Exhibit 99.1
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Settlement Agreement") is entered into as
of the 6th day of September, 2002 by and between Trenwick Group Ltd., a Bermuda
company ("Trenwick"), and European Reinsurance Company of Zurich, a corporation
organized under the laws of Switzerland ("European Re"), (collectively, the
"Parties").
WHEREAS, Trenwick and European Re entered into an Amended and Restated
Catastrophe Equity Securities Issuance Option Agreement, dated as of January 1,
2001, as amended as of January 25, 2002 (as so amended, the "CatEPut
Agreement");
WHEREAS, on March 28, 2002, Trenwick delivered to European Re a Notice of
Exercise pursuant to Section 2.3 of the CatEPut Agreement;
WHEREAS, on April 4, 2002, European Re delivered to Trenwick a Notice of
Objection pursuant to Section 2.3 of the CatEPut Agreement;
WHEREAS, on July 1, 2002, Trenwick delivered to European Re a demand for
arbitration pursuant to Section 8 of the CatEPut Agreement (the "Demand for
Arbitration");
WHEREAS, Trenwick and European Re have subsequently resolved their dispute
by agreeing to the purchase and sale of Series B Cumulative Convertible
Perpetual Preferred Shares having an aggregate liquidation preference of
US$55,000,000 (Fifty-Five Million US Dollars) (the "Preferred Shares"), upon the
terms and conditions set forth in the Second Restated CatEPut Agreement (as
hereinafter defined); and
WHEREAS, the Parties desire to amend and restate the CatEPut Agreement and
to settle their dispute and terminate the arbitration:
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the Parties hereby acknowledge, and with intent to be
legally bound, it is mutually agreed by the Parties as follows:
Second Amended and Restated CatEPut Agreement
1. Contemporaneously with the execution and delivery of this Settlement
Agreement (the date on which such execution and delivery is occurring, the
"Settlement Date"), the parties hereto shall execute and deliver a Second
Amended and Restated Catastrophe Equity Securities Issuance Option Agreement
(the "Second Restated CatEPut Agreement") in the form attached as Exhibit A
hereto, and the Second Restated CatEPut Agreement shall upon execution and
delivery supersede and replace in all respects the CatEPut Agreement, which will
be deemed terminated and of no further force or effect. Capitalized terms used
herein without definition shall have the meanings ascribed thereto under the
Second Restated CatEPut Agreement, it being understood that the Exercise Date
under the Second Restated CatEPut Agreement is the same date as the Settlement
Date hereunder.
Purchase of Preferred Shares
2. Notwithstanding anything in the Second Restated CatEPut Agreement to
the contrary, on the Settlement Date, European Re shall deliver to Trenwick the
aggregate Preferred Share Purchase Price of $40,000,000.00 (Forty Million US
Dollars) pursuant to the Second Restated CatEPut Agreement, and Trenwick shall
deliver the corresponding number of Preferred Shares pursuant to the Second
Restated CatEPut Agreement. Upon such delivery by European Re of the aggregate
Preferred Share Purchase Price, European Re shall have no further obligation to
purchase any shares of Trenwick or any of its Affiliates.
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Registration Rights Agreement
3. Contemporaneously with the execution and delivery of this Settlement
Agreement, the parties shall enter into Amendment No. 1 to the Registration
Rights Agreement, dated as of January 1, 2001, between the parties hereto, in
the form attached as Exhibit B hereto.
Resale of Preferred Shares
4. Notwithstanding anything to the contrary in any agreement between the
parties hereto, Trenwick agrees that in connection with any proposed disposition
of Preferred Shares by European Re or any of its Affiliates that conforms to the
requirements of Section 6.3(a) of the Second Restated CatEPut Agreement and
Section 10 of the Certificate of Designation, (i) Trenwick shall provide to the
proposed transferee of such Preferred Shares such information regarding Trenwick
and its Affiliates as such proposed transferee may reasonably request (subject
to the execution by such proposed transferee and Trenwick of a non-disclosure
agreement substantially in the form attached hereto as Exhibit C), (ii) European
Re and its Affiliates shall not be restricted from providing to the proposed
transferee any information regarding Trenwick or its Affiliates that is in their
possession (subject to the execution by such proposed transferee and Trenwick of
a non-disclosure agreement substantially in the form attached hereto as Exhibit
C), and (iii) Trenwick shall cooperate with any commercially reasonable requests
of the proposed transferor that such transferor reasonably believes would
facilitate or expedite such proposed disposition of Preferred Shares.
Withdrawal of Demand for Arbitration
5. Trenwick hereby withdraws the Demand for Arbitration.
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Satisfaction of Conditions to Exercise
6. European Re hereby waives or deems satisfied all conditions to the
exercise of Securities Issuance Option set forth in the Second Restated CatEPut
Agreement.
Releases
7. Each Party hereto, on its own behalf and on behalf of its present and
former parents, subsidiaries, affiliates, agents, officers, directors, partners,
trustees, employees, servants, predecessors, successors and assigns hereby
irrevocably and unconditionally releases and forever discharges and covenants
not to sue the other Party hereto, its present and former parents, subsidiaries,
affiliates, agents, officers, directors, partners, trustees, employees,
servants, predecessors, successors and assigns, from any and all suits, claims,
controversies, rights, agreements, promises, debts, liabilities, accounts,
reckonings, bonds, bills, demands, damages, judgments, extents, executions,
specialties, obligations, covenants, contracts, costs, losses, expenses, actions
and causes of action of every nature, character and description, in law or in
equity, whether presently known or unknown, vested or contingent, suspected or
unsuspected, foreseeable or unforeseeable, that result from actions, events or
omissions prior to the Settlement Date that arise under or otherwise relate to,
or that either had for, upon, or by reason of the CatEPut Agreement or the
covenants applicable prior to the Settlement Date under the Second Restated
CatEPut Agreement.
Governing Law and Dispute Resolution
8. This Settlement Agreement shall be governed in all respects, including
as to validity, interpretation and effect, as provided for in Section 10.4 of
the Second Restated CatEPut Agreement.
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9. The Parties agree that any dispute regarding the interpretation,
enforcement or construction of the terms of this Settlement Agreement will be
resolved by binding arbitration, as provided for in Section 8 of the Second
Restated CatEPut Agreement.
Confidentiality
10. The Parties agree that all events, communications and documents
relating to (i) the Parties' dispute regarding the CatEPut Agreement, Trenwick's
Notice of Exercise, European Re's Notice of Objection, and Trenwick's Demand for
Arbitration, and (ii) their negotiations and discussions leading to this
Settlement Agreement, Second Restated CatEPut Agreement and the Certificate of
Designation thereto, and Amendment No. 1 to the Registration Rights Agreement,
shall be protected as confidential and proprietary information, and shall not be
disclosed to any other person or entity, except for their respective attorneys
or accountants or as may be required by law. The parties shall protect such
confidential and proprietary information by exercising the same degree of care
each uses to protect its own proprietary and confidential information, which
shall be no less than a standard of reasonable care. Each party shall cause each
of its respective affiliates to honor the obligations set forth herein.
Notwithstanding the foregoing, the Parties agree that each may publicly disclose
the texts of the Settlement Agreement, Second Restated CatEPut Agreement and the
Certificate of Designation thereto, and Amendment No. 1 to the Registration
Rights Agreement to the extent that they reasonably believe is required by law.
Entire Agreement
11. Each party acknowledges and represents (i) that the Settlement
Agreement expresses all of the understandings and agreements between the Parties
concerning the subjects of the Settlement Agreement and supersedes all prior and
contemporaneous agreements and understandings, representations, inducements or
conditions, express or implied, oral or written it being understood that,
notwithstanding anything in Section 10.3 of the Second CatEPut
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Agreement to the contrary, the terms of the Second CatEPut Agreement shall be
superseded by this Settlement Agreement to the extent set forth herein; (ii)
that in executing the Settlement Agreement, each Party has not relied upon any
statements, representations, agreements, or warranties by any other Party or
such Party's representative, other than those contained herein; and (iii) that
each Party has executed this Settlement Agreement freely and voluntarily, and
without duress or other undue influence. This Settlement Agreement may not be
modified or amended except in a writing signed by all signatories hereto or
their duly authorized and designated successors in interest. This Settlement
Agreement is binding upon the Parties.
Miscellaneous
12. The parties agree that in communications with third parties they will
refrain from making disparaging or derogatory remarks about each other or about
their prior dealings.
13. This Settlement Agreement shall be binding upon and inure to the
benefit of the Parties and their respective agents, affiliates, officers,
directors, parents, subsidiaries, trustees, related entities, partners,
servants, and employees, and their respective heirs, executors, administrators,
successors and assigns.
14. This Settlement Agreement has been prepared through the combined
efforts of the attorneys of the Parties to it pursuant to arms-length compromise
and settlement negotiations. It shall be fairly interpreted in accordance with
its terms and without strict construction in favor of or against either party
based on the identity of the drafter of the Settlement Agreement or any term or
provision of it.
15. This Settlement Agreement, and all negotiations, statements and
proceedings in connection with it, shall not be construed as, or be deemed to be
evidence of, an admission or concession on the part of any party of any fact,
liability or wrongdoing by any of the parties, and shall not be offered or
received in evidence in any action or proceeding, or used in any way as an
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admission, concession or evidence of any fact, liability or wrongdoing of any
nature on the part of any party relating to claims, rights, obligations,
instances and/or occurrences before the date of this Settlement Agreement.
Notwithstanding the foregoing, nothing herein shall prohibit the introduction
into evidence of this Settlement Agreement in any action to enforce this
Settlement Agreement or any term or provision of this Settlement Agreement.
16. This Settlement Agreement may be signed in original or telecopied
counterparts, each of which shall be considered an original, but all of which
together shall be considered one agreement.
17. The Parties represent and warrant to each other that they have due
authority to enter into this Settlement Agreement and to grant the releases set
forth herein and that no other party owns any claim under the CatEPut Agreement,
by subrogation or otherwise.
18. The Parties declare that each of them has read this Settlement
Agreement, knows and understands its contents, and comprehends and agrees to all
of its terms, conditions and meanings and their significance.
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IN WITNESS WHEREOF, this Settlement Agreement has been duly signed by the
undersigned as of the date set forth above.
Trenwick Group Ltd.
/s/ John V. Del Col /s/ Alan L. Hunte
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By: John V. Del Col By: Alan L. Hunte
Title: Secretary Title: Executive Vice President and
Chief Financial Officer
European Reinsurance Company of
Zurich
/s/ J. Scott Bradley /s/ David R. Whiting
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By: J. Scott Bradley By: David R. Whiting
Title: Member of Senior Management Title: Member of Senior Management
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