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Distribution Agreement
by and between
Unitrin, Inc.
and
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Corporation
dated as of November 6, 2000
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS..........................................................2
Section 1.1 General................................................2
Section 1.2 References; Interpretation.............................9
ARTICLE 2
DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS
AND REPRESENTATIONS AND WARRANTIES...................................9
Section 2.1 The Distribution and Other Transactions................9
Section 2.2 Declaration Date and Distribution Date; Further
Assurances............................................15
Section 2.3 Representations and Warranties........................15
Section 2.4 Certain Post-Distribution Transactions................19
ARTICLE 3
INDEMNIFICATION.....................................................20
Section 3.1 Indemnification by C-W................................20
Section 3.2 Indemnification by UNITRIN............................23
Section 3.3 Treatment of Payments.................................23
Section 3.4 Procedures for Indemnification........................24
Section 3.5 Remedies Not Exclusive................................26
Section 3.6 Subrogation...........................................26
Section 3.7 Indemnification Payments..............................26
ARTICLE 4
COVENANTS...........................................................27
Section 4.1 Access to Information.................................27
Section 4.2 Confidentiality.......................................28
Section 4.3 No Solicitation.......................................28
Section 4.4 Certain Other Agreements..............................29
Section 4.5 Public Announcements..................................30
Section 4.6 Required Consents.....................................30
Section 4.7 Litigation Cooperation................................30
Section 4.8 Other Matters.........................................30
ARTICLE 5
MISCELLANEOUS.......................................................31
i
Section 5.1 Complete Agreement; Construction......................31
Section 5.2 Counterparts..........................................31
Section 5.3 Survival of Agreements................................31
Section 5.4 Expenses..............................................31
Section 5.5 Notices...............................................31
Section 5.6 Waivers...............................................33
Section 5.7 Amendments............................................33
Section 5.8 Assignment............................................33
Section 5.9 Successors and Assigns................................33
Section 5.10 Termination...........................................33
Section 5.11 Subsidiaries..........................................35
Section 5.12 Third Party Beneficiaries.............................35
Section 5.13 Title and Headings....................................35
Section 5.14 Exhibits and Schedules................................35
Section 5.15 GOVERNING LAW.........................................35
Section 5.16 Consent to Jurisdiction...............................35
Section 5.17 Severability..........................................36
ii
DISTRIBUTION AGREEMENT, dated as of November 6, 2000 (this
"Agreement"), between UNITRIN, INC, a Delaware corporation ("UNITRIN"), and
▇▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION, a Delaware corporation ("C-W").
WHEREAS, UNITRIN owns, as of the close of business on the date
hereof, 4,382,400 shares of common stock, par value $1.00 per share, of C-W
(the common stock of C-W is referred to herein as the "Common Stock");
WHEREAS, simultaneously with the execution hereof, C-W, UNITRIN and
CW DISPOSITION COMPANY, a Delaware corporation and a wholly owned
subsidiary of UNITRIN ("Merger Sub"), are entering into an Agreement and
Plan of Merger in the form attached hereto as Exhibit A-1 (the
"Recapitalization Agreement"), pursuant to which, among other things,
Merger Sub will merge with and into C-W (the "Merger") with the following
consequent capital stock changes: (a) 4,382,400 shares of Common Stock held
by UNITRIN will be contributed to Merger Sub and, as of the Effective Time
(as defined in the Recapitalization Agreement), will automatically be
canceled and retired with no securities or other consideration issued in
exchange therefore, (b) all of the common stock of Merger Sub owned by
UNITRIN will be converted into 4,382,400 shares of a new Class B common
stock, par value $1.00 per share, of C-W ("Class B Common Stock"), which
class of common stock will be entitled to elect at least 80% of the members
of the Board of Directors of C-W and in all other respects will be
substantially identical to the Common Stock, and (c) all other shares of
Common Stock held by stockholders of C-W will remain issued and outstanding
(the "Recapitalization");
WHEREAS, the Board of Directors of UNITRIN has determined that it
is in the best interests of UNITRIN and its stockholders to distribute on
the Distribution Date (as defined herein) all the shares of Class B Common
Stock that UNITRIN will receive in the Recapitalization, on the terms and
subject to the conditions set forth in this Agreement, to the holders of
record of the common stock, par value $.01 per share, of UNITRIN ("UNITRIN
Common Stock"), as of the Distribution Record Date (as defined herein), on
a pro rata basis (the "Distribution");
WHEREAS, the Board of Directors of C-W has determined that it is in
the best interests of C-W and its stockholders that the Distribution be
consummated, and the Recapitalization is a necessary and desirable means to
enable the Distribution to occur;
WHEREAS, UNITRIN is expected to receive a ruling from the Internal
Revenue Service to the effect that the Distribution will be, to the extent
set forth therein, a tax-free distribution within the meaning of Section
355 of the Code (as defined herein); and
WHEREAS, each of UNITRIN and C-W has determined that it is
necessary and desirable to set forth the principal corporate transactions
required to effect the Distribution and the Recapitalization and to set
forth other agreements that will govern certain other matters following the
Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 General. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or
other regulatory or administrative agency, body or commission or any
arbitration tribunal.
(b) "Acquisition Proposal" shall have the meaning set forth in
Section 4.3(a).
(c) "Affiliate" shall mean, when used with respect to a specified
person, another person that controls, is controlled by, or is under common
control with the person specified. As used herein, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of voting securities or other interests, by contract or
otherwise.
(d) "Assets" shall mean assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or
other third parties or elsewhere), whether real, personal or mixed,
tangible, intangible or contingent, in each case whether or not recorded or
reflected or required to be recorded or reflected on the books and records
or financial statements of any Person.
(e) "Business Entity" shall mean any corporation, partnership,
limited liability company or other entity which may legally hold title to
Assets.
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(f) "Cash Dividend" shall have the meaning set forth in Section
2.1(d).
(g) "Cash Dividend Record Date" shall mean the date determined by
the Board of Directors of C-W as the record date for the determination of
holders of record of Common Stock entitled to receive the Cash Dividend.
(h) "Certificate of Merger" shall have the meaning set forth in the
Recapitalization Agreement.
(i) "Class B Common Stock" shall have the meaning set forth in the
recitals hereto.
(j) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder, including any
successor legislation or regulations.
(k) "Commission" shall mean the U.S. Securities and Exchange
Commission.
(l) "Common Stock" shall have the meaning set forth in the recitals
hereto.
(m) "C-W" shall have the meaning set forth in the heading of this
Agreement.
(n) "C-W Business" shall mean each and every business conducted at
any time prior to, on or after the Distribution Date by C-W or any current,
former, or future Subsidiary of C-W or other Business Entity controlled by
C-W, whether or not such Subsidiary is a Subsidiary of C-W or such Business
Entity is controlled by C-W on the date hereof.
(o) "C-W Group" shall mean C-W and each Person that is a Subsidiary
of C-W immediately prior to the Distribution Date.
(p) "C-W Indemnitees" shall mean C-W, each member of the C-W Group,
each of their respective present and former directors, officers, employees
and agents and each of the heirs, executors, successors and assigns of any
of the foregoing.
(q) "C-W Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise out of, result from or are related to the
operation of the C-W
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Business or the ownership of the assets of the C-W
Business by C-W, any predecessor entity of C-W (and all predecessors
thereto) or any Subsidiary of or Business Entity controlled by such
predecessor, any current, former or future Subsidiary of C-W or any
Business Entity controlled by C-W, whether such Liabilities arise before,
on or after the Distribution Date and whether known or unknown, fixed or
contingent, and shall include, without limitation:
(i) any and all Liabilities to which UNITRIN or its
predecessors and successors may become subject arising from or based upon
its status or alleged status as a "controlling person" (as defined under
Section 15 of the Securities Act and Section 20 of the Exchange Act) of C-W
or a stockholder of C-W relating to (A) the Proxy Statement (or any
amendment thereto) or any other solicitation materials or any oral
solicitations of proxies (except for liabilities which C-W incurs as a
result of, and to the extent resulting from, information provided by
UNITRIN relating to UNITRIN for inclusion in the Proxy Statement (or any
amendment thereto) or any such other solicitation materials or oral
solicitation); or (B) any other report or document filed by C-W with the
Commission at any time before, on or after the Distribution Date (except
for liabilities which C-W incurs as a result of, and to the extent
resulting from, information provided by UNITRIN relating to UNITRIN for
inclusion in such report or document);
(ii) any Liabilities for a breach by C-W of any representation,
warranty or covenant herein or in the Recapitalization Agreement; and
(iii) any and all Liabilities which UNITRIN incurs as a
result of, and to the extent resulting from, information provided by C-W
relating to C-W for inclusion in any information statement provided by
UNITRIN to its stockholders or any report or document filed by UNITRIN with
the Commission.
(r) "Declaration Date" shall mean the date on which the UNITRIN
Board of Directors shall declare the Distribution; provided that the
declaration and the payment of the Distribution shall be conditioned upon
and subject to the consummation of the Recapitalization, and the payment of
the Distribution shall consist of the shares of Class B Common Stock
received by UNITRIN in the Recapitalization and shall be after the
consummation of the Recapitalization on the day on which the
Recapitalization occurs.
(s) "DGCL" shall mean the General Corporation Law of the State of
Delaware.
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(t) "Distribution" shall have the meaning set forth in the recitals
hereto.
(u) "Distribution Agent" shall mean the distribution agent selected
by UNITRIN to effect the Distribution, which shall be C-W's stock transfer
agent.
(v) "Distribution Date" shall mean the date determined by the Board
of Directors of UNITRIN for the mailing of certificates of Class B Common
Stock to stockholders of UNITRIN in the Distribution. The Distribution Date
shall be a date as soon as practicable following the Declaration Date and
shall be the day on which the Recapitalization occurs.
(w) "Distribution Record Date" shall mean the date determined by
the Board of Directors of UNITRIN as the record date for the determination
of the holders of record of UNITRIN Common Stock entitled to receive shares
of Class B Common Stock in the Distribution.
(x) "Established Liability" shall mean, with respect to each
UNITRIN stockholder, the amount of Tax Liability (including interest and
penalties) resulting from the Distribution, as evidenced by (a) an amended
tax return of such UNITRIN stockholder reflecting the amount of such Tax
Liability, together with proof of payment of such amount, or (b) a
deficiency notice received by such UNITRIN stockholder from the IRS setting
forth the amount of such Tax Liability, together with proof of payment of
such amount.
(y) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
(z) "Form 8-A" shall mean a C-W registration statement on Form 8-A
pursuant to which the Class B Common Stock shall be registered under the
Exchange Act, including all amendments thereto.
(aa) "Governmental Authority" shall mean any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or
governmental authority.
(bb) "Governance Provisions" shall have the meaning set forth in
the Recapitalization Agreement.
(cc) "HSR Act" shall have the meaning set forth in Section
2.3(a)(iii).
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(dd) "Indemnifying Party" shall have the meaning set forth in
Section 3.3.
(ee) "Indemnitee" shall have the meaning set forth in Section 3.3.
(ff) "IRS" shall mean the Internal Revenue Service.
(gg) "IRS Ruling" shall have the meaning set forth in Section
2.1(b)(i).
(hh) "Liabilities" shall mean any and all losses, claims, charges,
debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, bonds,
specialties, indemnities and similar obligations, exonerations, covenants,
contracts, controversies, agreements, promises, omissions, variances,
guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising
under any law, rule, regulation, Action, threatened or contemplated Action
(including the costs and expenses of demands, assessments, judgments,
settlements and compromises relating thereto and attorneys' fees and any
and all costs and expenses, whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or
threatened or contemplated Actions), order or consent decree of any
governmental or other regulatory or administrative agency, body or
commission or any award of any arbitrator or mediator of any kind, and
those arising under any contract, commitment or undertaking, including
those arising under this Agreement or the Recapitalization Agreement, in
each case, whether or not recorded or reflected or required to be recorded
or reflected on the books and records or financial statements of any
person.
(ii) "Material Adverse Effect" shall mean, with respect to any
Person, any change, effect, event, occurrence or development that is,
individually or in the aggregate, materially adverse to the business,
operations, assets, liabilities, condition (financial or otherwise),
results of operations or prospects of such Person.
(jj) "Merger" shall have the meaning set forth in the recitals
hereto.
(kk) "NYSE" shall mean the New York Stock Exchange, Inc.
(ll) "NYSE Listing Application" shall mean the application to be
submitted by C-W to the NYSE for the listing of the Class B Common Stock.
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(mm) "Person" shall mean any natural person, Business Entity,
corporation, business trust, joint venture, association, company,
partnership, other entity or government, or any agency or political
subdivision thereof.
(nn) "Proxy Statement" shall have the meaning set forth in the
Recapitalization Agreement.
(oo) "Recapitalization" shall have the meaning set forth in the
recitals hereto.
(pp) "Recapitalization Agreement" shall have the meaning set forth
in the recitals hereto.
(qq) "Required Consents" shall have the meaning set forth in
Section 4.5.
(rr) "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(ss) "Subsidiary" shall mean any corporation, limited liability
company, partnership or other entity of which another entity (i) owns,
directly or indirectly, ownership interests sufficient to elect a majority
of the Board of Directors (or persons performing similar functions)
(irrespective of whether at the time any other class or classes of
ownership interests of such corporation, partnership or other entity shall
or might have such voting power upon the occurrence of any contingency) or
(ii) is a general partner or an entity performing similar functions (e.g.,
a trustee).
(tt) "Tax" or "Taxes" shall mean taxes of any kind, levies or other
like assessments, customs, duties, imposts, charges or fees, including
income, gross receipts, ad valorem, value added, excise, real or personal
property, asset, sales, use, license, payroll, transaction, capital, net
worth and franchise taxes, withholding, employment, social security,
workers compensation, utility, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains
taxes or other governmental taxes imposed or payable to the United States,
or any state, county, local or foreign government or subdivision or agency
thereof, and in each instance such term shall include any interest,
penalties, additions to tax or additional amounts attributable to any such
tax.
(uu) "Tax Claim" shall have the meaning set forth in Section 3.3.
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(vv) "Third Party Claim" shall have the meaning set forth in
Section 3.3.
(ww) "UNITRIN Business" shall mean each and every business (except
for the C-W Business) conducted at any time prior to, on or after the
Distribution Date by UNITRIN or any current, former or future Subsidiary of
UNITRIN (it being understood that the foregoing does not include C-W and
its Subsidiaries) or any Business Entity controlled by UNITRIN (it being
understood that the foregoing does not include C-W and its Subsidiaries),
whether or not such Subsidiary is a Subsidiary of UNITRIN or such Business
Entity is controlled by UNITRIN on the date hereof.
(xx) "UNITRIN Common Stock" shall have the meaning set forth in the
recitals hereto.
(yy) "UNITRIN Group" shall mean UNITRIN and each Person (other than
any member of the C-W Group) that is a Subsidiary or Affiliate of UNITRIN
immediately prior to the Distribution Date.
(zz) "UNITRIN Indemnitees" shall mean UNITRIN, each member of the
UNITRIN Group, each of their respective present and former directors,
officers, employees and agents and each of the heirs, executors, successors
and assigns of any of the foregoing, except C-W Indemnitees who would not
otherwise be an UNITRIN Indemnitee.
(aaa) "UNITRIN Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise out of, result from or are related to the
operation of the UNITRIN Business or the ownership of the assets of the
UNITRIN Business by UNITRIN, any predecessor entity of UNITRIN (and all
predecessors thereto) or any Subsidiary of or Business Entity controlled by
any such predecessor, any current, former or future Subsidiary of UNITRIN
or any Business Entity controlled by UNITRIN (it being understood that the
foregoing does not include C-W and its Subsidiaries), whether such
Liabilities arise before, on or after the Distribution Date and whether
known or unknown, fixed or contingent, and shall include, without
limitation:
(i) any Liabilities for a breach by UNITRIN of any
representation, warranty or covenant herein or in the Recapitalization
Agreement; and
(ii) any and all Liabilities which C-W incurs as a result
of, and to the extent resulting from, information provided by UNITRIN
relating to UNITRIN for inclusion in the Proxy Statement (or any amendment
thereto), any other solicitation
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materials or any oral solicitation of proxies or any report or document
filed by C-W with the Commission.
Section 1.2 References; Interpretation. References in this Agreement to any
gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words "include",
"includes" and "including" when used in this Agreement shall be deemed to
be followed by the phrase "without limitation". Unless the context
otherwise requires, references in this Agreement to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections
of, and Exhibits and Schedules to, this Agreement. Unless the context
otherwise requires, the words "hereof", "hereby" and "herein" and words of
similar meaning when used in this Agreement refer to this Agreement in its
entirety and not to any particular Article, Section or provision of this
Agreement.
ARTICLE 2
DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS
AND REPRESENTATIONS AND WARRANTIES
Section 2.1 The Distribution and Other Transactions.
(a) The Distribution. Subject to the conditions set forth in
Section 2.1(b) of this Agreement, on the Declaration Date, the Board of
Directors of UNITRIN shall irrevocably declare the Distribution upon the
terms set forth in this Agreement. The declaration and the payment of the
Distribution shall be conditioned upon and subject to the consummation of
the Recapitalization, and the payment of the Distribution shall consist of
the shares of Class B Common Stock received by UNITRIN in the
Recapitalization, it being understood that the Distribution will occur
after, but on the same date as, the filing of the Certificate of Merger. To
effect the Distribution, UNITRIN shall cause the Distribution Agent to
distribute, on the Distribution Date, on a pro rata basis and taking into
account Section 2.1(c), to the holders of record of UNITRIN Common Stock on
the Distribution Record Date, the certificates representing the shares of
Class B Common Stock received by UNITRIN in the Recapitalization. During
the period commencing on the date the certificates representing shares of
Class B Common Stock are delivered to the Distribution Agent and ending
upon the date(s) on which certificates evidencing such shares are mailed to
holders of record of UNITRIN Common Stock on the Distribution Record Date
or on which fractional shares of Class B Common Stock are sold on behalf of
such holders, the Distribution Agent shall hold the certificates
representing shares of Class B Common Stock on behalf of
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such holders. UNITRIN shall deliver to the Distribution Agent the share
certificates representing the shares of Class B Common Stock held by
UNITRIN. UNITRIN shall enter into an agreement with the Distribution Agent
in connection with the foregoing, and shall agree, among other things, to
reimburse the Distribution Agent for its reasonable costs, expenses and
fees in connection with the Distribution. C-W agrees, if requested by
UNITRIN, to provide such number of certificates evidencing shares of Class
B Common Stock that UNITRIN shall reasonably require in order to effect the
Distribution.
(b) Conditions to the Declaration and Distribution. The UNITRIN
Board of Directors shall irrevocably declare the Distribution, and cause
the Distribution to be effected on the Distribution Date, as soon as
reasonably practicable following the satisfaction or waiver, as determined
by UNITRIN in its sole discretion, of the conditions set forth below (which
conditions must be satisfied or waived on or prior to the Declaration Date
unless any such condition by its terms can only be satisfied after the
Declaration Date in which case such condition must be satisfied or waived
on or prior to the Distribution Date):
(i) the private letter ruling requested from the IRS
providing that, among other things, the Recapitalization and the
Distribution will qualify, to the extent set forth therein, as tax-free
transactions for federal income tax purposes under Sections 354 and 355 of
the Code, respectively (the "IRS Ruling") shall have been issued and shall
continue in effect, such ruling shall be in form and substance satisfactory
to UNITRIN in its sole discretion, and C-W shall have complied with all
provisions set forth in the IRS Ruling that are required to be complied
with prior to the Declaration Date and the Distribution Date;
(ii) no event outside the control of UNITRIN shall have
occurred or failed to occur that prevents the lawful consummation of the
Distribution;
(iii) the transactions contemplated hereby and by the
Recapitalization Agreement shall be in compliance in all material respects
with applicable federal and state securities and other applicable laws;
(iv) each of C-W and UNITRIN shall have received all the
Required Consents;
(v) all conditions to the Recapitalization (including those
set forth in Article 4 of the Recapitalization Agreement) (other than, in
the case of the declaration,
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the declaration and consummation of the Distribution) shall have been
satisfied or waived by the applicable party, in the case of the
declaration, no circumstances shall exist that would reasonably be expected
to prevent the consummation of the Recapitalization immediately prior to
the Distribution and, in the case of the Distribution, the Recapitalization
shall have been consummated;
(vi) The Cash Dividend (as defined below) shall have been
declared by the Board of Directors of C-W substantially simultaneously with
the declaration of the Distribution and no circumstances shall exist that
would reasonably be expected to prevent prompt payment of the Cash
Dividend;
(vii) the Form 8-A shall have been filed with the Commission;
(viii) the Class B Common Stock shall have been approved for
listing on the NYSE, subject to official notice of issuance;
(ix) each of the representations and warranties (other than
the representation and warranty set forth in Section 2.3(a)(v) of this
Agreement) of C-W set forth in this Agreement and the Recapitalization
Agreement that are qualified as to materiality shall be true and correct,
and any such representations and warranties that are not so qualified shall
be true and correct in all material respects, as of the Declaration Date
and the Distribution Date and UNITRIN shall have received a certificate of
the chief executive officer of C-W as to the foregoing;
(x) C-W shall have performed or complied in all material
respects with all agreements and covenants required to be performed by it
under this Agreement and the Recapitalization Agreement at or prior to the
Declaration Date or, if applicable, the Distribution Date and UNITRIN shall
have received a certificate of the chief executive officer of C-W as to the
foregoing; and
(xi) all actions and other documents and instruments
reasonably necessary in connection with the transactions contemplated
hereby and by the Recapitalization Agreement shall have been taken or
executed, as the case may be, in form and substance reasonably satisfactory
to UNITRIN.
The foregoing conditions are for the sole benefit of UNITRIN and shall not
give rise to or create any duty on the part of UNITRIN to waive or not
waive any such condition.
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(c) Sale of Fractional Shares. UNITRIN shall appoint the
Distribution Agent as agent for each holder of record of UNITRIN Common
Stock who would otherwise be entitled to receive in the Distribution any
fractional share of Class B Common Stock. The Distribution Agent shall
aggregate all such fractional shares and sell them in an orderly manner as
soon as practicable after the Distribution Date in the open market and,
after completion of such sales, distribute a pro rata portion of the net
proceeds from such sales, based upon the gross selling price of all such
fractional shares net of all selling expenses, to each stockholder of
UNITRIN who would otherwise have received a fractional share. UNITRIN shall
reimburse the Distribution Agent for its reasonable costs, expenses and
fees (other than selling expenses) in connection with the sale of
fractional shares of Class B Common Stock and the distribution of the
proceeds thereof in accordance with this Section 2.1(c).
(d) Special Dividend. (i) Subject to the conditions set forth in
clause (ii) below, on the Declaration Date, the Board of Directors of C-W
shall declare a pro rata cash dividend (the "Cash Dividend") in the amount
of $.25 per share to all holders of record of Common Stock on the Cash
Dividend Record Date. UNITRIN hereby waives, subject to completion of the
Distribution, its right to receive its pro rata share of the Cash Dividend.
(ii) The obligation of the Board of Directors of C-W to
declare the Cash Dividend on the Declaration Date shall be conditioned upon
the satisfaction of the conditions set forth in Section 2.1(b) hereof
(other than the consummation of the Recapitalization and other than clause
(vi) thereof) and in Sections 4.1 and 4.2 of the Recapitalization
Agreement.
(e) Other Actions.
(i) UNITRIN shall prepare and mail, at such time as
determined by UNITRIN, to the holders of UNITRIN Common Stock, such
information concerning C-W, its business, operations and management, the
Distribution and the tax consequences thereof and such other matters as
UNITRIN shall reasonably determine or as may be required by law. UNITRIN
shall give C-W and its counsel reasonably appropriate advance opportunity
to review and comment upon such documents and shall consider in good faith
any comments C-W timely delivers to UNITRIN with respect to such
information. C-W agrees to cooperate with UNITRIN in the preparation of,
and provide any information reasonably requested by UNITRIN for inclusion
in, such mailing. C-W represents that all information provided to UNITRIN
for such mailing shall be true and correct in all material respects.
UNITRIN and C-W will prepare, and
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C-W will, to the extent required under applicable law, file with the
Commission any such documentation, including any no action letters or other
requests for interpretive or regulatory assistance, if any, which UNITRIN
reasonably determines are necessary or desirable to effectuate the
Distribution and the other transactions contemplated hereby and by the
Recapitalization Agreement, and UNITRIN and C-W shall each use all
reasonable efforts to obtain all necessary approvals from the Commission
with respect thereto as soon as practicable.
(ii) UNITRIN and C-W shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of the
United States (and any comparable laws under any foreign jurisdiction) in
connection with the Distribution and the other transactions contemplated
hereby and by the Recapitalization Agreement.
(iii) C-W shall prepare and file, and shall use all
reasonable efforts to have approved, an application for the listing on the
NYSE of the Class B Common Stock to be distributed in the Distribution,
subject to official notice of issuance.
(iv) C-W shall prepare and file the Form 8-A (which may
include or incorporate by reference information contained in the Proxy
Statement) with the Commission as promptly as practicable following the
execution hereof, and shall use all reasonable efforts to cause the Form
8-A to become effective under the Exchange Act immediately following the
consummation of the Recapitalization or as soon thereafter as practicable.
(v) On or prior to the Distribution Date, C-W shall, from
time to time as and to the extent reasonably requested by UNITRIN or
requested by the IRS, provide any documentation, certifications or other
information necessary to enable UNITRIN to obtain the IRS Ruling.
(vi) On or prior to the Distribution Date, each of UNITRIN
and C-W shall take those actions and consummate those other transactions in
connection with the Distribution that are contemplated by the IRS Ruling,
the ruling request therefor or any related submissions by UNITRIN to the
IRS (which submissions C-W and its counsel shall be given the opportunity
to review and comment upon in accordance with clause (viii) below).
(vii) In addition to those matters specifically set forth
above, UNITRIN and C-W also shall take all reasonable steps necessary and
appropriate to cause the conditions set forth in Section 2.1(b) to be
satisfied and to effect the
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Distribution on the Distribution Date and the Cash Dividend prior to the
Distribution Date.
(viii) UNITRIN will give C-W and its counsel reasonably
appropriate advance opportunity to review and comment upon filings to be
made by UNITRIN with the Commission or the IRS with respect to the
Distribution, this Agreement, the Recapitalization Agreement or any of the
transactions contemplated hereby or thereby and shall consider in good
faith any comments C-W timely delivers to UNITRIN with respect to such
filing.
(ix) C-W will give UNITRIN and its counsel reasonably
appropriate advance opportunity to review and comment upon filings to be
made by C-W with the Commission with respect to the Distribution, this
Agreement, the Recapitalization Agreement and any of the transactions
contemplated hereby or thereby and shall consider in good faith any
comments UNITRIN timely delivers to C-W with respect to such filing.
(x) Prior to the Distribution Date, C-W shall not amend, and
the C-W Board of Directors shall not approve any amendment to, C-W's
Restated Certificate of Incorporation or By-Laws, other than the amendments
to be effected upon the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in connection with the
Recapitalization and, if applicable, the Governance Provisions in
accordance with the terms of the Recapitalization Agreement.
(xi) UNITRIN agrees to be present, and agrees to cause
Merger Sub, as applicable, to be present, in person or by proxy at each and
every stockholders meeting of C-W at which the Recapitalization and the
Governance Provisions are submitted to the stockholders of C-W for
consideration at such meeting, and to vote, or cause to be voted, all
shares of Common Stock owned directly or indirectly by it and its
Subsidiaries in favor of the Recapitalization and the Governance Provisions
and similarly to execute any written consent submitted by stockholders of
C-W in favor of the Recapitalization and the Governance Provisions;
provided that the Governance Provisions are to become effective solely upon
the effectiveness of the Merger.
(xii) On or prior to the Distribution date, each of UNITRIN
and C-W, as the case may be, shall, from time to time and to the extent
reasonably requested by the other, provide any documentation,
certifications or other information to make required filings in connection
with the transactions contemplated by this Agreement and the
Recapitalization Agreement.
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Section 2.2 Declaration Date and Distribution Date; Further Assurances.
(a) The parties agree that the Declaration Date and the
Distribution Date, as applicable, shall occur as soon as reasonably
practicable following the satisfaction or waiver of the conditions set
forth in Section 2.1(b) hereof . The parties shall cause their respective
Boards of Directors to meet on the Declaration Date and each shall take
such corporate action at such meeting as shall be required to effect the
transactions contemplated hereby and by the Recapitalization Agreement.
Immediately following such meeting, C-W shall take all actions required to
consummate the Recapitalization in accordance with the terms of the
Recapitalization Agreement, including the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware.
(b) Subject to each of C-W's and UNITRIN's right to terminate this
Agreement in accordance with Section 5.10, in case at any time after the
date hereof any further action is reasonably necessary or desirable to
carry out the Distribution, the Recapitalization or any other purpose of
this Agreement or the Recapitalization Agreement, the proper officers of
each party to this Agreement shall take all such necessary action. Without
limiting the foregoing, UNITRIN and C-W shall use all reasonable efforts
promptly to obtain the IRS Ruling and all consents and approvals, to enter
into all amendatory agreements and to make all filings and applications
that may be required for the consummation of the transactions contemplated
by this Agreement and the Recapitalization Agreement, including all
applicable governmental and regulatory filings.
Section 2.3 Representations and Warranties.
(a) C-W hereby represents and warrants to UNITRIN as follows:
(i) Organization; Good Standing. C-W is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all corporate power required to consummate the
transactions contemplated hereby and by the Recapitalization Agreement.
(ii) Authorization. The execution, delivery and performance
by C-W of this Agreement and the Recapitalization Agreement and the
consummation by C-W of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
C-W, other than the adoption of the Recapitalization Agreement and the
approval of the Governance Provisions by the
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stockholders of C-W. Each of this Agreement and the Recapitalization
Agreement constitutes, and each other agreement or instrument executed and
delivered or to be executed and delivered by C-W pursuant to this Agreement
or the Recapitalization Agreement will, upon such execution and delivery,
constitute, a legal, valid and binding obligation of C-W, enforceable
against C-W in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, and general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(iii) Consents and Filings. Except (A) for the filing of the
Certificate of Merger in connection with the Recapitalization and any other
filings required to be made with the Secretary of State of the State of
Delaware, (B) for the NYSE Listing Application and any filings in
connection therewith, (C) as required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and (D) for the filing
of the Proxy Statement and the Form 8-A and any other reports or documents
required to be filed under the Exchange Act, no material consent of, or
filing with, any Governmental Authority which has not been obtained or made
is required to be obtained or made by C-W for or in connection with the
execution and delivery of this Agreement or the Recapitalization Agreement
by C-W, and the consummation by C-W of the transactions contemplated hereby
or thereby.
(iv) Noncontravention. Except in the case of any consents
that will be obtained prior to the Distribution Date, the execution,
delivery and performance of this Agreement and the Recapitalization
Agreement by C-W does not, and the consummation by C-W of the transactions
contemplated hereby and thereby will not, (A) violate any applicable
federal, state or local statute, law, rule or regulation, (B) violate any
provision of the Restated Certificate of Incorporation or By-Laws of C-W,
or (C) violate any provision of, or result in the termination or
acceleration of, or entitle any party to accelerate any obligation or
indebtedness under, any mortgage, lease, franchise, license, permit,
agreement, instrument, law, order, arbitration award, judgment or decree to
which C-W or any of its Subsidiaries is a party or by which any of them are
bound, except for, in the case of clause (C) above, such violations that,
individually or in the aggregate, would not (I) result in a Material
Adverse Effect with respect to C-W or (II) reasonably be expected to have a
material adverse effect on C-W's ability to consummate the transactions
contemplated by this Agreement or the Recapitalization Agreement.
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(v) Litigation. There are no actions or suits against C-W
pending, or to the knowledge of C-W, threatened which seek to, and C-W is
not subject to any judgments, decrees or orders which, enjoin or rescind
the transactions contemplated by this Agreement or the Recapitalization
Agreement or otherwise prevent C-W from complying with the terms and
provisions of this Agreement or the Recapitalization Agreement.
(vi) Change of Control Adjustments. Neither the
Recapitalization nor the Distribution or any of the other transactions
contemplated hereby or by the Recapitalization Agreement will (A)
constitute a "change of control" or otherwise result in the increase or
acceleration of any benefits, including to employees of C-W, under any
agreement to which C-W or any of its Subsidiaries is a party or by which it
or any of its Subsidiaries is bound or (B) result in any adjustment of the
number of shares subject to, or the terms of, including exercise price, any
outstanding employee stock options of C-W.
(vii) Certain Transactions. Except for transactions that are
described in Schedule 2.3(a)(vii), neither C-W nor any other member of the
C-W Group has engaged, nor will engage, in any transaction or taken, or
will take, any other action, or engaged, or will engage, in any
negotiations or discussions, involving or relating to the issuance of stock
of C-W or options, warrants or other rights to acquire stock of C-W (other
than compensatory stock plan issuances). None of the transactions or other
actions, negotiations or discussions described in Schedule 2.3(a)(vii) were
undertaken by C-W in contemplation of the Distribution or are related to
the Distribution.
(b) UNITRIN hereby represents and warrants to C-W as follows:
(i) Organization; Good Standing. UNITRIN is a corporation
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware and has all corporate power required to consummate
the transactions contemplated hereby and by the Recapitalization Agreement.
(ii) Authorization. The execution, delivery and performance
by UNITRIN of this Agreement and the Recapitalization Agreement and the
consummation by UNITRIN of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
UNITRIN, other than the formal declaration of the Distribution. Each of
this Agreement and the Recapitalization Agreement constitutes, and each
other agreement or instrument executed and delivered or to be executed and
delivered by UNITRIN pursuant to this Agreement or the
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Recapitalization Agreement will, upon such execution and delivery,
constitute, a legal, valid and binding obligation of UNITRIN, enforceable
against UNITRIN in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, and general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(iii) Consents and Filings. Except (A) for the filing of the
Certificate of Merger in connection with the Recapitalization and any other
filings required to be made with the Secretary of State of the State of
Delaware, (B) as required under the HSR Act and (C) any reports or
documents required to be filed under the Exchange Act, no material consent
of, or filing with, any Governmental Authority which has not been obtained
or made is required to be obtained or made by UNITRIN for or in connection
with the execution and delivery of this Agreement or the Recapitalization
Agreement by UNITRIN, and the consummation by UNITRIN of the transactions
contemplated hereby or thereby.
(iv) Noncontravention. Except in the case of consents that
will be obtained on or prior to the Distribution Date, the execution,
delivery and performance of this Agreement and the Recapitalization
Agreement by UNITRIN does not, and the consummation by UNITRIN of the
transactions contemplated hereby and thereby will not, (A) violate any
applicable federal, state or local statute, law, rule or regulation, (B)
violate any provision of the Certificate of Incorporation or By-Laws of
UNITRIN or (C) violate any provision of, or result in the termination or
acceleration of, or entitle any party to accelerate any obligation or
indebtedness under, any mortgage, lease, franchise, license, permit,
agreement, instrument, law, order, arbitration award, judgment or decree to
which UNITRIN or any of its Subsidiaries is a party or by which any of them
are bound, except for, in the case of clause (C) above, such violations
that, individually or in the aggregate, would not (I) result in a Material
Adverse Effect with respect to UNITRIN or (II) reasonably be expected to
have a material adverse effect on UNITRIN's ability to consummate the
transactions contemplated by this Agreement or the Recapitalization
Agreement.
(v) Litigation. There are no actions or suits against
UNITRIN pending, or to the knowledge of UNITRIN, threatened which seek to,
and UNITRIN is not subject to any judgments, decrees or orders which,
enjoin or rescind the transactions contemplated by this Agreement or the
Recapitalization Agreement or otherwise prevent UNITRIN from complying with
the terms and provisions of this Agreement or the Recapitalization
Agreement.
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(vi) Plan or Series of Related Transactions. As of the date
hereof, there is not, and as of the Distribution Date, there will not be
(except as permitted pursuant to Section 4.3 hereof and disclosed to C-W in
accordance with the terms of Section 4.3 and except for the contemplated
Distribution), any agreement, understanding, arrangement or substantial
negotiations involving UNITRIN and concerning the acquisition by any party
or parties of C-W or UNITRIN'S interest in C-W.
Section 2.4 Certain Post-Distribution Transactions.
(a) (i) C-W and UNITRIN shall each comply with, and shall cause its
Subsidiaries to comply with, and otherwise not take, and prevent any of its
Subsidiaries from taking, during the relevant time period, any action
inconsistent with any representation made by such respective party to the
IRS in connection with the request by UNITRIN for the IRS Ruling, and (ii)
until two years after the Distribution Date, C-W will maintain its status
as a company engaged in the active conduct of a trade or business, as
defined in Section 355(b) of the Code.
(b) C-W agrees that (i) prior to the two year anniversary of the
Distribution Date, it shall not (A) merge or consolidate with or into any
other corporation, (B) liquidate or partially liquidate, (C) sell or
transfer all or substantially all of its assets (within the meaning of Rev.
Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of
transactions, (D) redeem or otherwise repurchase any C-W stock (other than
as described in Section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B. 696),
or (E) take any other action or actions (other than the adoption of a
stockholder rights plan in customary form) (including the issuance of
options to acquire stock of C-W or securities that are convertible into
stock of C-W) which in the aggregate (not taking into account the
Recapitalization) would have the effect of causing or permitting one or
more persons to acquire directly or indirectly stock representing a 50
percent or greater interest (within the meaning of Section 355(e) of the
Code) in C-W, and (ii) prior to the five year anniversary of the
Distribution Date, it shall not initiate or support, or permit its
stockholders to vote on, any action that would in any way alter the ability
of the holders of the Class B Common Stock to (A) elect at least 80% of the
members of the Board of Directors of C-W (to the extent, and in the manner
set forth in, the Restated Certificate of Incorporation and By-Laws of C-W,
as in effect immediately after the consummation of the Recapitalization) or
(B) otherwise possess at least 80% of the total combined voting power of
all classes of C-W stock entitled to vote (as described in Section 368(c)
of the Code), unless prior to taking any such action set forth in the
foregoing clauses (i) and (ii), at the election of UNITRIN, either C-W has
obtained (and provided to
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UNITRIN) a written opinion in form and substance reasonably acceptable
to UNITRIN of a nationally recognized law firm reasonably acceptable to
UNITRIN and C-W, or UNITRIN has obtained (at the expense of C-W) a
supplemental ruling from the IRS, that such action or actions will not
result in (1) the Distribution failing to qualify under Section 355(a) of
the Code or (2) the C-W shares failing to qualify as qualified property for
purposes of Section 355(c)(2) of the Code by reason of Section 355(e) of
the Code. UNITRIN agrees to cooperate with C-W in obtaining such opinion
or, as the case may be, to use all reasonable efforts in obtaining any such
supplemental ruling, including, where appropriate, by providing written
representations as to factual events that transpired prior to the
Distribution Date.
ARTICLE 3
INDEMNIFICATION
Section 3.1 Indemnification by C-W.
(a) C-W shall, to the fullest extent permitted by law, indemnify,
defend and hold harmless the UNITRIN Indemnitees from and against any and
all C-W Liabilities or third party allegations of C-W Liabilities.
(b) C-W shall, to the fullest extent permitted by law, indemnify,
defend and hold harmless (i) UNITRIN, (ii) each member of the consolidated
group of corporations of which UNITRIN is the common parent corporation
(within the meaning of Section 1504 of the Code) and (iii) each direct or
indirect Subsidiary of UNITRIN (each Person referred to in clauses (ii) and
(iii), a "UNITRIN Member") from and against (A) any actual Liability of
UNITRIN or any UNITRIN Member (including any actual Liability for Taxes to
the extent that, in the absence of any Liability for Taxes resulting from a
determination that the Distribution fails to qualify under Section 355(a)
of the Code or that the C-W shares fail to qualify as qualified property
for purposes of Section 355(c)(2) of the Code by reason of Section 355(e)
of the Code, such Liability would otherwise have been reduced or eliminated
by a net operating loss deduction (within the meaning of Section 172 of the
Code and the Treasury regulations thereunder)), or (B) any Established
Liability of any stockholder of UNITRIN (it being understood that any
Established Liability of any stockholder of UNITRIN shall be deemed to be
an actual Liability of UNITRIN for purposes of determining C-W's
indemnification obligation hereunder, regardless of whether such
stockholder actually has or pursues a valid claim for such Established
Liability against UNITRIN), in each case arising from any inaccuracy in, or
failure by C-W to comply with, any representation or undertaking
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made by C-W to the IRS in connection with the request by UNITRIN for the
IRS Ruling (other than any representation or undertaking (express or
otherwise) contained in Part III.B of UNITRIN's letter request for the IRS
Ruling) (referred to herein as a "C-W Failure" (it being understood that a
Clause (d) Failure (as defined below) shall not constitute a C-W Failure
for purposes of this Article 3)); provided, however, that, notwithstanding
the foregoing, C-W shall not indemnify UNITRIN or any UNITRIN Member for
any Liability or Established Liability that results solely from a UNITRIN
Failure (as defined in Section 3.2(b) hereof) (except to the extent that
any such UNITRIN Failure is in respect of a representation based in whole
or in part upon information provided by C-W); and provided, further, that
if any Liability or Established Liability described in this clause (b)
arises as a result of both a C-W Failure and a UNITRIN failure, and each
such failure is an independent cause of such Liability or Established
Liability, then C-W and UNITRIN shall allocate such Liability or
Established Liability between themselves in such proportion as is
appropriate to reflect the relative fault of C-W on the one hand and
UNITRIN on the other with respect to such Liability or Established
Liability.
(c) If C-W (or any of its Subsidiaries) fails to comply with any of
its obligations under Section 2.4(a) or (b) above or takes any action or
fails to take any action, and such failure to comply, action or omission
contributes to a determination that the Distribution fails to qualify under
Section 355(a) of the Code or that the C-W shares fail to qualify as
qualified property for purposes of Section 355(c)(2) of the Code by reason
of Section 355(e) of the Code (each a "355 Failure" (it being understood
that a Clause (d) Failure shall not constitute a 355 Failure for purposes
of this Article 3)), then C-W shall, to the fullest extent permitted by
law, indemnify, defend and hold harmless UNITRIN and each UNITRIN Member
from and against (i) any and all federal, state and local Taxes, including
any interest, penalties or additions to Tax, imposed upon or incurred by
UNITRIN and any UNITRIN Member and (ii) any Established Liability of any
stockholder of UNITRIN (it being understood that any Established Liability
of any stockholder of UNITRIN shall be deemed to be a UNITRIN Tax Liability
(as defined below) for purposes of determining C-W's indemnification
obligation hereunder, regardless of whether such stockholder actually has
or pursues a valid claim for such Established Liability against UNITRIN),
in each case as a result of the failure of the Distribution to qualify
under Section 355(a) of the Code or the application of Section 355(e) (any
such Tax, interest, penalty or addition to Tax, together with any such
Established Liability, a "UNITRIN Tax Liability"); provided, however, that,
notwithstanding the foregoing, C-W shall not indemnify UNITRIN or any
UNITRIN Member for any UNITRIN Tax Liability that results solely from a
UNITRIN Failure (except to the extent that any such UNITRIN Failure is in
respect of a representation based in
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whole or in part upon information provided by C-W); and provided, further,
that if any UNITRIN Tax Liability described in this clause (c) arises as a
result of both a 355 Failure and a UNITRIN Failure, and each such failure
is an independent cause of such UNITRIN Tax Liability, then C-W and UNITRIN
shall allocate such UNITRIN Tax Liability between themselves in such
proportion as is appropriate to reflect the relative fault of C-W on the
one hand and UNITRIN on the other with respect to such UNITRIN Tax
Liability.
(d) Notwithstanding any other provision of this Agreement:
(i) C-W shall not be required to indemnify and hold
harmless, and shall have no liability to, UNITRIN or any UNITRIN Member for
any UNITRIN Tax Liability that would not have been imposed or incurred but
for the increase in UNITRIN's voting power with respect to Common Stock as
a result of the Recapitalization; and
(ii) Subject to the proviso hereto, C-W shall be entitled to
rely without limitation on any representations made by UNITRIN in (A)
Section 2.3(b)(vi) hereof or (B) its letter request for the IRS Ruling with
respect to sales by UNITRIN stockholders of stock or securities of UNITRIN
or C-W, and in the event that any such representations are not true,
correct and complete in all respects, subject to the proviso hereto, C-W
shall not indemnify UNITRIN or any UNITRIN Member for any UNITRIN Tax
Liability that would not have been incurred but for the failure of any such
representations to be true, correct and complete in all respects; provided,
however, that C-W shall not be entitled to rely on, and will not be
relieved of its indemnification obligations hereunder as a result of
inaccuracies or failures in, or incompleteness of, the representations made
by UNITRIN in its letter request for the IRS Ruling with respect to sales
by UNITRIN stockholders of stock or securities of UNITRIN or C-W if, before
taking or failing to take any action, C-W has actual knowledge of any such
inaccuracy, failure or incompleteness.
The exceptions to C-W's indemnification obligations hereunder that are
referred to in subclauses (i) and (ii) of this clause (d) are referred to
herein as "Clause (d) Failures."
(e) Any indemnity payment made by C-W pursuant to either clause (b)
or (c) above shall be made on an after-tax basis, based on the actual tax
position of UNITRIN, the UNITRIN Member or UNITRIN stockholder, as the case
may be, in the taxable year such indemnity payment is received and taking
into account the deductibility for federal income tax purposes of any state
taxes. The aggregate amount to be paid
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by C-W pursuant to its indemnity obligations set forth in clauses (b), (c),
(d), (e) and (f) of this Section 3.1 shall not exceed $135 million.
(f) In the event that C-W and UNITRIN are jointly liable under
either clause (b) or (c) above, C-W shall be required to indemnify and pay
UNITRIN or a UNITRIN Member, with respect to an Established Liability of a
UNITRIN stockholder, for C-W's proportionate share of such Established
Liability (if any) only if, and to the extent that, UNITRIN shall have
agreed (in form reasonably satisfactory to C-W) to pay such UNITRIN
stockholder for UNITRIN's proportionate share of such Established
Liability. In the event that UNITRIN does not actually pay such UNITRIN
stockholder for UNITRIN's proportionate share of such Established
Liability, then UNITRIN will reimburse C-W for any amounts paid by C-W to
UNITRIN in respect of C-W's proportionate share of such Established
Liability.
Section 3.2 Indemnification by UNITRIN.
(a) UNITRIN shall, to the fullest extent permitted by law,
indemnify, defend and hold harmless the C-W Indemnitees from and against
any and all UNITRIN Liabilities or third party allegations of UNITRIN
Liabilities.
(b) UNITRIN shall, to the fullest extent permitted by law,
indemnify, defend and hold harmless C-W and each member of the consolidated
group of corporations of which C-W is the common parent corporation (within
the meaning of Section 1504 of the Code) (each a C-W Member") from and
against any actual Liability of C-W or any C-W Member arising from any
inaccuracy in, or failure by UNITRIN to comply with, any representation or
undertaking made by UNITRIN to the IRS in connection with the request by
UNITRIN for the IRS Ruling or pursuant to Section 2.3(b)(vi) hereof
(referred to herein as a "UNITRIN Failure"); provided, however, that,
notwithstanding the foregoing, UNITRIN shall not indemnify C-W or any C-W
Member for any liability that results solely from a C-W Failure or a 355
Failure (except to the extent that any such failure is in respect of a
representation based in whole or in part upon information provided by
UNITRIN); and provided, further, that if any Liability described in this
clause (b) arises as a result of both a UNITRIN Failure and a C-W Failure
and/or a 355 Failure, and each such failure is an independent cause of such
Liability, then UNITRIN and C-W shall allocate such Liability between
themselves in such proportion as is appropriate to reflect the relative
fault of UNITRIN on the one hand and C-W on the other with respect to such
Liability.
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Section 3.3 Treatment of Payments. UNITRIN agrees to consider in good faith
treating for federal income tax purposes any indemnity payments it receives
pursuant to this Agreement as payments to which Section 301 of the Code
applies.
Section 3.4 Procedures for Indemnification. (a) If (i) a claim or demand is
made against C-W, any C-W Indemnitee, any C-W Member, UNITRIN, any UNITRIN
Indemnitee or any UNITRIN Member (each, an "Indemnitee") by any person who
is not a party to this Agreement (each a "Third Party Claim") as to which
such Indemnitee is entitled to indemnification pursuant to this Agreement,
such Indemnitee shall notify the party which is or may be required pursuant
to the terms hereof to make such indemnification (the "Indemnifying Party")
in writing, and in reasonable detail, of the Third Party Claim promptly
(and in any event within 15 business days) after receipt by such Indemnitee
of written notice of the Third Party Claim; provided, however, that failure
to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been
actually prejudiced as a result of such failure. Thereafter, the Indemnitee
shall deliver to the Indemnifying Party, promptly (and in any event within
five business days) after the Indemnitee's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnitee
relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnitee with respect
to which a claim for indemnification is made pursuant to Section 3.1 or
Section 3.2 hereof, the Indemnifying Party shall be entitled to participate
in the defense thereof and, if it so chooses and acknowledges in writing
its obligation to indemnify the Indemnitee therefor, to assume the defense
thereof with counsel selected by the Indemnifying Party; provided that such
counsel is not reasonably objected to by the Indemnitee. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party shall, within 30 days (or sooner if the nature of
the Third Party Claim so requires), notify the Indemnitee of its intent to
do so, and the Indemnifying Party shall thereafter not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, that such
Indemnitee shall have the right to employ counsel to represent such
Indemnitee if, in such Indemnitee's reasonable judgment, a conflict of
interest between such Indemnitee and such Indemnifying Party exists in
respect of such claim which would make representation of both such parties
by one counsel inappropriate, and in such event the reasonable fees and
expenses of such separate counsel shall be paid by such Indemnifying Party.
If the Indemnifying Party assumes such defense, the Indemnitee shall have
the right to participate in the defense thereof and to employ counsel,
subject to the proviso of the preceding sentence, at its own expense,
separate
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from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel
employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof. If the Indemnifying Party
so elects to assume the defense of any Third Party Claim, all of the
Indemnitees shall cooperate with the Indemnifying Party in the defense or
prosecution thereof, including by providing or causing to be provided,
records and witnesses as soon as reasonably practicable after receiving any
request therefor from or on behalf of the Indemnifying Party.
Unless otherwise required by law, in no event will an Indemnitee
admit any liability with respect to, or settle, compromise or discharge,
any Third Party Claim without the Indemnifying Party's prior written
consent (which will not be unreasonably withheld); provided, however, that
the Indemnitee shall have the right to settle, compromise or discharge such
Third Party Claim without the consent of the Indemnifying Party if the
Indemnitee releases the Indemnifying Party from its indemnification
obligation hereunder with respect to such Third Party Claim and such
settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for a Third Party Claim (as between the Indemnifying Party and
the Indemnitee), the Indemnifying Party shall be permitted to enter into,
and the Indemnitee will agree to, any settlement, compromise or discharge
of a Third Party Claim that the Indemnifying Party may recommend and that
by its terms obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and releases the
Indemnitee completely in connection with such Third Party Claim and that
would not otherwise adversely affect the Indemnitee; provided, however,
that the Indemnitee may refuse to agree to any such settlement, compromise
or discharge if the Indemnitee agrees that the Indemnifying Party's
indemnification obligation with respect to such Third Party Claim shall not
exceed the amount that would be required to be paid by or on behalf of the
Indemnifying Party in connection with such settlement, compromise or
discharge; and provided further that the Indemnifying Party shall not agree
to any other settlement, compromise or discharge of a Third Party Claim not
described above without the prior written consent of the Indemnitee, such
consent not to be unreasonably withheld. If an Indemnifying Party elects
not to assume the defense of a Third Party Claim, or fails to notify an
Indemnitee of its election to do so as provided herein, such Indemnitee may
compromise, settle or defend such Third Party Claim. In such case, the
Indemnifying Party shall be responsible for the cost of such compromise,
settlement or defense.
Notwithstanding the foregoing, the Indemnifying Party shall not be
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entitled to assume the defense of any Third Party Claim (and shall be
liable for the reasonable fees and expenses of counsel incurred by the
Indemnitee in defending such Third Party Claim) if the Third Party Claim
seeks an order, injunction or other equitable relief or relief for other
than money damages against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its counsel, cannot be separated from any
related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages.
(b) In the event any Tax Claim (as defined below) is disposed of
pursuant to the provisions of this Section 3.4 or a Final Determination has
been made in circumstances that give rise to a Tax Liability or an
Established Liability on the part of UNITRIN, any UNITRIN Member or any
UNITRIN stockholder, as the case may be, then C-W shall pay to UNITRIN all
amounts in respect of any Tax Claim within twenty (20) business days after
such Tax Claim is disposed of or such Final Determination has been made.
For purposes of this Section 3.4(b), (i) "Tax Claim" shall mean any notice
of deficiency, proposed adjustment, adjustment, assessment, audit,
examination, suit, dispute or other written claim which is commenced or
initiated against UNITRIN, any UNITRIN Member or any UNITRIN stockholder
with respect to Taxes that are attributable to the Recapitalization or
Distribution and which result from any act or acts of C-W or its
Subsidiaries described in Section 2.4 of this Agreement or the breach by
C-W of any representation or warranty set forth in this Agreement and (ii)
"Final Determination" shall mean (1) the entry of a decision of a court of
competent jurisdiction at such time as an appeal may no longer be taken
from such decision or (2) the execution of a closing agreement or its
equivalent between the particular taxpayer and the particular relevant
taxing authority.
Section 3.5 Remedies Not Exclusive. The remedies provided in this Article 3
shall be cumulative and shall not preclude assertion by any Indemnitee of
any other rights or the seeking of any and all other remedies against any
Indemnifying Party.
Section 3.6 Subrogation. In the event of payment by an Indemnifying Party
to any Indemnitee in connection with any Third Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right or claim relating to such Third Party Claim.
Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party,
in prosecuting any subrogated right or claim.
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Section 3.7 Indemnification Payments. Indemnification required by this
Article 3 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received
or loss, liability, claim, damage or expense is incurred.
ARTICLE 4
COVENANTS
Section 4.1 Access to Information.
(a) Other than in circumstances in which indemnification is sought
pursuant to Article 3 (in which event the provisions of such Article will
govern), from and after the Distribution Date, each of C-W and UNITRIN
shall afford to the other and its authorized accountants, counsel and other
designated representatives reasonable access during normal business hours,
subject to appropriate restrictions for classified, privileged or
confidential information, to the personnel, properties, books and records
of such party and its Subsidiaries to the extent such access is reasonably
required by the other party in order to perform its obligations under this
Agreement or the Recapitalization Agreement or to comply with such party's
financial, tax and other reporting obligations.
(b) A party providing information or access to information to the
other party under this Article 4 shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payments for such
amounts, relating to supplies, disbursements and other out-of-pocket
expenses, as may be reasonably incurred in providing such information or
access to information.
(c) For a period of two years following the Distribution Date, C-W
shall provide to UNITRIN: (i) promptly following the date (the "Target
Date"), as of which there has been an aggregate change in the outstanding
equity or capital structure of C-W (measured during the period beginning on
the Distribution Date and ending on the Target Date and not taking into
account the Recapitalization or transfers of shares by C-W stockholders,
unless C-W participates in such transfers or such transfers are reported on
a Schedule 13D or 13G under the Exchange Act) that accounts for at least
10% of the total outstanding equity of C-W as of the Distribution Date
written notice of such change and (ii) after the Target Date, reasonably
detailed reports delivered promptly following the occurrence of each
additional change or changes (if any) in the
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outstanding equity or capital structure of C-W that, individually or in the
aggregate (not taking into account the Recapitalization or transfers of
shares by C-W stockholders, unless C-W participates in such transfers or
such transfers are reported on a Schedule 13D or 13G under the Exchange
Act), account for at least 5% of the total outstanding equity of C-W as of
the Distribution Date.
Section 4.2 Confidentiality. Each of C-W and its Subsidiaries and UNITRIN
and its Subsidiaries shall keep, and shall cause its employees,
consultants, advisors and agents to keep, confidential all information
concerning the other parties in its possession, its custody or under its
control (except to the extent that (a) such information is then in the
public domain through no fault of such party, (b) such information has been
lawfully acquired from other sources by such party or (c) this Agreement or
the Recapitalization Agreement or any other agreement entered into pursuant
hereto or thereto permits the use or disclosure of such information) and
each party shall not (without the prior written consent of the other)
otherwise release or disclose such information to any other Person, except
such party's auditors and attorneys, unless compelled to disclose such
information by judicial or administrative process or unless such disclosure
is required by law and such party has used all reasonable efforts to
consult with the other affected party or parties prior to such disclosure,
and in such case shall exercise all reasonable efforts to obtain reliable
assurance that such information will be accorded confidential treatment.
Section 4.3 No Solicitation.
(a) Subject to Sections 4.3(b) and 4.3(c), each of UNITRIN and C-W
agree not to directly or indirectly, through any officer, director,
employee, representative, securityholder or agent solicit, initiate or
encourage any inquiries, offers or proposals or any indication of interest
or the commencement of negotiations or continue any current negotiations or
conduct any negotiations or enter into any agreement or provide any
nonpublic information regarding or in connection with any proposal for the
acquisition by any third party of any shares of capital stock of C-W from
C-W or UNITRIN (other than issuances of common stock by C-W pursuant to
employee stock plans in the ordinary course of business) or the acquisition
of, or business combination with, C-W through any other means including a
merger or purchase of assets (an "Acquisition Proposal") until the earlier
to occur of the termination of this Agreement or the time at which the
Distribution is consummated; provided, however, that UNITRIN and C-W may
respond to any unsolicited inquiries or proposals solely to indicate that
it is bound by this Section 4.3. If either of C-W or UNITRIN receives any
such inquiry or proposal, then C-W or UNITRIN, as the case may be, shall
inform the
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other of the terms and conditions, if any, of such inquiry or proposal and
the identity of the Person making the proposal and shall keep such party
promptly advised of all further communications relating to such inquiry or
proposal.
(b) UNITRIN shall be relieved of its obligations under Section
4.3(a) (in the case of clause (iii) below, only to the extent set forth
therein) if:
(i) the Board of Directors of C-W shall or shall resolve to
(A) not recommend, or withdraw its approval or recommendation of, the
Recapitalization, the Recapitalization Agreement, this Agreement or any of
the transactions contemplated thereby or hereby, (B) modify any such
approval or recommendation in a manner adverse to UNITRIN or (C) approve,
recommend or enter into any agreement for any Acquisition Proposal;
(ii) C-W breaches or fails to comply with any of its
material obligations set forth in this Agreement or the Recapitalization
Agreement and fails to cure such breach or failure within 30 days following
notice from UNITRIN; or
(iii) after receipt of a bona fide written Acquisition
Proposal, the Board of Directors of UNITRIN in good faith determines, after
consultation with its outside counsel, that it would be inconsistent with
the Board's fiduciary duties to stockholders of UNITRIN not to commence
discussions or negotiations with, or provide nonpublic information(other
than nonpublic information with respect to C-W) to the person making such
Acquisition Proposal; provided, however, that UNITRIN shall only be
released from its obligations under Section 4.3(a) pursuant to this Section
4.3(b)(iii) with respect to such Acquisition Proposal.
(c) C-W shall be relieved of its obligations under Section 4.3(a)
(to the extent specifically set forth in this Section 4.3(c)) if after
receipt of a bona fide written Acquisition Proposal, the Board of Directors
of C-W in good faith determines, after consultation with its outside
counsel, that it would be inconsistent with the Board's fiduciary duties to
stockholders of C-W not to commence discussions or negotiations with, or
provide nonpublic information to, the person making such Acquisition
Proposal; provided, however, that C-W shall only be released from its
obligations under Section 4.3(a) pursuant to this Section 4.3(c) with
respect to such Acquisition Proposal.
Section 4.4 Certain Other Agreements. During the period commencing on the
date hereof and continuing until the earlier of the termination of this
Agreement or the consummation of the Recapitalization, UNITRIN hereby
agrees that it shall not, and that
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it shall cause each of its Affiliates not to, without the prior approval of
the Board of Directors of C-W, directly or indirectly, (a) make, or in any
way participate in, any "solicitation" of "proxies" (as such terms are
defined or used in Regulation 14A under the Exchange Act) to consent or
vote or seek to advise or influence any Person with respect to the voting
of any shares of Common Stock; (b) form, join or in any way participate in
any Group (other than with respect to its Affiliates) with respect to any
of the shares of Common Stock; (c) otherwise act, either alone or in
concert with others, to seek control of C-W, including by submitting any
written consent in furtherance of the foregoing or calling a special
meeting of C-W stockholders; (d) publicly disclose any intention, proposal,
plan or arrangement with respect to any foregoing; or (e) make any demand,
request or proposal to amend, waive or terminate any provision of this
Section 4.4.
Section 4.5 Public Announcements. Each of UNITRIN and C-W agrees that no
public release or announcement concerning the Recapitalization or the
Distribution shall be issued by either party without the prior written
consent of the other (which shall not be unreasonably withheld), except as
such release or announcement may be required by law or the rules or
regulations of any United States securities exchange or the Nasdaq Stock
Market, in which case the party required to make the release or
announcement shall use all reasonable efforts to allow each other party
reasonable time to comment on each release or announcement in advance of
such issuance.
Section 4.6 Required Consents. Each of UNITRIN and C-W shall use all
reasonable efforts to obtain all of the consents, waivers or authorizations
required in connection with the completion of the Recapitalization and the
Distribution, including, without limitation, (a) any material governmental
approvals and consents necessary to consummate the Distribution and the
other transactions contemplated hereby and by the Recapitalization
Agreement and (b) those consents listed on Schedule 4.6 (collectively, the
"Required Consents").
Section 4.7 Litigation Cooperation. Each of UNITRIN and C-W shall use
reasonable efforts to make available to the other party, upon written
request and at the expense of the other party, its officers, directors,
employees and agents as witnesses to the extent such Persons may reasonably
be required in connection with any Action arising out of (a) the business
of such other party and its predecessors, if any, in which the requesting
party may from time to time be involved; provided that such Action does not
involve a claim by either of UNITRIN or C-W against the other or (b) the
matters contained in Section 2.4 and Article 3 hereof.
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Section 4.8 Other Matters. Each of UNITRIN and C-W shall negotiate in good
faith to execute prior to the Distribution Date such further certificates,
agreements and other documents which are reasonably necessary to consummate
or implement the transactions contemplated hereby and by the
Recapitalization Agreement.
ARTICLE 5
MISCELLANEOUS
Section 5.1 Complete Agreement; Construction. This Agreement and the
Recapitalization Agreement, including the Exhibits and Schedules hereto and
thereto, shall constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and shall supersede all
previous negotiations, commitments and writings with respect to such
subject matter.
Section 5.2 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been
signed by each of the parties and delivered to the other parties.
Section 5.3 Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants, representations, warranties and agreements
of the parties contained in this Agreement shall survive the Distribution
Date.
Section 5.4 Expenses. Except as otherwise set forth in this Agreement or in
the Recapitalization Agreement, all costs and expenses incurred in
connection with the preparation, execution, delivery and implementation of
this Agreement and the Recapitalization Agreement, and the Distribution and
the other transactions contemplated hereby and thereby shall be charged to
and paid by the party incurring such costs and expenses.
Section 5.5 Notices. All notices and other communications hereunder shall
be in writing, shall be effective when received, and shall be duly given if
delivered by (a) hand delivery, (b) U.S. mail, postage prepaid, for first
class delivery, (c) Federal Express or similar carrier, freight prepaid,
for next business day delivery, or (d) electronic transmission, provided
that confirmation of transmission and receipt is confirmed, to each party
at the following respective addresses (or at such other address for a party
as shall be specified by like notice):
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To UNITRIN:
UNITRIN, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
with a copy to:
UNITRIN, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
and with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
To C-W:
▇▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
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with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Section 5.6 Waivers. The failure of any party to require strict performance
by any other party of any provision in this Agreement will not waive or
diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
Section 5.7 Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by each of the parties hereto.
Section 5.8 Assignment. This Agreement shall not be assignable, in whole or
in part, directly or indirectly, by any party hereto without the prior
written consent of the other party hereto, and any attempt to assign any
rights or obligations arising under this Agreement without such consent
shall be void.
Section 5.9 Successors and Assigns. The provisions to this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and permitted assigns.
Section 5.10 Termination.
(a) Prior to the filing of the Certificate of Merger, this
Agreement may be terminated:
(i) by mutual written consent of UNITRIN and C-W;
(ii) by either UNITRIN or C-W if the other party is in
breach of any of its obligations or representations and warranties herein
or under the Recapitalization Agreement, which breach would result in a
Material Adverse Effect on such party after giving effect to the
Distribution, and such other party fails to cure such breach within 15 days
following notice;
(iii) by C-W if, following receipt of an Acquisition
Proposal, the Board of Directors of C-W is required by its fiduciary duties
to stockholders of C-W to
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terminate this Agreement or the Recapitalization Agreement and accept such
Acquisition Proposal; provided that in such event C-W shall pay the
reasonable documented out-of-pocket fees and expenses incurred by UNITRIN
in connection with this Agreement, the Recapitalization Agreement and the
transactions contemplated hereby and thereby in an aggregate amount of up
to $2.3 million, but only to the extent that UNITRIN does not agree to, or
otherwise vote in favor of, such Acquisition Proposal;
(iv) by UNITRIN if (A) the Board of Directors of C-W shall
or shall resolve to (I) not recommend, or withdraw its approval or
recommendation of, the Recapitalization, the Recapitalization Agreement,
this Agreement or any of the transactions contemplated thereby or hereby,
(II) modify any such approval or recommendation in a manner adverse to
UNITRIN or (III) approve, recommend or enter into an agreement for any
Acquisition Proposal, (B) the stockholders of C-W shall not approve the
Recapitalization or (C) following receipt of an Acquisition Proposal, the
Board of Directors of UNITRIN is required by its fiduciary duties to
stockholders of UNITRIN to terminate this Agreement and accept such
Acquisition Proposal; provided that (I) in the case of clause (A) above,
C-W shall pay the reasonable documented out-of-pocket fees and expenses
incurred by UNITRIN in connection with this Agreement, the Recapitalization
Agreement and the transactions contemplated hereby or thereby in an
aggregate amount of up to $2.3 million and (II) in the case of clause (C)
above, UNITRIN shall pay the reasonable documented out-of-pocket fees and
expenses incurred by C-W in connection with this Agreement, the
Recapitalization Agreement and the transactions contemplated hereby and
thereby in an aggregate amount of up to $2.3 million; or
(v) by either UNITRIN or C-W if the Recapitalization is not
consummated by June 30, 2001; provided that this right shall not be
available to any party that is in material breach of its obligations under
this Agreement or the Recapitalization.
(b) This Agreement shall terminate automatically without any action
on the part of C-W or UNITRIN in the event the Recapitalization Agreement
is terminated in accordance with its terms.
(c) Except as specifically set forth in clause (a) above and for
any liability in respect of any breach of this Agreement or the
Recapitalization Agreement by either party, no party shall have any
liability of any kind to any other party or any other person as a result of
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the termination of this Agreement. After the filing of the Certificate of
Merger relating to the Recapitalization, this Agreement may not be
terminated except by an agreement in writing signed by both parties.
Section 5.11 Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any
Subsidiary of such party or by any entity that is contemplated to be a
Subsidiary of such party on or after the Distribution Date (it being
understood that C-W and its Subsidiaries shall not be considered a
Subsidiary of UNITRIN).
Section 5.12 Third Party Beneficiaries. Except as provided in Article 3
relating to Indemnitees, this Agreement is solely for the benefit of the
parties hereto and should not be deemed to confer upon third parties any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.
Section 5.13 Title and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
Section 5.14 Exhibits and Schedules. The Exhibits and Schedules shall be
construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
Section 5.15 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF DELAWARE.
Section 5.16 Consent to Jurisdiction. Each of the parties irrevocably
submits to the exclusive jurisdiction of any state court of the State of
Delaware and the United States District Court for the District of Delaware,
for the purposes of any suit, action or other proceeding arising out of
this Agreement or any transaction contemplated hereby. Each of the parties
agrees to commence any action, suit or proceeding relating hereto in such
Delaware court. Each of the parties further agrees that service of any
process, summons, notice or document by U.S. registered mail to such
party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in Delaware with respect to any
matters to which it has submitted to jurisdiction in this Section 5.16.
Each of the parties irrevocably and unconditionally waives any objection
-35-
to the laying of venue of any action, suit or proceeding arising out of
this Agreement or the transactions contemplated hereby in such Delaware
court and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
Section 5.17 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way
be affected or impaired thereby; provided, however, that the consummation
of the Recapitalization is conditioned upon and is not severable from the
Distribution, and that the Distribution is not severable from the
Recapitalization. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid
provisions, the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
-36-
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
UNITRIN, INC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and
Chief Financial Officer
▇▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer