with
respect to such applicable law and (ii) there are not presently existing
circumstances that could reasonably be expected to result in any material
violation of any applicable law relating to the Business.
Section 3.9 Properties and Assets. LaSalle Re has good title to all
of the Transferred Assets and none of such Transferred Assets are subject to any
Liens. Upon Closing, the Purchaser will acquire good title to the Transferred
Assets free and clear of all Liens other than those created by the Purchaser.
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Section 3.10 Regulatory Filings. (a) The Business is being conducted
in compliance in all material respects with all applicable law, including,
without limitation, all insurance laws, ordinances, rules, regulations, decrees
and orders of any Governmental Body.
(b) LaSalle Re has all Permits necessary to its conduct of the
Business as it is currently conducted in each jurisdiction (as listed in
Schedule 3.10(b)) in which the Seller Parties require such Permits. The Business
has been and is being conducted in conducted in compliance, in all material
respects, with all such Permits. All such Permits are in full force and effect,
and there is no proceeding or investigation pending or, to the Knowledge of the
Seller Parties, threatened which would reasonably be expected to lead to the
revocation, amendment, failure to renew, limitation, modification, suspension or
restriction of any such Permit.
Section 3.11 Employee Matters. (a) LaSalle Re is in material
compliance in all material respects with all applicable laws respecting
employment and employment practices with respect to each of the employees listed
in Schedule 2.3, and the terms and conditions of such employees' employment and
wages and hours. LaSalle Re is not a party to or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes within the past
year, in each case, with respect to employees listed in Schedule 2.3. There is
no labor strike, dispute, arbitration, grievance, slowdown, stoppage,
organizational effort, dispute or proceeding by or with any employee listed in
Schedule 2.3 or any labor union pending or to the Knowledge of the Seller
Parties threatened against LaSalle Re relating to any employee listed in
Schedule 2.3. LaSalle Re is not the subject of any pending written or, to the
Knowledge of the Seller Parties, oral claim asserting that it has committed any
unfair labor practice.
(b) Except as set forth in Schedule 3.11, no employee listed in
Schedule 2.3 has any employment contract or other agreement, practice or
arrangement by which such employee is employed on any basis other than as an "at
will" employee or by which LaSalle Re is restricted in any manner from
terminating the services of such employee at any time without penalty or
payment.
Section 3.12 Reinsured Contracts. (a) Except as set forth on
Schedule 3.12(a), all Reinsured Contracts are valid, binding, enforceable and in
full force and effect and LaSalle Re is not in material breach of any provision
thereof and no other party to such Reinsured Contract is in breach or, to the
Knowledge of the Seller Parties, has threatened breach of any provision thereof.
There is no event that has occurred which, with the passage of time or the
giving of notice, or both, would create a default or breach by the Seller
Parties.
(b) Except as set forth in Schedule 3.12(b), none of the Reinsured
Contracts has been voided or commuted prior to the date hereof and none of the
Seller Parties or any reinsurer under any Reinsured Contract prior to the date
hereof has given any written notice of termination, commutation, voidance or
cancellation or, to the Knowledge of the Seller Parties, has threatened
termination, commutation, voidance or cancellation with respect to any such
Reinsured Contract, and there is no dispute under any Reinsured Contract between
the parties thereto regarding the liability for any claim against the Seller
Parties by the insureds that are covered by any Reinsured Contract.
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Section 3.13 Books and Records. The Books and Records are complete
and accurate in all material respects and have been maintained in accordance
with the Seller Parties' customary business practices with respect to the
Business. The Seller Parties have heretofore made available to Purchaser copies
of all of the material written underwriting and claim service policies,
procedures and guidelines of the Seller Parties with respect to the Business.
Section 3.14 Certain Fees. No Person other than Credit Suisse First
Boston has acted on behalf of the Seller Parties in connection with the Sale
Transaction and no other person is entitled to any payment from the Seller
Parties in connection herewith.
Section 3.15 Solvency; Adequate Capitalization; Ability to Pay
Debts. Each Seller Party is and, prior to and after giving effect to the
consummation of this Agreement and the Related Documents to be executed by the
Seller Party will be solvent. No Seller Party is subject to any supervision,
conservation, liquidation, rehabilitation, delinquency or similar proceeding, or
investigation or inquiry which is reasonably likely to result in any such
proceeding.
Section 3.16 No Other Representations or Warranties. Except for the
representations and warranties of the Seller Parties contained in this
Agreement, neither of the Seller Parties, nor any other Person acting for the
Seller Parties, makes any other representation or warranty, express or implied.
Section 3.17 Disclosure. (a) The representations and warranties of
the Seller Parties contained in this Agreement, the Retrocession Agreement, the
Assignment of Reinsurance Recoverables and the Administrative Services Agreement
are accurate and correct in all material respects.
(b) Copies of any underlying documents listed or described in the
Schedules referred to in this Agreement have heretofore been furnished to the
Purchaser. All such documents furnished to the Purchaser are true and correct
copies, and there are no amendments or modifications thereto, except as
expressly noted in the Schedules in which such documents are incorporated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller Parties
that:
Section 4.1 Organization and Good Standing. The Purchaser (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, (ii) has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, and (iii) has all material governmental
licenses, authorizations, permits, consents and approvals required to carry on
its business as now conducted.
Section 4.2 Authorization of Agreement. The Purchaser has the
requisite corporate power and authority to execute and deliver this Agreement
and each Related
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Document to be executed by the Purchaser and to perform fully its obligations
hereunder and thereunder. The execution, delivery and performance by the
Purchaser of this Agreement and each Related Document to be executed by the
Purchaser has been duly authorized by all necessary corporate action on the part
of the Purchaser. This Agreement and each of the Related Documents to be
executed by the Purchaser has been duly executed and delivered by the Purchaser
and this Agreement and each of the Related Documents to be executed by the
Purchaser constitutes valid and legally binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws relating to or affecting creditors' rights
generally and to general principles of equity (regardless of whether considered
in a proceeding at law or in equity).
Section 4.3 Governmental Authorization. The execution, delivery and
performance by the Purchaser of this Agreement and the Related Documents to
which the Purchaser is a party requires no action by or in respect of, or filing
with, any Governmental Body on the part of the Purchaser or any Affiliate
thereof.
Section 4.4 Conflicts; Consents of Third Parties. (a) Subject to
receipt of the consents, approvals and waivers set forth on Schedule 4.4(a), the
execution, delivery and performance by the Purchaser of this Agreement and the
Related Documents to be executed by the Purchaser and the consummation of the
Sale Transaction will not (i) conflict with or violate any provision of the
certificate of incorporation or bye-laws (or equivalent organizational
documents) of the Purchaser; (ii) conflict with, violate, result in the breach
or termination of, or (after the giving of notice or the lapse of time or both)
constitute a default or give rise to any right of termination or acceleration or
right to increase the obligations or otherwise modify the terms under any
Contract, Permit or Order to which the Purchaser is a party or by which the
Purchaser or any of its properties or assets is bound or subject; or (iii)
constitute a violation of any law; except, in the cases of clauses (ii) and
(iii), for any conflict, violation, breach, default, termination, acceleration
or Lien which would not reasonably be expected to materially impair the
Purchaser's ability to effect the Closing.
(b) No Permit or waiver of, declaration or filing with or
notification to any Governmental Body is required on the part of the Purchaser
in connection with the execution, delivery or performance of this Agreement or
the Related Documents to be executed by the Purchaser or the consummation of the
Sale Transaction except for the Permits, waivers, declarations, filings and
notifications set forth on Schedule 4.4(b).
Section 4.5 Litigation. There is no Legal Proceeding pending or, to
the Knowledge of the Purchaser, threatened that questions the validity of this
Agreement, any Related Documents or any action taken or to be taken by the
Purchaser in connection with, or which seeks to enjoin or obtain monetary
damages in respect of, the Sale Transaction, or which would reasonably be
expected to materially impair the Purchaser's ability to effect the Closing.
Section 4.6 Certain Fees. No person has acted on behalf of the
Purchaser in connection with the Sale Transaction and no other person is
entitled to any payment from the Purchaser in connection herewith.
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Section 4.7 Solvency; Adequate Capitalization; Ability to Pay Debts.
The Purchaser is and, prior to and after giving effect to the consummation of
this Agreement and the Related Documents to be executed by the Purchaser will be
solvent. The Purchaser is not subject to any supervision, conservation,
liquidation, rehabilitation, delinquency or similar proceeding, or investigation
or inquiry which is reasonably likely to result in any such proceeding.
Section 4.8 Financial Ability. The Purchaser has available to it
sufficient to consummate the Sale Transaction and has provided the Seller
Parties with satisfactory evidence thereof.
Section 4.9 Data Room. The Purchaser has been allowed the
opportunity to visit the Data Room and inspect and review the documents and
information contained therein.
ARTICLE V
COVENANTS OF THE SELLER PARTIES
The Seller Parties hereby covenant and agree that:
Section 5.1 Noncompetition; Nonsolicitation. (a) Each of the Seller
Parties agrees that for the period from the Closing Date to July 02, 2004,
neither it nor any of its Affiliates shall engage (for its own account or for
the benefit of any other Person), directly or indirectly, as a principal or
solely or jointly with others, or as stockholders or other owners in or of any
Persons, in any business that establishes or has an office in Bermuda that (i)
competes directly with the Protected Business or (ii) that underwrites, markets
or provides support services for property catastrophe business in Bermuda.
(b) Each of the Seller Parties further agrees that for the period
from the Closing Date to July 02, 2004, neither it nor any of its Affiliates
shall underwrite Protected Business; provided, however, to the extent any of the
Seller Parties or any of their Affiliates presently underwrites Business other
than in Bermuda which is covered by the Reinsured Contracts, the Seller Parties
and their affiliates may continue to renew such business at the same level of
participation.
(c) Notwithstanding the requirements of Section 5.1 (b), the Seller
Parties and their Affiliates shall be entitled from the Closing Date to July 02,
2004 to underwrite property catastrophe business with aggregate annual written
premiums of U.S. $36.0 million, whether or not it is Protected Business,
provided that it is not Business.
(d) Notwithstanding any other provision of this Section 5.1 to the
contrary, the Seller Parties and their Affiliates shall not be prohibited from
(i) making investments of assets in the ordinary course of business in entities
that compete, directly or indirectly or through a subsidiary, with the Business,
provided that each such investment is a passive investment where neither the
Seller Parties nor any of their Affiliates (A) intends to or has the right to
influence or direct the operation or management of any such entity or (B) is a
participant with any other Person in any group with such intention or right;
(ii) making investments in the Purchaser and its Affiliates; (iii) managing
investment funds that make investments in the ordinary course of business in
such entities; (iv) acquiring or directly or indirectly merging with any
business or
- 15 -
Person that includes operations the conduct of which by the Seller Parties would
otherwise violate Section 5.1(a), provided that (A) such operations do not
constitute the primary operations of such business or Person and (B) the Seller
Party or its Affiliate, as applicable, sells or otherwise disposes of any such
operations within 12 months of such acquisition (unless such 12-month period
would terminate subsequent to the termination of the restrictions contained in
this Section 5.1(d)); (v) competing with the Business in the event the Seller
Parties directly or indirectly merges or consolidates with another entity which
already competes with the Business at the time of such merger or consolidation
and, after giving effect to such transaction, individuals who were members of
the board of directors (or entity performing similar functions) of the Seller
Parties immediately prior to the consummation of such transaction or who are
otherwise designated by the Seller Parties constitute less than a majority of
combined entity's board of directors (or entity performing similar functions)
immediately after consummation of the transaction; or (vi) generally conducting
or engaging in any business which does not compete with the Business.
(e) Each of the Seller Parties agree that for the period from the
Closing Date to July 02, 2004, neither it nor any of its Affiliates shall,
directly or indirectly, solicit or attempt to employ any Transferred Employee.
Notwithstanding the foregoing, the restrictions set forth in the immediately
preceding sentence shall not apply to (i) any Person who contacts any Seller
Party or any of its Affiliates on his or her own initiative without any direct
or indirect solicitation by the Seller Party or any Affiliate of the Seller
Party, (ii) any Person who contacts the Seller Parties or any Affiliate of the
Seller Parties in response to general advertisements, searches or other
broad-based hiring methods or (iii) individuals who choose to leave employment
of, or are terminated by, Purchaser without the Seller Parties and any
Affiliates of the Seller Parties having taken any action otherwise prohibited by
this Section 5.1(e). LaSalle Re agrees to cause Amendment No. 2 dated May 16,
2002 attached hereto as Schedule 5.1(e) to the Amended and Restated Employment
Agreement dated October 1, 1999, as amended on April 30, 2002, ("Employment
Agreement") of Guy Hengesbaugh to be executed by LaSalle Re and Guy Hengesbaugh.
LaSalle Re further agrees that it shall not amend the Employment Agreement and
shall assign to the Purchaser the right to enforce the second sentence of
paragraph 6(b) of the Employment Agreement (as amended by Amendment No. 2) in
the name of LaSalle Re at Purchaser's own cost and expense; provided, however,
Purchaser agrees to consult with the Seller Parties prior to bringing any suit,
action or proceeding with respect to the enforcement of the Employment Agreement
and; provided, further however, Purchaser agrees to indemnify the Seller Parties
for any and all costs, liabilities or expenses arising or resulting from such
enforcement.
(f) The parties to this Agreement acknowledge that the covenants set
forth in this Section 5.1 are an essential element of this Agreement and that,
but for these covenants, the parties would not have entered into this Agreement.
The parties to this Agreement acknowledge that this Section 5.1 constitutes an
independent covenant and shall not be affected by performance or nonperformance
of any other provision of this Agreement or any Related Documents by the
parties.
(g) The parties to this Agreement acknowledge that the type and
periods of restriction imposed in the provisions of this Section 5.1 are fair
and reasonable and are reasonably required for the protection of the parties. If
any provision contained in this Section
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5.1 shall for any reason be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provisions of this Section 5.1, but this Section 5.1 shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein. It is the intention of the parties that if any of the restrictions or
covenants contained herein is held to cover a geographic area or to be for a
length of time which is not permitted by applicable law, or in any way construed
to be too broad or to any extent invalid, such provision shall not be construed
to be null, void and of no effect, but to the extent such provision would be
valid or enforceable under applicable law, a court of competent jurisdiction
shall construe and interpret or reform this Section 5.1 to provide for a
covenant having the maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable law.
Section 5.2 Confidentiality. (a) Each of the Seller Parties shall at
all times comply with all of the terms of the Confidentiality Agreement, which
shall terminate pursuant to its terms, and shall treat as confidential, keep
secret and not use in the course of its business any information relating in any
way to the affairs of the Purchaser (including, without limitation, information
about processes, procedures, techniques, know-how and other similar proprietary
and confidential information) and will not, without the prior written consent of
the Purchaser, disclose, furnish or make known or accessible to or use for the
benefit of any Person, any information of a confidential nature relating in any
way to the Business, unless such information is otherwise publicly available or
is required by any law or Order to which the Seller Party is bound or subject to
be disclosed. Prior to any disclosure of information pursuant to this Section
5.2, the Seller Parties shall give reasonable prior notice to the Purchaser of
such intended disclosure and, if requested by the Purchaser, shall use
commercially reasonable efforts , at the Purchaser's sole expense, to obtain a
protective order or similar protection for the Purchaser.
(b) Each of the Seller Parties shall use reasonable best efforts to
enforce any provisions relating to confidentiality with respect to the Business
found in any employment contracts with its former employees who are not
Transferred Employees.
Section 5.3 Public Announcements. The Seller Parties agree to
consult with the Purchaser before issuing any press release or making any public
statement with respect to this Agreement or the Related Documents or the
transactions contemplated hereby or thereby and, except as may be required by
applicable law, will not make any such public statement prior to such
consultation.
Section 5.4 Office Space/Lease. The Seller Parties agree to make
available to the Purchaser use of its office space in Hamilton, Bermuda which is
the subject of a real property lease (the "Lease") for the period from the
Closing Date to the date consent is received from the Lessor and the Purchaser
will reimburse the Seller Parties for all of its out-of-pocket expenses for the
office space, including rent; provided, however, Purchaser shall vacate such
office space at any time at the written request of the Seller Parties on sixty
(60) days prior written notice. Each of the Seller Parties further agrees to use
its reasonable best efforts to obtain from the Lessor, consent to the assignment
to the Purchaser of all LaSalle Re's rights, title and interest in the Lease
with respect to LaSalle Re's office space in Hamilton, Bermuda.
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ARTICLE VI
COVENANTS OF THE PURCHASER
The Purchaser hereby covenants and agrees that:
Section 6.1 Confidentiality. The Purchaser shall at all times comply
with all of the terms of the Confidentiality Agreement, which shall terminate
pursuant to its terms, and shall treat as confidential, keep secret and not use
in the course of its business any information relating in any way to the affairs
of the Seller Parties (including, without limitation, information about
processes, procedures, techniques, know-how and other similar proprietary and
confidential information) and will not, without the prior written consent of the
Seller Parties, disclose, furnish or make known or accessible to or use for the
benefit of any Person, any information of a confidential nature relating in any
way to the Business, unless such information is otherwise publicly available or
is required by any law or Order to which the Purchaser is bound or subject to be
disclosed. Prior to any disclosure of information pursuant to this Section 6.1,
the Purchaser shall give reasonable prior notice to the Seller Parties of such
intended disclosure and, if requested by the Seller Parties, shall use
commercially reasonable efforts, at the Seller Parties' sole expense, to obtain
a protective order or similar protection for the Seller Parties.
Section 6.2 Public Announcements. The Purchaser agrees to consult
with the Seller Parties before issuing any press release or making any public
statement with respect to this Agreement or the Related Documents or the
transactions contemplated hereby or thereby and, except as may be required by
applicable law, will not make any such public statement prior to such
consultation.
Section 6.3 Office Space. The Purchaser agrees to make available to
Ginette Handfield office space in Hamilton, Bermuda for the period from the
Closing Date through December 31, 2002 and the Seller Parties will reimburse the
Purchaser for their proportionate share of the out-of-pocket expenses for the
office space, including rent, at a cost not to exceed the per square foot rental
expense under the Lease. The Purchaser and the Seller Parties shall use their
joint reasonable best efforts to find temporary office space in Hamilton,
Bermuda for two (2) employees of LaSalle Re who are not Transferred Employees.
The Purchaser further agrees to use its reasonable best efforts to cooperate
with Seller Parties in obtaining from the Lessor, consent to the assignment to
the Purchaser of all LaSalle Re's rights, title and interest in the Lease with
respect to LaSalle Re's office space in Hamilton, Bermuda.
ARTICLE VII
CLOSING DELIVERIES
Section 7.1 Deliveries by the Closing Parties to the Purchaser. At
the Closing, the Seller Parties shall deliver to the Purchaser:
(a) confirmation of wire transfers of immediately available funds to
Purchaser in the amount set forth in Section 2.4;
(b) a copy of the executed Retrocession Agreement referred to in
Section 2.4;
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(c) a copy of the executed Administrative Services Agreement
referred to in Section 2.5;
(d) a copy of the amended Employment Agreement referred to in
Section 5.1 (e).
(e) a certificate of a duly authorized officer of each of the Seller
Parties, dated the Closing Date, setting forth the resolutions of the board of
directors of the Seller Parties authorizing the execution and delivery of this
Agreement and the Related Documents and the consummation of the Sale
Transaction, and certifying that such resolutions were duly adopted and have not
been rescinded or amended as of the Closing Date; and
(f) a certificate of the Secretary or an Assistant Secretary of each
of the Seller Parties attesting to the incumbency and signature of each officer
of the Seller Parties who shall execute this Agreement or any other Related
Document.
Section 7.2 Deliveries by the Purchaser to the Seller Parties. At
the Closing, the Purchaser shall deliver to the Seller Parties the following:
(a) confirmation of wire transfers of immediately available funds to
the Seller Parties, in the amount set forth Section 2.5;
(b) a copy of the executed Retrocession Agreement referred to in
Section 2.4;
(c) a copy of the executed Administrative Services Agreement
referred to in Section 2.5;
(d) a certificate of a duly authorized officer of the Purchaser,
dated the Closing Date, setting forth the resolutions of the board of directors
of the Purchaser authorizing the execution and delivery of this Agreement and
each Related Document to be executed by the Purchaser and the consummation of
the Sale Transaction, and certifying that such resolutions were duly adopted and
have not been rescinded or amended as of the Closing Date; and
(e) a certificate of the Secretary or an Assistant Secretary of the
Purchaser attesting to the incumbency and signature of each officer of the
Purchaser who shall execute this Agreement or any other Related Document.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
Section 8.1 Survival. The representations and warranties of the
parties hereto contained in this Agreement, any Related Document or in any
certificate or other writing delivered pursuant to or in connection with this
Agreement or any Related Document shall survive the Closing until two (2) years
after the Closing Date. Notwithstanding the preceding sentence, any
representation or warranty in respect of which indemnity may be sought under
this Agreement shall survive beyond the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the inaccuracy or
breach thereof giving rise to such right of indemnity shall have been given to
the party against whom such indemnity may be sought prior
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to the scheduled termination of such representation or warranty, as applicable.
The covenants and agreements of the parties (including, without limitation, the
covenants and agreements of the parties set forth in this Article VIII)
contained in this Agreement or in any Related Document shall survive
indefinitely, except to the extent expressly provided otherwise herein or
therein.
Section 8.2 Indemnification. (a) The Seller Parties hereby indemnify
the Purchaser and its Affiliates against and agree to hold each of them harmless
from any and all damage, loss, liability and expense (including, without
limitation, reasonable attorneys' fees and reasonable expenses of investigation
in connection with any action, suit or proceeding) ("Damages"), incurred or
suffered by Purchaser or any Affiliate of Purchaser, arising out of (i) any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Seller Parties pursuant to this Agreement or (ii) any claim by any
present or former employee of a Seller Party or Affiliate thereof, which arises
under local statute, regulation or ordinance, under the common law or in equity
(including any claims for wrongful discharge or otherwise), or under any policy,
agreement, understanding or promise, written or oral, formal or informal,
between a Seller Party or Affiliate thereof and such present or former employee,
which arose out of any action, event or omission that occurred (or in the case
of omissions, failed to occur) prior to the Closing except any action, event or
omission of the Purchaser or any of its Affiliates; provided, however, that
Seller Parties shall not be liable under this Section 8.2 (a) for any
misrepresentation or breach of warranty (x) unless the aggregate amount of
Damages with respect to all misrepresentations and breaches of warranties
referred to in this Section 8.2 (a) exceeds U.S. $500,000 (and then only to the
extent of such excess) and (y) in an amount exceeding seventy-five percent (75%)
of the Purchase Price.
(b) Purchaser hereby indemnifies the Seller Parties and their
Affiliates against and agrees to hold each of them harmless from any and all
Damages incurred or suffered by Seller Parties or any of its Affiliates arising
out of (i) any misrepresentation or breach of warranty, covenant or agreement
made or to be performed by Purchaser pursuant to this Agreement, (ii) the
enforcement of their rights under this Section 8.2, (iii) the operation of the
Business following the Closing, (iv) any action (or failure to act) by
Purchaser, in violation of applicable law, with respect to the hiring or terms
of employment of any person who is an employee of LaSalle Re immediately before
the Closing Date, or (v) any claim by any present or former employee of a Seller
Party or Affiliate thereof, including, without limitation, the Transferred
Employees, which arises under federal, state or local statute, regulation or
ordinance, under the common law or in equity (including any claims for wrongful
discharge or otherwise), or under any employee benefit plan or program of the
Purchaser or any Affiliate of the Purchaser, or under any policy, agreement,
understanding or promise, written or oral, formal or informal, between the
Purchaser or an Affiliate thereof and such present or former employee, which
arose out of any action, event or omission that occurred (or, in the case of
omissions, failed to occur) following the Closing.
(c) Required payments by any Indemnifying Party (as hereinafter
defined) pursuant to this Article VIII shall be limited to the amount of any
Damages that remains after deducting therefrom (i) any insurance proceeds
recoverable by any Indemnified party (less any increase in premium reasonably
related to the incurrence of such Damages) and (ii) any indemnity, contribution
or other similar payment recoverable by any Indemnified Party from any third
party, in each case with respect to such Damages. The Indemnified Party shall
use
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commercially reasonable efforts to collect all such insurance proceeds and
indemnity, contribution and other similar payments.
Section 8.3 Procedures for Third Party Claims. (a) The party seeking
indemnification under Section 8.2 (the "Indemnified Party") agrees to give
prompt notice (in accordance with Section 9.7) to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion of any claim, or
the commencement of any suit, action or proceeding in respect of which indemnity
may be sought under Section 8.2 (the "Third Party Claims"). Such notice referred
to in the preceding sentence shall state the relevant facts and include
therewith relevant documents and a statement in reasonable detail as to the
basis for the indemnification sought. The failure by any Indemnified Party so to
notify the Indemnifying Party shall not relieve any Indemnifying Party from any
Liability which it may have to such Indemnified Party with respect to any claim
made pursuant to this Section 8.3, except to the extent such failure shall
actually prejudice an Indemnifying Party. In the event of the assertion of any
claim or the commencement of any suit, action or proceeding in respect of which
indemnity would be sought by the Indemnified Party but for the fact that the
notice of such claim, suit, action or proceeding was sent to the Indemnifying
Party, the Indemnifying Party shall give prompt notice to the Indemnified Party
of such claim, suit, action or proceeding.
(b) Upon receipt of notice from the Indemnified Party pursuant to
Section 8.3 (a), the Indemnifying Party will have the right to, subject to the
provisions of Section 8.3 (c), assume the defense and control of such Third
Party Claims. In the event the Indemnifying Party assumes the defense of a Third
Party Claim, the Indemnified Party shall have the right but not the obligation
to participate in the defense of such Third Party Claim with their own counsel
and at their own expense and the Indemnifying Party will cooperate with the
Indemnified Party. Any election by an Indemnifying Party not to assume the
defense of a Third Party Claim must be received by the Indemnified Party
reasonably promptly following its receipt of the Indemnified Party's notice
delivered pursuant to Section 8.3 (a). If the Indemnifying Party elects to
assume the defense of a Third Party Claim, the Indemnifying Party shall select
counsel reasonably acceptable to the Indemnified Party; shall take all steps
necessary in the defense or settlement of such Third Party Claims; and shall at
all times diligently and promptly pursue the resolution of such Third Party
Claims. The Indemnified Party shall, and shall cause each of their Affiliates
and representatives to, cooperate fully with the Indemnifying Party in the
defense of any Third Party Claim defended by the Indemnifying Party.
Section 8.4 Procedures for Direct Claims. In the event any
Indemnified Party shall have a claim for indemnity against any Indemnifying
Party that does not involve a Third Party Claim, the Indemnified Party shall
deliver notice of such claim with reasonable promptness to the Indemnifying
Party. Such notice referred to in the preceding sentence shall state the
relevant facts and include therewith relevant documents and a statement in
reasonable detail as to the basis for the indemnification sought. The failure by
any Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any Liability that it may have to such Indemnified Party
with respect to any claim made pursuant to this Section 8.4, it being understood
that notices for claims in respect of a breach of a representation or warranty
must be delivered prior to the expiration of the survival period for such
representation or warranty.
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Section 8.5 Exclusive Remedy. The parties hereto expressly
acknowledge that (i) the provisions of this Article VIII shall be the sole and
exclusive remedy for Damages caused as a result of breaches of the
representations and warranties contained in this Agreement and (ii) no
Indemnifying Party shall be liable for punitive or treble Damages in connection
with any action, suit or proceeding brought by Purchaser against one or more
Seller Parties or by one or more Seller Parties against Purchaser.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.1 Entire Agreement. This Agreement, the Confidentiality
Agreement and the Related Documents including all Schedules and Exhibits
attached hereto and thereto, constitute the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein and
therein. There are no agreements, restrictions, promises, representations,
warranties, covenants, undertakings, other than those set forth herein. This
Agreement supercedes all prior agreements and understandings between the parties
with respect to such subject matters.
Section 9.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Bermuda, without regard to the conflict
of laws principles thereof.
Section 9.3 Specific Performance. The parties recognize and agree
that if for any reason any of the provisions of this Agreement are not performed
in accordance with their specific terms or are otherwise breached, immediate and
irreparable harm or injury would be caused for which money damages would not be
an adequate remedy. Accordingly, each party agrees that, in addition to any
other available remedies, each other party shall be entitled to seek an
injunction in any Bermuda court restraining any violation or threatened
violation of any of the provisions of this Agreement without the necessity of
posting a bond or other form of security. In the event that any action should be
brought in equity to enforce any of the provisions of this Agreement, no party
will allege, and each party hereby waives the defense, that there is an adequate
remedy at law.
Section 9.4 Expenses. Each of the parties hereto shall bear its own
expenses (including, without limitation, fees and disbursements of its counsel,
accountants and other experts and those acting on its behalf pursuant to
Sections 3.14 and 4.6) incurred by it in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement, the Related
Documents and the consummation of the Sale Transaction.
Section 9.5 Offset. Any debts or credits incurred on and after the
date hereof in favor of or against either the Seller Parties or the Purchaser
with respect to this Agreement, the Administrative Services Agreement and the
Retrocession Agreement are deemed mutual debts or credits, as the case may be,
and shall be set off, and only the balance and shall be allowed or paid.
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Section 9.6 Jurisdiction. Each of the parties hereto irrevocably and
unconditionally submits to the exclusive jurisdiction of the courts of Bermuda
for purposes of enforcing this Agreement. In any such action, suit or other
proceeding, each of the parties hereto irrevocably and unconditionally waives
and agrees not to assert by way of motion, as a defense or otherwise any claim
that it is not subject to the jurisdiction of the above court, that such action,
suit or other proceeding is not subject to the jurisdiction of the above court,
that such action, suit or other proceeding is brought in an inconvenient forum
or that the venue of such action, suit or other proceeding is improper. Each of
the parties hereto also agrees that any final and unappealable judgment against
a party hereto in connection with any action, suit or other proceeding shall be
conclusive and binding on such party and that such award or judgment may be
enforced in any court of competent jurisdiction, either within or outside of the
United States. A certified or exemplified copy of such award or judgment shall
be conclusive evidence of the fact and amount of such award or judgment. The
parties agree that any process or other paper to be served in connection with
any action or proceeding under this Agreement shall, if delivered, sent or
mailed in accordance with Section 9.7 of this Agreement, constitute good, proper
and sufficient service thereof. The parties recognize that they have entered
into the Retrocession Agreement and the Administrative Services Agreement, which
each contains an arbitration clause. The parties hereby agree that any issue
that could be subject to legal proceedings under this Agreement (including but
not limited to proceedings for relief under Section 9.3), but which also falls
within the scope of the arbitration clause of either the Retrocession Agreement
or the Administration Services Agreement, shall be resolved in arbitration under
such agreements or agreements. Until such issue has been finally resolved
pursuant to the arbitration clause of such agreement or agreements, no legal
proceedings or court action involving such issue may be brought by any party
under this Agreement (including but not limited to proceedings for relief under
Section 9.3) and any court action that may have been brought shall be
immediately stayed pending such resolution.
Section 9.7 Notices. All notices, requests, claims, demands and
other communications to be given under this Agreement shall be in writing and
shall be given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by facsimile transmission (which is confirmed) or sent by
overnight courier (providing proof of delivery) or by registered or certified
mail (postage prepaid, return receipt requested), to the other party at the
following address (or at such other address for a party as shall be specified by
like notice):
(a) If to the Seller Parties, to:
Trenwick Group Ltd.
25 Church Street
Hamilton HM 11
Bermuda
Attention: James F. Billett, Jr.
Telephone: (441) 292-4985
Facsimile: (441) 292-2656
with copies to:
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Trenwick America Corporation
One Canterbury Green
Stamford, Connecticut 06901
Attention: John Del Col
Telephone: (203)-602-3074
Facsimile: (203) 921-5536
and
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Attention: James R. Cameron, Esq.
Telephone: (212) 891-3930
Facsimile: (212) 891-3835
(b) If to the Purchaser, to:
Endurance Specialty Insurance Ltd.
Crown House
4 Par-la-ville Road
Hamilton HM 08
Bermuda
Attention: James Kroner
Chief Investment Officer
Telephone: (441) 278-0430
Facsimile: (441) 278-0401
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Attention: Robert J. Sullivan, Esq.
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Section 9.8 Severability and Validity. The provisions set forth in
this Agreement are severable. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any jurisdiction or against its
regulatory or public policy, the remainder of this Agreement, and the
application of such provision to other Persons or circumstances, shall not be
affected thereby and shall remain valid and enforceable in such jurisdiction,
and any such invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Upon a determination that any term, provision, covenant or restriction is
invalid, void or unenforceable or against the regulatory or public policy of the
governing jurisdiction, the parties hereto shall negotiate in good faith to
modify this Agreement so as to
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effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the extent
possible.
Section 9.9 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person not a party to this Agreement.
No assignment of this Agreement or of any rights or obligations hereunder may be
made by either party to this Agreement without the prior written consent of the
other party hereto; provided, however, notwithstanding the foregoing, the
Purchaser may assign this Agreement to an Affiliate with an A.M. Best credit
rating equivalent to that of the Purchaser.
Section 9.10 Amendments. This Agreement may be amended, supplemented
or modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Agreement signed by each of the
parties hereto.
Section 9.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the parties
to this Agreement and delivered to the other parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
TRENWICK GROUP LTD.
By: \s\ James F. Billett, Jr.
-----------------------------------------
Name: James F. Billett, Jr.
Title: Chairman, President and
Chief Executive Officer
LASALLE RE LIMITED
By: \s\ Guy D. Hengesbaugh
-----------------------------------------
Name: Guy D. Hengesbaugh
Title: President and Chief Executive Officer
ENDURANCE SPECIALTY INSURANCE LTD.
By: \s\ Kenneth J. LeStrange
-----------------------------------------
Name: Kenneth J. LeStrange
Title: Chief Executive Officer
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