CONFORMED COPY
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Dated as of 15 February 2001
WINTERTHUR SWISS INSURANCE COMPANY
and
XL INSURANCE LTD
SECOND AMENDED AND RESTATED AGREEMENT
for the Sale and Purchase of
Winterthur International
Second Amended and Restated Agreement for the Sale and Purchase of Winterthur
International
This second amended and restated Agreement is made as of 15 February 2001
Between:
(1) WINTERTHUR SWISS INSURANCE COMPANY a joint-stock company incorporated under
the laws of Switzerland (registered number CH-020.3.928.827-5) whose
registered office is at General Guisan-Strasse 40, PO Box 357, CH-8401
Winterthur, Switzerland ("Winterthur"); and
(2) XL INSURANCE LTD a company incorporated under the laws of Bermuda whose
registered office is at XL House, One Bermudiana Street, Hamilton HM 11,
Bermuda ("XL Insurance").
Whereas:
(A) Winterthur and the other Sellers carry on amongst other things the
Operations.
(B) Winterthur has agreed to sell and to procure that the other Sellers sell
and XL Insurance has agreed to purchase and to procure that the other
Purchasers purchase the Operations as a going concern at Completion.
(C) The parties intend to transfer the Operations at Completion with economic
effect as from the Effective Time of 1 July 2001. The Purchase Price is the
Pro-forma Net Asset Value at 30 June 2001 as determined in accordance with
US GAAP plus the Premium. The transfer will be by share transfer, by
portfolio transfer and/or by reinsurance arrangements. In certain
circumstances the parties may agree before Completion to adjust the method
of transfer.
(D) If all the conditions precedent to the transfer of the Key Operations are
satisfied, but not to the transfer of the other Operations, the parties
intend Completion to occur, the Key Operations to transfer legally and
beneficially, the economic value and management control and beneficial
interest in the other Operations to transfer to the maximum extent
permitted under Applicable Laws or as otherwise provided herein, and the
whole Purchase Price to be paid.
(E) The Pro-forma Net Asset Value at 30 June 2001 will be calculated, inter
alia, by reference to an Initial Net Reserves Amount. On the End Date of 30
June 2004 the Seasoned Net Reserves Amount shall be calculated, and a
balancing payment determined in accordance with the provisions of this
Agreement shall be made to Winterthur or XL Insurance as appropriate to
reflect the Seasoned Net Reserves Amount compared to the Initial Net
Reserves Amount (which balancing payment is intended to have the economic
effect (ignoring the time value of money) of the parties sharing in any
redundancy or deficiency in accordance with this Agreement).
(F) This second amended and restated Agreement amends, restates and supersedes
an agreement relating to the sale and purchase of Winterthur International
dated 15 February 2001 as amended and restated by an earlier amended and
restated agreement for the sale and purchase of Winterthur International.
It is agreed as follows:
1. Interpretation
In this Agreement including its Schedules neither the recitals nor the
headings shall affect its interpretation and unless the context otherwise
requires the provisions in this Clause 1 apply:
1.4 Definitions
"31.12.1999 Financial Statements" means the unaudited combined statement of
net assets relating to the Operations (including the Excluded Operations)
as at and for the 12 month period ended on 31 December 1999 prepared in
accordance with Swiss GAAP;
"30.09.2000 Financial Statements" means the unaudited combined statement of
net assets and income statement relating to the Operations (including the
Excluded Operations) as at and for the nine month period ended on 30
September 2000 prepared in accordance with US GAAP;
"31.12.2000 Balance Sheet" means the statement of net assets included in
the 31.12.2000 Financial Statements;
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"31.12.2000 Financial Information" has the meaning given to it in Part 1 of
Schedule 5;
"31.12.2000 Financial Statements" means the audited combined statement of
net assets, income statement and (if required of XL Insurance Group by
Applicable Laws) statement of cash flows relating to the Operations as at
and for the 12 month period ended on 31 December 2000 including all related
financial schedules and footnotes prepared in accordance with US GAAP;
"Acquired SRS Business" means the part of the SRS Business transferred to
the Purchaser pursuant to this Agreement, comprising those contracts listed
in Part 5 of Schedule 2 and the Reserves relating thereto;
"Actuary Appointment Notice" has the meaning given to it in Clause 4.2.5;
"Additional Property" means any real property which a Group Company or
Business Seller occupies or uses for the purposes of the Operations as at
the date of this Agreement but which are not listed in Schedule 10;
"agreed terms" means in relation to any document such document in the terms
agreed between the parties and signed by XL Insurance's Solicitors and
Winterthur's Solicitors for the purpose of identification as that document
may be amended by agreement in writing between XL Insurance and Winterthur
from time to time for any reason including without limitation to take
account of any agreed changes between the date of this Agreement and
Completion including without limitation those documents set out in Part 2
of Schedule 6;
"Amendment Date" has the meaning given to it in Clause 8.1.7;
"Antitrust Division" has the meaning given to it in Clause 5.1.3;
"Applicable Laws" means, all laws, rules and regulations (including all
applicable insurance and other financial services laws, rules and
regulations) in any jurisdiction in which any Group Company or Business
Seller (in relation to the relevant Business) is established or conducts or
solicits business or in which the Operations or the Businesses are carried
on;
"Asbestos Liabilities" means any and all Liabilities, risks and exposures
howsoever incurred or assumed arising out of or relating to the
manufacture, distribution, sale, installation, removal, utilisation,
ingestion, inhalation of, exposure to or existence of, as the case may be,
asbestos, any materials containing asbestos in whole or in part or
asbestiform talc;
"Asset Transfer Principles" has the meaning given to it in Clause 2.1.4;
"Associated Company" means a company which is from time to time in relation
to another company under the control of, under common control with or which
controls such other company provided that a company will not cease to be an
Associated Company of any other company by virtue of the liquidation or
dissolution of any other company;
"Assumed Liabilities" has the meaning given to it in Clause 2.2.2;
"Base Rate" means USD LIBOR being the London Inter-Bank Offer Rate for six
month deposits in US Dollars;
"Bespoke Software" means all software and associated documentation
developed by or on behalf of any member of the CS Group or the Group
Companies and used wholly or primarily in or in connection with the
Operations, including without limitation MIS-Layer, GWEB, WIMIS, RITA and
IDX (IMC, WIP, IDH and IDR);
"Books and Records" means any of the Business Sellers' or any other member
of the CS Group's books, records, files, designs, specifications, customer
lists, supplier lists, information, reports, correspondence, literature,
sales material and similar materials to the extent that such relate wholly
or primarily to the Businesses;
"Businesses" means those businesses carried on by or on behalf of the
Business Sellers and comprised in the Operations (including for the
avoidance of doubt the Assumed Liabilities) brief details of which are set
out in Part 1 of Schedule 2 and "Business" means any one of them;
"Business Assets" means all the business, property, rights and assets of
whatever nature owned by any member of the CS Group and used wholly or
primarily in or in connection with any Business including without
limitation the items listed in Clause 2.1.2(ii) to (xv) subject always to
the exclusions in Clause 2.1.3;
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"Business Day" means a day on which banks are open for business in England,
Switzerland, Bermuda and the United States (excluding Saturdays, Sundays
and public holidays) or for the purpose of Clause 18.12 in the places from
and to which any notice is sent in accordance with that Clause 18.12 save
that where the concept of Business Days is used merely to delineate a
period of time "Business Day" means a day on which banks are open for
business in England (excluding Saturdays, Sundays and public holidays)
only;
"Business Employee" means an employee who immediately before Completion is
employed by any member of the CS Group in any Business (other than a Group
Company Employee) details of whom are contained in the Employee List;
"Business Goodwill" means the goodwill of the Business Sellers in
connection with the Businesses together with the exclusive right for XL
Insurance or the relevant Purchaser to represent itself as carrying on the
Businesses in succession to the relevant Business Seller and includes the
goodwill associated with the Business Intellectual Property (and for the
avoidance of doubt shall not be restricted to items which may be construed
as goodwill for the purpose of US GAAP);
"Business Intellectual Property" means all rights and interest in
Intellectual Property owned by any member of the CS Group and used wholly
or primarily in or in connection with any Business;
"Business Office Equipment" means the Office Equipment owned by any member
of the CS Group and used wholly or primarily in or in connection with any
Business but excluding Office Equipment forming part of any of the
Properties;
"Business Sellers" means each of the Sellers which will be selling a
Business and whose names are set out in Part 2 of Schedule 1;
"CAS" has the meaning given to it in Clause 4.2.6;
"Claimant" has the meaning given to it in Clause 8.4.1;
"Claims" means all rights and claims of any Business Seller or any other
member of the CS Group arising at any time (whether before or after
Completion ) out of or in connection with the Businesses (whether arising
under any warranties, conditions, guarantees, indemnities, insurance and
reinsurance policies, contracts, agreements (in each case whether express
or implied) or otherwise howsoever) in so far as they relate to any of the
Business Assets (including the Contracts, the Licence Agreements, the Lease
Agreements, the Policies and the Retrocession Contracts) or to any Assumed
Liability;
"Code" has the meaning given to it in paragraph 10.11 of Schedule 7;
"Commission" has the meaning given to it in Clause 5.1.1;
"Companies" means the companies (including for the avoidance of doubt
branches of such companies) details of which are set out in Part 1 of
Schedule 1 and "Company" means any one of them;
"Completion" means the completion of the Transfers of Operations to occur
pursuant to Clauses 7.1 and 7.2;
"Completion Balance Sheet" means the combined Pro-forma statement of net
assets for the Operations as at 30 June 2001 which will be prepared and
finally determined in accordance with the procedures set out in Part 2 of
Schedule 5 which is included in the Completion Financial Information;
"Completion Date" means the date on which Completion takes place;
"Completion Financial Information" has the meaning given to it in Part 2 of
Schedule 5;
"Completion Financial Statements" means the audited combined statement of
net assets, income statement and (if required of XL Insurance Group by
Applicable Laws) statement of cashflows relating to the Operations
(excluding the Excluded Operations) as at and for the period from 1 January
2001 and ending on 30 June 2001 including all related financial schedules
and footnotes prepared in accordance with US GAAP and otherwise in
accordance with Part 2 of Schedule 5;
"Confidential Information" means all information of a confidential or
proprietary nature which is used in or otherwise relates to the Operations
including without limitation information relating to:
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(i) the marketing or placing of goods, products (both insurance and
reinsurance) or services including, without limitation, customer names
and lists and other details of customers, sales targets, sales
statistics, market share statistics, prices, market research reports
and surveys, and advertising or other promotional materials; or
(ii) future projects, business development or planning, commercial
relationships and negotiations,
but for the avoidance of doubt does not include information to the extent
that it is disclosed or used pursuant to Clause 18.4.3;
"Confidentiality Agreement" means the confidentiality agreement dated 20
September 2000 and made between Winterthur and XL Capital Ltd;
"Contracts" means the insurance policies (other than the Policies), the
Supplier Contracts and all other contracts, undertakings, arrangements and
agreements entered into prior to Completion by or on behalf of any Business
Seller to the extent related to any Business in each case to the extent
that at Completion the same remain to be completed or performed or rights
remain exercisable thereunder excluding the Lease Agreements, the Licence
Agreements, the Policies, the Retrocession Contracts and employment and
other agreements with Relevant Employees;
"control" and "controlled" for the purpose of the definition of Associated
Company and the Winterthur Group shall have the same meaning as is set out
in the UK City Code on Takeovers and Mergers;
"Conversion Rate" means the average of the spot selling and buying rates
for a transaction between the two currencies in question as quoted on the
relevant Reuters page at or about 8.00 am London time on the Relevant Date
or if such rates are not quoted on that date on the preceding date on which
such rates are quoted;
"Core Warranties" means those Warranties set out at paragraphs 1, 2, 3,
4.1, 4.3, 4.4, 4.5, 4.6, 5.1, 5.2.1, 5.2.2, 5.2.5, 5.2.6, 5.4, 5.5, 8, 9,
11, 12.1 and 12.2 of Schedule 7, and Clause 8.1.9 together with the
representations and warranties contained in the Tax Matters Agreement;
"CS Group" means Credit Suisse Holdings and its Associated Companies (but
for the purposes of Clause 16 only excluding the Winterthur Group);
"Current Policies" means insurance or reinsurance policies, treaties or
agreements written by or on behalf of any Business Seller (in connection
with the Operations) or Group Company and in force as at 15 February 2001
or under which Liabilities may arise;
"Data Room" means documents contained in a physical data room the contents
of which are listed in the Data Room Index;
"Data Room Index" means the list of all documents contained in the Data
Room a copy of which is attached to the Disclosure Letter;
"Deadlock Matter" has the meaning given to it in Clause 2.1.4;
"Deed of Adherence" means a deed of adherence in the form set out in
Schedule 12;
"Disclosure Letter" means the amended and restated letter dated as of 15
February 2001 from Winterthur to XL Insurance disclosing:
(i) information relating to the Warranties; and
(ii) details of other matters referred to in this Agreement;
"Effective Time" means 00.01 am (London time) on 1 July 2001;
"Employee Benefit Arrangements" means the schemes or arrangements operated
by or contributed to by or on behalf of any Business Seller or Group
Company in respect of Relevant Employees (other than State or statutory
social security, unemployment, insurance, workers compensation or pension
arrangements, share incentive, share option or other profit sharing
arrangements) providing for benefits payable on retirement, death or
disability and voluntary withdrawal from or involuntary termination of
employment, including life assurance, accidental death and dismemberment
schemes, medical benefit arrangements and termination indemnity payments,
incentive arrangements (other than share-related incentive arrangements
referred to above), life, accident and health insurances,
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hospitalisation, savings, holiday, vacation, severance pay, sick pay, sick
leave, tuition refund, service awards, company car, scholarship, relocation
or any other employee or executive benefits;
"Employee Bodies" means any works council, trade union or employee
representative;
"Employee List" means the list of Relevant Employees set out in Schedule 14
as updated in accordance with paragraph 2.2.4 of Part 1 of Schedule 2;
"Employment Costs" means a sum equivalent to the aggregate of:
(i) the amount payable or paid to or in respect of the employment of the
Relevant Employees (including but not limited to salary, wages, tax
and social security contributions, employer's pension contributions,
bonus, insurance premiums, payments or allowances or any other
consideration for employment); and
(ii) the cost of providing any non-cash benefits which the employer is
required to provide by law or contract or customarily provides in
connection with such employment (including but not limited to other
employee benefit provisions);
"Employment Liabilities" means any and all Losses arising out of or
connected with employment or the employment relationship or termination of
employment or of the employment relationship (including but not limited to
all Losses in connection with any claim for redundancy termination or
severance pay, or damages or compensation for unfair or wrongful dismissal
or breach of contract);
"Encumbrance" means any claim, charge, mortgage, security, lien, pledge,
option, equity, power of sale, hypothecation, easement or other third party
rights of any kind whatsoever;
"End Date" means 30 June 2004;
"Entitled Party" has the meaning given to it in Clause 7.4;
"Excluded Activities" means any and all of the following activities:
(i) the issue of non-life insurance (including accident and health)
products to individuals other than as part of a group scheme relating
to a Relevant Commercial Operation;
(ii) the issue of motor insurance policies;
(iii) the management or operation of captives for Relevant Commercial
Operations for a fee;
(iv) the provision of insurance or reinsurance products in connection with
captives other than those owned or utilised by Relevant Commercial
Operations;
(v) the issue or distribution of life insurance products to Relevant
Commercial Operations other than accident and/or health products; and
(vi) (other than in connection with any renewal account of the Operations)
the issue of domestic or single jurisdiction non-life insurance or
reinsurance products to Relevant Commercial Operations which have been
customers of any member of the Winterthur Group during the 12 months
prior to the date of this Agreement in respect of one or more of such
non-life insurance or reinsurance products (for the above purposes a
U.S. corporation that solely operates within the United States but has
a plant, branch or operation in a NAFTA jurisdiction solely in order
to get to treaty benefits shall be deemed to operate as or be
"domestic" or "single jurisdiction").
"Excluded Assets" has the meaning given to it in Clause 2.1.3;
"Excluded Operations" means all businesses and activities other than the
Operations and shall include, without limitation, those operations set out
in paragraph 5 of Part 1 of Schedule 2 and all assets relating wholly or
primarily thereto and all liabilities to the extent that they relate to
such businesses or activities;
"Excluded Operations Interim Arrangements" means the Excluded Operations
Reinsurance Agreements and such other agreements and arrangements as may
reasonably be required to give full effect to the terms of this Agreement
in relation to the Excluded Operations pending their effective transfer to
Winterthur including those listed in Part 3 of Schedule 2;
"Excluded Operations Reinsurance Agreements" means the reinsurance
agreements to be executed at Completion and further described in Part 4 of
Schedule 2 and such other reinsurance
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agreements as may reasonably be required to give full effect to the terms
of this Agreement in relation to the reinsurance by Winterthur or a member
of the Winterthur Group of 100 per cent of the Liabilities under any
contracts of insurance or reinsurance comprising Excluded Operations;
"FIA" has the meaning given to it in Clause 4.2.6;
"Freehold Properties" means the freehold properties details of which are
set out in Part 2 of Schedule 10 and "Freehold Property" means any one of
them;
"French Property" means the property known as La Residence de Bois Fontaine
37 Avenue Lucier Rene Duchcene 781070 La Sell St Cloud and for the purpose
of Clause 6.7 only shall include any other real estate of the Operations
located in France;
"FTC" has the meaning given to it in Clause 5.1.3;
"German Transfer Agreement" has the meaning given to it in Clause 8.1.7;
"Governmental Entity" means any government, governmental, supranational or
trade agency or regulatory authority (including any Regulator), agency or
body in any jurisdiction;
"Group" or "Group Companies" means each of the Companies and the
Subsidiaries and "Group Company" means any one of them;
"Group Company Employee" means an employee who at or on Completion is
employed by a Group Company details of whom are contained in the Employee
List;
"Guaranteed Purchaser Obligations" has the meaning given to it in Clause
17.1;
"Guaranteed Seller Obligations" has the meaning given to it in Clause 17.1;
"HSR Act" has the meaning given to it in Clause 5.1.3;
"Identified Fronting Agreements" means those agreements identified as such
in specific disclosure 2.3.3 in the Disclosure Letter;
"Identified Third Party Software" means the software programs known as
CERES, GENIUS and RAIS which are currently used in or in connection with
the Operations, and all enhancements and modifications thereof;
"Indebtedness" means:
(i) all monies borrowed or raised for the purpose of financing the
Operations (whether or not under normal commercial lending terms or
upon the issue of bills, bonds, notes or loan stock);
(ii) obligations under finance leases involving a liability in the case of
any individual lease in excess of CHF250,000;
(iii) receivables sold or discounted;
(iv) all foreign exchange contracts and all derivative instruments
(including without limitation any interest or currency protection,
hedging or financial future transactions) of the Operations; and
(v) any guarantee, counter-indemnity, letter of credit, indemnity or
similar assurance against the financial loss of any person (save, for
the avoidance of doubt, insurance or reinsurance);
"Independent Actuary" means an actuary with an appropriate level of
experience and expertise in dealing with matters related to US GAAP and
European insurance companies and for the purpose of this Agreement shall be
Watson Wyatt or if that firm is unable or unwilling to act in any matter
referred to them under this Agreement a firm of Actuaries to be agreed by
Winterthur and XL Insurance within seven days of a notice by one to the
other requiring such agreement or failing such agreement to be nominated on
the application of either of them by or on behalf of the President for the
time being of the Institute of Actuaries in England and Wales;
"Initial Net Reserves Amount" means an amount equal to:
(i) the sum of the amount of the Reserves relating to the Relevant
Operations set out in the Completion Balance Sheet; less
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(ii) the sum of the amount of reinsurance ceded or receivable set out in
the Completion Balance Sheet the calculation of the Initial Net
Reserves Amount being made without regard to and ignoring the Sellers
Retrocession Agreement and any transactions thereunder;
"Intellectual Property" or "IP" means trade marks, unregistered trade
marks, service marks, trade names, business and company names, internet
domain names and email addresses, logos, get-up, patents, inventions,
registered and unregistered design rights, rights in designs and
inventions, copyrights, semi-conductor topography rights, rights of
extraction relating to databases and all other similar proprietary rights
which may subsist in any part of the world (including Know-how) including
where such rights are obtained or enhanced by registration any registration
of such rights and applications and rights to apply for such registrations,
rights under licences, consents, orders, statutes or otherwise in relation
to an aforementioned right, and the right to sue for past infringements of
any of the foregoing rights;
"Inter-Company Accounts" means all inter-company accounts or other amounts
receivable or payable as at the Completion Date (whether or not currently
due or payable) between (i) any Group Company on the one hand and (ii) any
member of the CS Group on the other hand, but shall exclude any amounts due
under the Limited Recourse Receivables Financing Facility Agreement, and
for the avoidance of doubt shall also in no event include insurance or
reinsurance accounts, inter-company pooling arrangements or any of the
reorganisation arrangements contemplated by Clause 5.1.4 or receivables or
payables related to carrying or funding reinsurance or other amounts owed
to WIRE except such other amounts owed by WIRE which the parties agree are
used for non-insurance purposes;
"Interim Arrangements" means in respect of any Portfolio which is not
transferred to a Purchaser at Completion, the arrangements described in
paragraphs 2 and 3 of Part 1 and Part 3 of Schedule 2 and in Part 2 of
Schedule 9;
"Interim Reinsurance Agreements" means the reinsurance contracts referred
to in paragraph 2.2.1 of Part 1 of Schedule 2, brief details of which are
contained in Part 4 of Schedule 2 including, without limitation, any
reinsurance to Winterthur International (Re) which it has been agreed will
continue following 30 June 2001;
"IT Separation" has the meaning given to it in Clause 15.8.1;
"Key Employees" means those persons whose names are set out in Part 1 of
Schedule 3;
"Key Operations" means the Operations set out in Part 1 of Schedule 4;
"Know-how" means confidential and proprietary industrial and commercial
information and techniques in any form (including paper, electronically
stored data, magnetic media, film and microfilm) including without
limitation to the generality of the foregoing drawings, formulae, test
results, reports, project reports and testing procedures, shop practices,
instruction and training manuals, tables of operating conditions, market
forecasts, specifications, quotations, models, tables, lists and
particulars of customers and suppliers, marketing methods and procedures,
show-how and advertising copy;
"Last Accounting Date" means in relation to each Group Company or Business
Seller the date to which the latest audited accounts of that company have
been made up and audited;
"Leasehold Properties" means the leasehold properties details of which are
set out in Part 3 of Schedule 10 and "Leasehold Property" means any one of
them;
"Lease Agreements" means all lease agreements relating to any Leasehold
Property entered into prior to Completion by or on behalf of any Business
Seller wholly or primarily in relation to any Business details of which are
set out in Part 3 of Schedule 10;
"Liabilities" means all liabilities, duties, commitments and obligations of
every description, whether deriving from contract, common law, statute or
otherwise, whether present or future, accrued or unaccrued, actual or
contingent, ascertained or unascertained, agreed or disputed and whether
owed or incurred severally or jointly or as principal or surety and whether
or not required to be set out on a balance sheet;
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"Licence Agreements" means the licence agreements entered into prior to
Completion by or on behalf of any Business Seller wholly or primarily in
relation to any Business details of which are set out in Schedule 11;
"Licence to Occupy" has the meaning given to it in Part 1C of Schedule 10;
"Life and Pensions Distribution Agreement" means the agreement relating
amongst other things to the distribution after Completion of life insurance
products and/or pensions products of Winterthur dated 21 June 2001 and made
between Winterthur or such other member of the Winterthur Group as it shall
nominate and XL Insurance or such other member of the XL Insurance Group as
it shall nominate;
"Limited Recourse Receivables Financing Facility Agreement" means the
limited recourse receivables financing facility agreement in the agreed
terms between the parties;
"LOC Facility Agreement" means the LOC facility agreement in the agreed
terms between the parties;
"Local Agreements" means the agreements for the sale and purchase of Shares
and/or Businesses in particular jurisdictions which are to be made between
certain of the Sellers and the relevant Purchasers on or after Completion
and for the avoidance of doubt, Local Agreements shall include any
agreement relating to any reorganisation contemplated by this Agreement,
any agreement governing the transfer of a Portfolio, whether by reinsurance
or otherwise (including related fronting, administrative or other services)
as contemplated by this Agreement and any agreement effecting an Interim
Arrangement or an Excluded Operations Interim Arrangement and any other
agreement entered into between a member of the Winterthur Group or the XL
Insurance Group pursuant to this Agreement;
"Losses" means all losses, Liabilities, costs (including without limitation
legal costs), charges, expenses, actions, proceedings, claims and demands
(excluding in each case recoverable VAT);
"Net Asset Value" means for any date the aggregate of the amount of the
relevant assets minus the aggregate of the amounts of the relevant
liabilities (including, without limitation, all Assumed Liabilities) of the
Operations in each case determined as at 31 December 2000 or 30 June 2001
as applicable and all as determined in accordance with US GAAP and the
other terms of this Agreement;
"Office Equipment" means all computer hardware, office supplies, office and
store equipment, furniture and furnishings;
"Operations" means:
(i) the Group Companies and all of the businesses or activities carried on
by or on behalf of any Group Company; and
(ii) the businesses or activities carried on by or on behalf of any
Business Seller or any other member of the CS Group under the
"Winterthur International" name,
carried on in any part of the world by or on behalf of any Group Company
and/or the Business Seller including in each case without limitation the
provision (in the case of any Business Seller under the aforementioned
name) of all property and casualty and all other non-life insurance and
reinsurance products and services and any and all related or ancillary
services (whether traditional or alternative) including workers'
compensation and accident and health coverage pertaining to commercial
clients (and not directly to individuals) but excluding the Excluded
Operations and any reference in this Agreement to Operations shall where
applicable and save to the extent expressly provided otherwise incorporate
reference to any one or more parts of the Operations;
"Payment Account Details" means in relation to any payment to be made under
or pursuant to this Agreement the name, account number, sort code, account
location and other details specified by the payee and necessary to effect
payment (whether by cheque, banker's draft, telegraphic or other electronic
means of transfer) to the payee;
"Payment Agreement" means the payment agreement in agreed terms, and to be
made between the parties and Clifford Chance Limited Liability Partnership;
"Permitted Investment Assets" means with respect to Group Companies, the
following:
(i) cash in the local currencies or otherwise in US Dollars, Pounds
Sterling, Euros and Swiss Francs;
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(ii) equity securities listed on a "national securities exchange" or
similar exchange as defined under US Applicable Laws or on a
recognised investment exchange in the EU or as otherwise mutually
agreed;
(iii) non-convertible fixed income debt instruments that are:
(a) rated investment grade by an independent rating agency or are
issued by public or quasi-public issuers in OECD countries; and
(b) meet one of the following liquidity requirements:
(aa) (A) traded on an exchange described in sub-paragraph (ii);
and
(B) have an original issue value at least equivalent to USD200
million or equivalent liquidity; or
(bb) a securities dealer traded security with equivalent
liquidity; and
(iv) other investment assets as mutually agreed or specifically referenced
in this document,
provided that Permitted Investment Assets shall not be deemed to meet the
criteria set out in sub-paragraph (i), (ii) or (iii) if they fall within
any of the following categories:
(aa) do not comply with the applicable investment guidelines, as in
effect on the date of this Agreement, adopted by the Board of
Directors (or investment committees) of the relevant Group
Company or Business Seller;
(bb) do not comply with investment restrictions under Applicable Laws;
or
(cc) if the aggregate composition and mix, including as to currencies,
of all the investment assets being transferred at Completion are
inconsistent with such composition and mix at 30 September 2000,
and, with respect to Portfolio transfers, only cash in the following
currencies: US Dollars, Euros and otherwise as agreed;
"Policies" means all contracts and agreements (including programmes)
entered into prior to Completion by or on behalf of any of the Business
Sellers with respect to the provision of insurance or reinsurance services
by any Business Seller to the extent related to the relevant Business in
each case to the extent that at Completion the same remain to be completed
or performed (but excluding any such contracts or agreements to the extent
that they relate to any period prior to 1 January 1986 or otherwise relate
to Excluded Operations);
"Portfolio" means the Policies and related Retrocession Contracts to which
a Business Seller is party in relation to the Operations conducted by that
Business (or any part thereof) brief details of which are set out in Part 1
of Schedule 2;
"Preliminary Purchase Price" has the meaning given to it in Clause 3.1.2;
"Premium" has the meaning given to it in Clause 3.1.1;
"Pro-forma 31.12.2000 Balance Sheet" means a pro-forma balance sheet
derived from the 31.12.2000 Balance Sheet adjusted to have Pro-forma effect
and prepared in accordance with Part 1 and Part 2 of Schedule 5;
"Pro-forma" means the pro-forma adjustments described in Part 1 of Schedule
5 after giving effect without limitation to each of the following (and as
further adjusted if necessary in accordance with paragraph 4 of Part 2 of
Schedule 5):
(i) the exclusion of the Excluded Assets, Excluded Operations and Retained
Liabilities (including any reinsurance or other payment made in
connection with the Excluded Operations Interim Arrangements);
(ii) the settlement of the inter-company pooling and reorganisation and
other arrangements as described in Clause 5.1.4 and Part 1 of Schedule
6 other than (i) the Inter-Company Accounts; and (ii) any debt due
from Winterthur International (Re) to Winterthur of the amount of the
outstanding balance as defined in the Limited Recourse Receivables
Financing Facility Agreement;
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(iii) the exclusion of "goodwill" or other intangibles (subject to Part 3
of Schedule 5) including that which results from any pre-Completion
reorganisation including as described in Clause 5.1.4;
(iv) the exclusion of deferred Tax assets (except, in the case of the
Completion Financial Statements, to the extent used by the
Purchasers);
(v) the reorganisations described in Clause 5.1.4;
(vi) any payments or accruals arising under any employment retention or
similar program including those that arise as a result of the
transactions occurring on Completion or as otherwise contemplated in
this Agreement;
(vii) the exclusion of any liabilities for which Winterthur U.S. Holdings,
Inc. is responsible pursuant to section 4(a) of the Tax Matters
Agreement;
(viii) the exclusion of any refunds to which Winterthur U.S. Holdings, Inc.
is entitled pursuant to section 9(a) of the Tax Matters Agreement;
(ix) with respect to valuing investment assets all such investment assets
shall be valued as if such investment assets are "available for sale";
(x) Reserves shall not be subject to discounting (subject to Part 3 of
Schedule 5);
(xi) the commutation of any aggregate stop loss provided by the CS Group
prior to 15 February 2001 to the Operations shall be treated as return
of premium;
(xii) with respect to the Completion Financial Statements, (x) the
exclusion of any assets otherwise included in the Operations that have
not been transferred to Purchasers, except to the extent such assets
are subject to an Interim Arrangement, on the terms otherwise
contemplated hereby, by the date on which the Completion Financial
Statements have been agreed or become final and binding in accordance
with Part 2 of Schedule 5; (y) the provisions of the Sellers
Retrocession Agreement shall be ignored in all respects (other than
with respect to costs, including commutation payments paid or owed,
with respect thereto); and (z) the provisions of Clause 4 of Part 2 of
Schedule 5 shall apply; and
(xiii) with respect to the Completion Financial Statements, the inclusion
of the amount set forth in Part 3 of Schedule 5 in connection with
that certain liquidity arrangement provided by Winterthur to the
Purchasers or the Operations;
"Properties" means the Freehold Properties and the Leasehold Properties and
"Property" means any one of them;
"Purchase Price" has the meaning given to it in Clause 3.1.1;
"Purchasers" means XL Insurance, each of the parties which will be
purchasing the Shares or a Business comprised in the Operations which are
identified in Part 1 of Schedule 2 and any subsidiary of XL Insurance
agreed with Winterthur pursuant to Clause 2.5 to purchase any part of the
Operations (including any party which enters into an Interim Arrangement in
respect of a Business on behalf of XL Insurance) and "Purchaser" means any
one of them;
"Receivables" means the book and other debts receivable by or owing to (or
on their behalf) any of the Business Sellers to the extent that they arise
in connection with the Businesses (and whether or not yet due or payable)
as at Completion (including without limitation trade debts, deposits,
prepayments, retrospective rebates and overpayments) and any interest due
thereon but excluding:
(i) debts owing by any employee who is not a Relevant Employee; and
(ii) debts due from any relevant Taxation authority in respect of Taxation
including for the avoidance of doubt any bond or other security issued
by any Taxation authority or other governmental agency representing
any such debts;
"Recipient" has the meaning given to it in Clause 8.4.1;
"Recipient's Assessment Period" has the meaning given to it in Clause
8.4.3;
"Registered Intellectual Property" means such of the Business Intellectual
Property or Intellectual Property owned by a Group Company as is the
subject of a registration or application for registration at any
Intellectual Property registry anywhere in the world;
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"Regulation" has the meaning given to it in Clause 5.1.1;
"Regulator" means in any jurisdiction any government or governmental agency
or person or body or authority, established or recognised by or pursuant to
statute or any self-regulatory organisation, professional body or other
person properly having statutory or legal power or authority to regulate
the conduct of any business of any of the Operations;
"Relevant Capacity" means for its own account or for that of any person,
firm or company (other than XL Insurance or any other Purchaser or the
Group Companies) or in any other manner and whether through the medium of
any company controlled by it or him (for which purpose there shall be
aggregated with its or his shareholding or ability to exercise control over
the shares held or control exercised by any person connected with
Winterthur or the Sellers);
"Relevant Commercial Operations" means corporate, partnership or other
legal entities and their subsidiaries engaged in business operations which
have consolidated annual revenues in excess of CHF250 million and conduct
business in more than one jurisdiction;
"Relevant Date" for the purpose of:
(i) Clause 8.2 means the date on which the relevant claim was made;
(ii) determining any amount referred to in Clauses 6.1 or 6.2 means the
date as at which the relevant circumstances exist; and
(iii) any Warranty means the date(s) as at which it is deemed given or
made;
"Relevant Employees" means the Business Employees and the Group Company
Employees;
"Relevant Operations" means insurance or reinsurance policies, treaties or
agreements including the Policies written by the Operations prior to the
Effective Time (but excluding any renewal of such policies, treaties or
agreements which take effect after the Effective Time);
"Reporting Accountants" means Deloitte & Touche or if that firm is unable
or unwilling to act on any matter referred to them under this Agreement a
firm of Chartered Accountants to be agreed by Winterthur and XL Insurance
within seven days of a notice by one to the other requiring such agreement
or failing such agreement to be nominated on the application of either of
them by or on behalf of the President for the time being of the Institute
of Chartered Accountants in England and Wales;
"Reserves" means all unearned premium reserves (including, without
limitation, any premium deficiency reserve or unexpired risk reserve
relating to unearned premium) and all reserves for incurred losses
including (without limitation) case reserves, reserves for incurred but not
reported losses, reserves for loss adjustment expenses, both allocated and
unallocated, and any reserve or provision in respect of dividends or other
similar payments accruing due but not yet paid, to policyholders prior to
the Effective Time in respect of any of the accident and health policies
written by the Operations (in each case without applying any discount
except as set forth in the next sentence) and determined before giving
effect to any reinsurance ceded or also any reinsurance receivables,
salvage and subrogation to the extent included in assets, reinsurance
retrospective premiums and reinsurance profit commissions. In determining
the Initial Net Reserves Amount and the Seasoned Net Reserves Amount, the
unearned premium reserve shall be calculated net of reinsurance prepaid
prior to 30 June 2001, which net amount shall then be adjusted to be equal
to 105.3% of such net amount less the actual operating expense ratio
(including, for the avoidance of doubt, acquisition costs) derived from the
Completion Financial Statements and computed on an annualised basis;
"Reserves Assets" means, in relation to a Business, the cash, reinsurance
receivables, salvage and subrogation rights to the extent reflected on the
Completion Balance Sheet as finally determined or other assets approved by
the Purchaser the aggregate value of which (after application of any asset
valuation or admissibility regulations) is equal to the Reserves of the
relevant Business as at the Effective Time;
"Restricted Activity" means:
(i) the conduct of property and casualty and accident and health insurance
business and related or ancillary activities anywhere in the world
involving the issue of insurance or reinsurance products (including
insurance or reinsurance of property and casualty risks or accident
and health risks written by or placed with captive insurers or
reinsurers and fronting arrangements) to Relevant Commercial
Operations; and
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(ii) the issue of any product to any customer of the Acquired SRS Business
where that product had previously been issued to that customer by the
Acquired SRS Business prior to Completion,
but excluding the Excluded Activities (and except as provided in paragraph
(ii) above for the avoidance of doubt the issue of insurance or reinsurance
products and/or the provision of risk management services of a type issued
or provided by the SRS Business prior to the date of this Agreement or
proposed to be issued or provided in accordance with the SRS Business Plan
(Document FDP 06.0.02.006) does not fall within the definition of
"Restricted Activity");
"Restricted Period" means three years commencing on the Completion Date;
"Retained Liability" means those Liabilities referred to in Clause 2.2.1 or
otherwise expressly retained by a Business Seller under this Agreement or
any Local Agreement and any other Liability of a Business Seller which is
not an Assumed Liability;
"Retrocession Contracts" means the contracts of reinsurance or retrocession
entered into by or on behalf of any Business Seller or any other member of
the CS Group in relation to the relevant Business but shall in no event
include the Sellers' Retrocession Agreement;
"Seasoned Net Reserves Amount" means an amount equal to:
(i) the amount of Reserves as at the End Date with respect to each of the
Operations which Reserves relate in each case solely to the Relevant
Operations thereof; plus
(ii) all losses and loss adjustment expenses (whether allocated or
unallocated) actually paid with respect to such Relevant Operations
after the Effective Time through and including the End Date; plus all
dividends and other similar payments actually paid to policyholders
between the Effective Time and the End Date inclusive in respect of
any of the accident and health policies; less
(iii) the amount of collectable reinsurance ceded as at the End Date with
respect to such Relevant Operations; less
(iv) without duplication of the amounts in paragraph (iii) the amount of
collectable reinsurance receivable as at the End Date with respect to
such Relevant Operations; less
(v) the amount of reinsurance actually received with respect to such
Relevant Operations after the Effective Time through and including the
End Date including any amounts received under reinsurance agreements
in effect prior to the Effective Time,
in each case determined in accordance with US GAAP after giving effect to
the adjustments in Clause 4.3.4 and set out in US Dollars. For the
avoidance of doubt, reinsurance, as used in this definition, does not
include the benefit of any reinsurance or retrocession agreement entered
into by any of the Operations or any member of the XL Insurance Group after
the Effective Time. Furthermore, any portfolio transfer from any of the
Operations to any other member of the XL Group after the Effective Time
shall be deemed not to have occurred. Finally, the calculation of Seasoned
Reserves shall be made without regard to and ignoring (x) the Limited
Recourse Receivables Financing Facility Agreement and any transactions
thereunder; and (y) the Sellers Retrocession Agreement and any transactions
thereunder. Clause 8.6.2 shall apply;
"Seasoned Net Reserves Payment" means any payment made or amount paid or
payable, whether by Winterthur or XL Insurance, under Clause 4.3;
"Seasoned Net Reserves Statement" has the meaning given to it in Clause
4.2.2;
"Sellers" means the Share Sellers and the Business Sellers and "Seller"
means any one of them;
"Sellers Retrocession Agreement" means collectively both the sellers
retrocession agreements in the agreed terms and made between Winterthur and
Winterthur International (Re);
"Senior Employee" means any Relevant Employee on an annual salary, fee and
other compensation (on the basis of full-time employment or consultancy) in
excess of CHF250,000 details of whom are contained in the Disclosure
Letter;
"Service Level Agreements" means the agreements in relation to separation
issues affecting the Operations and the CS Group after Completion to be
entered into at Completion between members of
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the CS Group and members of the XL Insurance Group (including the Group
Companies) which agreements are to be made pursuant to the provisions of
Clause 2.8;
"Shared IP" means all the Intellectual Property other than any trade marks
comprising the word "Winterthur" and/or "Winterthur" and device used in any
Operation at or immediately before Completion but which is or may be
required by any other businesses or companies within the CS Group and which
is owned and retained by a member of the CS Group details of material items
of which are set out in Schedule 11; "Shares" means the shares in the
capital of the Companies specified in paragraph 1 of Part 1 of Schedule 1;
"Share Sellers" means each of the Sellers which will be selling Shares
whose names are set out in Part 1 of Schedule 1;
"Specified Claim" means a claim by XL Insurance or any other Purchaser in
relation to the Warranties (including the Core Warranties) or under the
indemnities set out in Clauses 9.1.3, 9.1.6, 9.1.7, 9.1.9, 9.1.12, 9.1.13,
9.1.14, 9.1.15 and 9.1.18;
"SRS Business" means the business unit of the CS Group which operates under
the name "Strategic Risk Solutions" or "SRS";
"Subsidiaries" means the subsidiaries (including for the avoidance of any
doubt any branch of such subsidiaries) of the Companies details of which
are set out in Part 1 of Schedule 1;
"Supplier Contracts" means all contracts (other than any contract with
Employees or any Retrocession Contract) entered into on or prior to
Completion by or on behalf of any Business Seller with suppliers for the
provision of services wholly or primarily in connection with the relevant
Business;
"Swiss Francs" or "CHF" means the lawful currency for the time being of
Switzerland;
"Swiss GAAP" means Swiss generally accepted accounting principles as in
effect from time to time;
"Swiss Transfer" has the meaning given to it in paragraph 4 of Part 2 of
Schedule 5;
"Tax Deed" means the tax deed in the agreed terms between the parties and
the Tax Matters Agreement;
"Tax Matters Agreement" means the tax matters agreement in the agreed terms
between XL America, Inc., Winterthur US Holdings, Inc. and the US Business
Seller;
"Taxation" or "Tax" means all forms of taxation whether direct or indirect
and whether levied by reference to income, profits, gains, net wealth,
asset values, turnover, added value, sales, purchases, insurance premiums,
instruments or other reference and statutory, governmental, state,
supranational, provincial, local governmental or municipal impositions,
duties, contributions, surcharges, rates and levies (including without
limitation social security contributions and any other payroll taxes) and
whether imposed by way of a withholding or deduction for or on account of
tax or otherwise and in respect of any person and (save insofar as
attributable to the unreasonable delay or default of a Purchaser or a Group
Company after Completion ) all penalties, fines, charges, costs and
interest relating thereto;
"Third Party Consents" means all consents, licences, approvals, permits,
authorisations or waivers required from third parties for the conveyance,
transfer, assignment, novation or underletting in favour of the Purchasers
of any of the Shares, Business Assets (including, for the avoidance of
doubt the Properties and the Additional Properties) or Assumed Liabilities
in terms reasonably acceptable to XL Insurance and "Third Party Consent"
means any one of them;
"Third Party Software" means all rights granted to any Business Seller or
Group Company or any other member of the CS Group in respect of software
and associated documentation and used wholly or primarily in or in
connection with the Operations;
"Trade Mark Licence Agreement" means the trademark licence agreement in the
agreed terms between the parties;
"Transaction" means any transaction, act, event or omission of whatsoever
nature including without limitation any change in the residence of any
person for the purpose of any Taxation and references to a Transaction
effected prior to Completion including references to a transaction
completed on or after
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Completion in pursuance of a legally binding obligation or an arrangement
in either case whether or not conditional incurred or entered into prior to
Completion;
"Transfer of Operations" means separately each transfer by a Seller to a
Purchaser of:
(i) the Shares in a Group Company; and
(ii) the Business and Business Assets and assumption of Assumed Liabilities
of a Business Seller;
"Transfer Provisions" means within the European Union the national
legislation implementing the provisions of the European Community's
Directive 77/98/EEC dated 14 February 1977 as amended applicable to a
Business Employee's employment the effect of which in relation to relevant
Business Employees is to transfer their employment to a member of the XL
Insurance Group by operation of law;
"US Business Seller" means General Casualty Company of Wisconsin;
"US Dollars", "USD", or "US$" means the lawful currency for the time being
of the United States of America;
"US GAAP" means United States generally accepted accounting principles as
in effect at the respective time of the applicable financial statements;
"US Group Companies" means Winterthur International America Insurance
Company, Winterthur International America Underwriters Insurance Company
and Winterthur International Services of America, Inc.;
"VAT" means within the European Community such Tax as may be levied in
accordance with but subject to derogations from the Directive 77/338/EEC
and outside the European Community any Taxation levied by reference to
added value or sales;
"VATA" means the Value Added Taxes Act 1994;
"Warranties" means the warranties contained in Schedule 7 and Clause 8.1
hereof and "Warranty" means any one of them;
"Warranty Claim" means a claim by XL Insurance under or pursuant to the
provisions of Clause 8.1;
"WIICL" means Winterthur International Insurance Company Limited details of
which are set out in paragraph 3.1.2 of Part 1 of Schedule 1;
"Winterthur Disagreement Notice" has the meaning given to it in Clause
4.2.4;
"Winterthur Group" means Winterthur and any companies it controls (but
excluding from and after Completion the Group Companies);
"Winterthur Group Reporting Manual" means the document relating to the
Winterthur Group's accounting and reporting procedures which is referred to
in the Disclosure Letter;
"Winterthur International" means in the context of Schedule 5 the Group
Companies and Businesses comprising the Operations;
"Winterthur International (Re)" means the company whose legal name is
Winterthur International, being a joint-stock company incorporated under
the laws of Switzerland (registered number CH-020.3.927.914-5) whose
registered office is at Gruzefeldstrasse 41, CH-8401 Winterthur, but which
is generally known as "Winterthur International (Re)" or "WIRE";
"Winterthur's Actuary" means Bacon & Woodrow;
"Winterthur's Accountants" means KPMG Audit Plc;
"Winterthur's Solicitors" means Linklaters of One Silk Street, London EC2Y
8HQ;
"XL Insurance Group" means XL Insurance and its Associated Companies;
"XL Insurance's Accountants" means PricewaterhouseCoopers;
"XL Insurance's Actuary" means Tillinghast-Towers Perrin or an
internationally recognised actuarial firm designated by XL Insurance; and
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"XL Insurance's Solicitors" means Clifford Chance Limited Liability
Partnership of 200 Aldersgate Street, London EC1A 4JJ.
1.5 Subordinate Legislation Any reference to a statute or a statutory provision
shall include any subordinate legislation made from time to time under that
statute or provision.
1.6 Modification, etc. of Statutes Any reference to a statute or a statutory
provision shall include such statute or statutory provision as from time to
time modified or re-enacted or consolidated whether before or after the
date of this Agreement so far as such modification, re-enactment or
consolidation applies or is capable of applying to any transactions entered
into on or prior to Completion and (so far as liability thereunder may
exist or can arise) shall include also any past statute or statutory
provision (as from time to time modified, re-enacted or consolidated) which
such statute or statutory provision has directly or indirectly replaced.
1.7 Connected Persons A person shall be deemed to be connected with another if
that person is connected with such other within the meaning of Section 839
of the Income and Corporation Taxes Act 1988.
1.8 Companies Act 1985 The words "subsidiary", "holding company", "parent
undertaking" and "subsidiary undertaking" shall have the same meanings in
this Agreement as their respective definitions in the Companies Act 1985.
1.9 Singulars, etc. Words in the singular shall include the plural (and vice
versa), words importing one gender shall include the other and references
to a person shall include a body corporate.
1.10 Schedules, etc. References to this Agreement shall include any Schedules to
it and references to Clauses and Schedules are to Clauses of and Schedules
to this Agreement.
1.11 English Legal Terms References to any English legal term or concept
including without limitation those for any action, remedy, method of
judicial proceeding, document, statute, court official, governmental
authority or agency shall in respect of any jurisdiction other than England
be construed as references to the term or concept which most nearly
corresponds to it in that jurisdiction.
1.12 Information Any reference to books, records or other information means
books, records or other information in any form including paper,
electronically stored data, magnetic media, film and microfilm.
1.13 Currency Conversion Any amount to be converted from one currency into a
second currency for the purpose of this Agreement shall be converted into
an equivalent amount at the Relevant Date at the Conversion Rate prevailing
at the Relevant Date.
1.14 Materiality In this Agreement including for the avoidance of doubt Schedule
7 reference to "material" or "material to the Operations" or any other
concept of materiality shall (except as otherwise expressly provided and
for this purpose the introductory words in this Clause 1 shall not apply)
mean material in the context of any one of the individual Businesses or
Group Companies.
1.15 VAT Groups Any reference in this Agreement to any person shall (where
appropriate in relation to VAT matters) be deemed at any time when such
person is a member of a group for VAT purposes to include a reference to
the representative member of such group at such time.
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1.16 Date of the Agreement Any reference in this Agreement to "the date hereof"
or "the date of this Agreement" or any other similar phrase shall be a
reference to 15 February 2001, save where and to the extent that such
phrase is expressly deemed, under the terms of this Agreement, to be a
reference to another date, in which case such reference shall remain a
reference to such other date.
2. Agreement to Sell the Operations
2.4 Sale and Purchase of the Operations
2.4.1 As of the Effective Time Winterthur and the other Sellers shall sell,
transfer, assign, convey and deliver with full title guarantee and
(except in respect of the Business Assets as otherwise provided under
this Agreement or specifically disclosed in the Disclosure Letter or
as arising by operation of law in the normal course of trading) free
from any Encumbrance and XL Insurance shall procure that there are
purchased by the Purchasers with the benefit of the several
warranties, representations, covenants and undertakings contained in
this Agreement together with all rights and advantages attaching
thereto at Completion all right, title and interest of Winterthur and
the other relevant Sellers in the whole of the Operations as a going
concern including the Shares and the Businesses.
2.4.2 Without limitation to the generality of Clause 2.1.1 and subject to
Clause 2.1.3 there shall be included in the sale under this Agreement
(and where relevant the Local Agreements) without limitation the
following: (i) the Shares;
(ii) the benefit of each of the Contracts, the Lease Agreements and
the Licence Agreements (subject in each case to the burden of the
same);
(iii) the benefit of each of the Policies and the Retrocession
Contracts (subject in each case to the burden of the same) and
the Reserves Assets in respect of each Business except where
Clause 2.7 applies in relation to such Business;
(iv) all renewal rights with respect to all Policies and Retrocession
Contracts, whether or not Clause 2.7 applies;
(v) the Properties and the Additional Properties;
(vi) the Business Goodwill;
(vii) the Books and Records;
(viii) the Business Office Equipment;
(ix) the Business Intellectual Property (subject to Clause 2.1.4);
(x) all assets reflected or that should be reflected on a balance
sheet for the Business prepared in accordance with US GAAP
excluding for the avoidance of doubt any assets referred to
specifically in this Clause 2.1.2;
(xi) the benefit of any fronting arrangements to which any Business
Seller or Group Company is a party in relation to the Operations
(subject to the burden of the same);
(xii) the benefit of the policies of life assurance and insurance to
which any of the Business Sellers is a party in relation to the
Operations;
(xiii) the benefit (so far as the same can lawfully be assigned or
transferred to or held in trust for XL Insurance and/or the other
Purchasers) of the Claims;
(xiv) the Receivables and the benefit of all securities relating
thereto and of all guarantees, indemnities and rights in respect
of the same; and
(xv) all other property, rights and assets owned or used by the
Business Sellers at or immediately before Completion to the
extent used or exercised by or comprising a part of the
Operations or which are necessary to carry on the relevant
Business as carried on immediately prior to Completion.
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2.4.3 There shall be excluded from the sale of any Business under this
Agreement (or where relevant the Local Agreements) the following
(together the "Excluded Assets"): (xvi) where Clause 2.7 applies, the
Policies, Retrocession Contracts and Reserves Assets relating to the
relevant Business;
(xvii) debts due from any relevant Taxation authority in respect of
Taxation as at the Effective Time;
(xviii) any contracts or agreements which would fall within the
definition of "Policies" if such definition did not exclude such
contracts or agreements insofar as they relate to any period
prior to 1 January 1986;
(xix) any assets comprised in or relating to Excluded Operations; and
(xx) any shares held by any of the Business Sellers save to the extent
that such shares are included in the Reserves Assets with the
agreement of the Purchaser (including for the avoidance of doubt
any interests in joint ventures).
2.4.4 Asset Transfer Principles
(xxi) If prior to Completion and to the extent that Clauses 2.1.1 to
2.1.3 do not expressly provide whether a particular asset or
right shall be included in the sale under this Agreement or after
the application of or in attempting to apply the provisions of
Clauses 2.1.1 to 2.1.3 there is any ambiguity or uncertainty as
to whether a particular asset or right shall be included in the
sale under this Agreement the parties shall use their reasonable
efforts to provide for such matters or to resolve such
ambiguities or uncertainties according to the general principles
set out in Part 6 of Schedule 2 (the "Asset Transfer
Principles"). In any case, the parties agree that the provisions
of Clauses 2.1.1 to 2.1.3 shall be interpreted with due regard to
the Asset Transfer Principles provided that such Asset Transfer
Principles shall not override a specific provision of this
Agreement.
(xxii) If the parties cannot reach agreement either on the application
of the Asset Transfer Principles or in respect of jointly used
Assets under Clause 2.1.5 or 2.1.6 in any particular case within
10 Business Days of the first notification of such instance by
one party to the other party (a "Deadlock Matter"), the parties
shall refer the Deadlock Matter to in the case of Winterthur John
Dacey and in the case of XL Insurance Robert Lusardi for
resolution.
(xxiii) If the Deadlock Matter cannot be resolved by the persons
referred to in Clause 2.1.4(ii) within 10 Business Days of the
Deadlock Matter being so referred to them under the provisions of
this Clause 2.1.4, then the parties shall jointly instruct such
other party as may be selected by the parties or failing
agreement between them by the President of the Institute of
Chartered Accountants of England and Wales to provide their own
independent opinion and study as to the appropriate resolution of
the Deadlock Matter and the parties shall use reasonable
endeavours to procure that such report and opinion if provided in
relation to this Clause 2.1.4 is provided no later than 20
Business Days prior to the expected date of Completion.
(xxiv) The parties agree to the extent permitted by law to adopt the
final resolution determined in accordance with the provisions of
this Clause 2.1.4 for all purposes pursuant to this Agreement.
2.4.5 Jointly Used Assets Transferred If an asset or right is discovered
after Completion which relates to the Operations as at Completion and
has been included in the sale under this Agreement but is necessary
for any member of the Winterthur Group to carry on its business as
carried on immediately prior to Completion and in respect of which no
Service Level Agreement has been entered into at Completion,
Winterthur may give notice to XL Insurance of such discovery within
twelve months following Completion in which case the parties shall
co-operate so as to provide to Winterthur and/or the relevant
member(s) of the Winterthur Group such level of use of the asset or
right as it enjoyed before Completion by entering into a Service Level
Agreement in respect of such asset or right on the same terms as would
have been granted had the
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appropriate Service Level Agreement been entered into under this
Agreement at Completion and in accordance with the principles set out
in paragraph 4.1 of Part 1 of Schedule 2.
2.4.6 Jointly Used Assets Not Transferred If an asset or right is
discovered after Completion which relates to the Operations as at
Completion but which has not been included in the sale under this
Agreement and is necessary for any Group Company and/or Business to
carry on its business as carried on immediately prior to Completion
and in respect of which no Service Level Agreement has been entered
into at Completion, XL Insurance may give notice to Winterthur of such
discovery within twelve months following Completion in which case the
parties shall co-operate so as to provide to the relevant Group
Company and/or Business such level of use of the asset or right as it
enjoyed before Completion by entering into a Service Level Agreement
in respect of such asset or right on the same terms as would have been
granted had the appropriate Service Level Agreement been entered into
under this Agreement at Completion and in accordance with the
principles set out in paragraph 4.1 of Part 1 of Schedule 2.
2.4.7 In the case of Registered Intellectual Property the sale agreed in
Clause 2.1 shall be effected by means of assignments in a form
suitable for transferring such rights and recording such transfer in
the relevant registries. The assignments shall be effected at or as
soon as reasonably practicable after Completion.
2.4.8 Where any Property or Additional Property will not vest in XL
Insurance, any member of the XL Insurance Group or any Group Company
pursuant to the sale of the Shares under this Agreement then the
provisions of Schedule 10 and in particular Part 1B thereof shall
apply including where any Property is to be transferred under the
Asset Transfer Principles as an Asset (as defined in Part 6 of
Schedule 2).
2.4.9 Where any Property or Additional Property has vested in XL Insurance,
any member of the XL Insurance Group or any Group Company pursuant to
the sale of Shares under this Agreement but in accordance with the
Asset Transfer Principles should have remained vested in the
Winterthur Group then the provisions of Schedule 10 and in particular
part 1B shall apply save that the "Sellers" shall be deemed to be a
reference to the relevant member of the Winterthur Group and a
reference to the "Purchaser" shall be deemed to be a reference to XL
Insurance, any member of XL Insurance Group and Group Company as
appropriate.
2.4.10 Where following Completion and/or following the transfer of any
Property or Additional Property pursuant to the Asset Transfer
Principles any Property, Additional Property or any Property which is
an Asset (as defined in Part 6 of Schedule 2, is or is to be occupied,
possessed or shared by any member of the Winterthur Group and any
member of the XL Insurance Group or any Group Company then the
provisions of Schedule 10 and in particular Part 1C thereof shall
apply.
2.4.11 For the avoidance of doubt Clauses 2.1.8, 2.1.9 and 2.1.10 shall
also apply to any Property or Additional Property that falls within
Clauses 15.4.1 and 15.5.
2.4.12 Where at Completion any Property or Additional Property was to vest
in any Purchaser pursuant to Schedule 10 of this Agreement (including
a Licence to Occupy) but such vesting has not occurred then: (xxv)
Winterthur shall and shall procure that the Sellers shall and the
relevant Purchasers shall use all reasonable endeavours to procure the
vesting of the Property or Additional Property in the relevant
Purchaser (and the Third Party Consents necessary to allow such
vesting to occur) as soon as practicable after Completion and mutatis
mutandis in accordance with the principles set down in Schedule 10;
(xxvi) for the avoidance of doubt all other Clauses of this Agreement
relating to post-Completion obligations shall continue to apply
(mutatis mutandis) in relation to the Property and the Additional
Property including Clauses 2.1.8, 2.1.9, 2.1.10 and 2.1.11.
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2.4.13 Where at Completion Clause 2.1.12 applies to any Property or
Additional Property, then Clauses 2.14 to 2.17 shall apply to that
Property or Additional Property and the definitions of Leasehold
Property and Freehold Property shall for those purposes include any
freehold property or leasehold property respectively comprising any
Additional Property.
2.4.14 The Purchasers shall pay or procure the payment to the Sellers (or
as the Sellers may direct) on and from Completion until such time as
any Property or Additional Property vests in the relevant Purchaser or
as any licence with respect to such Property or Additional Property
terminates pursuant to the provisions of Clause 2.1.17 a fee
determined by the relevant Seller (acting reasonably) equal to the
proper and reasonable proportion attributable to the relevant
Purchaser's use and occupation of any Property or Additional Property
of: (xxvii) all rents, insurance premiums and service charges and
other amounts properly payable in respect of any Leasehold Property in
accordance with the relevant Lease Agreements; and
(xxviii) all rates, electricity, phone charges and other general
outgoings (excluding taxes of any nature) in respect of any
Freehold Property.
2.4.15 From Completion until such time as any Property or Additional
Property vests in the relevant Purchaser the relevant Purchaser shall
be entitled to occupy the Property or Additional Property as a
licensee to the same extent of the occupation immediately prior to
Completion or as agreed between the parties (acting reasonably) as
follows: (xxix) in relation to any Leasehold Property in accordance
with the terms and provisions contained in the relevant Lease
Agreement and in accordance with any matter affecting any reversionary
interest (notwithstanding any prohibition on granting such a licence
in any Lease Agreement); and
(xxx) and in relation to any Freehold Property all parties shall act
reasonably in co-operating with the others in relation to that
occupation.
2.4.16 Where any Third Party Consent is required to vest any Freehold
Property or Leasehold Property in the relevant Purchaser and such
consent is not to be unreasonably withheld by the third party from
whom consent is required and such consent has not been obtained within
six (6) months after Completion (subject to extension as agreed by the
parties) Winterthur shall or shall procure that the relevant Seller
(or any other relevant party) shall apply to court (or other relevant
tribunal) for a declaration that the relevant third party is
unreasonably withholding consent and if and when such declaration is
obtained the relevant parties shall enter into such documents in
accordance with Schedule 10 to vest the relevant Freehold Property or
Leasehold Property in the relevant Purchaser.
2.4.17 If the relevant Third Party Consent in relation to any Freehold
Property or Leasehold Property has not been obtained within nine (9)
months after Completion (subject to extension as agreed by the
parties) or the Freehold Property or Leasehold Property has not vested
in the relevant Purchaser for any other reason (other than as provided
for in Clause 2.1.16) XL Insurance may by 10 Business Days' notice in
writing to Winterthur: (xxxi) require the Sellers to complete (or
procure the completion of and Winterthur shall procure the completion
of) any documents or do any thing or act necessary (save to the extent
that such thing or act would give rise to a breach of contract or a
contravention of law) to vest the relevant Freehold Property or
Leasehold Property in the relevant Purchaser in accordance with
Schedule 10 notwithstanding that the requisite Third Party Consent has
not been obtained and the parties shall complete (or procure the
completion of) all arrangements necessary to vest the Freehold
Property or Leasehold Property in the relevant Purchaser within 30
Business Days of the date of such notice failing which the relevant
Purchaser may at any time thereafter terminate the relevant
Purchaser's licence to occupy any Freehold Property or Leasehold
Property contemplated by Clause 2.1.15 by notice in writing to the
relevant Seller and the Purchasers shall have no further Liabilities
hereunder (including, without limitation, under Clause 2.1.14 and
Clause 2.2.2) with respect to such Freehold Property or Leasehold
Property; or
(xxxii) at any time thereafter terminate any licence to occupy any
Freehold Property or Leasehold Property implied by Clause 2.1.15
on 30 Business Days' notice
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to the relevant Seller and the Purchasers shall have no further
Liabilities hereunder (including, without limitation, under
Clause 2.1.14 and Clause 2.2.2) with respect to such Freehold
Property or Leasehold Property.
2.4.18 Where at Completion any Property or Additional Property vests in any
Purchaser pursuant to the sale of Shares under this Agreement and any
member of the Winterthur Group is still in occupation of part of that
Property or Additional Property but a Licence to Occupy or Consent has
not been obtained in accordance with Part 1C of Schedule 10, then:
(xxxiii) Clause 2.1.10 shall continue to apply (and for the avoidance
of doubt all other Clauses of this Agreement relating to
post-Completion obligations shall continue to apply mutatis mutandis
in relation to the Property and Additional Property); and
(xxxiv) Clauses 2.1.19, 2.1.20, 2.1.21 and 2.1.22 shall apply.
2.4.19 Where Clause 2.1.18 applies to any Property or Additional Property,
then this Clause and Clauses 2.1.20 to 2.1.22 (inclusive) shall apply
to that Property or Additional Property and the definitions of
"Leasehold Property" and "Freehold Property" shall for those purposes
include any leasehold property or freehold property respectively
comprising any Property or Additional Property and any reference to
"Licence to Occupy" or "Consent" means a Licence to Occupy or Consent
as those terms are defined in Part 1C of Schedule 10 of this
Agreement.
2.4.20 From Completion until such time as any Consent is obtained and any
Licence to Occupy is entered into in favour of any member of the
Winterthur Group such member shall be entitled to occupy the Property
or Additional Property as a licensee on such reasonable terms as the
relevant parties shall agree and such member shall pay (and Winterthur
shall procure that such member pays) on and from Completion until such
time as any Licence to Occupy is completed or any licence contemplated
by this clause is terminated in accordance with Clause 2.1.21 a fee
equal to the proper and reasonable proportion attributable to the
relevant member of the Winterthur Group's use and occupation of any
Property or Additional Property as determined by the relevant
Purchaser (acting reasonably) of: (xxxv) all rents, insurance premiums
and service charges and other amounts properly payable in respect of
any Leasehold Property under the relevant Lease Agreements; and
(xxxvi) all rates, electricity, phone charges and other general
outgoings (excluding taxes of any nature other than VAT properly
payable on any such outgoings) in respect of any Freehold
Property.
2.4.21 (Subject to Clause 2.1.22) following the parties' using all
reasonable endeavours to procure any Consent in accordance with Clause
2.1.10 if any third party refuses to grant any Consent for any
Leasehold Property or Freehold Property in relation to any Licence to
Occupy or at any time serves notice on the relevant Purchaser
requiring the relevant Purchaser to cease all sharing of occupation
and possession of any Leasehold Property or Freehold Property with any
member of the Winterthur Group then: (xxxvii) the relevant Purchaser
shall be entitled to serve notice on any member of the Winterthur
Group terminating the licence contemplated by Clause 2.1.20; and
(xxxviii) any such member of the Winterthur Group shall (and
Winterthur shall procure that such member shall) upon the service
of any notice under Clause 2.1.21 forthwith vacate the relevant
Leasehold Property or Freehold Property causing as little
inconvenience as possible to the relevant Purchaser and making
good any damage thereby caused.
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2.4.22 If any Consent is required pursuant to Clause 2.1.18 and such
consent is not to be unreasonably withheld, then upon receiving
written notice from the Winterthur Group the Purchaser shall or shall
procure that (at the cost of the Winterthur Group) an application to
court or other relevant tribunal is made for a declaration that the
relevant third party is unreasonably withholding consent.
2.5 Liabilities
2.5.1 The Business Sellers shall remain responsible after the Effective
Time for:
(xxxix) all Liabilities and claims under the Policies and Retrocession
Contracts relating to any Business in respect of which Clause 2.7
applies (unless and until the relevant Policies and Retrocession
Contracts are transferred to a Purchaser and subject always to
any Liabilities such Purchaser may incur under any Reinsurance
Agreement entered into under Clause 2.7) whether such Liabilities
or claims arise before or after the Effective Time;
(xl) except as provided in Clause 2.2.2(ii), all Liabilities arising
under the Retrocession Contracts which have been incurred before
the Effective Time whether these relate to Policies which have
been transferred under Clause 2.1 or otherwise;
(xli) all Liabilities of the Business Sellers which were incurred or
relate to any period before the Effective Time other than (a)
those Liabilities referred to in Clause 2.2.1(i) or (ii) and (b)
those Liabilities which relate to the Business Assets, are
disclosed to XL Insurance in writing before Completion, are
readily quantifiable and are stated as Liabilities in the
Completion Balance Sheet;
(xlii) all Liabilities under Policies to the extent they relate to
periods prior to 1 January 1986;
(xliii) all Liabilities related to Excluded Assets or Excluded
Operations;
(xliv) (save in respect of the Policies to the extent that these are
transferred under Clause 2.1 and the Liabilities under such
Policies are not excluded pursuant to Clause 2.2.1(iv)) all
claims by any person outstanding against any Business Seller as
at the Effective Time or arising at any time by reason of any act
or omission of or by any Business Seller before the Effective
Time;
(xlv) any Taxation liability of any Business Seller; and
(xlvi) all Liabilities relating to each Freehold Property and
Leasehold Property prior to the time at which such relevant
property vests in the relevant Purchaser or, as applicable, on
and after termination of the license with respect thereto
pursuant to the provisions of Clause 2.1.17,
and shall promptly pay the Liabilities and settle the claims referred to in
Clauses 2.2.1(i), (ii), (iii), (iv), (v), (vi), (vii) and/or (viii) as
appropriate.
2.5.2 Subject as expressly provided elsewhere in this Agreement, the
relevant Purchaser shall be responsible after the Effective Time for:
(xlvii) all Liabilities arising under the Policies which have been
transferred to such Purchaser under Clause 2.1.2 (whether such
Liabilities arose before or after the Effective Time but subject
always to Clause 2.2.1(iv));
(xlviii) all Liabilities under the Retrocession Contracts relating to
any of the Businesses which Retrocession Contracts have been
transferred to the Purchaser under Clause 2.1.2(iii) to the
extent that those liabilities arise after the Effective Time or
are reflected in the Completion Balance Sheet;
(xlix) all Liabilities (other than those referred to in Clause
2.2.2(i) or Clause 2.2.2(viii)) incurred in connection with the
Businesses and the Business Assets after the Effective Time;
(l) all claims by any person in connection with the operation of any
relevant Business after the Effective Time; and
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(li) any Liabilities which relate to the Business Assets which are
disclosed to XL Insurance before Completion, are readily
quantifiable and are stated as Liabilities in the Completion
Balance Sheet,
(together the "Assumed Liabilities") and shall promptly pay the Liabilities
and settle the claims referred to in Clauses 2.2.2(i), (ii), (iii), (iv)
and/or (v) as appropriate.
2.5.3 The Assumed Liabilities are assumed by the relevant Purchaser subject
to and so that such Purchaser to the extent permitted by Applicable
Laws shall have and be entitled to the benefit of the same rights,
powers, remedies, claims, defences, obligations, conditions and
incidents (including without limitation rights of set-off and
counterclaim) as the relevant Business Seller enjoyed. The Purchasers'
sole responsibility in respect of any Policies or Retrocession
Contracts relating to any Business to which Clause 2.7 applies shall
be to perform their obligations under the relevant Reinsurance
Agreement as provided in Clause 2.
2.6 Indemnities
2.6.1 XL Insurance agrees with Winterthur (for itself and in trust for each
member of the Winterthur Group) that, subject as expressly provided
elsewhere in this Agreement, XL Insurance shall and shall procure that
any other Purchaser shall indemnify and hold harmless and keep
indemnified and held harmless the Sellers and each member of the
Winterthur Group and their respective directors, officers, agents,
employees and Associated Companies against:
(lii) all Assumed Liabilities including for the avoidance of doubt any
such Assumed Liability which is or is deemed to be or becomes a
Liability of Winterthur and/or any other Seller by virtue of any
Applicable Laws; and
(liii) any Losses which Winterthur and/or any other Seller may suffer
by reason of any Purchaser's failure to comply with its
obligations under Clause 2.2.2 or otherwise by reason of
Winterthur and/or any other Seller taking any reasonable action
to avoid, resist or defend against any Assumed Liability.
2.6.2 Winterthur agrees with XL Insurance (for itself and in trust for each
member of the Purchaser's group) that Winterthur shall and shall
procure that the Sellers shall indemnify and hold harmless and keep
indemnified and held harmless XL Insurance, each other Purchaser and
their respective directors, officers, agents, employees and Associated
Companies against: (liv) any Liability of any Seller which is not an
Assumed Liability, including, without limitation, each Retained
Liability and including for the avoidance of doubt of any such
Liability which is or is deemed to be or becomes a Liability of a
Purchaser or any of the Operations by virtue of any Applicable Laws;
and
(lv) any Losses which XL Insurance and/or any other Purchaser may
suffer by reason of any Seller's failure to comply with its
obligations under Clause 2.2.1 or otherwise by reason of XL
Insurance and/or any other Purchaser taking any reasonable action
to avoid, resist or defend against any Liability.
2.7 Pre-emption rights Winterthur shall procure that on or prior to Completion
any and all rights of pre-emption over or other restrictions on transfer
applying in relation to the Shares are waived irrevocably by the persons
entitled thereto.
2.8 Identity of Purchasers and Sellers
2.8.1 XL Insurance has proposed that those companies or details of types of
companies (such details to include jurisdiction of incorporation and
such other details as Winterthur may reasonably request) referred to
in paragraph 6 of Part 1 of Schedule 2 will purchase the Shares and/or
Business Assets and to assume the Assumed Liabilities or any part
thereof.
2.8.2 Notwithstanding Clause 2.5.1 XL Insurance shall be entitled to change
its proposals referred to in Schedule 2 and nominate by notice in
writing to Winterthur at any time up to 10 Business Days prior to the
expected Completion Date one or more Purchasers (being in each case a
subsidiary of XL Insurance whose obligations to any Seller under this
Agreement or any Local
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Agreement shall be guaranteed by XL Insurance in the terms set out in
Clause 17) to purchase any of the Shares and/or Business Assets and to
assume the Assumed Liabilities or any part thereof subject to
obtaining Winterthur's prior consent to such nomination (such consent
not to be unreasonably withheld or delayed and the reasons for the
withholding of such consent having been provided in writing to XL
Insurance along with any withholding of consent). For the purpose of
this Clause 2.5.2 consent shall only be considered to have been
reasonably withheld if it has been withheld for a material financial,
regulatory or other bona fide reason of the Sellers.
2.8.3 The parties shall procure that any Purchaser referred to in Schedule
2 or nominated (Winterthur having consented to such nomination under
Clause 2.5.2) under this Clause 2.5 and any Seller shall become a
party to this Agreement by entering into a Deed of Adherence.
2.9 Local Agreements
2.9.1 Winterthur shall or shall procure that the relevant Sellers shall and
XL Insurance shall or shall procure that the relevant Purchasers shall
enter into such Local Agreements in individual jurisdictions as may be
necessary or deemed (by both Winterthur and XL Insurance) to be
desirable to give effect to the transfer of the Operations in such
jurisdictions on Completion or such earlier date as may be agreed
between Winterthur and XL Insurance. To the extent that the provisions
of this Agreement are inconsistent with or additional to the
provisions of a Local Agreement, the provisions of this Agreement
shall prevail and Winterthur and XL Insurance shall procure that the
provisions of the relevant Local Agreement are adjusted so far as
permissible under the laws of the relevant jurisdiction to the extent
necessary to give effect to the provisions of this Agreement and/or
that the relevant Seller and the relevant Purchaser comply with the
provisions of this Agreement as though they were bound by such
provisions in place of the provisions of the relevant Local Agreement,
save in relation to any Local Agreement to which the US Business
Seller is a party or where Winterthur and XL Insurance otherwise agree
in writing that such Local Agreement shall expressly override the
provisions of this Agreement. For the avoidance of doubt, to the
extent that any Local Agreement is otherwise terminated or would not
otherwise apply, the rights and the obligations of the parties to such
Local Agreement, as contemplated by this Agreement, shall in no way be
amended, modified, waived or otherwise affected. 2.9.2 For the
avoidance of doubt in relation to the US Business Seller the
provisions of any Local Agreement to which it is a party shall in no
way amend, modify, waive or otherwise affect any of the rights or
obligations of the parties to this Agreement, as between the parties
to this Agreement.
2.9.3 Notwithstanding the above, any provision in the Service Level
Agreement in relation to Supply Tax (as defined in the Service Level
Agreement) shall apply in accordance with its terms whether or not
such provision is consistent with the terms of this Agreement.
2.10 Portfolio Transfers
To the extent that paragraph 2 of Part 1 of Schedule 2 envisages the
transfer of a Portfolio (comprising Policies and related Retrocession
Contracts) to a Purchaser and it is not practicable for whatever reason to
effect such transfer at Completion Winterthur and XL Insurance shall or
shall procure that the relevant Seller and relevant Purchaser enter into
the Interim Arrangements. XL Insurance may propose changes to the Interim
Arrangements at any time up to 5 Business Days prior to the expected
Completion Date subject to obtaining Winterthur's prior consent to such
change (such consent not to be unreasonably withheld or delayed). The
Sellers shall provide to the relevant Purchaser such information as it may
reasonably request at any time after the date of this Agreement in relation
to the Policies and the Retrocession Contracts comprised in any Portfolio
(including as to whether or not the other parties to such Policies or
Retrocession Contracts have consented or have the right to object to a
transfer of the same to the Purchaser).
2.11 Service Level Agreements and Other Agreements The parties shall use
reasonable endeavours to negotiate in good faith and enter into the
following agreements at Completion namely:
2.11.1 Service Level Agreements similar to those service level agreements
currently existing (unless the same are to be continued after
Completion by agreement between the parties) or such
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further agreements as may be required between any member of the
Winterthur Group and any of the Operations after Completion in
relation to those inter-dependencies which are referred to in the
Disclosure Letter and in accordance with the principles set out in
paragraph 4 of Part 1 of Schedule 2 and any additional Service Level
Agreements which may be required pursuant to the provisions of Clauses
2.1.5 and 2.1.6;
2.11.2 the Life and Pensions Distribution Agreement in accordance with the
principles set out in paragraph 4.2 of Part 1 of Schedule 2;
2.11.3 quota share reinsurance agreements in accordance with the principles
set out in paragraph 2.2.1 of Part 1 of Schedule 2;
2.11.4 fronting or other similar agreements or arrangements in accordance
with the principles set out in Part 1 of Schedule 2;
2.11.5 where applicable, management or other similar agreements or
arrangements in accordance with the principles set out in Part 1 of
Schedule 2;
2.11.6 the Trade Mark Licence Agreement in accordance with the principles
set out in Clause 15.6; and
2.11.7 such other types of agreements as may be necessary or appropriate to
give effect to any of the principles set out in this Agreement.
2.12 Structural Changes Winterthur and XL Insurance shall give appropriate
and due consideration to each other's requests to optimise the
structure of the reorganisations referred to in Clause 5.1.4 or the
Transfer of Operations.
3. Purchase Price
3.4 Calculation of Purchase Price
3.4.1 The aggregate consideration for the purchase of the Operations shall
be an amount equal to the sum (such sum being hereinafter referred to
as the "Purchase Price") of: (lvi) the Pro-forma Net Asset Value of
the Operations as at 30 June 2001 (as determined and adjusted pursuant
to Schedule 5); and
(lvii) USD53 million (the "Premium") subject to adjustment pursuant to
Clause 3.1.5.
3.4.2 At Completion XL Insurance shall or shall procure that other
Purchasers as appropriate pay to Winterthur or other Sellers as
appropriate an aggregate amount which is equal to the sum (such sum
being hereinafter referred to as the "Preliminary Purchase Price") of:
(lviii) the Pro-forma Net Asset Value of the Operations as at 31
December 2000 (as determined pursuant to Schedule 5); and
(lix) the Premium.
3.4.3 The Preliminary Purchase Price and the Purchase Price shall be paid
in accordance with the Payment Agreement.
3.4.4 Following Completion the Pro-forma Net Asset Value of the Operations
as at 30 June 2001 shall be determined in accordance with Schedule 5.
3.4.5 If the Purchase Price as so finally determined exceeds the
Preliminary Purchase Price, XL Insurance shall or shall procure that
other Purchasers as appropriate shall pay to Winterthur or any other
Seller an amount equal to such excess. If the Preliminary Purchase
Price exceeds the Purchase Price as so finally determined, Winterthur
shall or shall procure that other Sellers as appropriate shall refund
to XL Insurance or any other Purchaser a portion of the Preliminary
Purchase Price being an amount equal to such excess (and, if relevant,
together with an additional amount equal to the amount by which the
Pro-forma Net Asset Value is less than zero). If the Pro-forma Net
Asset Value as at 30 June 2001 ("Closing NAV") is less than 80% of the
Pro-forma Net Asset Value as at 30 September 2000
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("Opening NAV"), the Premium shall be adjusted as follows and
Winterthur shall pay to XL Insurance the difference between the
Preimium under Clause 3.1.1 and the adjusted Premium calculated in
accordance with the table below:
Closing NAV Premium (USD million)
1. Greater than or equal to 80% of 50 + 3 = 53
Opening NAV
2. Greater than zero and less than {50 x Closing NAV} + 3
------------
80% of Opening NAV Opening NAV
3. Less than or equal to zero 0 + 3 = 3
The Closing NAV and Opening NAV shall be calculated on a like-for-like
basis (including that the Closing NAV shall be calculated without
reference to any capital contribution made by Winterthur (or any
Associated Company other than a Group Company) to any Group Company
after 30 September 2000).
The payment of any amounts due under this Clause 3.1.5 shall be made
within five Business Days of the date on which the Purchase Price is
so finally determined and all amounts due under this Clause 3.1.5
shall include interest thereon (from and including the Completion Date
until the date such payment is made) at a non-compounding rate per
annum of 0.5 per cent above the Base Rate.
3.4.6 Without otherwise affecting any provision of this Agreement, the
parties acknowledge that XL Insurance and the other Purchasers may
credit, against the cash payment for the Purchase Price and
Preliminary Purchase Price, any purchase price paid under any Local
Agreement.
3.5 Method of Payment
Wherever in this Agreement provision is made for payment by one party to
another such payment shall be made in US Dollars and subject to the terms
of the Payment Agreement be effected by crediting the account specified in
the Payment Accounts Details of the party entitled to payment by wire
transfer of immediately available funds on or before the due date for
payment unless the payee by notice in writing to the payer not later than
three Business Days prior to the due date for payment elects to be paid by
banker's draft drawn on any international bank reasonably acceptable to the
payer and having an office in London, Zurich, the United States or Bermuda.
Payment of such sum shall be a good discharge to the payer (and those on
whose behalf such payment is made) of its (and their) obligation to make
such payment and the payer (and those on whose behalf such payment is made)
shall not be obliged to see to the application of the consideration as
between the relevant Sellers in the case of a payment to Winterthur or as
between the relevant Purchasers in the case of a payment to XL Insurance.
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3.6 Allocation of Purchase Price
3.6.1 The Purchase Price shall be allocated to the Operations in accordance
with the principles set out in this Clause 3.3 as the parties shall
mutually agree. Unless otherwise agreed in writing by the parties, the
parties shall as soon as practicable after the date of this Agreement
instruct their financial advisors Morgan Stanley in the case of the
Purchasers and Credit Suisse First Boston in the case of the Sellers
to provide (by the time contemplated by the Payment Agreement) their
opinion and study as to the appropriate allocation of the Purchase
Price and shall include in such opinions and study their opinion as to
what portion of the Purchase Price shall be allotted to the benefit of
the use of the name "Winterthur International" pursuant to Clause 15
and to the restrictive covenants referred to in Clause 16 as they
should deem appropriate. Notwithstanding the above in the event that
the above financial advisors are unable to agree and recommend the
appropriate allocation of the Purchase Price then the parties shall
jointly instruct such internationally renowned financial and
investment banking firm as may be selected by the parties or failing
agreement between them by the President of the Institute of Chartered
Accountants of England and Wales to provide their own independent
opinion and study as to the appropriate allocation of the Purchase
Price.
3.6.2 All parties agree to the extent permitted by Applicable Laws to adopt
the final allocation reached in accordance with Clause 3.3.1 (as may
be further adjusted) for all purposes, including Tax purposes.
3.7 VAT
3.7.1 General
(lx) The parties agree that any VAT chargeable on the supply or
supplies for which any sums payable (or other consideration
provided) by any Purchaser to any Seller pursuant to this
Agreement or any Local Agreement or any document pursuant to
which any estate or interest or title is transferred to or
otherwise vested in XL Insurance or any other Purchaser are the
whole or part of the consideration for VAT purposes shall be
borne by Winterthur or the relevant Seller and (without prejudice
to the generality of the foregoing) any such sums payable (or
other consideration provided) shall be inclusive of any VAT which
may be chargeable on the supply or supplies for which such sum or
other consideration (or any part thereof) is the whole or part of
the consideration for VAT purposes and s.89 of the VATA shall not
apply to affect the amount of such sum or other consideration.
For the avoidance of doubt, this paragraph shall not apply to VAT
due on services provided under the Service Level Agreement in
respect of which Clause 7 of that Agreement shall apply.
(lxi) The parties intend that the Businesses shall be sold as a going
concern for VAT purposes and shall procure that in each relevant
jurisdiction Winterthur (which in this Clause 3.4 shall include
any relevant Seller) and XL Insurance shall give notice of such
sale to the relevant Tax authorities as required by Applicable
Laws.
3.7.2 Records: Each Seller may so far as it is able prior to Completion in
respect of a Relevant Transfer of Operations obtain a direction from
the relevant Taxation authority detailing provisions for the retention
and preservation by it of any VAT records relating to the Businesses
and where such directions are obtained each Seller undertakes to
preserve any such records in such a manner and for such period as may
be required by Applicable Laws and will produce on demand information
from these records to the relevant Purchaser and/or any relevant
Taxation authority and afford the relevant Purchaser access to such
records for the purpose of inspecting and making copies of the same if
the relevant Purchaser demonstrates that such production or access is
necessary for its VAT affairs.
3.7.3 Going Concern: To the extent that any jurisdiction in which any of
the Businesses is carried on provides for relief or exemption from VAT
on the transfer of a business or treats such a transaction as being
non-taxable or giving rise to no supply for VAT purposes XL Insurance
and Winterthur shall use all reasonable endeavours (including for the
avoidance of doubt the making of an election or application in respect
of VAT to any Taxation authority) to secure such treatment.
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3.8 Adjustments to Purchase Price
If any payment is made by any party to another party in respect of any
claim against any party for any breach of or otherwise under the terms of
this Agreement, Tax Deed or any Local Agreement the payment shall be made
by way of adjustment of the Purchase Price paid by XL Insurance or other
Purchasers as appropriate for the Operations pursuant to Clause 3.1 and the
Purchase Price shall be deemed to have been reduced or increased as
appropriate by the amount of such payment.
3.9 Breach of Agreement known prior to determination of Completion Balance
Sheet
In the event that there has been a breach of this Agreement by any Seller
including without limitation a breach of any of the Warranties under Clause
8 (at whatever date given) then to the extent that such breach is known
prior to the date on which the Completion Balance Sheet is finally
determined the parties shall use their reasonable efforts to agree an
appropriate adjustment to the Net Asset Value of the relevant Operations to
be set out in the Completion Balance Sheet to ensure that the financial and
other conditions of the relevant Operations are fairly reflected in such
Completion Balance Sheet in the light of such breach (whether or not such
circumstance needs to be reflected in such Completion Balance Sheet for the
purpose of US GAAP). In the event that the parties do not agree any such
adjustment the Reporting Accountants shall make whatever adjustment they
consider to be appropriate thereto on the basis of the above criteria and
in accordance with the timetable set out in Schedule 5.
3.10 Adjustment to amounts paid under Clause 3.6
3.10.1 In the event that there has been a breach of this Agreement by any
Seller including without limitation a breach of any of the Warranties
under Clause 8 (at whatever date given) then to the extent that such
breach is known prior to the date on which the Completion Balance
Sheet is finally determined then Winterthur shall or shall procure
that other Sellers as appropriate subject as below pay to XL Insurance
or other Purchasers as appropriate on demand an amount equal to all
Losses incurred by any Purchaser or any Group Company in respect of
any Business or Operation (including without limitation each Loss
incurred as a result of defending or settling a claim alleging such
liability) in respect of such breach to the extent that such Losses
exceed the amount of any adjustment to the Net Asset Value of the
Operations in relation to such breach made pursuant to Clause 3.6.
3.10.2 In the event that there has been a breach of this Agreement by any
Seller including without limitation a breach of any of the Warranties
under Clause 8 (at whatever date given) then to the extent that such
breach is known prior to the date on which the Completion Balance
Sheet is finally determined but the level of any adjustment made in
the Net Asset Value of the Operations made in the Completion Balance
Sheet pursuant to Clause 3.6 exceeds the aggregate amount of all
Losses incurred by any Purchaser or any Group Company in respect of
any Business or Operation (including without limitation each Loss
incurred as a result of defending or settling a claim alleging such
Liability) in respect of such breach, XL Insurance shall or shall
procure that other Purchasers as appropriate pay to Winterthur or
other Sellers as appropriate on demand an amount equal to such excess.
4. Net Reserves
4.4 Review of calculation of Net Reserves at 31 December 2000 In
connection with the preparation of the 31.12.2000 Financial Statements
including the calculation of the net reserves of the Operations
Winterthur shall and shall procure that each of the other Sellers
(both before and after Completion) and each of the Group Companies
(before Completion) shall:
4.4.1 keep up-to-date and make available to XL Insurance, XL
Insurance's Accountants and XL Insurance's Actuary their books,
records, contracts and agreements relating to the Operations
during normal business hours; and
4.4.2 co-operate with them with regard to their review thereof and
give them the opportunity to consult with Winterthur and
Winterthur's Accountants and Winterthur's Actuary.
Winterthur agrees insofar as it is reasonable to do so to make available
the services of the relevant Associated Companies of Winterthur and
Winterthur's Accountants and Winterthur's Actuary to assist XL Insurance,
XL Insurance's Accountants and XL Insurance's Actuary to undertake the
review
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contemplated by this Clause 4.1. For the avoidance of doubt the fees and
expenses of XL Insurance's Accountants and XL Insurance's Actuary in
connection with their review contemplated by this Clause 4.1 shall be for
the account of XL Insurance.
4.5 Determination of Seasoned Net Reserves Amount
4.5.1 Subject to Clause 18.4 from and after Completion and until the
End Date XL Insurance shall make available to Winterthur,
Winterthur's Accountants and Winterthur's Actuary during
normal business hours:
(lxii) all reserves studies prepared by or on behalf of XL Insurance
to the extent relating to Relevant Operations; and
(lxiii) all auditor's letters to management to the extent relating to
net claims subject to the Initial Net Reserves Amount which have
been completed by or on behalf of XL Insurance during such
period.
4.5.2 Within 30 Business Days following the End Date XL Insurance shall
deliver to Winterthur a written statement setting forth in reasonable
detail its calculation of the Seasoned Net Reserves Amount (the
"Seasoned Net Reserves Statement").
4.5.3 In order to enable Winterthur, Winterthur's Accountants and
Winterthur's Actuary to review the Seasoned Net Reserves Statement, XL
Insurance shall keep up-to-date and make available to Winterthur,
Winterthur's Accountants and Winterthur's Actuary its books, records,
contracts and agreements relating to the Relevant Operations during
normal business hours and co-operate with them with regard to their
review of the Seasoned Net Reserves Statement. XL Insurance agrees
insofar as it is reasonable to do so to make available the services of
the employees of the relevant Associated Companies of XL Insurance to
assist Winterthur, Winterthur's Accountants and Winterthur's Actuary
to undertake the matters contemplated by this Clause 4.2. XL Insurance
shall procure that after the preparation of the Seasoned Net Reserves
Statement, XL Insurance's Accountants and XL Insurance's Actuary shall
give Winterthur, Winterthur's Accountants and Winterthur's Actuary
access to XL Insurance's Accountants' and XL Insurance's Actuary's
working papers and files (with the right to take copies at
Winterthur's expense, subject to Winterthur entering into an
acceptable confidentiality undertaking) and personnel which or who are
(and only to the extent) relevant to the review of the Seasoned Net
Reserves Statement by Winterthur, Winterthur's Accountants and
Winterthur's Actuary subject to Winterthur providing or procuring the
provision of a hold harmless undertaking to XL Insurance's Accountants
and XL Insurance's Actuary.
4.5.4 Within 30 Business Days of receipt by Winterthur of the Seasoned Net
Reserves Statement Winterthur may give written notice to XL Insurance
stating that it disagrees with the Seasoned Net Reserves Statement,
together with reasons for the disagreement in reasonable detail and
quantifying the amount of such disagreement (for the purpose of this
Clause 4.2 the "Winterthur Disagreement Notice"). In the absence of
such notice within such period, the Seasoned Net Reserves Statement
shall be final and binding on the parties for all purposes.
4.5.5 If Winterthur gives a valid Winterthur Disagreement Notice within
such 30 Business Days Winterthur and XL Insurance shall attempt in
good faith to reach agreement in respect thereto. If they reach
agreement then the agreed amount shall be fully and conclusively the
Seasoned Net Reserves Amount for the purpose of this Agreement and if
they are unable to do so within 10 Business Days of receipt by XL
Insurance of the Winterthur Disagreement Notice then either Winterthur
or XL Insurance may by notice in writing to the other require that the
calculation of the Seasoned Net Reserves Amount be referred to the
Independent Actuary (an "Actuary Appointment Notice"). Within 10
Business Days of receipt by a party of the Actuary Appointment Notice
each of Winterthur and XL Insurance shall give written notice to the
other and to the Independent Actuary of its proposed Seasoned Net
Reserves Amount.
4.5.6 The Independent Actuary shall be a member of the Casualty Actuarial
Society ("CAS") or a Fellow of the Institute of Actuaries ("FIA") and
shall be instructed to independently determine the Seasoned Net
Reserves Amount in accordance with the principles and standards of
practice of the CAS or the FIA as the case may be and the American
Academy of Actuaries
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and to make its determination as soon as is reasonably practicable.
The procedures of the Independent Actuary shall be determined by the
Independent Actuary, but shall:
(lxiv) give the parties a reasonable opportunity to make written and
oral representations to them;
(lxv) require that the parties supply each other with a copy of any
written representations at the same time as they are made to the
Independent Actuary; and
(lxvi) permit each party to be present while oral submissions are
being made by any other party.
4.5.7 The determination of the Independent Actuary shall be made in writing
and sent to the parties at such time as it shall determine. The
Independent Actuary shall act as an expert and not as an arbitrator
and his or her determination shall be final and binding on the parties
as provided in Clause 4.2.8.
4.5.8 If the Seasoned Net Reserves Amount as determined by the Independent
Actuary is closer to the amount proposed by XL Insurance than the
amount proposed by Winterthur (in each case pursuant to the last
sentence of Clause 4.2.5) then for the purpose of this Agreement the
Seasoned Net Reserves Amount shall be finally and conclusively deemed
to be the amount so proposed by XL Insurance. If the Seasoned Net
Reserves Amount as determined by the Independent Actuary is closer to
the amount proposed by Winterthur than the amount proposed by XL
Insurance (in each case pursuant to the last sentence of Clause 4.2.5)
then for the purpose of this Agreement the Seasoned Net Reserves
Amount shall be finally and conclusively deemed to be the amount so
proposed by Winterthur.
4.5.9 The parties shall co-operate with the Independent Actuary and comply
with its reasonable requests made in connection with the carrying out
of its duties under this Agreement. In particular without limitation
XL Insurance shall keep up-to-date and subject to reasonable notice
make available to Winterthur, Winterthur's Accountants, Winterthur's
Actuary and the Independent Actuary its books, records, contracts and
agreements relating to the Relevant Operations during normal business
hours during the period from the appointment of the Independent
Actuary down to the making of the determination by the Independent
Actuary.
4.5.10 Subject to Clause 4.2.11 nothing in this Clause 4.2 shall entitle a
party or the Independent Actuary access to any information or document
which is protected by legal professional privilege or any other legal
obligation of confidentiality or which has been prepared by the other
party or its accountants, actuaries and other professional advisers
with a view to assessing the merits of any claim or argument.
4.5.11 A party shall not be entitled by reason of Clause 4.2.10 to refuse
to supply such part or parts of documents as contain only the facts on
which the relevant claim or argument is based.
4.5.12 Each party shall and shall procure that its accountants, actuaries
and other advisers shall and shall instruct the Independent Actuary to
keep all information and documents provided to them pursuant to this
Clause 4.2 confidential and shall not use the same for any purpose
except for use in connection with the matters contemplated by this
Clause 4.
4.5.13 The methodology for determining unallocated loss adjustment expenses
for both the Initial Net Reserves Amount and the Seasoned Net Reserves
Amount shall be as set out in Part 4 of Schedule 5.
4.6 Seasoned Net Reserves Payment
4.6.1 If the Seasoned Net Reserves Amount as finally agreed or determined
pursuant to Clause 4.2 is greater than 105 per cent of the Initial Net
Reserves Amount Winterthur shall or shall procure that other Sellers
as appropriate pay to XL Insurance or other Purchasers as appropriate
within five Business Days of such agreement or determination an amount
in US Dollars equal to 90 per cent of the difference between:
(lxvii) the Seasoned Net Reserves Amount; and
(lxviii) 105 per cent of the Initial Net Reserves Amount, plus
interest thereon (from and including the End Date, to but
excluding the date such payment is made) at a non-compounding
rate per annum of 0.5 per cent above the Base Rate.
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4.6.2 In addition to any payment required pursuant to Clause 4.3.1 if the
Seasoned Net Reserves Amount as finally agreed or determined pursuant
to Clause 4.2 exceeds the sum of: (lxix) the Initial Net Reserves
Amount;
(lxx) USD61 million; and
(lxxi) the amount of the payment (if any) required to be made by
Winterthur pursuant to Clause 4.3.1,
Winterthur shall or shall procure that other Sellers as appropriate pay to
XL Insurance or other Purchasers as appropriate within five Business Days
of such agreement or determination an amount in US Dollars equal to such
excess plus interest thereon (from and including the End Date to but
excluding the date such payment is made) at a non-compounding rate per
annum of 0.5 per cent above the Base Rate. The parties agree that the
intention of this Clause 4.3.2 is to ensure that the Purchasers themselves
bear no more than USD61 million of the amount by which the Seasoned Net
Reserves Amount exceeds the Initial Net Reserves Amount.
4.6.3 If the Seasoned Net Reserves Amount as finally agreed or determined
pursuant to Clause 4.2 is less than 95 per cent of the Initial Net
Reserves Amount XL Insurance shall or shall procure that other
Purchasers as appropriate pay to Winterthur or other Sellers as
appropriate within five Business Days of such agreement or
determination an amount in US Dollars equal to 90 per cent of the
difference between:
(a) 95 per cent of the Initial Net Reserves Amount; and
(b) the Seasoned Net Reserves Amount,
plus interest thereon (from and including the End Date to but
excluding the date such payment is made) at a non-compounding rate per
annum of 0.5 per cent above the Base Rate.
4.6.4 To the extent that the Seasoned Net Reserves Amount is greater than
the Initial Net Reserves Amount, XL Insurance shall also be entitled
to receive from Winterthur an additional amount such that Winterthur
and XL Insurance share 70:30 (Winterthur:XL Insurance) the reserves
deterioration to the extent that: (a) it is caused by reinsurance
being unrecoverable from a reinsurer (other than as a result of that
reinsurer being subject to insolvency or receivership proceedings
arising after Completion); and (b) this non-recoverability causes
deterioration (ie Seasoned Net Reserves Amount exceeds the Initial Net
Reserves Amount); and (c) the deterioration would otherwise be borne
by XL Insurance under either the 5% deductible (between 100% and 105%)
or the 10% sharing mechanism (above 105%) referred to in Clause 4.3.1
above.
4.6.5 If, for any reason, the Completion Financial Statements are not
agreed by 31 December 2003, the Independent Actuary shall forthwith be
instructed to determine the Initial Net Reserves Amount by the End
Date, which determination shall be final and binding on the parties,
and the parties shall cooperate with the Reporting Accountants in all
respects in relation to such determination.
5. Conditions
5.4 Conditions Precedent Completion of this Agreement is conditional upon
satisfaction of the following conditions (or waiver if capable of
being waived pursuant to Clause 5.3.2) and upon satisfaction of the
conditions set out opposite the relevant Key Operations in Part 2 of
Schedule 4:
5.4.1 After notification, if required, of the proposed acquisition of
the Operations (the "Transaction") to the European Commission
("Commission"):
(lxxii) the Commission taking a decision that the Transaction
does not give rise to a concentration falling within the
scope of Council Regulation (EEC) 4064/89 concerning the
control of concentrations between undertakings (as amended
by Council Regulation (EEC) 1310/97) (the "Regulation"); or
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(lxxiii) the Commission taking a decision without imposing any
conditions or obligations that are not on terms reasonably
satisfactory to both XL Insurance and Winterthur under
Article 6(1)(b) or, if the Commission has initiated
proceedings pursuant to Article 6(1)(c), under Article 8(2)
of the Regulation declaring the Transaction compatible with
the common market, or being deemed to have done so under
Article 10(6); or
(lxxiv) the Commission having referred the whole or part of the
Transaction to the competent authorities of one or more
Member States under Article 9(3) of the Regulation or having
been deemed to have done so under Article 9(5):
(a) each such authority granting a clearance without
imposing any conditions or obligations that are not on
terms reasonably satisfactory to both XL Insurance and
Winterthur in respect of all those parts of the
Transaction which were referred to it or being deemed
to have granted such a clearance; and
(b) the requirements of Clause 5.1.1(ii) being satisfied
with respect to any part not referred to the competent
authority of any Member State,
and if this condition has not been satisfied on or before
the date which is 12 months from the date of this Agreement
(otherwise than by reason of either party's breach of Clause
5.2) or prior to that date the Commission adopts a decision
declaring that the proposed acquisition of the Operations or
any matter relating thereto is incompatible with the Common
Market or prior to that date the Commission adopts a
decision on compatibility with the Common Market subject to
conditions or obligations which are rejected or which cannot
be accepted by both XL Insurance and Winterthur, this
condition shall thereupon be deemed not to have been
satisfied.
5.4.2 All necessary filings (except under the HSR Act) having been made and
all consequential consents having been obtained on terms that are
reasonably satisfactory to both XL Insurance and Winterthur and no
notice of any intention to revoke any of the same or to initiate any
proceedings having been received or all appropriate waiting periods
(including any extension(s) thereof) under any applicable legislation
or regulations of any jurisdiction having expired, lapsed or been
terminated in each case in respect of the Transaction and all
statutory and regulatory obligations in connection with the
Transaction in any material jurisdiction having been complied with.
For the purpose of this paragraph:
(lxxv) a filing shall be deemed to be necessary if it is required by
Applicable Laws or if XL Insurance and Winterthur agree that it
is necessary (neither party to withhold unreasonably its
agreement in this respect); and
(lxxvi) a jurisdiction shall be material if it is material in the
context of Winterthur's Group or XL Insurance's Group.
5.4.3 Any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act 1976 as amended (the "HSR Act") relating to the
proposed acquisition of the Operations shall have expired or been
terminated provided always that:
(lxxvii) Winterthur and XL Insurance will within 20 Business Days from
the date of this Agreement file or cause to be filed Notification
and Report Forms under the HSR Act with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") in
connection with the transactions contemplated by this Agreement
and each shall use all reasonable endeavours to respond as
promptly as practicable to all inquiries received from the FTC or
the Antitrust Division for additional information or
documentation and to cause the waiting periods under the HSR Act
to terminate or expire at the earliest possible date. Each of
Winterthur and XL Insurance will furnish to the other such
necessary information and reasonable assistance as the other may
request in connection with its preparation of filings under the
provisions of the HSR Act; and
(lxxviii) Winterthur and XL Insurance shall take any and all steps
necessary to eliminate each and every non-material impediment
that may be asserted under any United States federal or state
antitrust
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law by a United States federal or state antitrust authority or
any other party so as to enable Winterthur and XL Insurance to
complete expeditiously the proposed acquisition of the Operations
provided that XL Insurance shall not be obliged to negotiate,
commit to and/or effect, by consent decree, hold separate order
or otherwise, the sale or disposition of such business assets as
are required to be divested in order to avoid the entry of, or to
effect the dissolution of, any injunction, temporary restraining
order or other order in any suit or proceeding that would
otherwise have the effect of materially delaying or preventing
the consummation of XL Insurance's acquisition of the Operations.
5.4.4 The following intra-group reorganisations shall have taken place and
have been completed to the reasonable satisfaction of XL Insurance:
(lxxix) the transfer of all the business of the Operations, in so far
as it relates to Switzerland, owned as at the date of this
Agreement by Winterthur to Winterthur International Insurance
Switzerland including without limitation to the generality of the
foregoing the portfolio of insurance business carried by
Winterthur and identified as RD33 within a subset of technical
accounts;
(lxxx) the transfer of all of the business of the Operations, in so
far as it relates to Germany, owned as at the date of this
Agreement by Winterthur International (Deutschland) AG to
Winterthur International Insurance Company Limited (German
branch) but excluding any and all motor insurance business (for
the purposes of this Clause "Operations" being deemed to include
all of the business of Winterthur International (Deutschland) AG
save to the extent that such business forms part of the Excluded
Operations);
(lxxxi) [intentionally omitted]
(lxxxii) the settlement of the inter-company accounts and other
amounts and inter-company pooling and other arrangements
including those referred to in sub-paragraph 1.1.23 of Part 1 of
Schedule 6, save as otherwise provided in Schedule 2 or Clause
15.2 of this Agreement and save for the Inter-Company Accounts
and the Limited Recourse Receivables Financing Facility
Agreement;
(lxxxiii) all Excluded Operations having been removed from the Group
Companies at no cost to the Group Companies or the XL Insurance
Group or, where XL Insurance agrees, the Excluded Operations
Interim Arrangements having been duly entered into; and
(lxxxiv) the workers' compensation business reinsurance portfolio
having been transferred to one of the US Group Companies or,
without causing increased cost to the XL Insurance Group, that
portfolio having been transferred to a member of the XL Insurance
Group with effect from immediately before Completion .
5.4.5 There having been no material breach of, amendment to or termination
other than for gross misconduct by Winterthur of any of the service
agreements between Winterthur or any member of the Winterthur Group
and any of the Key Employees by Winterthur or any member of the
Winterthur Group (other than with the written consent of XL Insurance
(such consent not to be unreasonably withheld or delayed)).
5.4.6 There having been no cessation of business in relation to any of the
Key Operations.
5.4.7 There having been no action taken or threatened or litigation,
arbitration or other proceedings commenced or threatened by or on
behalf of any Regulator which will or might materially adversely
affect any of the Key Operations.
5.4.8 Winterthur having supplied all of the 31.12.2000 Financial
Information (as defined in Part 1 Schedule 5) to XL Insurance.
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5.4.9 The Sellers having secured for the Group Companies and the Operations
the right to continue to use all Identified Third Party Software
notwithstanding Completion on terms which are current as at Completion
or otherwise on terms which are reasonably satisfactory to XL
Insurance.
5.4.10 Consent to the extent required by Applicable Laws or agreement
having been received from any minority shareholder in any Group
Company or Business Seller or joint venture participant to the
Transfer of any of the Operations contemplated hereunder.
5.4.11 Waiver having been received from all parties (other than members of
the CS Group) to the Identified Fronting Agreements in relation to
such parties' respective rights under the terms of such agreements
arising as a result of a change of control occurring in relation to
the Operations.
5.4.12 The Sellers having caused to be provided such services in support of
software used by or in connection with the Operations (including
without limitation hosting and data processing services) as have been
provided by IBM immediately prior to Completion on reasonable
commercial terms.
5.4.13 The Sellers Retrocession Agreement having been entered into in a
form and upon terms satisfactory to XL Insurance and such agreement
remaining in full force and effect.
5.5 Responsibility for Satisfaction
5.5.1 The parties (and solely the Sellers in the case of Clauses 5.1.4,
5.1.8, 5.1.9 or 5.1.12) hereby undertake to use all reasonable
endeavours to ensure the satisfaction of the conditions set out in
Clause 5.1 and Part 2 of Schedule 4 and the parties shall bear their
own respective fees and other costs incurred in relation to any such
matter including without limitation any antitrust or similar filing
required to be made in any jurisdiction in connection with XL
Insurance's acquisition of the Operations (except in respect of
filings under the HSR Act the filing fees and other costs incurred in
relation to which shall be borne by XL Insurance). Such reasonable
endeavours on the part of Winterthur shall include taking all
reasonable steps to ensure that each of the Group Companies is in good
standing under Applicable Laws.
5.5.2 Without prejudice to the foregoing it is agreed that all requests and
enquiries from any Governmental Entity in respect of the conditions
set out in Clause 5.1 shall be dealt with by Winterthur and XL
Insurance in consultation with each other and Winterthur and XL
Insurance shall promptly co-operate with and provide all necessary
information and assistance reasonably required by any Governmental
Entity upon being requested to do so by the other. In the event that
any Governmental Entity indicates that its consent will only be
obtained if conditions are accepted or undertakings given by XL
Insurance the parties shall promptly consult each other to determine
whether such conditions or undertakings are acceptable and consistent
with the terms of the Transaction. For the avoidance of doubt, XL
Insurance shall acting reasonably at all times be entitled not to
accept any relevant condition and shall be entitled to refuse to give
any relevant undertaking.
5.5.3 XL Insurance hereby undertakes that it will not withdraw the
notification made to the European Commission pursuant to Clause 5.1.1,
at any time prior to the taking of a decision or granting of a
clearance referred to in Clause 5.1.1, without the prior consent of
Winterthur.
5.5.4 Each of the parties shall notify the other party and keep it advised
as to the status of all applications to and proceedings before
Governmental Entities in connection with the Transactions contemplated
by this Agreement. Other than with respect to any filings under the
HSR Act each of the parties shall provide to the other parties copies
of all applications or other correspondence or materials relating to
the transactions contemplated by this Agreement in advance of filing
or submission thereof to Governmental Entities.
5.6 Non-Satisfaction and Waiver
5.6.1 Subject to Clause 5.3.2 each of Winterthur and XL Insurance shall
promptly give notice to the other of the satisfaction of each
condition as specified in Clause 5.1 and in any event within two
Business Days of becoming aware of the same. If the conditions in
Clause 5.1 are not satisfied or not deemed to have been satisfied on
or before the date which is 12 months from
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the date of this Agreement then save as expressly provided this
Agreement shall lapse and no party shall have any claim against any
other under it save for any claim arising from breach of the
undertaking contained in Clause 5.2.
5.6.2 XL Insurance may waive on its own behalf and on behalf of the other
Purchasers in whole or in part and conditionally or unconditionally
any of the conditions in Clauses 5.1.4 to 5.1.12 inclusive by notice
in writing to Winterthur.
5.6.3 If all conditions precedent to Completion set out in this Clause 5
shall be satisfied (or waived as provided herein) except for
conditions applicable to Winterthur Administracao e Participacoes Ltda
or Winterthur International Brasil Seguradora S/A (together the
"Brazil Operations") the Purchaser agrees to waive any such
outstanding conditions provided that it is satisfied (acting
reasonably) that the Seller will put in place as at Completion a
mechanism and documentation reasonably satisfactory to the Purchaser
to ensure that: (lxxxv) the Purchaser receives the entire economic
benefit of the relevant Group Company from the Effective Time;
(lxxxvi) the Purchaser is given adequate management control over the
operations of the relevant Group Company;
(lxxxvii) the Purchaser will be indemnified in respect of any Losses
incurred by the relevant Group Company after Completion which
result from any failure by the Group Company to comply with the
Purchaser's instructions pursuant to the management control
arrangements referred to in sub-paragraph (ii) above; and
(lxxxviii) upon satisfaction of the relevant conditions the shares in
the relevant Group Company will be transferred to the Purchaser
for no additional consideration,
provided that if the Purchaser does not grant a waiver in accordance
with this Clause 5.3.3 within 15 Business Days (or such longer time as
the parties may agree) of receiving a reasonable proposal from the
Seller satisfying sub-paragraphs (i) to (iv) above the Brazil
Operations will (unless the parties otherwise agree) be deemed to be
excluded from the Operations (and accordingly all conditions precedent
shall be deemed to be satisfied) and the definition of Excluded
Operations shall be extended to include the Brazil Operations.
6. Action Pending Completion
6.4 Sellers' General Obligations Subject to Clause 6.4 Winterthur
undertakes to procure that pending Completion and (in relation to
paragraphs 6.1.1 to 6.1.12 only) in relation to any Operations covered
by Interim Arrangements, during the period from Completion until the
date of the relevant Portfolio Transfer or other termination of the
relevant Interim Arrangement Winterthur, the other relevant Sellers,
the Business Sellers and the Group Companies shall:
6.4.1 carry on the Operations as a going concern in the ordinary
course of business consistent with past practice and in
particular in accordance with the underwriting and claims
manuals, details of which are contained in the Disclosure Letter
save insofar as otherwise agreed in writing by XL Insurance;
6.4.2 take all reasonable steps to protect and preserve the Operations
and the assets associated therewith, and the value of such
Operations and assets, including with respect to the retention of
employees;
6.4.3 inform XL Insurance as soon as possible of any significant
developments, occurrences, circumstances or other factors of
which they become aware and which materially and adversely affect
or may so affect any of the Operations or Businesses;
6.4.4 as soon as available, but no later than forty-five (45) days
after the end of each relevant quarter (and promptly after the
end of each month) as the case may be, deliver promptly to the
Purchaser any and all monthly and quarterly financial statements
as the case may be, for each of the Group Companies and the
Businesses (on a Pro-forma basis), audited or unaudited, and
prepared for the management of the Seller after the date of this
Agreement and prior to the Completion Date and a report as to the
investment assets of the Operations
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as at the end of each month containing such information as the
Purchaser may reasonably request;
6.4.5 report to the committee established under Clause 6.3 every 14
days on any material developments or circumstances in relation to
the Operations;
6.4.6 except as otherwise set out in this Agreement the Operations and
each member of the CS Group shall each continue all dealings
between themselves on substantially the same terms as such
dealings were carried out immediately prior to the date of this
Agreement;
6.4.7 immediately after the date of this Agreement deliver to XL
Insurance (for itself and on behalf of the other relevant
Purchasers) lists of the Policies and Retrocession Contracts
which comprise each of the Portfolios;
6.4.8 subject to their right to refuse access on the grounds that
access would be contrary to any Applicable Laws, allow XL
Insurance and its employees, agents and advisers such access
during normal working hours to the Operations and to the relevant
employees, agents and advisers and the books and records of, or
relating in whole or in part to, the Operations including without
limitation statutory books, minute books, customer files, any
correspondence or other documents relating to insurance
regulation, leases, licences, contracts, details of all
receivables and related security, guarantees, indemnities and
rights and Intellectual Property as XL Insurance may reasonably
require (upon reasonable notice in writing to Winterthur) at such
times and at such locations as XL Insurance may reasonably
require;
6.4.9 comply in all material respects with all Applicable Laws,
regulations and the rules of any Regulator and Winterthur shall
inform XL Insurance promptly of any failure to do so;
6.4.10 not do or omit to do anything or allow any circumstance to
continue which would cause any of the Warranties set out or
referred to in Clause 8 to cease to be true, accurate and not
misleading to a material extent and shall notify XL Insurance
immediately if the Seller becomes aware of a fact or circumstance
which constitutes or which would or might constitute a breach of
Warranty or which would or might cause a Warranty to be untrue,
inaccurate or misleading in each case to a material extent if
given in respect of the facts or circumstances as at Completion
(whether or not any such Warranty is to be reaffirmed as of any
date later than the date of this Agreement);
6.4.11 comply with the terms of all reinsurance agreements to which
any of the Group Companies or the Business Sellers (solely in
relation to the Business) is party as an "insured" or
"reinsured", including in particular payment of all premiums due;
6.4.12 continue to operate on their current terms all the services and
arrangements which are intended to be the subject following
Completion of the agreements to be made pursuant to Clause 2.8
and Schedule 2;
6.4.13 procure as soon as practicable after the date of this Agreement
that to the extent necessary the Excluded Operations shall be
removed from the Group Companies at no cost to any Group Company
or Purchaser; and
6.4.14 not do or omit to do anything which would render any of the
conditions precedent in Clause 5 incapable of being fulfilled.
6.5 Restrictions on Sellers Subject to Clause 6.4, Winterthur shall or shall
procure that the other Sellers and the Group Companies and their employees
and agents shall consult with, provide relevant information to, and take
due account of the wishes and suggestions of such employees,
representatives and advisers of XL Insurance and the Purchasers as XL
Insurance or such other Purchaser may designate in relation to the running
of the Operations between the date of this Agreement and Completion (or, in
the case of a Portfolio which is subject to an Interim Arrangement, the
date of transfer of the relevant Portfolio or the termination of the
relevant Interim Arrangement). During the period from the date of this
Agreement to Completion (or, in the case of a Portfolio which is subject to
an Interim Arrangement, the date of transfer of the relevant Portfolio or
the termination of the relevant Interim Arrangement) in relation to the
Operations Winterthur shall not or shall procure that the relevant Business
Seller and
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the relevant Group Companies shall not without the prior written consent of
XL Insurance (such consent not to be unreasonably withheld or delayed):
6.5.1 incur or enter into or materially amend any agreement or commitment
which involves any capital expenditure in excess of USD5 million per
item and USD10 million in aggregate;
6.5.2 incur, enter into, amend or terminate any contract or commitment or
other arrangement which is either not capable of being terminated
without compensation at any time with six months' notice or less or
which involves or may involve total annual expenditure in excess of
USD1 million or which is unusual or onerous;
6.5.3 incur or enter into or materially amend any Encumbrance, contract or
commitment relating to any of the Properties or their management or
the rents payable therefor other than Encumbrances, contracts or
commitments which would not have a material adverse effect on the
value of the Operations;
6.5.4 write or otherwise enter into any insurance or reinsurance policy or
treaty involving a net retained liability (being gross loss limit or
sum insured less facultative or treaty reinsurance) by the Operations
in excess of existing limits in force at 31 December 2000 or a
reinsurance or retrocession treaty, agreement or arrangement in
relation to which a liability may relate to a period after Completion;
6.5.5 acquire or dispose of, or agree to acquire or dispose of, an asset
except in the usual course of its business consistent with past
practice or assume or incur, or agree to assume or incur, a liability,
obligation or expense (actual or contingent) except in the usual
course of its business consistent with past practice in each case for
an amount or at a value in excess of USD1 million;
6.5.6 amend or agree to amend the terms of any borrowing or other
Indebtedness or incur or agree to incur any Indebtedness except in the
ordinary course of business consistent with past practice or to hedge
any currency exposure of the relevant Operations;
6.5.7 create, allot, issue, redeem or repurchase any share or loan capital
of any Group Company or any option or right to subscribe for the same
(or arrange or undertake to do any of those things);
6.5.8 pass any members' or shareholders' resolution or make any alteration
to its Memorandum of Association, Articles of Association, bye-laws or
other constitutional documentation save to the extent required to
ensure compliance with its obligations under Clause 2.4;
6.5.9 in relation to the insurance policies in respect of the Companies and
the Businesses (other than reinsurance policies or other policies in
respect of the insurance and reinsurance business conducted by the
Companies and the Businesses) do or omit to do anything which might
threaten the continuance of any of such policies, make any such policy
void or voidable, entitle any of the insurers under such policies to
refuse indemnity in relation to particular claims either in whole or
in part, result in an increase in the premium payable under any such
policies, or prejudice the ability to effect insurance, on the same or
better terms, in the future;
6.5.10 (in respect of Group Companies only) declare or set aside any
dividends, bonuses or other distributions and for the avoidance of
doubt this shall not prevent any member of Winterthur Group other than
the Group Companies from declaring or making a dividend;
6.5.11 pay its creditors otherwise than in the ordinary course consistent
with past practice or change its policy in relation to the payments of
creditors;
6.5.12 make any changes to its underwriting claims handling or reserving
policies, practices or guidelines, including the determination of
applicable loss ratios for the year 2001;
6.5.13 make any changes to the range of products being underwritten or to
the pricing of any products or policies or any change to the manner in
which products or policies are marketed;
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6.5.14 enter into, amend or terminate any outward reinsurance or
retrocession contracts relating to the Operations including, without
limitation, any outward reinsurance or retrocession contracts that
would be in force after Completion ;
6.5.15 except for case reserves in the ordinary course of business release
any provision or reserve in respect of liabilities of the Operations;
6.5.16 enter into any material litigation or arbitration or other actions
or proceedings as plaintiff (other than interlocutory proceedings
where the Seller reasonably considers that the interests of a Group
Company or Business will be compromised if action is not taken on an
urgent basis, in which case the Seller shall notify XL Insurance as
soon as possible of the action taken, the reasons for the action, and
the reasons for the urgency of the action). For the purpose of this
Clause 6.2.16 material litigation shall mean proceedings where the
amount claimed exceeds CHF1 million;
6.5.17 enter into any agreement or arrangement or obligation in which any
of the Sellers, a director or former director of any of the Group
Companies or a person associated or connected with any of them is an
interested party;
6.5.18 make any change to the terms of employment or engagement of any of
the Relevant Employees or directors or officers of any of the Group
Companies or the benefits, including any bonus plan, profit sharing
scheme, commission arrangements or executive benefit arrangements,
given to any such employees, directors or officers or in any working
practices or collective agreements relating to such practice in any
such case where the change is material;
6.5.19 materially change the numbers of the Relevant Employees or dismiss
any Senior Employee or hire any employee or consultant who will be
paid a salary or fee or other compensation which in total exceeds
CHF200,000 per annum;
6.5.20 discontinue or amend the terms of any of the Pension Scheme(s) or
commence to wind them up, to cause them to cease to admit new members
or communicate to any employee any material plan, proposal or
intention to amend, wind up or terminate in relation to any of the
Pension Schemes;
6.5.21 pay any benefits under any of the Pension Scheme(s) otherwise than
in accordance with the terms of the documents governing such schemes
and not under any discretionary power;
6.5.22 change its residence for Tax purposes;
6.5.23 change any method of accounting for Tax purposes or make any
election for Tax purposes; or
6.5.24 agree, conditionally or otherwise, to do any of the above, provided
that nothing in this Clause 6.2 shall prevent or restrict in any way
any Business Seller or Group Company from carrying out any activity
which is necessary in order to give effect to or comply with this
Agreement or any Local Agreement or to implement any of the Service
Level Agreements if prior written notice has been given to XL
Insurance.
6.6 Committee
Winterthur and XL Insurance shall each appoint three of its employees to be
its representatives for the purpose of the operation of Clauses 6.1 and
6.2. The above representatives shall meet as a committee on a regular basis
either in person or by telephone (or other communication equipment) and in
any event at least every 14 days to discuss the Operations including in
particular any material developments or circumstances in relation to the
Operations. For the purpose of Clauses 6.1 and 6.2 and notwithstanding
anything else in this Agreement any obligation that Winterthur, the other
Sellers, the Business Sellers and the Group Companies consult with, notify,
or seek the consent of XL Insurance or any other Purchaser shall be fully
satisfied if such consultation occurs with, such notification is made to,
or such consent is received in writing from any representative of XL
Insurance appointed under this Clause 6.3.
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6.7 Applicable Laws
Notwithstanding Clauses 6.1 and 6.2 neither Winterthur nor any of the other
Sellers nor (prior to Completion only) any of the Group Companies nor XL
Insurance nor any of the other Purchasers nor (from Completion) any of the
Group Companies, as appropriate, shall be obliged to act or omit to act or
otherwise do anything or omit to do anything pursuant to the terms of this
Agreement, any Local Agreement or any other agreement entered into under or
pursuant to this Agreement if prohibited under Applicable Laws and
appropriate notice of such act or omission, and the reasons therefor, have
been provided in writing to XL Insurance or Winterthur, as appropriate.
6.8 Exclusivity
6.8.1 Without limiting any other rights or remedies of any of the
Purchasers hereunder or under Applicable Laws, Winterthur undertakes
to procure that pending Completion in relation to the Operations
Winterthur, the other relevant Sellers, the Business Sellers, the
Group Companies, all other members of the CS Group and any of their
respective directors, officers, employees, investment bankers,
advisers and other agents and representatives (together the
"Representatives") shall not directly or indirectly:
(lxxxix) solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing information) any
enquiries, proposals or offers from any third party with respect
to, or that could reasonably be expected to lead to, any
transaction in respect of the acquisition of any such Operations;
(xc) negotiate, explore or otherwise communicate in any way with any
third party with respect to any such transaction; or
(xci) enter into, approve or recommend an agreement, arrangement or
understanding requiring the abandonment or termination of any of
the arrangements contemplated by this Agreement.
6.8.2 Furthermore Winterthur shall promptly (but in any event within one
day of it becoming aware of the same) advise XL Insurance of the
receipt by Winterthur, any of the other relevant Sellers, the Business
Sellers, the Group Companies, any other member of the Winterthur Group
or any of the Representatives of the fact of any enquiry, proposal or
offer from any third party relating to any transaction or potential
transaction in respect of the acquisition of any such Operations or
Retained Operations, and unless prevented by a duty of confidentiality
provide XL Insurance with a copy of any such enquiry, proposal or
offer in writing and a written statement in respect of any such
enquiry, proposal or offer not in writing, which statement shall
include the identity of the person working on any such enquiry,
proposal or offer and the material terms thereof.
6.9 Investment Assets
Between the date of this Agreement and Completion , XL Insurance and
Winterthur shall consult with one another as to the components of the
investment assets to be transferred at Completion and, in particular, so as
to enable XL Insurance to satisfy itself that all investments to be
transferred at Completion will be Permitted Investment Assets.
6.10 Disposal of French Property
Winterthur shall or shall procure that the appropriate Group Company shall,
prior to Completion, appoint agents for the purposes of selling,
transferring or otherwise disposing of the French Property as soon as is
reasonably practicable after Completion and in any event on or prior to 31
December 2001 so that the French Property is no longer in the ownership of
the appropriate Group Company. In the event that such French Property has
not been disposed of in the manner set out above, on or before 31 December
2001, XL Insurance shall be entitled at any time after 31 December 2001, to
transfer such French Property to Winterthur at the greater of (i) the
market value thereof at the date of transfer; and (ii) FF75 million, and
the terms of Clause 18.16 shall apply in relation thereto.
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7. Completion
7.4 Date and Place
Subject to Clause 5, Completion (which shall comprise at least the
Transfers of Operations in respect of each of the Key Operations) shall
take place at the offices of Winterthur's Solicitors in Brussels on the
tenth Business Day (provided that such Business Day is a Business Day in
Brussels) after:
7.4.1 the conditions set out in Clause 5.1; and
7.4.2 the conditions set out in Part 2 of Schedule 4 insofar as they apply
to each of the Key Operations, are satisfied or deemed to have been
satisfied or waived whichever is the later or at such other place time
or date as may be agreed in writing between XL Insurance and
Winterthur.
7.5 Completion Events
On Completion the parties shall procure that the Deeds of Adherence, each
Local Agreement and other documents referred to in Part 1 of Schedule 6 are
entered into and that the events set out in Part 1 of Schedule 6 for which
they are respectively responsible shall take place, provided that the
Sellers and the Purchasers in respect of Operations in the following
countries: Brazil, Canada, Czech Republic, Hungary, Japan, Poland,
Singapore and the US shall not be required to execute a Deed of Adherence.
Neither party (treating for this purpose Winterthur and each of the other
Sellers as a single party and XL Insurance and each of the Purchasers as a
single party) shall be obliged to proceed to Completion unless the other
party is (save as set out below) simultaneously ready and able to proceed
to Completion. XL Insurance shall not be obliged to purchase some only of
the Shares or the Business Assets comprised in a Transfer of Operations and
neither party shall be obliged to proceed to Completion unless the other
party is simultaneously ready and able to proceed to Completion in respect
of the Key Operations.
7.6 Payment of Purchase Price
On Completion XL Insurance shall or shall procure that other Purchasers as
appropriate pay the Preliminary Purchase Price in the manner specified in
Clause 3 subject to the terms and conditions set out in this Agreement.
7.7 Partial Completion
If the foregoing provisions of this Clause 7 are not fully complied with by
any of Winterthur and the other Sellers or any of XL Insurance and the
other Purchasers by or on the date set for Completion XL Insurance in the
case of non-compliance by Winterthur or any of the other Sellers or
Winterthur in the case of non-compliance by XL Insurance or any of the
Purchasers (as the case may be the "Entitled Party") shall be entitled (in
addition to and without prejudice to all other rights or remedies available
to it including the right to claim damages) by written notice to Winterthur
or as the case may be to XL Insurance served on such date:
7.7.1 to effect Completion so far as practicable having regard to the
defaults which have occurred; or
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7.7.2 to fix a new date for Completion (not being more than 20 Business
Days after the agreed date for Completion) in which case the
provisions of Part 1 of Schedule 6 shall apply to Completion as so
deferred but provided such deferral may only occur once unless
otherwise agreed in writing between Winterthur and XL Insurance.
7.8 Right to Terminate
7.8.1 If after the date of this Agreement and prior to Completion there has
been or become known any change, event, condition or development (for
the avoidance of doubt including without limitation to the generality
of the foregoing any breach of Warranty given pursuant to Clause 8 or
any breach of Clause 6) that is singly or in the aggregate materially
adverse to the business, assets, liabilities, results of operations,
prospects or financial or operating condition of the Operations taken
as a whole except for any such change, event, condition or development
resulting from: (xcii) the transactions contemplated by this
Agreement;
(xciii) changes applicable to participants in the relevant business of
the Business Sellers and the Group Companies generally;
(xciv) changes in economic, financial, regulatory or political
conditions generally; or
(xcv) changes to the capital used in the Operations agreed with XL
Insurance,
(which in any of the above cases if capable of cure has not been cured
within 20 Business Days of its occurrence or if earlier the time fixed
for Completion ) XL Insurance shall be entitled by notice to
Winterthur delivered prior to Completion to terminate this Agreement.
For the above purposes a change, event, condition or development shall
be materially adverse in the above context if either alone or together
with any other such change, event, condition or development it has led
or is reasonably expected to lead over a period of two years from the
date the notice under this Clause 7.5.1 is delivered to a reduction in
the Net Asset Value of the Operations taken as a whole of USD110
million (being approximately 20 per cent of the Net Asset Value of the
Operations as stated in the 30.09.2000 Financial Statements).
7.8.2 If after the date of this Agreement and prior to Completion any
Seller breaches the terms of paragraphs (i), (ii) or (iii) of Clause
6.5.1 XL Insurance shall be entitled by notice to Winterthur delivered
prior to Completion to terminate this Agreement.
7.8.3 Any failure to exercise any right of termination under this Clause
7.5 shall not constitute a waiver of or otherwise prejudice any other
rights of the Purchaser or its successors in title hereunder or under
Applicable Laws. Notwithstanding the above in the event that XL
Insurance has exercised its right of termination under Clauses 7.5.1
or 7.5.2 and such termination occurs as a result amongst other things
of any breach of this Agreement by the Sellers and/or any breach of
Warranty as given at the date of this Agreement and/or any breach of a
Core Warranty as at Completion which breach of Core Warranty results
from the act or default of any of the Sellers or Business Sellers or
any Group Company then in addition to exercising its right of
termination and being indemnified as provided in the next sentence of
this Clause 7.5.3 the Purchaser shall be entitled to exercise any
other right or remedy hereunder or under Applicable Laws. If the
Purchaser terminates the Agreement pursuant to this Clause 7.5 then
Winterthur shall indemnify the Purchaser against all its costs and
expenses relating to the negotiation, preparation, execution or
termination of this Agreement. Except as provided in this Clause 7.5.3
in the event that XL Insurance exercises its right of termination
under this Clause 7.5 Winterthur and its Associated Companies and all
other persons referred to in this Clause 7.5 shall have no further
liability to the Purchasers or any other person in respect of this
Agreement.
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7.9 Specific Performance
The parties agree that they shall proceed to Completion in the terms set
out in this Agreement and they further agree that damages are not an
adequate remedy for failure of either party to fulfil any of its
obligations under this Agreement and that the parties shall be entitled to
seek an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement (including, without limitation, such party's
obligations prior to and at Completion , and including, to sell the
Operations), this being in addition to any other remedy to which they may
be entitled by law or equity, and any party sued for breach of this
Agreement expressly waives any defence that a remedy in damages would be
adequate.
7.10 Transfer Taxes
7.7.1 To the extent that any stamp duty, transfer, notarial or registration
taxes (not being VAT) are payable in respect of this Agreement or any
Local Agreement or any document pursuant to which any estate or
interest or title is transferred to or otherwise vested in XL
Insurance or any other Purchaser, XL Insurance shall pay such taxes or
procure that such taxes are paid provided that, to the extent that
payment of such taxes can be lawfully deferred or avoided (or
otherwise mitigated), Winterthur and the Sellers shall use all
reasonable endeavours to co-operate with XL Insurance with a view to
deferring or avoiding (or otherwise mitigating) such payment.
7.7.2 Notwithstanding the above, clause 7 of the Service Level Agreement
shall apply in accordance with its terms in relation to that agreement
and the services provided thereunder.
7.11 Consolidated Tax Groups
Subject to anything to the contrary in the Tax Matters Agreement:
7.11.1 Wintherthur and XL Insurance agree that where a Group Company is a
member of a group which makes a consolidated return for any Taxation
purpose arrangements shall be made before Completion to terminate any
existing arrangements between members of the Winterthur Group and that
Group Company for sharing tax payments and tax refunds so that the
Group Company shall not on or after the Completion Date be required to
make any payment to or be entitled to receive any payment from a
member of the Winterthur Group in respect of any period ended prior to
Completion other than amounts which have been taken into account in
computing the Completion Balance Sheet; and
7.11.2 if it does not prove possible to terminate the existing arrangements
on the above basis referred to in Clause 7.8.1 or doing so would have
adverse Tax consequences in the relevant jurisdiction, Winterthur and
XL Insurance shall agree appropriate arrangements which achieve the
same economic result for XL Insurance Group.
8. Warranties
8.4 Incorporation of Schedule 7
8.4.1 As at the date of this Agreement Winterthur and each Seller
warrants to XL Insurance (for itself and as trustee for each
Purchaser) in relation to the Operations including as applicable
the Businesses and the Shares that each Warranty in Schedule 7 is
true, accurate and not misleading subject to any matter which is
fully, fairly and specifically disclosed in or pursuant to the
Disclosure Letter or expressly provided for under the terms of
this Agreement.
8.4.2 Immediately before Completion Winterthur and each Seller is
deemed to warrant to XL Insurance (for itself and as trustee for
each Purchaser) in relation to the Operations including as
appropriate the Businesses and the Shares sold by any Seller to
any Purchaser at the Completion Date that each Core Warranty
remains true, accurate and not misleading subject to any matter
which is fully, fairly and specifically disclosed in or pursuant
to the Disclosure Letter or expressly provided for under the
terms of this Agreement. For this purpose only where there is an
express or implied reference in a Core Warranty to the "date of
this Agreement" or similar references that reference is to be
construed as also a reference to the Completion Date. For the
avoidance of doubt except as otherwise expressly agreed by the
Purchaser in the event that any matter is disclosed after the
date of this Agreement in relation to any of the Core Warranties
as reaffirmed under this Clause 8.1.2 pursuant to Clause
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6.1.10 or otherwise such disclosure shall not prejudice any right
of XL Insurance or other Purchasers hereunder including without
limitation to make a claim in respect of breach of Warranty under
this Clause 8 or any right under Clause 7.5 or Clause 9.
8.4.3 The Sellers acknowledge that XL Insurance and each other
Purchaser has entered into this Agreement in reliance upon each
Warranty which has also been given as a representation and with
the intention of inducing such Purchaser to enter into this
Agreement. Save as expressly otherwise provided each Warranty
shall be separate and independent and shall not be limited by
reference to any other paragraphs of the said Schedule 7.
8.4.4 The Sellers shall not invoke knowledge of XL Insurance or any of
the other Purchasers (actual, constructive or imputed) of a fact
or circumstance which might make a Warranty untrue, inaccurate or
misleading as a defence to a claim for breach of this Clause 8.
8.4.5 Any statement qualified by the expression "so far as the Sellers
are aware" or words to that effect shall be deemed to refer only
to matters within the actual knowledge of those persons named
and/or holding the positions listed in Part 2 of Schedule 3 in
each case as to their actual knowledge of the area of their
expertise indicated opposite their names after making due and
careful enquiry.
8.4.6 For the avoidance of doubt each of the Warranties which is given
in relation to the Group Companies is also true, accurate and not
misleading in relation to each of the relevant branches of such
Group Companies.
8.4.7 As at the date this Second Amended and Restated Amendment
Agreement was signed (the "Amendment Date") Winterthur warrants
to XL Insurance (for itself and as trustee for each purchaser)
and in relation to each Core Warranty is deemed to warrant to XL
Insurance (for itself and as trustee for each Purchaser) as at
Completion that each Warranty in Schedule 7 hereof shall apply to
the business of the Operations (which for the purposes of this
clause has the same meaning as is set out in Clause 5.1.4(ii) in
so far as it relates to Germany), owned as at the date of the
Agreement by Winterthur International (Deutschland) AG but
excluding any and all motor insurance business, and that each
Warranty is true, accurate and not misleading with respect to
such business and in relation to the Core Warranties that each
Core Warranty remains true, accurate and not misleading with
respect to such business as at Completion . For the purposes of
this paragraph 8.1.7 and Clause 2.6 only: (xcvi) the definition
of "Business Seller" or "Business Sellers" and "Seller" and
"Sellers" in Schedule 7 or in the definition referred to
expressly or implied in this Clause 8.1.7 shall include
Winterthur International (Deutschland) AG;
(xcvii) any reference to "Agreement" or "Agreements" and "Local
Agreement" or "Local Agreements" in Schedule 7 or in the
definitions referred to expressly or implied in this Clause
8.1.7 shall be deemed to be a reference to the agreement
between Winterthur International (Deutschland) AG and
Winterthur International Insurance Company Limited dated 11
April 2001 relating to the transfer referred to in Clause
5.1.4 (the "German Transfer Agreement");
(xcviii) the definition of "Operations" or "Operation" and
"Business" or "Businesses" in Schedule 7 or in the
definitions referred to expressly or implied in this Clause
8.1.7 shall for the avoidance of doubt include all of the
business, in so far as it relates to Germany, owned as at
the date of the Agreement by Winterthur International
(Deutschland) AG but excluding any and all motor insurance
business;
(xcix) where there is any express or implied reference in any
Warranty in Schedule 7 or in the definitions referred to
expressly or implied in this Clause 8.1.7 to the "date of
this Agreement" or "date hereof" or "currently" or
"presently" or similar references that reference is to be
construed as a reference to the Amendment Date;
(c) any reference to "31.12.1999 Financial Statements" or
"30.09.2000 Financial Statements" in Schedule 7 shall be
deemed to be a reference to Winterthur International
(Deutschland) AG's 31.12.2000 Financial Statement;
(ci) any reference to "since 30 September 2000" or to "since 31
December 1999" in Schedule 7 shall be deemed to be a
reference to since 31 December 2000;
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(cii) any reference to "Schedule 11" in Schedule 7 or in the
definitions referred to expressly or implied in this Clause
8.1.7 shall be deemed to be a reference to "Schedule 11 and
Schedule 15" (and Winterthur hereby warrants the accuracy of
such Schedule 15); and
(ciii) any reference to "Relevant Employees" or "Business
Employees" shall include directors, agents or any other
person performing a role equivalent to that of an employee.
8.4.8 As at the Completion Date Winterthur warrants to XL Insurance
(for itself and as trustee for each Purchaser) that the transfer
referred to in Clause 5.1.4(ii) has been completed and that the
agreement dated 11 April 2001 between the parties thereto
operates to transfer the Operations, other than the Excluded
Operations, as referred to in Clause 5.1.4(ii).
8.4.9 As at the Completion Date Winterthur Warrants to XL Insurance
(for itself and as trustee for each Purchaser) that Schedule 16
is an accurate summary of the reinsurance of the Operations by
Winterthur International (Re) in Hungary, Czech Republic, Poland,
Singapore and Japan.
8.5 Limitation of Liability Notwithstanding the provisions of Clause 8.1:
8.5.1 Time Limits
(civ) The Sellers shall not be liable in respect of any Specified
Claim unless notice of such Specified Claim is given in writing
by XL Insurance to Winterthur on behalf of the Sellers (setting
out reasonably comprehensive details in respect of which the
Specified Claim is made including an estimate of the amount of
such Specified Claim if practicable) on or before 30 April 2003
except that the limit shall be six years and one month from the
end of the accounting period of the relevant Group Company
current at Completion in the case of any Specified Claims
relating to Taxation in the United Kingdom or one month after the
expiry of the relevant local statutory limitation period after
which the relevant Tax authority cannot bring a claim or make an
assessment in relation to Specified Claims relating to Taxation
in any jurisdiction other than the United Kingdom or where there
is no such period six years from Completion , provided that the
limitations set out in this Clause 8.2.1(i) shall not apply to
Warranties in paragraphs 3 (The Shares) or 12.1 (Ownership of the
Subsidiaries) of Schedule 7.
(cv) Any such Specified Claim (other than a Specified Claim under
paragraph 11 (Tax) of Schedule 7) or under the Tax Matters
Agreement) shall (if it has not been previously satisfied,
settled or withdrawn) be deemed to be withdrawn nine months after
the relevant time limit set out above unless legal proceedings in
respect of it have been commenced by being both issued and served
provided that:
(c) in respect of claims in respect of Losses which remain
contingent the relevant time limit will if later be nine
months after such contingency crystallises; and
(d) where due to lack of information it is not practicable for
XL Insurance properly to pursue a litigated claim the
relevant time limit shall if later be nine months after it
does so become practicable.
8.5.2 Minimum Claims
The Sellers shall not be liable in respect of any Specified Claim
(other than a Specified Claim under paragraphs 3 (The Shares) or 12.1
(Ownership of the Subsidiaries) of Schedule 7) arising from any single
circumstance if the amount of such Specified Claim does not exceed
USD100,000 (and claims relating to connected matters shall be treated
as arising from a single circumstance and aggregated for this purpose)
but the Sellers shall not be liable for a Specified Claim in excess of
that amount unless the liability determined in respect of any such
Specified Claim (excluding interest, costs and expenses) also exceeds
that amount. For the avoidance of doubt the Seller shall subject to
the terms of Clause 8.2.3 be liable for the whole of any such claim
and not merely the excess over USD100,000.
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8.5.3 Aggregate Minimum Claims The Sellers shall not be liable in respect
of any Specified Claim (other than a Specified Claim under paragraphs
3 (The Shares) or 12.1 (Ownership of the Subsidiaries) of Schedule 7)
unless and to the extent that the aggregate amount of all Specified
Claims for which the Sellers would otherwise be liable under this
Agreement exceeds USD8 million in which case the Sellers shall be
liable for the whole of such claims and not merely the excess over
USD8 million.
8.5.4 Maximum Claims The Sellers shall not be liable in respect of any
Specified Claim to the extent that the aggregate amount of the
liability of the Sellers would exceed:
(cvi) the aggregate amount of the Purchase Price in the case of any
Specified Claim under any Core Warranty; or
(cvii) 60 per cent of the aggregate amount of the Purchase Price in
all other cases,
provided that for the avoidance of doubt in no circumstances shall
such aggregate liability of the Sellers exceed the aggregate amount of
the Purchase Price.
8.5.5 Specified Indemnities, Fraud and Dishonesty Notwithstanding the
above, the restrictions and limitations set out in Clauses 8.2.1 to
8.2.4 or elsewhere in the Agreement shall not apply:
(cviii) to Clause 9.1; or
(cix) to the extent that the matter giving rise to a Specified Claim
is a result of any fraud, dishonesty or wilful misconduct, wilful
concealment or wilful default on the part of any Seller.
8.5.6 Contingent Liabilities The Sellers shall not be liable in respect of
any Specified Claim where a liability is contingent unless and until
such contingent liability becomes an actual liability and is due and
payable but this Clause 8.2.6 shall not operate to avoid a Specified
Claim made in respect of a contingent liability within the applicable
time limit specified in Clause 8.2.1 if the requisite details of such
claim, such as they are known by the Purchaser have been delivered
before expiry of such period (even if such liability does not become
an actual liability until after the expiry of the relevant period).
8.5.7 Provisions in the Completion Balance Sheet The Sellers shall not be
liable in respect of any Specified Claim if and to the extent that
provision or reserve is made for the matter giving rise to the claim
in the Completion Balance Sheet or such matter is written off as
irrecoverable in the Completion Balance Sheet or is otherwise
specifically taken into account in calculating the Purchase Price
(including as a result of Clause 3.6).
8.5.8 Events Beyond the Control of the Sellers The Sellers shall not be
liable in respect of any Specified Claim to the extent that such
Specified Claim would not have occurred but for:
(a) the passing of or any change after Completion in any law, rule,
or regulation including without limitation to the generality of
the foregoing any increase in the rates of Taxation or any
imposition of Taxation or any withdrawal of relief from Taxation
not actually in effect at the date of this Agreement; or
(b) any change in accounting policy, bases or practice of XL
Insurance or any member of XL Insurance Group or any Group
Company introduced or having effect after Completion other than
changes implemented to conform to relevant accounting standards
or requirements existing at the date of this Agreement.
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8.5.9 Insurance
The Sellers shall not be liable in respect of any Specified Claim to
the extent that any liability arising from such Specified Claim is
recovered by the XL Insurance Group after Completion under a policy of
insurance in force immediately prior to Completion.
8.6 Mitigation of Loss
XL Insurance shall procure that all reasonable steps are taken and all
reasonable assistance is given to avoid or mitigate any Losses which in the
absence of mitigation might give rise to a liability on the part of the
Sellers in respect of any Specified Claim provided always that:
8.6.1 the Purchasers shall not be required hereunder to exercise any right
or remedy hereunder or make any claim which they may have in respect
of any misrepresentation in or omission from any information or advice
supplied or given by any Group Company or Relevant Employee;
8.6.2 for the avoidance of doubt the Purchasers shall not hereby be
precluded from making any claim against any Seller; and
8.6.3 the Purchasers shall be entitled to receive all reasonable assistance
and co-operation from the Sellers in relation to its obligations
hereunder.
8.7 Conduct of Claims
Save in respect of a Specified Claim relating to Taxation (to which the
provisions of the Tax Deed shall apply) or in respect of any claim, payment
or adjustment to be made pursuant to Clause 4 or Schedule 5 or in respect
of Specified Claims under Clause 9.1.7 which relate to claims under or in
connection with insurance or reinsurance policies issued by the Operations:
8.7.1 If any party to this Agreement (the "Claimant") becomes aware of any
matter that is likely in the reasonable opinion of the Claimant to
give rise to a Specified Claim against another party to this Agreement
(the "Recipient") under this Agreement notice of that fact shall be
given to the Recipient as soon as and in any case within seven
Business Days thereafter but failure to give such timely notice shall
not affect the rights of the Claimant except to the extent that the
Recipient is prejudiced by such failure.
8.7.2 Without prejudice to the validity of the claim or alleged claim in
question the Claimant shall on reasonable terms allow and shall
procure that the relevant Associated Companies of the Claimant allow
the Recipient and its accountants and professional advisers to
investigate the matter or circumstance alleged to give rise to such
claim and whether and to what extent any amount is payable in respect
of such claim and for such purpose the Claimant shall give and shall
procure that the relevant Associated Companies of the Claimant give
subject to the Recipient providing an indemnity in terms reasonably
satisfactory to the Claimant in respect of all reasonable
out-of-pocket costs and expenses, all such reasonable information and
assistance including access to premises and personnel and the right to
examine and copy or photograph any assets, accounts, documents and
records as the Recipient or its accountants or professional advisers
may reasonably request provided that subject to Clause 8.4.3(iii) the
Claimant shall not be required to provide access to or copies of any
information which is of a legally privileged nature.
8.7.3 If the Specified Claim in question is a result of or in connection
with a claim by or liability to a third party then:
(cx) no admission of liability shall be made by or on behalf of the
Claimant or any Associated Company of the Claimant and the claim
shall not be compromised, disposed of or settled within 30
Business Days of the relevant notice served pursuant to Clause
8.4.1 (the "Recipient's Assessment Period") without the consent
of the Recipient such consent not to be unreasonably withheld or
delayed;
(cxi) the Claimant shall keep the Recipient informed of the progress
of the relevant claim including by way of the provision of all
such documentation as may be reasonably necessary or desirable as
often as is reasonable and in any event at no less than monthly
intervals after giving notice of the matter pursuant to Clause
8.4.1 provided that the Recipient shall treat and shall procure
that its professional advisers shall treat all information and
documents which it has been provided with as
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confidential and shall not disclose such information and document
to any third party (other than professional advisers) and shall
use it only for the purpose of dealing with the relevant claim
(unless the Recipient has obtained the prior written consent of
the Claimant or the information was already known to the
Recipient or the information comes into the public domain
otherwise than a breach by the Recipient) and provided that
nothing in this Clause 8.4.3 shall (unless the Claimant has taken
control of the litigation following an appropriate indemnity in
accordance with Clause 8.4.3(iii)) require the Claimant to
provide the Recipient with a copy of any document which it in
good faith considers and acting reasonably believes to be
privileged as against the Recipient in the context of any actual
or threatened litigation connected with the Specified Claim in
which case the Claimant shall promptly notify the Recipient of
that fact and as much other information about the document as can
be disclosed to the Recipient without losing that privilege; and
(cxii) (subject to the Claimant being indemnified to its reasonable
satisfaction by the Recipient for any reasonably incurred costs,
charges, losses, expenses and other liabilities incurred by it as
a result of taking such action and the Claimant being reasonably
satisfied that such action would not otherwise have an unduly
adverse effect on the Operations) the Claimant shall (provided
that the Recipient shall have notified the Claimant that it
wishes to control such action within 10 Business Days of the
relevant notice served pursuant to Clause 8.4.1 or such later
date as the parties may expressly agree) take all such action as
the Recipient may reasonably request, including the institution
of proceedings and the instruction of professional advisers
nominated by the Recipient to act on behalf of the Claimant to
avoid, dispute, resist, compromise, defend or appeal against any
such claim against the Claimant, or to make such recovery by the
Claimant, as the case may be, in accordance with the reasonable
instructions of the Recipient. The Recipient shall ensure that
the Claimant is kept fully informed of the progress of any such
action.
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8.7.4 XL Insurance agrees that after the Completion Date XL Insurance shall
or shall procure that another Purchaser or a Group Company shall
retain and exert reasonable efforts to preserve the condition of the
relevant Books and Records and the books and records of the Group
Companies. The Sellers will use reasonable efforts to preserve the
condition of all books and records of or relating to the Sellers and
the Businesses which are or may be relevant in connection with any
claim brought by XL Insurance or any Purchaser against the Sellers
under this Agreement or the operations of the Businesses by the
Purchaser after Completion for a seven year period or if longer for so
long as any actual or anticipated claims remain outstanding.
8.7.5 XL Insurance agrees that if Winterthur or any member of Winterthur
Group is in receipt of a claim in relation to a Liability other than
an Assumed Liability the provisions of Clauses 8.4.2 to 8.4.4 shall at
the request of Winterthur apply mutatis mutandis to such claim as if
references to the Recipient were to Winterthur or the relevant member
of Winterthur Group and references to the Claimant were to XL
Insurance or the relevant Purchaser or Group Company.
8.7.6 Winterthur agrees that if XL Insurance or any member of XL
Insurance's Group is in receipt of a claim in relation to an Assumed
Liability the provisions of Clauses 8.4.2 to 8.4.4 shall at the
request of XL Insurance apply mutatis mutandis to such claim as if
references to the Recipient were to XL Insurance or the relevant
member of XL Insurance's Group and references to the Claimant were to
Winterthur or the relevant member of Winterthur Group.
8.8 Third Party Claims and Prior Receipt
8.8.1 Where XL Insurance or any Purchaser or any Group Company is entitled
as a matter of law or pursuant to any contractual arrangement of the
Group Companies existing prior to Completion to recover (due to
circumstances or arrangements of any of the Group Companies existing
prior to Completion) from some other person Losses which could give
rise to a claim against the Sellers for breach of Warranty the person
so entitled shall not be obliged to pursue such claim against such
third party before pursuing a claim against the Sellers provided that
this Clause 8.5.1 shall not negate the Purchasers' duty to mitigate
under Clause 8.3.
8.8.2 If any party pays an amount in discharge of any Specified Claim under
this Agreement and the other party subsequently recovers (whether by
payment, discount, credit, relief or otherwise) from a third party a
sum which is referable to the subject matter of the claim and which
would not before the matter giving rise to the Specified Claim have
been received by such other party that party shall pay on behalf of
itself or the relevant Purchasers or Sellers as the case may be to the
other party an amount equal to: (cxiii) the sum recovered from the
third party minus any out of pocket costs and expenses reasonably
incurred in obtaining such recovery and minus also any Taxation costs,
charges or other deductions chargeable or suffered in respect of such
sum; or
(cxiv) if less the amount previously paid by the party to the other
party.
8.9 Double Claims
8.6.1 XL Insurance and any Purchasers taken together shall not be entitled
to recover from the Sellers under this Agreement or any Local
Agreement or the Tax Deed or the Sellers' Retrocession Agreement or
otherwise in connection with the subject matter of this Agreement more
than once in respect of the same Losses and accordingly the Sellers
shall not be liable in respect of any Specified Claim under any one
such document if and to the extent that the Losses have been paid in a
claim under another such agreement. Without limitation to the
generality of the foregoing to the extent that any Losses have been
recovered in full by the Purchaser through the Net Asset Value
calculation or the provisions of Clause 4 the Seller shall not be
liable to the Purchaser for the same Losses under any other provision
of this Agreement or any Local Agreement or the Tax Deed or the
Sellers Retrocession Agreement or otherwise in connection with the
subject matter of this Agreement.
8.6.2 The parties acknowledge that the purchase price adjustment, the
Sellers Retrocession Agreement and the seasoning of reserves under
this Agreement interact. The double claims
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provision in this Clause 8.6 should be interpreted so that the net
economic effect (ignoring the time value of money) of the above
referenced agreements should be the same as if the Sellers
Retrocession Agreement did not exist.
8.10 Effect of Completion
The Warranties and all other provisions of this Agreement and each Local
Agreement in so far as the same shall not have been performed at Completion
shall not be extinguished or affected by Completion or by any other event
or matter whatsoever (including without limitation any satisfaction and/or
waiver of any condition contained in Clause 5.1) except by a specific and
duly authorised written waiver or release by XL Insurance.
8.11 Information Supplied to the Sellers
Winterthur agrees with XL Insurance for itself and as trustee for each
Purchaser and each relevant Group Company and each Relevant Employee to
assign and to procure that any other relevant member of the Winterthur
Group assigns to XL Insurance, any rights, remedies or claims which any of
them may have in respect of any misrepresentation in or omission from any
information or advice supplied or given by any Relevant Employee and on
which the Sellers have relied in giving the Warranties, preparing the
Disclosure Letter or entering into this Agreement or any Local Agreement
other than to the extent that that Relevant Employee has acted with fraud,
dishonesty or wilful misconduct, wilful concealment or wilful default.
8.12 Remedial Action
If a breach of any of the Warranties occurs prior to Completion then
without prejudice to the right of XL Insurance to claim damages to the
extent that a breach of any of the Warranties is capable of being remedied
the Sellers shall be afforded a reasonable opportunity to remedy the matter
the subject of the breach which remedy may include the payment by
Winterthur on behalf of the Sellers to XL Insurance or another Purchaser of
such compensation as shall place XL Insurance or such other relevant
Purchaser (after taking account of any taxation to which such compensation
may be subject) in an equivalent position to that in which it would have
been had such breach of Warranty not occurred.
8.13 Warranties from XL Insurance
XL Insurance and each relevant Purchaser warrants to each of the Sellers in
the terms set out in Schedule 13 subject only to any exception fairly
disclosed to Winterthur on or prior to the date of this Agreement.
8.14 Entire Agreement
8.14.1 This Agreement contains the whole agreement between the parties
relating to the subject matter of this Agreement at the date of this
Agreement to the exclusion of any terms implied by law which may be
excluded by contract. XL Insurance acknowledges that it has not been
induced to enter this Agreement by and (so far as is permitted by law
and except in the case of fraud) hereby waives any remedy in respect
of any warranties, representations and undertakings not incorporated
into this Agreement.
8.14.2 Each party to this Agreement confirms it has received independent
legal advice relating to all the matters provided for in this
Agreement including the provisions of this Clause 8.11 and agrees
having considered the terms of this Clause 8.11 and this Agreement as
a whole that the provisions of this Clause 8.11 are fair and
reasonable.
8.14.3 In Clauses 8.11.1 and 8.11.2 "this Agreement" includes the
Disclosure Letter, the Local Agreements, the agreements referred to in
Part 2 of Schedule 6, the Tax Deed and all Schedules to this Agreement
any other agreements entered into pursuant to this Agreement between
any Seller(s) and any Purchaser(s).
8.15 Remedies
8.15.1 The remedies available to the parties for breach of any of the
provisions of this Agreement consist of any one or any combination
(except as otherwise expressly provided in this
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Agreement) of the following subject where relevant to the limitations
on liability expressly set out in this Clause 8: (cxv) the right to
terminate the Agreement in the circumstances and in the manner set out
in Clause 7.5;
(cxvi) the equitable remedies of injunction, rectification, or
specific performance of this Agreement (as set out in Clause
7.6);
(cxvii) the right to seek damages in tort for negligent mis-statement,
deceit or any other tort (but for the avoidance of doubt without
limitation to the provisions of Clause 8.11.1);
(cxviii) the right to claim damages at common law for breach of
contract (including but not limited to breach of Warranty);
(cxix) right to claim damages (but not rescission) for any
misrepresentation by the Sellers (or any of them) under
Misrepresentation Act 1967); and
(cxx) the right to claim discharge for frustration.
8.15.2 A failure to exercise or delay in exercising a right or remedy
provided by this Agreement or by law does not constitute a waiver of
the right or remedy or a waiver of other rights or remedies. No single
or partial exercise of a right or remedy provided by this Agreement or
by law prevents further exercise of the right or remedy or the
exercise of another right or remedy.
8.15.3 Except as set out in this Clause 8.12 or otherwise expressly stated
in this Agreement, to the extent permitted by law all rights and
remedies of the parties to this Agreement in respect of the subject
matter of this Agreement are excluded, whether at common law, in tort,
by statute, in equity or otherwise.
9. Winterthur's Covenants
9.4 Specified Indemnities
In addition to (and not in limitation of any indemnities given hereunder)
Winterthur shall or shall procure that other Sellers as appropriate pay to
XL Insurance or other Purchasers as appropriate on demand an amount equal
to each Loss incurred by any member of the XL Insurance Group, any
Purchaser or any Group Company in respect of any Business or Operations
which arises directly or indirectly out of or in connection with any of the
following events, matters or circumstances (including without limitation
each Loss incurred as result of defending or settling a claim alleging any
liability):
9.4.1 (i) any removal of the Excluded Operations; (ii) any failure properly
to remove the same in accordance with the terms of this Agreement;
(iii) the continued operation of the Excluded Operations after
Completion until their removal; (iv) the operation of any Excluded
Operations Interim Arrangement or the act or default of any member of
the Winterthur Group thereunder; (v) any invalidity, termination,
breach or non-performance of any Excluded Operations Reinsurance
Agreement; (vi) arising out of the Excluded Operations or Excluded
Assets at any time whether before or after Completion (whether or not
such Excluded Operations or Excluded Assets shall have been or are to
be transferred to any member of the Winterthur Group); including
without limitation in relation to any policy of insurance or
reinsurance entered into by any Group Company or Business Seller which
was entered into and/or relates to any period and/or covers any loss
prior to 1 January 1986 and/or relates to any Excluded Operations,
Excluded Asset or Retained Liability;
9.4.2 any intra group reorganisation involving the Operations including
those referred to in Clause 5.1.4 or as may be required to remove
Excluded Operations (whether taking place before or after Completion)
and any other pre-Completion intra group reorganisation involving the
Operations including without limitation in relation to regulatory,
employment or pensions related matters arising in relation to any such
reorganisation or any Loss incurred by any Group Company or Purchaser
as a result of any failure to effect any such reorganisation correctly
or at all or any Loss incurred by any Group Company or Purchaser in
relation to the business transferred out of the company being so
reorganised including without limitation all Losses incurred or
suffered, before or after Completion , by Winterthur International
Insurance Company Limited directly or indirectly in relation to the
Bestands - und
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Teilbertriebseinbringungsvertrag dated 11 April 2001 between
Winterthur International (Deutschland) Versicherung Aktiengesellschaft
and Winterthur International Insurance Company Limited, including,
without limitation, any Losses attributable to the Excluded Operations
or the transfer of any business assets, liabilities or employees by
operation of law which do not relate to the Operations and those
Losses incurred or suffered which relate to any part of the business
retained by Winterthur International (Deutschland) AG, whether arising
before or after Completion , save only to the extent those Losses have
been expressly assumed by the relevant Purchaser pursuant to a written
agreement;
9.4.3 any and all costs they may incur in order to secure the right to
continue to use all Identified Third Party Software notwithstanding
Completion on the terms which are current as at Completion or on terms
which are reasonably satisfactory to XL Insurance;
9.4.4 any failure by any member of the CS Group to comply with Applicable
Laws in relation to the transfer of any portfolio of policies to or
from any of the Group Companies or the Business Sellers which transfer
was effected since 1 January 1990;
9.4.5 any Loss incurred under or in connection with the Senior Management
Retention Plan referred to in specific disclosure 10.4 of the
Disclosure Letter or similar incentive arrangement for Relevant
Employees;
9.4.6 any failure to: (i) establish; and/or (ii) consult, a works council
in relation to the transactions contemplated in this Agreement (other
than the pre-Completion reorganisations referred to in Clause 9.1.2);
9.4.7 any disputes or proceedings (whenever commenced) (including, but not
limited to, disputes or proceedings with a Regulator) relating to any
of the Operations (other than in respect of or relating to any of the
Current Policies to the extent that adequate Reserves in respect
thereof are included in the Completion Balance Sheet) provided that a
letter before action or equivalent formal threat of proceedings has
been received by the Operations prior to Completion;
9.4.8 unless dealt with under paragraph 9 of Schedule 9 any Loss or
Liability (whether under Title IV of the US Employee Retirement Income
Security Act of 1974 as amended or otherwise) incurred by virtue of
the inclusion of any Group Company in a controlled group (within the
meaning of Section 414 of the US Internal Revenue Code of 1986 as
amended) prior to Completion;
9.4.9 any business written by any Operation outside the permitted
jurisdictions or beyond the permitted business scope under its
relevant regulatory licences or consents;
9.4.10 any Losses relating to: (i) the activities of Winterthur Properties
(Pty) Limited (other than the holding of Properties); (ii) Winterthur
International Employee Benefits SA or (iii) the insolvency of any
Group Company at the Effective Time or the failure at the Effective
Time of any Group Company to be in compliance with any applicable
regulatory, insolvency, financial ratio or other similar test;
9.4.11 unless dealt with under paragraph 9 of Schedule 9, any Liability for
employee or retirement benefits owed to former employees (or their
beneficiaries) of a Group Company whose employment terminated prior to
Completion ;
9.4.12 any breach of any applicable data protection laws arising in respect
of any relationship between any of the Operations and Churchill
Management Limited or any of its Associated Companies;
9.4.13 any breach of any regulatory rules by Winterthur International
Brasil Seguradora S/A, or the China Operations including in relation
to filing requirements and capital adequacy requirements.
9.4.14 any failure of any of the systems used in connection with any of the
Operations to function fully in relation to the euro and as accurately
as prior to the introduction of the euro, in each case: (i) in the
jurisdictions where the euro is a national currency; and (ii) judged
by the standards of leading market competitors;
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9.4.15 any Liabilities arising in relation to the activities of the Polish,
Czech or Hungarian Operations prior to the Effective Time but only to
the extent that these Liabilities exceed in aggregate USD5 million;
9.4.16 any Current Policy to the extent that it provides cover in respect
of risks relating to the H S Weavers or Pan Atlantic Pool;
9.4.17 except to the extent otherwise expressly agreed by the parties, any
Liability arising or incurred in respect of any period prior to the
Effective Time for or in respect of non-pension employee benefits
under plans maintained by General Casualty Corporation of Wisconsin in
which the employees of one or more Group Companies participate;
9.4.18 any claim for breach of the sale and purchase agreement (or any
ancillary documentation) entered into between Winterthur International
(Re) and Partner Reinsurance Company (in relation to the disposal of
Winterthur International (Re)); 9.4.19 any Liabilities arising out of
any weight loss products (such as phentermine), whether used singly or
in combination with other drugs or substances, including, without
limitation, the so-called "fen-phen" effect of any product containing
phentermine, fenfluramine, or dexfenfluramine, and/or any failure to
warn of any of the foregoing or in connection with phentermine,
fenfluramine, dexfentluramine, lonamin or any derivatives thereof used
as an appetite suppressant or weight loss drug, or any combination
thereof; such liabilities being restricted to those arising in respect
of the accounts referenced in document number OPR12.0.10.009 referred
to in the annex to the letter dated as of 15 February 2001 and made
between the parties in relation to the review of a confidential data
room of documentation in connection with the Transaction;
9.4.20 any Losses incurred by any of the Operations or any of the
Purchasers in connection with any indemnity, hold harmless, terms of
engagement or similar arrangement entered into by or on behalf of the
Operations or any of the Purchasers in connection with the preparation
of the 31.12.2000 Financial Information, the financial statements
referred to in Clause 15.4.9 or the Completion Financial Information
or the provision of Winterthur's Accountants reports or reviews
thereon and any Losses incurred by any of the Operations or any of the
Purchasers for which, but for the terms of any indemnity, hold
harmless terms of engagement, or similar arrangement or any
restriction of liability of Winterthur's Accountants to any of the
Purchasers or any of the Operations contained in the terms of
engagement or other agreement entered into between Winterthur and/or
Winterthur International or any of the Purchasers and Winterthur's
Accountants or otherwise in connection with the preparation of such
financial information and reports or reviews, the Operations or the
Purchasers would be able to claim compensation from Winterthur's
Accountants;
9.4.21 any Losses of any of the Operations or any Purchasers arising out of
the 31.12.2000 Financial Information or the financial statement
referred to in Clause 15.4.9 being found to be inaccurate or
incomplete, incurred at any time before the final determination of the
Purchase Price under Part 2 of Schedule 5;
9.4.22 any Losses resulting from any breach of, or the unenforceability of,
the Sellers Retrocession Agreement or any commutation payments
thereunder (which, for the avoidance of doubt shall include the
commutation payments themselves);
9.4.23 any Losses which arise out of or in connection with, directly or
indirectly, the failure of the assignments referred to in Clause
15.7.1 and the licences referred to in Clause 15.7.2 to vest in the
Purchasers and the Group Companies the Registered Intellectual
Property and the Shared IP in the manner set out in Clause 15.7.1 or
15.7.2 as applicable;
9.4.24 any dividends or other similar payments accruing due but not yet
paid, to policyholders prior to the Effective Time in respect of any
of the accident and health policies written by the Operations (to the
extent that the Liabilities of the Operations represented by such
dividends have not been otherwise accounted for as liabilities in the
Completion Financial Statements);
9.4.25 in the case of any of the Operations, any Losses arising out of a
breach of Clause 6.1 and/or 6.2 between the Effective Time and the
Completion Date, and in the case of any of the Operations which are
the subject to an Interim Arrangement, any Losses arising out of a
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breach of the provisions of Clause 6.1 and/or Clause 6.2 or any breach
of the Interim Arrangements or the Interim Reinsurance Agreements by
any of the Sellers, to the extent that any such breach occurred during
the period from Completion to the date on which the relevant
Operations were transferred or the relevant Interim Arrangements were
terminated except any Losses to the extent that they arise from any
act or omission at the express direction of any member of the XL
Insurance Group pursuant to the Interim Arrangements;
9.4.26 any Losses relating to the employee benefits terms written by the
Hong Kong branch of Winterthur International Insurance Company Limited
prior to the Effective Time (such business being an Excluded
Operation, but not being reinsured by or transferred to a member of
the Winterthur Group);
9.4.27 any Losses incurred by Winterthur International (Re) as a result of
the commutation of any policy written by it prior to the Effective
Time which falls within the definition of Excluded Operations;
9.4.28 any Losses incurred by any of the Operations which arise out of or
in connection with the insolvency, liquidation or other similar event
in relation to HIH Insurance Limited or its subsidiaries (and, for the
avoidance of doubt, in the event that the top company in the HIH group
of companies is not HIH Insurance Limited, such top company and its
subsidiaries);
9.4.29 any Losses arising as a result of the failure by Harrington Holdings
Limited or any of its subsidiaries (and, for the avoidance of doubt,
in the event that the top company in the Harrington group of companies
is not Harrington Holdings Limited, such top company and its
subsidiaries) to honour its obligations to any of the Group Companies;
9.4.30 any Losses arising as a result of the continuation of any of the US
agreements referred to in any agreement reached between the parties as
referred to in paragraph 1.1.23 of Part 1 of Schedule 6; and
9.4.31 any Losses arising as a result of any indemnity given by XL
Insurance in respect of the redundancy or termination of employment of
any employees of the Winterthur Group in Belgium pursuant to the
Interim Reinsurance Agreement relating to the Operations in Belgium.
It being understood that, with respect to third party claims that are
subject to Clause 9.1.23 above, the provisions of Clause 8.4 shall apply
except that Winterthur shall not have the right to exercise any right under
such Clause to take control of such action.
9.5 Closing Certificate Indemnity
In addition to (and not in limitation of) any indemnities given hereunder
in the event that the letter issued by Winterthur pursuant to sub-paragraph
1.1.22 of Part 1 of Schedule 6 proves to be false or improperly given as at
the date on which it is given as a result of any fraud, dishonesty, or
wilful misconduct, wilful concealment or wilful default on the part of any
of the persons referred to in Part 2 of Schedule 3 Winterthur shall or
shall procure that the Sellers shall subject as below pay to XL Insurance
or other Purchasers as appropriate on demand an amount equal to all Losses
incurred by any Purchaser or any Group Company or in respect of any
Business or Operations which arise directly or indirectly out of or in
connection therewith (including without limitation each Loss incurred as
result of defending or settling a claim alleging such liability).
Notwithstanding the above neither Winterthur nor any of the other Sellers
shall be liable for any such Loss:
9.5.1 to the extent that the relevant matter is accounted for in the
mechanism for adjusting the Purchase Price contained in Clauses 3.1 or
3.6; or
9.5.2 if the parties agree another adjustment to the Purchase Price to take
account of such matter.
9.6 Property Indemnity
9.6.1 Winterthur shall and shall procure that the Sellers shall indemnify
XL Insurance, each member of the XL Insurance Group, each Group
Company and each relevant Purchaser (as the case may be) ("Indemnified
Parties") against any Losses incurred or suffered by any relevant
Indemnified Party (as the case may be) in relation to any matter,
state of affairs or circumstances which exist prior to or on the date
on which the legal and beneficial title in the
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Property vests in the relevant Indemnified Party ("Property
Completion") and affect the Properties (each such instance of Loss
being referred to as a "Property Claim") other than: (cxxi) any such
matter, state of affairs or circumstances which arises directly and
solely as a result of a change in market value of any property brought
about by economic, financial, regulatory or political conditions or
the state of the property market generally but this shall not apply
where the change in market value has been brought about solely by a
direct act or omission of Winterthur or its Associated Companies; and
(cxxii) any such matter which is shown in the Completion Balance
Sheet.
9.6.2 Minimum Claims
The Indemnifying Parties shall not be liable in respect of any
Property Claim arising from any single circumstance if the amount of
such Property Claim does not exceed USD100,000 (and claims relating to
connected matters shall be treated as arising from a single
circumstance and aggregated for this purpose) provided that the
Indemnifying Parties shall not be liable for a Property Claim in
excess of that amount unless the liability determined in respect of
any such Property Claim (excluding interest, costs and expenses) also
exceeds that amount. For the avoidance of doubt the Indemnifying
Parties shall subject to the terms of Clause 9.3.3 be liable for the
whole of any such claim and not merely the excess over USD100,000.
9.6.3 Aggregate Minimum Property Claims
The Indemnifying Parties shall not be liable in respect of any
Property Claim unless and to the extent that the aggregate amount of
all Property Claims for which the Indemnifying Parties would otherwise
be liable under this Agreement exceeds USD5 million in which case the
Indemnifying Parties shall not be liable for the whole of such claims
but merely the excess over USD5 million.
9.6.4 Incorporation of Clause 8
The following clauses shall apply where applicable mutatis mutandis to
each Property Claim under Clause 9.3.1 as if references to "Specified
Claim" were to "Property Claim", "Seller (or Sellers)" were to
"Indemnifying Parties" and "XL Insurance", "XL Insurance Group",
"Group Company (or Companies)" or "Purchaser (or Purchasers)" were to
"Indemnified Parties" and "Completion" were to "Property Completion":
(cxxiii) Clause 8.2.4 (Maximum Claims);
(cxxiv) Clause 8.2.6 (Contingent Liabilities);
(cxxv) Clause 8.2.7 (Provisions in the Completion Balance Sheet);
(cxxvi) Clause 8.2.8 (Events beyond the control of the Sellers);
(cxxvii) Clause 8.2.9 (Insurance);
(cxxviii) Clause 8.3 (Mitigation of Loss);
(cxxix) Clause 8.4 (Conduct of Claims);
(cxxx) Clause 8.5 (Third Party Claims and Prior Receipt); and
(cxxxi) Clause 8.6 (Double Claims).
9.6.5 Completion
Where a Service Level Agreement, licence to occupy, underlease or
other similar document is to be put in place regulating the sharing of
the occupation and use of the Property and/or Additional Property
pursuant to the provisions of Schedule 10 then, if not in place at
Completion the indemnity contained in Clause 9.3.1 shall continue
after Completion to relate to any matter, state of affairs or
circumstances in existence until the date when such document has been
completed.
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9.6.6 Additional Properties
In relation to the Additional Properties the Indemnifying Parties
shall indemnify the relevant Indemnified Party against any Losses
incurred or suffered by the relevant Indemnified Party in relation to
any matter, state of affairs or circumstances which exists prior to or
at the date on which the legal and beneficial title in the Additional
Property vests in the relevant Indemnified Party as at the date on
which the legal and beneficial title in the Additional Property vests
in the relevant Indemnified Party and affecting the Additional
Properties other than any such matter, state of affairs or
circumstances which arise directly and solely as a result of a change
in market value of any Additional Property brought about by economic,
financial, regulatory or political conditions or the state of the
property market generally but this shall not apply where brought about
solely by a direct act or omission of Winterthur or its Associated
Companies.
9.6.7 Winterthur shall and shall procure that the Sellers shall indemnify
the Indemnified Parties (as defined in Clause 9.3.1) against any
Losses incurred or suffered by any relevant Indemnified Party arising
as a result of any action taken by any landlord under any Leasehold
Agreement terminating any Leasehold Agreement as a result of the
occupation of any Leasehold Property by any Purchaser where such
occupation arose as a result of any licence contemplated by Clause
2.1.15 of this Agreement unless such action is caused by the
Purchaser's non-compliance with the terms of the Leasehold Agreements
or any matter affecting the reversionary interest to any Leasehold
Property or the breach or non-compliance by any Purchaser of any
Applicable Laws or legal code.
9.6.8 The Purchaser shall indemnify Winterthur against any Losses incurred
or suffered by Winterthur or any Seller as a result of any Purchaser's
non-compliance with the terms of any Leasehold Agreement or Licence to
Occupy or any matter affecting the reversionary interest to any
Leasehold Property or the breach or non-compliance by any Purchaser of
any Applicable Laws or legal code excluding any Losses arising merely
by virtue of the Purchaser's occupation or possession of any Leasehold
Property.
9.6.9 From the Completion Date Winterthur shall indemnify XL Insurance
against any Losses incurred or suffered by XL Insurance or any
Purchaser as a result of any Sellers' non-compliance with the terms of
any Leasehold Agreement or Licence to Occupy or any matter affecting
the reversionary interest to any Leasehold Property or the breach or
non-compliance by any Seller of any Applicable Laws or legal code.
9.7 Share Schemes Indemnity
Winterthur and each relevant Seller shall indemnify each relevant Purchaser
against any liability which may be incurred by each relevant Purchaser in
respect of pay as you earn income tax and secondary national insurance
contributions and/or any other similar tax or social security liabilities
which may arise in respect of any award or benefit made to Relevant
Employees prior to the Effective Time or as a result of Completion under,
or otherwise in respect of the operation prior to the Effective Time of,
any share incentive, share option or other profit sharing arrangement of
the Winterthur Group.
10. Apportionment
10.4 General
Subject to Clause 10.2 if and to the extent that any Business Seller has
prior to Completion made any payment in respect of any Contract or
Retrocession Contract which payment relates solely to a period after the
Effective Time or any Purchaser has after the Effective Time received any
payment in respect of any Contract which payment relates solely to a period
prior to the Effective Time XL Insurance shall or shall procure that other
Purchasers as appropriate shall unless the same has been taken into account
in the Completion Balance Sheet reimburse to the relevant Business Seller
the amount thereof. Subject to Clause 10.2 if and to the extent that any
Purchaser has after the Effective Time made any payment in respect of any
Contract or Retrocession Contract which payment relates solely to a period
before the Effective Time or any Business Seller receives a payment in
respect of any Contract which payment relates solely to a period after such
Effective Time or any Business Seller receives any payment in respect of
any Policy or Retrocession Contract which has been transferred to a
Purchaser under Clause 2.1 Winterthur shall or shall procure that the
relevant Business Seller shall unless the same has been taken into account
in the Completion Balance Sheet reimburse to the relevant Purchaser the
amount thereof.
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10.5 Amount of reimbursement
In determining the liability under Clause 10.1 of XL Insurance or other
Purchasers to reimburse the relevant Business Seller and Winterthur or
other Business Sellers to reimburse the relevant Purchaser for amounts paid
by it regard shall be had to the extent to which the relevant Business
Seller or the relevant Purchaser as applicable has been or is able to
obtain credit or repayment of input tax for VAT purposes in respect of
supplies of goods and/or services (made under a Contract, Retrocession
Contract or Policy) to which such amounts relate and the liability of XL
Insurance or Winterthur as applicable under Clause 10.1 shall be reduced
accordingly.
11. Third Party Consents
11.4 Consents
Nothing in this Agreement shall be construed as an attempt to assign any
Business Asset (including any Contract, Retrocession Contract or Policy)
which by its terms or by law is not assignable without a Third Party
Consent unless such consent shall have been given.
11.5 Failure to Obtain Consents
11.5.1 If any Business Asset cannot be vested in XL Insurance except by way
of conveyance, novation, transfer or assignment in each case requiring
a Third Party Consent then where the relevant Third Party Consent has
not been obtained on or prior to Completion in respect of any such
Business Asset such Business Asset shall not be conveyed, transferred
or assigned by this Agreement or any local Agreement or otherwise on
Completion but: (a) shall (except in the case of Policies and
Retrocession Contracts to which the provisions of paragraph 2.2 of
Part 1 of Schedule 2 shall apply) be held in trust for XL Insurance
absolutely from Completion until the relevant Third Party Consent is
obtained and the relevant Business Asset is so conveyed, transferred
or assigned. Until such conveyance, transfer or assignment or until
the license with respect to the relevant Business Asset is terminated
pursuant to the provisions of Clause 2.1.17 XL Insurance shall (to the
extent that it may lawfully do so) perform all the obligations of the
relevant Business Seller thereunder and shall indemnify the Business
Seller against all Losses incurred by the Business Seller by reason of
or in connection with the non-performance or the negligent or
defective performance by XL Insurance or any Purchaser of such
obligations (except to the extent that such obligations have not been
performed as a result of a failure by any Seller to follow the
directions of the relevant Purchaser) and the Business Seller shall
otherwise co-operate in any reasonable arrangements proposed by XL
Insurance designed to procure for XL Insurance the benefits of the
relevant Business Asset. If in the case of any Contract any such Third
Party Consent is not obtained within six months after Completion (or
any reasonable longer period as Winterthur and XL Insurance may agree)
Winterthur shall procure that the relevant Business Seller shall if XL
Insurance reasonably requests in writing and subject to XL Insurance
providing an indemnity in terms reasonably satisfactory to the
relevant Business Seller in respect of all reasonable out of pocket
costs and expenses and subject further to such Business Seller being
indemnified for any Losses (including any Taxation) it may incur in
connection therewith use reasonable endeavours to procure the lawful
termination of the relevant Contract, any Losses being incurred on
termination being for the account of XL Insurance or the relevant
Purchaser;
(b) Winterthur shall procure that the relevant Business Seller shall
at its cost make or assist XL Insurance in making application for
any such Third Party Consent and together with XL Insurance
endeavour to obtain such conveyance, transfer or assignment as
aforesaid such that the relevant conveyance, transfer or
assignment is effective from Completion . XL Insurance shall
supply to Winterthur such information and references regarding
the financial position of XL Insurance as may reasonably be
requested by Winterthur and shall enter into such direct
covenants in favour of any relevant third party as may reasonably
be requested in respect of any rent charges, rents, royalties,
fees or other outgoings or liabilities for which XL Insurance or
any Purchaser will from Completion become liable. If required by
any third party XL Insurance shall give such reasonable
additional covenants requested by any third party as a condition
of giving their consent (provided that such covenants shall be no
more extensive than those
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given by the relevant Business Seller) and shall generally use
reasonable endeavours to secure such consent; and
(c) when and until any relevant Business Assets are conveyed,
transferred or assigned Winterthur shall (so far as it lawfully
may) and shall procure that the relevant Business Seller shall
give reasonable assistance to XL Insurance to enable XL Insurance
to enforce its rights in relation to the Business Asset.
References to XL Insurance in this Clause 11.2 shall be deemed to
include references to each Purchaser.
11.6 Right of Exclusion
In any case where the relevant Third Party Consents are not obtained within
12 months after the Completion Date the relevant Business Seller, by notice
to XL Insurance or the relevant Purchaser, by notice to Winterthur, shall
be entitled to exclude the relevant Business Assets concerned or any of
them from the sale under this Agreement and references in this Agreement to
the Business Assets (or any assets comprised therein), the Properties and
the Businesses (other than in this Clause 11.3) shall thereafter be
construed as excluding the Business Asset concerned and the amount of the
Purchase Price referable to that Business Asset shall be refunded without
interest.
11.7 Purchasers' rights not affected
Nothing in this Clause 11 affects the Purchasers' rights and remedies
against the Sellers in respect of any Business Asset which the Sellers have
warranted is assignable or may be performed by a Purchaser instead of the
relevant Seller without a novation agreement.
12. The Relevant Employees
The provisions of Schedule 8 shall apply. Where the provisions of Schedule
8 are inconsistent with the provisions of Schedule 9 the provisions of
Schedule 9 shall prevail.
13. Employee Benefit Arrangements
The provisions of Schedule 9 shall apply.
14. The Properties
The provisions of Schedule 10 shall apply.
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15. Post-Completion Obligations
15.4 The Assumed Liabilities
15.4.1 If any Business Seller becomes aware after Completion of any claim
of which it believes that XL Insurance is not aware which constitutes
or may constitute an Assumed Liability the relevant Business Seller
shall as soon as reasonably practicable give written notice thereof to
XL Insurance and shall not admit, compromise, settle, discharge or
otherwise deal with such claim without prior consultation with and the
prior agreement of XL Insurance.
15.4.2 The relevant Business Seller shall take such action as XL Insurance
may reasonably request to avoid, dispute, resist, appeal, compromise,
defend or mitigate any claim which constitutes or may constitute an
Assumed Liability but subject to the relevant Business Seller (and if
Winterthur reasonably requests other members of Winterthur Group)
being indemnified and secured to its reasonable satisfaction by XL
Insurance against all Losses which may thereby be incurred. In
connection therewith the relevant Business Seller shall and (if such
Business Seller is not Winterthur) Winterthur shall procure that it
shall make or procure to be made available to XL Insurance or its duly
authorised agents on reasonable notice during normal business hours
all relevant books of account, records and correspondence relating to
the Operations which have been retained by the relevant Business
Seller (and shall permit XL Insurance to take copies thereof) for the
purpose of enabling XL Insurance to ascertain or extract any
information relevant to the claim except to the extent that such
information is the subject of legal privilege.
15.5 Release of Guarantees
15.5.1 As soon as practicable following Completion and subject to Clauses
15.2.2 and 15.2.3 XL Insurance shall procure the release of all
guarantees and letters of comfort given by or binding upon any of the
Sellers in relation to any debt or obligation of any Group Company
which are referred to in the Disclosure Letter and such others as the
parties may agree prior to Completion . Pending such release XL
Insurance shall indemnify and keep indemnified the Sellers from and
against all costs, claims and demands arising out of or in connection
with such securities, guarantees and indemnities and any other
securities, guarantees and indemnities binding upon any of the Sellers
in relation to any debt or obligation of any Group Company to the
extent that such obligations are otherwise Assumed Liabilities or
otherwise obligations of the Group Companies (subject to XL
Insurance's right to control any Claim thereunder).
15.5.2 Save as set out below at Completion the Sellers shall procure the
release of all security, guarantees and indemnities (for the avoidance
of doubt not including indemnities under those insurance or
re-insurance contracts which the parties have agreed will remain in
place after Completion) given by or binding on any Group Company in
relation to any debt or obligation of any of the Sellers or other
persons as aforesaid. Pending such release the Sellers shall indemnify
and keep indemnified XL Insurance as trustee for itself and the Group
Companies concerned from and against all costs, claims and demands
arising out of or in connection with any such securities, guarantees
and indemnities.
15.5.3 Notwithstanding Clause 15.2.1 the relevant parties shall procure
that:
(a) Winterthur International shall continue to have access to the
Winterthur cash pool facility for a period of two years following
Completion on the terms set out in the Limited Recourse
Receivables Financing Facility Agreement;
(b) any letters of credit given or supported by members of the CS
Group in relation to the Operations shall remain in place
notwithstanding Completion for so long as the Purchaser requires
up to 1 July 2002 on the terms set out in the LOC Facility
Agreement; and
(c) XL Insurance and Winterthur will co-ordinate with each other with
respect to any replacement or termination of any "comfort"
letters provided by or on behalf of Winterthur to customers or
clients of the Operations so as to minimise any disruption of the
relevant Operations.
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15.6 Sellers' General Obligations
If at any time after Completion any Business Seller or any member of
Winterthur Group receives any monies in respect of any Claim or Receivable
then, if such Business Seller is Winterthur, Winterthur shall pay, and
otherwise Winterthur shall procure that the relevant Business Seller shall
pay to XL Insurance as soon as reasonably practicable and in any event
within five Business Days of receipt thereof the amount recovered minus any
cost of recovery and minus any Taxation payable by Winterthur or the
relevant Business Seller which would not have arisen but for the receipt of
such monies and minus any amount in respect of VAT included in the amount
recovered to the extent that the relevant Business Seller will be required
to account to a Taxation authority for such VAT.
15.7 Sellers' Continuing Obligations
Notwithstanding Completion the Sellers shall at their own expense:
15.7.1 procure that if any property, rights or assets forming part of the
Operations which ought to have been transferred or licensed to any
Purchaser (other than any property, rights or assets expressly
excluded from the sale under this Agreement or any Local Agreement)
and which are capable of being so transferred or licensed are not
transferred or licensed by a Seller at Completion the relevant Seller
transfers or licenses such property, rights or assets to XL Insurance
or any other relevant Purchaser as soon as practicable after it is
discovered that such property, rights or assets should have been
transferred or licensed to XL Insurance or any other relevant
Purchaser at Completion and without limitation to the generality of
Clause 18.4.2 to the extent that such property, right or asset
consists of information including Know-how which relates wholly or
primarily to the Operations shall keep such information confidential
and procure that such information is not used by the relevant Seller
for any purpose at any time (including but not limited to after it is
transferred or licensed to XL Insurance). If any such property, rights
or assets are not included in the calculation of the Purchase Price
Winterthur and XL Insurance shall agree the amount of consideration to
be paid by XL Insurance in respect of such property, rights or assets
failing which the Reporting Accountants shall determine the amount of
such consideration;
15.7.2 continue for a period of three years from Completion to give to XL
Insurance (subject to appropriate confidentiality restrictions where
appropriate) such information and assistance as it may reasonably
require relating to the Operations, their employees, customers and
suppliers, their current contracts and engagements and their trade
debtors and trade creditors and pass on any trade enquiry which the
Sellers receive provided that nothing in this Clause 15.4.2 shall
require the Sellers to do anything which may breach any Applicable
Laws or regulation including without limitation to the generality of
the foregoing the Data Protection Act 1998;
15.7.3 without prejudice to the provisions of Clause 11 from time to time
execute and perform all such acts, deeds and documents and afford to
XL Insurance or any other relevant Purchaser such assistance as XL
Insurance may reasonably require including commencing or defending any
litigation: (a) for the purpose of vesting in XL Insurance or the
relevant Purchaser the full benefit of the Operations, the Businesses
and the Shares and implementing all the relevant provisions of this
Agreement;
(b) for the purpose of vesting in XL Insurance or the relevant
Purchaser the full benefit of any rights, powers, remedies,
claims or defences including without limitation rights of set-off
and counterclaim which any of the Business Sellers may have in
relation to any Claim or Assumed Liability or otherwise ensuring
that the same ensure for the benefit of XL Insurance or the
relevant Purchaser;
(c) to enable any claim, action, suit, prosecution, litigation,
proceedings, dispute or arbitration to which any of the Business
Sellers was a party and which relates to any Claim or Assumed
Liability to be continued by or against XL Insurance or the
relevant Purchaser; and
(d) to enable any judgment or award obtained by any of the Business
Sellers and not fully satisfied as at Completion to the extent to
which it is a Claim enforceable by the relevant Business Sellers
to be enforced by XL Insurance or the relevant Purchaser whether
by XL Insurance or the relevant Purchaser joining itself as a
defendant or by
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XL Insurance or the relevant Purchaser consenting to any
plaintiff concerned joining it as a defendant or otherwise,
provided that XL Insurance shall pay on behalf of itself or the
relevant Purchaser to the Sellers an amount equal to the sum recovered
from any third party in respect of costs incurred by the Sellers in
fulfilling their obligations under this Clause 15.4.3;
15.7.4 allow XL Insurance access upon reasonable notice in writing to
Winterthur at such times and at such locations as XL Insurance may
reasonably require to, and copies of, any books, records or other
information relating to the Operations which are not delivered to XL
Insurance pursuant to Part 1 of Schedule 6;
15.7.5 retain for a period of six years from Completion all books, records
and other information relating to the Operations which XL Insurance
may reasonably require and which are not delivered to XL Insurance
pursuant to Part 1 of Schedule 6 and thereafter afford XL Insurance a
reasonable opportunity to acquire such books, records and other
information prior to any disposition or destruction thereof;
15.7.6 procure (subject to the relevant member of the XL Insurance Group
executing an appropriate transfer agreement on terms reasonably
satisfactory to it and otherwise complying with Clause 18.16) that any
Excluded Operations not transferred to a member of the Winterthur
Group prior to Completion shall be so transferred as soon as
practicable after Completion and in any event within 6 months of
Completion ;
15.7.7 procure that in respect of any Portfolios not transferred to a Group
Company at Completion all steps required to be taken by the relevant
Business Seller in order to transfer such Portfolios are taken
promptly after XL Insurance serves notice requiring such transfer as
provided in Schedule 2, Part 1;
15.7.8 cause each Business Seller that retains a Portfolio after Completion
to take all action (and not omit to take any action) so that such
entity at all times complies with any managerial, consulting or other
similar rights provided to XL Insurance or the Operations under the
Local Agreements and the other agreements referred to in Schedule 2;
15.7.9 procure the delivery to XL Insurance, no later than 17 September
2001, unaudited financial statements for the Operations, prepared on a
Pro forma basis and in accordance with US GAAP (which shall consist of
a statement of net assets, income statements and statement of cash
flows and related summary footnotes), for the six month period ending
30 June 2001 together with a letter from Winterthur's Accountants that
they have performed the procedures specified by the American Institute
of Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial Information.
Winterthur and XL Insurance will cooperate with one another in the
preparation of such financial statements in accordance with paragraph
3.2 of Part 2 of Schedule 5, as if such 30 June 2001 financial
statements were actually referred to in such paragraph; and
15.7.10 procure a certificate issued by the relevant tax authority pursuant
to article 442bis of the Belgian Income Tax Code 1992 and notify the
transaction to the tax collector of its domicile by submitting the
certificate along with a certified true copy of this Agreement in
executed form.
15.8 Property, Rights and Assets not Part of Operations Clause 15.4.1 shall
apply mutatis mutandis to any property, rights or assets which do not form
part of the Operations but which have been transferred to XL Insurance or
included as an asset of a Group Company in error and without limitation to
the generality of Clause 18.4.2 to the extent that such property, right or
asset consists of information including Know-how XL Insurance undertakes to
keep such information confidential until it is returned to the relevant
Seller and not at any time including after its return use any of it for any
purpose.
15.9 Trade marks, etc.
15.9.1 XL Insurance shall procure that as soon as practicable after
Completion the Group Companies shall change their names so that they
do not contain the name or expression "Winterthur" or "Winterthur
International" or any name which is likely to be confused with the
same and shall provide Winterthur with appropriate evidence of such
changes of name,
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provided that it is agreed that the name of any Group Company may be
changed to "XL Winterthur International" or any derivation thereof.
15.9.2 Subject to Clause 15.6.3 XL Insurance shall not and shall procure
that none of its subsidiaries or its holding company or any subsidiary
of its holding company shall after Completion use in any way
whatsoever any registered or unregistered trade marks including any
logos or other devices used prior to or at the date of this Agreement
in the Operations other than any such rights which are being assigned
or licensed to XL Insurance pursuant to this Agreement and shall
procure that not later than three months after Completion all such
trade marks shall be removed from all business stationery, all other
assets acquired by any Purchasers pursuant to this Agreement or any
Local Agreement and from all premises occupied by XL Insurance, any
other Purchaser and the Group Companies in connection with the
Operations, provided that they may use any marketing or similar
materials until the exhaustion thereof.
15.9.3 Notwithstanding Clauses 15.6.1 and 15.6.2, XL Insurance shall be
entitled to nominate one of the Purchasers, at no extra cost to
Winterthur, which shall have the right to use any trade marks
comprising the word "Winterthur" and/or "Winterthur" and device in
conjunction with the word "International" on a world wide royalty
free, non-exclusive basis for a period of two years from Completion
and such Purchaser shall be entitled to sub-licence such right to any
other Purchaser or any Group Company. The parties shall enter into a
trade mark licence on those terms at Completion.
15.10 Business Intellectual Property and Shared IP
15.10.1 The Business Sellers hereby assign to XL Insurance with full title
guarantee the Registered Intellectual Property with effect from the
Completion Date. The Business Sellers shall execute and deliver such
other instruments of transfer, conveyance, and assignment as XL
Insurance may reasonably request from time to time in order to perfect
or record XL Insurance's interest in or title to the Business
Intellectual Property. XL Insurance shall prepare and assume the cost
of obtaining, preparing, executing, notarising, legalising and/or
recording any instrument of transfer, conveyance or assignment
referred to in this section or any other document needed to perfect XL
Insurance's interest in or title to any portion of the Business
Intellectual Property or to establish a chain of title. After
Completion no member of Winterthur Group shall have any obligation to
maintain or prosecute any of the Business Intellectual Property.
However if any member of Winterthur Group is involved in the
maintenance or prosecution of any part of the Business Intellectual
Property XL Insurance shall reimburse such member for all fees
incurred in the maintenance or prosecution of such Business
Intellectual Property including but not limited to maintenance fees,
renewal fees and agents' fees, subject to advance approval by XL
Insurance of such maintenance and prosecution and submission of the
relevant invoices.
15.10.2 The Business Sellers hereby grant (or shall procure that any
Associated Company shall grant) to the Purchasers and the Group
Companies with effect from the Completion Date an irrevocable,
royalty-free, non-exclusive and perpetual licence to use the Shared IP
in connection with the Operations.
15.11 IT Infrastructure and Software Applications
15.11.1 Winterthur and XL Insurance agree that should the separation of the
information technology and telecommunications systems including but
not limited to hardware and software required under the terms of this
Agreement ("IT Separation") (for which a work schedule which will be
regularly updated by Winterthur up to Completion will promptly be
provided to XL Insurance) not be finished by Completion the parties
shall co-operate and use all reasonable endeavours to finalise the IT
Separation as soon as is practicable after Completion.
15.11.2 Subject to Clause 15.8.3 Winterthur will be responsible for all
reasonable costs incurred in relation to the IT Separation including
all reasonable costs incurred by XL Insurance and approved by
Winterthur in advance in writing after Completion . In respect of sums
claimed under this Clause 15.8.2 XL Insurance will provide Winterthur
with an invoice setting out clearly that to which the costs relate.
15.11.3 In order to minimise the security risks to Winterthur Group and XL
Insurance's Group after Completion resulting from there being shared
IT infrastructure between members of the
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Winterthur Group and the Operations Winterthur and XL Insurance agree
to act in good faith and co-operate with each other and until IT
Separation is finalised agree that:
(a) XL Insurance shall not create additional electronic or physical
links between the Operations' IT infrastructure and that of any
third parties (including XL Insurance) without the prior written
consent of Winterthur (such consent not to be unreasonably
withheld);
(b) both parties shall comply with Winterthur's IT security standards
as amended from time to time;
(c) where it is possible to do so without loss of confidentiality XL
Insurance shall allow Winterthur or its representatives to
monitor the Operations' IT infrastructure to ensure compliance
with this Clause 15.8.3 and to do all that is reasonably
necessary to rectify any non-compliance discovered;
(d) both parties shall co-operate in promptly identifying any
security breaches and resolving such breaches forthwith; and
(e) Winterthur shall immediately sever the link between its IT
infrastructure and that of the Operations should serious security
breaches be identified which are not able to be or have not been
resolved within a reasonable time.
15.12 Administration of Winterthur International (Re)
XL Insurance shall, after Completion, manage and administer the run-off of
all reinsurance written or ceded by Winterthur International (Re) prior to
the Effective Time. XL Insurance shall consult with Winterthur on a regular
basis in respect of such management and administration, up to and including
the Final Date (as defined below) but, for the avoidance of doubt, not
thereafter. Winterthur shall second such employees of Winterthur at actual
cost as XL Insurance may reasonably require to XL Insurance or any Group
Company in order for XL Insurance to conduct effectively such management
and administration. Winterthur shall pay to XL Insurance within 15 Business
Days of submission of an invoice by XL Insurance in relation thereto (such
invoice to be submitted on a quarterly basis and to contain reasonable
detail to support the amount being invoiced) an amount equal to all
interest expenses paid and foregone (including in respect of deposits with
reinsurers) and 90 per cent of each non-insurance liability, expense or
cost including reasonable internal management time spent by employees of
any member of the XL Insurance Group arising directly or indirectly in
respect of the above management and administration and incurred by XL
Insurance or any Group Company on or before the Final Date. However for the
avoidance of doubt Winterthur shall remain liable for all liabilities,
expenses and costs arising directly or indirectly from the employment of or
the termination of the employment of any individual seconded to XL
Insurance or any Group Company. For the purposes of this clause the "Final
Date" shall mean the date on which XL Insurance's Accountants have
determined that all accounting and administrative records are, in all
material respects, up to date in respect of all such Policies. Interest in
relation to amounts due under this clause shall run from the date on which
payment is due hereunder until the date such payment is made at a
non-compounding rate per annum of 0.5 per cent above the Base Rate.
15.13 Settlement of Inter-Company Accounts
15.10.1 Winterthur shall procure that Winterthur's Accountants shall, on or
before 31 August 2001, calculate: (i) the aggregate amounts in the
Inter-Company Accounts which are receivable by any Group Company from
any member of the CS Group; and (ii) the aggregate amounts in the
Inter-Company Accounts which are receivable by any member of the CS
Group from any Group Company, and Winterthur shall provide a
certificate to XL Insurance detailing each of the aggregate amounts
referred to in (i) and (ii) above.
15.10.2 XL Insurance and XL Insurance's Accountants shall be entitled to
review and verify the accuracy of the amounts referred to in such
certificate and XL Insurance shall notify Winterthur in writing within
45 days of receipt of such certificate as to whether it agrees with
the amounts detailed in the certificate. In the event that XL
Insurance does not so agree with the amounts contained in such
certificate, then the parties shall use their best endeavours acting
in good faith to reach agreement as to the relevant amounts, and if
they fail to reach agreement within 14 days thereof, shall together,
immediately thereafter, appoint the
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Reporting Accountants who shall determine such amounts and issue a
certificate in relation thereto to the parties, such certificate being
final and binding.
15.10.3 In the event that XL Insurance agrees that the amounts referred to
in the above certificate are accurate, or, failing such agreement, if
the Reporting Accountants have issued a certificate, then if the
aggregate amount in (i) above exceeds the aggregate amount in (ii)
above as referred to in the relevant certificate, Winterthur shall pay
to XL Insurance the amount of the excess in US Dollars thereafter, and
if the aggregate amount in (ii) above exceeds the aggregate amount in
(i) above as referred to in the relevant certificate, XL Insurance
shall pay to Winterthur the amount of such excess in US Dollars, in
each case either such payment being made within 15 Business Days
following the date on which XL Insurance agrees to the certificate
issued by Winterthur's Accountants, or the date of issue of the
Reporting Accountants' certificate.
15.10.4 Interest in relation to amounts due under this Clause 15.10 shall
run from the date on which payment is due hereunder until the date
such payment is made at a non-compounding rate per annum of 0.5 per
cent above the Base Rate.
15.11 German Reorganization
Winterthur shall not account for goodwill in relation to the German
reorganisation in a way which might reasonably be expected to have any
adverse effect on Winterthur International Insurance Company Limited
without the prior written approval of XL Insurance.
15.12 Interim Reinsurance Agreements
All executed Interim Reinsurance Agreements shall be held in escrow to the
order of the relevant party (by its legal advisers) for a maximum of 5
Business Days after execution and during such time the parties shall use
reasonable endeavours, and procure that the other Sellers or Purchasers as
appropriate use reasonable endeavours to agree any amendments to such
agreements as may be necessary solely to ensure the enforceability of such
agreements and their compliance with Applicable Laws. Whether or not any
such amendments have been agreed by 31 July 2001, the Interim Reinsurance
Agreements (or amended versions thereof as the case may be) shall be
released from escrow at the close of business on such date.
16. Restrictions
16.4 Restrictions on the Sellers
Subject to Clause 16.2 Winterthur and the other Sellers undertake with XL
Insurance and its successors in title that the Sellers will not and will
procure that no other member of the Winterthur Group will directly or
indirectly or in any Relevant Capacity during the Restricted Period:
16.4.1 be engaged, concerned in or interested in any Restricted Activity;
16.4.2 otherwise than as agreed between the parties, induce, solicit or
hire or seek to induce, solicit or hire any Senior Employee to become
employed or engaged whether as employee, consultant, agent, advisor or
otherwise by Winterthur or any member of the Winterthur Group provided
that nothing shall prevent the Sellers or any other member of the
Winterthur Group from time to time advertising in general solicitation
for employees or consultants not targeted at employees of the
Operations provided that none of Winterthur or any of the other
Sellers approach or encourage any third party to approach any Senior
Employee;
16.4.3 on its own or jointly with, through or as agent of, any person
directly or indirectly acquire or merge with or assist a business,
company, firm or entity which carries on any Restricted Activity
unless such Restricted Activity represents less than 20 per cent of
the aggregate annual turnover or net profits or less than 20 per cent
of the assets of such business, company, firm or entity (in this
Clause 16 a "Minor Part") or manage, advise or otherwise assist in the
business of another company, firm or entity in relation to activities
or operations constituting Restricted Activity (unless such Restricted
Activity represents a Minor Part); or
16.4.4 knowingly or intentionally do or say anything which is adverse or
harmful to a Group Company's goodwill or the goodwill attaching to any
Business (as subsisting at the date of this Agreement) or which may
lead a customer, broker or other person who has dealt with a
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Group Company or a Business at any time during the 12 months prior to
the date of this Agreement to cease to deal with a Group Company or a
Business on substantially equivalent terms to those previously offered
or at all.
16.5 Exceptions Notwithstanding Clause 16.1 nothing shall prevent the Sellers or
any other member of the Winterthur Group from time to time from:
16.5.1 being interested for passive investment purposes only in any class
of securities in any company provided that such securities are traded
on a recognised investment exchange, such interest is of a financial
or investment (and not operational or trading) interest only and not
more than 10 per cent of such securities are acquired or otherwise
held in aggregate by all members of the Winterthur Group;
16.5.2 fulfilling their obligations under the Service Level Agreement; and
16.5.3 continuing to conduct any of the Operations on behalf of the
Purchaser after Completion as contemplated by this Agreement.
16.6 Restrictions on the Purchasers
XL Insurance and the other Purchasers undertake with the Sellers and their
successors in title that the Purchasers will not and will procure that no
other member of the XL Insurance Segment (as defined by XL Insurance for US
Securities Exchange Act reporting purposes) will directly or indirectly or
in any Relevant Capacity during the Restricted Period induce or solicit or
seek to induce or solicit any present employee of any of the SRS or motor
insurance units of any member of the Winterthur Group who would be a Senior
Employee to become employed or engaged whether as employee, consultant,
agent, advisor or otherwise by any of the Group Companies or the Businesses
or XL Insurance or any member of the XL Insurance Segment provided that
this shall not prevent any of the Purchasers or any other such member of
the XL Insurance Segment from advertising in general solicitation for
employees or consultants not targeted at employees of such units provided
that none of XL Insurance or any of the other Purchasers or any other such
member of the XL Insurance Segment approaches or encourages any third party
to approach any such person. For the avoidance of doubt this Clause 16.3
shall not apply in relation to Relevant Employees.
16.7 Restrictions and Undertakings from CS Group
16.7.1 No member of the CS Group will after Completion use for any purpose
whatsoever any of the Business Assets or assets of the Group Companies
(except that members of the CS Group may use Business Assets or assets
of the Group Companies as and to the extent provided under the terms
of a Service Level Agreement executed pursuant hereto) or use or
disclose any Confidential Information.
16.7.2 No member of the CS Group shall during the Restricted Period
establish outside of the Winterthur Group any business, firm, company
or group of companies which would engage or be interested in a
Restricted Activity (for the avoidance of doubt, "establish" in this
paragraph shall not include acquisition or merger with an existing
business, firm, company or group).
16.7.3 During the Restricted Period no member of the CS Group nor any
member of the Winterthur Group shall use a brand, trade name or logo
incorporating the words "Winterthur" and "International" together or
any similar expression in relation to any Restricted Activity or any
general insurance business or in the case of the CS Group only use the
name Winterthur in relation to any Restricted Activity.
16.8 Restrictions Cease to Apply
The restrictions in Clause 16.4 above shall cease to apply to each and
every member of the CS Group upon it ceasing to be a member of the CS
Group.
16.9 Reasonableness of Restrictions
Winterthur and the other Sellers agree that they consider that the
restrictions contained in this Clause 16 are no greater than is reasonable
and necessary for the protection of the interest of XL Insurance and any
other Purchaser or the Sellers as the case may be but if any such
restriction shall be held to
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be void but would be valid if deleted in part or reduced in application
such restriction shall apply with such deletion or modification as may be
necessary to make it valid and enforceable.
17. Guarantee
17.4 Unconditional Guarantee
In consideration of Winterthur entering into this Agreement XL Insurance
hereby unconditionally and irrevocably guarantees to Winterthur and the
other Sellers due and punctual performance and observance by the Purchasers
and any member of the XL Insurance Group (whether or not such person ceases
to be a member of such group after the Completion Date) of all their
obligations under or for breach of or unenforceability of this Agreement or
any agreement entered into pursuant to this Agreement (including
obligations to pay damages) including, without limitation, the Sellers
Retrocession Agreement, the Interim Arrangements, the Excluded Operations
Reinsurance Agreements and the Interim Reinsurance Contracts but in the
case of any member of the XL Insurance Group only to the extent that such
member is a party to this Agreement or any agreement entered into pursuant
to this Agreement (the "Guaranteed Purchaser Obligations"). In
consideration of XL Insurance entering into this Agreement Winterthur
hereby unconditionally and irrevocably guarantees to XL Insurance and the
Purchasers due and punctual performance and observance by the Sellers and
any member of the Winterthur Group (whether or not such person ceases to be
a member of such group after the Completion Date) of all their obligations
under or for breach of or unenforceability of this Agreement or any
agreement entered into pursuant to this Agreement (including obligations to
pay damages) including, without limitation, the Sellers Retrocession
Agreement, the Interim Arrangements, the Excluded Operations Reinsurance
Agreements and the Interim Reinsurance Contracts but in the case of any
member of the Winterthur Group only to the extent that such member is a
party to this Agreement or any agreement entered into pursuant to this
Agreement (the "Guaranteed Seller Obligations"). The liability of XL
Insurance or Winterthur under this Clause 17 shall not be released or
diminished by any variation of the terms of the Guaranteed Purchaser
Obligations or the Guaranteed Seller Obligations as applicable, any
forbearance, neglect or delay in seeking performance of the Guaranteed
Purchaser Obligations or the Guaranteed Seller Obligations as applicable or
any granting of time for such performance or by any assignment by
Winterthur of the benefit of the Guaranteed Purchaser Obligations or the
Guaranteed Seller Obligations as applicable in accordance with Clause 17.5.
17.5 Default by a Party to this Agreement
If and whenever a Purchaser or a Seller defaults for any reason whatsoever
(and irrespective of the time during which such default has been
unremedied) in the performance of any of the Guaranteed Purchaser
Obligations or the Guaranteed Seller Obligations as applicable XL Insurance
or Winterthur as applicable shall forthwith upon demand unconditionally and
irrevocably perform or procure performance of and satisfy or procure the
satisfaction of the Guaranteed Purchaser Obligations or the Guaranteed
Seller Obligations as applicable in regard to which such default has been
made in the manner prescribed by this Agreement or any agreement entered
into pursuant to this Agreement (insofar as applicable) and so that the
same benefits shall be conferred on Winterthur or XL Insurance as
applicable as it would have received if the Guaranteed Purchaser
Obligations or the Guaranteed Seller Obligations as applicable had been
duly performed and satisfied by the relevant Purchaser.
17.6 Continuing Guarantee
This guarantee is to be a continuing guarantee and accordingly is to remain
in force until all the Guaranteed Purchaser Obligations or the Guaranteed
Seller Obligations as applicable shall have been irrevocably performed or
satisfied. This guarantee is in addition to and without prejudice to and
not in substitution for any rights or security which Winterthur or XL
Insurance may now or hereafter have or hold for the performance and
observance of the Guaranteed Purchaser Obligations or the Guaranteed Seller
Obligations as applicable.
17.7 Legal limitations, etc.
As a separate and independent stipulation each of XL Insurance and
Winterthur agrees that any of the Guaranteed Purchaser Obligations or the
Guaranteed Seller Obligations as applicable including without limitation
any monies payable which may not be enforceable against or recoverable from
any Purchaser or Seller as applicable by reason of any legal limitation,
disability or incapacity on or of the Purchaser or Seller as applicable or
any other fact or circumstance other than any limitation imposed
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by this Agreement or any agreement entered into pursuant to this Agreement
shall nevertheless be enforceable against and recoverable from XL Insurance
or Winterthur as applicable as though the same had been incurred by XL
Insurance and XL Insurance or Winterthur as applicable were the sole or
principal obligor in respect thereof and shall be performed or paid by XL
Insurance or Winterthur as applicable on demand.
17.8 Other restrictions, etc.
This guarantee shall not be affected or impaired by reason of any other
fact or event which in the absence of this provision would or might
constitute or afford a legal or equitable discharge or release or a defence
to a guarantor.
18. Other Provisions
18.4 Sellers' Liability
Any reference in this Agreement or any Local Agreement however expressed to
a liability or obligation of the Sellers, the Share Sellers or the Business
Sellers (or any of them) shall be deemed to incorporate a reference to an
obligation on the part of Winterthur to procure that the relevant liability
is discharged or obligation is performed.
18.5 Purchasers' Liability
Any reference in this Agreement or any Local Agreement however expressed to
a liability or obligation of the Purchasers shall be deemed to incorporate
a reference to an obligation on the part of XL Insurance to procure that
the relevant liability is discharged or obligation is performed.
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18.6 Announcements
18.6.1 Pending Completion Winterthur and XL Insurance shall subject to the
requirements of law or any regulatory body or the rules and
regulations of any recognised stock exchange use all reasonable
endeavours to agree together as to the terms of, the timetable for and
manner of publication of any formal announcement or circular to
shareholders, employees, customers, suppliers, distributors and
sub-contractors and to any recognised stock exchange or other
authorities or to the media or otherwise which either party may desire
or be obliged to make regarding this Agreement or any Local Agreement
and/or Transactions contemplated by this Agreement and the Local
Agreements provided that if Winterthur and XL Insurance have been
unable to reach such an agreement before the time at which either
Winterthur or XL Insurance is so required to publish such an
announcement or circular Winterthur or XL Insurance as the case may be
may nevertheless publish such announcement or circular. Any other
communication which XL Insurance or Winterthur may make concerning the
foregoing matters shall subject to the requirements of law or any
regulatory body or the rules and regulations of any recognised stock
exchange be consistent with any such formal announcement or circular
as aforesaid.
18.6.2 Subject to Clause 18.3.1 neither party shall pending Completion make
or authorise or issue any formal announcement or circular or other
communication concerning the subject matter of this Agreement or any
Local Agreement or any Transaction referred to in or contemplated by
this Agreement and any Local Agreement.
18.6.3 If Completion does not take place by the date which is 12 months
from the date of this Agreement or such later date as Winterthur and
XL Insurance may agree XL Insurance shall forthwith hand over or
procure the handing over of all accounts, records, documents and
papers of or relating to the Sellers which shall have been made
available to it and all copies or other records derived from such
materials and expunge any information derived from such materials or
otherwise concerning the subject matter of this Agreement or any Local
Agreement from any computer, word processor or other device containing
information provided that this shall not apply to information
available from public records or information acquired (without any
person being in direct or indirect breach of the Confidentiality
Agreement or Clause 18.4 in respect thereof) by XL Insurance otherwise
than from the Sellers or their agents.
18.7 Confidentiality
18.7.1 The parties acknowledge that the Confidentiality Agreement shall
cease to have any force or effect from the date of this Agreement to
the extent inconsistent with this Clause 18.4 save in relation to any
claims the parties thereto may have arising under the Confidentiality
Agreement prior to such date.
18.7.2 Subject to Clause 18.4.3 each party shall and shall procure that its
Associated Companies shall treat as strictly confidential and not use
any Confidential Information received or obtained as a result of
entering into or performing this Agreement (or any other agreement
entered into under or pursuant to this Agreement) which relates to:
(a) the provisions of this Agreement (or any such other agreement);
(b) the negotiations relating to this Agreement (and such other
agreements); or
(c) any other party and its Associated Companies (as at the date of
this Agreement) and the business carried on by each of them.
After Completion Winterthur shall, and shall procure that the members of
Winterthur Group and any member of the Winterthur Group shall treat as
strictly confidential and not use or disclose, and prevent the use or
disclosure of any of the Confidential Information.
18.7.3 The provisions of Clause 18.4.2 shall not prohibit disclosure or use
if and to the extent:
(a) required by law or for the purpose of any judicial proceedings
arising out of this Agreement or any other agreement entered into
under or pursuant to this Agreement;
(b) required by the rules of any stock exchange on which the shares
of the parties to this Agreement are listed or quoted or any
other competent regulatory authority provided
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that where either Winterthur or XL Insurance is so required to
make such disclosure the provisions of Clause 18.3.1 shall apply
to such disclosure;
(c) required to vest the full benefit of this Agreement in any party;
(d) made to or used by the professional advisers, auditors and
bankers of each party on terms that such professional advisers,
auditors and bankers undertake to comply with the provisions of
Clause 18.4.2 in respect of such information as if they were a
party to this Agreement or to the extent that disclosure is made
to a Taxation authority in connection with the Taxation affairs
of the disclosing party or a holding company of that party;
(e) it becomes publicly available following disclosure under the
terms of the Confidentiality Agreement or this Agreement (other
than as a result of disclosure by the parties to this Agreement
or the Confidentiality Agreement or any other person in breach of
such Agreements);
(f) that other party has given prior written approval to the
disclosure;
(g) the information is obtained free of any restrictions on use or
obligations of confidentiality from a third party which is itself
free of any restrictions on use or obligations of confidentiality
with respect to that information;
(h) the information is already in the possession of that party and is
not subject to an obligation of confidentiality or a restriction
on use; or
(i) the information is independently developed after the Completion
Date,
provided that except where prohibited by any Applicable Laws or
regulation or in circumstances where a party wishes to disclose
information to its counsel or other legal advisers in contemplation of
proceedings being brought in relation to or arising out of this
Agreement, prior to disclosure of any information pursuant to
paragraphs (i), (ii) or (iii) of this Clause 18.4.3 the party
concerned shall promptly notify the other party of such requirement
with a view to providing the other party with the opportunity to
contest such disclosure or otherwise to agree the timing and content
of such disclosure.
18.7.4 The restrictions contained in this Clause 18.4 shall continue to
apply for a period of 10 years from the Completion Date.
18.7.5 In no event shall the fact that any party is required to disclose
(or has disclosed) the 31.12.2000 Financial Information or the
Completion Financial Information or the financial information referred
to in Clause 15.4.9 in any regulatory or other filing or press release
preclude or otherwise affect any party's rights or remedies hereunder
including without limitation with respect to the preparation and
agreement of the Completion Financial Statements or the Seasoned Net
Reserve Amount.
18.7.6 In the event that Winterthur proposes that any member of the
Winterthur Group (other than Winterthur itself) which may owe
obligations to any member of the XL Group under this Agreement or
agreements made pursuant to this Agreement should cease to be such a
member (the "Departing Member"):
(i) provided the guarantee in Clause 17 continues to apply to the
Departing Member, Winterthur shall have no obligation to consult
with or seek the approval of XL Insurance in connection
therewith; and
(ii) the provisions of Clause 18.4.2 shall not prohibit disclosure or
use if and to the extent that Winterthur, acting reasonably,
discloses to potential purchasers (and members, advisers and
agents of the selling and potential purchasing groups)
information in relation to the express obligations and rights of
the Departing Member under the Local Agreements for the purposes
of the proposed sale, provided that (a) Winterthur shall ensure
that all such persons are bound by confidentiality obligations at
least as wide as Winterthur's obligations under this Clause 18
(but such obligations need not be owed to XL Insurance or any
Group Company) and provided that Winterthur remains liable for
any breach of this Clause 18 as a result of disclosure by any
such person; and (b) Winterthur shall, before entering into
detailed negotiations with any potential purchaser (which
expression shall not include exploratory negotiations to
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ascertain expressions of interest from potential purchasers),
inform XL Insurance (which shall keep such information
confidential) of the fact of the proposed sale and the identity
of the Departing Member (but for the avoidance of doubt
Winterthur shall not be obliged to give any information about
potential purchasers).
18.7.7 In the event that XL Insurance proposes that any member of the XL
Insurance Group (other than XL Insurance itself) which may owe
obligations to any member of the Winterthur Group under this Agreement
or agreements made pursuant to this Agreement should cease to be such
a member (the "Departing Member"):
(i) provided the guarantee in Clause 17 continues to apply to the
Departing Member, XL Insurance shall have no obligation to
consult with or seek the approval of Winterthur in connection
therewith; and
(ii) the provisions of Clause 18.4.2 shall not prohibit disclosure or
use if and to the extent that XL Insurance, acting reasonably,
discloses to potential purchasers (and members, advisers and
agents of the selling and potential purchasing groups)
information in relation to the express obligations and rights of
the Departing Member under the Local Agreements for the purposes
of the proposed sale, provided that (a) XL Insurance shall ensure
that all such persons are bound by confidentiality obligations at
least as wide as XL Insurance's obligations under this Clause 18
(but such obligations need not be owed to Winterthur) and
provided that XL Insurance remains liable for any breach of this
Clause 18 as a result of disclosure by any such person; and (b)
XL Insurance shall, before entering into detailed negotiations
with any potential purchaser (which expression shall not include
exploratory negotiations to ascertain expressions of interest
from potential purchasers), inform Winterthur (which shall keep
such information confidential) of the fact of the proposed sale
and the identity of the Departing Member (but for the avoidance
of doubt XL Insurance shall not be obliged to give any
information about potential purchasers).
18.8 Successors and Assigns
18.8.1 Subject to Clause 18.5.2 save as expressly provided elsewhere in
this Agreement this Agreement is personal to the parties to it.
Accordingly neither the Purchasers nor the Sellers may without the
prior written consent of Winterthur or XL Insurance respectively
assign the benefit of all or any of the obligations of any other party
under this Agreement nor any benefit arising under or out of this
Agreement or any Local Agreement.
18.8.2 Except as otherwise expressly provided in this Agreement either the
Sellers or a Purchaser may without the consent of the other parties
assign to an Associated Company the benefit of all or any of any other
party's obligations under this Agreement or any Local Agreement
provided that if the assignee ceases to be an Associated Company of
Winterthur or as the case may be XL Insurance then Winterthur or as
the case may be XL Insurance shall procure that the assignee
re-assigns the benefit of the assigned obligations to an Associated
Company before the assignee ceases to be such an Associated Company
and provided further that the maximum liability of any party for
breach of this Agreement or under any indemnity contained in or
entered into pursuant to this Agreement shall be limited to the
liability which would have arisen in the absence of any such
assignment by the Sellers or XL Insurance.
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18.9 Third Party Rights
18.9.1 A person who is not a party to this Agreement either directly or
pursuant to a Deed of Adherence has no right under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this
Agreement, except that the various persons identified in Clauses
2.3.1, 2.3.2, 4.3 and 9 (including any Group Company) shall be express
third party beneficiaries of the provisions contained in such clauses.
Each of such third party beneficiaries appoints Winterthur (in the
case of a Seller) and XL Insurance (in the case of any Purchaser or
Group Company) to act as its trustee or agent to enforce such
provisions on its behalf (and may not enforce such provisions save
through such trustee or agent) and each of Winterthur and XL Insurance
accept the above appointments.
18.9.2 Winterthur (on behalf of any Seller) and XL Insurance (on behalf of
any Purchaser and, following Completion, any Group Company) may amend,
modify, waive or otherwise affect any rights or obligations of any
Seller or any Purchaser and, following Completion, any Group Company,
respectively, under this Agreement.
18.10 Variation, etc.
18.10.1 No variation of this Agreement shall be effective unless in writing
and signed by or on behalf of Winterthur (on behalf of the Sellers)
and XL Insurance (on behalf of the Purchasers).
18.10.2 For the purpose of Section 2 of the Law of Property (Miscellaneous
Provisions) Act 1989 this Agreement shall be deemed to incorporate all
documents directly or indirectly required to be executed pursuant to
it.
18.11 Time of the Essence
Any time, date or period referred to in any provision of this Agreement may
be extended by mutual agreement between the parties but as regards any
time, date or period originally fixed or any time, date or period so
extended time shall be of the essence.
18.12 Joint and Several Liability
All obligations of: (i) the Sellers on the one hand; and (ii) the
Purchasers on the other hand, as contained in this Agreement are joint and
several.
18.13 Costs
Subject as otherwise provided the Sellers shall bear all legal, accountancy
and other costs and expenses incurred by them and the Group Companies in
connection with this Agreement or any Local Agreement and the sale of the
Operations. XL Insurance shall bear all such costs and expenses incurred by
it. The costs of the Reporting Accountants and the Independent Actuary
shall be borne by the parties equally.
18.14 Interest
Except as otherwise expressly provided in this Agreement, if the Sellers or
XL Insurance default in the payment when due of any sum payable under this
Agreement or any Local Agreement (whether determined by agreement or
pursuant to an order of a court or otherwise) the liability of the Sellers
or XL Insurance (as the case may be) shall unless otherwise provided be
increased to include interest on such sum from the date when such payment
is due until the date of actual payment (as well after as before judgment)
at a non-compounding rate per annum of 4 per cent above the Base Rate. Such
interest shall accrue from day to day on the original amount payable and
for the avoidance of doubt interest shall not be compounded.
18.15 Notices
18.15.1 Any notice, consent, approval or other communication requiring to
be given or served under or in connection with this Agreement shall
unless otherwise expressly provided be in writing and shall be
sufficiently given or served if delivered or sent: In the case of any
of the Sellers to Winterthur at:
General Guisan-Strasse 40
PO Box 357
-70-
CH-8401 Winterthur
Switzerland
Fax: +41 52 261 48 20
Attention: Katharina Schoop
In the case of any of the Purchasers to XL Insurance at:
XL House
One Bermudiana Road
Hamilton HM11
Bermuda
Fax: +1 441 295 4867
Attention: Paul Giordano
with a copy to Katherine Coates at Clifford Chance, 200
Aldersgate Street, London EC1A 4JJ, England (fax +44 (20) 7600
5555) and Immanuel Kohn at Cahill Gordon & Reindel at 80 Pine
Street, New York, NY 10005, USA (fax +1 (212) 269 5420).
18.15.2 Any such notice or other communication shall be delivered by hand
or sent by courier, fax or prepaid first class post. If sent by
courier or fax such notice or communication shall conclusively be
deemed to have been given or served at the time of despatch in case of
service in the United Kingdom or on the following Business Day in the
case of international service. If sent by post such notice or
communication shall conclusively be deemed to have been received two
Business Days from the time of posting in the case of inland mail in
the United Kingdom or three Business Days from the time of posting in
the case of international mail.
18.16 Withholding and Deductions/VAT
18.16.1 All sums payable by any party to another party under this Agreement
(including for the avoidance of doubt payments under Clause 4.3) shall
be paid free and clear of all deductions, withholdings, set-offs or
counter-claims whatsoever save only as may be required by law. If any
deductions or withholdings are required by law the payer shall (except
to the extent the same has been taken into account in calculating the
amount due under any other provision of this Agreement) be obliged to
pay to the payee such sum as will after such deduction or withholding
has been made leave the payee with the same amount as it would have
been entitled to receive in the absence of any such requirement to
make a deduction or withholding.
18.16.2 If any Taxation authority charges to Taxation any sum paid to any
party by another party under any indemnity contained in this Agreement
(except to the extent the same has been taken into account in
calculating any amount due under any other provision of this
Agreement) then the amount so payable shall be grossed up by such
amount as will ensure that after payment of the Taxation so charged
there shall be left a sum equal to the amount that would otherwise be
payable under this Agreement provided that in determining the amount
payable under this Clause 18.13.2 there shall be taken into account
any deduction arising no later than the end of the period in which the
charge to tax arises which is or will be available for Taxation
purposes to the payee or any group of companies of which the payee is
a member in respect of the matter in relation to which such sum is
paid.
18.16.3 To the extent that the payee is satisfied (acting in good faith) it
can so do without prejudice to the retention of any credit refund or
similar benefit it receives if the payee receives a credit for or
refund of any Taxation payable by it or similar benefit by reason of
any deduction or withholding for or on account of Taxation it shall
reimburse to the payer such part of such additional amounts paid to it
pursuant to Clause 18.13.1 as the payee certifies to the payer will
leave it (after such reimbursement) in no better and no worse position
than it would have been if the payer had not been required to make
such deduction or withholding. The payee shall use all reasonable
endeavours to obtain any available credit, refund or similar benefit.
18.16.4 If any deduction or withholding is made from any payment as
contemplated in Clause 18.13.1 the payer shall supply to the payee
such official receipt if any or other evidence of payment to
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the relevant authority of the amount deducted or withheld and shall
give all reasonable assistance to enable the payee to receive a credit
or refund or similar benefit by reason of the deduction or withholding
as promptly as possible.
18.16.5 Where for the purpose of any provision of this Agreement (including
without limitation any provisions concerning reimbursement,
indemnification or compensation) any amount is to be determined or
calculated by reference to any amount incurred or to be incurred by
any person such part of such latter amount as represents VAT in
respect of which such person is entitled to credit or repayment from
the relevant Tax authority shall be excluded for the purpose of such
determination or calculation.
18.17 Severance
If any term or provision of this Agreement is held to be illegal or
unenforceable in whole or in part under any enactment or rule of law such
term or provision or part shall to that extent be deemed not to form part
of this Agreement but the enforceability of the remainder of this Agreement
shall not be affected.
18.18 Counterparts
This Agreement may be executed in any number of counterparts each of which
shall be deemed an original but all the counterparts shall together
constitute one and the same instrument.
18.19 Further Assurances
The parties agree that they shall take all reasonable action and execute
all further documentation or procure that all reasonable action is taken
and all further documentation is executed so as to give full effect to the
terms of this Agreement including, without limitation: (i) Winterthur
entering into such agreements as are necessary or appropriate to give
effect to Winterthur's obligations and covenants referred to in Clause
15.4: (ii) both parties complying with the provisions of Schedule 5; and
(iii) both parties entering into appropriate reinsurance agreements
(reflecting substantially the same overall economic effect on the relevant
party and other terms otherwise contemplated hereby) to the extent
necessary so that the relevant member of the XL Insurance Group or the
Winterthur Group can obtain reinsurance credit for applicable regulatory
purposes.
18.20 Set Off
Any amount due to be paid to any of the Sellers hereunder by any of the
Purchasers shall be decreased by any amount which, at the relevant time, is
due to be paid to any of the Purchasers hereunder by any of the Sellers.
Any amount due to be paid to any of the Purchasers hereunder by any of the
Sellers shall be decreased by any amount which, at the relevant time, is
due to be paid to any of the Sellers hereunder by any of the Purchasers.
For the purposes of this Clause 18.17, an amount should be deemed 'due' if
and only if (i) it has been so agreed in writing by Winterthur and XL
Insurance, (ii) it has been determined or is deemed to be the case in
accordance with this Agreement or any other agreement referred to herein,
or (iii) it has been determined or declared by court or administration
order.
18.21 Governing Law and Submission to Jurisdiction
This Agreement and the documents to be entered into pursuant to it save as
expressly referred to therein shall be governed by and construed in
accordance with English law and the parties expressly waiving their rights
to any other forum to which they may be entitled irrevocably agree that the
courts of England are to have non-exclusive jurisdiction to settle any
disputes which may arise out of or in connection with this Agreement
provided that this Clause 18.18 shall not preclude the enforcement of any
Local Agreement in the courts of the relevant jurisdiction in a manner
consistent with Clause 2.6.
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18.22 Appointment of Process Agents
18.22.1 Each of the Purchasers which is not incorporated in England
irrevocably appoints XL Brockbank Limited of Fitzwilliam House, 10 St.
Mary Axe, London EC3A 8NL as its agent for the service of process in
England in relation to any matter arising out of this Agreement,
service upon whom shall be deemed completed whether or not forwarded
to or received by any Purchaser.
18.22.2 Each of the Purchasers shall inform Winterthur in writing of any
change in the address of its process agents within 28 days.
18.22.3 If such process agents cease to have an address in England each of
the relevant Sellers irrevocably agrees to appoint new process agents
acceptable to Winterthur and to deliver to Winterthur within 14 days a
copy of a written acceptance of appointment by its new process agents.
18.22.4 Winterthur shall procure that each of the Purchasers which is not
incorporated in England shall irrevocably appoint Churchill Insurance
Group Plc of Churchill Court, Westmoreland Road, Bromley, Kent BR1 1DP
as its agent for the service of process in England in relation to any
matter arising out of this Agreement, service upon whom shall be
deemed completed whether or not forwarded to or received by any
Purchaser.
18.22.5 Each of the Sellers shall inform XL Insurance in writing of any
change in the address of its process agents within 28 days.
18.22.6 If such process agents cease to have an address in England, each of
the relevant Sellers irrevocably agrees to appoint new process agents
acceptable to XL Insurance and to deliver to XL Insurance within 14
days a copy of a written acceptance of appointment by its new process
agents.
18.22.7 Nothing contained in this Agreement shall affect the right to serve
process in any other manner permitted by law or the right to bring
proceedings in any other jurisdiction for the purpose of the
enforcement or execution of any judgment or other settlement in any
other courts.
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In witness whereof this Agreement has been duly executed.
SIGNED by S. Fokkema ) S. FOKKEMA
)
and W. Schmidt-Soelch ) WOLFGANG SCHMIDT-SOELCH
on behalf of WINTERTHUR SWISS ) As attorney for Winterthur Swiss
INSURANCE COMPANY in the Insurance Company
presence of Nigel Hatfield:
NIGEL HATFIELD
24 July 2001
SIGNED by Paul S. Giordano ) PAUL S. GIORDANO
on behalf of XL INSURANCE LTD in the ) As attorney for XL Insurance Ltd
presence of C. J. Lawson : )
C. J. LAWSON
July 2001
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