-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EsDeLA0xlXiE94BGrjp7XIQ+d/3PUPKOevNrByHmDWSumX2lX0pBh/TC3dbzO5sK cMaf9q1n0SXhomx0YyZ0mw== 0000912057-97-017410.txt : 19970515 0000912057-97-017410.hdr.sgml : 19970515 ACCESSION NUMBER: 0000912057-97-017410 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19970514 SROS: NYSE GROUP MEMBERS: EXEL ACQUISITION LTD. GROUP MEMBERS: EXEL LTD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: GCR HOLDINGS LTD CENTRAL INDEX KEY: 0000913912 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-50011 FILM NUMBER: 97603415 BUSINESS ADDRESS: STREET 1: SOFIA HOUSE 48 CHURCH ST 3RD FLOOR STREET 2: HAMILTON HM 12 P O BOX HM 762 CITY: BERMUDA STATE: D0 BUSINESS PHONE: 4412924159415 MAIL ADDRESS: STREET 1: SOFIA HOUSE 48 CHURCH ST 3RD FLOOR STREET 2: HAMILTON HM 12 CITY: BERMUDA STATE: D0 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EXEL LTD CENTRAL INDEX KEY: 0000875159 STANDARD INDUSTRIAL CLASSIFICATION: SURETY INSURANCE [6351] IRS NUMBER: 980058718 FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: CUMBERLAND HOUSE STREET 2: 1 VICTORIA ST CITY: HAMILTON HM11 BERMUD STATE: D2 BUSINESS PHONE: 4412928515 MAIL ADDRESS: STREET 1: CAHILL GORDON & REINDEL(IMMANUEL KOHN) STREET 2: 80 PINE STREET CITY: NEW YORKI STATE: NY ZIP: 10005 SC 14D1 1 SC 14D1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 -------------------------- GCR HOLDINGS LIMITED (Name of Subject Company) -------------------------- EXEL LIMITED EXEL ACQUISITION LTD. (Bidders) -------------------------- ORDINARY SHARES, PAR VALUE $.10 PER SHARE (Title of Class of Securities) -------------------------- G3774N 10 0 (CUSIP Number of Class of Securities) -------------------------- PAUL S. GIORDANO, ESQ. SENIOR VICE PRESIDENT AND GENERAL COUNSEL EXEL LIMITED CUMBERLAND HOUSE ONE VICTORIA STREET HAMILTON HM 11, BERMUDA (441) 292-8515 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) -------------------------- COPY TO: IMMANUEL KOHN, ESQ. CAHILL GORDON & REINDEL 80 PINE STREET NEW YORK, NEW YORK 10005 (212) 701-3000 CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE** - -------------------------------------------------- -------------------------------------------------- $635,586,885 $127,117.38
* For purposes of calculating the filing fee only. This calculation assumes the purchase of 23,540,255 Ordinary Shares of the Subject Company at $27.00 net per share in cash. Such number of shares represents all outstanding shares as of May 13, 1997 (excluding shares owned by the Bidders). ** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the aggregate value of cash offered by Bidders for such number of Shares. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and date of its filing. Amount Previously Paid: Not Applicable Filing Not Applicable Party: Form of Registration Not Applicable Date Filed: Not Applicable No.:
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Exhibit Index begins on Page 9 (Page 1 of 9 Pages) CUSIP No. G3774N 10 0
- ----------------------------------------------------------------------------------------------------------------------- 1. Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons EXEL Limited I.R.S. No. 98-0058718 - ----------------------------------------------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of Group (See Instructions) (a) / / (b) / / - ----------------------------------------------------------------------------------------------------------------------- 3. SEC Use Only - ----------------------------------------------------------------------------------------------------------------------- 4. Sources of Funds (See Instructions) BK, WC, OO - ----------------------------------------------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) / / - ----------------------------------------------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Cayman Islands - ----------------------------------------------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person 1,226,000 - ----------------------------------------------------------------------------------------------------------------------- 8. Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See Instructions) / / - ----------------------------------------------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row (7) Approximately 4.75% of the shares outstanding as of May 8, 1997, on a fully diluted basis. - ----------------------------------------------------------------------------------------------------------------------- 10. Type of Reporting Person (See Instructions) CO
Exhibit Index begins on Page 9 (Page 2 of 9 Pages) CUSIP No. G3774N 10 0
- ----------------------------------------------------------------------------------------------------------------------- 1. Names of Reporting Persons S.S. or I.R.S. Identification Nos. of Above Persons Exel Acquisition Ltd. I.R.S. No. (pending) - ----------------------------------------------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of Group (See Instructions) (a) / / (b) / / - ----------------------------------------------------------------------------------------------------------------------- 3. SEC Use Only - ----------------------------------------------------------------------------------------------------------------------- 4. Sources of Funds (See Instructions) BK, WC, OO - ----------------------------------------------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) / / - ----------------------------------------------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Cayman Islands - ----------------------------------------------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person 1,226,000 - ----------------------------------------------------------------------------------------------------------------------- 8. Check if the Aggregate Amount in Row (7) Excludes Certain Shares (See Instructions) / / - ----------------------------------------------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row (7) Approximately 4.75% of the shares outstanding as of May 8, 1997, on a fully diluted basis. - ----------------------------------------------------------------------------------------------------------------------- 10. Type of Reporting Person (See Instructions) CO
Exhibit Index begins on Page 9 (Page 3 of 9 Pages) This Schedule 14D-1 relates to the offer by EXEL ACQUISITION LTD. (the "Purchaser"), a Cayman Islands company and a wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"), to purchase all of the outstanding Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the "Company"), at a purchase price of $27.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), which are annexed to and filed with this Schedule 14D-1 as Exhibits (a)(1) and (a)(2). The item numbers and responses thereto below are in accordance with the requirements of Schedule 14D-1. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is GCR HOLDINGS LIMITED. The address of its principal executive offices is Sofia House, 48 Church Street, Hamilton HM 12, Bermuda. (b) The equity securities to which this Schedule 14D-1 relates are the Shares. Reference is hereby made to the information set forth in the "Introduction" and Section 1 ("Terms of the Offer") of the Offer to Purchase, which is incorporated herein by reference. (c) Reference is hereby made to the information set forth in Section 6 ("Price Range of the Shares; Dividends") of the Offer to Purchase, which is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)--(d) Reference is hereby made to the information set forth in the "Introduction," Section 8 ("Certain Information Concerning the Purchaser and Parent") and Schedule I ("Directors and Executive Officers of Parent and the Purchaser") of the Offer to Purchase, which is incorporated herein by reference. (e)--(f) During the last five years, neither Parent nor the Purchaser, nor, to their knowledge, any of their respective executive officers and directors listed in Schedule I ("Directors and Executive Officers of Parent and the Purchaser") of the Offer to Purchase has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. (g) Reference is hereby made to the information set forth in Schedule I ("Directors and Executive Officers of Parent and the Purchaser") of the Offer to Purchase, which is incorporated herein by reference. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)--(b) Reference is hereby made to the information set forth in the "Introduction," Section 8 ("Certain Information Concerning the Purchaser and Parent"), Section 9 ("Background of the Offer; Contacts with the Company") and Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal Rights and Other Matters") of the Offer to Purchase, which is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)--(b) Reference is hereby made to the information set forth in Section 11 ("Source and Amount of Funds") of the Offer to Purchase, which is incorporated herein by reference. (c) Not applicable. Exhibit Index begins on Page 9 (Page 4 of 9 Pages) ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSAL OF THE BIDDER. (a)--(g) Reference is hereby made to the information set forth in the "Introduction," Section 9 ("Background of the Offer; Contacts with the Company"), Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal Rights and Other Matters"), Section 12 ("Possible Effects of the Offer on the Market for Shares; Nasdaq National Market; Exchange Act Registration; Margin Regulations") and Section 13 ("Dividends and Distributions") of the Offer to Purchase, which is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)--(b) Reference is hereby made to the information set forth in (i) the "Introduction," Section 8 ("Certain Information Concerning the Purchaser and Parent"), Section 9 ("Background of the Offer; Contacts with the Company"), Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal Rights and Other Matters") and Schedule I ("Directors and Executive Officers of Parent and the Purchaser") of the Offer to Purchase and (ii) the Acquisition Agreement, each of which is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. Reference is hereby made to the information set forth in (i) the "Introduction," Section 8 ("Certain Information Concerning the Purchaser and Parent"), Section 9 ("Background of the Offer; Contacts with the Company") and Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal Rights and Other Matters") of the Offer to Purchase and (ii) the Acquisition Agreement, each of which is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. Reference is hereby made to the information set forth in Section 16 ("Certain Fees and Expenses") of the Offer to Purchase, which is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Not Applicable. ITEM 10. ADDITIONAL INFORMATION. (a) Reference is hereby made to the information set forth in Section 10 ("Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal Rights and Other Matters") of the Offer to Purchase, which is incorporated herein by reference. (b)--(c) Reference is hereby made to the information set forth in Section 15 ("Certain Legal Matters; Required Regulatory Approvals") of the Offer to Purchase, which is incorporated herein by reference. (d) Reference is hereby made to the information set forth in Section 12 ("Possible Effects of the Offer on the Market for the Shares; Nasdaq National Market; Exchange Act Registration; Margin Regulations") of the Offer to Purchase, which is incorporated herein by reference. (e) To the best knowledge of Parent and the Purchaser, no such proceedings are pending or have been instituted. (f) Reference is hereby made to the entire text of the Offer to Purchase and the related Letter of Transmittal, which is incorporated herein by reference. Exhibit Index begins on Page 9 (Page 5 of 9 Pages) ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) -- Offer to Purchase, dated May 14, 1997. (a)(2) -- Letter of Transmittal. (a)(3) -- Notice of Guaranteed Delivery. (a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) -- Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) -- Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) -- Text of joint press release issued by Parent and the Company on May 8, 1997. (a)(8) -- Form of Summary Advertisement, dated May 14, 1997. (b) -- Not applicable. (c) -- Agreement and Plan of Amalgamation dated as of May 8, 1997, among Parent, the Purchaser and the Company. (d) -- Not applicable. (e) -- Not applicable. (f) -- Not applicable.
Exhibit Index begins on Page 9 (Page 6 of 9 Pages) SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. EXEL LIMITED By: /s/ BRIAN M. O'HARA ----------------------------------------- Name: Brian M. O'Hara Title: President and Chief Executive Officer Dated: May 14, 1997 Exhibit Index begins on Page 9 (Page 7 of 9 Pages) SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. EXEL ACQUISITION LTD. By: /s/ BRIAN M. O'HARA ----------------------------------------- Name: Brian M. O'Hara Title: President Dated: May 14, 1997 Exhibit Index begins on Page 9 (Page 8 of 9 Pages)
EXHIBIT SEQUENTIAL NO. DESCRIPTION PAGE NUMBER - --------- -------------------------------------------------------------------------------- --------------- (a)(1) -- Offer to Purchase, dated May 14, 1997. (a)(2) -- Letter of Transmittal. (a)(3) -- Notice of Guaranteed Delivery. (a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) -- Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) -- Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) -- Text of joint press release issued by Parent and the Company on May 8, 1997. (a)(8) -- Form of Summary Advertisement, dated May 14, 1997. (b) -- Not applicable. (c) -- Agreement and Plan of Amalgamation dated as of May 8, 1997 among Parent, the Purchaser and the Company.
Exhibit Index begins on Page 9 (Page 9 of 9 Pages) EX-99.(A)(1) 2 OFFER TO PURCHASE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING ORDINARY SHARES OF GCR HOLDINGS LIMITED AT $27.00 NET PER SHARE BY EXEL ACQUISITION LTD. A WHOLLY OWNED SUBSIDIARY OF EXEL LIMITED THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 11, 1997, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF GCR HOLDINGS LIMITED (THE "COMPANY") HAS UNANIMOUSLY APPROVED THE OFFER AND THE AMALGAMATION DESCRIBED HEREIN, HAS DETERMINED THAT EACH OF THE OFFER AND THE AMALGAMATION IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, AND RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND ADOPT AND APPROVE THE AMALGAMATION. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY EXEL LIMITED AND ITS SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN OUTSTANDING CALCULATED ON A FULLY DILUTED BASIS. SEE THE INTRODUCTION AND SECTIONS 1, 14 AND 15. ------------------------ IMPORTANT Any shareholder desiring to tender all or any portion of such shareholder's Ordinary Shares, par value $.10 per share, of the Company (the "Shares") should either (a) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal and mail or deliver it together with the certificate(s) representing tendered Shares to the Depositary (as hereinafter defined) or tender such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 or (b) request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder. A shareholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if such shareholder desires to tender such Shares. A shareholder who desires to tender Shares and whose certificates representing such Shares are not immediately available or who cannot comply with the procedures for book-entry transfer on a timely basis may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to the Information Agent (as hereinafter defined) or the Dealer Manager (as hereinafter defined) at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be obtained from the Information Agent or from brokers, dealers, commercial banks and trust companies. ------------------------ THE DEALER MANAGER FOR THE OFFER IS: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION ------------------ May 14, 1997 TABLE OF CONTENTS
PAGE --------- INTRODUCTION............................................................................................... 1 1. Terms of the Offer..................................................................................... 3 2. Acceptance for Payment and Payment for Shares.......................................................... 4 3. Procedures for Accepting the Offer and Tendering Shares................................................ 5 4. Withdrawal Rights...................................................................................... 8 5. Certain United States Federal Tax Consequences......................................................... 8 6. Price Range of the Shares; Dividends................................................................... 9 7. Certain Information Concerning the Company............................................................. 10 8. Certain Information Concerning the Purchaser and Parent................................................ 10 9. Background of the Offer; Contacts with the Company..................................................... 12 10. Acquisition Agreement; Purpose of the Offer and the Acquisition, Appraisal Rights and Other Matters.... 13 11. Source and Amount of Funds............................................................................. 23 12. Possible Effects of the Offer on the Market for the Shares; Nasdaq National Market; Exchange Act Registration; Margin Regulations....................................................................... 23 13. Dividends and Distributions............................................................................ 24 14. Certain Conditions of the Offer........................................................................ 24 15. Certain Legal Matters; Required Regulatory Approvals................................................... 26 16. Certain Fees and Expenses.............................................................................. 26 17. Miscellaneous.......................................................................................... 27 Schedule I - Directors and Executive Officers of Parent and the Purchaser Schedule II - Sections 85, 86 and 87 of the Cayman Islands Companies Law (1995 Revision)
i To: All Holders of Ordinary Shares of GCR Holdings Limited: INTRODUCTION EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser") and a wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"), hereby offers to purchase all of the outstanding Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company ("GCR" or the "Company"), at a purchase price of $27.00 per Share, net to the seller in cash, without interest thereon (the "Price Per Share"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements hereto or thereto, collectively constitute the "Offer"). Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. However, any tendering shareholder or other payee who fails to complete and sign the Substitute Form W-9 that is included in the Letter of Transmittal may be subject to a required backup federal income tax withholding of 31% of the gross proceeds payable to such shareholder or other payee pursuant to the Offer. See Section 3. The Purchaser will pay all charges and expenses of Donaldson, Lufkin & Jenrette Securities Corporation, as Dealer Manager (the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., as Depositary (the "Depositary"), and Georgeson & Company Inc., as Information Agent (the "Information Agent"), in each case incurred in connection with the Offer. See Section 16. Shareholders will not possess any appraisal rights with respect to the Offer and the consummation of the Offer will not require their approval. See Section 10. THE BOARD OF DIRECTORS OF GCR (THE "BOARD") HAS UNANIMOUSLY APPROVED THE OFFER AND THE AMALGAMATION DESCRIBED HEREIN, HAS DETERMINED THAT EACH OF THE OFFER AND THE AMALGAMATION IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, AND RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND ADOPT AND APPROVE THE AMALGAMATION. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY PARENT AND ITS SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN OUTSTANDING CALCULATED ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). SEE SECTIONS 1, 14 AND 15. On April 25, 1997, the Company declared a quarterly dividend of $0.62 per Share, payable on May 27, 1997, to shareholders of record on May 14, 1997. Tendering Shares pursuant to the Offer will not affect the right of shareholders of record on May 14, 1997, to receive this dividend. The Offer is being made pursuant to an Agreement and Plan of Amalgamation, dated as of May 8, 1997 (the "Acquisition Agreement"), among Parent, the Purchaser and the Company. The purpose of the Offer is for the Purchaser to acquire control of, and the entire equity interest in, the Company. As used herein, the "Acquisition" means the acquisition by the Purchaser of the entire equity interest in the Company. The Offer is intended to increase the likelihood that the Acquisition will be effected. The Purchaser currently does not intend to permit the Company to continue to pay dividends on the Shares until the Acquisition has been consummated, except that the Company may pay the $0.62 per Share dividend declared on April 25, 1997, and payable on May 27, 1997, to holders of record as of May 14, 1997. Upon consummation of the Offer, the Company will become a subsidiary of the Purchaser. See Section 10. The Acquisition Agreement provides that, among other things, as soon as practicable after the purchase of Shares pursuant to the Offer and the satisfaction of the other conditions set forth in the 1 Acquisition Agreement and in accordance with the relevant provisions of the Companies Law (1995 Revision) of the Cayman Islands (the "Cayman Law"), it is the intention of the Purchaser to be amalgamated with and into the Company under a scheme of arrangement under the Cayman Law (the "Amalgamation"). Following consummation of the Amalgamation, the Company will continue as the surviving company (the "Surviving Company") and will become a wholly owned subsidiary of Parent. At the effective time of the Amalgamation (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares owned by the Purchaser, Parent or any direct or indirect wholly owned subsidiary of Parent), will be canceled and entitle the holder to receive the Price Per Share. The Acquisition Agreement is more fully described in Section 10. The Acquisition Agreement provides that, after giving effect to the purchase by Parent and/or the Purchaser of such number of Shares that, together with the number of Shares then beneficially owned by Parent and its subsidiaries, represents a majority of the outstanding Shares, and from time to time thereafter, Parent shall be entitled to designate such number of directors, rounded up to the next whole number but in no event more than one less than the total number of directors, on the Board as will give Parent representation on the Board equal to the product of the number of directors on the Board and the percentage that such number of Shares so purchased and the number of Shares owned by the Purchaser and its affiliates prior to the Offer bears to the total number of Shares then outstanding. See Section 10 for a description of the membership of the Board, including Independent Directors (as defined herein). In the Acquisition Agreement, the Company has agreed to take all actions necessary to cause Parent's designees to be elected as directors of the Company, including increasing the size of the Board or securing the resignations of incumbent directors or both. The Acquisition Agreement also provides that, subject to certain conditions, if at any time Parent's designees constitute a majority of the Board, Parent shall be entitled to designate all of the members of the board of directors of each subsidiary of Parent, including Global Capital Reinsurance Limited. The consummation of the Amalgamation is subject to the satisfaction or waiver of certain conditions, including, if required by law, the approval and adoption of the Amalgamation by the requisite vote of the shareholders of the Company. See Section 10. Under the Cayman Law, except as otherwise described below, upon an application to the Cayman Islands Court by the Company or the Purchaser, the Court may order a meeting of the shareholders of the Company to approve and adopt the Amalgamation. At such meeting, the affirmative vote of the holders of seventy-five percent (75%) of each class of the Shares eligible to vote thereon is required to approve and adopt the Amalgamation pursuant to Sections 85 and 86 of the Cayman Law, which are set forth in their entirety in Schedule II hereto. Upon a subsequent application to the Court, the adopted and approved Amalgamation shall, if sanctioned by the Court, be binding on all shareholders of the Company. The Court may make provisions for such incidental, consequential, and supplemental matters as are necessary to secure that the Amalgamation is fully and effectively carried out. See Section 10. If the Purchaser succeeds in acquiring at least ninety percent (90%) of the Shares within four months after commencement of the Offer, then, subject to and in accordance with Cayman Law, the Purchaser currently intends to give notice to all holders of the then outstanding Shares (other than Shares held by the Purchaser) that the Purchaser intends to acquire compulsorily (the "Compulsory Acquisition") such Shares at the Per Share Price, pursuant to Section 87 of the Cayman Law, which is set forth in its entirety in Schedule II hereto. See Section 10. The Company has advised the Purchaser that as of May 8, 1997, 24,766,255 Shares were issued and outstanding and that (i) no Shares were held by the subsidiaries of the Company and (ii) 997,925 Shares were subject to issuance upon the exercise of outstanding options and 26,273 restricted Shares have been granted and are subject to issuance upon satisfaction of vesting requirements. The Company has advised the Purchaser that since May 8, 1997, the date of the Acquisition Agreement, the Company has not issued any Shares or any options to purchase Shares. As of the date hereof, Parent, the Purchaser, and all other subsidiaries of Parent and the Purchaser own 1,226,000 Shares, which constitute 4.9% of the outstanding 2 number of Shares. As a result, as of the date of this Offer to Purchase, the Minimum Condition would be satisfied if the Purchaser acquired pursuant to the Offer 18,116,840 Shares. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and thereby purchase all Shares validly tendered and not withdrawn in accordance with the procedures set forth in Section 4 on or prior to the Expiration Date (as hereinafter defined). The term "Expiration Date" means 12:00 Midnight, New York City time, on Wednesday, June 11, 1997, unless and until the Purchaser, in its sole discretion (but subject to the terms of the Acquisition Agreement), shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the time and date at which the Offer, as so extended by the Purchaser, shall expire. The Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the Offer for any reason, including the occurrence of any of the events specified in Section 14, by giving oral or written notice thereof to the Depositary and by making a public announcement thereof, as described below. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer and subject to the right of a tendering shareholder to withdraw such shareholder's Shares. See Section 4. Subject to the applicable rules and regulations of the Securities and Exchange Commission (the "Commission"), the Purchaser also expressly reserves the right, in its sole discretion, at any time or from time to time, to (i) terminate the Offer if any condition referred to in Section 14 has not been satisfied or upon the occurrence of any event specified in Section 14 and (ii) postpone the acceptance for payment of or payment for tendered Shares or waive any condition or otherwise amend the Offer in any respect, in each case, by giving oral or written notice of such termination, waiver or amendment to the Depositary and by making a public announcement thereof, as described below. See Section 10 for a full description of the Purchaser's ability to amend the Offer. The rights reserved by the Purchaser in this paragraph are in addition to the Purchaser's rights pursuant to Section 14. Any such extension, termination, waiver or amendment will be followed as promptly as practicable by a public announcement thereof, such announcement, in the case of an extension, to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 14d-6(d) and 14e-1 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) and without limiting the manner in which the Purchaser may choose to make any public announcement, the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release or other public announcement. If the Purchaser makes a material change in the terms of the Offer, or if it waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and will extend the Offer to the extent required by Rule 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the changed terms or information. In the Commission's view, an offer should generally remain open for a minimum of five business days from the date a material change is first published, sent or given to shareholders. With respect to a change in price or a change in percentage of securities sought (other than an increase in the number of Shares sought not in excess of 2% of the outstanding Shares), a minimum ten business day period is required to allow for adequate dissemination to shareholders and investor response. Accordingly, 3 if, prior to the Expiration Date, the Purchaser should increase or decrease the number of Shares being sought or increase or decrease the consideration being offered in the Offer, such increase or decrease in the number of Shares being sought or such increase or decrease in the consideration being offered will be applicable to all shareholders whose Shares are accepted for payment pursuant to the Offer and if, at the time notice of any such increase or decrease in the number of Shares being sought or such increase or decrease in the consideration being offered is first published, sent or given to holders of such Shares (except in respect of an increase in the number of Shares not in excess of 2% of the outstanding Shares), the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day, from and including the date that such notice is first so published, sent or given, the Offer will be extended at least until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time. The Company has provided the Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's shareholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of the Offer as so extended and amended) the Purchaser will purchase, by accepting for payment, and will pay for, all Shares validly tendered and not withdrawn (as permitted by Section 4) prior to the Expiration Date promptly after the later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions to the Offer set forth in Section 14. In addition, subject to applicable rules of the Commission, the Purchaser expressly reserves the right to delay acceptance for payment of, or payment for, Shares pending receipt of any regulatory or governmental approvals specified in Section 15 in order to comply in whole or in part with any other applicable law. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares ("Share Certificates") or timely confirmation (a "Book-Entry Confirmation") of the book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, The Midwest Securities Trust Company or The Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of such Shares for payment pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Purchaser and 4 transmitting such payments to tendering shareholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PRICE PER SHARE BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR OF ANY DELAY IN MAKING SUCH PAYMENT. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if Share Certificates are submitted representing more Shares than are tendered, Share Certificates representing unpurchased or untendered Shares will be returned, without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3, such Shares will be credited to an account maintained at such Book-Entry Transfer Facility), as promptly as practicable following the expiration, termination or withdrawal of the Offer. IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH INCREASED CONSIDERATION WILL BE PAID TO ALL HOLDERS OF SHARES THAT ARE PURCHASED PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED PRIOR TO SUCH INCREASE IN CONSIDERATION. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of the Purchaser's subsidiaries or affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES. VALID TENDER OF SHARES. In order for Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares, and any other documents required by the Letter of Transmittal must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date and either (i) Share Certificates representing tendered Shares must be received by the Depositary, or Shares must be tendered pursuant to the procedure for book-entry transfer set forth below and Book-Entry Confirmation must be received by the Depositary, in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery procedures set forth below must be complied with. THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. 5 BOOK-ENTRY TRANSFER. The Depositary will make a request to establish accounts with respect to the Shares at each of the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make book-entry delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at such Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message and any other required documents must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedure set forth below must be complied with. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. SIGNATURE GUARANTEES. Signatures on the Letter of Transmittal must be guaranteed by a firm that is a member in good standing of the Medallion Signature Guarantee Program, or by any other "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the Share Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made to, or Share Certificates for unpurchased Shares are to be issued or returned to, a person other than the registered holder(s), then the Share Certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the Share Certificates, with the signatures guaranteed by an Eligible Institution. See Instructions 1, 5 and 7 of the Letter of Transmittal. GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's Share Certificates are not immediately available or time will not permit the Share Certificates and all other required documents to reach the Depositary prior to the Expiration Date, or the procedures for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all of the following guaranteed delivery procedures are duly complied with: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, is received by the Depositary, as provided below, prior to the Expiration Date; and (iii) the Share Certificates for (or a Book-Entry Confirmation with respect to) all tendered Shares, in proper form for transfer together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees (or, in the case of a book- entry transfer of Shares, an Agent's Message) and any other documents required by the Letter of Transmittal are received by the Depositary within three Nasdaq National Market ("Nasdaq") trading days after the date of execution of the form of Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by facsimile transmission to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. 6 Notwithstanding any other provisions hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Share Certificates for, or of Book-Entry Confirmation with respect to, such Shares, a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required signature guarantees (or, in the case of a book-entry transfer of Shares, an Agent's Message) and any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering shareholders at the same time, and will depend upon when Share Certificates are received by the Depositary or Book-Entry Confirmations of such Shares are received into the Depositary's account at a Book-Entry Transfer Facility. DETERMINATION OF VALIDITY. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, whose determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any or all tenders determined by it not to be in proper form or the acceptance of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender of Shares of any particular shareholder whether or not similar defects or irregularities are waived in the case of other shareholders. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. No tender of Shares will be deemed to have been validly made until all defects and irregularities with respect to such tender have been cured or waived by the Purchaser. None of Parent, the Purchaser or any of their respective affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person or entity will be under any duty to give any notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. APPOINTMENT AS PROXY. By executing the Letter of Transmittal, a tendering shareholder irrevocably appoints designees of the Purchaser, and each of them, as such shareholder's attorneys-in-fact and proxies, with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such shareholder's rights with respect to the Shares tendered by such shareholder and accepted for payment by the Purchaser (and with respect to any and all other Shares and other securities issued or issuable in respect of such Shares on or after May 8, 1997). All such powers of attorney and proxies shall be considered irrevocable and coupled with an interest in the tendered Shares. Such appointment will be effective upon the acceptance for payment of such Shares by the Purchaser in accordance with the terms of the Offer. Upon such acceptance for payment, all other powers of attorney and proxies given by such shareholder with respect to such Shares (and such other Shares and securities) prior to such payment will be revoked, without further action, and no subsequent powers of attorney and proxies may be given, or written consents executed, by such shareholder (and, if given or executed, will not be deemed effective). The designees of the Purchaser will, with respect to the Shares (and such Shares and other securities for which such appointment is effective), be empowered to exercise all voting and other rights of such shareholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's shareholders, or any adjournment or postponement thereof, or by consent in lieu of any such meeting or otherwise. OTHER REQUIREMENTS. The Purchaser's acceptance for payment of Shares tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering shareholder and the Purchaser upon the terms and subject to the conditions of the Offer. UNDER THE UNITED STATES FEDERAL INCOME TAX LAWS, THE DEPOSITARY MAY BE REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN SHAREHOLDERS PURSUANT TO THE OFFER. TO PREVENT BACKUP UNITED STATES FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENTS MADE PURSUANT TO THE OFFER, 7 EACH TENDERING SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL. 4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment as provided herein, may also be withdrawn at any time after July 13, 1997 (or such later date as may apply in case the Offer is extended). If, for any reason whatsoever, acceptance for payment of any Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept for payment or pay for Shares tendered pursuant to the Offer, then, without prejudice to the Purchaser's rights set forth herein, the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares and such Shares may not be withdrawn except to the extent that the tendering shareholder is entitled to and duly exercises withdrawal rights as described in this Section 4. Any such delay will be by an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share Certificates have been tendered) the name of the registered holder of the Shares as set forth in the Share Certificates, if different from that of the person who tendered such Shares. If Share Certificates have been delivered or otherwise identified to the Depositary, then prior to the physical release of such Share Certificates, the tendering shareholder must submit the serial numbers shown on the particular Share Certificates evidencing the Shares to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of Shares tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 3, the notice of withdrawal must specify the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination shall be final and binding. None of Parent, the Purchaser or any of their respective affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person or entity will be under any duty to give any notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES. The receipt of cash for Shares pursuant to the Offer or the Amalgamation will be a taxable transaction for United States federal income tax purposes and may also be a taxable sale or exchange under applicable state, local and foreign tax laws. For United States federal income tax purposes, each selling or exchanging shareholder would generally recognize gain or loss equal to the difference between the amount of cash received and such shareholder's adjusted tax basis for the sold or exchanged Sharess. Subject to the discussion below of the potential application of the "related person insurance income" rules to a sale or exchange of the Shares, such gain or loss will be capital gain or loss (assuming the Shares are held as capital assets) and any such capital gain or loss will be long term if, as of the date of sale or exchange, the Shares were held for more than one year or will be short term if, as of such date, the Shares were held for one year or less. 8 Special rules applicable to "related person insurance income" ("RPII") provide that if a shareholder who is a U.S. person diposes of shares in a foreign insurance corporation that has RPII and that is 25% or more owned by U.S. persons, directly or by application of attribution rules, any gain from the disposition will generally be treated as ordinary income to the extent of the shareholder's share of the corporation's undistributed earnings and profits that were accumulated during the period that the shareholder owned the shares (whether or not such earnings and profits are attributable to RPII). In addition, such a shareholder will be required to comply with certain reporting requirements, regardless of the amount of shares owned by the shareholder. These rules should not apply to a sale or exchange of Shares pursuant to the Offer or the Amalgamation because the Company is not itself directly engaged in the insurance business and because proposed U.S. Treasury Regulations should be interpreted as applying only to dispositions of shares of corporations that are directly engaged in the insurance business. There can be no assurance, however, that the Internal Revenue Service will interpret the proposed regulations in this manner or that the proposed regulations will not be promulgated in final form in a manner that would cause these rules to apply to the sale or exchange of Shares. The foregoing discussion does not address the tax consequences that may be relevant to shareholders with special tax status, including shareholders who own (or who owned at any time during the five-year period ending on the date of sale or exchange) 10% or more of the Shares, directly or by attribution (under section 958 of the Internal Revenue Code), shareholders who acquired Shares pursuant to the exercise of employee stock options or otherwise as compensation, individuals who are not citizens or residents of the United States and foreign corporations, insurance companies, financial institutions, dealers in securities, tax-exempt entities and regulated investment companies. THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. EACH SHAREHOLDER IS URGED TO CONSULT SUCH SHAREHOLDER'S OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO SUCH SHAREHOLDER OF THE OFFER AND AMALGAMATION, INCLUDING UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES. 6. PRICE RANGE OF THE SHARES; DIVIDENDS. The Shares are listed and traded on Nasdaq under the symbol "GCREF." The following table (which has been provided to the Purchaser by the Company) sets forth, for the calendar periods indicated, the high and low Nasdaq sale prices per Share, as reported in published financial sources, plus any cash dividends declared, since public trading commenced on December 19, 1995.
CASH HIGH LOW DIVIDENDS --------- --------- ----------- Calendar 1995 Fourth Quarter (commencing December 19, 1995).................................. $ 23.000 $ 19.875 $ -- Calendar 1996 First Quarter.................................................................. 25.750 21.500 0.62 Second Quarter................................................................. 27.125 24.250 0.62 Third Quarter.................................................................. 26.875 21.500 0.62 Fourth Quarter................................................................. 25.375 21.875 0.62 Calendar 1997 First Quarter.................................................................. 24.625 22.000 0.62 Second Quarter (through May 13, 1997).......................................... 27.375 20.250 0.62
9 On May 7, 1997, the last full day of trading prior to the announcement of the Offer, the reported Nasdaq closing sales price of the Shares was $22.375 per share. On May 13, 1997, the last full trading day prior to the date of this Offer to Purchase, the reported Nasdaq closing sales price of the Shares was $26.625 per share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. On April 25, 1997, the Company declared a quarterly dividend of $0.62 per Share, payable on May 27, 1997, to shareholders of record on May 14, 1997. Tendering Shares pursuant to the Offer will not affect the right of shareholders of record on May 14, 1997, to receive this dividend. The Company has agreed in the Acquisition Agreement that prior to the Amalgamation it will not declare, set aside for payment or pay any other dividends, except that the Company may pay the $0.62 per Share dividend declared on April 25, 1997 and payable on May 27, 1997, to holders of record as of May 14, 1997. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Cayman Islands company with its principal executive offices located at Sofia House, 48 Church Street, Hamilton HM 12, Bermuda. The Company was established in 1993 and provides property catastrophe, property risk excess-of-loss, property pro rata, marine, energy, satellite and financial products reinsurance to insurers on a worldwide basis through its principal wholly owned subsidiary, Global Capital Reinsurance Limited ("Global"). The Company is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is required to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Certain information, as of particular dates, concerning the Company's business, principal physical properties, capital structure, material pending legal proceedings, operating results, financial condition, directors and officers (including their remuneration and the stock options granted to them), the principal holders of the Company's securities, any material interests of such persons in transactions with the Company and certain other matters is required to be disclosed in proxy statements and annual reports distributed to the Company's shareholders and filed with the Commission. Such reports, proxy statements and other information may be inspected and copied at the Commission's public reference facilities at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection at the following regional offices of the Commission: 7 World Trade Center, New York, New York 10048; and 500 West Madison Street, Chicago, Illinois 60661-2511; and copies may be obtained by mail at prescribed rates from the principal office of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains an Internet site on the world wide web at http://www.sec.gov that contains reports, proxy statements and other information. All information contained in this Offer to Purchase or incorporated herein by reference concerning the Company or its subsidiaries and affiliates, or actions or events with respect to any of them, was provided by the Company, and the Purchaser and Parent take no responsibility for the accuracy or completeness of such information or for any failure by such entities to disclose events or circumstances that may have occurred and may affect the significance, completeness or accuracy of any such information. 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT. The Purchaser is a newly incorporated Cayman Islands company organized in connection with the Offer and the Amalgamation and has not carried on any activities other than in connection with the Offer and the Amalgamation. The principal offices of the Purchaser are located at c/o EXEL Limited, Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda. The Purchaser is a wholly owned subsidiary of Parent. Until immediately prior to the time that the Purchaser will purchase Shares pursuant to the Offer, it is not anticipated that the Purchaser will have any significant assets or liabilities or engage in activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer and 10 the Acquisition Agreement. Because the Purchaser is newly formed and has minimal assets and capitalization, no meaningful financial information regarding the Purchaser is available. Parent is a Cayman Islands company with its principal executive offices located at Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda. Parent and its wholly owned subsidiary X.L. Insurance Company, Ltd., a Bermuda company ("X.L."), were incorporated in 1986. These entities were formed in response to a shortage of high excess liability underwriting capacity in the insurance industry. In 1990, X.L. Europe Insurance, a subsidiary of X.L., was organized in the Republic of Ireland to serve the European Community. On November 1, 1995, X.L. Reinsurance Company, Ltd. was incorporated under the laws of Bermuda as a wholly owned subsidiary of X.L. and commenced operations effective December 1, 1995. Parent, through its subsidiaries, provides excess liability insurance coverage to industrial, commercial and other enterprises, directors and officers of such enterprises, professional firms, high excess property coverage, and the assumption of tailored reinsurance contracts on a worldwide basis. Except as described in this Offer, including Schedule I hereto, (i) to the knowledge of the Purchaser and Parent, none of the persons listed in Schedule I to this Offer to Purchase, or any associate or majority-owned subsidiary of the Purchaser, Parent or any of the persons so listed, beneficially owns or has any right to acquire, directly or indirectly, any Shares, and (ii) neither the Purchaser nor Parent nor, to the knowledge of the Purchaser and Parent, any of the persons or entities referred to above, nor any director, executive officer or subsidiary of any of the foregoing, has effected any transaction in the Shares during the past 60 days. Except as provided in the Acquisition Agreement and as otherwise described in this Offer (including Schedule I hereto), none of the Purchaser, Parent nor, to the knowledge of the Purchaser and Parent, any of the persons listed in Schedule I to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guaranties or loans, guaranties against loss, guaranties of profits, division of profits or loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, neither the Purchaser nor Parent nor, to the knowledge of the Purchaser and Parent, any of the persons listed on Schedule I hereto, has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, there have been no contacts, negotiations or transactions between any of the Purchaser, Parent or any of their respective subsidiaries or, to the knowledge of the Purchaser and Parent, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, and election of directors or a sale or other transfer of a material amount of assets. See Section 9. The name, business address, citizenship, present principal occupation and employment history for the past five years of each of the directors and executive officers of Parent and the Purchaser are set forth in Schedule I of this Offer to Purchase. The insurance subsidiaries of the Company and Parent, in the ordinary course of their respective insurance businesses, have entered into insurance and insurance-related transactions with one another. Parent is subject to the information and reporting requirements of the Exchange Act and in accordance therewith is required to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Certain information, as of particular dates, concerning Parent's business, principal physical properties, capital structure, material pending legal proceedings, operating results, financial condition, directors and officers (including their 11 remuneration and stock options granted to them), the principal holders of Parent's securities, any material interests of such persons in transactions with Parent and certain other matters is required to be disclosed in proxy statements and annual reports distributed to Parent's shareholders and filed with the Commission. Such reports, proxy statements and other information may be inspected and copied at the Commission's public reference facilities and should also be available for inspection in the same manner as set forth with respect to the Company in Section 8. 9. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. Parent periodically explores potential acquisition and investment opportunities and, in that regard, Parent has, from time to time, considered the acquisition of a Bermuda-based property catastrophe reinsurance company. In April 1997, Parent engaged Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to act as its financial advisor in connection with a potential acquisition of the Company. On April 22, 1997, DLJ presented its preliminary analysis of a transaction to the Parent's Board of Directors, and DLJ was authorized to communicate to Goldman, Sachs & Co., the Company's financial advisor, Parent's preliminary ideas regarding a potential transaction. On April 24, 1997, Parent, through DLJ, submitted an oral initial indication of interest in acquiring the Company. The Executive Committee of the Board decided to raise for consideration by the full Board Parent's preliminary ideas regarding a potential transaction. On April 25, 1997, the Board met to consider the range of alternatives available to the Company, including the oral indication of interest it received from Parent. The Board, with the assistance of the Company's legal advisors and Goldman, Sachs & Co., reviewed strategic alternatives for the Company, including an analysis of different acquisition partners, the possibility of a sale of the Company or a merger-of-equals, the Company's prospects if the Company were to remain independent and other measures affecting the Company's capital base. The Board appointed a Special Committee consisting of three non-employee directors to consider these matters further, authorized the Special Committee to continue discussions with Parent, and authorized Goldman, Sachs & Co. to solicit in the market preliminary indications of interest from a limited number of other parties identified by the Board in consultation with Goldman, Sachs & Co. regarding a potential transaction involving the Company. Thereafter Parent was invited to conduct a due diligence investigation of the Company and to finalize an acquisition proposal to be submitted to the Company. During the week of April 28, 1997, Goldman, Sachs & Co. contacted a limited number of third parties with respect to a potential transaction involving the Company, as authorized by the Board. On May 3, 1997, a confidentiality agreement was executed and on May 3 and 4, 1997, various meetings, discussions and due diligence sessions occurred among Parent, the Company and their respective financial and legal advisors. On May 5, 1997, Parent and its legal and financial advisors met with representatives of the Company and its legal and financial advisors to negotiate the terms of the proposed Acquisition Agreement. Goldman, Sachs & Co. suggested that Parent consider improving the consideration offered in Parent's initial oral indication of interest. Discussions among the parties and their respective advisors continued through May 7, 1997. On May 8, 1997, the Board of Directors of Parent authorized Parent to enter into the Acquisition Agreement for the acquisition of all of the outstanding Shares for $27.00 per Share in cash. 12 On May 7 and 8, 1997, the Board held meetings to review, with the advice and assistance of the Company's legal advisors and Goldman, Sachs & Co., the proposed Acquisition Agreement and the transactions contemplated thereby, including the Offer and the Amalgamation. At such meetings, counsel to the Company reviewed the terms of the Acquisition Agreement and Goldman, Sachs & Co. reviewed with the Board the range of alternatives available to the Company previously discussed on April 25, 1997, including the results of Goldman, Sachs & Co.'s inquiries to other parties regarding a potential transaction involving the Company. Following a number of questions from, and discussion among, the directors of the Company, the Board, at the meeting held May 8, unanimously (i) approved the Acquisition Agreement and the transactions contemplated thereby, (ii) determined that the Acquisition Agreement and the transactions contemplated thereby are fair to and in the best interests of the Company and the Company's shareholders, and (iii) recommended that the Company's shareholders tender their Shares in the Offer and approve and adopt the Amalgamation. Immediately following the conclusion of the board meetings held on May 8, 1997, the parties thereto executed the Acquisition Agreement. The Company and Parent issued a joint press release on May 8, 1997. The Purchaser commenced the Offer on May 14, 1997. Reference is made to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 for a description of the matters considered by the Board in connection with its actions regarding the Acquisition Agreement and the Offer. 10. ACQUISITION AGREEMENT; PURPOSE OF THE OFFER AND THE ACQUISITION, APPRAISAL RIGHTS AND OTHER MATTERS. THE ACQUISITION AGREEMENT. The following is a summary of the Acquisition Agreement, a copy of which has been filed as an Exhibit to the Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") filed by the Purchaser and Parent with the Commission in connection with the Offer. Such summary is qualified in its entirety by reference to the Acquisition Agreement. THE OFFER. The Acquisition Agreement provides for the commencement of the Offer as promptly as practicable, but in no event later than five business days after the date of the initial public announcement of the execution and delivery of the Acquisition Agreement. The obligation of Parent and the Purchaser to consummate the Offer and to accept for payment and to pay for Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in Section 14 hereof. The Purchaser and Parent have agreed that, without the prior written consent of the Company, no change in the Offer may be made which decreases the Price Per Share payable in the Offer, reduces the number of Shares subject to the Offer, imposes any additional conditions to the Offer, reduces the percentage amount of the Minimum Condition to less than a majority of the outstanding Shares, changes the form of consideration payable in the Offer, or which amends or alters any other term of the Offer in a manner materially adverse to the holders of the Shares. The Company agrees that no Shares held by the Company or any of its subsidiaries will be tendered pursuant to the Offer. THE AMALGAMATION. The Acquisition Agreement provides that, upon the terms and subject to the conditions thereof, and in accordance with the Cayman Law, at the Effective Time, the Purchaser shall be amalgamated with and into the Company. As a result of the Amalgamation, the separate corporate existence of the Purchaser will cease and the Company will continue as the Surviving Company and will become a wholly owned subsidiary of Parent. Upon consummation of the Amalgamation, (i) each Share issued and outstanding immediately prior to the Effective Time (other than any Shares owned by the Company or any of its subsidiaries, which shall be canceled) shall be cancelled, and the holder thereof shall be entitled to receive the Price Per Share and (ii) each option to acquire Shares ("Company Options") under the Share option plans of the Company (the "Company Plans") outstanding immediately prior to the Effective Time shall be canceled, and the holder thereof shall be entitled to receive an amount in cash 13 equal to (x) the product of the number of Shares covered by such Company Option multiplied by the Price Per Share minus (y) the option exercise price payable upon exercise of such option. Pursuant to the Acquisition Agreement, all ordinary shares, par value $.01 per share, of the Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and become at the Effective time such number of newly issued shares of the Surviving Company. The Acquisition Agreement provides that the directors of the Purchaser and any additional individuals designated by Parent at the Effective Time shall be the initial directors of the Surviving Company and that the officers of the Surviving Company shall be the individuals then designated by Parent, each to hold offices in accordance with the applicable provisions of the Memorandum and Articles of Association of the Surviving Company and until their respective successors are duly elected or appointed and duly qualified. Except as may be designated by the Parent, immediately prior to the Effective Time, the current directors of the Company shall cease to be directors of the Company and shall not be directors of the Surviving Company. The Acquisition Agreement provides that the Memorandum and Articles of Association of the Company shall become the Memorandum and the Articles of Association of the Surviving Company and thereafter may be amended as provided by law. SPECIAL MEETING. The Acquisition Agreement provides that, if required by applicable law in order to consummate the Amalgamation, the Company, acting through the Board, shall, upon consummation of the Offer, in accordance with applicable law, (i) duly call, give notice of, convene and hold a special meeting (the "Special Meeting") of its shareholders as soon as practicable following the consummation of the Offer for the purpose of considering and taking action with respect to the Amalgamation; (ii) if required, file with the Commission under the Exchange Act a letter to shareholders, notice of meeting, proxy statement and form of proxy, or an information statement, as the case may be, to be distributed to shareholders in connection with the Amalgamation, including any schedules required to be filed with the Commission in connection therewith (the "Disclosure Statement") and use its best efforts to obtain and furnish the information required to be included by it in the Disclosure Statement and, after consultation with Parent, respond promptly to any comments made by the Commission with respect to the Disclosure Statement and any preliminary version thereof and cause the Disclosure Statement to be mailed to its shareholders at the earliest practicable time following the consummation of the Offer or at such other time as Parent shall direct following consultation with the Company; and (iii) include in the Disclosure Statement that the Board unanimously (a) has approved the Offer and the Amalgamation, (b) has determined that the Offer and the Amalgamation taken together are fair and in the best interests of the Company and its shareholders, and (c) recommends that shareholders of the Company accept the Offer and tender their Shares pursuant to the Offer and adopt and approve the Amalgamation. Parent has agreed that, at the Special Meeting, all of the Shares then owned by Parent and the Purchaser will be voted in favor of the Amalgamation. COMPULSORY ACQUISITION OF MINORITY SHARES. The Acquisition Agreement provides that, in the event that, following the purchase of Shares pursuant to the Offer, Parent, the Purchaser and any other subsidiary of Parent shall own an aggregate of at least ninety percent (90%) of the outstanding Shares, at the request of Parent or the Purchaser, the Company, Parent and the Purchaser will take all necessary and appropriate action to effect the Compulsory Acquisition of those outstanding Shares not owned by Parent, Purchaser or any subsidiary of Parent, in accordance with Cayman Law. DESIGNATION OF DIRECTORS. The Acquisition Agreement provides that, promptly upon purchase by Parent or the Purchaser of such number of Shares that, together with the number of Shares currently owned by Parent or the Purchaser, represents at least a majority of the outstanding Shares and from time to time thereafter prior to the Effective Time, (i) Parent shall be entitled to designate such number of directors, rounded up to the next whole number but in no event more than one less than the total number of directors, on the Board as will give Parent, subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, representation on the Board equal to the product of the number of directors 14 on the Board and the percentage that such number of purchased Shares and Shares currently owned bears to the number of Shares outstanding, and (ii) the Company shall, upon request by Parent, promptly increase the size of the Board to the extent permitted by its Memorandum and Articles of Association and/ or exercise its best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Board and shall cause Parent's designees to be so elected; PROVIDED, HOWEVER, that until the Effective Time (or termination of the Acquisition Agreement) (x) the two members of the Board not otherwise affiliated with Parent or the Purchaser and not employees of the Company or any of its subsidiaries, who shall be designated by the Company, the Purchaser and Parent, or (y) any successor of either of them reasonably satisfactory to Parent and the Purchaser designated by such directors then in office (the "Independent Directors") shall be members of the Board, each of whom shall resign at the Effective Time or such termination; PROVIDED, FURTHER, that if a successor is not so designated after an Independent Director resigns or otherwise leaves office, Parent shall be entitled to designate a successor who meets the requirements of clause (x). At the request of Parent, the Company has agreed to take, at its expense, all action necessary to effect any such election, including mailing to its shareholders the information required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Pursuant to the Acquisition Agreement, at any time Parent's designees constitute a majority of the Board, Parent shall be entitled to designate all of the members of the Board of Directors of each subsidiary of the Parent, subject to Bermuda law. Prior to the Effective Time, following the election or appointment of Parent's designees, any amendment to the Acquisition Agreement, any termination of the Acquisition Agreement by the Company, any extension by the Company of the time for performance of any acts or obligations of Parent or the Purchaser, and any waiver of any of the Company's rights under the Acquisition Agreement requires the concurrence of the Independent Directors then in office. CONDUCT OF BUSINESS OF THE COMPANY. Pursuant to the Acquisition Agreement, the Company has covenanted and agreed that except as expressly contemplated by the Acquisition Agreement, during the period from the date of the Acquisition Agreement to the Effective Time, the Company will, and will cause its Subsidiaries to, conduct its operations according to their ordinary course of business consistent with past practice, and shall use all reasonable best efforts to preserve intact its business organization, to keep available the services of its officers and employees, to maintain all permits, licenses, and franchises from governmental entities required to conduct their businesses as now being conducted and to maintain satisfactory relationships with producers, brokers, insureds, suppliers, distributors, customers and others having business relationships with them and shall take no action which would materially adversely affect the ability of the Company, Parent or the Purchaser to consummate the transactions contemplated by the Acquisition Agreement (it being understood that the Company will discuss with Parent the implementation of the joint venture with Capital Re Corporation and the writing of any insurance thereby or thereunder). The Acquisition Agreement provides that, without limiting the generality of the foregoing, and except as otherwise expressly provided therein, prior to the Effective Time, the Company shall not nor shall it permit any of its subsidiaries to, without the prior written consent of Parent, directly or indirectly: (a) amend the Memorandum or Articles of Association of the Company or any organizational document of any of its subsidiaries; (b) authorize for issuance, issue, sell, deliver, grant any options for, or otherwise agree or commit to issue, sell or deliver any securities of the Company or any of its subsidiaries, except pursuant to and in accordance with the terms of any Company Options outstanding on the date of the Acquisition Agreement; (c) split, combine or reclassify any shares of the Company or any of its subsidiaries, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any such shares or purchase, redeem or otherwise acquire any shares other than the dividend payable on May 27, 1997; (d) (i) create, incur, assume, maintain or permit to exist any long-term debt or any short-term debt for borrowed money except pursuant to the Company's existing credit agreements in the ordinary course of the property catastrophe business to the extent required to pay properly documented claims, (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any person except in the ordinary course of its reinsurance business, consistent with past practices (except customary letters of credit issued 15 in the ordinary course of business consistent with past practices), or (iii) make any loans, advances or capital contributions to, or investments in, any person; (e) (i) increase in any manner (including bonuses) the compensation of any director, officer or other employee of the Company or any of its subsidiaries; (ii) pay or agree to pay any pension, retirement allowance or other employee benefit not required, or enter into or agree to enter into any agreement or arrangement with any such director, officer or employee, whether past or present, relating to any such pension, retirement allowance or other employee benefit; (iii) grant any severance or termination pay to, or enter into any employment or severance agreement with, any such director, officer or other employee; or (iv) become obligated under any new pension plan, welfare plan, multi-employer plan, employee benefit plan, benefit arrangement, or similar plan or arrangement, not in existence on the date of the Acquisition Agreement, including any bonus, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other benefit plan, agreement or arrangement, or employment or consulting agreement with or for the benefit of any person, or amend any of such plans or any of such agreements in existence on the date thereof; (f) except as required by the Acquisition Agreement, authorize, recommend, propose or announce an intention to authorize, recommend or propose, or enter into, any agreement in principle or any agreement with respect to any plan of liquidation or dissolution, any acquisition of a material amount of assets or securities, any sale, transfer, lease, license, pledge, mortgage, or other disposition or encumbrance of any assets or securities or any change in the capitalization of the Company or any of its subsidiaries (other than upon exercise of the Company Options outstanding on the date of the Acquisition Agreement) or, except for reinsurance agreements entered into in the ordinary course of business, consistent with past practice, any other material agreements, commitments or contracts or any amendment or modification thereof or any release or relinquishment of any material rights thereunder; (g) knowingly undertake any act, or suffer to exist any condition, causing any insurance policy naming it as a beneficiary or a loss payee to be canceled or terminated; (h) enter into any hedging, option, derivative or other similar transaction, except in the ordinary course of business consistent with past practices and following written notice to Parent; or (i) agree to do any of the foregoing. ACCESS TO INFORMATION; CONFIDENTIALITY. The Acquisition Agreement provides that, from the date of the Acquisition Agreement until the Effective Time, the Company shall (x) give Parent and its authorized representatives (including counsel, consultants, financial advisors, accountants and auditors) reasonable access during normal business hours to all facilities, personnel and operations and to all books and records of it and its subsidiaries, (y) permit Parent to make such inspections as it may reasonably require and (z) cause its officers and those of its subsidiaries to furnish Parent with such financial and operating data and other information with respect to its business and properties as Parent may from time to time reasonably request. Also, pursuant to the Acquisition Agreement, each of the Company, Parent and the Purchaser will hold and will use its best efforts to cause all of its employees and representatives and the employees and representatives of its subsidiaries to hold in strict confidence pursuant to the Confidentiality Agreement, dated as of April 28, 1997, between Parent and the Company (the "Confidentiality Agreement)" all documents and information furnished to the other in connection with the transactions contemplated by the Acquisition Agreement as if each such employee or representative were a party thereto. ACQUISITION PROPOSALS. Pursuant to the Acquisition Agreement, the Company has represented and warranted to, and covenanted and agreed with, Parent and the Purchaser that neither the Company nor any of its subsidiaries has any agreement, arrangement or understanding with any potential acquiror that, directly or indirectly, would be violated, or require any payments, by reason of the execution, delivery and/ or consummation of the Acquisition Agreement. The Acquisition Agreement provides that the Company shall, and shall cause its subsidiaries and use its best efforts to cause its and their officers, directors, employees, investment bankers, attorneys and other agents and representatives, to (a) immediately cease any existing discussions or negotiations with any person other than Parent or the Purchaser, (b) not solicit, initiate, continue, facilitate or encourage (including by way of furnishing or disclosing non-public information), directly or indirectly, any inquiries, proposals or offers from any such person relating to any 16 acquisition or purchase of a material portion of the assets or business of, or any significant equity interest in (including by way of tender offer), or any amalgamation, merger, consolidation or business combination with, or any recapitalization or restructuring, or any similar transaction involving, the Company or any of its subsidiaries (collectively, an "Acquisition Transaction"), or (c) not negotiate, explore or otherwise communicate in any way, directly or indirectly, with any person other than Parent or the Purchaser with respect to any Acquisition Transaction or not enter into, approve or recommend any agreement, arrangement or understanding requiring the Company to abandon, terminate or fail to consummate the Offer and/ or the Amalgamation or any other transaction contemplated by the Acquisition Agreement. The Acquisition Agreement provides, however, notwithstanding the foregoing, that prior to the purchase of Shares pursuant to the Offer, the Company may, in response to an unsolicited written proposal with respect to an Acquisition Transaction involving the acquisition of all of the Shares (or all or substantially all of the assets of the Company and its subsidiaries) from a person other than the Purchaser or Parent (which proposal (I) is not subject to a financing condition and is from a person that Goldman, Sachs & Co. or another nationally recognized investment bank advises in writing is financially capable of consummating such proposal or (II) is subject to financing, but is from a person that Goldman, Sachs & Co. or another nationally recognized investment bank advises in writing is financially capable of achieving such financing to consummate such proposal), (i) furnish or disclose non-public information to such person and (ii) negotiate, explore or otherwise communicate with such person, in each case only if and to the extent that (a) the Board determines reasonably and in good faith by a majority vote (after receipt of written advice of the Company's outside legal counsel that failing to take such action would, in all likelihood, constitute a breach of the fiduciary duties of the Board to the Company's shareholders under applicable law) that taking such action would, in all likelihood, lead to an Acquisition Transaction that, based upon the written advice of Goldman, Sachs & Co., is more favorable to the Company's shareholders than the Offer and Amalgamation and that failing to take such action would, in all likelihood, constitute a breach of fiduciary duties of the Board to the Company's shareholders under applicable law (the proposal with respect to an Acquisition Transaction meeting the requirements of the parenthetical clause immediately preceding clause (i) and this clause (a), a "Superior Proposal"), (b) prior to furnishing or disclosing any non-public information to, or entering into discussions or negotiations with, such person, the Company receives from such person an executed confidentiality agreement with terms no less favorable to the Company than those contained in the Confidentiality Agreement, but which confidentiality agreement shall not provide for any exclusive right to negotiate with the Company or any payments and (c) the Company advises Parent of all such non-public information delivered to such person concurrently with such delivery; PROVIDED, HOWEVER, that the Company shall not, and shall cause its affiliates not to, enter into a definitive agreement with respect to a Superior Proposal unless (x) the Company concurrently terminates the Acquisition Agreement in accordance with the terms hereof and pays any amounts required thereunder and (y) such agreement permits the Company to terminate it if it receives a Superior Proposal, such termination and related provisions to be on terms no less favorable to the Company, including as to fees and reimbursement of expenses, as those contained in the Acquisition Agreement. The Company shall promptly (but in any event within one day of the Company becoming aware of same) advise Parent of the receipt by the Company, any of its subsidiaries or any of the Company's or any subsidiary's officers, directors, employees, investment bankers, attorneys or other agents or representative of any inquires or proposals relating to an Acquisition Transaction and any action taken pursuant thereto. The Company shall promptly provide Parent with a copy of any such inquiry or proposal in writing and a written statement with respect to any such inquiries or proposals not in writing, which statement shall include the identity of the parties making such inquiries or proposal and the terms thereof. The Company shall, from time to time, promptly inform Parent of the status and content of any discussions regarding any Acquisition Transaction with a person other than Parent or the Purchaser. For the avoidance of doubt, the Company agrees that it will not enter into any agreement with respect to a Superior Proposal unless and until Parent has been given at least five business days notice prior to the entering into such agreement to match the terms of such agreement. The Company has obtained the agreement of each member of its Board of Directors and the board of directors of each of its subsidiaries and of its executive officers and 17 investment bankers that each such person will comply with such provisions set forth herein as if it were a party to the Acquisition Agreement. EFFECT ON COMPANY OPTIONS AND AGREEMENTS. The Acquisition Agreement provides that the Company will use its best efforts (including, to the extent possible, by way of amendment to the Company Plans) so that, upon consummation of the Offer, each outstanding Company Option shall be canceled in exchange for an amount of cash equal to (x) the product of the number of Shares covered by such Company Option multiplied by the Price Per Share minus (y) the option exercise price payable upon exercise of such option. INDEMNIFICATION. Pursuant to the Acquisition Agreement, Parent shall cause the Surviving Company to indemnify, defend and hold harmless the present and former officers, directors, employees and agents of the Company and its subsidiaries (the "Indemnified Parties") against all losses, obligations, claims, damages, expenses or liabilities arising out of actions or omissions or alleged actions or omissions occurring at or prior to the Effective Time (including, without limitation, in connection with the transactions contemplated by the Acquisition Agreement) to the same extent and on the same terms and conditions provided for in the Company's Memorandum and Articles of Association in effect at the date of the Acquisition Agreement, to the extent permitted under applicable law (which terms and conditions shall not be amended in any manner which adversely affects any Indemnified Party for a period of six years, including provisions relating to advances of expenses incurred in the defense of any action or suit; PROVIDED, that in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification (and to advancement of expenses) in respect of each such claim shall continue until final disposition of such claim). For a period of six years after the Effective Time, Parent shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by the Company (provided that Parent may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous) with respect to claims arising from facts or events which occurred before the Effective Time; PROVIDED, HOWEVER, that Parent or the Surviving Company shall not be obligated to incur any annual premium in excess of 200% of the last annual aggregate premium paid prior to the date of the Acquisition Agreement, for all current directors' and officers' liability insurance policies maintained by the Company, which the Company represents and warrants to be $604,000 (the "Current Premium"). If such premiums for such insurance would at any time exceed 200% of the Current Premium, then the Surviving Company shall cause to be maintained policies of insurance which, in the Surviving Company's good faith determination, provide the maximum coverage available at an annual premium equal to 200% of the Current Premium. If the Surviving Company or any of its respective successors or assigns (i) reorganizes or consolidates with or merges into any other person and is not the resulting, continuing or surviving corporation or entity of such reorganization, consolidation or merger or (ii) liquidates, dissolves or transfers all or substantially all of its properties and assets to any person or persons, then, and in such case, proper provision will be made so that the successors and assigns of the Surviving Company assumes all of the obligations of the Surviving Company, as the case may be, set forth herein. REASONABLE BEST EFFORTS. The Acquisition Agreement provides that, subject to its terms and conditions and applicable law, each of the Company, Parent and the Purchaser shall use reasonable best efforts promptly to take, or cause to be taken, all other actions and do, or cause to be done, all other things necessary, proper or appropriate (including obtaining all material consents and making all material filings) under applicable laws and regulations to consummate and make effective the transactions contemplated by the Acquisition Agreement. REPRESENTATIONS AND WARRANTIES. In the Acquisition Agreement, the Company has made customary representations and warranties to Parent and the Purchaser with respect to, among other things, its organization, capitalization, authority, financial statements, public filings, employees, brokers' fees, state antitakeover statutes, compliance with laws, legal proceedings, taxes, consents and approvals, and the absence of certain changes with respect to the Company since March 31, 1997. 18 CONDITIONS TO THE AMALGAMATION. The Acquisition Agreement provides that the respective obligations of the Company, Parent and the Purchaser to effect the transactions contemplated therein shall be subject to the satisfaction at or prior to the Effective Time of each of the following conditions: (a) the Purchaser shall have purchased all Shares duly tendered and not withdrawn, pursuant to the terms of the Offer and subject to the terms thereof; (b) the Amalgamation shall have been approved by the affirmative vote of the Company's shareholders by the requisite vote in accordance with the Cayman Law and pursuant to the appropriate order of the court on the application of Company; (c) the Amalgamation shall have been sanctioned by the court in accordance with the Cayman Law on the petition of the Court by the Company; (d) any required approval of the Minister of Finance under the Insurance Act 1978 of Bermuda and of the Registrar under the Cayman Law shall have been obtained; (e) there shall not be in effect any order, decree or ruling or other action restraining, enjoining or otherwise prohibiting the Amalgamation, which order, decree, ruling or action shall have been issued or taken by any court of competent jurisdiction or other governmental body located or having jurisdiction within the Cayman Islands, Bermuda or the United States; and (f) a copy of the order of the Court sanctioning the Amalgamation shall have been delivered to the Registrar for registration in accordance with the Cayman Law. TERMINATION; FEES. The Acquisition Agreement provides that: (a) The Acquisition Agreement may be terminated, and the Offer and Amalgamation abandoned, at any time prior to the Effective Time, (i) by mutual written consent of Parent, the Purchaser and the Company; (ii) by Parent and the Purchaser or the Company (x) if any court of competent jurisdiction in the Cayman Islands, Bermuda or the United States or other Cayman Islands, Bermuda or United States governmental body shall have issued an order, decree or ruling or taken any other action restraining, enjoining, not approving or otherwise prohibiting the Offer or the Amalgamation and such order, decree, ruling or other action is or shall have become final and nonappealable; PROVIDED, HOWEVER, that the party seeking to so terminate the Acquisition Agreement shall have used reasonable best efforts to remove or lift such order, decree or ruling or (y) if the conditions to consummation of the Amalgamation are not satisfied by March 31, 1998; (iii) by Parent and the Purchaser if the Purchaser shall have (x) failed to commence the Offer within five business days following the date of the initial public announcement of the Offer, (y) terminated the Offer or (z) failed to pay for Shares pursuant to the Offer by December 31, 1997 (unless, in any such case, such failure or termination results from a breach of any representation, warranty, covenant or agreement of Parent or the Purchaser); (iv) by the Company if (A) the Purchaser shall have (x) failed to commence the Offer within five business days following the date of the initial public announcement of the Offer, (y) terminated the Offer, or (z) failed to pay for Shares pursuant to the Offer by December 31, 1997 (unless, in any such case, such failure or termination results from a breach of any representation, warranty, covenant or agreement of the Company), or (B) prior to the purchase of Shares pursuant to the Offer, Company shall, in compliance with "--ACQUISITION PROPOSALS" above, concurrently be entering into a definitive agreement with respect to a Superior Proposal; (v) by Parent and the Purchaser prior to the purchase of Shares pursuant to the Offer, if (A) there shall have been a breach of any representation or warranty (without giving effect to any materiality or similar qualifications contained therein) on the part of the Company having a Material Adverse Effect (as defined in the Acquisition Agreement), (B) there shall have been a breach of any covenant or agreement on the part of the Company resulting in a Material Adverse Effect which breach shall not have been cured within ten (10) days following written notice to the Company of such breach, (C) the Company shall engage in negotiations (in violation of the Acquisition Agreement) with any person other than Parent or the Purchaser that has proposed an Acquisition Transaction, (D) the Board shall have withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner adverse to Parent or the Purchaser its approval or recommendation of the Offer, the Acquisition Agreement or the Amalgamation or shall have recommended a proposal with respect to an Acquisition Transaction, or shall have adopted any resolution to effect any of the foregoing, or (E) the Minimum Condition shall not have been satisfied by the Expiration Date and a third party shall have made and not withdrawn a proposal (information concerning which has been or is made publicly available) with respect to an Acquisition Transaction; or (vi) by the Company if 19 (x) there shall have been a breach of any representations or warranty (without giving effect to any materiality or similar qualifications contained therein) on the part of Parent or the Purchaser having a material adverse effect on the ability of Parent or the Purchaser to consummate the Offer or the Amalgamation or (y) there shall have been a breach of any covenant or agreement on the part of Parent or the Purchaser resulting in a material adverse effect on the ability of Parent or the Purchaser to consummate the Offer or the Amalgamation, which breach shall not have been cured within ten (10) days following written notice to Parent and the Purchaser of such breach. (b) In the event of the termination and abandonment of the Acquisition Agreement as described above, the Acquisition Agreement shall forthwith become void and have no effect, without any liability on the part of any party or its affiliates, directors, officers or shareholders, other than with respect to the Confidentiality Agreement and as described herein and in (c) below. (c) (i) Upon the termination of the Acquisition Agreement for any reason prior to the purchase of Shares by the Purchaser pursuant to the Offer (other than pursuant to (a)(i), (a)(ii) or (a)(vi) above), the Company shall reimburse Parent, the Purchaser and their affiliates (not later than one business day after request therefor) for all out-of-pocket fees and expenses (subject to a maximum amount of $2,000,000) reasonably incurred by any of them or on their behalf in connection with the Offer and the Amalgamation and the consummation of all other transactions contemplated by the Acquisition Agreement (including fees payable to financing sources, investment bankers, counsel to any of the foregoing and accountants); (ii) if (A) the Acquisition Agreement is terminated for any reason (other than pursuant to (a)(i), (a)(ii) or (a)(vi) above) and, not later than the first anniversary of such termination, the Company enters into an agreement with respect to an Acquisition Transaction, or an Acquisition Transaction occurs involving any person (or any affiliate thereof) other than Parent or the Purchaser (x) with whom the Company (or any of its agents or representatives) had communications with a view to an Acquisition Transaction, (y) to whom the Company (or any of its agents or representatives) furnished information with a view to an Acquisition Transaction or (z) who had submitted a proposal or expressed an interest in an Acquisition Transaction, in any such case, prior to such termination or (B) Company terminates the Acquisition Agreement pursuant to (a)(iv)(B) above, the Company shall pay to Parent and the Purchaser, upon such entry into or such occurrence of an Acquisition Transaction in the case of (c)(ii)(A) above and immediately upon such termination in the case of (c)(ii)(B) above, a fee of $7,500,000 in cash, however, that the Company in no event shall be obligated to pay more than one such $7,500,000 fee with respect to all such agreements and occurrences and such termination; and (iii) except as specifically provided above, each party shall bear its own expenses in connection with the Acquisition Agreement and the transactions contemplated thereby, including the preparation, execution and performance of the Acquisition Agreement and the transactions contemplated thereby, and all fees and expenses of their respective investment bankers, finders, brokers, agents, representatives, counsel and accountants. PURPOSE OF THE OFFER AND THE ACQUISITION, APPRAISAL RIGHTS AND OTHER MATTERS. PURPOSE OF THE OFFER. The purpose of the Offer is for the Purchaser to acquire control of, and the entire equity interest in, the Company. The Offer is intended to increase the likelihood that the Acquisition will be effected. The Purchaser currently does not intend to permit the Company to continue to pay dividends on the Shares until the Acquisition has been consummated, except that the Company may pay the $0.62 per Share dividend declared on April 25, 1997 and payable on May 27, 1997, to holders of record as of May 14, 1997. Upon consummation of the Offer, the Company will become a subsidiary of the Purchaser. For other related matters, see "--Other" below. COMPULSORY ACQUISITION. If, following the consummation of the Offer, the Purchaser has acquired at least ninety percent (90%) of the Shares then, subject to and in accordance with Cayman Law, the Purchaser currently intends, promptly and in no event later than two months after the expiration of four months from the commencement of the Offer, to give notice to each shareholder that has not tendered his or her Shares to the Purchaser pursuant to the Offer (a "Dissenting Shareholder") that it desires to 20 acquire such Dissenting Shareholder's Shares pursuant to a Compulsory Acquisition, and if no Order (as defined herein under APPRAISAL RIGHTS) is obtained to the contrary, to acquire such Shares. A Compulsory Acquisition will not require any approval by the other shareholders of the Company. The Purchaser is making the Offer because the Purchaser believes that it is the means by which it will most likely be able to effect the Acquisition, while at the same time affording all other shareholders an equal opportunity to sell their Shares at the cash Price Per Share offered in the Offer. Schedule II sets forth, in their entirety, relevant provisions of Caymans Law. ACQUISITION THROUGH AMALGAMATION. If the Purchaser is not able to acquire all remaining Shares pursuant to a Compulsory Acquisition for any reason, then depending upon the results of the Offer and other relevant factors, the Purchaser currently intends to proceed with an Amalgamation under Section 85 of the Cayman Law, subject to receiving the necessary shareholder, regulatory and Court approvals in which case each Share would be converted into the right to receive the same Price Per Share in cash as those paid in the Offer. Under Section 85 of the Cayman Law, except as otherwise described below, upon an application to the Cayman Islands Court by the Company and/or the Purchaser, the Court may order a meeting of the shareholders of the Company to approve and adopt the Amalgamation. At such meeting, the affirmative vote of the holders of seventy-five percent (75%) of each class of the Shares eligible to vote thereon is required to approve and adopt the Amalgamation. Upon a subsequent application to the Court, the adopted and approved the Amalgamation shall, if sanctioned by the Court, be binding on all shareholders of the Company. The Court may make provisions for such incidental, consequential, and supplemental matters as are necessary to secure that the Amalgamation is fully and effectively carried out. Under the Acquisition Agreement, the Purchaser will be obligated to vote its Shares in favor of the Amalgamation. Schedule II sets forth, in their entirety, relevant provisions of Caymans Law. OTHER. If the Purchaser (a) is not able to acquire all remaining Shares pursuant to a Compulsory Acquisition for any reason, and (b) is not able to effect the Amalgamation for any reason, the Purchaser will explore other alternatives to complete the Acquisition, including any or all of the following: the Purchaser may seek to acquire either additional Shares or the entire remaining equity interest in the Company, and the Purchaser may seek to pursue other transactions with the Company and/or its subsidiaries, which may include extraordinary corporate transactions such as a reorganization, liquidation, reincorporation to a jurisdiction that permits mergers or amalgamations, reverse stock split, or sale or transfer of some or all of the Company's assets, including the capital stock of Global. Although the Purchaser currently has no plans or proposals with respect to such other means, future Share acquisitions may be by means of open market or privately negotiated purchases, or otherwise. Such transactions might involve the exchange of cash or securities of the Purchaser and/or Parent, or some combination of cash and securities, and may be on terms and at prices more or less favorable than those of the Offer. The Purchaser and/or Parent may also choose to purchase some or all of the assets of the Company, including the capital stock of Global. Such purchase may require a vote of the Board and, if necessary, a vote of the shareholders of the Company. The Purchaser, as a holder of a majority of Shares at such a meeting, may be able, on its own, to effect such shareholder approval, if such approval is necessary or is otherwise sought. Such a proposed transaction may have the effect of reorganizing the Company in a manner similar to the Amalgamation. The decision to enter into such future transactions and the forms they might take will depend upon whether such transactions are in the best interests of Parent and relevant legal considerations and circumstances then existing, including the financial resources of the Purchaser and Parent and the business, tax and accounting objectives of the Purchaser and Parent, the performance of the Shares in the market, if any, the availability and alternative uses of funds, money market and stock market conditions and general economic conditions. The Purchaser and/or Parent also may engage in certain of such transactions during the period following the expiration or termination of the Offer and prior to any Compulsory Acquisition. 21 The Purchaser and Parent intend to continue to evaluate the business and operations of the Company on an ongoing basis and may determine to engage in one or more of the foregoing or other transactions with the Company in the future. Upon the conclusion of the Offer, the Purchaser intends to seek to remove, or cause the Company to seek resignations from, members of the current Board, have persons designated by the Purchaser elected or appointed to the Board, and may reduce or increase the size of the Board. The Purchaser currently does not intend to permit the Company to continue to pay dividends on the Shares until the Acquisition has been consummated, except that the Company may pay the $0.62 per Share dividend declared on April 25, 1997 and payable on May 27, 1997, to holders of record as of May 14, 1997. See Section 10. It is the present intention of the Purchaser to seek to cause the Company to make a certification to effect termination of registration of the Shares under the Exchange Act as soon as practicable after the consummation of the Offer. It is also the present intention of the Purchaser to cause the Company to seek to delist the Shares from Nasdaq as soon as practicable after the consummation of the Offer. If the Company does terminate registration under the Exchange Act and/or delist the Shares from trading on Nasdaq, the liquidity of the Shares will be severely and adversely affected. See Section 12. If the Acquisition is consummated, the shareholders of the Company other than the Purchaser and its affiliates will no longer have an equity interest in the Company and therefore will not share in the Company's future earnings and growth, if any. Additionally, Parent will, in effect, have a 100% interest in the net book value and net earnings of the Company, and be entitled to all benefits resulting from such interest. These benefits include complete management and investment discretion regarding the future conduct of the Company's business, all income generated by the Company's operations and any future increase in the Company's value. Similarly, Parent also will, in effect, bear the risk of any losses incurred by the Company's operations or any decrease in the value of the Company. The Commission has adopted Rule 13e-3 under the Exchange Act, which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Amalgamation. However, Rule 13e-3 would be inapplicable if the Amalgamation is consummated within one year after the purchase of the Shares pursuant to the Offer. If applicable, Rule 13e-3 requires, among other things, that certain financial information concerning the fairness of the proposed transaction and the consideration offered to minority shareholders in such transaction be filed with the Commission and disclosed to shareholders prior to the consummation of the transaction. APPRAISAL RIGHTS. None of the Cayman Law, the Company's Articles of Association, the Company's Memorandum of Association, nor the Offer provides for appraisal rights or other similar rights. Appraisal rights will not be voluntarily provided by the Company or the Purchaser. Under Section 86(1)(e) of the Cayman Law, if the Company has made an application to the Cayman Islands Court for the sanctioning of the Amalgamation, and it is shown to the Court that the Amalgamation has been proposed for the purpose of an amalgamation of the Purchaser and the Company, and that under the Amalgamation all of the property of the Company is to be transferred to the Surviving Company, the Court may make provision for any person who, within such time and such manner as the Court directs, dissents from the Amalgamation. Under Section 87(1) of the Cayman Law, if the Purchaser acquires (or receives unconditional acceptances of the Offer in respect of) at least ninety percent (90%) of the Shares within four months after the commencement of the Offer, then it may give notice (the "Notice") at any time within two months following the expiration of the four-month period to any Dissenting Shareholder that it desires to acquire the Shares held by such Dissenting Shareholder, on the same terms as the Offer. Each Dissenting Shareholder will then have one month to make an application to the Cayman Islands Court for an order (an "Order") preventing the Purchaser from so acquiring his Shares. If such application is not timely made or if an Order is not obtained by such Dissenting Shareholder, then the Purchaser would become entitled 22 to acquire such Dissenting Shareholder's Shares upon transmission of a copy of the Notice to the Company and payment of the Per Share Price to the Company, at which point the Company would be required to register the Purchaser as the holder of those Shares. Any sums paid to the Company in respect of Shares to be acquired from Dissenting Shareholders pursuant to a Compulsory Acquisition under Section 87 are required to be held by the Company in trust for such Dissenting Shareholders. 11. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the Purchaser to purchase all of the Shares (other than Shares owned by Parent and its subsidiaries) pursuant to the Offer and the Amalgamation and to pay related fees and expenses is estimated to be approximately $656.3 million. The Purchaser expects to obtain such funds from Parent. Parent will obtain such funds from a combination of cash on hand, liquidation of certain investments and bank borrowings. The consummation of the Offer and Amalgamation is not conditioned on obtaining financing. 12. POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ NATIONAL MARKET; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS. The purchase of Shares pursuant to the Offer will reduce the number of holders of Shares and the number of Shares that might otherwise trade publicly. Consequently, depending upon the number of Shares purchased and the number of remaining holders of Shares, the purchase of Shares pursuant to the Offer may adversely affect the liquidity and market value of the remaining Shares held by the public. The extent of the public market for the Shares and, according to the published guidelines of the National Association of Securities Dealers, Inc., the continued trading of the Shares on Nasdaq, after commencement of the Offer, will depend upon the number of holders of Shares remaining at such time, the interest in maintaining a market in such Shares on the part of securities firms, the possible termination of registration of such Shares under the Exchange Act, as described below, and other factors. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, trading of the Shares on Nasdaq is discontinued, the liquidity of and market for the Shares would be adversely affected. Parent and the Purchaser cannot predict whether or to what extent the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future prices to be greater or less than the Price Per Share. The Shares are currently registered under Section 12(g) of the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application by the Company to the Commission if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its shareholders and to the Commission and could make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with shareholders' meetings and the related requirement of furnishing an annual report to shareholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or 144A promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. The Purchaser intends to seek to cause the Company to terminate the registration of the Shares under the Exchange Act as soon after the completion of the Offer as the requirements for such termination are met. If registration of the Shares is not terminated prior to the Amalgamation, the registration of the Shares under the Exchange Act will be terminated following consummation of the Amalgamation. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those 23 described above regarding listing and market quotations, it is possible that, following the Offer, the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. If registration of Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or be eligible for quotation on Nasdaq. 13. DIVIDENDS AND DISTRIBUTIONS. The Acquisition Agreement provides that the Company shall not, between the date of the Acquisition Agreement and the Effective Time of the Amalgamation, without the prior written consent of Parent, (a) authorize for issuance, issue, sell, deliver, grant any options for, or otherwise agree or commit to issue, sell or deliver any shares of any class of capital stock of the Company or any securities convertible into shares of any class of capital stock of the Company, except pursuant to and in accordance with the terms of currently outstanding options; or (b) split, combine or reclassify any shares of capital stock of the Company, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of capital stock of the Company or purchase, redeem or otherwise acquire any shares of the Company's capital stock or that of any of the Company's subsidiaries, except that the Company may set aside for payment, and pay a quarterly dividend of $0.62 per Share on May 27, 1997, to shareholders of record on May 14, 1997. See Sections 6 and 10. If, however, the Company should, while the Offer is outstanding, (i) split, combine or otherwise change the Shares or its capitalization, (ii) acquire or otherwise cause a reduction in the number of outstanding Shares or (iii) issue or sell any additional Shares (other than pursuant to outstanding options to purchase Shares), shares of any other class or series of capital stock, other voting securities or any securities convertible into, or options, rights, or warrants, conditional or otherwise, to acquire, any of the foregoing, then, without prejudice to Purchaser's rights under Section 14, Purchaser may (subject to the provisions of the Acquisition Agreement) make such adjustments to the purchase price and other terms of the Offer (including the number and type of securities to be purchased) as it deems appropriate to reflect such split, combination or other change, acquisition, reduction, issuance or sale. If, on or after May 8, 1997, the Company should declare or pay any dividend on the Shares or make any other distribution (including the issuance of additional shares of capital stock pursuant to a stock dividend or stock split, the issuance of other securities or the issuance of rights for the purchase of any securities) with respect to the Shares that is payable or distributable to shareholders of record on a date prior to the transfer to the name of Purchaser or its nominee or transferee on the Company's stock transfer records of the Shares purchased pursuant to the Offer (other than a quarterly dividend of $0.62 per Share for which the Company may set aside payment, and pay, on May 27, 1997, to shareholders of record on May 14, 1997) then, without prejudice to Purchaser's rights under Section 14, (i) the Price Per Share payable by Purchaser pursuant to the Offer will be reduced (subject to the Acquisition Agreement) to the extent any such dividend or distribution is payable in cash and (ii) any non-cash dividend, distribution or right shall be received and held by the tendering shareholder for the account of Purchaser and will be required to be promptly remitted and transferred by each tendering shareholder to the Depositary for the account of Purchaser, accompanied by appropriate documentation of transfer. Pending such remittance and subject to applicable law, Purchaser will be entitled to all the rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Purchaser in its sole discretion. 14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer and in addition to (and not in limitation of) the Purchaser's rights to extend and amend the Offer at any time in its sole discretion, the Purchaser shall not be required to accept for payment or pay for any tendered Shares, and may postpone the acceptance for payment of or payment for tendered Shares and may terminate or amend the Offer if in the Purchaser's judgment (i) the Minimum Condition shall not have been satisfied, or (ii) any of the following shall exist or occur: 24 (a) (x) there shall be instituted or pending any action or proceeding, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction shall be enacted, promulgated, entered, enforced, amended or made applicable to the Purchaser or Parent or any of their affiliates or to the Offer or the Amalgamation by or before any Cayman Islands, Bermuda, United States or other government or governmental, regulatory or administrative authority or agency or by or before any court or tribunal, (i) challenging or restricting the acquisition by the Purchaser or any affiliate of the Purchaser, in whole or in part, of the Shares, seeking, directly or indirectly, to restrain, materially delay or prohibit the making or consummation of the Offer or seeking to obtain any material damages or otherwise, directly or indirectly, relating to the transactions contemplated by the Offer or the Amalgamation, (ii) seeking to prohibit, restrict or limit the ownership or operation by the Purchaser or Parent or any of their affiliates of all or any material portion of its or the Company's business or assets, or to compel the Purchaser or Parent or any of their affiliates to dispose of or hold separate all or any material portion of its or the Company's business or assets as a result of the Offer or the Amalgamation, (iii) making the purchase of, or payment for, some or all of the Shares illegal, (iv) seeking to impose limitations on the ability of the Purchaser or Parent or any of their affiliates effectively to acquire, hold or exercise rights of ownership of any Shares now owned or hereafter purchased or to be purchased, including the right to vote with respect to, such Shares on any matter properly presented to the shareholders of the Company, (v) imposing any material limitations on the ability of the Purchaser or Parent or any of their affiliates effectively to acquire, operate or hold, or require Parent, the Purchaser or the Company or any of the respective subsidiaries to dispose of or hold separate, in any material respect the business and operations of the Company, or (vi) restricting any material future business activity by Parent, the Purchaser or the Company or any of their respective subsidiaries or (y) any necessary approvals by any government or governmental, regulatory or administrative authority or agency necessary to consummate the Offer shall not have been obtained; (b) any fact or circumstance exists or will have occurred that has a material adverse effect on the business, operations, assets, condition (financial or other), prospects or results of operations of the Company and its subsidiaries taken as a whole; (c) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange, or on Nasdaq or otherwise in the over-the-counter market, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any material limitation (whether or not mandatory) by any governmental authority or agency, or any other event which would significantly affect the extension of credit by banks or other lending institutions in the United States, (v) any imposition of currency controls in the United States or a material change in exchange rates or a suspension of, or material limitation on, the markets therefor, or (vi) in the case of any of the foregoing existing at the time of commencement of the Offer, any material worsening or acceleration thereof; (d) it shall have been publicly disclosed after the date of the Acquisition Agreement or Parent or the Purchaser shall have learned or become aware that any person (including the Company or any of its subsidiaries or affiliates), or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired (including by the formation of any groups) 5.0% or more of any class or series of shares of the Company (including the Shares) or its subsidiaries or shall have been granted any option or right to acquire 5.0% or more of any class or series of shares of the Company (including the Shares) or its subsidiaries, other than acquisitions of Shares for bona fide arbitrage positions, and such person or group shall not have tendered (and not withdrawn) all of the Shares owned beneficially or of record by it at or prior to the Expiration Date; (e) the representations and warranties (without giving effect to any materiality or similar qualifications contained therein) made by the Company in the Acquisition Agreement shall have failed to be true and correct on the date of the Acquisition Agreement or on the Expiration Date as though such representations and warranties had been made at and on such dates (other than representations and 25 warranties expressly made as of a specific other date), except for such failures which, individually or in the aggregate, would not have a material adverse effect on the business, operations, assets, condition (financial or other), prospects or results of operations of the Company and its subsidiaries taken as a whole; or (f) the Acquisition Agreement shall be terminated in accordance with its terms. The foregoing conditions are for the sole benefit of the Purchaser and Parent and may be asserted by the Purchaser or Parent or any of their affiliates or may be waived by any of them in whole or in part at any time and from time to time in their sole discretion. See Section 10 for a full description of the Purchaser's ability to amend the Offer. The failure to exercise any of the foregoing rights shall not be deemed a waiver of any right, and each right shall be deemed a continuing right which may be asserted at any time and from time to time for so long as such right exists. 15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as set forth in this Offer to Purchase, based on its review of publicly available filings by the Company with the Commission and other publicly available information regarding the Company, neither Parent nor the Purchaser is aware of any licenses or regulatory permits that appear to be material to the business of the Company and its subsidiaries, taken as a whole, and that might be adversely affected by the Purchaser's acquisition of Shares (and the indirect acquisition of the stock of the Company's subsidiaries) as contemplated herein, or any filings, approvals or other actions by or with any domestic, foreign or supranational governmental authority or administrative or regulatory agency that would be required for the acquisition or ownership of the Shares (or the indirect acquisition of the stock of the Company's subsidiaries) by the Purchaser pursuant to the Offer as contemplated herein, except for certain approvals necessary under the laws and regulations of Bermuda applicable to the direct or indirect acquisition of Global. Should any such approval or other action be required, it is presently contemplated such approval or other action would be sought. Should any such approval or other action be required there can be no assurance that any such approval or action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the Company's or its subsidiaries' businesses, or that certain parts of the Company's, Parent's, the Purchaser's or any of their respective subsidiaries' businesses might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or action or in the event that such approvals were not obtained or such actions were not taken. The Purchaser's obligation to purchase and pay for Shares is subject to certain conditions, including conditions with respect to litigation and governmental actions. See the Introduction and Section 14 for a description thereof. TAKEOVER LAWS. For a discussion of the Cayman Law provisions to be used in the Amalgamation, see Section 10. The Purchaser does not believe that any state takeover statutes apply to the Offer or the Amalgamation and has not attempted to comply with any state takeover statutes in connection with the Offer or the Amalgamation. The Purchaser reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer or the Amalgamation and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of that right. In the event that it is asserted that one or more takeover statutes apply to the Offer or the Amalgamation, and it is not determined by an appropriate court that such statute or statutes do not apply or are invalid as applied to the Offer or the Amalgamation, as applicable, the Purchaser may be required to file certain documents with, or receive approvals from, the relevant state authorities, and the Purchaser might be unable to accept for payment or purchase Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for purchase, or pay for, any Shares tendered. See Section 14. 16. CERTAIN FEES AND EXPENSES. Donaldson, Lufkin & Jenrette Securities Corporation is acting as the Dealer Manager in connection with the Offer and as financial advisor to Parent and the 26 Purchaser in connection with the Acquisition for which it will receive reasonable and customary fees. In addition, Parent has agreed to reimburse the Dealer Manager for its reasonable expenses, and has agreed to indemnify the Dealer Manager against certain liabilities and expenses, including certain liabilities under the federal securities laws. The Dealer Manager has in the past provided investment banking services to Parent, for which it has received customary fees. Georgeson and Company Inc. has been retained by the Purchaser as Information Agent in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee shareholders to forward material relating to the Offer to beneficial owners of Shares. The Purchaser will pay the Information Agent reasonable and customary compensation for all such services in addition to reimbursing therewith. The Purchaser has agreed to indemnify the Information Agent against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. In addition, ChaseMellon Shareholder Services, L.C.C. has been retained as the Depositary. The Purchaser will pay the Depositary reasonable and customary compensation for its services in connection with the Offer, will reimburse the Depositary for its reasonable out-of-pocket expenses in connection therewith and will indemnify the Depositary against certain liabilities and expenses in connection therewith, including certain liabilities under the federal securities laws. Except as set forth above, neither Parent nor the Purchaser will pay any fees or commissions to any broker, dealer or other person (other than the Information Agent and the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies and other nominees will, upon request, be reimbursed by Parent or the Purchaser for customary clerical and mailing expenses incurred by them in forwarding offering materials to their customers. 17. MISCELLANEOUS. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. However, the Purchaser may, in its discretion, take such action as it may deem necessary to make the Offer in any jurisdiction and extend the Offer to holders of Shares in such jurisdictions. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. Parent and the Purchaser have filed with the Commission a Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. Such Schedule 14D-1 and any amendments thereto, including exhibits, may be examined and copies may be obtained from the office of the Commission in the same manner as described in Section 7 with respect to information concerning the Company, except that they will not be available at the regional offices of the Commission. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. Neither the delivery of the Offer to Purchase nor any purchase pursuant to the Offer shall, under any circumstances, create any implication that there has been no change in the affairs of Parent, the Purchaser, the Company or any of their respective subsidiaries since the date as of which information is furnished or the date of this Offer to Purchase. EXEL ACQUISITION LTD. May 14, 1997 27 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER PARENT Set forth below are the name, business address and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years, of each director and executive officer of Parent. Except as otherwise noted, the business address of each such person is EXEL Limited, Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda. In addition, except as otherwise noted, each director and executive officer of Parent (a) is a United States citizen and (b) has been employed in his or her present principal occupation listed below during the last five years. Directors of Parent are indicated by an asterisk.
PRINCIPAL OCCUPATION AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE YEARS, SHARE OWNERSHIP, CITIZENSHIP - --------------------------------------- ------------------------------------------------------------------------ Michael P. Esposito, Jr.*.............. Chairman of the Board since April 1995 and a Director of Parent since 1986. Mr. Esposito has been a partner of Inter-Atlantic Securities Corporation since June 1995. Mr. Esposito served as Chief Corporate Compliance, Control and Administration Officer of The Chase Manhattan Corporation from 1991 to 1995, having previously served as Executive Vice President and Chief Financial Officer from 1987 to 1991. Mr. Esposito serves as a director of Mid Ocean Limited, Risk Capital Holdings, Inc. and Forest City Enterprises. Mr. Esposito beneficially owns 16,500 Shares. Brian M. O'Hara*....................... President and Chief Executive Officer of Parent since 1994 and a Director of Parent since 1986, having previously served as Vice Chairman of Parent from 1987 to 1994. He has also served as Chairman and Chief Executive Officer of X.L. Insurance Company, Ltd. since December 1995, having served as Chairman, President and Chief Executive Officer from 1994, as President and Chief Executive Officer from 1992, and as President and Chief Operating Officer from 1986. Mr. O'Hara also serves as a director of Mid Ocean Limited. Robert Clements*....................... Director of Parent since 1986. Mr. Clements served as Chairman of Marsh & McLennan Risk Capital Corp. from 1994 to 1996. He served as President of Marsh & McLennan Companies, Inc. from 1992 to 1994 and has been a director of Marsh & McLennan Companies, Inc. since 1981. He previously served as President and Chairman of the Board of Marsh and McLennan, Incorporated from 1985 and 1988, respectively. Mr. Clements also serves as Chairman and a director of Risk Capital Holdings, Inc., the parent company of Risk Capital Reinsurance Company. Taracay Investors Company, of which Mr. Clements is the managing partner, beneficially owns 10,700 Shares.
I-1
PRINCIPAL OCCUPATION AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE YEARS, SHARE OWNERSHIP, CITIZENSHIP - --------------------------------------- ------------------------------------------------------------------------ Gilbert Gould*......................... Director of Parent since 1987. Mr. Gould has served as Manager of Financial Services for Southern California Edison Company since 1993. He previously served as Manager of Insurance for Southern California Edison Company from 1984 to 1993. Ian R. Heap*........................... Director of Parent since 1987 and was Chairman of the Board of Parent from 1988 to 1992. He was President and Chief Executive Officer of Parent and X.L. Insurance Company, Ltd. from 1987 to 1988. From 1992 to 1993 he served as President and Chief Executive Officer of Mid Ocean Reinsurance Company Ltd. Mr. Heap also serves as a director of Risk Capital Holdings, Inc. John Loudon*........................... Director of Parent since 1992. Mr. Loudon has been Chairman of Caneminster Ltd., a British investment company, since 1991 and previously served as Chairman of Warrior International Limited from 1988 to 1991. Mr. Loudon also serves as a director of Tambrands Inc., Heineken N.V., Derby Trust plc, BNB Resources plc, Ocean Group plc, and Alex. Brown & Sons (Holdings) Ltd. Mr. Loudon is a citizen of The Netherlands. Robert S. Parker*...................... Director of Parent since 1991. Dr. Parker has been Dean of the School of Business Administration at Georgetown University since 1986. Dr. Parker also serves as a director of Back Bay Restaurant Group, Inc. Cyril Rance*........................... Director of Parent since 1990. Mr. Rance served as President and Chief Executive Officer of the Bermuda Fire & Marine Insurance Co. Ltd. from 1985 to 1990. Mr. Rance is a citizen of Bermuda. Alan Z. Senter*........................ Director of Parent since 1986. Mr. Senter served as Executive Vice President and Chief Financial Officer of Nynex Corporation from 1994 to 1996. Mr. Senter served as Principal of Senter Associates, a financial advisory company, from 1993 to 1994. Mr. Senter served as a director and Executive Vice President and Chief Financial Officer of International Specialty Products and GAF Corporation from 1992 to 1993. Mr. Senter previously served as the Vice President and Senior Financial Officer of Xerox Corporation from 1990 to 1992. John T. Thornton*...................... Director of Parent since 1988. Mr. Thornton has served as Executive Vice President and Chief Financial Officer of Norwest Corporation since 1987. Ellen E. Thrower*...................... Director of Parent since December 1995. Dr. Thrower has been President and Chief Executive Officer of The College of Insurance since 1988.
I-2
PRINCIPAL OCCUPATION AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE YEARS, SHARE OWNERSHIP, CITIZENSHIP - --------------------------------------- ------------------------------------------------------------------------ John Weiser*........................... Director of Parent since 1986. Mr. Weiser served as Senior Vice President and director of Bechtel Group, Inc. from 1980 to 1996 and continues as a director thereof. Mr. Weiser also served as President of Bechtel Enterprises, Inc. from 1988 to 1992 and as General Counsel of Bechtel Group, Inc. from 1980 to 1988 and from 1992 to 1994. James J. Ansaldi....................... Senior Vice President of X.L. Insurance Company, Ltd. since 1988. K. Bruce Connell....................... Executive Vice President and Chief Underwriting Officer of X.L. Reinsurance Company, Ltd. since December 1995, having previously served as Senior Vice President of X.L. Insurance Company, Ltd. from 1990 to 1995. Robert J. Cooney....................... Executive Vice President of Parent since March 1995 and President and Chief Operating Officer of X.L. Insurance Company, Ltd. since December 1995, having previously served as Executive Vice President and Chief Underwriting Officer of X.L. Insurance Company, Ltd. from 1992, and as a Senior Vice President from 1987. Paul S. Giordano....................... Senior Vice President and General Counsel of Parent since 1997. Prior to joining Parent, Mr. Giordano was in private practice in New York and London with the law firms of Clifford Chance from 1993 to 1996 and Cleary, Gottlieb, Steen & Hamilton from 1990 to 1993. Brian G. Walford....................... Executive Vice President of Parent and X.L. Insurance Company, Ltd. since 1991 and Chief Financial Officer of Parent since 1990. Mr. Walford has been Secretary of Parent since 1991 and X.L. Insurance Company, Ltd. since 1990. Mr. Walford previously served as Chief Financial Officer of X.L. Insurance Company, Ltd. from 1990 to 1996 and as Senior Vice President of Parent and X.L. Insurance Company, Ltd. from 1988 to 1991. Mr. Walford beneficially owns Shares. Mr. Walford is a citizen of the United Kingdom.
I-3 THE PURCHASER Set forth below are the name, business address and present position with the Purchaser, principal occupation or employment, and material occupations, positions, offices or employments for the past five years, of each director and executive officer of the Purchaser. Each such person is a United States citizen. Except as otherwise noted, the business address of each such person is Exel Acquisition Ltd., c/o EXEL Limited, Cumberland House, One Victoria Street, Hamilton HM 11, Bermuda. In addition, except as otherwise noted, each director and executive officer of the Purchaser (a) is a United States citizen and (b) has been employed in his or her present principal occupation listed below during the last five years. Directors of the Purchaser are indicated by an asterisk.
PRINCIPAL OCCUPATION AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES OR NAME AND BUSINESS ADDRESS EMPLOYMENT FOR THE PAST FIVE-YEARS, SHARE OWNERSHIP, CITIZENSHIP - --------------------------------------- ------------------------------------------------------------------------ Brian M. O'Hara*....................... Director and President of the Purchaser since its inception. President and Chief Executive Officer of Parent since 1994 and a Director of Parent since 1986, having previously served as Vice Chairman of Parent from 1987 to 1994. He has also served as Chairman and Chief Executive Officer of X.L. Insurance Company, Ltd. since December 1995, having served as Chairman, President and Chief Executive Officer from 1994, as President and Chief Executive Officer from 1992, and as President and Chief Operating Officer from 1986. Mr. O'Hara also serves as a director of Mid Ocean Limited. Brian G. Walford*...................... Director and Secretary of the Purchaser since its inception. Executive Vice President of Parent and X.L. Insurance Company, Ltd. since 1991 and Chief Financial Officer of Parent since 1990. Mr. Walford has been Secretary of Parent since 1991 and X.L. Insurance Company, Ltd. since 1990. Mr. Walford previously served as Chief Financial Officer of X.L. Insurance Company Ltd. from 1990 to 1996 and as Senior Vice President of Parent and X.L. Insurance Company, Ltd. from 1988 to 1991. Mr. Walford beneficially owns Shares. Mr. Walford is a citizen of the United Kingdom. Michael P. Esposito, Jr.*.............. Director of the Purchaser since its inception. Chairman of the Board since April 1995 and a Director of Parent since 1986. Mr. Esposito has been a partner of Inter-Atlantic Securities Corporation since June 1995. Mr. Esposito served as Chief Corporate Compliance, Control and Administration Officer of The Chase Manhattan Corporation from 1991 to 1995, having previously served as Executive Vice President and Chief Financial Officer from 1987 to 1991. Mr. Esposito serves as a director of Mid Ocean Limited, Risk Capital Holdings, Inc. and Forest City Enterprises. Mr. Esposito beneficially owns 16,500 Shares.
I-4 SCHEDULE II CAYMAN ISLANDS COMPANIES LAW (1995 REVISION) SECTION 85. (1) Where a compromise or arrangement is proposed between a company and its creditors or any class of them, or between the company and its members or any class of them, the Court may, on the application of the company or of any creditor or member of the company, or where a company is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members of the company or class of members, as the case may be, to be summoned in such manner as the Court directs. (2) If a majority in number representing seventy-five percent in value of the creditors or class of creditors, or members or class of members, as the case may be, present and voting either in person or by proxy at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors or the class of creditors, or on the members or class of members, as the case may be, and also on the company or, where a company is in the course of being wound up, on the liquidator and contributories of the company. (3) An order made under subsection (2) shall have no effect until a copy of the order has been delivered to the Registrar for registration, and a copy of every such order shall be annexed to every copy of the memorandum of association of the company issued after the order has been made, or, in the case of a company not having a memorandum, of every copy so issued of the instrument constituting or defining the constitution of the company. (4) If a company makes default in complying with subsection (3), the company and every officer of the company who is in default shall be liable to a fine of two dollars for each copy in respect of which default is made. (5) In this section the expression "company" means any company liable to be wound up under this Law and the expression "arrangement" includes a reorganisation of the share capital of the company by the consolidation of shares of different classes or by the division of shares into shares of different classes or by both those methods. SECTION 86. (1) Where an application is made to the Court under section 85 for the sanctioning of a compromise or arrangement proposed between a company and any such persons as are specified in that section, and it is shown to the Court that the compromise or arrangement has been proposed for the purpose of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies, and that under the scheme the whole or any part of the undertaking or the property of any company concerned in the scheme (in this section referred to as "a transferor company") is to be transferred to another company (in this section referred to as "the transferee company") the Court, may either by the order sanctioning the compromise or arrangement or by any subsequent order make provision for-- (a) the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company; (b) the allotting or appropriation by the transferee company of any shares, debentures, policies, or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person; (c) the continuation by or against the transferee company of any legal proceedings pending by or against any transferor company; (d) the dissolution, without winding up, of any transferor company; II-1 (e) the provisions to be made for any person who within such time and in such manner as the Court directs dissent from the compromise or arrangement; and (f) such incidental, consequential and supplemental matters as are necessary to secure that the reconstruction or amalgamation is fully and effectively carried out. (2) Where an order under this section provides for the transfer of property or liabilities, that property shall, by virtue of the order, be transferred to and vest in, and those liabilities shall, by virtue of the order, be transferred to and become the liabilities of, the transferee company, and any such property shall, if the order so directs, be freed from any charge which is, by virtue of the compromise or arrangement, to cease to have effect. (3) Where an order is made under this section, every company in relation to which the order is made shall cause a copy thereof to be delivered to the Registrar for registration within seven days after the making of the order, and if default is made in complying with this subsection, the company and every officer of the company who is in default shall be liable to a default fine. (4) In this section-- "property" includes property, rights and powers of every description; "liabilities" includes duties; and "transferee company" means any company or body corporate established in the Islands or in any other jurisdiction. SECTION 87. (1) Where a scheme or contract involving the transfer of shares or any class of shares in a company (in this section referred to as "the transferor company") to another company, whether a company within the meaning of this Law or not (in this section referred to as "the transferee company") has, within four months after the making of the offer in that behalf by the transferee company, been approved by the holders of not less than ninety percent in value of the shares affected, the transferee company may, at any time within two months after the expiration of the said four months, give notice in the prescribed manner to any dissenting shareholder that it desires to acquire his shares, and where such a notice is given the transferee company shall, unless on an application made by the dissenting shareholder within one month from the date on which the notice was given, the Court thinks fit to order otherwise, be entitled and bound to acquire those shares on the terms on which under the scheme or contract the shares of the approving shareholders are to be transferred to the transferee company. (2) Where a notice has been given by the transferee company under this section and the Court has not, on an application made by the dissenting shareholder, ordered to the contrary, the transferee company shall, on the expiration of one month from the date on which the notice has been given or, if an application to the Court by the dissenting shareholder is then pending, after that application has been disposed of, transmit a copy of the notice to the transferor company and pay or transfer to the transferor company the amount or other consideration representing the price payable by the transferee company for the shares which by virtue of this section that company is entitled to acquire, and the transferor company shall thereupon register the transferee company as the holder of those shares. (3) Any sums received by the transferor company under this section shall be paid into a separate bank account, and any such sums and any other consideration so received shall be held by that company on trust for the several persons entitled to the shares in respect of which the said sum or other consideration were respectively received. (4) In this section-- "dissenting shareholder" includes a shareholder who has not assented to the scheme or contract and any shareholder who has failed or refused to transfer his shares to the transferee company, in accordance with the scheme or contract. II-2 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each shareholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary at one of its addresses set forth below: THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Hand: By Mail: Overnight Delivery: ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder Services, L.L.C. Services, L.L.C. Services, L.L.C. 120 Broadway P.O. Box 3301 85 Challenger Road 13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg New York, NY 10271 Ridgefield Park, NJ 07660 Attn: Reorganization Dept.
OUR FAX NUMBER IS: 201-329-8936 OUR FAX CONFIRMATION NUMBER IS: 201-296-4860 Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be obtained from the Information Agent or the Dealer Manager as set forth below, and will be furnished promptly at the Purchaser's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: [Georgeson LOGO] Wall Street Plaza New York, New York 10005 Banks and Brokerage Firms, Call Toll-Free (800) 445-1790 All Others Call Toll-Free (800) 223-2064 THE DEALER MANAGER FOR THE OFFER IS: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION 277 PARK AVENUE NEW YORK, NEW YORK 10172 CALL COLLECT (212) 892-7700 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL LETTER OF TRANSMITTAL TO TENDER ORDINARY SHARES OF GCR HOLDINGS LIMITED PURSUANT TO THE OFFER TO PURCHASE DATED MAY 14, 1997, BY EXEL ACQUISITION LTD. A WHOLLY OWNED SUBSIDIARY OF EXEL LIMITED THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 11, 1997, UNLESS THE OFFER IS EXTENDED THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
BY HAND: BY MAIL: OVERNIGHT DELIVERY: ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder Services, L.L.C. Services, L.L.C. Services, L.L.C. 120 Broadway P.O. Box 3301 85 Challenger Road 13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg New York, NY 10271 Ridgefield Park, NJ 07660 Attn: Reorganization Dept.
OUR FAX NUMBER IS: 201-329-8936 OUR FAX CONFIRMATION NUMBER IS: 201-296-4860 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by shareholders either if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase dated May 14, 1997 (the "Offer to Purchase")) is utilized, if tenders of Shares are to be made by book-entry transfer to an account maintained by ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at The Depository Trust Company ("DTC"), Midwest Securities Trust Company ("MSTC") or Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and collectively referred to as the "Book Entry Transfer Facilities"), pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Shareholders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Shareholders". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. If a shareholder desires to tender Shares pursuant to the Offer and certificates evidencing such shareholder's Shares (the "Share Certificates") are not immediately available or time will not permit Share Certificates and all other required documents to reach the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or the procedures for book-entry transfer cannot be completed on a timely basis, such shareholder must tender his Shares according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution: Check Box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number: Transaction Code Number: / / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY. Name(s) of Registered Holder(s): Window Ticket Number (if any): Date of Execution of Notice of Guaranteed Delivery: Name of Institution which Guaranteed Delivery: If delivered by Book-Entry Transfer, check box of applicable Book-Entry Transfer Facility: / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number: Transaction Code Number:
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED APPEAR ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY) TOTAL NUMBER OF SHARES SHARE REPRESENTED NUMBER OF CERTIFICATE BY SHARE SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** TOTAL SHARES * Need not be completed by Book-Entry Shareholders. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by certificates delivered to the Depositary are being tendered. See Instruction 4.
Ladies and Gentlemen: The undersigned hereby tenders to EXEL ACQUISITION LTD. (the "Purchaser"), a Cayman Islands company and a wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"), the above described Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the "Company"), at a price of $27.00 per Share net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together with the Offer to Purchase and, together with any amendment or supplement hereto and thereto, collectively constitute the "Offer"). The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of the Purchaser's subsidiaries or affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Subject to, and effective upon, acceptance for payment of the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all of the Shares that are being tendered hereby and any and all dividends and distributions (including, without limitation, the issuance of additional Shares pursuant to a stock dividend or stock split, the issuance of other securities or the issuance of rights for the purchase of any securities) declared, paid or distributed with respect to the tendered Shares on or after May 8, 1997, and is payable or distributable to shareholders of record on a date prior to the transfer into the name of the Purchaser or its nominees or transferees on the Company's stock transfer records of the Shares purchased pursuant to the Offer (collectively, "Distributions"), and irrevocably appoints the Depositary the true and lawful agent, attorney-in-fact and proxy of the undersigned to the full extent of the undersigned's rights with respect to such Shares (and any Distributions), with full power of substitution (such power of attorney and proxy being deemed to be an irrevocable power coupled with an interest), to (a) deliver Share Certificates (and any Distributions), or transfer ownership of such Shares (and any Distributions), on the account books maintained by the Book-Entry Transfer Facilities, together in either such case with all accompanying evidences of transfer and authenticity, to, or upon the order of, the Purchaser, (b) present such Shares (and any Distributions) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any Distributions), all in accordance with the terms in the Offer. On April 25, 1997, the Company declared a quarterly dividend of $0.62 per Share, payable on May 27, 1997, to shareholders of record on May 14, 1997. Notwithstanding anything else contained herein, tendering Shares pursuant to the Offer will not affect the right of shareholders of record on May 14, 1997, to receive this dividend. The undersigned hereby irrevocably appoints Michael P. Esposito, Jr., Brian M. O'Hara or Brian G. Walford, or any other designees of the Purchaser, and each of them, as attorneys-in-fact and proxies of the undersigned, with full power of substitution, to the full extent of the undersigned's rights with respect to the Shares tendered hereby, to exercise all voting and other rights of such shareholder as each, in his sole discretion may deem proper at any annual or special meeting of the Company's shareholders, or any adjournment or postponement thereof, or by consent in lieu of any such meeting or otherwise. This power of attorney and proxy is coupled with an interest in the Shares and is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by the Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke, without further action, any other power of attorney or proxy granted by the undersigned at any time with respect to such Shares (and any Distributions) and no subsequent powers of attorney or proxies will be given or written consent executed (and if given or executed will be deemed not to be effective) with respect thereto by the undersigned. The undersigned understands that in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares (and any Distributions), including voting at any meeting of shareholders then scheduled. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any Distributions) and that, when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and none of the Shares (and any Distributions) will be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and any Distributions). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any and all other Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer and, pending such remittance or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of any such Distributions, and may withhold the entire purchase price or deduct from the purchase price of Shares tendered hereby the amount or value thereof, as determined by the Purchaser in its sole discretion. All authority herein conferred or herein agreed to be conferred shall not be affected by, and shall survive, the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, legal representatives, successors and assigns of the undersigned. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the Offer. The Purchaser's acceptance of such Shares for payment will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions set forth in the Offer. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any Share Certificates not tendered or accepted for payment in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and return any Share Certificates not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that both the "Special Delivery Instructions" and the "Special Payment Instructions" are completed, please issue the check for the purchase price and return any Share Certificates not tendered or accepted for payment in the name(s) of, and deliver said check and return certificates to, the person or persons so indicated. The undersigned recognizes that the Purchaser has no obligation pursuant to the "Special Payment Instructions" to transfer any Shares from the name of the registered holder thereof if the Purchaser does not accept for payment any of such Shares. SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the To be completed ONLY if Share Certificates purchase price of Shares purchased and/or not tendered or not purchased and/or the Share Certificates not tendered or not check for the purchase price of Shares purchased are to be issued in the name of purchased are to be sent to someone other someone other than the undersigned. than the undersigned, or to the undersigned at an address other than that shown under "Description of Shares Tendered." Issue check and/or certificates to: Mail check and/or certificates to: Name: Name: (PLEASE PRINT) (PLEASE PRINT) Address: Address: (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 ON BACK COVER)
IMPORTANT SHAREHOLDERS SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE) ______________________________________________________________________________ ______________________________________________________________________________ SIGNATURE(S) OF OWNER(S) DATED: ________________________ , 1997 (Must be signed by the registered holder(s) exactly as name(s) appear(s) on the Share Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the necessary information. See Instruction 5.) Name(s): _____________________________________________________________________ (PLEASE PRINT) Capacity (Full Title): _______________________________________________________ Address: _____________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (INCLUDE ZIP CODE) Area Code and Telephone Number: ______________________________________________ Tax Identification or Social Security No.: ___________________________________ (COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE) GUARANTEE OF SIGNATURE(S) (IF REQUIRED--SEE INSTRUCTIONS 1 AND 5) Authorized Signature: ________________________________________________________ Name: ________________________________________________________________________ (PLEASE PRINT) Title: _______________________________________________________________________ Name of Firm: ________________________________________________________________ Address: _____________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ (INCLUDE ZIP CODE) Area Code and Telephone Number: ______________________________________________ Dated: ________________________ , 1997 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must be guaranteed by a firm that is a member in good standing of the Medallion Signature Guarantee Program, or by any other "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (each, an "Eligible Institution"), unless the Shares tendered hereby are tendered (i) by a registered holder of Shares who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on this Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be used either if Share Certificates are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing all physically tendered Shares, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each delivery. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's Share Certificates are not immediately available or time will not permit the Share Certificates and all other required documents to reach the Depositary prior to the Expiration Date, or the procedures for book-entry transfer cannot be completed on a timely basis, such shareholder may tender Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Share Certificates evidencing all physically tendered Shares, in proper form for transfer, or a Book-Entry Confirmation for all Shares tendered by book-entry transfer, in each case with a properly completed and duly executed Letter of Transmittal (or a facsimile hereof), with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three Nasdaq National Market trading days after the date of execution of such Notice of Guaranteed Delivery. THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering shareholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares and any other required information should be listed on a separate schedule attached hereto and separately signed on each page thereof in the same manner as this Letter of Transmittal is signed. 4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares evidenced by any certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such case, new certificate(s) for the remainder of the Shares that were evidenced by your old certificate(s) will be sent to you, unless otherwise provided in the appropriate box marked "Special Payment Instructions" and/or "Special Delivery Instructions" on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any Shares tendered hereby are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such Shares. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity for the registered holders, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. When this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to or certificates for Shares not tendered or purchased are to be issued in, the name of a person other than the registered owner(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Shares listed, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered owner(s) appear(s) on the certificates. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser will pay or cause to be paid any stock transfer taxes with respect to the transfer and sale of purchased Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificates for Shares not tendered or purchased are to be registered in the name of, any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF TRANSMITTAL. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of and/or certificates for unpurchased Shares are to be returned to a person other than the signer of this Letter of Transmittal or if a check is to be sent and/or such certificates are to be returned to someone other than the signer of this Letter of Transmittal or to an address other than that shown in the box entitled "Description of Shares Tendered," the appropriate boxes on this Letter of Transmittal should be completed. 8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may be directed to the Information Agent at its address set forth below. Requests for additional copies of the Offer to Purchase and this Letter of Transmittal may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9; FORM W-8. Each tendering shareholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, that such number is correct and that such shareholder is not subject to backup withholding of federal income tax. If a tendering shareholder has been notified by the Internal Revenue Service that such shareholder is subject to backup withholding, such shareholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such shareholder has since been notified by the Internal Revenue Service that such shareholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering shareholder to 31% backup federal income tax withholding on the payment of the purchase price of all Shares purchased from such shareholder. If the tendering shareholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such shareholder should check the box in Part III of the Substitute Form W-9 and sign and date both the Substitute Form W-9 and the "Certificate of Awaiting Taxpayer Identification." If the box in Part III for "Awaiting TIN" is checked and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price to such shareholder until a TIN is provided to the Depositary. In order for a foreign individual to qualify as an exempt recipient, that shareholder must submit a statement on IRS Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. Forms for such statements can be obtained from the Depositary. See the enclosed Guidelines for Certificates of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. 10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s) representing Shares has been lost, destroyed or stolen, the shareholder should promptly notify the Depositary. The shareholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen certificates have been followed. 11. DELAY, TERMINATION OR AMENDMENT OF OFFER. Subject to the terms of the Acquisition Agreement (as defined in the Offer to Purchase) and the applicable regulations of the Securities and Exchange Commission, the Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to (i) delay acceptance for payment of or, regardless of whether such Shares were theretofore accepted for payment, payment for any Shares pending receipt of any regulatory or governmental approvals specified in Section 15 of the Offer to Purchase, (ii) terminate the Offer (whether or not any Shares have theretofore been accepted for payment) if any condition referred to in Section 14 of the Offer to Purchase has not been satisfied or upon the occurrence of any event specified in Section 14 of the Offer to Purchase and (iii) waive any condition or otherwise amend the Offer in any respect, in each case, by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF) OR AN AGENT'S MESSAGE TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under current federal income tax law, a shareholder whose tendered Shares are accepted for payment is required to provide the Depositary (as payer) with such shareholder's correct TIN on Substitute Form W-9 below. If such shareholder is an individual, the TIN is his social security number. If the tendering shareholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future, the shareholder should so indicate on the Substitute Form W-9. See Instruction 9. If the Depositary is not provided with the correct TIN, the shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to the shareholder with respect to Shares purchased pursuant to the Offer may be subject to backup federal income tax withholding in an amount equal to 31% of the gross proceeds resulting from the Offer. Certain shareholders (including, among others, certain corporations and foreign individuals) are not subject to these backup withholding and reporting requirements and should indicate their status by writing "exempt" across the face of, and by signing and dating, the Substitute Form W-9. In order for a foreign individual to qualify as an exempt recipient, that shareholder must submit a statement on IRS Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. Forms for such statements can be obtained from the Depositary. See the enclosed Guidelines for Certificates of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payments made to the shareholder. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding with respect to payment of the purchase price for Shares purchased pursuant to the Offer, a shareholder must provide the Depositary with such shareholder's correct TIN by completing the Substitute Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is correct (or that the shareholder is awaiting a TIN) and that (1) the shareholder is exempt from backup withholding, (2) the shareholder has not been notified by the Internal Revenue Service that he is subject to backup withholding as a result of a failure to report all interest or dividends, or (3) the Internal Revenue Service has notified the shareholder that he is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The shareholder is required to give the Depositary the Social Security Number or employer identification number of the record holder of the Shares tendered hereby. If the Shares are registered in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. TO BE COMPLETED BY ALL TENDERING SHAREHOLDERS (SEE INSTRUCTION 9) PAYER'S NAME: SUBSTITUTE FORM W-9 PART 1--PLEASE PROVIDE SOCIAL SECURITY NUMBER DEPARTMENT OF THE TREASURY YOUR TIN IN THE BOX AT OR EMPLOYEE ID NUMBER INTERNAL REVENUE SERVICE RIGHT AND CERTIFY BY --------------------------------- PAYER'S REQUEST FOR SIGNING AND DATING BELOW TAXPAYER IDENTIFICATION NUMBER ("TIN") PART 2--CERTIFICATES--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such item (2). SIGNATURE DATE PART 3 AWAITING TIN / / NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld, but that such amounts will be remitted to the IRS as backup withholding if I do not provide my Taxpayer Identification Number within sixty (60) days. Signature: Date:
THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
BY HAND: BY MAIL: OVERNIGHT DELIVERY: ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder Services, L.L.C. Services, L.L.C. Services, L.L.C. 120 Broadway P.O. Box 3301 85 Challenger Road 13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg New York, NY 10271 Ridgefield Park, NJ 07660 Attn: Reorganization Dept.
Our FAX number is: 201-329-8936 Our FAX Confirmation number is: 201-296-4860 Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers listed below. Additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other related materials may be obtained from the Information Agent or the Dealer Manager as set forth below, and will be furnished promptly at the Purchaser's expense. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: [GEORGESON LOGO] WALL STREET PLAZA NEW YORK, NEW YORK 10005 BANKS & BROKERAGE FIRMS CALL TOLL-FREE (800) 445-1790 ALL OTHERS CALL TOLL-FREE (800) 223-2064 THE DEALER MANAGER FOR THE OFFER IS: DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION 277 PARK AVENUE NEW YORK, NEW YORK 10172 CALL COLLECT (212) 892-7700 EX-99.(A)(3) 4 NOTICE OF GUAR. DEL. NOTICE OF GUARANTEED DELIVERY FOR TENDER OF ORDINARY SHARES OF GCR HOLDINGS LIMITED (NOT TO BE USED FOR SIGNATURE GUARANTEES) This Notice of Guaranteed Delivery or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates representing Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the "Company"), are not immediately available or time will not permit such certificates and all other required documents to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior to the Expiration Date (as defined in the Offer), or the procedures for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram or facsimile transmission to the Depositary. See Section 3 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
BY HAND: BY MAIL: OVERNIGHT DELIVERY: ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder Services, L.L.C. Services, L.L.C. Services, L.L.C. 120 Broadway P.O. Box 3301 85 Challenger Road 13th Floor South Hackensack, NJ 07606 Mail Drop-Reorg New York, NY 10271 Ridgefield Park, NJ 07660 Attn: Reorganization Dept.
Our FAX Number is: 201-329-8936 Our FAX Confirmation number is: 201-296-4860 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. LADIES AND GENTLEMEN: The undersigned hereby tenders to EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Shares: ________________________ Shares Certificate No(s). (if available): _____________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ If Share(s) will be tendered by book-entry transfer, check one box. / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number: ________________________________________________________________ Date: __________________________________________________________________________ Name(s) of Record Holder(s): ___________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Address(es): ___________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Area Code and Telephone Number(s): _____________________________________________ Signature(s): __________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ 2 THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm that is a member in good standing of the Medallion Signature Guarantee Program or is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to the Depositary, at one of its addresses set forth above, the certificates representing all Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in the case of book-entry delivery of Shares, an Agent's Message (as defined in the Offer to Purchase), and any other documents required by the Letter of Transmittal within three Nasdaq National Market trading days after the date of execution of this Notice of Guaranteed Delivery. Name of Firm: __________________________________________________________________ Address: _______________________________________________________________________ _______________________________________ Area Code and Telephone Number: ________________________________________________ ________________________________________________________________________________ (Authorized Signature) Title: _________________________________________________________________________ Name: __________________________________________________________________________ ________________________________________________________________________________ (Please type or print) Date: __________________________________________________________________________ NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.(A)(4) 5 FORM OF BROKER/DEALER LETTER Donaldson, Lufkin & Jenrette Securities Corporation 277 Park Avenue New York, New York 10172 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING ORDINARY SHARES OF GCR HOLDINGS LIMITED AT $27.00 NET PER SHARE BY EXEL ACQUISITION LTD. A WHOLLY OWNED SUBSIDIARY OF EXEL LIMITED THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 11, 1997, UNLESS THE OFFER IS EXTENDED. May 14, 1997 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser"), and EXEL LIMITED, a Cayman Islands company, to act as Dealer Manager in connection with the Purchaser's offer to purchase all outstanding Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the "Company"), at a purchase price of $27.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES WHICH, TOGETHER WITH SHARES BENEFICIALLY OWNED BY EXEL LIMITED AND ITS SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN OUTSTANDING, CALCULATED ON A FULLY DILUTED BASIS. SEE THE INTRODUCTION AND SECTIONS 1, 14 AND 15 OF THE OFFER TO PURCHASE. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase dated May 14, 1997; 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients; 3. A letter to the shareholders of the Company from the Chairman of the Board of Directors of the Company, together with the Solicitation/Recommendation Statement on Schedule 14D-9; 4. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if certificates representing Shares are not immediately available or time will not permit such certificates and all other required documents to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior to the Expiration Date as defined in the Offer to Purchase or if the procedure for book-entry transfer cannot be completed on a timely basis; 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. A return envelope addressed to the Depositary. The Board of Directors of the Company has unanimously approved the Offer and the Amalgamation (as described in the Offer to Purchase), has determined that each of the Offer and the Amalgamation is fair to, and in the best interests of, the shareholders of the Company, and recommends that the shareholders of the Company accept the Offer and tender their Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of the Offer as so extended and amended) the Purchaser will purchase, by accepting for payment, and will pay for, all Shares validly tendered and not withdrawn (as permitted by Section 4 of the Offer to Purchase) prior to the Expiration Date promptly after the later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions to the Offer set forth in Section 14 of the Offer to Purchase. In addition, subject to applicable rules of the Securities and Exchange Commission, the Purchaser expressly reserves the right to delay acceptance for payment of, or payment for, Shares pending receipt of any regulatory or governmental approvals specified in Section 15 of the Offer to Purchase or in order to comply in whole or in part with any other applicable law. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or timely confirmation of the book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, Midwest Securities Trust Company or Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 11, 1997, UNLESS THE OFFER IS EXTENDED. In order to accept the Offer, an appropriate, duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares and any other required documents should be sent to the Depositary and either Share 2 Certificates representing the tendered Shares should be delivered to the Depositary or the Shares should be tendered by book-entry transfer into the Depositary's account maintained at one of the Book-Entry Transfer Facilities, all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. Neither EXEL LIMITED nor the Purchaser will pay any fees or commissions to any broker, dealer or other person (other than the Information Agent and the Dealer Manager as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. You will, upon request, be reimbursed by EXEL LIMITED or the Purchaser for customary clerical and mailing expenses incurred by you in forwarding offering materials to your customers. Any inquiries you may have with respect to the Offer should be addressed to, and additional copies of the enclosed material may be obtained from, the Dealer Manager or the Information Agent, at their respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, Donaldson, Lufkin & Jenrette Securities Corporation NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEALER MANAGER, THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE OFFER TO PURCHASE AND THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.(A)(5) 6 FORM OF CLIENT LETTER OFFER TO PURCHASE FOR CASH ALL OUTSTANDING ORDINARY SHARES OF GCR HOLDINGS LIMITED AT $27.00 NET PER SHARE BY EXEL ACQUISITION LTD. A WHOLLY OWNED SUBSIDIARY OF EXEL LIMITED THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JUNE 11, 1997, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to the offer by EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser") and a wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"), to purchase all outstanding Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the "Company"), at a purchase price of $27.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish to have us tender on your behalf any or all Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. Please note the following: 1. The tender price is $27.00 per Share, net to you in cash, without interest thereon. 2. The Board of Directors of the Company has unanimously approved the Offer and the Amalgamation (as described in the Offer to Purchase), has determined that each of the Offer and the Amalgamation is fair to, and in the best interests of, the Company and its shareholders, and recommends that the shareholders of the Company accept the Offer and tender their Shares pursuant to the Offer. 3. The Offer is being made for all Shares. 4. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares which, together with Shares beneficially owned by Parent and its subsidiaries, shall be not less than seventy-five percent of the Shares then outstanding, calculated on a fully diluted basis. See the Introduction and Sections 1, 14 and 15 of the Offer to Purchase. 5. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. 6. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on June 11, 1997, unless the Offer is extended. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing, detaching and returning to us the instruction form set forth on the back page of this letter. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the back page of this letter. An envelope to return your instructions to us is enclosed. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal, and is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue-sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by Donaldson, Lufkin & Jenrette Securities Corporation, or one or more other registered brokers or dealers that are licensed under the laws of such jurisdiction. 2 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL ORDINARY SHARES OF GCR HOLDINGS LIMITED The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated May 14, 1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") in connection with the offer by EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser") and a wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"), to purchase all outstanding Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company (the "Company"), at a purchase price of $27.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Number of Shares To Be Tendered(*): ______________ Shares Dated: ___________________ , 1997 - -------------------------------------------------------------------------------- SIGN HERE Signature(s) ___________________________________________________________________ (Print Name(s)) ________________________________________________________________ (Address(es)) __________________________________________________________________ (Area Code and Telephone Number(s)) ____________________________________________ (Taxpayer Identification or Social Security Number(s)) _____________________________________________________ - ------------------------ * Unless otherwise indicated, it will be assumed that you instruct us to tender all Shares held by us for your account. EX-99.(A)(6) 7 TAX GUIDELINES GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table below will help determine the number to give the payer.
- ----------------------------------------------------- GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - ----------------------------------------------------- 1. An individual's The individual account 2. Two or more The actual owner of individuals (joint the account or, if account) combined funds, any one of the individuals(1) 3. Husband and wife The actual owner of (joint account) the account or, if joint funds, either person(1) 4. Custodian account of The minor(2) a minor (Uniform Gift to Minors Act) 5. Adult and minor The adult or, if the (joint account) minor is the only contributor, the minor(1) 6. Account in the name The ward, minor, or of guardian or incompetent committee for a person(3) designated ward, minor, or incompetent person 7. a. The usual The revocable savings grantor-trustee(1) trust account (grantor is also trustee) b. So-called trust account that is The actual owner(1) not a legal or valid trust under State law 8. Sole proprietorship The owner(4) account - ----------------------------------------------------- GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF -- - ----------------------------------------------------- 9. A valid trust, The legal entity (Do estate, or pension not furnish the trust identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, The organization charitable, or educational organization account 12. Partnership account The partnership held in the name of the business 13. Association, club or The organization other tax-exempt organization 14. A broker or The broker or registered nominee nominee 15. Account with the The public entity Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------- - --------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to non-resident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045 and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1998, payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES. (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated an being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(7) 8 JOINT PRESS RELEASE Exhibit 99(a)(7) EXEL Limited to Acquire GCR Holdings Limited Hamilton, Bermuda, May 8 - - EXEL LIMITED (NYSE:XL) ("EXEL") and GCR HOLDINGS LIMITED (Nasdaq:GCREF) ("GCR") announced today that EXEL has signed a definitive agreement with GCR to acquire all of the outstanding shares of GCR. Under the terms of the agreement, EXEL will pay GCR shareholders $27.00 per share in cash, or a total of $637 million, for the approximately 23.6 million outstanding shares of GCR which it does not already own. EXEL currently owns 1.2 million shares, or 4.9 percent, of GCR's 24.8 million shares outstanding. EXEL will commence a cash tender offer for all of GCR's shares no later than May 14, 1997. The tender offer will be subject to several conditions, including the tender and non-withdrawal of at least 75 percent of GCR's shares, and various regulatory approvals. The boards of directors of both companies have unanimously approved the acquisition. GCR, which is headquartered in Bermuda, was established in 1993 and provides property catastrophe, property risk excess-of-loss, property pro rata, marine, energy, satellite and financial products reinsurance to insurers on a worldwide basis through its principal wholly owned subsidiary, Global Capital Reinsurance Limited. For the six months ended March 31, 1997, GCR had gross premiums written of $70.1 million. At march 31, 1997, GCR's total assets were $532.9 million and shareholders' equity was $426.3 million. Book value per share at March 31, 1997 was $17.21. "GCR has established itself as a leading reinsurer with a disciplined approach to underwriting," stated Brian M. O'Hara, president and chief executive officer of EXEL Limited. "GCR's philosophy to underwrite for a profit rather than premium volume matches our own. The combination of GCR's relatively short tailed lines of business and EXEL's predominately longer tailed liability book provides the combined organization with further spread of risk and diversification. Additionally, the amalgamation of the two companies should be accretive to 1997 earnings and result in increased shareholder value." Lawrence S. Doyle, president and chief executive officer of GCR Holdings Limited, noted, "I am delighted that our organization will become part of EXEL. The combined resources of the two companies will be able to offer a significantly wider array of products and services to our customers than either organization could on its own. Our shareholders should be pleased with the total return that we have created for them over the relatively short period since GCR has been in business." Upon completion of the transaction, it is expected that Mr. Doyle will become an executive vice president of EXEL and serve as president and chief operating officer of GCR. Mr. O'Hara will assume the titles of chairman and chief executive officer of GCR. Donaldson, Lufkin & Jenrette Securities Corporation has acted as financial advisor to EXEL in connection with the acquisition and Goldman, Sachs & Co. has acted for GCR. EXEL Limited, through X.L. Insurance Company, Ltd., X.L. Europe Insurance and X.L. Reinsurance Company, Ltd., is a leading provider of general liability, directors and officers liability, employment practices and professional liability, excess property insurance and reinsurance coverages to industrial, commercial and professional service firms, insurance organizations and other enterprises on a worldwide basis. EX-99.(A)(8) 9 FORM OF SUMMARY ADVERTISEMENT This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase dated May 14, 1997, and the related Letter of Transmittal, and is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser (as defined below) by Donaldson, Lufkin & Jenrette Securities Corporation or one or more other registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Ordinary Shares of GCR HOLDINGS LIMITED at $27.00 Net Per Share by EXEL ACQUISITION LTD. a wholly owned subsidiary of EXEL LIMITED EXEL ACQUISITION LTD., a Cayman Islands company (the "Purchaser") and a wholly owned subsidiary of EXEL LIMITED, a Cayman Islands company ("Parent"), is offering to purchase all outstanding Ordinary Shares, par value $.10 per share (the "Shares"), of GCR HOLDINGS LIMITED, a Cayman Islands company ("GCR" or the "Company"), at a purchase price of $27.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 14, 1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). Following the Offer, the Purchaser intends to effect the Amalgamation described below. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON JUNE 11, 1997, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF GCR HAS UNANIMOUSLY APPROVED THE OFFER AND THE AMALGAMATION, HAS -2- DETERMINED THAT EACH OF THE OFFER AND THE AMALGAMATION IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, AND RECOMMENDS THAT SHAREHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER AND ADOPT AND APPROVE THE AMALGAMATION. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES WHICH, TOGETHER WITH ALL SHARES BENEFICIALLY OWNED BY PARENT AND ITS SUBSIDIARIES, SHALL BE NOT LESS THAN SEVENTY-FIVE PERCENT OF THE SHARES THEN OUTSTANDING, CALCULATED ON A FULLY DILUTED BASIS. The Offer is being made pursuant to an Agreement and Plan of Amalgamation, dated as of May 8, 1997 (the "Acquisition Agreement"), among Parent, the Purchaser and the Company. The Acquisition Agreement provides that, among other things, as soon as practicable after the purchase of Shares pursuant to the Offer and the satisfaction of the other conditions set forth in the Acquisition Agreement and subject to the relevant provisions of the Cayman Islands Companies Law (1995 Revision) (the "Cayman Law"), the Purchaser and the Company will be amalgamated under a scheme of arrangement under the Cayman Law (the "Amalgamation"). At the effective time of the Amalgamation (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares owned by the Purchaser, Parent or any direct or indirect subsidiary of any of them will be canceled and the holder thereof will be entitled to receive $27.00 in cash, or any higher price that may be paid per Share in the Offer, without interest. If, however, the Purchaser succeeds in acquiring at least ninety percent (90%) of the Shares, then, subject to and in accordance with the Cayman Law, the Purchaser currently intends to give notice to all holders of the then outstanding Shares (other than Shares held by the Purchaser) that the Purchaser intends to acquire compulsorily such Shares at $27.00 per share in cash, or any higher price that may be paid per Share in the Offer, without interest. On April 25, 1997, the Company declared a quarterly dividend of $.62 per Share, payable on May 27, 1997, to shareholders of record on May 14, 1997. Tendering Shares pursuant to the Offer will not affect the right of shareholders of record on May 14, 1997, to receive this dividend. -3- For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of the Purchaser's acceptance of such Shares for payment pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering shareholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates evidencing such Shares (the "Share Certificates") or timely confirmation (a "Book-Entry Confirmation") of the book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities (as defined in Section 2 of the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. Subject to the terms of the Acquisition Agreement, the Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period during which the Offer is open for any reason, including the occurrence of any event specified in Section 14 of the Offer to Purchase, by giving oral or written notice of such extension to the Depositary. There can be no assurance that the Purchaser will exercise its right to extend the Offer. Any such extension will be followed as promptly as practicable by a public announcement thereof, such announcement to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date (as defined below). During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer and subject to the right of a tendering shareholder to withdraw such shareholder's Shares. -4- Subject to the terms of the Acquisition Agreement and the applicable regulations of the Securities and Exchange Commission, the Purchaser also expressly reserves the right, in its sole discretion, at any time and from time to time, to (i) delay acceptance of any Shares tendered for payment, (ii) terminate the Offer and (iii) waive any condition or otherwise amend the Offer in any respect (other than to reduce the amount of consideration payable in the Offer), in each case, by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. Tenders of Shares made pursuant to the Offer are irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn at any time on or prior to 12:00 Midnight, New York City time, on Wednesday, June 11, 1997 (or such later date as may apply in case the Offer is extended) (the "Expiration Date"), and, unless theretofore accepted for payment as provided in the Offer to Purchase, may also be withdrawn at any time after July 13, 1997 (or such later date as may apply in case the Offer is extended). For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share Certificates have been tendered) the name of the registered holder of the Shares as set forth in the Share Certificate, if different from that of the person who tendered such Shares. If Share Certificates have been delivered or otherwise identified to the Depositary, then prior to the physical release of such Share Certificates, the tendering shareholder must submit the serial numbers shown on the particular Share Certificates evidencing the Shares to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), except in the case of Shares tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedures for book-entry transfer set forth in Section 3 of the Offer to Purchase, the notice of withdrawal must specify the name and number of the account at the appropriate Book-Entry Transfer Facility to be credited with the withdrawn Shares. Any Shares properly withdrawn will be deemed not validly tendered for purposes of the Offer, but may be retendered at any subsequent time prior to the Expiration Date by following any of the procedures described in Section 3 of the Offer to Purchase. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be -5- determined by the Purchaser, in its sole discretion, whose determination shall be final and binding. The information required to be disclosed pursuant to Rule 14d-6(e)(1)(vii) under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder lists or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance or copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below and copies will be furnished promptly at the Purchaser's expense. No fees or commissions will be payable by the Purchaser to any broker, dealer or other person (other than the Information Agent and the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. -6- The Information Agent for the Offer is: [Logo of Georgeson & Company Inc.] Wall Street Plaza New York, New York 10005 Banks and Brokerage Firms, Call Toll-Free: (800) 445-1790 All Others Call Toll-Free: (800) 223-2064 The Dealer Manager for the Offer is: [Logo of Donaldson, Lufkin & Jenrette Securities Corporation] 277 Park Avenue New York, New York 10172 Call: (212) 892-7700 (Call Collect) May 14, 1997 EX-99.(C) 10 AGREEMENT AND PLAN OF AMALGAMATION AGREEMENT AND PLAN OF AMALGAMATION among GCR HOLDINGS LIMITED and EXEL LIMITED and EXEL ACQUISITION LTD. Dated as of May 8, 1997 TABLE OF CONTENTS SECTION PAGE ------- ---- ARTICLE I. THE OFFER SECTION 1.1 The Offer............................................... 1 SECTION 1.2 Company Actions......................................... 3 SECTION 1.3 Directors; Section 14(f)................................ 4 ARTICLE II. THE AMALGAMATION; DISPOSITION OF SHARES SECTION 2.1 The Amalgamation........................................ 5 SECTION 2.2 Effect of the Amalgamation.............................. 5 SECTION 2.3 Memorandum of Association and Articles of Association of the Amalgamated Company; Registration Number............................................ 5 SECTION 2.4 Directors and Officers of the Amalgamated Company........................................................ 5 SECTION 2.5 Further Assurances...................................... 6 SECTION 2.6 Effect on Shares of Newco and Company................... 6 SECTION 2.7 Company Option Plans and Agreements..................... 7 SECTION 2.8 Payment for Shares...................................... 7 SECTION 2.9 Transfers............................................... 8 SECTION 2.10 Special Meeting........................................ 8 SECTION 2.11 Compulsory Acquisition of Minority Shares......................................................... 9 ARTICLE III. REPRESENTATIONS AND WARRANTIES OF COMPANY SECTION 3.1 Organization............................................ 10 SECTION 3.2 Capitalization.......................................... 11 SECTION 3.3 Authority............................................... 11 SECTION 3.4 Voting Requirements..................................... 11 SECTION 3.5 No Violations; Consents and Approvals................... 12 SECTION 3.6 SEC Documents; Financial Statements..................... 12 SECTION 3.7 Absence of Certain Changes.............................. 14 SECTION 3.8 Legal Proceedings....................................... 14 SECTION 3.9 Compliance with Laws and Agreements..................... 14 SECTION 3.10 Schedule 14D-9 and Disclosure Statement; Other Information.............................................. 15 SECTION 3.11 State Antitakeover Statutes............................ 15 SECTION 3.12 Broker's Fees.......................................... 15 SECTION 3.13 Opinion of Financial Advisor........................... 16 SECTION 3.14 Taxes.................................................. 16 SECTION 3.15 Employees.............................................. 17 SECTION 3.16 Disclosure............................................. 18 - i - SECTION PAGE ------- ---- ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO SECTION 4.1 Organization............................................ 19 SECTION 4.2 Authority............................................... 19 SECTION 4.3 No Violations........................................... 19 SECTION 4.4 Offer Documents; Other Information...................... 20 SECTION 4.5 Financial Ability to Perform............................ 20 ARTICLE V. COVENANTS SECTION 5.1 Conduct of Business of Company.......................... 20 SECTION 5.2 Public Announcements.................................... 22 SECTION 5.3 Acquisition Proposals................................... 22 SECTION 5.4 Access to Information................................... 25 SECTION 5.5 Board Recommendation.................................... 25 SECTION 5.6 Reasonable Best Efforts; Other Actions.................. 25 SECTION 5.7 Notification of Certain Matters......................... 25 SECTION 5.8 Indemnification......................................... 26 SECTION 5.9 Termination of Share Plans.............................. 27 SECTION 5.10 Certain Change in Control Matters...................... 27 ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE AMALGAMATION SECTION 6.1 Conditions to Each Party's Obligation to Effect the Amalgamation............................... 27 ARTICLE VII. CLOSING SECTION 7.1 Time and Place.......................................... 28 ARTICLE VIII. TERMINATION; AMENDMENT; WAIVER SECTION 8.1 Termination............................................. 28 SECTION 8.2 Effect of Termination................................... 30 SECTION 8.3 Certain Payments; Expenses.............................. 30 ARTICLE IX. DEFINITIONS SECTION 9.1 Definitions............................................. 31 SECTION 9.2 Terms Defined in the Agreement.......................... 32 - ii - SECTION PAGE ------- ---- ARTICLE X. MISCELLANEOUS SECTION 10.1 Amendment and Modification............................. 33 SECTION 10.2 Waiver of Compliance; Consents......................... 34 SECTION 10.3 Survival............................................... 34 SECTION 10.4 Notices................................................ 34 SECTION 10.5 Assignment............................................. 35 SECTION 10.6 Governing Law.......................................... 35 SECTION 10.7 Counterparts........................................... 35 SECTION 10.8 Severability........................................... 35 SECTION 10.9 Interpretation......................................... 36 SECTION 10.10 Entire Agreement...................................... 36 - iii - AGREEMENT AND PLAN OF AMALGAMATION AGREEMENT AND PLAN OF AMALGAMATION, dated as of May 8, 1997 (the "Agreement"), by and among GCR HOLDINGS LIMITED, a Cayman Islands limited liability company ("Company"), EXEL LIMITED, a Cayman Islands limited liability company ("Parent"), and EXEL ACQUISITION LTD., a Cayman Islands limited liability company and a wholly owned subsidiary of Parent ("Newco"). Company and Newco are hereinafter sometimes collectively referred to as the "Constituent Companies," and Company, Parent and Newco are hereinafter sometimes collectively referred to as the "Parties." WHEREAS, the Board of Directors of Company (the "Board") has unanimously determined that it is fair to, and in the best interests of, Company and its shareholders for Parent to acquire Company upon the terms and subject to the conditions hereinafter set forth, and recommends that shareholders of Company accept the Offer and tender their Shares pursuant to the Offer and adopt and approve the Amalgamation; WHEREAS, in furtherance of such acquisition, it is proposed that Parent shall cause Newco to make a tender offer (the "Offer") to acquire all the issued and outstanding ordinary shares, par value $.10 per share, of Company (the "Shares") for $27.00 in cash per Share, net to the seller (such amount, or any higher amount as may be paid for Shares pursuant to the Offer, being hereinafter referred to as the "Amalgamation Consideration"), upon the terms and subject to the conditions of this Agreement and the Offer; and WHEREAS, the Boards of Directors of each of Parent, Newco and Company have approved the amalgamation of Newco with and into Company (the "Amalgamation") following consummation of the Offer, upon the terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the Parties agree as follows: ARTICLE I. THE OFFER SECTION 1.1 The Offer. (a) As promptly as practicable (but in no event later than five business days after the date of the initial public announcement of the execution and delivery of this Agreement), Newco shall, and Parent shall cause Newco to, commence (within the meaning of Rule 14d-2 under the United States Securities Exchange Act of 1934, as amended (collectively with the rules and regulations promulgated thereunder, the "Exchange Act")), the Offer and, subject to the conditions of the - 2 - Offer, shall use commercially reasonable efforts to consummate the Offer as promptly as permitted by law. The obligation of Parent and Newco to consummate the Offer, to accept for payment and to pay for any Shares tendered pursuant to the Offer (i) shall be subject to the condition that the number of Shares validly tendered and not withdrawn prior to the expiration date of the Offer (the "Expiration Date"), together with all Shares beneficially owned by Parent or any of its subsidiaries on such date (the "Parent Owned Shares"), shall be not less than 75% of the Shares then outstanding, calculated on a fully diluted basis (the "Minimum Condition"), and (ii) shall be subject to the other conditions set forth in Annex A. (b) Parent and Newco expressly reserve the right to increase the price per Share payable in the Offer or to make any other changes in the terms and conditions of the Offer; provided, however, that neither Parent nor Newco will, without the prior written consent of Company, decrease the consideration payable in the Offer, reduce the number of Shares subject to the Offer, impose any additional conditions to the Offer, change the form of consideration payable in the Offer or amend or alter any other term of the Offer in any manner materially adverse to the holders of Shares. Company agrees that no Shares held by Company or any of its subsidiaries will be tendered pursuant to the Offer. Notwithstanding any other provision of this Agreement, the conditions of the Offer are for the sole benefit of Parent and Newco and may be asserted by Parent and Newco regardless of the circumstances giving rise to any such conditions or may be waived by Parent and Newco in whole at any time or in part from time to time in their sole and absolute discretion (except that, without Company's consent, Newco may not reduce the percentage amount of the Minimum Condition to less than majority). (c) As soon as practicable on the date of commencement of the Offer, Parent and Newco shall file with the United States Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will contain the offer to purchase and form of the related letter of transmittal (together with any supplements or amendments thereto, collectively referred to herein as the "Offer Documents"). Parent and Newco shall give Company and its counsel a reasonable opportunity to review the Offer Documents prior to their being filed with the SEC or disseminated to the shareholders of Company. Parent and Newco will furnish Company and its counsel in writing any comments that Parent, Newco or their counsel may receive from the SEC or its staff with respect to the Offer Documents, promptly after receipt of such comments, and the proposed responses thereto. Each of Parent and Newco (and Company with respect to information supplied by it specifically for use in the Offer Documents) agrees to promptly correct the Offer Documents if and to the extent that they shall have become false or misleading in any material respect, and Parent and Newco - 3 - shall take all steps reasonably necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to Company's shareholders, in each case as and to the extent required by applicable United States federal securities laws. (d) Parent shall provide or cause to be provided to Newco on a timely basis the funds sufficient to accept for payment, and Parent shall cause Newco to pay for, any and all Shares that Newco becomes obligated to accept for payment pursuant to the Offer. SECTION 1.2 Company Actions. Company hereby consents to the Offer and represents that (a) the Board (at a meeting duly called and held) has unanimously (i) determined that the Offer and the Amalgamation are fair to, and in the best interests of, Company and its shareholders, (ii) approved this Agreement and the Offer and the transactions contemplated hereby, including the Offer and the Amalgamation, and (iii) resolved to recommend acceptance of the Offer and approval of the Amalgamation by Company's shareholders, and (b) Goldman, Sachs & Co. have advised, and delivered their written opinion to, the Board that as of the date hereof, the cash consideration to be received by Company's shareholders in the Offer and the Amalgamation is, based upon and subject to the matters set forth therein, fair to such shareholders. Company hereby agrees to file with the SEC contemporaneously with the commencement of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") containing such recommendations in favor of the Offer and the Amalgamation. Company (and Newco and Parent, with respect to information supplied by either of them specifically for use in the Schedule 14D-9) agrees promptly to correct the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect, and Company shall take all steps reasonably necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to Company's shareholders, in each case as and to the extent required by applicable United States federal securities laws. Company hereby consents to the inclusion in the Offer Documents of the representation in the first sentence of this paragraph. In connection with the Offer, Company will promptly furnish Newco with mailing labels, security position listings and any available listing or computer file containing the names and addresses of the record holders of Shares as of a recent date, and shall furnish Newco with such information and assistance as Newco or its agents may reasonably request in communicating the Offer to Company's shareholders, such information to be subject, to the extent applicable, to the Confidentiality Agreement. SECTION 1.3 Directors; Section 14(f). (a) Promptly upon the purchase by Parent or Newco of such number of Shares that, together with the number of Parent Owned Shares, represents - 4 - at least a majority of the outstanding Shares, and from time to time thereafter prior to the Effective Time, (i) Parent shall be entitled to designate such number of directors, rounded up to the next whole number but in no event more than one less than the total number of directors, on the Board as will give Parent, subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 thereunder, representation on the Board equal to the product of the number of directors on the Board and the percentage that such number of purchased Shares and Parent Owned Shares bears to the number of Shares outstanding, and (ii) Company shall, upon request by Parent, promptly (x) increase the size of the Board to the extent permitted by its Organization Documents and/or (y) exercise its best efforts to secure the resignations of such number of directors as is necessary to enable Parent's designees to be elected to the Board and cause Parent's designees to be so elected; provided, however, that until the Effective Time (or termination of this Agreement) the Board will have at least two Independent Directors, each of whom shall resign at the Effective Time or such termination. At the request of Parent, Company shall take, at its expense, all action necessary to effect any such election, including mailing to its shareholders the information required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. Parent and Newco will supply to Company in writing and shall be solely responsible for any information with respect to any of them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. At any time Parent's designees constitute a majority of the Board, Parent shall be entitled to designate all of the members of the board of directors of each subsidiary of Parent, subject to any applicable restrictions under the Insurance Act 1978 of Bermuda (the "Insurance Act") and any rules and regulations of the Bermuda Minister of Finance (the "Minister") thereunder. The provisions of this Section 1.3 are in addition to and shall not limit any rights that Newco, Parent or any of their affiliates may have as a holder or beneficial owner of Shares as a matter of law with respect to the election of directors or otherwise. "Independent Director" means (x) the two members of the Board not otherwise affiliated with Parent or Newco and not employees of Company or any of its subsidiaries, who shall be designated by Company, Newco and Parent, or (y) any successor of either of them reasonably satisfactory to Parent and Newco designated by the Independent Directors then in office; provided, however, that if a successor is not so designated after an Independent Director resigns or otherwise leaves office, Parent shall be entitled to designate a successor who meets the requirements of clause (x). (b) Following the election or appointment of Parent's designees pursuant to this Section 1.3 and prior to the Effective Time (or termination of this Agreement), (i) any amendment to - 5 - this Agreement, (ii) any termination of this Agreement by Company, (iii) any extension by Company of the time for the performance of any of the obligations or other acts of Parent or Newco and (iv) any waiver of any of Company's rights under this Agreement will require the concurrence of the Independent Directors then in office. ARTICLE II. THE AMALGAMATION; DISPOSITION OF SHARES SECTION 2.1 The Amalgamation. In accordance with the provisions of this Agreement and the Companies Law (1995 Revision) of the Cayman Islands (the "Companies Law"), at the Effective Time, Newco and Company shall be amalgamated. At and after the Effective Time, Company shall continue in the form of the amalgamated company and shall operate under the name "GCR Holdings Limited" (the "Amalgamated Company"). SECTION 2.2 Effect of the Amalgamation. The Amalgamation shall have the effects set forth in Sections 85 and 86 of the Companies Law. SECTION 2.3 Memorandum of Association and Articles of Association of the Amalgamated Company; Registration Number. The memorandum of association of Company shall become the memorandum of association of the Amalgamated Company and thereafter may be amended as provided therein and by law. The articles of association of Company shall become the articles of association of the Amalgamated Company and thereafter may be amended as provided therein and by law. The registration number of the Amalgamated Company in the Cayman Islands after the Effective Time shall be the same registration number as that of Company immediately prior to the Effective Time. SECTION 2.4 Directors and Officers of the Amalgamated Company. At the Effective Time, the then current directors of Newco and any additional individuals designated by Parent shall be the initial directors of the Amalgamated Company, each of such directors to hold office in accordance with the applicable provisions of the memorandum and articles of association of the Amalgamated Company and until their successors shall be elected or appointed and shall duly qualify. Except as may be designated by Parent, immediately prior to the Effective Time, the current directors of Company shall cease to be directors of Company and shall not be directors of the Amalgamated Company. After giving effect to the Amalgamation, the officers of the Amalgamated Company shall be the individuals then designated by Parent, each to hold office in accordance with the applicable provisions of the memorandum and articles of association of the Amalgamated Company and until their respective successors are duly elected or appointed and qualified. - 6 - SECTION 2.5 Further Assurances. If, at any time after the Effective Time, the Amalgamated Company shall consider or be advised that any deeds, bills of sale, assignments, assurances, or any other actions or things (including an order of the court under Section 86 of the Companies Law) are necessary or desirable to vest, perfect or confirm of record or otherwise in the Amalgamated Company its right, title or interest in, to or under any of the rights, properties or assets of either of the Constituent Companies acquired or to be acquired by the Amalgamated Company as a result of, or in connection with, the Amalgamation or otherwise to carry out this Agreement, the officers and directors of the Amalgamated Company shall be authorized to execute and deliver, in the name and on behalf of each of the Constituent Companies or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of the Constituent Companies or otherwise, all such other actions and things as may be necessary or desirable (including an application to the court under Section 86 of the Companies Law) to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Amalgamated Company or otherwise to carry out this Agreement and the transactions contemplated hereby. SECTION 2.6 Effect on Shares of Newco and Company. As of the Effective Time, by virtue of the Amalgamation and without any action on the part of the holders thereof: (a) Each Share issued and outstanding immediately prior to the Effective Time (except for Shares owned by Company or any of its subsidiaries) shall be canceled, and the holder thereof shall be entitled to receive in cash the Amalgamation Consideration. (b) Each Company Option outstanding immediately prior to the Effective Time shall be canceled, and the holder thereof shall be entitled to receive an amount in cash equal to (x) the product of the number of Shares covered by such Company Option multiplied by the Amalgamation Consideration minus (y) the option exercise price payable upon exercise of such option. (c) All ordinary shares, par value $.01 per share, of Newco issued and outstanding immediately prior to the Effective Time shall, by virtue of the Amalgamation and without any action on the part of the holder thereof, be converted into and become at the Effective Time ordinary shares of the Amalgamated Company. (d) Each Share owned by Company or any of its subsid- iaries shall be canceled. - 7 - (e) At and after the Effective Time, each certificate representing Shares shall represent only the right to receive the Amalgamation Consideration payable in exchange for such Shares upon the surrender of such certificate for payment in accordance with Section 2.8. At and after the Effective Time, each holder of a certificate or certificates that represented issued and outstanding Shares immediately prior to the Effective Time ("Certificates") shall cease to have any rights as a shareholder of Company. SECTION 2.7 Company Options. The Company will use its best efforts (including, to the extent possible, by way of amendment to the Company Plans) so that, upon consummation of the Offer, each outstanding Company Option shall be canceled in exchange for an amount of cash equal to (x) the product of the number of Shares covered by such Company Option multiplied by the Amalgamation Consideration minus (y) the option exercise price payable upon exercise of such option. SECTION 2.8 Payment for Shares. (a) Prior to the Effective Time, Parent shall designate a bank or trust company reasonably satisfactory to Company to act as paying agent in the Amalgamation (the "Paying Agent"). At or prior to the Effective Time, Parent will take all steps necessary to enable and cause the Amalgamated Company to provide the Paying Agent funds necessary to make the payments contemplated by Sections 2.6 and 2.7. Any funds remaining with the Paying Agent three months after the Effective Time shall be released and repaid by the Paying Agent to the Amalgamated Company, after which time persons entitled thereto may look, subject to applicable escheat and other similar laws, only to the Amalgamated Company for payment thereof. (b) As soon as practicable after the Effective Time, Parent shall cause the Paying Agent to mail to each record holder of Certificates, as of the Effective Time, a form letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates for payment therefor. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor an amount equal to the product of the number of Shares represented by such Certificate and the Amalgamation Consideration, and such Certificate shall forthwith be canceled. No interest will be paid or accrued on the cash payable upon the surrender of the Certificates. If payment is to be made to a person other than the person in whose name the Certificate surrendered is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other - 8 - Taxes required by reason of the payment to a person other than the registered holder of the Certificate surrendered or establish to the satisfaction of the Amalgamated Company that such Tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 2.8, each Certificate (other than Certificates representing Shares held by Company or any subsidiary of Company) shall represent for all purposes the right to receive the Amalgamation Consideration in cash multiplied by the number of Shares evidenced by such Certificate, without any interest thereon. (c) The Amalgamated Company shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of cash for Shares. SECTION 2.9 Transfers. From and after the Effective Time, there shall be no transfers of Shares of Company or the Amalgamated Company. If, after the Effective Time, Certificates are presented to the Amalgamated Company, they shall be canceled and exchanged as provided in this Article II. SECTION 2.10 Special Meeting. (a) If required by applicable law in order to consummate the Amalgamation, Company, acting through the Board, shall, upon consummation of the Offer, in accordance with applicable law and subject to the applicable provisions of this Agreement: (i) duly call, give notice of, convene and hold a special meeting (the "Special Meeting") of its shareholders as soon as practicable following the consummation of the Offer for the purpose of considering and taking action with respect to the Amalgamation; and (ii) if required, file with the SEC under the Exchange Act, a Disclosure Statement and use its best efforts to obtain and furnish the information required to be included by it in the Disclosure Statement and, after consultation with Parent, to respond promptly to any comments made by the SEC with respect to the Disclosure Statement and any preliminary version thereof and cause the Disclosure Statement to be mailed to its shareholders at the earliest practicable time following the consummation of the Offer or at such other time as Parent shall direct following consultation with Company. (b) Parent will provide Company with the information regarding Parent and Newco required to be included in the Disclosure Statement. Parent further agrees that, at the Special Meeting, all of the Shares then owned by Parent and Newco will be voted in favor of the Amalgamation. - 9 - (c) The Disclosure Statement shall state that the Board unanimously (i) has approved the Offer and the Amalgamation, (ii) has determined that the Offer and the Amalgamation taken together are fair and in the best interests of the Company and its shareholders, and (iii) recommends that shareholders of Company both accept the Offer and tender their Shares pursuant to the Offer and adopt and approve the Amalgamation. Company shall give Parent, Newco and their counsel a reasonable opportunity to review the Disclosure Statement prior to their being filed with the SEC or disseminated to the shareholders of Company. Company will furnish Parent, Newco and its counsel any comments that Company or its counsel may receive from the SEC or its staff with respect to the Disclosure Statement, promptly after receipt of such comments, and the proposed responses thereto. "Disclosure Statement" means the letter to shareholders, notice of meeting, proxy statement and form of proxy, or the information statement, as the case may be, to be distributed to shareholders in connection with the Amalgamation, including any schedules required to be filed with the SEC in connection therewith. SECTION 2.11 Compulsory Acquisition of Minority Shares. In the event that, following the purchase of Shares pursuant to the Offer, Parent, Newco and any other subsidiary of Parent shall own an aggregate of at least 90% of the outstanding Shares, the Parties agree, at the request of Parent or Newco, to take all necessary and appropriate action to effect the compulsory acquisition of those outstanding Shares not owned by Parent, Newco or any other subsidiary of Parent in accordance with Section 87 of the Companies Law. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF COMPANY Company represents and warrants to Parent and Newco that, except as specifically disclosed in the Disclosure Schedule, dated the date hereof, being delivered confidentially by Company to Parent and Newco concurrently herewith (the "Disclosure Schedule"): SECTION 3.1 Organization. Company and each of its subsidiaries is a company duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Company and each of its subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, - 10 - leased or operated by it or the nature of the business conducted by it makes such qualification, license or good standing necessary, except where the failure to be so duly qualified or licensed or be in good standing would not, individually or in the aggregate, (x) have a material adverse effect on the business, operations, assets, condition (financial or other), prospects or results of operations of Company and its subsidiaries taken as a whole or (y) prevent or materially delay the consummation of the Offer or the Amalgamation on the terms contemplated hereby (each, a "Material Adverse Effect"). Except as and to the extent set forth in the SEC Documents, Company owns directly or indirectly all of the outstanding capital stock of each of its subsidiaries. Neither Company nor any of its subsidiaries is required to be authorized, qualified, licensed or domesticated under any federal, state or local law in the United States. Company has furnished to Parent and Newco complete and correct copies of the Organizational Documents of Company and each of its subsidiaries as in effect on the date hereof. Such Organizational Documents are in full force and effect and no other Organizational Documents are applicable to or binding upon Company or any of its subsidiaries. "Organizational Documents" means, with respect to any person, the articles of association, memorandum of association, bye-laws and similar documents (including any shareholders and similar agreement) of such person. SECTION 3.2 Capitalization. Company's authorized capital consists of 50,000,000 Shares (of which 1,040,283 Shares have been repurchased by Company and retired) and 25,000,000 other shares, par value $.10 per share ("Other Shares"). As of the date hereof and after giving effect to the Second Quarter Dividend, there are 24,766,255 Shares issued and outstanding, 26,278 restricted Shares (all of which shall vest upon consummation of the Offer) and no Other Shares issued and outstanding. Neither Company nor any of its subsidiaries holds any Shares. As of the date hereof, there were reserved under the share option plans of Company (the "Company Plans"), all of which are described in the SEC Documents, 997,925 Shares for issuance upon exercise of outstanding options to acquire Shares ("Company Options"). Except for the options to acquired such Shares under Company Plans, the restricted Shares described above and for the 5,283 Shares to be issued as a dividend on certain Shares in connection with the Second Quarter Dividend, there are not now, and at the Effective Time there will not be, any existing options, warrants, calls, subscriptions, or other rights, agreements or commitments obligating Company or any of its subsidiaries to issue, transfer or sell any share capital of Company or any of its subsidiaries or any other securities convertible into or evidencing the right to subscribe for any such share capital. All issued and outstanding Shares are duly - 11 - authorized and validly issued, fully paid and non-assessable and free of preemptive rights with respect thereto. SECTION 3.3 Authority. Company has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, subject, in the case of the Amalgamation, to approval of Company's shareholders (if required by applicable law) as described in Section 3.4. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by its Board of Directors, and no corporate proceedings on the part of the Company are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby, subject, in the case of the Amalgamation, to approval of Company's shareholders (if required by applicable law) as described in Section 3.4. This Agreement has been duly and validly executed and delivered by Company and (assuming this Agreement constitutes a valid and legally binding agreement of Parent and Newco) constitutes a valid and legally binding agreement of Company, enforceable against Company in accordance with its terms. SECTION 3.4 Voting Requirements. The requisite shareholder vote under Sections 85 and 86 of the Companies Law approving the Amalgamation is the only vote of the holders of any securities of Company necessary in connection with the Amalgamation. SECTION 3.5 No Violations; Consents and Approvals. (a) Neither the execution and delivery of this Agreement nor the consummation by Company of the transactions contemplated hereby nor compliance by Company with any of the provisions hereof will (i) be subject, in the case of the Amalgamation, to obtaining the approval of its shareholders as described in Section 3.4 and, if required under applicable law, to approval by a court of competent jurisdiction, violate any provision of its Organization Documents, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default, or give rise to any right of termination, cancellation or acceleration or any right which becomes effective upon the occurrence of a merger, consolidation or change in control, under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture or other instrument of, or document governing, indebtedness for money borrowed or any license, franchise or permit or any other agreement to which Company or any of its subsidiaries is a party, or by which Company or any of its subsidiaries or any of their respective properties is bound, or (iii) violate any statute, rule, regulation, order or decree of any public body or authority by which Company or any of its subsidiaries or any of its respective properties is bound, except in the case of clause (ii) or (iii), such as would not, individually or in the aggregate, have a Material Adverse Effect. - 12 - (b) No filing or registration with, notification to, or authorization, consent or approval of, any governmental entity is required by Company or any of its subsidiaries in connection with the execution and delivery of this Agreement or the consummation by Company of the transactions contemplated hereby, except (i) the approval of the Minister under the Insurance Act, (ii) in connection, or in compliance, with the provisions of the Exchange Act or any other foreign or state securities or "blue sky" laws, (iii) the registration of the Amalgamated Company with the Registrar and (iv) filings with the Nasdaq National Market System and the SEC with respect to the deregistration of Shares. SECTION 3.6 SEC Documents; Financial Statements. (a) Company has provided to Parent and Newco a list of each registration statement, report, proxy statement or information statement, including all exhibits and schedules thereto, heretofore filed by it with the SEC (the "SEC Documents"). As of their respective dates, the SEC Documents complied as to form in all material respects with the applicable requirements of the United States Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act, as the case may be. None of the SEC Documents contained any untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Board consists of the directors identified in Company's proxy statement for the annual general meeting of shareholders held on December 19, 1996 (the "1996 Proxy Statement"). Company agrees that all SEC Documents, other than those specifically identified in writing by Company as excluded documents, are deemed to have been provided to Parent and Newco by Company specifically for use in the Offer Documents. (b) The consolidated financial statements included in Company's SEC Documents complied, as of their respective dates, in all material respects with then applicable accounting requirements and the rules and regulations of the SEC with respect thereto, were prepared in accordance with United States generally accepted accounting principles ("GAAP"), applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present, in all material respects, the consolidated financial position, results of operations, cash flows and changes in shareholders' equity of Company and its subsidiaries at the dates and for the periods presented (subject, in the case of unaudited statements, to the lack of footnotes thereto, to normal year-end audit adjustments (consisting only of normal recurring accruals) and to any other adjustments described therein). (c) Company has provided to Parent and Newco copies of each annual statutory financial return filed by Global Capital Reinsurance Limited with the Bermuda Registrar of Companies (the - 13 - "Bermuda Registrar") for the years ended September 30, 1995 and 1996. The statutory financial statements included in such returns were prepared in accordance with statutory accounting practices prescribed by the Insurance Act and the rules and regulations of the Bermuda Registrar thereunder and fairly present the admitted assets, liabilities, capital and surplus and results of operations and cash flows of Global Capital Reinsurance Limited at the dates and for the periods presented. (d) Neither Company nor any of its subsidiaries, nor any of their respective assets, businesses or operations, is as of the date of this Agreement a party to, or is bound or affected by, or receives benefits under any contract or agreement or amendment thereto, that in each case would be required to be filed as an exhibit to a Form 10-K as of the date of this Agreement that has not been filed as an exhibit to an SEC Document filed prior to the date hereof. (e) The SEC Documents include (i) consolidated balance sheets of Company as of September 30, 1996 and March 31, 1997 and (ii) consolidated statements of income of Company for the years ended September 30, 1995 and 1996 and the six months ended March 31, 1996 and 1997. The foregoing consolidated audited balance sheet as of September 30, 1996 is sometimes herein referred to as the "Balance Sheet." The foregoing consolidated unaudited balance sheet as of March 31, 1997 is sometimes herein referred to as the "Interim Balance Sheet." (f) There are no liabilities or obligations of Company or any of its subsidiaries accrued, absolute, or contingent and whether due or to become due, other than liabilities or obligations (i) reflected, or adequately reserved against, in the Interim Balance Sheet or (ii) that, individually or in the aggregate, would not have a Material Adverse Effect. (g) No dividends have been declared or paid on any Shares since March 31, 1997 except for the Second Quarter Dividend. SECTION 3.7 Absence of Certain Changes. Since the date of the Interim Balance Sheet, Company has not (a) suffered any event, condition or occurrence, that individually or in the aggregate, would have a Material Adverse Effect or (b) implemented any change in accounting methods, principles or practices except as required by GAAP. SECTION 3.8 Legal Proceedings. Except as specifically disclosed in the SEC Documents filed prior to the date hereof, there is no (i) claim, action, suit or proceeding pending or, to Company's best knowledge, threatened, against or relating to it or any of its subsidiaries or any of their respective assets before any court or governmental or regulatory authority or body - 14 - or arbitration tribunal or (ii) outstanding judgment, order, writ, injunction or decree, or application, request or motion therefor, of any court governmental agency or arbitration tribunal in a proceeding to which Company or any of its subsidiaries is a party, except any such claim, action, suit or proceeding or judgment, order, writ, injunction, decree, application, request or motion which if adversely determined, individually or in the aggregate, would not have a Material Adverse Effect. SECTION 3.9 Compliance with Laws and Agreements. Neither Company nor any of its subsidiaries is (i) in violation of or noncompliance with any statute, law, ordinance, regulation, rule or order of any foreign, federal, state or local government or any other governmental department or agency, or any judgment, decree or order of any court, applicable to its business or operations or (ii) in violation, breach or default (with or without due notice or lapse of time or both) under any of the terms, conditions or provisions of any agreement to which it is a party, or by which any of its properties is bound, except where any such violations or failures to comply or breaches or defaults would not, individually or in the aggregate, have a Material Adverse Effect. Company and its subsidiaries have all permits, licenses and franchises from governmental agencies required to conduct their businesses as now being conducted, except for such permits, licenses and franchises the absence of which would not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.10 Schedule 14D-9 and Disclosure Statement; Other Information. The Schedule 14D-9 and, if a Disclosure Statement is required for the consummation of the Amalgamation under applicable law, the Disclosure Statement will each comply as to form in all material respects with the requirements of the Exchange Act. The Schedule 14D-9 will not, at the time it is filed with the SEC or is first published, sent or given to Company's shareholders, and any such Disclosure Statement will not, at the time it is filed with the SEC, is first published, sent or given to Company's shareholders, or at the time of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of circumstances under which they were made, not misleading; provided, however, that the foregoing shall not apply to the extent that any such untrue statement or omission was made by Company in reliance upon and in conformity with information furnished to Company by Parent or Newco specifically for use in the Schedule 14D-9 and Disclosure Statement, as the case may be. The information supplied or to be supplied by Company specifically for use in the Offer Documents will not, at the time they are filed with the SEC or are first published, sent or given to Company's shareholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements - 15 - therein, in the light of the circumstances under which they were made, not misleading. SECTION 3.11 State Antitakeover Statutes. No "business combination," "moratorium," "control share" or other anti-takeover statute or regulation (x) prohibits or restricts Company's ability to perform its obligations under this Agreement or its ability to consummate the transactions contemplated hereby, (y) would have the effect of invalidating or voiding this Agreement, or any material provision hereof, or (z) would subject Parent or Newco to any material impediment or condition in connection with the exercise of any of their respective rights under this Agreement or with respect to Company or the Amalgamated Company. SECTION 3.12 Broker's Fees. Except for the engagement of Goldman, Sachs & Co. by Company, neither Company nor any of its subsidiaries nor any of their respective directors or officers has employed any broker, finder or financial advisor or incurred any liability for any broker's fees, commissions, or financial advisory or finder's fees in connection with any of the transactions contemplated by this Agreement. Company has provided to Parent copies of Company's engagement letter with Goldman, Sachs & Co. in connection with this Agreement and the transactions contemplated hereby. SECTION 3.13 Opinion of Financial Advisor. Company has received the opinion of Goldman, Sachs & Co., dated the date hereof, to the effect that, as of such date, the consideration to be received in the Offer and the Amalgamation by the shareholders of Company is fair to such shareholders, a copy of which opinion has been delivered to Parent. SECTION 3.14 Taxes. (a) Neither Company nor any of its subsidiaries has, or has had, any income which is, or has been, subject to the United States federal income tax as income effectively connected with the conduct of a trade or business within the United States, within the meaning of Sections 842 or 882(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code"). Global Capital Reinsurance Limited is and has been predominantly engaged in the active conduct of an insurance business within the meaning of Section 1296(b) of the Code. Company and its subsidiaries have prepared and timely filed or will timely file with the appropriate governmental agencies all Tax (as hereinafter defined) returns, information returns and reports (collectively, "Tax Returns") required to be filed for any period on or prior to the Effective Time, taking into account any extension of time to file granted to or obtained on behalf of Company and/or its subsidiaries which, if not filed, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and all such Tax Returns as filed are or will be accurate and complete in all material respects; all Taxes - 16 - of Company and its subsidiaries (including taxes withheld from employees' salaries and other withholding taxes and obligations) shown to be due on such Tax Returns have been paid in full to the proper authorities or fully accrued for with respect to fiscal periods for which there are publicly available financial statements in such statements and otherwise on the books of Company, other than such Taxes as are being contested in good faith by appropriate proceedings and are adequately reserved for in accordance with GAAP. All material written assessments of Taxes due and payable by or on behalf of Company or any of its subsidiaries have either been paid or adequately reserved for in accordance with GAAP. (b) Company has not for any taxable year (or portion thereof) ended on or prior to September 30, 1996, reported to its shareholders that the Company or any of its subsidiaries had incurred, in such taxable year (or portion thereof), and does not expect to have for the period commencing October 1, 1996 and ending on the date hereof (treating such period as if it were a taxable year), "related person insurance income" within the meaning of Section 953(c)(2) of the Code in excess of the amount determined under Section 953(c)(3)(B) of the Code. (c) There are no deficiencies that have been asserted in writing by a tax authority for Taxes that, individually or in the aggregate, would have a Material Adverse Effect. Neither Company nor any of its subsidiaries has any liability for any material Cayman Islands, Bermuda, United Kingdom or United States federal, state, local, foreign or other Taxes of any corporation or entity other than Company and its subsidiaries. There is no action, suit, proceeding, investigation, audit or claim now pending or, to the knowledge of Company or its subsidiaries, threatened in writing by any authority regarding any Taxes relating to Company or any of its subsidiaries that, individually or in the aggregate, would have a Material Adverse Effect. (d) There are no liens or security interests on any of the assets of Company or any of its subsidiaries that arose in connection with any failure (or alleged failure) to pay any Taxes that, individually or in the aggregate, would have a Material Adverse Effect. "Tax" or "Taxes" shall mean all Cayman Islands, Bermuda, United Kingdom and United States federal, state, local and foreign taxes, duties, levies, charges and assessments of any nature, including social security payments and deductibles relating to wages, salaries and benefits and payments to subcontractors (to the extent required under applicable Tax law), and also including all interest, penalties and additions imposed with respect to such amounts. - 17 - SECTION 3.15 Employees. (a) Section 3.15 of the Disclosure Schedule lists (i) all Employee Benefit Plans, (ii) all employment contracts and similar arrangements between Company or any of its subsidiaries and its employees, and (iii) all plans and arrangements pursuant to which Company or any of its subsidiaries is, or may be or become, obligated to make any payment to confer any benefit upon or accelerate the vesting or exercisability of any benefit for any officer, director, employee or agent of Company as a result of or in connection with any of the transactions contemplated by this Agreement or any transaction or transactions resulting in a change of control of Company. Company is not aware that any officer, director, executive or key employee of Company or any of its subsidiaries or any group of employees of Company or any of its subsidiaries has any plans to terminate his, her or its employment. (i) Company and its subsidiaries have complied with all laws relating to the employment of labor, including provisions thereof relating to wages, hours, equal opportunity, and collective bargaining except where the failure so to comply could not reasonably be expected to have a Company Material Adverse Effect, (ii) no labor dispute with employees of Company exists or, to the knowledge of Company, is threatened, except as could not reasonably be expected to have a Company Material Adverse Effect, (iii) each Employee Benefit Plan conforms in all material respects to, and its administration is in conformity in all material respects with, all applicable laws, no material liability has been or is expected to be incurred by Company with respect to any Employee Benefit Plan except for benefits payable or contributions due under the terms of such plans, and full payment has been made of all amounts that Company is required to have paid as contributions to each Employee Benefit Plan, (iv) Company has provided Parent with a true and correct copy of each of the Employee Benefit Plans and all contracts relating thereto, or to the funding thereof, (v) all Employee Benefit Plans intended to satisfy applicable tax qualification requirements or other requirements necessary to secure favorable tax or other legal treatment comply in all material respects with such requirements, and (vi) adequate accruals for all obligations under the Employee Benefit Plans are reflected in the financial statements of Company. Neither Company nor any of its subsidiaries nor any of their ERISA Affiliates has incurred or expect to incur any liability under Title IV of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Neither Company nor any of its subsidiaries has ever maintained, contributed to or had any liability with respect to an employee benefit plan subject to Title IV of ERISA. All contributions to employee benefit plans required to be made by Company, its subsidiaries or any of their ERISA Affiliates in accordance with the terms of the plans, any applicable collective bargaining agreement and, when applicable, Section 302 of ERISA or Section 412 of the Code, have been timely made. - 18 - "Employee Benefit Plan" shall mean each benefit plan maintained or contributed to by Company or any of its subsidiaries or with respect to which Company or any of its subsidiaries may have any liability which provides (or is intended to provide) benefits to the employees of Company or any of its subsidiaries (or other service providers to Company or any of its subsidiaries), including each pension, retirement or deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation plan, vacation pay, severance pay, bonus or benefit arrangement, insurance, medical or hospitalization program, sickness, accident, disability or death benefit program or any other fringe benefit. "ERISA Affiliate" shall mean any person (as defined in Section 3(9) of ERISA) that is or has been a member of any group of persons described in Section 414(b), (c), (m) or (o) of the Code, including Company or one of its subsidiaries. (b) There are no pending or, to the knowledge of Company, threatened claims for indemnification by Company or any of its subsidiaries in favor of directors, officers, employees and agents of Company or any of its subsidiaries. SECTION 3.16 Disclosure. No representation or warranty by Company and no statement or information relating to Company or any of its subsidiaries contained herein, or in any certificate furnished by or on behalf of Company to Parent or Newco in connection herewith, contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary in order to make the statements herein or therein, in the light of the circumstances under which they were made, not misleading. ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO Parent and Newco hereby jointly and severally represent and warrant to Company as follows: SECTION 4.1 Organization. Each of Parent and Newco is a company duly organized, validly existing and in good standing under the laws of their respective jurisdictions of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of Parent and Newco is duly qualified or licensed to conduct business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification, license or good standing necessary, except where the failure to be so duly qualified or licensed or be in good - 19 - standing would not have a material adverse effect on Parent's or Newco's ability to consummate the transactions contemplated hereby. Newco is a wholly owned subsidiary of Parent. SECTION 4.2 Authority. Each of Parent and Newco has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized and approved by the respective Boards of Directors of Parent and Newco and by Parent as the sole shareholder of Newco, and no other corporate proceedings on the part of Parent or Newco are necessary to authorize this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent and Newco and (assuming this Agreement constitutes a valid and legally binding agreement of Company) constitutes a valid and legally binding agreement of Parent and Newco, enforceable against each of them in accordance with its terms. SECTION 4.3 No Violations. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby nor compliance by Parent and Newco with any of the provisions hereof will violate any provision of their respective memorandum and articles of association. SECTION 4.4 Offer Documents; Other Information. The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act. The Offer Documents will not, at the time they are filed with the SEC or first published, sent or given to Company's shareholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing shall not apply to the extent that any such untrue statement or omission was made by Parent or Newco in reliance upon and in conformity with information furnished to Parent or Newco by Company specifically for use in the Offer Documents. The information supplied or to be supplied by Parent or Newco specifically for use in the Schedule 14D-9 or in the Disclosure Statement will not, at the time the Schedule 14D-9 or the Disclosure Statement, as the case may be, is filed with the SEC or is first published, sent or given to Company's shareholders or, in the case of the Disclosure Statement, at the time of the Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. - 20 - SECTION 4.5 Financial Ability to Perform. Parent and Newco presently have, and at all times up to and including the Expiration Date and the Effective Time will have, the financial resources necessary on the part of Parent and Newco to consummate the transactions contemplated by this Agreement. ARTICLE V. COVENANTS SECTION 5.1 Conduct of Business of Company. Except as expressly contemplated by this Agreement, during the period from the date of this Agreement to the Effective Time, Company will, and will cause its subsidiaries to, conduct their operations according to their ordinary course of business consistent with past practice, and will use all reasonable best efforts to preserve intact their business organization, to keep available the services of their officers and employees, to maintain all permits, licenses and franchises from governmental entities required to conduct their businesses as now being conducted and to maintain satisfactory relationships with producers, brokers, insureds, suppliers, distributors, customers and others having business relationships with it and will take no action which would materially adversely affect the ability of the Parties to consummate the transactions contemplated by this Agreement (it being understood that Company will discuss with Parent the implementation of the joint venture with Capital Re Corporation and the writing of any insurance thereby or thereunder). Without limiting the generality of the foregoing, and except as otherwise expressly provided in this Agreement, prior to the Effective Time, Company will not, and will not permit any of its subsidiaries to, without the prior written consent of Parent, directly or indirectly: (a) amend the Organizational Documents of Company or any of its subsidiaries; (b) authorize for issuance, issue, sell, deliver, grant any options for, or otherwise agree or commit to issue, sell or deliver any securities of Company or any of its subsidiaries, except pursuant to and in accordance with the terms of any Company Options outstanding on the date hereof; (c) split, combine or reclassify any shares of Company or any of its subsidiaries, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any such shares or purchase, redeem or otherwise acquire any such shares, except that the Company may pay the dividend of $0.62 per Share declared on April 25, 1997 payable on - 21 - May 27, 1997 to shareholders of record on May 14, 1997 (the "Second Quarter Dividend"); (d) (i) create, incur, assume, maintain or permit to exist any long-term debt or any short-term debt for borrowed money, except pursuant to Company's existing credit agreements in the ordinary course of the property catastrophe business to the extent required to pay properly documented claims, (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any person except in the ordinary course of its reinsurance business, consistent with past practices (except customary letters of credit issued in the ordinary course of business consistent with past practices), or (iii) make any loans, advances or capital contributions to, or investments in, any person; (e) (i) increase in any manner the compensation (including bonuses) of any director, officer or other employee of Company or any of its subsidiaries; (ii) pay or agree to pay any pension, retirement allowance or other employee benefit not required, or enter into or agree to enter into any agreement or arrangement with any such director, officer or employee, whether past or present relating to any such pension, retirement allowance or other employee benefit; (iii) grant any severance or termination pay to, or enter into any employment or severance agreement with, any such director, officer or other employee; or (iv) become obligated under any new pension plan, welfare plan, multi-employer plan, employee benefit plan, benefit arrangement, or similar plan or arrangement, which was not in existence on the date hereof, including any bonus, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other benefit plan, agreement or arrangement, or employment or consulting agreement with or for the benefit of any person, or amend any of such plans or any of such agreements in existence on the date hereof; (f) except as required by this Agreement, authorize, recommend, propose or announce an intention to authorize, recommend or propose, or enter into, any agreement in principle or any agreement with respect to any plan of liquidation or dissolution, any acquisition of a material amount of assets or securities, any sale, transfer, lease, license, pledge, mortgage, or other disposition or encumbrance of any assets or securities or any change in the capitalization of Company or any of its subsidiaries (other than upon exercise of Company Options outstanding on the date hereof), or, except for reinsurance agreements entered into in the ordinary course of business, consistent with past practice, (i) any other material agreements, commitments or contracts, - 22 - (ii) any amendment or modification thereof or (iii) any release or relinquishment of any material rights thereunder; (g) knowingly undertake any act, or suffer to exist any condition, causing any insurance policy naming it as a beneficiary or a loss payee to be canceled or terminated; (h) enter into any hedging, option, derivative or other similar transaction, except in the ordinary course of business consistent with past practices and following written notice to Parent; or (i) agree to do any of the foregoing. SECTION 5.2 Public Announcements. No party hereto shall issue any press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby without the approval of the other party (which shall not be unreasonably withheld or delayed) as to the wording, timing and media for such press release or statement. SECTION 5.3 Acquisition Proposals. (a) Company represents and warrants to, and covenants and agrees with, Parent and Newco that neither Company nor any of its subsidiaries has any agreement, arrangement or understanding with any potential acquiror that, directly or indirectly, would be violated, or require any payments, by reason of the execution, delivery and/or consummation of this Agreement. Company shall, and shall cause its subsidiaries and use its best efforts to cause its and their officers, directors, employees, investment bankers, attorneys and other agents and representatives to, immediately cease any existing discussions or negotiations with any person (including a "person" as defined in Section 13(d)(3) of the Exchange Act) other than Parent or Newco (a "Third Party") heretofore conducted with respect to any Acquisition Transaction. Company shall not, and shall cause its subsidiaries and use its best efforts to cause its and their officers, directors, employees, investment bankers, attorneys and other agents and representatives not to, directly or indirectly, (x) solicit, initiate, continue, facilitate or encourage (including by way of furnishing or disclosing non-public information) any inquiries, proposals or offers with respect to, or that could reasonably be expected to lead to, any acquisition or purchase of a material portion of the assets or business of, or any significant equity interest in (including by way of a tender offer), or any amalgamation, merger, consolidation or business combination with, or any recapitalization or restructuring, or any similar transaction involving, Company or any of its subsidiaries (the foregoing being referred to collectively as an "Acquisition Transaction"), or (y) negotiate, explore or otherwise communicate in any way with any Third Party with respect to any Acquisition Transaction or enter into, approve or recommend any agreement, arrangement or - 23 - understanding requiring Company to abandon, terminate or fail to consummate the Offer and/or the Amalgamation or any other transaction contemplated hereby. Notwithstanding anything to the contrary in the foregoing, Company may, prior to the purchase of Shares pursuant to the Offer, in response to an unsolicited written proposal with respect to an Acquisition Transaction involving the acquisition of all of the Shares (or all or substantially all of the assets of Company and its subsidiaries) from a Third Party (which proposal (I) is not subject to a financing condition and is from a person that Goldman, Sachs & Co. or another nationally recognized investment bank advises in writing is financially capable of consummating such proposal or (II) is subject to financing, but is from a person that Goldman, Sachs & Co. or another nationally recognized investment bank advises in writing is financially capable of achieving such financing to consummate such proposal, (i) furnish or disclose non-public information to such Third Party and (ii) negotiate, explore or otherwise communicate with such Third Party, in each case only if and to the extent that (a) the Board determines reasonably and in good faith by a majority vote (after receipt of written advice of Company's outside legal counsel that failing to take such action would, in all likelihood, constitute a breach of the fiduciary duties of the Board to Company's shareholders under applicable law), that taking such action would, in all likelihood, lead to an Acquisition Transaction that, based upon the written advice of Goldman, Sachs & Co., is more favorable to Company's shareholders than the Offer and the Amalgamation and that failing to take such action would, in all likelihood, constitute a breach of the fiduciary duties of the Board to Company's shareholders under applicable law (the proposal with respect to an Acquisition Transaction meeting the requirements of the parenthetical clause immediately preceding clause (i) and this clause (a), a "Superior Proposal"), (b) prior to furnishing or disclosing any non-public information to, or entering into discussions or negotiations with, such Third Party, Company receives from such Third Party an executed confidentiality agreement with terms no less favorable to Company than those contained in the Confidentiality Agreement, but which confidentiality agreement shall not provide for any exclusive right to negotiate with Company or any payments and (c) Company advises Parent of all such non-public information delivered to such Third Party concurrently with such delivery; provided, however, that Company shall not, and shall cause its affiliates not to, enter into a definitive agreement with respect to a Superior Proposal unless (x) Company concurrently terminates this Agreement in accordance with the terms hereof and pays any amounts required under Article VIII and (y) such agreement permits Company to terminate it if it receives a Superior Proposal, such termination and related provisions to be on terms no less favorable to Company, including as to fees and reimbursement of expenses, as those contained herein. - 24 - (b) Company shall promptly (but in any event within one day of Company becoming aware of same) advise Parent of the receipt by Company, any of its subsidiaries or any of Company's or any subsidiary's officers, directors, employees, investment bankers, attorneys or other agents or representatives of any inquiries or proposals relating to an Acquisition Transaction and any actions taken pursuant to Section 5.3(a). Company shall promptly provide Parent with a copy of any such inquiry or proposal in writing and a written statement with respect to any such inquiries or proposals not in writing, which statement shall include the identity of the parties making such inquiries or proposal and the terms thereof. Company shall, from time to time, promptly inform Parent of the status and content of any discussions regarding any Acquisition Transaction with a Third Party. For the avoidance of doubt, Company agrees that it will not enter into any agreement with respect to a Superior Proposal unless and until Parent has been given at least five business days prior to the entering into such agreement to match the terms of such agreement. (c) Company has obtained the agreement of each member of the Board and the board of directors of each of its subsidiaries and of its executive officers and investment bankers that each such person will comply with the provisions of this Section 5.3 as if it were a party hereto (to the extent that it would be otherwise applicable thereto). SECTION 5.4 Access to Information. (a) From the date of this Agreement until the Effective Time, Company will (x) give Parent and its authorized representatives (including counsel, consultants, financial advisors, accountants and auditors) reasonable access during normal business hours to all facilities, personnel and operations and to all books and records of it and its subsidiaries, (y) permit Parent to make such inspections as it may reasonably require and (z) cause its officers and those of its subsidiaries to furnish Parent with such financial and operating data and other information with respect to its business and properties as Parent may from time to time reasonably request. (b) Each of the Parties will hold and will use its best efforts to cause all of the employees and representatives of such Party and its subsidiaries to hold in strict confidence pursuant to the Confidentiality Agreement dated as of April 28, 1997 between Parent and Company (the "Confidentiality Agreement") all documents and information furnished to the other in connection with the transactions contemplated by this Agreement as if each such employee or representative were a party thereto. SECTION 5.5 Board Recommendation. Company shall, through the Board, recommend, and continue to recommend, to its shareholders that they tender all of their Shares in the Offer - 25 - and approve the Amalgamation; provided, however, that the taking of a position by Company pursuant to Rule 14e-2(a)(2) or (3) solely in respect of any proposal with respect to an Acquisition Transaction shall not be deemed a withdrawal, modification, or a proposal to do either, of its position with respect to the Offer or the Amalgamation for purposes hereof; provided, however, that the Board may withdraw, modify or change its recommendations to Company's shareholders only in the event that this Agreement has been terminated in accordance with its terms and any payments required under Article VIII have been made. SECTION 5.6 Reasonable Best Efforts; Other Actions. Subject to the terms and conditions herein provided and applicable law, the Parties shall use reasonable best efforts promptly to take, or cause to be taken, all other actions and do, or cause to be done, all other things necessary, proper or appropriate (including obtaining all material consents and making all material filings) under applicable laws and regulations or otherwise to consummate and make effective the transactions contemplated by this Agreement. SECTION 5.7 Notification of Certain Matters. Each of Company and Parent shall give prompt notice to the other of (i) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, (ii) the occurrence, or non-occurrence, of any event the occurrence, or non-occurrence, of which would be reasonably likely to cause any representation or warranty contained in this Agreement to be untrue or inaccurate and (iii) any failure of Company, Parent or Newco, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.07 shall not limit or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 5.8 Indemnification. (a) Parent shall cause the Amalgamated Company to indemnify, defend and hold harmless the present and former officers, directors, employees and agents (collectively, "Indemnified Parties") of Company and its subsidiaries from and against all losses, obligations, claims, damages, expenses or liabilities arising out of actions or omissions or alleged actions or omissions occurring at or prior to the Effective Time (including, without limitation, in connection with the transactions contemplated by this Agreement) to the same extent and on the same terms and conditions provided for in Company's Organizational Documents in effect at the date hereof, to the extent permitted under applicable law (which terms and conditions shall not be amended in any manner which adversely affects any Indemnified Party for a period of six years, including provisions relating to advances of expenses incurred in - 26 - the defense of any action or suit; provided that in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification (and to advancement of expenses) in respect of each such claim shall continue until final disposition of such claim). (b) For a period of six years after the Effective Time, Parent shall cause to be maintained in effect the current policies of directors' and officers' liability insurance maintained by Company (provided that Parent may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are no less advantageous) with respect to claims arising from facts or events which occurred before the Effective Time; provided, however, that nothing contained herein shall require Parent or the Amalgamated Company to incur any annual premium in excess of 200% of the last annual aggregate premium paid prior to the date of this Agreement for all current directors' and officers' liability insurance policies maintained by Company, which Company represents and warrants to be $604,000 (the "Current Premium"). If such premiums for such insurance would at any time exceed 200% of the Current Premium, then the Amalgamated Company shall cause to be maintained policies of insurance which, in the Amalgamated Company's good faith determination, provide the maximum coverage available at an annual premium equal to 200% of the Current Premium. (c) This Section 5.8 is intended for the benefit of the Indemnified Parties and each of the Indemnified Parties shall be entitled to enforce the covenants contained herein. (d) If the Amalgamated Company or any of their respective successors or assigns (i) reorganizes or consolidates with or merges into any other person and is not the resulting, continuing or surviving corporation or entity of such reorganization, consolidation or merger, or (ii) liquidates, dissolves or transfers all or substantially all of its properties and assets to any person or persons, then, and in such case, proper provision will be made so that the successors and assigns of the Amalgamated Company assumes all of the obligations of the Amalgamated Company, as the case may be, set forth in this Section 5.8. SECTION 5.9 Termination of Share Plans. Prior to the consummation of the Offer, the Board (or, if appropriate, any committee thereof) shall adopt such resolutions or take such other actions as are required to ensure that, following the Effective Time, no participant in any share, share option, share appreciation or other benefit plan of Company or any of its subsidiaries or any holder of any Company Option shall have any right thereunder to acquire any shares of the Amalgamated Company or any subsidiary thereof. - 27 - SECTION 5.10 Certain Change in Control Matters. Company shall use best efforts to exempt the transactions contemplated by this Agreement from, or if necessary challenge the validity or applicability of, any applicable takeover or change in control law, and otherwise act to eliminate or minimize the effects of any applicable takeover or change in control law. Company will not revoke, or attempt to revoke, any approvals, exemptions and agreements described in Section 3.11. ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE AMALGAMATION SECTION 6.1 Conditions to Each Party's Obligation to Effect the Amalgamation. The respective obligation of each Party to effect the Amalgamation is subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) Newco shall have purchased all Shares duly tendered and not withdrawn, pursuant to the terms of the Offer and subject to the terms thereof; (b) the Amalgamation shall have been approved by the affirmative vote of Company's shareholders by the requisite vote in accordance with the Companies Law and pursuant to the appropriate order of the court on the application of Company; (c) the Amalgamation shall have been sanctioned by the court in accordance with the Companies Law on the petition of the court by Company; (d) any required approval of the Minister under the Insurance Act and of the Registrar under the Companies Law shall have been obtained; (e) there shall not be in effect any order, decree or ruling or other action restraining, enjoining or otherwise prohibiting the Amalgamation, which order, decree, ruling or action shall have been issued or taken by any court of competent jurisdiction or other governmental body located or having jurisdiction within the Cayman Islands, Bermuda or the United States; and (f) a copy of the order of the court sanctioning the Amalgamation shall have been delivered to the Registrar for registration in accordance with the Companies Law. - 28 - ARTICLE VII. CLOSING SECTION 7.1 Time and Place. Subject to the provisions of Article VI, the closing of the Amalgamation (the "Closing") shall take place at a mutually agreeable location, as soon as practicable but in no event later than 9:00 a.m., on the date that is two business days after the later of (x) the day of the Special Meeting, if required by law, or (y) the day on which the last of the conditions set forth in Article VI shall have been satisfied or waived by the Parties, or at such other place, at such other time or on such other date as Parent and Company may mutually agree. The date on which the Closing actually occurs is herein referred to as the "Closing Date" and the time thereof is herein referred to as the "Effective Time." ARTICLE VIII. TERMINATION; AMENDMENT; WAIVER SECTION 8.1 Termination. This Agreement may be terminated and the Offer and the Amalgamation may be abandoned at any time prior to the Effective Time: (a) by mutual written consent of Parent, Newco and Company; (b) by Parent and Newco or Company (x) if any court of competent jurisdiction in the Cayman Islands, Bermuda or the United States or other Cayman Islands, Bermuda or United States governmental body shall have issued an order, decree or ruling or taken any other action restraining, enjoining, not approving or otherwise prohibiting the Offer or the Amalgamation and such order, decree, ruling or other action is or shall have become final and nonappealable; provided, however, that the Party seeking to terminate this Agreement under this paragraph (b) shall have used reasonable best efforts to remove or lift such order, decree or ruling or (y) if the conditions to consummation of the Amalgamation are not satisfied by March 31, 1998; (c) by Parent and Newco if Newco shall have (x) failed to commence the Offer within five business days following the date of the initial public announcement of the Offer, (y) terminated the Offer or (z) failed to pay for Shares pursuant to the Offer by December 31, 1997 (unless, in any such case, such failure or termination results from a breach of any representation, warranty, covenant or agreement of Parent or Newco); - 29 - (d) by Company if (i) Newco shall have (x) failed to commence the Offer within five business days following the date of the initial public announcement of the Offer, (y) terminated the Offer or (z) failed to pay for Shares pursuant to the Offer by December 31, 1997 (unless, in any such case, such failure or termination results from a breach of any representation, warranty, covenant or agreement of Company) or (ii) prior to the purchase of Shares pursuant to the Offer, Company shall, in compliance with Section 5.3(a) (including the last proviso thereof), concurrently be entering into a definitive agreement with respect to a Superior Proposal; (e) by Parent and Newco prior to the purchase of Shares pursuant to the Offer, if (i) there shall have been a breach of any representation or warranty (without giving effect to any materiality or similar qualifications contained therein) on the part of Company having a Material Adverse Effect, (ii) there shall have been a breach of any covenant or agreement on the part of Company resulting in a Material Adverse Effect, which breach shall not have been cured within 10 days following written notice to Company of such breach, (iii) Company shall engage in negotiations (in violation of this Agreement) with any Third Party that has proposed an Acquisition Transaction, (iv) the Board shall have withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner adverse to Parent or Newco its approval or recommendation of the Offer, this Agreement or the Amalgamation, or shall have recommended a proposal with respect to an Acquisition Transaction, or shall have adopted any resolution to effect any of the foregoing or (v) the Minimum Condition shall not have been satisfied by the Expiration Date and a Third Party shall have made and not withdrawn a proposal (information concerning which has been or is made publicly available) with respect to an Acquisition Transaction; or (f) by Company if (i) there shall have been a breach of any representation or warranty (without giving effect to any materiality or similar qualifications contained therein) on the part of Parent or Newco having a material adverse effect on the ability of Parent or Newco to consummate the Offer or the Amalgamation or (ii) there shall have been a breach of any covenant or agreement on the part of Parent or Newco resulting in a material adverse effect on the ability of Parent or Newco to consummate the Offer or the Amalgamation, which breach shall not have been cured within 10 days following written notice to Parent and Newco of such breach. SECTION 8.2 Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to - 30 - Section 8.1, this Agreement shall forthwith become void and have no effect, without any liability on the part of any Party or its affiliates, directors, officers or shareholders, other than the provisions of this Section 8.2 and Sections 8.3 and 5.4(b). Nothing contained in this Section 8.2 or Section 8.3 shall relieve any party from liability for any breach of this Agreement. SECTION 8.3 Certain Payments; Expenses. (a) Upon the termination of this Agreement for any reason prior to the purchase of Shares by Newco pursuant to the Offer (other than pursuant to Section 8.1(a), 8.1(b) or 8.1(f)), Company shall reimburse Parent, Newco and their affiliates (not later than one business day after request therefor) for all out-of-pocket fees and expenses (subject to a maximum amount of $2,000,000) reasonably incurred by any of them or on their behalf in connection with the Offer and the Amalgamation and the consummation of all other transactions contemplated by this Agreement (including fees payable to financing sources, investment bankers, counsel to any of the foregoing and accountants). (b) If (i) this Agreement is terminated for any reason (other than pursuant to Section 8.1(a), 8.1(b) or 8.1(f)) and, not later than the first anniversary of such termination, Company enters into an agreement with respect to an Acquisition Transaction, or an Acquisition Transaction occurs, involving any Third Party (or any affiliate thereof) (x) with whom Company (or any of its agents or representatives) had communications with a view to an Acquisition Transaction, (y) to whom the Company (or any of its agents or representatives) furnished information with a view to an Acquisition Transaction or (z) who had submitted a proposal or expressed an interest in an Acquisition Transaction, in any such case, prior to such termination; or (ii) Company terminates this Agreement pursuant to 8.1(d)(ii), Company shall pay to Parent and Newco, upon such entry into or such occurrence of an Acquisition Transaction in the case of clause (i) and immediately upon any such termination in the case of clause (ii), a fee of $7,500,000 in cash, however, that Company in no event shall be obligated to pay more than one such $7,500,000 fee with respect to all such agreements and occurrences and such termination. (c) Except as specifically provided in this Section 8.3, each party shall bear its own expenses in connection with this Agreement and the transactions contemplated hereby, includ- - 31 - ing the preparation, execution and performance of this Agreement and the transactions contemplated hereby, and all fees and expenses of their respective investment bankers, finders, brokers, agents, representatives, counsel and accountants. (d) Company acknowledges that the agreements contained in this Section 8.3 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Parent and Newco would not enter into this Agreement. ARTICLE IX. DEFINITIONS SECTION 9.1 Definitions. As used in this Agreement, the following terms have the meanings set forth below: (i) "affiliate" of a person shall mean a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned person. (ii) "business day" shall mean any day other than a Saturday, Sunday, United States federal holiday or a holiday in the Cayman Islands or Bermuda. (iii) "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of interests, as trustee or executor, by contract or credit arrangement or otherwise. (iv) "person" shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a government or any department or agency thereof. (v) "subsidiary" of any specified person shall mean any person of which a majority of the outstanding securities having ordinary voting power to elect a majority of the board of directors are, directly or indirectly, owned by such specified person or any other person of which a majority of the equity interests therein are directly or indirectly, owned by such specified person. SECTION 9.2 Terms Defined in the Agreement. The following capitalized terms used herein shall have the meanings ascribed in the indicated sections. - 32 - Acquisition Transaction.............................. 5.3 Agreement............................................ Preamble Amalgamated Company.................................. 2.1 Amalgamation......................................... Recitals Amalgamation Consideration........................... Recitals Balance Sheet........................................ 3.6 Bermuda Registrar.................................... 3.6 Board................................................ Recitals Certificates......................................... 2.6 Closing.............................................. 7.1 Closing Date......................................... 7.1 Code................................................. 3.14 Companies Law........................................ 2.1 Company.............................................. Preamble Company Options...................................... 3.2 Company Plans........................................ 3.2 Confidentiality Agreement............................ 5.4 Constituent Companies................................ Preamble Current Premium...................................... 5.8 Disclosure Schedule.................................. 3.0 Disclosure Statement................................. 2.10 Effective Time....................................... 7.1 Employee Benefit Plan................................ 3.15 ERISA................................................ 3.15 ERISA Affiliate...................................... 3.15 ERISA Benefit Plan................................... 3.15 Exchange Act......................................... 1.1 Expiration Date...................................... 1.1 GAAP................................................. 3.6 Indemnified Parties.................................. 5.8 Independent Director................................. 1.3 Insurance Act........................................ 1.3 Interim Balance Sheet................................ 3.6 Material Adverse Effect.............................. 3.1 Newco................................................ Preamble Minimum Condition.................................... 1.1 Minister............................................. 1.3 October Options...................................... 2.7 Offer................................................ Recitals Offer Documents...................................... 1.1 Organizational Documents............................. 3.1 Other Shares......................................... 3.2 Parent............................................... Preamble Parent Options....................................... 2.7 Parent Owned Shares.................................. 1.1 Parties.............................................. Preamble Paying Agent......................................... 2.8 1996 Proxy Statement................................. 3.6 Schedule 14D-9....................................... 1.2 SEC.................................................. 1.1 SEC Documents........................................ 3.6 Second Quarter Dividend.............................. 5.1 - 33 - Securities Act....................................... 3.6 Shares............................................... Recitals Special Meeting...................................... 2.10 Superior Proposal.................................... 5.3 Tax.................................................. 3.14 Tax Returns.......................................... 3.14 Third Party.......................................... 5.3 ARTICLE X. MISCELLANEOUS SECTION 10.1 Amendment and Modification. This Agreement may be amended, modified or supplemented only by written agreement of the Parties at any time prior to the Effective Time with respect to any of the terms contained herein; provided, however, that, after the Amalgamation is approved by the shareholders of Company, no such amendment or modification shall reduce the amount or change the form of the Amalgamation Consideration or in any way adversely affect the rights of the holders of Shares without the further approval of such holders; provided, further, that from and after the date that Parent's designees to the Board constitute a majority of the Board and prior to the consummation of the Amalgamation, any amendment or modification of this Agreement and any material deviation in the performance of this Agreement shall require the approval of the Independent Directors. SECTION 10.2 Waiver of Compliance; Consents. Any failure of Parent and Newco or Company to comply with any obligation, covenant, agreement or condition herein may be waived only by a written instrument signed by the Party granting such waiver, but such waiver or failure to insist upon compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 10.02. SECTION 10.3 Survival. The respective representations and warranties of the Parties contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party hereto and shall not survive the Closing. The covenants and agreements herein shall survive in accordance with their respective terms. SECTION 10.4 Notices. All notices and other communications hereunder shall be in writing and shall be delivered personally, by express courier or mailed by registered or certi- - 34 - fied mail (return receipt requested), first class postage pre-paid, or telecopied with confirmation of receipt, to the Parties at the addresses specified below (or at such other address for a Party as shall be specified by like notice; provided, however, that notices of a change of address shall be effective only upon receipt thereof). Any such notice shall be effective upon receipt, if personally delivered or telecopied, one day after delivery to a courier for next-day delivery, or three days after mailing, if deposited in the mail, first class postage prepaid. (a) if to Company, to GCR Holdings Limited Sofia House 48 Church Street Hamilton HM12 Bermuda Telecopy: (441) 292-4338 Attention: Secretary with a copy to: Debevoise & Plimpton 875 Third Avenue New York, New York 10022 Telecopy: (212) 909-6836 Attention: James C. Scoville, Esq. (b) if to Parent or Newco, to EXEL Limited Cumberland House One Victoria Street P.O. Box HM 2245 Hamilton HM JX Bermuda Telecopy: (441) 292-8515 Attention: Paul Giordano, Esq. with a copy to: Cahill Gordon & Reindel 80 Pine Street New York, New York 10005 Telecopy: (212) 269-5420 Attention: Immanuel Kohn, Esq. - 35 - SECTION 10.5 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the Parties without the prior written consent of the other Parties, nor is this Agreement intended to confer any rights or remedies hereunder upon any other person except the parties hereto and, with respect to Section 5.08, the officers, directors and employees of Company. SECTION 10.6 Governing Law. Except as the laws of the Cayman Islands are by their terms applicable, this Agreement shall be governed by the laws of the State of New York (regardless of the laws that might otherwise govern under applicable New York principles of conflicts of law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. SECTION 10.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. SECTION 10.8 Severability. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect against a Party, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby and such invalidity, illegality or unenforceability shall only apply as to such Party in the specific jurisdiction where such judgment shall be made. SECTION 10.9 Interpretation. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement. This Agreement has been negotiated by the Parties and is their mutual product; accordingly, no rule of strict construction against Parent or Newco shall be applied in the interpretation of this Agreement. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation." Unless the context shall otherwise require, all references herein to (i) Articles, Sections, Annexes and Exhibits shall be deemed references to Articles and Sections of, and Annexes and Exhibits to, this Agreement, (ii) persons include their respective permitted successors and assigns or, in the case of governmental persons, persons succeeding to the relevant functions of such persons, (iii) statutes and related regulations include any - 36 - amendments of same and any successor statutes and regulations, and (v) time shall be deemed to be to New York City time. SECTION 10.10 Entire Agreement. This Agreement, including the schedules and exhibits hereto and the documents and instruments referred to herein and therein, embodies the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements and the understandings between the parties with respect to such subject matter, except for the Confidentiality Agreement, which shall remain in full force and effect. There are no representations, promises, warranties, covenants, or undertakings, other than those expressly set forth or referred to herein and therein. IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be signed by a duly authorized officer as of the date first above written. EXEL LIMITED By: /s/ Brian M. O'Hara -------------------------------------- Name: Brian M. O'Hara EXEL ACQUISITION LTD. By: /s/ Michael P. Esposito, Jr. -------------------------------------- Name: Michael P. Esposito, Jr. GCR HOLDINGS LIMITED By: /s/ Frederick W. Deichmann -------------------------------------- Name: Frederick W. Deichmann ANNEX A to Agreement and Plan of Amalgamation CONDITIONS OF THE OFFER Notwithstanding any other provision of the Offer and in addition to (and not in limitation of) Newco's rights to extend and amend the Offer at any time in its sole discretion, and in addition to the Minimum Condition, Newco shall not be required to accept for payment or pay for any tendered Shares, and may postpone the acceptance for payment of or payment for tendered Shares and may terminate or amend the Offer if, at or before the acceptance of such Shares for payment or the payment therefor pursuant to the Offer, or, in Newco's judgment, any of the following shall exist or occur: (a) (x) there shall be instituted or pending any action or proceeding, or any statute, rule, regulation, legislation, interpretation, judgment, order or injunction shall be enacted, promulgated, entered, enforced, amended or made applicable to Newco or Parent or any of their affiliates or to the Offer or the Amalgamation by or before any Cayman Islands, Bermuda, United States or other government or governmental, regulatory or administrative authority or agency or by or before any court or tribunal, (i) challenging or restricting the acquisition by Newco or any affiliate of Newco, in whole or in part, of the Shares, seeking, directly or indirectly, to restrain, materially delay or prohibit the making or consummation of the Offer or seeking to obtain any material damages or otherwise, directly or indirectly, relating to the transactions contemplated by the Offer or the Amalgamation, (ii) seeking to prohibit, restrict or limit the ownership or operation by Newco or Parent or any of their affiliates of all or any material portion of its or Company's business or assets, or to compel Newco or Parent or any of their affiliates to dispose of or hold separate all or any material portion of its or Company's business or assets as a result of the Offer or the Amalgamation, (iii) making the purchase of, or payment for, some or all of the Shares illegal, (iv) seeking to impose limitations on the ability of Newco or Parent or any of their affiliates effectively to acquire, hold or exercise rights of ownership of any Shares now owned or hereafter purchased or to be purchased, including the right to vote with respect to, such Shares on any matter properly presented to the shareholders of Company, (v) imposing any material limitations on the ability of Newco or Parent or any of their affiliates effectively to acquire, operate or hold, or require Parent, Newco or Company or any of the respective subsidiaries to dispose of or hold separate, in any material respect the business and operations of Company, or (vi) restricting any material future business activity by Parent, Newco or Company or any of their respective subsidiaries or (y) any necessary approvals by any government or governmental, regulatory or administrative authority or agency necessary to consummate the Offer shall not have been obtained; (b) any fact or circumstance exists or will have occurred that has a material adverse effect on the business, operations, assets, condition (financial or other), prospects or results of operations of Company and its subsidiaries taken as a whole; (c) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange, or on NASDAQ or otherwise in the over-the-counter market, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any material limitation (whether or not mandatory) by any governmental authority or agency, or any other event which would significantly affect the extension of credit by banks or other lending institutions in the United States, (v) any imposition of currency controls in the United States or a material change in exchange rates or a suspension of, or material limitation on, the markets therefor, or (vi) in the case of any of the foregoing existing at the time of commencement of the Offer, any material worsening or acceleration thereof; (d) it shall have been publicly disclosed after the date of the Agreement or Parent or Newco shall have learned or become aware that any person (including Company or any of its subsidiaries or affiliates) or "group" (as defined in Section 13(d)(3) of the Exchange Act) shall have acquired (including by the formation of any groups) 5.0% or more of any class or series of shares of Company (including the Shares) or its subsidiaries or shall have been granted any option or right to acquire 5.0% or more of any class or series of shares of Company (including the Shares) or its subsidiaries, other than acquisitions of Shares for bona fide arbitrage positions, and such person or group shall not have tendered (and not withdrawn) all of the Shares owned beneficially or of record by it at or prior to the Expiration Date; or (e) the representations and warranties (without giving effect to any materiality or similar qualifications contained therein) made by Company in the Agreement shall have failed to be true and correct on the date of the Amalgamation Agreement or on the Expiration Date as though such representations and warranties had been made at and on such dates (other than representations and warranties expressly made as of a specific other date), except for such failures which, individually or in the aggregate, would not have a material adverse effect on the business, operations, assets, condition (financial or other), prospects or results of operations of Company and its subsidiaries taken as a whole; or (f) the Agreement shall be terminated in accordance with its terms. The foregoing conditions are for the sole benefit of Parent and Newco and may be asserted by Parent or Newco or any of their affiliates or may be waived by any of them in whole or in part at any time or from time to time in their sole discretion. The failure to exercise any of the foregoing rights shall not be deemed a waiver of any right, and each right shall be deemed a continuing right which may be asserted at any time and from time to time for so long as such right exists. -----END PRIVACY-ENHANCED MESSAGE-----