Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 1 of 60 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK LOUISIANA MUNICIPAL POLICE EMPLOYEES RETIREMENT SYSTEM, Individually on Behalf of Itself and All Others Similarly Situated, Case No. 13 CV 0933-ALC CLASS ACTION Plaintiff, V. ALTERRA CAPITAL HOLDINGS LIMITED, W. MARSTON BECKER, MICHAEL O'REILLY, JAMES D. CAREY, MERYL D. HARTZBAND, WILLIS T. KING, JR., JAMES L. ZECH, MARIO P. TORSIELLO, K. BRUCE CONELL, JAMES H. MACNAUGHTON, W. THOMAS FORRESTER, STEPHAN F. NEWHOUSE, ANDREW H. RUSH, MARKEL CORPORATION, and COMMONWEALTH MERGER SUBSIDIARY LIMITED, Defendants. ECF CASE DECLARATION OF ERIC J. O'BELL IN SUPPORT OF PROPOSED LEAD PLAINTIFF'S MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND CERTIFICATION OF SETTLEMENT CLASS I, Eric J. O'Bell, hereby declare as follows: 1. I am a member of good standing of the bar of the State of Louisiana and Pennsylvania and have been admitted pro hac vice in the above captioned matter. I am a member of the O'Bell Law Firm, LLC. I submit this declaration in support of Proposed Lead Plaintiffs Motion for Preliminary Approval of Settlement and Certification of Settlement Class. 2. Attached as exhibits are true and correct copies of the following: Exhibit 1: Stipulation and Agreement of Compromise and Settlement, along with Exhibits A-D attached in globo.
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 2 of 60 I declare under penalty of perjury under the laws of the United States of America that the foregoing facts are true and correct. Executed this 26 day of June, 2013', at Metairie, Louisiana, Is! Eric I O'Be!l -2-
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 3 of 60 Exhibit 1
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 4 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy STIPULATION AND AGREEMENT OF COMPROMISE AND SETTLEMENT This Stipulation and Agreement of Compromise and Settlement (the "Settlement Agreement"), dated June 20, 2013, which is entered into by, between and among (i) the Louisiana Municipal Police Employees Retirement System ("Plaintiff'), on behalf of itself as well as members of the Settlement Class (defined in paragraph 1(1)) and (ii) defendants W. Marston Becker, Michael O'Reilly, James D. Carey, Meryl D. Hartzband, Willis T. King, Jr., James L. Zech, Mario P. Torsiello, K. Bruce Connell, James H. Macnaughton, W. Thomas Forrester, Stephan F. Newhouse, Andrew H. Rush, Alterra Capital Holdings Limited ("Alterra"), Markel Corporation ("Markel"), and Commonwealth Merger Subsidiary Limited ("Merger Sub") which has merged with and into Alterra (collectively, the "Defendants," and collectively with the Plaintiff, the "Parties"), by and through their undersigned attorneys, states all of the terms of the settlement and resolution of the action entitled Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) (the "Action"), and is intended by all of the Parties to fully and finally compromise, resolve, discharge and settle the Released Claims (defined in paragraph 16)) subject to the approval of the Court: BACKGROUND TO THE SETTLEMENT WHEREAS, the background to the Settlement (defined in paragraph 1(k)) is set forth in paragraphs A through J below: A. On December 19, 2012, Alterra and Markel announced a definitive merger agreement (the "Merger Agreement") pursuant to which each Alterra common share would be converted into the right to receive 0.04315 Markel common shares plus a cash payment of $10 per share (the "Transaction"); 104066106 v2 I
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 5 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-ev-0933 (S.D.N.Y.) Execution Copy B. On January 18, 2013, Alterra and Markel filed with the Securities Exchange Commission (the "SEC") a definitive proxy statement on Form DEFM14A relating to the Transaction (the "Proxy"); C. On February 8, 2013 the Plaintiff commenced Action in the United States District Court for the Southern District of New York (the "Court") as a putative class action against the Defendants alleging, among other things, that the Proxy misrepresents and/or omits material information necessary for Alterra's public shareholders to make an informed decision regarding whether to vote in favor of the Transaction; D. On February 13, 2013, Plaintiff filed a Motion for Preliminary Injunction seeking to enjoin the shareholder vote on the Transaction based on alleged deficiencies in the Proxy; E. On February 15, 2013, in response to the Plaintiff's demands for further disclosure to Alterra's shareholders and as a result of negotiations among the Parties, Alterra included certain additional and/or revised disclosures (the "Supplemental Disclosures"), substantially in the form of Exhibit A, in its Definitive Proxy Statement filed with the SEC (the "Definitive Proxy"). F. On or as of February 15, 2013, the Parties executed a Memorandum of Understanding ("MOU"). The MOU memorialized the terms of the Parties' agreement in principle to settle the Action. G. Defendants acknowledged that the pendency of the Action and the efforts of the Plaintiff's counsel caused their decision to include the Supplemental Disclosures in the Definitive Proxy to Alterra's shareholders. H. As further provided in the MOU, the Parties contemplated that the MOU 104066106 v2 2
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 6 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N,Y.) Execution Copy ultimately would be replaced by this Settlement Agreement, to be prepared by the Parties and submitted to the Court for approval, and that this Settlement Agreement would include all of the terms of the Settlement, including proposing the certification of a class for settlement purposes only. I. Prior to negotiating and entering into the MOU, the Plaintiff's counsel received productions of documents from Alterra which they reviewed and analyzed. The Plaintiff's counsel reserved the right to conduct additional discovery to confirm their, and the Plaintiff's, conclusion that the Settlement was fair, adequate, reasonable and in the best interests of the putative class (the "Confirmatory Discovery"). The Plaintiff's counsel deemed it appropriate and necessary to conduct Confirmatory Discovery before entering into this Settlement Agreement. The post-mou Confirmatory Discovery occurred and included the depositions of W. Marston Becker, the Chief Executive Officer of Alterra, and Robert Giammarco, a representative of Bank of American Merrill Lynch. Transaction. J. On February 26, 2013, shareholders of Alterra and Markel voted to approve the WHEREAS, the Defendants vigorously have denied, and vigorously continue to deny, all allegations of wrongdoing, fault, liability or damage with respect to each and all claims asserted in the Action, including that any of them has committed any violation of any law, rule or regulation; that any of them has acted improperly in any way; that any of them has breached any duty; and/or that any of them has any liability or owe any damages of any kind to the Plaintiff and/or the Settlement Class or any member thereof. The Defendants further deny that any of the provisions of the Supplemental Disclosures was or is required under any applicable law, rule or regulation, but are entering into this Settlement Agreement solely because they consider it 104066106 v2 3
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 7 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D,N.Y.) Execution Copy desirable that the Action be settled and dismissed with prejudice in order to, among other things, (i) eliminate the burden, inconvenience, expense, risk and distraction of further litigation, and (ii) finally put to rest and terminate all the claims that were or could have been asserted against any of the Defendant Releasees (defined in paragraph 1(c)). WHEREAS, the Plaintiff's counsel has reviewed and analyzed the facts and circumstances relating to the claims asserted and which could have been asserted in the Action, including conducting arm's-length discussions with counsel to the Defendants, analyzing documents produced by the Defendants and obtained through public sources, analyzing applicable case law and other authorities and conducting the Confirmatory Discovery. Based on these investigations and analyses, the Plaintiff has decided to enter into the Settlement Agreement and to settle the Action after taking into account, among other things, (i) their belief that the litigation of the Action and the Settlement already have delivered substantial benefits to the Settlement Class; (ii) the facts developed during discovery; (iii) the attendant risks of continued litigation and the uncertainty of the outcome of the Action; (iv) the conclusion reached by the Plaintiff and the Plaintiff's counsel that the Settlement upon the terms and provisions set forth in this Settlement Agreement is fair, reasonable, adequate and in the best interests of the Settlement Class; (v) the probability of success on the merits of the allegations made in the Action, including the uncertainty relating to proof of those allegations; and (vi) the desirability of permitting the Settlement to be consummated as provided by the terms of this Settlement Agreement. The Plaintiff believes that the claims asserted in the Action have merit. The Plaintiff and Plaintiff's Counsel have concluded that the Proxy with the Supplemental Disclosures resulting from the Settlement provided Alterra's shareholders with material information sufficient to cast a fully-informed vote with respect to the Transaction. 104066106 y2 4
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 8 of 60 Louisiana Municipal Police Employees Retirement System v, Alterra Capital Holdings Limited et al., No. 13-ev-0933 (S.D.NY.) Execution Copy WHEREAS, the Parties recognize the time and expense that would be incurred by further litigation and the uncertainties inherent in such further litigation against Defendants through trial and through appeals. WHEREAS, the Settlement of the Action on the terms and conditions set forth in this Settlement Agreement includes, but is not limited to, a release of all claims that were or could have been asserted in the Action or that arise out of or relate to any of the allegations asserted in the Action. TERMS OF THE STIPULATION AND SETTLEMENT AGREEMENT NOW, THEREFORE, IT IS HEREBY STIPULATED, CONSENTED TO AND AGREED, by the Plaintiff, for itself and on behalf of the Settlement Class, and the Defendants that, subject to the approval of the Court pursuant to, inter alia, Rule 23(e) of the Federal Rules of Civil Procedure, and the other conditions set forth in this Settlement Agreement, for the good and valuable consideration set forth in this Settlement Agreement and conferred on the Plaintiff and the Settlement Class, the receipt and sufficiency of which hereby are acknowledged, the Action shall be finally and fully settled, compromised and dismissed, on the merits and with prejudice, that the Class Released Claims (defined in paragraph 1(a)) shall be finally and fully compromised, settled, released and dismissed with prejudice as to the Defendant Releasees, and that the Defendants Released Claims (defined in paragraph 1(b)) shall be finally and fully compromised, settled and released with prejudice as to the Plaintiff Releasees (defined in paragraph 1(h)), in the manner and upon the terms and conditions set forth in this Settlement Agreement. 1. The following capitalized terms, used in this Settlement Agreement and the Exhibits attached hereto (the "Exhibits"), shall have the meanings specified below: 104066106 v2 5
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 9 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (SD.NX) Execution Copy (a) "Class Released Claims" means all claims, including Unknown Claims (defined in paragraph 1(n)), that were brought or could have been brought by the Plaintiff or any Settlement Class Member in the Action, or that arise out of or relate to any of the allegations that are or were asserted in the Action; provided however, that the Class Released Claims shall not include (1) properly perfected claims for appraisal under Bermuda law; (2) claims by any of the Parties to enforce the terms of the Settlement; or (3) any federal securities claim any Settlement Class member may have against Markel as a shareholder of Markel to the extent that such federal securities law claim is unrelated to the Transaction, the Merger Agreement or any disclosures, non-disclosures or public statements made in connection with the Transaction or Merger Agreement. (b) "Defendants Released Claims" means all claims, including Unknown Claims, arising out of or relating to the initiation, prosecution and/or resolution of the Action, provided however, that the Defendants Released Claims shall not include any claim by any of the Defendant Releasors (defined in paragraph 7) to enforce the terms of the Settlement Agreement, the Settlement and/or the Order and Final Judgment. (c) "Defendant Releasees" means each and all of the Defendants and each and all of their respective past and present predecessors, successors, parent entities, subsidiaries, affiliates, general or limited partners or partnerships, and agents (including, without limitation, any past or present officers, directors, stockholders, members, managers, general or limited partners, limited liability companies, agents, representatives, assignors, employees, advisors, accountants, attorneys, financial or investment advisors (including, without limitation, Bank of America Merrill Lynch and Citigroup), other advisors, consultants, insurers, co-insurers, reinsurers, investment bankers and each and all of their respective heirs, executors, 104066106 v2 6
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 10 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D,N.Y.) Execution Copy administrators, trustees, personal or legal representatives, estates, successors or assigns). (d) "Effective Date" means the date on which the Order and Final Judgment (defined in paragraph 1 (f)) has either been finally affirmed on appeal or is no longer subject to appeal and the time for any petition for re-argument, appeal or review thereof has expired. (e) "Notice" means the Notice of Pendency Of Class Action, Proposed Settlement, Settlement Hearing And Right To Appear, substantially in the form of Exhibit B. (1) "Order and Final Judgment" means the Order and Final Judgment to be entered in the Action, substantially in the form of Exhibit D, approving (among other things) this Settlement Agreement and dismissing the Action with prejudice, or as modified by the Court with the written consent of the Parties or as modified by agreement of the Parties in writing. "Person" means any individual, corporation, partnership, limited liability company, association, affiliate, joint stock company, estate, trust, unincorporated association, entity, government and any political subdivision thereof, or any other type of business or legal entity. (g) "Plaintiff' means the Louisiana Municipal Police Employees' Retirement System, individually and on behalf of the Settlement Class. (h) "Plaintiffs Counsel" means O'Bell, LLC, 3500 North Hullen Street, Metairie, Louisiana, 70002; Brannon Law Firm, LLC, 3500 North Hullen Street, Metairie, Louisiana, 70002; and Glancy Binkow & Goldberg, LLP, 77 Water Street, Suite 721, New York, New York 10005. (i) 'Plaintiff Releasees" means the Plaintiff and the Plaintiffs counsel and each and all of their respective heirs, executors, administrators, trustees, personal or legal representatives, estates, successors or assigns. (j) "Preliminary Approval Order" means the order entered by the Court with respect to notice of the Settlement, the Settlement Hearing and the administration of the 104066106 v2 7
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 11 of 60 Louisiana Municipal Police Employees Retirement System v. A/terra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy Settlement, in substantially the form attached as Exhibit C, providing for (among other things) notice to the Settlement Class Members of the hearing on this Settlement. (k) "Released Claims" means, collectively, the Class Released Claims and the Defendants Released Claims. (1) "Settlement" means the settlement of the Action by, between and among the Plaintiff, on behalf of itself and the Settlement Class, and the Defendants, as set forth in this Settlement Agreement. (m) "Settlement Class Members" or the "Settlement Class" means a non-optout settlement class of all record holders and beneficial owners of Alterra common stock who held such stock at any time during the period beginning on and including December 19, 2012, through and including May 1, 2013 including any and all of their respective successors-ininterest, successors, predecessors-in-interest, predecessors, representatives, trustees, executors, administrators, estates, heirs, assigns or transferees, immediate and remote, and any Person acting for or on behalf of, or claiming under, any of them, and each of them, together with their respective successors-in-interest, successors, predecessors-in-interest, predecessors, representatives, trustees, executors, administrators, estates, heirs, assigns and transferees; provided however, that the Settlement Class shall exclude the Defendants and their respective immediate family members, directors, partners, direct or indirect parent or subsidiary entities, and any other Person over whom or which any Defendant exercises sole or exclusive control. For purposes of this Settlement only, the Action shall be certified conditionally as a non-opt-out class action pursuant to Rule 23(b)(1) of the Federal Rules of Civil Procedure. (n) "Settlement Hearing" means the hearing to be held by the Court to determine, among other things, whether to certify the Settlement Class for settlement purposes; 104066106 v2 8
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 12 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al,, No. 13-cv-0933 (S.D.N.Y.) Execution Copy whether the proposed Settlement should be approved as fair, reasonable and adequate and in the best interests of the Settlement Class; whether all Released Claims should be deemed released, acquitted and discharged; whether the Action should be dismissed with prejudice; whether the Order and Final Judgment approving the Settlement should be entered; and, subject to paragraph 15, whether and in what amount any award of attorneys' fees and reimbursement of expenses should be paid to the Plaintiff's counsel by any or all of the Defendants (or their successors-ininterest) in the Action. (o) "Unknown Claims" means any of the Released Claims which any Plaintiff Releasor or any Defendant Releasor does not know or suspect to exist at or prior to the Effective Date which, if known by her, him or it, might have affected her, his or its settlement with and release of any or all of, respectively, the Defendant Releasees or the Plaintiff Releasees, or might have affected her, his or its decision not to object to the Settlement. The Plaintiff acknowledges, and the Class Members by operation of law shall be deemed to have acknowledged, that each of them may discover facts in addition to or different from those now known or believed to be true with respect to the Class Released Claims, but that it is the intention of the Plaintiff; and by operation of law the Settlement Class Members, to completely, fully, finally and forever extinguish any and all Class Released Claims, known or unknown, suspected or unsuspected, which now exist, or heretofore existed, or hereafter may exist, and without regard to the subsequent discovery of any additional or different facts. The Plaintiff acknowledges, and the Settlement Class Members by operation of law shall be deemed to have acknowledged, that the inclusion of "Unknown Claims" in the definition of "Class Released Claims" separately was bargained for and was a material element of the Settlement and was relied upon by each and all of the Defendants in entering into the Settlement Agreement. The Defendants acknowledge that 104066106 v2 9
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 13 of 60 Louisiana Municipal Police Employees Retirement System v, Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S,D,N.Y.) Execution Copy each of them may discover facts in addition to or different from those now known or believed to be true with respect to the Defendants Released Claims, but that it is the intention of the Defendants to completely, fully, finally and forever extinguish any and all Defendants Released Claims, known or unknown, suspected or unsuspected, which now exist, or heretofore existed, or hereafter may exist, and without regard to the subsequent discovery of any additional or different facts. The Defendants acknowledge that the inclusion of "Unknown Claims" in the definition of "Defendants Released Claims" separately was bargained for and was a material element of the Settlement and was relied upon by the Plaintiff in entering into the Settlement Agreement. CONDITIONAL CERTIFICATION OF THE SETTLEMENT CLASS 2. The Plaintiff avers, and solely for the purposes of this Settlement the Defendants do not contest, that the Action is appropriate for class treatment pursuant to Rules 23(a) and 23(b)(1) of the Federal Rules of Civil Procedure (for purposes of settlement) because (a) the Settlement Class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable; (b) there are questions of law or fact common to the Settlement Class which predominate over any questions affecting other individual Settlement Class Members; (c) the claims and defenses of Plaintiff are typical of the claims and defenses of the Settlement Class; (d) Plaintiff will fairly and adequately represent and protect the interests of the Settlement Class; (e) a class action is superior to other available methods for the fair and efficient settlement of the Action; and (f) prosecuting separate actions by individual Settlement Class Members would create a risk of (I) inconsistent or varying adjudications with respect to individual Settlement Class Members that would establish incompatible standards of conduct for the party opposing the class or (2) adjudications with respect to Settlement Class Members that, as a practical matter, would be dispositive of the interests of the other Settlement Class Members not 104066106 v2 10
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 14 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al,, No. 13-cv-0933 (S.D.N.Y.) Execution Copy parties to the individual adjudications or would substantially impair or impede their ability to protect their interests. On that basis and solely for the purposes of this Settlement, the Action shall be maintained and proceed as a class action pursuant to Rule 23(b)(1) of the Federal Rules of Civil Procedure on behalf of the Settlement Class, 3. The certification of the Settlement Class shall be binding only with respect to this Settlement Agreement. In the event that this Settlement Agreement is terminated pursuant to its terms; that this Settlement Agreement is not approved in all material respects by the Court; that the Defendants withdraw from the Settlement pursuant to the terms hereof; that the Effective Date does not occur; that the Settlement does not otherwise become final for any reason; or that any judgment or order entered pursuant hereto is reversed, vacated or modified in any material respect by the Court or any other court, the certification of the Settlement Class shall be deemed vacated, the Action shall proceed as though the MOU and this Settlement Agreement had never existed, the Settlement Class had never been certified, and no reference to the certification, or lack thereof, of the Settlement Class, or to the Settlement Agreement or any document related thereto, shall be made by any of the Parties, any of the Plaintiff Releasces or any of the Defendant Releasees for any purpose, except as expressly authorized by the terms of this Settlement Agreement. If any of the foregoing events occur, the Defendants reserve the right to oppose certification of any class in any proceeding and to fully defend any proceeding, and, conversely, the Plaintiff reserves the right to move for certification of a class for all purposes. SETTLEMENT CONSIDERATION 4. As a result of the Plaintiffs prosecution of the Action and their agreement to settle the Action on the terms of this Settlement Agreement, the Defendants took steps to confer substantial benefits upon the Settlement Class Members, Specifically, Alterra included the 104066106 y2 11
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 15 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy Supplemental Disclosures in its Definitive Proxy, set forth in Exhibit A, attached hereto and filed with the SEC on or about February 15, 2013. 5. The Defendants acknowledge that the prosecution of the Action and the efforts of and negotiations with the Plaintiffs Counsel caused their decision to provide the above benefits to the Settlement Class Members. RELEASE 6. In consideration of the benefits provided to the Settlement Class Members in paragraph 4, upon the Effective Date, the Plaintiff and each and all of the Settlement Class Members, on behalf of herself, himself or itself and each and all of her, his or its respective affiliates, predecessors, successors and assigns, and each and all of their respective current and former officers, directors, managers, members, partners, employees, agents, security holders, attorneys and representatives in their capacities as such, and each of their respective heirs, executors, administrators, legal representatives, assigns or transferees, immediate and remote, and any Person acting for or on behalf of or claiming under any of them, individually and collectively (collectively, the "Plaintiff Releasors") shall and hereby do completely, fully, finally and forever release, relinquish, acquit, settle and discharge each and all of the Defendant Releasees from any and all of the Class Released Claims, including Unknown Claims, from the beginning of the world to the date of this Settlement Agreement; provided however, that this release does not extend to claims (a) arising out of ordinary course of business commercial dealings, not arising out of or related to any of the allegations that are or were asserted in the Action, between any of the Plaintiff Releasors and any of the Defendant Releasees, and (b) to enforce the terms of the Settlement Agreement, the Settlement and/or the Order and Final Judgment. 104066106 v2 12
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 16 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13cv-0933 (S.D.N.Y.) Execution Copy 7. Upon the Effective Date, each of the Defendants, on behalf of himself or itself and his or its respective affiliates, predecessors, successors and assigns, and each and all of their respective current and former officers, directors, managers, members, partners, employees, agents, security holders, attorneys and representatives in their capacities as such, and each of their respective heirs, executors, administrators, legal representatives, assigns or transferees, immediate and remote, and any Person acting for or on behalf of or claiming under any of them, individually and collectively (collectively, the "Defendant Releasors"), shall and hereby do completely, fully, finally and forever release, relinquish, acquit, settle and discharge each and all of the Plaintiff Releasees from any and all of the Defendants Released Claims, including Unknown Claims, from the beginning of the world to the date of this Settlement Agreement; provided however, that this release does not extend to claims (a) arising out of ordinary course of business commercial dealings, not arising out of or related to any of the allegations that are or were asserted in the Action, between any of the Defendant Releasors and any of the Plaintiff Releasees, and (b) to enforce the terms of the Settlement Agreement, the Settlement and/or the Order and Final Judgment. 8. Each of the Plaintiff Releasors and each of the Defendant Releasors shall be deemed to relinquish to the full extent permitted by law, the provisions of, and the rights and benefits conferred by Section 1542 of the California Civil Code ("Section 1542") or any other similar law, rule or regulation of any other state or country. Section 1542 provides: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY HIM OR 104066106 v2 13
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 17 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S,D.N,Y.) Execution Copy HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR, 9. Except as otherwise provided in this Settlement Agreement, including at paragraphs 10(e), 11 and 15 below, each of the Parties is to bear her, his or its own costs, expenses and attorneys' fees in connection with the Action and the Settlement Agreement, SUBMISSION OF THE SETTLEMENT TO THE COURT FOR APPROVAL 10. As soon as practicable after this Settlement Agreement has been executed, the Parties jointly shall apply to the Court for entry of the Preliminary Approval Order, substantially in the form of Exhibit C, which specifically shall include provisions that, among other things, will: (a) preliminarily certify the Action, pending the Settlement Hearing, as a nonopt-out class action on behalf of the Settlement Class for purposes of this Settlement only, pursuant to Rule 23(b)(1) of the Federal Rules of Civil Procedure; (b) certify Plaintiff, Louisiana Municipal Police Employees' Retirement System as Class representative and Plaintiff's Counsel, O'Bell, LLC and Brannon Law Finn, LLC as Lead Counsel for the Class; (c) schedule the Settlement Hearing to consider: (i) whether Plaintiff is an adequate representative of the Settlement Class, (ii) whether the Settlement is fair, reasonable, adequate and in the best interests of the Settlement Class, (iii) whether the Order and Final Judgment should be entered, (iv) any objections to the Settlement, (v) the Fee Application (defined in paragraph 15), and any objections 104066106 v2 14
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 18 of 60 Louisiana Municipal Police Employees Retirement System v. A/terra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy thereto, and (vi) any such other matters as the Court may deem necessary and appropriate; (d) approve the Notice, substantially in the form of Exhibit 13, and find that such Notice constitutes adequate notice to the Settlement Class Members pursuant to Rule 23(c)(2)(A) of the Federal Rules of Civil Procedure; (e) direct that Alterra shall be responsible for providing the Notice, substantially in the form of Exhibit B, to all Settlement Class Members who will be bound by the provisions of Paragraphs 6, 7 and 8 of this Settlement Agreement, and Alterra shall pay all reasonable costs and expenses incurred in providing that Notice, with the understanding that such Notice shall be effected by mail or such other method or methods as the Court deems appropriate; (f) provide that any Settlement Class Member who objects to the terms of the Settlement Agreement, the proposed Settlement, the settlement class action determination, the entry of the Order and Final Judgment approving the Settlement and/or the Fee Application, or who otherwise wishes to be heard at the Settlement Hearing, may appear in person or by her, his or its attorney at the Settlement Hearing and present any evidence or argument that may be proper and relevant; provided, however, that no Person (other than the Parties) shall be heard, and no papers, briefs, pleadings or other documents submitted by any such Person shall be received and considered by the Court (unless the Court in its discretion otherwise shall direct, upon application of such Person and for good cause shown), unless no later than ten (10) calendar days prior to the Settlement Hearing, (i) written notice of the intention to appear, (ii) a detailed statement of all 104066 106 v2 15
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 19 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy of such Person's objections to any matter before the Court, including all of the grounds therefor and/or the reasons for such Person's desiring to appear and to be heard, signed personally by such objector, (iii) documentary proof of such Person's membership in the Settlement Class, and (iv) all documents and writings which such Person desires the Court to consider are filed by such Person with the Court and, simultaneously with or before such filing, are served by hand or overnight delivery upon the counsel to the Parties designated in the Preliminary Approval Order and identified in the Notice; (g) preliminarily enjoin all proceedings in the Action (other than proceedings as may be necessary to carry out the terms and conditions of the Settlement or to provide status reports to the Court) and order that, pending final determination of whether the Settlement provided for in this Settlement Agreement should be approved, the Plaintiff and all the Settlement Class Members, or any of them, shall be barred and enjoined from commencing, prosecuting, instigating, continuing or in any way participating in the commencement or prosecution of any action asserting any or all of the Class Released Claims, either directly, representatively, derivatively or in any other capacity, against any or all of the Defendant Releasees, or challenging the Settlement (other than in the Action in accordance with the procedures established by the Court); and (h) provide that the Settlement Hearing may, from time to time and without further notice to the Settlement Class Members, be continued or adjourned by order of the Court. 11. Alterrra or its successor-in-interest shall assume the administrative responsibility 104066106 y2 16
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 20 of 60 Louisiana Municipal Police Employees Retirement System v. Alterrcz Capital Holdings Limited et al., No. 13-cv-0933 (S,D.N,Y.) Execution Copy of providing, and shall bear the sole expense of preparing and disseminating, the Notice to the Settlement Class, as required by the Preliminary Approval Order. At least ten (10) business days before the Settlement Hearing, Alterra shall file with the Court appropriate proof that the Notice required by the Preliminary Approval Order has been provided to the Settlement Class Members. ORDER AND FINAL JUDGMENT 12. If the Settlement (including any modification made with the written consent of the Parties) is approved by the Court following the Settlement Hearing as fair, reasonable, adequate and in the best interests of the Settlement Class, the Parties jointly shall request the Court to enter the Order and Final Judgment, substantially in the form of Exhibit D. The Order and Final Judgment shall, among other things: (a) find that the prerequisites to a class action set forth in Rule 23(a) of the Federal Rules of Civil Procedure are satisfied, that Plaintiff is an adequate representatives of the Settlement Class, and that the Action properly may be maintained as a non-opt-out class action pursuant to Rule 23(b)(1) of the Federal Rules of Civil Procedure, and certify the Settlement Class; (b) approve the Settlement, and all transactions preparatory or incident thereto, as fair, reasonable, adequate and in the best interests of the Settlement Class Member; (c) authorize and direct performance of the Settlement in accordance with all of its terms and conditions; (d) dismiss the Action, with prejudice as against the Plaintiff and the Settlement Class Members, and all of them, without costs except as hereinafter provided, and extinguish all Released Claims against all Defendant Releasees and 104066106 v2 17
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 21 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy all Plaintiff Releasees; (e) (f) determine the Fee Application; and reserve jurisdiction over the Action, without affecting the finality of the Order and Final Judgment, with respect to all matters relating to the administration, consummation, construction and enforcement of the Settlement. CONDITIONS OF THE SETTLEMENT AGREEMENT, EFFECT OF DISAPPROVAL, CANCELLATION OR TERMINATION OF THE SETTLEMENT AGREEMENT 13. The Effective Date shall be conditioned solely upon the entry by the Court of the Order and Final Judgment and either: (a) the final affirmance of the Order and Final Judgment on appeal, or (b) the expiration of the time from which an appeal, review or reargument of the Order and Final Judgment (or reargument, further appeal or other review of any order or mandate of an appellate court affirming the Order and Final Judgment) may be sought without any such appeal, review or reargument having been sought. 14. In the event that the Settlement Agreement fails for any reason to become effective in accordance with its terms, the Settlement Agreement shall have no further force and effect and shall not be deemed to prejudice in any way the respective positions of any or all of the Defendants or the Plaintiff in the Action, and neither the existence of this Settlement Agreement, nor its contents or negotiations, shall be admissible in evidence or shall be referred to for any purpose in any or all of the Action or in any other litigation or proceeding and any judgment or order entered by the Court in accordance with the terms of the Settlement Agreement shall be treated as vacated nunc pro tune. Moreover, in such event, no Party shall be entitled to recover any costs or expenses incurred in connection with this Settlement Agreement, ATTORNEYS' FEES AND EXPENSES 104066106 y2 18
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 22 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy 15. After negotiating the substantive terms of the Settlement, the Parties negotiated an amount of attorneys' fees and expenses that, subject to the terms and conditions of this Stipulation and approval by the Court, will be paid to Plaintiff's Counsel. The Defendants acknowledge that the Plaintiff's Counsel are entitled to a reasonable and appropriate award of attorneys' fees and reimbursement of expenses for the benefits achieved in the Settlement. Subject to the Court's approval, the Defendants have agreed not to object to an award of attorneys' fees and expenses to the Plaintiff's' Counsel in an amount not exceeding $340,000.00 (the "Fee Amount"). The Plaintiff and the Plaintiff's Counsel may petition the Court for an award of attorneys' fees and expenses in that amount, which petition shall be the sole fee application of any kind to be made in the Action by the Plaintiff and its counsel (the "Fee Application"). The Defendants will not oppose such an application for fees and expenses in or below such amount. It is expressly understood and agreed by the Plaintiff and its counsel that none of the Defendant Releasees, other than Alterra (or its successor, insurers or reinsurers), shall pay or cause to be paid or be obligated to pay all or any part of such fees and expenses. Subject to the terms and conditions of this Settlement Agreement and any order of the Court, if the Court awards attorneys' fees and expenses in an amount greater than $340,000.00 Alterra (or its successor, or any of its insurers or reinsurers) shall not be obligated to pay any more than $340,000.00. Upon dismissal of the Action, Alterra (or its successor, insurers or reinsurers) shall pay or cause to be paid fees and expenses in the amount awarded (but not more than $340,000.00) within ten (10) business days after notice of entry of the Court's order approving the Settlement. The Fee Amount shall be transferred to O'Bell, LLC as custodian for all of Plaintiffs Counsel within ten business days after the entry of the Court's entry of Judgment or a judgment substantially in the form of Exhibit D, notwithstanding any objection thereto or 104066106 v2 19
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 23 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al,, No. 13-cv-0933 (S.D.N.Y.) Execution Copy potential appeal therefonn. Co-Lead Counsel shall be solely responsible for distribution of Plaintiff's attorneys' fees and expenses. Plaintiff's Counsel shall be jointly and severally liable to refund or repay any amounts paid by Alterra, or on behalf of Alterra, or its successor, insurers and/or reinsurers if, for any reason, the fee and expenses award is overturned or reduced. None of the Defendant Releasees shall have ny responsibility for, or liability with respect to, the fee and expense allocation among the Plaintiff's Counsel and/or any other Person who may assert any claim thereto, or for any amount of an award to the Plaintiff's Counsel in excess of $340,000.00. 16. Any order or proceedings relating to the Fee Application, or any appeal from any order relating thereto or reversal or modification thereof, shall not operate to terminate or cancel this Settlement Agreement, and shall not affect or delay the finality of the Order and Final Judgment. In the event that a Settlement Class Member objects to the amount of fees to be awarded, the Parties agree that the Court may enter the Order and Final Judgment but reserve for subsequent determination, on a schedule to be set by the Court, the amount of the fee award. 17. Except as provided in paragraphs 10(e), 11 and 15, the Defendants shall bear no expense, cost, damage or fee alleged or incurred by the Plaintiff, any Settlement Class Member, or any of their respective attorneys, experts, advisors, agents, representatives or the like. MISCELLANEOUS 18. All of the Exhibits and the WHEREAS clauses shall be incorporated by reference into the Settlement Agreement as though fully set forth herein. 19. This Settlement Agreement, or any of its provisions, only may be amended, modified or waived by a written instrument signed by counsel for all Parties or their respective successors. 104066 106 y2 20
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 24 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et at, No. 13-cv-0933 (S.D.N.Y.) Execution Copy 20. This Settlement Agreement, including the Exhibits, shall be binding upon the Parties and the Settlement Class Members and inure to the benefit of each and all of the Plaintiff Releasees and each and all of the Defendant Releasees, provided, however, that no assignment by any Party or Settlement Class Member shall operate to relieve such Party or Settlement Class Member of her, his or its obligations under this Settlement Agreement. 21. The Parties represent and agree that the terms of the Settlement were negotiated at arm's length and in good faith by the Parties, and reflect a settlement that was reached voluntarily based upon adequate information and sufficient discovery and after consultation with experienced legal counsel. 22. The Plaintiff and its counsel represent and warrant that the Plaintiff was a shareholder of Alterra at the time the Transaction was announced, that the Plaintiff will provide proof of ownership upon request and that none of the Plaintiff's claims or causes of action referred to in any complaint in the Action or in the MOU has been assigned, encumbered or in any manner transferred in whole or in part. 23. If any claim which is or would be subject to the release and dismissal contemplated by the Settlement Agreement is asserted against any Person in any court or other forum prior to final approval of the Settlement, the Plaintiff shall join, at the request of any of the Defendants, in any motion to dismiss or stay such proceeding. 24. The Settlement Agreement, including all of the Exhibits, constitutes the entire agreement by, between and among the Parties with respect to its subject matter, and supersedes any and all prior agreements or understandings concerning the subject matter hereof, whether written or oral, 25. Any failure by any Party to insist upon the strict performance by any other Party 104066106 v2 21
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 25 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy or Settlement Class Member of any of the provisions of the Settlement Agreement shall not be deemed a waiver of any of the provisions, and such Party, notwithstanding such failure, shall have the right thereafter to insist upon the strict performance of any and all of the provisions of the Settlement Agreement to be performed by such other Party or Settlement Class Member. 26. The Settlement Agreement may be executed, by original, email or facsimile signature, in counterparts, all of which shall be considered one and the same agreement and shall become effective when such counterparts have been signed by each of the Parties and delivered to the other Parties. 27. The Settlement Agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to any principles of conflict of laws. Each of the Parties and Settlement Class Members (a) irrevocably submits to the personal jurisdiction of the Court and any federal court sitting in or having jurisdiction over the County of New York, State of New York, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, in any suit, action or proceeding arising out of or relating to the MOU, the Settlement and/or the Settlement Agreement and (b) agrees that all claims in respect of such suit, action or proceeding shall be brought, heard and determined exclusively in the Court (provided that, in the event that subject matter jurisdiction is unavailable in the Court because the claim(s) are subject to exclusive jurisdiction in federal district courts, then all such claims shall be brought, heard and determined exclusively in the United States District Court for the Southern District of New York). Each of the Parties and Settlement Class Members waives any defense of inconvenient forum to the maintenance of any action or proceeding brought in accordance with this paragraph. Each of the Parties and Settlement Class Members further agrees to waive any bond, surety or other security that might be required of any other party with respect to such any 104066 1045 v2 22
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 26 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy action or proceeding, including an appeal thereof. 28. Neither the MOU nor this Settlement Agreement, nor the fact or any terms of the Settlement, is evidence, or a presumption, admission or concession by any Party in the Action or any other action or proceeding, any signatory hereto or any Plaintiff Releasee or any Defendant Releasee, of any fault, liability or wrongdoing whatsoever, or lack of any fault, liability or wrongdoing, as to any facts or claims alleged or asserted in the Action, or any other action or proceeding. Neither the MOU nor this Settlement Agreement is a finding or evidence of the validity or invalidity of any claim or defense in the Action or any other action or proceeding, or any wrongdoing by any of the Defendants or any of the Defendant Releasees or any damage or injury to any Settlement Class Member. Neither the MOU nor this Settlement Agreement, nor any of the terms and provisions of the MOU or this Settlement Agreement, nor any of the negotiations or proceedings in connection therewith, nor any of the documents or statements referred to herein or therein, nor the Settlement, nor the fact of the Settlement, nor the settlement proceedings, nor any statements in connection therewith, (a) shall (i) be argued to be, used or construed as, offered or received in evidence as, or otherwise constitute an admission, concession, presumption, proof, evidence or a finding of any liability, fault, wrongdoing, injury or damage, or of any wrongful conduct, act or omission on the part of any of the Defendant Releasces, or of any infirmity of any defense, or of any damage to any Plaintiff or Settlement Class Member, or (ii) otherwise be used to create or give rise to any inference or presumption against any of the Defendant Releasees concerning any fact alleged or that could have been alleged, or any claim asserted or that could have been asserted in the Action, or of any purported liability, fault or wrongdoing of any of the Defendant Releasees or of any injury or damages to any Person, or (b) shall otherwise be admissible, referred to or used in any proceeding of any 104066106 v2 23
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 27 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D.N.Y.) Execution Copy nature, for any purpose whatsoever; provided, however, that (x) the Settlement Agreement and/or Order and Final Judgment may be introduced in any proceeding, whether in the Court or otherwise, as may be necessary to argue that the Settlement Agreement and/or Order and Final Judgment has res judicata, collateral estoppel or other issue or claim preclusion effect or to otherwise consummate or enforce the Settlement Agreement and/or Order and Final Judgment, and (y) the Plaintiff and its counsel may refer to the final, executed version only of the MOU or this Settlement Agreement in connection with the Fee Application (in addition to any other documents or information they may utilize with respect to such Fee Application). 29. In the event of any dispute or disagreement with respect to the meaning, effect or interpretation of the Settlement Agreement or an Exhibit, or in the event of a claimed breach of the Settlement Agreement or an Exhibit, such dispute shall be adjudicated only in the Court, which shall retain jurisdiction for purposes, among other things, of administering the Settlement and resolving any disputes under the Settlement Agreement. 30. Each of the Parties and their respective attorneys shall cooperate fully with one I nother in seeking the Court's approval of the Settlement Agreement and the Settlement, and use their best efforts to cause the entry of the Order and Final Judgment and to effect, as promptly as practicable, the consunimation of this Settlement Agreement, the Settlement and the dismissal of the Action, including any and all complaints filed in any of the Individual Actions, with prejudice and without costs to any Party, except as provided in paragraphs 10(e), 11 and 15 above. 31. Without further order of the Court, the Parties may agree in writing to reasonable extensions of time to carry out any of the provisions of this Settlement Agreement, 32, The Settlement Agreement, together with all Exhibits, shall be deemed to have 104066 106 v2 24
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 28 of 60 Louisiana Municipal Police Employees Retirement System v. Alterra Capital Holdings Limited et al., No. 13-cv-0933 (S.D,N.Y.) Execution Copy been mutually prepared by the Parties and shall not be construed against any of them by reason of authorship. 33. Each of the attorneys executing the Settlement Agreement on behalf of one or more of the Parties warrants and represents that she or he has been duly authorized and empowered to execute the Settlement Agreement on behalf of each such Party. 104066106 v2 25
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 29 of 60 Louisiana Municipal Police Employees Retirement System v. A/terra Capital Holdings Limited ci at., No. 13-cv-0933 (S.D.N.Y) Execution Copy Dated: June 20, 2013 BRANN20 F 17 1RUIC Paul M. Brannon 3500 North 1-lullen Street Metairie, LA 70002 Telephone: (504) 456-8696 Facsimile: (504) 456-8697 pmb@bratitionlawfirin.com Attorneys for Plaintiff GLANCY BINKOW & GOLDBERG LLP By: Brian P. Murray Gregory B. Linkh 77 Water Street, Suite 721 New York, NY 10005 Telephone: (646) 722-4180 Facsimile: (310) 201-9160 bmurrayglancyiaw.com glinkhmurrayfrank.com Attorneys,fbr Plaintiff O' By ll 35VNorl len Street Metairie, LA 70002 Telephone: (504) 456-8677 Facsimile: (504) 456-8653 ericg1-1w1egal.com Attorneys for Plaintiff J)EBEVOISE & PLIMPTON LU By: Macye O'Connor, Esq. 919 Third Avenue New York, NY 10022 Telephone: (212) 909-6315 Facsimile: (212) 872-1002 mloconnor@debevoise.com A itorneys for Defendants Markel Corporation and commonwealth Merger Subsidiary Limited AKIN CUM.P STRAU S HAUER & FE LALLP By: RobeitU es,lsq One Bryant.Park New York, NY 10036 Telephone: (212) 872-1070 Facsimile: (212) 872-1002 rpeesakingurnp.com Attorneys for Defendants Alterra Capital Holdings Limited, W Marston Becker, Michael O'Reilly, James D. Carey,.Ikieyl D. Hartzband, Willis T King, Jr., James L. Zech, Mario P. Thrsiello, K Bruce Connell, James H. Macnaughton, W Thomas Forrester, Stephan F. Newhouse and Andrew H Rush 104066106 v2 26
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 30 of 60 Louisiana Junicipai Police Employees Retire merit Syrlem i 4/terra Capital Holdings Limited ci al., No. I 3-cv-0933 (S.D.N.Y,)!Lecufion Copy Dated: June 20, 2013 BRANNON LAW FIRM, LLC By: Paul M. Brannon 3500 North I Jullen Street Metaiiie, LA 70002 I'eiephonc: (504) 456-8696 Facsimile: (504) 456-8697 pmbbrannonlawfirni.com A norneys fbr Plaintiff GL.ANiNKOiJi9ERC LLP O'BELL, LLC By: Eric J. O'BeIl 3500 North ilullen Street Metairie, LA 70002 Telephone: (504) 456-8677 Facsimile: (504) 456-8653 ericghwlegai.com Attorneys/or Plaint i/f DflIE'O1SE & PJ+\1!T()N LLP Brian P. rray Gregory B. Linkh 77 Water Street, Suite 721 New York, NY 10005 Telephone: (646) 722-4180 Facsimile: (310) 201-9160 hmurrayrglancykiw.com glinkh(djnurrayfrank.com :4ttornej,rfbr Piceintiji Macye O'Connor, L. 919 Third Avenue New York, NY 10022 Telephone: (212) 909-6313 Facsimile: (212) 872-1002 m1oconnor@dehcvoise.com Attorncysfi..'r Defendants i1'iarkei (ioiporaiion and Commonwealth Merger Su/,sidiwy Limited AKIN GUMP STEUSS HAUFR & 11I,1), LLP. B) Robert 1.1 Lsq. One Bryant Park New York, NY 10036 Telephone: (212) 872-1070 Facsimile: (212) 872-1002 rpeesakingump.com A twrne ys Thr De/endonl.c A/terra Capital Holdings LimIted, 14< Marston Becker, Michael O'Reilly,.Janes D. Carey, it'ieryl f) Harizband, Willis 71 King Jr., James L. Zec'h, Mario P. Torsieiio, K. Bruce Cannel?, Joiner H. Macnaughion, W Thomas l'orrester, Stephan F. Newhouse anclandrew Ii Rush 06 v2 26
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 31 of 60 Exhibit A
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 32 of 60 onne N ER 13-Feb-2013 13:11 EST 486075 I4ACOV 1 HTMESS OC Page 1 of 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 SCHEDULE 14A PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant LJ Filed by a Party other than the Registrant D Check the appropriate box: U Preliminary Proxy Statement U Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) U Definitive Proxy Statement MR Definitive Additional Materials U Soliciting Material Pursuant to 240.14a-12 ALTERRA CAPITAL HOLDINGS LIMITED (Name of Registrant as Specified in Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): 151 No fee required. 0 Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and State how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: U U Fee paid previously with preliminary materials. Check box if any part of the fee is offset as provided by Exchange Act Rule 0-1 l(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: (2) Form, schedule or registration statement no.: (3) Filing party: (4) Date filed:
Case 1:1 3-cv-00933-ALC-HBP Docume nt 29 Filed 1111111111111111111111 06/26/13 Page 33 of 60 ALTERRA CAPITAL HOLD RR Donnelley ProFile NER trsevind 14-Feb-201317:51 EST DEFA14A NYM DC go SUPPLEMENT NO.! TO DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS The supplemental information disclosed below should be read in conjunction with the definitive joint proxy statement/prospectus on Schedule 14A (the "definitive joint proxy statement/prospectus") filed with the Securities and Exchange Commission (the "SEC") by Alterra Capital Holdings Limited ("Alterra" or "the Company") on January 18, 2013, relating to the special meeting of stockholders of A/terra to be held on February 26, 2013 at 11:00 am. Atlantic time, at the A/terra House, 2 Front Street, Hamilton, MM 1/, Bermuda. At the special meeting, Alterra's stockholders will be asked to vote on, among other things, proposals related to the approval and adoption of the Agreement and Plan of Merger (the 'merger agreement"), dated as of December 18, 2012, among Alterra, Markel Corporation ("Markel") and Commonwealth Merger Subsidiary Limited, a Bermuda exempted company and a direct, wholly owned subsidiary of Markel ("Merger Sub"), providing for Merger Sub to merge with and into A/terra, with Alterra surviving the merger as a wholly-owned subsidiary of Markel (the "merger"). LITIGATION RELATED TO THE MERGER Alterra stockholder Louisiana Municipal Police Employees Retirement System filed a complaint in the United States District Court for the Southern District of New York, purportedly on behalf of itself and other stockholders of Altena, against Alterra, Alterra's board of directors, Markel, and Merger Sub, On February 15, 2013, the defendants entered into a memorandum of understanding with the plaintiff regarding the settlement of this action. In connection with the settlement, Alterra agreed to make certain supplemental disclosures to its stockholders. The Company believes that the claims in this action are without merit and that no further disclosure is required to supplement the definitive joint proxy statement/prospectus under applicable laws; however, to avoid the risk that the action may delay or otherwise adversely affect the consummation of the merger and to minimize the expense of defending such action, Alterra is voluntarily making the supplemental disclosures set forth below. The memorandum of understanding contemplates that the parties will enter into a stipulation of settlement. The stipulation of settlement will be subject to customary conditions, including court approval following notice to Alterra's stockholders. In the event that the parties enter into a stipulation of settlement, a hearing will be scheduled at which the United States District Court for the Southern District of New York will consider the fairness, reasonableness and adequacy of the settlement. If the settlement is finally approved by the court, it will resolve and release all claims in all actions that were or could have been brought challenging any aspect of the proposed merger, the merger agreement and any disclosure made in connection therewith (excluding claims for dissenters' rights under Bermuda Law), pursuant to terms that will be disclosed to Alterra's stockholders prior to final approval of the settlement. In addition, in connection with the settlement, the parties contemplate that plaintiffs counsel will file a petition in the United States District Court for the Southern District of New York for an award of attorneys' fees and expenses to be paid by Alterra or its successor. The settlement will not affect the consideration that Alterra's stockholders are entitled to receive in the merger. There can be no assurance that the parties will enter into a stipulation of settlement, or that the court will approve any proposed settlement. In such event, the proposed settlement as contemplated by the memorandum of understanding may be terminated.
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 34 of 60 11111111111 liii IIIIi I 111111 SUPPLEMENTAL DISCLOSURES NER greevind 14Feb-2013 1620 EST 486075 TX 2 11* NYM RIM ESS DC Page 1 of I This supplemental information should be read in conjunction with the definitive joint proxy statement/prospectus, which should be read in its entirety. Defined terms used but not defined herein have the meanings set forth in the definitive joint proxy statement/prospectus. New text is underlined. The Merger Background of the Merger The following disclosure supplements and restates the sixth full paragraph on page 40 of the definitive joint proxy statement/prospectus. On August 28, 2012, Mike O'Reilly, Chairman of Alterra's board of directors, and IVIr. Becker met with Messrs. Market, Whitt, Gayner and Kirshner, at Market's offices in Richmond, Virginia, at which meeting Markel proposed a non-binding draft term sheet, which included among other things, a proposed form of transaction, valuation, form of consideration, tax treatment of the proposed acquisition, board representation, closing conditions and certain provisions intended to address deal certainty. The August 28 Markel term sheet proposed that the consideration payable to holders of Alterra common shares, on a fully-diluted basis, be equal_o approximately LOx the June 30, 2012 GAAP book value of Alterra (as estimated by Alterra, and that the form of consideration would be 25-30% in cash and 70-75% in Markel common stock. The August 28 Market term sheet further proposed that the merger agreement would include customary deal protection and fiduciary out provisions, including no-shop and no talk covenants with a customary fiduciary out and a break-up fee equal to 3.0% of the aggregate merger consideration. In addition, the August 28 Markel term sheet noted that two to three Alterra directors would be added to the Markel board of directors. Under this term sheet. the anticipated merger agreement was contemplated to be signed by November 1, 2011 The following disclosure supplements and restates the ninth full paragraph on page 40 of the definitive joint proxy statement/prospectus. On September 6, 2012, Alterra, with input from its financial and outside legal advisors, presented proposed changes to Markel's non-binding term sheet, including changes to valuation and board representation. Among other provisions, the September 6 Alterra term sheet proposed that the consideration to be paid to the holders of Alterra common shares, on a fully diluted basis, be equal to approximately 1,2x the June 30, 2012 GAAP book value of Alterra. The September 6 Alterra term sheet indicated that a break-up fee of up to 3.0% of the aggrerate merger consideration was subject to the review of counsel. In addition, the September 6 Alterra term sheet proposed that four Alterra directors would be added to the Markel board of directors. This term sheet also amended the anticipated signing date of the merger agreement to mid-october 2012. The following disclosure supplements and restates thefifthftul paragraph an page 41 of the definitive joint proxy statement/prospectus. On November 13, 2012, Mr. Becker provided Mr. Markel with a further revised non-binding term sheet that reflected the November 12, 2012, discussions and suggested an accelerated timeline should the parties agree to proceed. The November 13 Alterra term sheet proposed that the consideration to be paid to the holders of Alterra common shares, on a fully-diluted basis, be equal to approximately 1.1 x the estimated December 31, 2012 GAAP book value of Alterra (before taking into account any Al terra losses from Superstorm Sandy), and contemplated that the cash paid to Alterra's shareholders would be $1 billion to $1.3 billion. The November 13 Alterra term sheet indicated that the break-up fee equal to 3.0% of the aggregate merger consideration was still sublect to negotiation and that three Alterra directors would be added to the Markel board of directors. The following disclosure supplements and restates the fourth full paragraph on page 42 of the definitive joint proxy statement/prospectus. On December 12, 201.2, the Alterra board of directors held an informational call with Alterra's senior management, BofA Merrill Lynch and Akin Gump. Mr. Becker provided an update on recent discussions and an overview of the revised term sheet. BofA Merrill Lynch provided the Alterra board of directors with certain financial analysis. The December 12 Alterra term sheet øroposed that the consideration to be paid to the holders of Alterra common shares, on a fully-diluted basis, be equal to approximately 1. lx the estimated December 31, 2012 OAAP book value of Alterra (after taking into account Alterra' a estimated net losses from Superstorm Sandy), and contemplated that the cash paid to Alterra's shareholders would be 1 billion, The November 13 Alterra term sheet accepted the 3.0% break-up fee equal, and indicated two Alterra directors would be added to the Markel board of directors. The Merger Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Financial Advisor to Alterra Atterra Financial Analyses The following disclosure amends and restates the disclosure under the heading "The Merger Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Financial Advisor to Alterra-Alterra Financial Analyses" beginning on page 60 of the definitive joint proxy statement/prospectus.
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 Page 35 of 60 ALTERRA CAPITAL HOLD HR Donrolby ProFile N ER 486075 DEFA14A NYM Alterra Financkd Analyses Selected Publicly Traded Companies Analysis, BofA Merrill Lynch reviewed publicly available financial and stock market information for Alterra and the following nine publicly traded companies: Allied World Assurance Company Holdings, AG; Arch Capital Group Ltd.; Aspen Insurance Holdings Limited; Axis Capital Holdings Limited; Endurance Specialty Holdings Ltd.; Everest Re Group, Ltd.; PartnerRe Ltd.; Platinum Underwriters Holdings, Ltd.; and XL Group plc. BofA Merrill Lynch reviewed, among other things, earnings per share multiples, based on closing stock prices on December 14, 2012, of the selected publicly traded companies divided by calendar year 2012 and calendar year 2013 estimated fully diluted EPS. BofA Merrill Lynch also reviewed primary book value per share multiples, based on closing stock prices on December 14, 2012 divided by December 31, 2012 estimated primary book value per share. The results of these analyses are summarized in the table below: Price/2012B Price/2013E Fully Fully- Price/Primary Diluted Diluted Book Value FPS - El l's per Share Allied World Assnrance ComDany Holdings, A I Lox 1L4 Arch Capital Group Ltd. 15.7x 14.Rx 1. 17x Aspen Insurance Holdings Limited 1L11\ Axis Capital Holdines Limited 9.9x ).)x Endurance Specially Holdings Ltd. 14_x ).lx U.71x Everest Re Group, Ltd. 2L2 ParinerRe Ltd 2J Platinum Underwriters Holdings 1A 1 9. 9X 11. 4x LLlx XL Group We 15.3x loh Based upon the multiples of the selected companies above, and BofA Merrill Lynch's professional judgment and experience. BofA Merrill Lynch then applied calendar year 2013 EPS multiples of 9.Ox to 11.Ox derived from the selected publicly traded companies to Alterra's calendar year 2013 estimated fully diluted EPS based on both AltelTa's management estimates and research analyst estimates and applied December 31, 2012 book value multiples of 0,75x to 0.85x derived from the selected publicly traded companies to Alterra's December 31, 2012 estimated primary book value per share. BofA Merrill Lynch also reviewed trading multiples of Alterra common shares, based on the closing stock price of Alterra common shares on December 14, 2012 compared to calendar year 2013 estimated fully diluted EPS based on both Altena's management estimates and research analyst estimates and compared to December 31, 2012 estimated fully diluted book value per share based on Alterra's management estimates. The indicated trading multiples were 8.5x 2013 estimated fully diluted EPS based on Alterra's management estimates, l0,ox 2013 estimated fully diluted EPS based on research analyst estimates and 0.77x December 31, 2012 estimated fully diluted book value based on Alterra's management estimates, Estimated financial data of the selected publicly traded companies were based on publicly available research analysts' estimates, and estimated financial data of Al terra were based on the Alterra management forecasts and publicly available research analysts' estimates. This analysis indicated the following approximate implied per share equity value reference ranges for Alterra, as compared to the implied merger consideration: Implied Per Share Equity Value Reference Ranges for Alterra 2013E EPS 12/31/2012E Book Value (Alterra go Implied Merger Consideration 2013E EL'S (Alterra Estimates) (Research Analyst Estimates) Estimates) $23.84 - $29.14 $20.34- $24.86 $22.50 - $25.50 $30.97
Case 1:13-cv-00933-ALC-HBP Document 29 Filed 06/26/13 P 36 of 60 ALTERRA CAPITAL HOLD DEFA1 4A RR Donnelley ProFile III I[IIIIII I 11111 -feb-2013 19:D EST!IJ III I liiiii u 486075TX4 13* HIMESS 1C No company used in this analysis is identical or directly comparable to Alterra, Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Alterra was compared. Selected Precedent Transactions Analysis. BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating to seven selected transactions in the insurance and reinsurance sectors. BofA Merrill Lynch selected these transactions based on its professional judgment and experience, considering factors such as the financial and operating characteristics of each compapy. No company or transaction was, however, identical to Alterra or the merger. BofA Merrill Lynch reviewed transaction values, calculated as the equity value implied for the target company in the selected transaction, as a multiple of the target company's one-year forward fully diluted EPS and as a multiple of the target company's fully diluted book value for the most recent quarter ending before the date on which the transaction was announced. The results of these analyses are summarized in the table below: Announcement Date 8/30/12 11/20/il 3/3/10 9/8/09 7/9/09 7/4/09 11/18/05 Acguiior Validus Holdings, Ltd. Allegheny Corporation Max Capital Group Ltd. Fairfax Financial Holdings Limited Validus Holdings, Ltd. ParteerRe Ltd. Swiss Re Target Flagstone Reinsurance Holdings. S.A. Transatlantic Holdings Inc. Harbor Point Limited OdvssevRe IPC Holdings. Ltd. Paris RE Holdings Limited GB Insurance Solutions Prieef Forward Earnings 1S.5x NA 16.7x 7.1 x lo.2x NA Price / Fully. Diluted Book Value 0,72x Based on the multiples of the selected companies and BofA Merrill Lynch's professional judgment and experience, BofA Merrill Lynch then applied one-year forward BPS multiples of 9.Ox to 11 Ox derived from the selected transactions to Alterra's calendar year 2013 estimated fully diluted EPS based on both Alterra' s management estimates and research analyst estimates and applied book value multiples of 0.80x to 0.95x derived from the selected transactions to Alterra's December 31, 2012 estimated fully diluted book value per share. Estimated financial data of the selected transactions were based on publicly available information at the time of announcement of the relevant transaction, Estimated financial data of Alterra were based on the Alterra management forecasts and publicly available research analysts' estimates. This analysis indicated the following approximate implied per share equity value reference ranges for Alterra, as compared to the implied merger consideration: Implied Per Share Equity Value Reference Ranges for Aiterra 2013E EPS 2013E EPS 2I31120I2E Book Value (Alterrn (Alterra Estimates) (Research, Analyst Estimates) Estimates) $23.84-$29.14 $20.34-$24.86 $23.41 -$27.80 0.80x 1.25x 0.84X 0.97x 0.76x Implied Merger Consideration $30.97 No company, business or transaction used in this analysis is identical or directly comparable to Alterra or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which Alterra and the merger were compared. Discounted Cash Flow Analysis. BofA Merrill Lynch performed a discounted cash flow analysis of Alterra to calculate the estimated present value of the standalone levered, after-tax free cash flows that Alterra was forecasted to generate during Alterra's fiscal years 2013 through 201.7 based on the Alterra management forecasts. "Levered, after-tax free cash flows" is defined for this purpose as the portion of cash flows after the impact of interest expense and taxes that can be distributed to shareholders during Alterra's fiscal years 2013 through 2017 based on the Alterra management forecasts. BofA Merrill Lynch calculated terminal values for Alterra by applying terminal multiples of 0.80x to 1.00x to Alterra's December 31, 2017 estimated book value. For purposes of its discounted cash flow analysis. BofA Merrill Lynch included the impact of the issuance of shares related to annual expected stockbased compensation expense. The cash flows and terminal values were then discounted to present value as of December 31, 2012 using discount rates ranging from 8% to 10%, which were based on an estimate of Alterra's cost of equity. This analysis indicated the following approximate implied per share equity value reference range for Alterra as compared to the implied merger consideration: Implied Per Share Equity Value Reference Range ror Alterra Implied Merger Consideration $24.17 - $29.49 $30.97