STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT, dated as of June 10, 1999 (the
"Agreement"), is between ACE Limited, a Cayman Islands company (the "Grantee"),
and Capital Re Corporation, a Delaware corporation (the "Grantor").
WHEREAS, Grantee, CapRe Acquisition Corp., a Delaware corporation and a
wholly owned, direct subsidiary of Grantee (the "Merger Subsidiary"), and
Grantor have entered into an Agreement and Plan of Merger, dated as of the date
hereof (the "Merger Agreement"), pursuant to which Grantee and Grantor intend to
effect a merger of Merger Subsidiary with and into Grantor (the "Merger");
WHEREAS, as a condition and inducement to Grantee's and Merger
Subsidiary's willingness to enter into the Merger Agreement, Grantee and Merger
Subsidiary have requested that Grantor grant to Grantee an option to purchase up
to 3,220,135 fully paid and nonassessable shares of common stock, par value
$0.01 per share, of Grantor (the "Common Stock"), upon the terms and subject to
the conditions hereof; and
WHEREAS, in order to induce Grantee and Merger Subsidiary to enter into
the Merger Agreement, and in consideration thereof, Grantor is willing to grant
Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Adjustments.
(a) Subject to the other terms and conditions set forth
herein, Grantor hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 3,220,135 fully paid and nonassessable
shares of Common Stock (the "Shares") at a cash purchase price equal to
$17.40 per share (the "Option Price"); provided, however, that in no
event shall the number of shares for which the Option is exercisable
exceed 9.9% of the shares of Common Stock issued and outstanding at the
time of exercise (without giving effect to the shares of Common Stock
issued or issuable pursuant to the Option) (the "Maximum Applicable
Percentage"). The number of shares of Common Stock purchasable upon
exercise of the Option and the Option Price are subject to adjustment
as set forth in this Agreement.
(b) In the event that any additional shares of Common Stock
are issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement), the aggregate number
of shares of Common Stock purchasable upon exercise of the Option
(inclusive of shares, if any, previously purchased upon exercise of the
Option) shall automatically be increased (without any further action on
the part of Grantor or Grantee being necessary) so that, after such
issuance, it equals the Maximum Applicable Percentage. Any such
increase shall not affect the Option Price.
2. Exercise; Closing.
(a) Conditions to Exercise; Termination. Grantee or any other
person that shall become a holder of all or part of the Option in
accordance with the terms of this Agreement (each such person being
referred to in this Agreement as a "Holder") may exercise the Option,
in whole or in part, by delivering a written notice thereof as provided
in Section 2(d) within 180 days following the occurrence of a
Triggering Event (as defined in Section 2(b)) unless prior to such
Triggering Event the Effective Time (as defined in the Merger
Agreement) shall have occurred. If no notice pursuant to the preceding
sentence has been delivered prior thereto, the Option shall terminate
upon either (i) the occurrence of the Effective Time or (ii) the close
of business on the earlier of (x) the day 180 days after the date that
Grantee becomes entitled to receive the Termination Fee (as defined in
the Merger Agreement) under Section 8.5(b) or (c) of the Merger
Agreement and (y) the date that Grantee is no longer potentially
entitled to receive the Termination Fee under Section 8.5(b) or (c) of
the Merger Agreement for a reason other than that Grantee has already
received the Termination Fee.
(b) Triggering Event. A "Triggering Event" shall have occurred
if the Merger Agreement is terminated and Grantee then or thereafter
becomes entitled to receive the Termination Fee pursuant to Section
8.5(b) or (c) of the Merger Agreement.
(c) Notice of Triggering Event by Grantor. Grantor shall
notify Grantee promptly in writing of the occurrence of any Triggering
Event, it being understood that the giving of such notice by Grantor
shall not be a condition to the right of a Holder to exercise the
Option.
(d) Notice of Exercise by Grantee. If a Holder shall be
entitled to and wishes to exercise the Option, it shall send to Grantor
a written notice (the date of which is referred to in this Agreement as
the "Notice Date") specifying (i) the total number of shares the Holder
will purchase pursuant to such exercise and (ii) a place and date (a
"Closing Date") not earlier than three business days nor later than 20
business days from the Notice Date for the closing of such purchase (a
"Closing"); provided, that if a filing is required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), or any other notice, report, filing or approval is required
with respect to any governmental or regulatory authority, court,
agency, commission, body or other governmental entity (a "Governmental
Entity") in connection with such purchase, (x) the Holder or Grantor,
as required, promptly after the giving of such notice shall file the
required notice, report, filing or application for approval and shall
expeditiously process the same and (y) the period of time referred to
in clause (ii) above shall commence on the date on which the Grantee
furnishes to Grantor a supplemental written notice setting forth the
Closing Date, which notice shall be furnished as promptly as
practicable after all required notification, reporting or filing
periods shall have expired or been terminated, all required approvals
shall have been obtained and all requisite waiting periods shall have
passed. Each of Grantee and Grantor agrees to use all commercially
reasonable efforts to cooperate with and provide information to Grantor
or the Holder, as the case may be, for the purpose of any required
notice, report, filing or application for approval.
(e) Payment of Purchase Price. At each Closing, the Holder
shall pay to Grantor the aggregate purchase price for the shares of
Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by a wire transfer to a bank account
designated by Grantor; provided, that failure or refusal of Grantor to
designate such a bank account shall not preclude the Holder from
exercising the Option, in whole or in part.
(f) Delivery of Common Stock. At such Closing, simultaneously
with the payment of the purchase price by the Holder, Grantor shall
deliver to the Holder a certificate or certificates representing the
number of shares of Common Stock purchased by the Holder and, if the
Option shall be exercised in part only, a new Option evidencing the
rights of the Holder to purchase the balance (as adjusted pursuant to
Section 1(b)) of the shares of Common Stock then purchasable under this
Agreement.
(g) Restrictive Legend. Certificates for Common Stock
delivered at a Closing may be endorsed with a restrictive legend that
shall read substantially as follows:
"The transfer of the shares represented by this certificate is
subject to resale restrictions arising under the Securities
Act of 1933, as amended."
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such reference if the
Holder shall have delivered to Grantor a copy of a letter from the
staff of the Securities and Exchange Commission, or a written opinion
of counsel, in form and substance reasonably satisfactory to Grantor,
to the effect that such legend is not required for purposes of the
Securities Act of 1933, as amended (the "Securities Act"). In addition,
such certificates shall bear any other legend as may be required by
applicable law.
(h) Ownership of Record; Tender of Purchase Price; Expenses.
Upon the giving by the Holder to Grantor of a written notice of
exercise referred to in Section 2(d) and the tender of the applicable
purchase price in immediately available funds, the Holder shall be
deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer
books of Grantor shall then be closed or that certificates representing
such shares of Common Stock shall not have been delivered to the
Holder. Grantor shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Covenants of Grantor. In addition to its other agreements and
covenants in this Agreement, Grantor agrees:
(a) Shares Reserved for Issuance. It will maintain, free from
preemptive rights, sufficient authorized but unissued or treasury
shares of Common Stock to issue the appropriate number of shares of
Common Stock pursuant to the terms of this Agreement so that the Option
may be fully exercised without additional authorization of Common Stock
after giving effect to all other options, warrants, convertible
securities and other rights of third parties to purchase shares of
Common Stock from Grantor.
(b) No Avoidance. It will not avoid or seek to avoid (whether
by charter amendment or through reorganization, consolidation, merger,
issuance of rights, dissolution or sale of assets, or by any other
voluntary act) the observance or performance of any of the covenants,
agreements or conditions to be observed or performed under this
Agreement by Grantor.
(c) Further Assurances. Promptly after the date of this
Agreement, it will take all actions as may from time to time be
required (including (i) complying with all applicable premerger
notification, reporting and waiting period requirements under the HSR
Act and (ii) in the event that prior notice, report, filing or approval
with respect to any Governmental Entity is necessary under any
applicable foreign or United States federal, state or local law before
the Option may be exercised, cooperating fully with the Holder in
preparing and processing the required applications or notices) in order
to permit the Holder to exercise the Option and purchase shares of
Common Stock pursuant to such exercise and to take all action necessary
to protect the rights of the holder against dilution.
(d) Stock Exchange Listing. Subject to applicable law and the
rules and regulations of the New York Stock Exchange, Inc. (the
"NYSE"), it will promptly file an application to list the Shares on the
NYSE (to the extent they are not already listed) and will use all
commercially reasonable efforts to obtain approval of such listing and
to effect all necessary filings by Grantor under the HSR Act and the
applicable insurance laws of each state and foreign jurisdiction;
provided, however, that if it is unable to effect such listing on the
NYSE by the Closing Date, it will nevertheless be obligated to deliver
the Shares upon the Closing Date.
4. Representations and Warranties of Grantor.
(a) Merger Agreement. Grantor hereby makes each of the
representations and warranties contained in Sections 4.1, 4.2, 4.4, 4.5
and 4.15 of the Merger Agreement as they relate to Grantor and this
Agreement, as if such representations were set forth in this Agreement.
(b) Shares Reserved for Issuance; Capital Stock. Grantor has
taken all necessary corporate action to authorize and reserve, free
from preemptive rights, and permit it to issue, sufficient authorized
but unissued or treasury shares of Common Stock so that the Option may
be fully exercised without additional authorization of Common Stock
after giving effect to all other options, warrants, convertible
securities and other rights of third parties to purchase shares of
Common Stock from Grantor, and all such shares, upon issuance pursuant
to the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims,
liens, encumbrances, and security interests (other than those created
by this Agreement) and not subject to any preemptive rights.
(c) The Shares. No "fair price," "moratorium," "control share
acquisition," "interested shareholder" or other form of antitakeover
statute or regulation, including without limitation Section 203 of the
Delaware General Corporation Law, or similar provision contained in the
certificate of incorporation or by-laws of Grantor, is or shall be
applicable to the acquisition of the Shares pursuant to this Agreement.
5. Representations and Warranties of Grantee. Grantee represents and
warrants to Grantor that (a) the execution and delivery of this Agreement by
Grantee and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Grantee
and this Agreement has been duly executed and delivered by a duly authorized
officer of Grantee and constitutes a valid and binding obligation of Grantee;
and (b) Grantee is acquiring the Option and, if and when it exercises the
Option, will be acquiring the Shares issuable upon the exercise thereof for its
own account and not with a view to distribution or resale in any manner which
would be in violation of the Securities Act.
6. Exchange; Replacement. This Agreement and the Option granted by this
Agreement are exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Agreement at the principal office of Grantor,
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable at such time under this Agreement, subject to
corresponding adjustments in the number of shares of Common Stock purchasable
upon exercise so that the aggregate number of such shares under all stock option
agreements issued in respect of this Agreement shall not exceed the Maximum
Applicable Percentage. Unless the context shall require otherwise, the terms
"Agreement" and "Option" as used in this Agreement include any stock option
agreements and related Options for which this Agreement (and the Option granted
by this Agreement) may be exchanged. Upon (i) receipt by Grantor of evidence
reasonably satisfactory to it of the loss, theft, destruction of this Agreement,
or mutilation of this Agreement, (ii) receipt by Grantor of reasonably
satisfactory indemnification in the case of loss, theft or destruction of this
Agreement and (iii) surrender and cancellation of this Agreement in the case of
mutilation, Grantor will execute and deliver a new Agreement of like tenor and
date. Any such new Agreement executed and delivered shall constitute an
additional contractual obligation on the part of Grantor, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by any person other than the holder of the new Agreement.
7. Adjustments. In addition to the adjustment to the total number of
shares of Common Stock purchasable upon exercise of the Option pursuant to
Section 1(b), the total number of shares of Common Stock purchasable upon the
exercise of the Option and the Option Price shall be subject to adjustment from
time to time as follows:
(a) In the event of any change in the outstanding shares of
Common Stock by reason of stock dividends, split-ups, mergers,
recapitalizations, combinations, subdivisions, conversions, exchanges
of shares or the like, the type and number of shares of Common Stock
purchasable upon exercise of the Option shall be appropriately
adjusted, and proper provision shall be made in the agreements
governing any such transaction, so that (i) any Holder shall receive
upon exercise of the Option the number and class of shares, other
securities, property or cash that such Holder would have received in
respect of the shares of Common Stock purchasable upon exercise of the
Option if the Option had been exercised and such shares of Common Stock
had been issued to such Holder immediately prior to such event or the
record date therefor, as applicable, and (ii) in the event any
additional shares of Common Stock are to be issued or otherwise become
outstanding as a result of any such change (other than pursuant to an
exercise of the Option), the number of shares of Common Stock
purchasable upon exercise of the Option shall be increased so that,
after such issuance and together with shares of Common Stock previously
issued pursuant to the exercise of the Option (as adjusted on account
of any of the foregoing changes in the Common Stock), the number of
shares so purchasable equals the Maximum Applicable Percentage of the
number of shares of Common Stock issued and outstanding immediately
after the consummation of such change.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise of the Option is adjusted as provided in this Section 7,
the Option Price shall be adjusted by multiplying the Option Price by a
fraction, the numerator of which is equal to the number of shares of
Common Stock purchasable prior to the adjustment and the denominator of
which is equal to the number of shares of Common Stock purchasable
after the adjustment.
8. Registration.
(a) Upon the occurrence of a Triggering Event, Grantor shall,
at the request of Grantee delivered in the written notice of exercise
of the Option provided for in Section 2(d), as promptly as practicable
prepare, file and keep current a shelf registration statement under the
Securities Act covering any or all shares issued and issuable pursuant
to the Option and shall use all commercially reasonable efforts to
cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares
of Common Stock issued upon total or partial exercise of the Option
("Option Shares") in accordance with any plan of disposition requested
by Grantee; provided, however, that Grantor may postpone filing a
registration statement relating to a registration request by Grantee
under this Section 8 for a period of time (not in excess of 60 days) if
in its judgment such filing would require the disclosure of material
information that Grantor has a bona fide business purpose for
preserving as confidential. Grantor will use all commercially
reasonable efforts to cause such registration statement first to become
effective as soon as practicable and then to remain effective for 270
days from the day such registration statement first becomes effective
or until such earlier date as all shares registered shall have been
sold by Grantee. In connection with any such registration, Grantor and
Grantee shall provide each other with representations, warranties,
indemnities and other agreements customarily given in connection with
such registrations. If requested by Grantee in connection with such
registration, Grantor shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent
of obligating Grantor in respect of representations, warranties,
indemnities, contribution and other agreements customarily made by
issuers in such underwriting agreements.
(b) In the event that Grantee so requests, the closing of the
sale or other disposition of the Common Stock or other securities
pursuant to a registration statement filed pursuant to Section 8(a)
shall occur substantially simultaneously with the exercise of the
Option.
9. Repurchase of Option and/or Shares.
(a) Repurchase; Repurchase Price. Upon the occurrence of a
Triggering Event, (i) at the request of a Holder, delivered in writing
within 180 days of such occurrence (or such later period as provided in
Section 2(d) with respect to any required notice or application or in
Section 10), Grantor shall repurchase the Option from the Holder, in
whole or in part, at a price (the "Option Repurchase Price") equal to
the number of shares of Common Stock then purchasable upon exercise of
the Option (or such lesser number of shares as may be designated in the
Repurchase Notice (as defined below)) multiplied by the amount by which
the market/offer price (as defined below) exceeds the Option Price and
(ii) at the request of a Holder or any person who has been a Holder
(for purposes of this Section 9 only, each such person being referred
to as a "Holder"), delivered in writing within 180 days of such
occurrence (or such later period as provided in Section 2(d) with
respect to any required notice or application or in Section 10),
Grantor shall repurchase such number of Option Shares from such Holder
as the Holder shall designate in the Repurchase Notice at a price (the
"Option Share Repurchase Price") equal to the number of shares
designated multiplied by the market/offer price. The term "market/offer
price" shall mean the highest of (x) the price per share of Common
Stock at which a tender or exchange offer for Common Stock has been
made, (y) the price per share of Common Stock to be paid by any third
party pursuant to an agreement with Grantor and (z) the highest trading
price for shares of Common Stock on the NYSE (or, if the Common Stock
is not then listed on the NYSE, any other national securities exchange
or automated quotation system on which the Common Stock is then listed
or quoted) within the six-month period immediately preceding the
delivery of the Repurchase Notice. In the event that a tender or
exchange offer is made for the Common Stock or an agreement is entered
into for a merger, share exchange, consolidation or reorganization
involving consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for the Common Stock
shall (I) if such consideration is in securities and such securities
are listed on a national securities exchange, be determined to be the
highest trading price for such securities on such national securities
exchange within the six-month period immediately preceding the delivery
of the Repurchase Notice or (II) if such consideration is not
securities, or if in securities and such securities are not traded on a
national securities exchange, be determined in good faith by a
nationally recognized investment banking firm selected by an investment
banking firm designated by Grantee and an investment banking firm
designated by Grantor.
(b) Method of Repurchase. A Holder may exercise its right to
require Grantor to repurchase the Option, in whole or in part, and/or
any Option Shares then owned by such Holder pursuant to this Section 9
by surrendering for such purpose to Grantor, at its principal office,
this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder
elects to require Grantor to repurchase the Option and/or such Option
Shares in accordance with the provisions of this Section 9 (each such
notice, a "Repurchase Notice"). As promptly as practicable, and in any
event within two business days after the surrender of the Option and/or
certificates representing Option Shares and the receipt of the
Repurchase Notice relating thereto, Grantor shall deliver or cause to
be delivered to the Holder the applicable Option Repurchase Price
and/or the Option Share Repurchase Price. Any Holder shall have the
right to require that the repurchase of Option Shares shall occur
immediately after the exercise of all or part of the Option. In the
event that the Repurchase Notice shall request the repurchase of the
Option in part, Grantor shall deliver with the Option Repurchase Price
a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock purchasable pursuant to
the Option at the time of delivery of the Repurchase Notice minus the
number of shares of Common Stock represented by that portion of the
Option then being repurchased.
(c) Effect of Statutory or Regulatory Restraints on
Repurchase. To the extent that, upon or following the delivery of a
Repurchase Notice, Grantor is prohibited under applicable law or
regulation from repurchasing the Option (or portion thereof) and/or any
Option Shares subject to such Repurchase Notice (and Grantor will
undertake to use all commercially reasonable efforts to obtain all
required regulatory and legal approvals and to file any required
notices as promptly as practicable in order to accomplish such
repurchase), Grantor shall immediately so notify the Holder in writing
and thereafter deliver or cause to be delivered, from time to time, to
the Holder the portion of the Option Repurchase Price and the Option
Share Repurchase Price that Grantor is no longer prohibited from
delivering, within two business days after the date on which it is no
longer so prohibited; provided, however, that upon notification by
Grantor in writing of such prohibition, the Holder may, within five
days of receipt of such notification from Grantor, revoke in writing
its Repurchase Notice, whether in whole or to the extent of the
prohibition, whereupon, in the latter case, Grantor shall promptly (i)
deliver to the Holder that portion of the Option Repurchase Price
and/or the Option Share Repurchase Price that Grantor is not prohibited
from delivering; and (ii) deliver to the Holder, as appropriate, (A)
with respect to the Option, a new Stock Option Agreement evidencing the
right of the Holder to purchase that number of shares of Common Stock
for which the surrendered Stock Option Agreement was exercisable at the
time of delivery of the Repurchase Notice less the number of shares as
to which the Option Repurchase Price has theretofore been delivered to
the Holder, and/or (B) with respect to Option Shares, a certificate for
the Option Shares as to which the Option Share Repurchase Price has not
theretofore been delivered to the Holder. Notwithstanding anything to
the contrary in this Agreement, including, without limitation, the time
limitations on the exercise of the Option, the Holder may give notice
of exercise of the Option for 180 days after a notice of revocation has
been issued pursuant to this Section 9(c) and thereafter exercise the
Option in accordance with the applicable provisions of this Agreement.
(d) Acquisition Transactions. In addition to any other
restrictions or covenants, Grantor agrees that, in the event that a
Holder delivers a Repurchase Notice, Grantor shall not enter or agree
to enter into an agreement or series of agreements relating to a merger
with or into or the consolidation with any other person or entity, the
sale of all or substantially all of the assets of Grantor or any
similar disposition unless the other party or parties to such agreement
or agreements agree to assume in writing Grantor's obligations under
Section 9(a) and, notwithstanding any notice of revocation delivered
pursuant to the proviso to Section 9(c), a Holder may require such
other party or parties to perform Grantor's obligations under Section
9(a) unless such party or parties are prohibited by law or regulation
from such performance, in which case such party or parties shall be
subject to the obligations of Grantor under Section 9(c).
10. Extension of Exercise Periods. The 180-day periods for exercise of
certain rights under Sections 2 and 9 shall be extended in each such case at the
request of the Holder to the extent necessary to avoid liability by the Holder
under Section 16(b) of the Securities Exchange Act of 1934, as amended, by
reason of such exercise.
11. Limitation of Holder Profit. (a) Notwithstanding any other
provision herein, in no event shall Grantee's Total Profit (as defined below)
exceed $25,000,000, exclusive of any reimbursement of expenses pursuant to
Section 8.5(e) of the Merger Agreement (the "Maximum Profit"), and, if it
otherwise would exceed such amount, Grantee, at its sole discretion, shall
either (1) reduce the number of shares subject to the Option (and any Substitute
Option), (2) deliver to Grantor for cancellation shares of Common Stock (or
other securities into which such Option Shares are converted or exchanged), (3)
pay cash to the Grantor or (4) any combination of the foregoing, so that
Grantee's actually realized Total Profit shall not exceed the Maximum Profit
after taking into account the foregoing actions.
(b) For purposes of this Agreement, "Total Profit" shall mean: (1) the
aggregate amount of (a) the excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option Shares (or securities into which such
shares are converted or exchanged) to any unaffiliated third party within 12
months after the exercise of the Option, over (y) the Grantee's aggregate
purchase price for such Option Shares (or other securities), plus (b) all
amounts received by Grantee on the transfer of the Option (including pursuant to
Section 9), plus (c) all amounts received by Grantee pursuant to Section 8.5(b)
or (c) of the Merger Agreement (other than reimbursement in respect of
Expenses), minus (2) all amounts of cash previously paid to Grantor pursuant to
this Section 11 plus the value of the Option Shares (or other securities)
previously delivered to the Grantor for cancellation pursuant to this Section
11.
(c) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Grantor's obligation to pay, any payment provided for in Section 8.5(b) and (c)
of the Merger Agreement; provided that if and to the extent the Total Profit
received by Grantee would exceed the Maximum Profit following receipt of such
payment, Grantee shall be obligated to comply with the terms of Section 11(a)
within 30 days of the latest of (1) the date of receipt of such payment, (2) the
date of receipt of the net cash by Grantee pursuant to the sale of Option Shares
(or securities into which such Option Shares are converted or exchanged) to any
unaffiliated party within 12 months after the exercise of this Option with
respect to such Option Shares and (3) the date of receipt of net cash from the
disposition of the Option.
(d) For purposes of paragraph (a) of this Section and clause (b)(ii) of
this Section, the value of any Option Shares delivered to the Grantor shall be
the market/offer price of such Option Shares.
12. Assignment. Neither party may assign any of its rights or
obligations under this Agreement or the Option to any other person without the
express written consent of the other party except that, (i) Holder may assign
this Agreement to a wholly-owned subsidiary of Holder and (ii) in the event that
a Triggering Event shall have occurred, Grantee may assign the Option, in whole
or in part. Any attempted assignment in contravention of the preceding sentence
shall be null and void.
13. Filings; Other Actions. Grantor will use all commercially
reasonable efforts to make all filings with, and to obtain consents of, all
third parties and governmental authorities necessary for the consummation of the
transactions contemplated by this Agreement.
14. Specific Performance. Grantor acknowledges that if Grantor fails to
perform any of its obligations under this Agreement immediate and irreparable
harm or injury would be caused to Grantee and/or the Holder for which money
damages would not be an adequate remedy. In such event, Grantor agrees that
Grantee or a Holder shall have the right, in addition to any other rights it may
have, to specific performance of this Agreement. Accordingly, if Grantee or a
Holder should institute an action or proceeding seeking specific enforcement of
the provisions hereof, Grantor hereby waives the claim or defense that Grantee
or a Holder has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law exists.
Grantor further agrees to waive any requirements for the securing or posting of
any bond in connection with obtaining any such equitable relief.
15. Severability. If any term, provision, covenant, or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void, or unenforceable, the
remainder of the terms, provisions, covenants, and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired, or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Grantor is not
permitted to repurchase pursuant to Section 9, the full number of shares of
Common Stock provided in Section 1(a) of this Agreement (as adjusted pursuant to
Sections 1(b) and 7 of this Agreement), it is the express intention of Grantor
to allow the Holder to acquire or to require Grantor to repurchase such lesser
number of shares as may be permissible, without any amendment or modification of
this Agreement.
16. Notice. Notices, requests, instructions, or other documents to be
given under this Agreement shall be in writing and shall be deemed given (i)
three business days following sending by registered or certified mail, postage
prepaid, (ii) when sent, if sent by facsimile, provided that receipt of the fax
is promptly confirmed by telephone, (iii) when delivered, if delivered
personally to the intended recipient, and (iv) one business day later, if sent
by overnight delivery via a national courier service, in each case at the
addresses of the parties set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such party:
If to Grantee or a Holder:
ACE Limited
The ACE Building
30 Woodbourne Avenue
Xxxxxxxx XX 08 Bermuda
Attn: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Best, Esq.
Facsimile: (000) 000-0000
If to Grantor:
Capital Re Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx
Facsimile: 000-000-0000
With a copy to:
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Silver, Esq.
Facsimile: 000-000-0000
17. Expenses. Except as otherwise expressly provided in this Agreement
or in the Merger Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement shall be paid
by the party incurring such expense, including fees and expenses of its own
financial consultants, investment bankers, accountants, and counsel.
18. Entire Agreement. This Agreement, the Stockholder Support Agreement
(as defined in the Merger Agreement) and the Merger Agreement constitute the
entire agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, between the parties, with
respect to the subject matter of this Agreement. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. Nothing in this Agreement, is
intended to confer upon any person or entity, other than the parties to this
Agreement, and their respective successors and permitted assigns, any rights or
remedies under this Agreement.
19. Governing Law and Venue; Waiver of Jury Trial.
(a) This Agreement shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and in
accordance with Delaware law without regard to the conflict of law
principles thereof. The parties irrevocably and unconditionally consent
to submit to the exclusive jurisdiction of the courts of the State of
Delaware and of the United States of America located in Wilmington,
Delaware (the "Delaware Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated by this
Agreement (and agree not to commence any litigation relating thereto
except in such Delaware Courts), waive any objection to the laying of
venue of any such litigation in the Delaware Courts and agree not to
plead or claim in any Delaware Court that such litigation brought
therein has been brought in an inconvenient forum.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
20. Captions. The Section and paragraph captions in this Agreement are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions of this
Agreement.
21. Amendments. This Agreement may not be changed, amended or modified
orally, but may be changed only by an agreement in writing signed by the party
against whom any waiver, change, amendment, modification or discharge may be
sought.
22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
23. Public Announcement. Grantee and Grantor shall consult with each
other prior to issuing, and will provide each other with a meaningful
opportunity to review and comment upon, any press releases or otherwise making
public announcements with respect to the Option and prior to making any filings
with any third party and/or Governmental Entity (as defined in the Merger
Agreement) (including any national securities exchange) with respect thereto,
except as may be required by law, court process or by obligations pursuant to
any listing agreement with or rules of any national securities exchange or
interdealer quotation system.
24. Survival. All representations and warranties contained in this
Agreement shall survive delivery of and payment for the Shares.
IN WITNESS WHEREOF, Grantee and Grantor have caused this Agreement to
be duly executed and delivered on the day and year first above written.
CAPITAL RE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
ACE LIMITED
By: /s/ Xxxxx Xxxxxxxxxxx
----------------------------------------
Xxxxx Xxxxxxxxxxx
Director/Chairman of the Board
