EXHIBIT 99(a)
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PURCHASE AGREEMENT
Between
ABB HOLDING AG, ZURICH,
as Seller
and
LAGRUMMET DECEMBER NR 919 AB
(under change of name to "FUND AMERICAN HOLDINGS AB"),
as Purchaser
Dated as of December 8, 2003
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WHITE & CASE
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TABLE OF CONTENTS
ARTICLE 1 INTERPRETATION AND RELATED MATTERS.................................2
1.1. Definitions....................................................2
1.2. Other Terms...................................................11
1.3. Interpretation................................................11
ARTICLE 2 SALE AND PURCHASE OF U.S. SHARES AND INTERNATIONAL SHARES.........12
2.1. Sale and Purchase.............................................12
2.2. Title.........................................................12
ARTICLE 3 PURCHASE PRICE AND ADJUSTMENT.....................................12
3.1. Purchase Price................................................12
3.2. Payment of U.S. Purchase Price................................13
3.3. Payment of International Purchase Price.......................13
3.4. Closing Financial Statements; Disputes........................13
3.5. Adjustments...................................................18
ARTICLE 4 CLOSING...........................................................23
4.1. Date and Place................................................23
4.2. Deliveries at the U.S. Closing................................23
4.3. Deliveries at the Closing.....................................23
4.4. Escrow........................................................24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ABB.............................25
5.1. Organization..................................................25
5.2. Authority.....................................................25
5.3. Capital Stock.................................................26
5.4. Subsidiaries and Branch Offices...............................27
5.5. Financial Information.........................................27
5.6. Compliance with Law...........................................30
5.7. Personal Property.............................................31
5.8. Real Property.................................................32
5.9. Intellectual Property.........................................33
5.10. Contracts.....................................................34
5.11. Employees.....................................................38
5.12. Employee Benefit Plans........................................39
5.13. Taxes.........................................................41
5.14. Litigation....................................................43
5.15. Environmental Matters.........................................43
5.16. Insurance.....................................................44
5.17. Agents........................................................44
5.18. Accounts with Financial Institutions..........................44
5.19. Continuing Business Relationships.............................44
5.20. Brokers.......................................................45
5.21. Solvency......................................................45
5.22. Alstom Instruments............................................45
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5.23. ABB Instruments...............................................45
5.24 Sirius America Contracts......................................45
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................46
6.1. Organization..................................................46
6.2. Authority.....................................................46
6.3. Financing.....................................................47
6.4. Employees.....................................................47
ARTICLE 7 COVENANTS.........................................................47
7.1. General.......................................................47
7.2. Conduct of Business...........................................48
7.3. Access to Information.........................................53
7.4. Reasonable Efforts............................................53
7.5. Employee Benefit Plans........................................55
7.6. Taxes.........................................................56
7.7. Replacement of Directors and Auditors.........................57
7.8. No Solicitation/No Hire of Employees..........................57
7.9. No Solicitation of Offers.....................................58
7.10. Notice of Certain Matters.....................................58
7.11. Intercompany Accounts.........................................59
7.12. Investment Portfolio..........................................59
7.13. Assignment of Confidentiality Agreements......................59
7.14. Amendment of Leases...........................................59
7.15. Sirius Belgium................................................60
7.16. Access to Purchaser Auditors..................................60
7.17. Facility Agreement............................................60
7.18. Purchaser Disclosure Procedures...............................60
7.19. Dividends.....................................................60
7.20. ABB Intellectual Property.....................................62
7.21. Amendments to Certain Contracts...............................62
7.22. Employees.....................................................62
ARTICLE 8 CONDITIONS TO CLOSING.............................................63
8.1. Conditions of Both Parties....................................63
8.2. Additional Conditions of Purchaser............................63
8.3. Additional Conditions of ABB..................................65
8.4. Frustration of Closing Conditions.............................65
ARTICLE 9 LIABILITY AND RELATED MATTERS.....................................65
9.1. Indemnification by ABB........................................65
9.2. Indemnification by Purchaser..................................67
9.3. Termination of Indemnification................................68
9.4. Procedures Relating to Third Party and Direct
Indemnification Claims......................................69
9.5. Assignment of Rights..........................................71
9.6. Tax Indemnification and Related Matters.......................72
9.7. Indemnity Payments............................................75
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9.8. Scandinavian Re Indemnity.....................................75
9.9. Special Indemnity in Respect of Alstom Instruments............77
9.10. Special Indemnity in Respect of ABB Instruments...............77
9.11. Other Limitations; Indemnity Provisions.......................78
9.12. Survival of Representations and Warranties and Covenants......80
9.13. Reliance on Representations and Warranties....................80
9.14. ABB's Disclosure..............................................80
ARTICLE 10 TERMINATION, AMENDMENT AND WAIVER................................80
10.1. Termination...................................................80
10.2. Amendments and Waivers........................................82
ARTICLE 11 GENERAL PROVISIONS...............................................82
11.1. No Announcement; Confidentiality..............................82
11.2. Cooperation...................................................83
11.3. Entire Agreement..............................................83
11.4. Severability..................................................84
11.5. No Third Party Beneficiaries..................................84
11.6. Assignment....................................................84
11.7. Notices.......................................................84
11.8. Governing Law.................................................85
11.9. Pre-Closing Dispute Resolution................................85
11.10. Post-Closing Dispute Resolution...............................86
11.11. Enforcement...................................................87
11.12. Costs, Expenses, Transfer Taxes and Fees......................87
11.13. No Set-Off....................................................87
11.14. Further Assurances............................................87
11.15. Certain Insurance.............................................88
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SCHEDULES AND ANNEXES
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Schedules
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1.1(1) Financial Statements
1.1(2) Investment Guidelines
1.1(3) Permitted Encumbrances
1.3.4 ABB's Knowledge
3.4.1(1) Net Equity Statement - Adjustments
3.4.1(2) Form of Closing Financial Statements
3.4.2 Form of Business Auditors' Opinions
7.2.1 Conduct of Business
7.5(1) Transferred Plans
7.5(2) Retained Plans
7.21 Amendments to Certain Contracts
8.1 Governmental Approvals
11.6 Merger Schedule
Disclosure Schedule
Annexes
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1 ABB Bank Guaranty
2 Escrow Agreement
3 ABB and ABB Ltd Legal Opinion
4 Purchaser Legal Opinion
5 Transitional Services Agreement
6 White Mountains Insurance Group, Ltd. Opinion
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PURCHASE AGREEMENT
This Purchase Agreement (the "Agreement") is entered into as of this
8th day of December 2003 between the following parties:
ABB HOLDING AG, ZURICH, a company organized and existing under the
laws of Switzerland with its principal office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("ABB"); and
LAGRUMMET DECEMBER NR 919 AB (under change of name to "FUND AMERICAN
HOLDINGS AB"), a company organized and existing under the laws of Sweden (Reg.
No. 556651-1084 with its principal office at ▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ("Purchaser").
WITNESSETH:
WHEREAS, ABB owns 100% of the issued and outstanding shares (the
"International Shares") of ABB Insurance Holding Sweden AB, a company
organized and existing under the laws of Sweden ("Sirius Holding");
WHEREAS, Sirius Holding owns: (i) 100% of the issued and outstanding
shares of Sirius International Insurance Corporation, a company organized and
existing under the laws of Sweden ("Sirius International"); and (ii) 100% of
the issued and outstanding shares of Sirius Ruckversicherungs Service GmbH,
a company organized and existing under the laws of Germany ("Sirius Ruck");
WHEREAS, Sirius International owns: (i) 100% of the issued and
outstanding shares (the "U.S. Shares") of Sirius America Insurance Company, a
company organized and existing under the laws of the State of Delaware
("Sirius America"); (ii) 100% of the issued and outstanding shares of Sirius
Belgium Reassurances S.A., a Company organized and existing under the laws of
Belgium ("Sirius Belgium"); and (iii) 100% of the issued and outstanding
shares of Scandinavian Reinsurance Company Ltd (Bermuda), a company organized
and existing under the laws of Bermuda ("Scandinavian Re"), and together with
Sirius Holding, Sirius International, Sirius Ruck, Sirius Belgium and
Sirius America, (the "Acquired Group", and each of which, an "Acquired
Company");
WHEREAS, ABB desires to sell, and Purchaser desires to purchase, the
International Shares, in each case on the terms and conditions herein set
forth; and
WHEREAS, Purchaser desires to cause Folksamerica Reinsurance
Company, a company organized and existing under the laws of New York with its
principal office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. ("U.S.
Purchaser") to purchase the U.S. Shares from Sirius International, and ABB
desires to cause Sirius International to sell the U.S. Shares to U.S.
Purchaser, in each case at the U.S. Closing and on the terms and conditions
herein set forth (the "U.S. Transaction");
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties herein contained, and subject to and on the
terms and conditions herein set forth, the parties hereto agree as follows:
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ARTICLE 1
INTERPRETATION AND RELATED MATTERS
1.1. DEFINITIONS
Unless the context of this Agreement provides otherwise, the
following terms shall have the meanings set out below:
"ABACUS Financial Statements" shall have the meaning set out in
Section 7.19(a).
"ABACUS Net Equity" shall have the meaning set out in Section
7.19(a).
"ABACUS Net Equity Statement" shall have the meaning set out in
Section 7.19(a).
"ABB" shall have the meaning set out in the preamble to this
Agreement.
"ABB Distribution" shall have the meaning set out in Section
7.19(b).
"ABB Distribution Amount" shall have the meaning set out in Section
7.19(b).
"ABB Group" means ABB Ltd, being an Affiliate of ABB and a company
organized and existing under the laws of Switzerland with its principal
office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇ ▇▇▇ ▇▇▇▇, ▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
and each of its Affiliates.
"ABB Instruments" shall have the meaning set out in Section 5.23.
"ABB Specified Claims" shall have the meaning set out in Section
9.1.
"Acquired Company" shall have the meaning set out in the recitals to
this Agreement.
"Acquired Group" shall have the meaning set out in the recitals to
this Agreement.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with such Person.
"Affiliate Contracts" shall have the meaning set out in Section
5.5.5.
"Alstom Group" shall have the meaning set out in Section 5.22.
"Alstom Indemnified Parties" shall have the meaning set out in
Section 9.9(a).
"Alstom Instruments" shall have the meaning set out in Section 5.22.
"Alstom Losses" shall have the meaning set out in Section 9.9(a).
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"Assumed Reinsurance Agreements" means all Contracts pursuant to
which any Acquired Company has provided reinsurance or retrocessional
coverage to another Person (other than another Acquired Company).
"Audited Closing Financial Statements" shall have the meaning set
out in Section 3.4.2(a)(i).
"Audited Closing Net Equity Statement" shall have the meaning set
out in Section 3.4.2(a)(ii).
"Audited Deficiency Amount" means the amount, if any, by which the
Audited Net Equity is less than the Guaranteed Net Equity.
"Audited Excess Amount" means the amount, if any, by which Audited
Net Equity exceeds the Guaranteed Net Equity.
"Audited Net Equity" means the amount of Net Equity, determined on
the basis of the Audited Closing Financial Statements.
"Belgian Tax Reassessments" shall have the meaning set out in
Section 9.6.4(b).
"Branded Assets" shall have the meaning set out in Section 7.20.1.
"Business" means the insurance and reinsurance business operations
conducted by the Acquired Group.
"Business Auditors" means Ernst & Young, auditors to the Acquired
Group.
"Business Day" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by applicable Law to
be closed in Stockholm, Sweden or New York, New York.
"Ceded Reinsurance Agreements" means all Contracts pursuant to which
any Acquired Company has ceded or transferred to any Person (other than
another Acquired Company) any of its obligations or liabilities under any
assumed insurance or assumed reinsurance agreement.
"Closing" means the completion of the matters set forth in Section
4.3 after the satisfaction or waiver of the conditions set forth in
Article 8.
"Closing Date" means the date on which the Closing occurs in
accordance with this Agreement.
"Closing Financial Statements" means the Unaudited Closing Financial
Statements, the Audited Closing Financial Statements and the Final
Closing Financial Statements.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall have the meaning set out in the
Confidentiality Agreement.
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"Confidentiality Agreement" shall have the meaning set out in
Section 11.3.
"Contract" means a loan or credit agreement, bond, debenture, note,
mortgage, indenture, guarantee, lease or other contract, commitment,
agreement, arrangement, understanding, obligation, undertaking,
instrument, permit, concession, franchise or license (other than any
permit or license granted by any governmental authority), whether oral or
written, in each case that is legally binding or intended to be legally
binding (including all amendments thereto).
"Direct Claim" shall have the meaning set out in Section 9.4.2.
"Direct Insurance Agreement" means all Contracts pursuant to which
an Acquired Company has provided insurance to another Person (other than
another Acquired Company).
"Disclosed Insurance Agreements" shall have the meaning set out in
Section 5.10.1(g).
"Disclosure Schedule" means the disclosure schedule delivered by ABB
to Purchaser concurrently with the execution and delivery of this
Agreement.
"Disputed Net Equity" means the difference between the Audited Net
Equity and the Net Equity proposed by Purchaser in the Objection Notice
(or, if Purchaser does not propose a Net Equity in the Objection Notice,
the lowest Net Equity that may be reasonably derived from the objections
raised by Purchaser in the Objection Notice).
"Disputes Auditors" shall have the meaning set out in Section 3.4.6.
"Employee" means each employee actively employed by an Acquired
Company as of the Closing, including any employee of an Acquired Company
on leave of absence or short-term disability (but not long-term
disability) (or whenever the term "Employee" is used herein with respect
to any date prior to the Closing Date, each individual who would be an
Employee were the Closing to occur on such date).
"Employee Benefit Plan" shall have the meaning set out in Section
5.12.1.
"Encumbrance" means a lien, pledge, mortgage, security interest,
assessment, claim, lease, charge, option, right of first refusal,
imperfection of title, easement, transfer restriction under any
shareholder or similar agreement or other encumbrance of any kind
whatsoever.
"Environmental Claims" shall have the meaning set out in Section
5.15.
"Environmental Laws" shall have the meaning set out in Section 5.15.
"ERISA" shall have the meaning set out in Section 5.12.1.
"Escrow Agent" shall have the meaning set out in Section 4.4.
"Escrow Agreement" shall have the meaning set out in Section 4.4.
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"Facility Agreement" means the Facility Agreement dated as of June
26, 2003, among Sirius Holding, Skandinaviska Enskilda ▇▇▇▇▇▇ ▇▇ (publ)
and ForeningsSparbanken AB (publ).
"Final Closing Financial Statements" shall have the meaning set out
in Section 3.4.10(b).
"Final Deficiency Amount" means the amount, if any, by which the
Final Net Equity is less than the Guaranteed Net Equity.
"Final Excess Amount" means the amount, if any, by which Final Net
Equity exceeds the Guaranteed Net Equity.
"Final Net Equity" means the amount of Net Equity, determined on the
basis of the Final Closing Financial Statements.
"Financial Risks Business" means the issuance by the Acquired Group
of project bonds, performance bonds and financial products relating to
trade credit risks, political risks, credit derivative risks, and export
finance risks.
"Financial Statements" means the audited consolidated financial
statements of the Acquired Group (excluding Sirius Holding and Sirius
Ruck) as of December 31, 2002, including the balance sheet of the
Acquired Group (excluding Sirius Holding and Sirius Ruck) as of
December 31, 2002, and the notes thereto, and the related income
statements and statements of cash flow for the twelve month period then
ended, in each case prepared in accordance with U.S. GAAP, copies of
which are attached as Schedule 1.1(1).
"Former Employee" means each employee who was formerly employed by
an Acquired Company with respect to whom any Acquired Company or any
Employee Benefit Plan transferred to Purchaser or its Affiliates in
connection with the transactions contemplated hereby (including any
Employee Benefit Plan sponsored by any Acquired Company) has any
liability.
"Gain" shall have the meaning set out in Section 9.8.2(b).
"Guaranteed Net Equity" means SEK 3.566 billion.
"Hazardous Material" means (i) any petroleum or petroleum products,
radioactive materials or wastes, asbestos in any form, urea formaldehyde
foam insulation and polychlorinated biphenyls; and (ii) any other
chemical, material, substance or waste that is prohibited, limited or
regulated under any Environmental Law.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"IMG" means International Medical Group, Inc.
"Indemnified Party" shall have the meaning set out in Section 9.4.1.
"Indemnifying Party" shall have the meaning set out in Section
9.4.1.
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"Insurance Agreement Claims" shall have the meaning set out in
Section 9.1.
"Insurance Policy" means each policy and binder currently-in- effect
held by ABB and its Affiliates (including the Acquired Group) under which
any Acquired Company or any assets of the Business are insured
(excluding, for the avoidance of doubt, insurance coverage relating to
areas such as life, medical and disability which are contained in any
Employee Benefit Plan).
"Intellectual Property" means trade names, service marks,
trademarks, logos, patents, copyrights, rights in Know-How and other
similar proprietary rights which may subsist in any part of the world,
whether registered or not.
"International Purchase Price" shall have the meaning set out in
Section 3.1(a).
"International Shares" shall have the meaning set out in the
recitals to this Agreement.
"Investment Guidelines" means the investment guidelines of the
Acquired Group as of the date of this Agreement set out in Schedule
1.1(2).
"Investment Portfolio" means all investments, including stocks,
bonds, cash and limited partnership interests, owned, directly or
indirectly, by the Acquired Group, other than shares in an Acquired
Company, IMG or the LUC.
"Know-How" means any technical, industrial and commercial
information and techniques in any tangible form.
"KPMG Report" shall have the meaning set out in Section 3.4.4.
"Law" means any statute, law, code, ordinance, regulation, directive
or other national or supra-national legally binding requirement or rule
as in effect (i) wherever such term is used in Article 5 or 6, as at the
date(s) the relevant warranty is made pursuant to this Agreement and, in
any event, no later than the Closing Date, (ii) wherever such term is
used in Article 7, as at the date any permitted, required or prohibited
action is taken, and in any event (other than with respect to Sections
7.4.2 and 7.7.1) no later than the Closing Date and (iii) wherever such
term is otherwise used in this Agreement, from time to time in force.
"Leased Real Property" shall have the meaning set out in Section
5.8.3.
"Lenders" means Skandinaviska Enskilda ▇▇▇▇▇▇ ▇▇ (publ) and
ForeningsSparbanken AB (publ) and any other Persons that have agreed
to make available to Sirius Holding a term loan facility under the
Facility Agreement.
"Lenders' Payment" shall have the meaning set out in Section 8.2(d).
"Licensed Intellectual Property" shall have the meaning set out in
Section 5.9.4.
"Loss" means any actual loss, claim, damage, liability, cost,
expense, obligations, judgments, Encumbrances, injunctions, charges,
orders, decrees, rulings,
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dues, assessments, Taxes, fines, penalties, fees and amounts paid in
settlement (including reasonable fees and expenses of counsel), but
excluding special, indirect, incidental, consequential and punitive
damages.
"Losses In Excess Of Reserves" shall have the meaning set out in
Section 9.8.1(b).
"LUC" means the real property located at the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇.
"Material Adverse Effect" means any change in, or effect on, the
Acquired Group or the Business which, individually or in the aggregate
is, or which is reasonably likely to be, materially adverse to the
properties, assets, liabilities, results of operations or financial
condition of the Acquired Group, taken as a whole or, in relation to
references to "Material Adverse Effect" in Sections 5.2.2, 5.2.3, 5.3,
5.6.1 and 5.14(ii)(z) only, will or is reasonably likely to prevent the
material transactions contemplated hereby, including the acquisition of
the International Shares.
"Material Contract" shall have the meaning set out in Section
5.10.2.
"Measurement Date" means December 31, 2003.
"Measurement Date Representations and Warranties" means the
representations and warranties in: Section 5.5.3, Section 5.5.4, Section
5.6.2, Section 5.7, the second sentence of Section 5.8.1, Section 5.8.2,
Section 5.8.3, Section 5.9.2(b), Section 5.9.2(d)(ii), Section 5.9.2(e),
Section 5.9.3(a), Section 5.9.3(b)(ii), Section 5.11.2, Section 5.12.2
(except (i) thereof), Section 5.14 and Section 5.15.
"Net Equity" means, as of the Measurement Date, the total
shareholders' equity value in Swedish kronor of the Acquired Group from
the Closing Financial Statements, calculated in accordance with U.S. GAAP
consistently applied to the Financial Statements (so long as the
Financial Statements were in accordance with U.S. GAAP) and the
adjustments set out in Schedule 3.4.1(1). In calculating Net Equity,
there will be no accrual, provision or reserve in respect of any costs,
liabilities, charges or events to be incurred after the Measurement Date
in respect of the disposal, closure, reorganization or restructuring of
any operations initiated by Purchaser or any of its Affiliates, other
than those duly authorized by ABB and/or its Affiliates prior to the
Measurement Date and recognizable in accordance with U.S. GAAP.
"Objection Notice" shall have the meaning set out in Section 3.4.5.
"Order" shall have the meaning set out in Section 5.2.2.
"Other Intellectual Property" shall have the meaning set out in
Section 5.9.3.
"Outstanding Retained Amount" shall have the meaning set out in
Section 3.5.3.
"Owned Real Property" shall have the meaning set out in Section
5.8.2.
"Permits" shall have the meaning set out in Section 5.6.2.
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"Permitted ABB Distribution Amount " shall have the meaning set out
in Section 7.19(b).
"Permitted Encumbrances" means: (i) rights of first refusal and
similar rights of governmental authorities under applicable Law; (ii)
mechanics', carriers', workmen's, repairmen's and other like Encumbrances
arising or incurred in the ordinary course of business; (iii)
Encumbrances for Taxes, assessments and other governmental charges not
yet due and payable or that may thereafter be paid without penalty (with
the applicable Encumbrance thereby released) or that are being contested
in good faith by appropriate proceedings; and (iv) Encumbrances related
to deposits to secure policyholders' obligations as required by the
insurance regulators of various jurisdictions to the extent that such
deposits and the corresponding Encumbrances are listed on Schedule
1.1(3).
"Person" means any individual, company, partnership or other entity
of any kind or governmental authority.
"Pledge Agent" means Skandinaviska Enskilda ▇▇▇▇▇▇ ▇▇ (publ) or any
other Person serving as the agent for the financing parties under the
Pledge Agreement.
"Pledge Agreement" means the Pledge Agreement dated as of June 26,
2003, between Sirius Holding and Skandinaviska Enskilda ▇▇▇▇▇▇ ▇▇ (publ).
"Pre-Measurement Tax Period" shall have the meaning set out in
Section 9.6.1(a).
"Prior ABB Payments" shall have the meaning set out in Section
9.11.5.
"Property" means real, personal or mixed property, tangible or
intangible, including any leased real property.
"Property Taxes" shall have the meaning set out in Section 9.6.1(b).
"Purchaser" shall have the meaning set out in the preamble to this
Agreement.
"Purchaser Specified Claims" shall have the meaning set out in
Section 9.2.
"Reinsurance Pools" shall have the meaning set out in Section
5.10.1(d).
"Registered Intellectual Property" shall have the meaning set out in
Section 5.9.2(a).
"Release" means any actual or threatened release, spill, emission,
leaking, dumping, injection, pouring, deposit, disposal, discharge,
dispersal, leaching or migration into or through the environment or
within any building, structure, facility or fixture.
"Reserves" means: (i) all loss reserves for losses relating to the
Business, consisting of case reserves and reserves for incurred but not
reported losses, including unallocated and allocated reserves for loss
adjustment expenses; and (ii) all reserves for unearned premiums relating
to the Business.
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"Retained Amount" means an amount in Swedish kronor equal to
$30,000,000 based on the closing mid-point rate calculated on the basis
of the exchange rates between U.S. Dollars and Swedish kronor published
in The Financial Times five (5) Business Days prior to the Closing.
"Retained Plans" shall have the meaning set out in Section 7.5(b).
"Retirement Benefits" shall have the meaning set out in Section
7.5(a).
"Rules" shall have the meaning set out in Section 11.10.1.
"Scandinavian Re" shall have the meaning set out in the recitals to
this Agreement.
"Scandinavian Re Affiliate Commitment" means any capital, property,
asset or right, or commitment to provide capital, properties, assets or
rights that is legally binding or intended to be legally binding,
provided by an Acquired Company (other than Scandinavian Re) to another
Person to support the obligations of Scandinavian Re under any Contract.
"Scan Re Agreements" shall have the meaning set out in Section
5.10.1(e).
"Scan Re Disputes" shall have the meaning set out in Section
9.8.1(a).
"Scan Re Memo" shall have the meaning set out in Section 9.8.1(a).
"Senior Executive" means a managing director of an Acquired Company
and all managers of such Acquired Company who report directly to him or
her.
"Sirius America" shall have the meaning set out in the recitals to
this Agreement.
"Sirius Belgium" shall have the meaning set out in the recitals to
this Agreement.
"Sirius Holding" shall have the meaning set out in the recitals to
this Agreement.
"Sirius Holding Dividend" means the dividend to be declared and paid
by Sirius Holding prior to the Measurement Date in the amount of Three
Hundred and Forty-Five Million Swedish kronor (SEK 345,000,000).
"Sirius International" shall have the meaning set out in the
recitals to this Agreement.
"Sirius Ruck" shall have the meaning set out in the recitals to
this Agreement.
"Straddle Period" shall have the meaning set out in Section 7.6(b).
"Subsidiary" means, as to any Person, any other Person 50% or more
of whose voting shares are owned or controlled, directly or indirectly,
through one or more intermediaries, by such first Person.
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"Swedish kronor" and "SEK" means the lawful currency of the Kingdom
of Sweden.
"Tax Claim" shall have the meaning set out in Section 9.6.3.
"Tax Return" means any return, declaration of estimated tax
payments, report, estimate, information return or statement, including
any related or supporting information with respect to any of the
foregoing, filed or to be filed with any taxing authority in connection
with the determination, assessment, collection or administration of any
Taxes.
"Taxes" means all taxes, fees, duties and other assessments imposed
by any government or political subdivision or taxing authority thereof or
therein, including any income, estimated, premium, profits, windfall
profits, environmental, alternative, minimum, license, import, transfer,
registration, stamp, franchise, sales, use, value added, gross receipts,
excise, utility, property (real or personal), severance, ad valorem, net
proceeds, deed, lease, service, capital, customs, occupation, payroll
wage, ▇▇▇▇▇▇▇'▇ compensation, employment, withholding and social security
taxes, including all interest, fines, assessments, penalties or additions
to taxes imposed in connection therewith or with respect thereto.
"Third Party Claim" shall have the meaning set out in Section 9.4.1.
"▇▇▇▇▇▇▇▇▇▇▇ Report" shall have the meaning set out in Section
3.4.4.
"Transfer Taxes" means all transfer, documentary, registration,
stamp and similar Taxes (including all applicable real estate transfer
Taxes and stock transfer Taxes) and related fees (including any
penalties, interest or additions to Tax) arising out of, in connection
with or attributable to this Agreement and the transactions contemplated
hereby. For the avoidance of doubt, Transfer Taxes shall not include any
income Taxes arising out of, in connection with or attributable to this
Agreement or the transactions contemplated hereby, such as any capital
gains Taxes.
"Transferred Plan" shall have the meaning set out in Section 7.5(a).
"U.S. Closing" means the completion of the matters set forth in
Section 4.2.
"U.S. GAAP" means generally accepted accounting principles in the
United States of America.
"U.S. Dollars" or "$" means the lawful currency of the United States
of America.
"U.S. Purchase Price" shall have the meaning set out in Section 3.2.
"U.S. Purchaser" shall have the meaning set out in the recitals to
this Agreement.
"U.S. Shares" shall have the meaning set out in the recitals to this
Agreement.
"U.S. Transaction" shall have the meaning set out in the recitals to
this Agreement.
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"Unaudited Closing Financial Statements" shall have the meaning set
out in Section 3.4.1(a).
"Unaudited Closing Net Equity Statement" shall have the meaning set
out in Section 3.4.1(a).
"Unaudited Net Equity" means the amount of Net Equity, determined on
the basis of the Unaudited Closing Financial Statements.
1.2. Other Terms
Other terms may be defined elsewhere in this Agreement (including in
any Annex or Schedule hereto) and, unless otherwise indicated, shall have
the respective meanings there ascribed to such terms.
1.3. Interpretation
The following provisions shall apply in connection with the
interpretation of this Agreement:
1.3.1 Any reference to Articles, Sections, clauses, Annexes and
Schedules are, unless otherwise stated, references to Articles, Sections,
clauses, Annexes and Schedules of or to this Agreement. The headings in
this Agreement have been inserted for convenience only and shall not be
taken into account in its interpretation.
1.3.2 All Annexes and Schedules form an integral part of this
Agreement and are equally binding therewith. Any reference to "this
Agreement" shall include such Annexes and Schedules.
1.3.3 If any period is referred to in this Agreement by way of
reference to a number of days, the days shall be reckoned exclusively of
the first and inclusively of the last day unless the last day falls on a
day that is not a Business Day, in which case the last day shall be the
next succeeding Business Day.
1.3.4 Whenever any reference is made in this Agreement to ABB's
knowledge, information, belief or awareness, it shall be deemed to mean
the knowledge of the individuals identified in Schedule 1.3.4 in relation
to the subject matter in question.
1.3.5 Whenever the words "include", "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation".
1.3.6 Any reference to the "stock", "capital stock", "shares" or
"share capital" of a Person shall refer to all voting and non-voting
equity securities and other ownership and voting interests with respect
to such Person.
1.3.7 Whenever the term "or its foreign currency equivalent" is used
in this Agreement, it shall be deemed to refer to such foreign currency
equivalent (i) as calculated as of the date of delivery of notice of a
Direct Claim or Third Party Claim under Article 9 or (ii) otherwise as
calculated as at the date of this Agreement.
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ARTICLE 2
SALE AND PURCHASE OF U.S. SHARES AND INTERNATIONAL SHARES
2.1. Sale and Purchase
2.1.1 U.S. Shares
Upon the terms and subject to the conditions of this Agreement, ABB
shall cause Sirius International to transfer and deliver to U.S. Purchaser,
and Purchaser shall cause U.S. Purchaser to purchase and take delivery of, the
U.S. Shares at the U.S. Closing, free and clear of all Encumbrances and with
all rights attached and accruing to such U.S. Shares, in exchange for the U.S.
Purchase Price (paid in accordance with Section 4.2.2). For purposes of the
making of the representations and warranties set forth in Articles 5 and 6
below at Closing, the U.S. Transaction shall be deemed not to have occurred,
and for purposes of the covenants set forth in Section 7.2.4 below, Purchaser
shall be deemed to have provided prior written consent with respect to the
U.S. Transaction.
2.1.2 International Shares
Upon the terms and subject to the conditions of this Agreement, ABB
shall transfer and deliver to Purchaser, and Purchaser shall purchase and take
delivery of, the International Shares at the Closing, free and clear of all
Encumbrances and with all rights attached and accruing to such International
Shares, in exchange for the International Purchase Price (paid in accordance
with Section 4.3.2(a)).
2.2. Title
2.2.1 U.S. Shares
Subject to Purchaser having caused U.S. Purchaser to pay the U.S.
Purchase Price in accordance with Section 4.2.2, title of ownership to the
U.S. Shares shall transfer to U.S. Purchaser at the U.S. Closing.
2.2.2 International Shares
Subject to Purchaser having paid, or caused to be paid, to the
extent applicable, the amounts set forth in Section 4.3.2(a), title of
ownership to the International Shares shall transfer to Purchaser at the
Closing.
ARTICLE 3
PURCHASE PRICE AND ADJUSTMENT
3.1. Purchase Price
(a) The purchase price for the International Shares (the
"International Purchase Price") shall equal (i) the sum of (a) Three Billion
Two Hundred and Twenty Million Swedish kronor (SEK 3,220,000,000), (b) the
Final Excess Amount, if any, and (c) the interest amounts payable by Purchaser
to ABB pursuant to Section 3.5.5 less (ii) the sum of (x) the amount of the
ABB Distribution, if any, (y) the Final Deficiency Amount, if any, and (z) the
interest amounts payable by ABB to Purchaser pursuant to Section 3.5.5, if
any.
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(b) The International Purchase Price and the U.S. Purchase Price are
each exclusive of any Transfer Taxes, 75% of which shall be borne by ABB and
25% of which shall be borne by Purchaser.
3.2. Payment of U.S. Purchase Price
The purchase price for the U.S. Shares (the "U.S. Purchase Price")
shall be the U.S. GAAP book value of Sirius America as of the Measurement Date
(in U.S. Dollars). Purchaser shall cause U.S. Purchaser to pay the U.S.
Purchase Price in full at the U.S. Closing in accordance with Section 4.2.2.
3.3. Payment of International Purchase Price
Purchaser shall pay, or shall cause to be paid, to the extent
applicable, the amounts set forth in Section 4.3.2(a) at the Closing.
3.4. Closing Financial Statements; Disputes
3.4.1 Unaudited Closing Financial Statements
(a) As soon as reasonably practicable after the Measurement Date:
(i) ABB, assisted by the Business Auditors, shall prepare in good faith: (x)
in accordance with U.S. GAAP consistently applied to the Financial Statements
(so long as the Financial Statements were in accordance with U.S. GAAP), in
Swedish kronor and in the form of Schedule 3.4.1(2), a consolidated balance
sheet of the Acquired Group as of December 31, 2003, together with related
consolidated income statements and statements of cash flow for the twelve
month period then ended (collectively, the "Unaudited Closing Financial
Statements"); and (y) a statement showing the calculation of Net Equity,
determined on the basis of the Unaudited Closing Financial Statements and
taking into account the adjustments set out in Schedule 3.4.1(1) (the
"Unaudited Closing Net Equity Statement"); and (ii) ABB shall prepare
consolidating financial statements with respect to each Acquired Company
related to the Unaudited Closing Financial Statements in each case in the form
of Schedule 3.4.1(2). ABB shall deliver the Unaudited Closing Financial
Statements, the Unaudited Closing Net Equity Statement and the consolidating
financial statements described in sub-clause (ii) above to Purchaser within
five (5) days of such statements being finalized by the Acquired Group and
ABB.
(b) ABB shall:
(i) cause the Acquired Group to retain Reserves as of the
Measurement Date relating to (x) the EPIX/Hartford dispute
identified as Treaty 260, all underwriting years, in the Scan Re
Memo, (y) the Reliance Re dispute identified as Treaty 189, all
underwriting years, in the Scan Re Memo and (z) each Scan Re
Dispute, in each case at a minimum value equal to the highest value
of such Reserves as of December 31, 2002, March 31, 2003, June 30,
2003 and September 30, 2003, provided that the value of such
Reserves with respect to the disputes identified in clauses (x), (y)
and (z) of this Section 3.4.1(b)(i) as of the Measurement Date may
be (A) lowered to nil if any amount is paid in a full and final
settlement of such Scan Re Dispute, on or prior to the Measurement
Date, (B) lowered to the amount proposed by the third party in
writing to such dispute to be paid in full and final settlement
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thereof if such settlement remains outstanding for acceptance as at
the Measurement Date or to the amount adjudicated, on or prior to
the Measurement Date, by a court or arbitrator to be due to the
third party to such dispute in full and final adjudication of all
claims under such dispute or (C) lowered by the amount of any
payments made, on or prior to the Measurement Date, in partial
settlement of such Scan Re Dispute; and
(ii) set forth the value of each Reserve described in
sub-clause (i) above in an appendix to the balance sheet included in
the Unaudited Closing Financial Statements.
Purchaser and ABB hereby agree that establishing the value of each Reserve
described in sub-clause (i) above in accordance with such sub-clause is in
accordance with U.S. GAAP.
3.4.2 Audit of Closing Financial Statements
(a) The Unaudited Closing Financial Statements shall be audited by
the Business Auditors in accordance with generally accepted auditing standards
in the United States and the Unaudited Closing Net Equity Statement shall be
reviewed by the Business Auditors. Upon completion of the audit, the Business
Auditors shall deliver to ABB and Purchaser:
(i) (x) a copy of the Unaudited Closing Financial Statements,
including the requisite footnotes thereto, all as adjusted to
reflect any changes resulting from the Business Auditors' audit of
such statements and (y) the Business Auditors' executed opinion
thereon in the form set out in Schedule 3.4.2(1) stating that the
Unaudited Closing Financial Statements were prepared in accordance
with U.S. GAAP consistently applied to the Financial Statements (so
long as the Financial Statements were in accordance with U.S. GAAP)
and the audit was conducted in accordance with generally accepted
auditing standards in the United States, which opinion shall be
unqualified if delivered and dated on or after the Closing Date or,
if delivered prior to the Closing and qualified, such qualified
opinion shall be reissued as unqualified at the Closing
(collectively, the "Audited Closing Financial Statements"); and
(ii) a copy of the Unaudited Closing Net Equity Statement, as
adjusted to reflect any changes resulting from the Business
Auditors' review of such statement, and the Business Auditors'
unqualified and executed opinion in the form set out in Schedule
3.4.2(2) (collectively, the "Audited Closing Net Equity Statement").
(b) ABB shall cause the Business Auditors, as part of their audit,
to perform audit procedures as to the adequacy of the values and allowances
for the Reserves relating to (i) the EPIX/Hartford dispute identified as
Treaty 260, all underwriting years, in the Scan Re Memo, (ii) the Reliance Re
dispute identified as Treaty 189, all underwriting years, in the Scan Re Memo,
(iii) the receiveables/recoverables of the Acquired Group, (iv) each Scan Re
Dispute and (v) the deferred tax assets of the Acquired Group, in each case as
set forth in the Unaudited Closing Financial Statements.
(c) Provided that Purchaser has complied with its obligation to
provide access pursuant to Section 3.4.3(a) as is reasonably required by ABB
or the Business
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Auditors to perform their obligations under this Section 3.4.2, ABB shall
procure that the Business Auditors deliver the Audited Closing Financial
Statements and the Audited Closing Net Equity Statement to ABB and Purchaser
no later than ninety (90) days after the Measurement Date. The fees and
expenses of the Business Auditors in connection with the Audited Closing
Financial Statements and the Audited Closing Net Equity Statement shall be
borne by ABB.
(d) Simultaneously with the delivery of the Audited Closing
Financial Statements and the Audited Closing Net Equity Statement by the
Business Auditors pursuant to Section 3.4.2(c), ABB shall deliver to Purchaser
consolidating financial statements with respect to each Acquired Company
related to the Audited Closing Financial Statements, all as adjusted to
reflect any changes resulting from the Business Auditors' audit of the
Unaudited Closing Financial Statements, and in the form of Schedule 3.4.1(2).
3.4.3 Access
(a) Following the Closing, until the Audited Closing Financial
Statements and the Audited Closing Net Equity Statement become the Final
Closing Financial Statements, Purchaser shall, and shall cause its Affiliates
to, provide reasonable access on reasonable notice during normal business
hours to ABB's employees and representatives to the Acquired Group's and each
member of the Acquired Group's respective offices, employees agents,
accountants (including the Business Auditors) and actuaries and to premises,
properties, books, accounting records and other documents (including
supporting contractual documentation) of the Acquired Group or available to
the Acquired Group reasonably required for the purpose of agreeing or settling
any dispute in relation to the Audited Closing Financial Statements or the
Audited Closing Net Equity Statement and allow ABB to take copies of such
documents. Neither Purchaser nor any of its Affiliates shall be under any
obligation to disclose to ABB's employees or representatives any information
the disclosure of which, according to the advice of Purchaser's legal counsel,
is restricted by confidentiality obligations or applicable Law or would
jeopardize the legal privilege, if any, accorded to any documents produced or
prepared by the legal representatives of Purchaser or its Affiliates.
(b) Prior to the Closing, and following delivery of the Audited
Closing Financial Statements and the Audited Closing Net Equity Statement
pursuant to Section 3.4.2, ABB shall, and shall cause its Affiliates to
provide reasonable access on reasonable notice during normal business hours to
Purchaser's auditors, employees and representatives to the Acquired Group's
and each member of the Acquired Group's respective officers, employees,
agents, accountants (including the Business Auditors) and actuaries and to the
premises, properties, books, accounting records and other documents (including
supporting contractual documentation and the work papers of the Business
Auditors relating to the audit of the Financial Statements and the Audited
Closing Financial Statements, provided that Purchaser's auditors, employees
and representatives have signed any release letter reasonably required by the
Business Auditors in connection therewith) of the Acquired Group or available
to the Acquired Group reasonably required for the purpose of reviewing the
Audited Closing Financial Statements and the Audited Closing Net Equity
Statement and/or the purpose of agreeing or settling any dispute in relation
to the Audited Closing Financial Statements or the Audited Closing Net Equity
Statement and allow Purchaser and its auditors to take copies of such
documents. Neither ABB or any of its Affiliates shall be under any obligation
to disclose to Purchaser's auditors, employees and representatives any
information the disclosure of which, according to the advice of ABB's legal
counsel, is restricted by
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confidentiality obligations or applicable Law or would jeopardize the legal
privilege, if any, accorded to any documents produced or prepared by the legal
representatives of ABB or its Affiliates.
3.4.4 Actuarial Review of Reserves
As soon as reasonably practicable after the Measurement Date, ABB
shall cause:
(a) ▇▇▇▇▇▇▇▇▇▇▇ (i) to perform a loss and loss adjustment expense
reserve review of each Acquired Company (other than Scandinavian Re and
Sirius America) as of the Measurement Date, with the same scope as
▇▇▇▇▇▇▇▇▇▇▇'▇ loss and loss adjustment expense reserve review of each
Acquired Company as of December 31, 2002 and (ii) to deliver to ABB a
report on such Reserves in the form of the report issued to ▇▇▇▇ ▇▇▇▇▇▇
on 8 April 2003 (the "▇▇▇▇▇▇▇▇▇▇▇ Report"); and
(b) KPMG LLP (i) to perform a loss and loss adjustment expense
reserve review of Sirius America as of the Measurement Date, with the
same scope as KPMG LLP's loss and loss adjustment expense reserve review
of Sirius America as of December 31, 2002, and (ii) deliver to ABB a
report on such Reserves in the form of the report issued to the board of
directors of Sirius America on March 14, 2003 (the "KPMG Report").
Prior to or concurrently with the delivery of the Audited Closing
Financial Statements and the Audited Closing Net Equity Statement, ABB shall
deliver to Purchaser the ▇▇▇▇▇▇▇▇▇▇▇ Report and the KPMG Report. ABB shall
cause the Business Auditors, as part of their audit, to perform audit
procedures as to the adequacy of the Reserves of Scandinavian Re.
3.4.5 Objection Notice
The Audited Closing Financial Statements and the Audited Closing Net
Equity Statement shall be binding and conclusive upon ABB and Purchaser unless
Purchaser shall have notified ABB in writing within forty-five (45) days after
receipt of the Audited Closing Financial Statements and Audited Closing Net
Equity Statement of any objections thereto (an "Objection Notice"); provided,
however, that no objections may be made with respect to amounts in the income
statements and statements of cash flow contained in the Audited Closing
Financial Statements other than to the extent that such amounts affect amounts
included in the Audited Closing Net Equity Statement. A notice under this
Section 3.4.5 shall be given in accordance with Section 11.7 and shall: (i)
specify in reasonable detail the items or issues relating to the Audited
Closing Financial Statements or the Audited Closing Net Equity Statement which
are the subject of a dispute and provide a description in reasonable detail of
the reasons for such dispute; and (ii) expressly state that such objections
have been made by Purchaser in good faith and taking into account the
adjustments set forth in Schedule 3.4.1(1).
3.4.6 Disputes Auditors
If any dispute between ABB and Purchaser relating to objections
validly made pursuant to Section 3.4.5 to the Audited Closing Financial
Statements or the Audited Closing Net Equity Statement is not resolved by them
within thirty (30) days after ABB's receipt of
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an Objection Notice, Purchaser and ABB shall submit such dispute to the
Washington, D.C. office of Deloitte & Touche LLP or, in the event Deloitte &
Touche LLP is unable or unwilling to act, to the Washington, D.C. office of
such other international accounting firm agreed between ABB and Purchaser (or,
failing such agreement within seven (7) days of written notice by ABB or
Purchaser to the other party, such other international accounting firm
nominated by Deloitte & Touche LLP (or its designee)) (the "Disputes
Auditors").
3.4.7 Procedures
(a) Before referring a matter to the Disputes Auditors, ABB and
Purchaser shall agree on procedures to be followed by the Disputes Auditors
(including procedures for presentation of evidence). If ABB and Purchaser are
unable to agree upon procedures within seven (7) days of notice to the other
party that procedures need to be agreed pursuant to this Section 3.4.7(a), the
Disputes Auditors shall establish the procedures giving due regard to the
provisions of this Article 3 and the intention of ABB and Purchaser to resolve
disputes as quickly, efficiently and inexpensively as reasonably possible.
(b) ABB and Purchaser shall, as promptly as practicable, submit
evidence in accordance with the procedures agreed upon or established by the
Disputes Auditors, and the Disputes Auditors shall decide the dispute in
accordance therewith as promptly as practicable. At all times pending
resolution of any matter submitted to the Disputes Auditors pursuant to this
Section 3.4, ABB and Purchaser shall, and shall cause their respective
Affiliates to afford to, the Disputes Auditors reasonable access on reasonable
notice during normal business hours, subject to the Disputes Auditors
undertaking to preserve the confidentiality thereof, to all personnel,
properties, books, contracts, records, electronically stored material,
schedules, analyses and working papers of or relating to the Business for the
purposes of deciding the dispute.
3.4.8 Disputes Auditors' Decision
The Disputes Auditors shall act as experts and not as arbitrators,
shall review only the objections to the Audited Closing Financial Statements
or Audited Closing Net Equity Statement as to which ABB and Purchaser are in
dispute as set out in the Objection Notice and shall make their determination
based upon the terms and conditions set forth in this Article 3 and within the
range of (i) the Net Equity stated in the Audited Net Equity Statement; and
(ii) the Net Equity proposed by Purchaser in the Objection Notice (or, if
Purchaser does not propose a Net Equity in the Objection Notice, the lowest
Net Equity that may be reasonably derived from the objections raised by
Purchaser in the Objection Notice). ABB and Purchaser agree that they will
require the Disputes Auditors to render a draft of their decision within
twenty-eight (28) days after referral of the dispute to the Disputes Auditors
for a decision pursuant hereto and their final decision two (2) days later.
ABB or Purchaser may query manifest arithmetic errors in the draft decision of
the Disputes Auditor; provided, however, that the Disputes Auditors shall
respond to any such queries in their sole discretion. The final decision of
the Disputes Auditors shall be final and binding on ABB and Purchaser.
3.4.9 Fees and Expenses
All fees and expenses of the Disputes Auditors shall be borne by ABB
and Purchaser equally.
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3.4.10 Final Closing Financial Statements
(a) The Audited Closing Financial Statements and the Audited Closing
Net Equity Statement shall become final and binding in total on ABB and
Purchaser upon the earliest to occur of:
(i) if no Objection Notice has been given, the expiration of
the period within which Purchaser may notify ABB of any objections
thereto pursuant to Section 3.4.5;
(ii) the written agreement by ABB and Purchaser that such
Audited Closing Financial Statements and Audited Closing Net Equity
Statement, together with any modifications thereto agreed by them,
are final and binding; and
(iii) if a dispute has been submitted to the Disputes Auditors
in accordance with Section 3.4.6, the date on which the Disputes
Auditors have issued their final decision with respect to such
dispute.
(b) The Audited Closing Financial Statements and Audited Closing Net
Equity Statement, as adjusted, where applicable, pursuant to any agreement
between the parties or pursuant to the decision of the Disputes Auditors, when
final and binding on the parties in accordance with clause (a) above, are
herein referred to as the "Final Closing Financial Statements".
Notwithstanding any other provision of this Agreement to the contrary, the
parties' agreement on or determination of the Final Closing Financial
Statements shall not affect (i) each party's rights under Article 9, including
rights relating to any breach of any of the representations and warranties set
forth in Articles 5 and 6 or (ii) the content of such representations and
warranties.
3.4.11 Exclusive Remedy
Notwithstanding any other provision of this Agreement to the
contrary, the procedures set out in this Section 3.4 shall be each party's
exclusive remedy against the other party to this Agreement with respect to any
disputes relating to an adjustment to the International Purchase Price under
this Article 3.
3.5. Adjustments
3.5.1 Closing Adjustments for Audited Amounts
If the U.S. Closing and the Closing occur prior to the date when the
Audited Closing Financial Statements and the Audited Closing Net Equity
Statement become the Final Closing Financial Statements pursuant to Section
3.4.10, then:
(a) if there has been an ABB Distribution:
(i) in excess of the Audited Excess Amount, the aggregate
amount payable by Purchaser at the Closing shall be decreased by the
total of (x) the amount by which the ABB Distribution Amount exceeds
the Audited Excess Amount and (y) the Retained Amount; or
(ii) of less than the Audited Excess Amount, the aggregate
amount payable by Purchaser at the Closing shall be (x) increased by
the difference
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between the Audited Excess Amount and the ABB Distribution Amount
and (y) decreased by the Retained Amount; or
(iii) equal to the Audited Excess Amount, the aggregate amount
payable by Purchaser at the Closing shall be decreased by the
Retained Amount; or
(iv) and there is an Audited Deficiency Amount, the aggregate
amount payable at the Closing shall be decreased by the total of (x)
the Audited Deficiency Amount, (y) the ABB Distribution Amount and
(z) the Retained Amount; or
(v) and there is neither an Audited Excess Amount nor an
Audited Deficiency Amount, the aggregate amount payable by Purchaser
at the Closing shall be decreased by the total of (x) the ABB
Distribution Amount and (y) the Retained Amount; or
(b) if there has not been an ABB Distribution:
(i) and there is an Audited Excess Amount, the aggregate amount
payable by Purchaser at the Closing shall be (x) increased by the
Audited Excess Amount and (y) decreased by the Retained Amount; or
(ii) and there is an Audited Deficiency Amount, the aggregate
amount payable by Purchaser at the Closing shall be decreased by the
total of (x) the Audited Deficiency Amount and (y) the Retained
Amount; or
(iii) and there is neither an Audited Excess Amount nor an
Audited Deficiency Amount, the aggregate amount payable by Purchaser
at the Closing shall be decreased by the Retained Amount.
3.5.2 Closing Adjustments for Final Amounts
If the U.S. Closing and the Closing occur on or after the date when
the Audited Closing Financial Statements and the Audited Closing Net Equity
Statement become the Final Closing Financial Statements pursuant to Section
3.4.10, then at the Closing:
(a) if there is a Final Excess Amount, the aggregate amount payable
by Purchaser at the Closing shall be (i) increased by an amount equal to
the Final Excess Amount and (ii) decreased by the ABB Distribution
Amount, if any; or
(b) if there is a Final Deficiency Amount, the aggregate amount
payable by Purchaser at the Closing shall be decreased by an amount equal
to the total of the Final Deficiency Amount and the ABB Distribution
Amount, if any; or
(c) if there is neither a Final Excess Amount nor a Final Deficiency
Amount, the aggregate amount payable by Purchaser at the Closing shall be
decreased by the ABB Distribution Amount, if any.
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3.5.3 Retained Amount Adjustment
If Section 3.5.1 applies to the Closing, then within three (3)
Business Days after delivery of an Objection Notice, if any, Purchaser shall
pay to ABB, in Swedish kronor, by electronic transfer in immediately available
funds and to the account designated by ABB in writing, any amount by which the
Retained Amount exceeds the Disputed Net Equity (the amount of the Retained
Amount outstanding after such payment, if any, being referred to hereinafter
as the "Outstanding Retained Amount").
3.5.4 Post-Closing Adjustments for Final Amounts
If Section 3.5.1 applies to the Closing, then within three (3)
Business Days after the Audited Closing Financial Statements and the Audited
Closing Net Equity Statement have become the Final Closing Financial
Statements pursuant to Section 3.4.10:
(a) if there is a Final Excess Amount which is:
(i) less than the Audited Excess Amount, (x) ABB shall pay to
Purchaser, in Swedish kronor, by electronic transfer in immediately
available funds and to the account designated by Purchaser in
writing, an amount equal to the amount, if any, by which the
difference between the Audited Excess Amount and the Final Excess
Amount is greater than the Outstanding Retained Amount or (y)
Purchaser shall pay to ABB in Swedish kronor, by electronic transfer
in immediately available funds and to the account designated by ABB
in writing, an amount equal to the amount, if any, by which the
Outstanding Retained Amount exceeds the difference between the
Audited Excess Amount and the Final Excess Amount; or
(ii) greater than the Audited Excess Amount, Purchaser shall
pay to ABB, in Swedish kronor, by electronic transfer in immediately
available funds and to the account designated by ABB in writing, an
amount equal to the total of (x) the difference between the Final
Excess Amount and the Audited Excess Amount and (y) the Outstanding
Retained Amount; or
(iii) equal to the Audited Excess Amount, Purchaser shall pay
to ABB the Outstanding Retained Amount in Swedish kronor in
immediately available funds to the account designated by ABB in
writing; or
(b) if there is a Final Excess Amount and there was an Audited
Deficiency Amount, Purchaser shall pay to ABB, in Swedish kronor, by
electronic transfer in immediately available funds and to the account
designated by ABB in writing, an amount equal to the total of the Audited
Deficiency Amount, the Final Excess Amount and the Outstanding Retained
Amount; or
(c) if there is a Final Excess Amount and there was neither an
Audited Excess Amount nor an Audited Deficiency Amount, then Purchaser
shall pay to ABB, in Swedish kronor, by electronic transfer in
immediately available funds and to the account designated by ABB in
writing, an amount equal to the total of (i) the Final Excess Amount and
(ii) the Outstanding Retained Amount; or
(d) if there is a Final Deficiency Amount which is:
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(i) greater than the Audited Deficiency Amount, (x) ABB shall
pay to Purchaser, in Swedish kronor, by electronic transfer in
immediately available funds and to the account designated by
Purchaser in writing, an amount equal to the amount, if any, by
which the difference between the Final Deficiency Amount and the
Audited Deficiency Amount is greater than the Outstanding Retained
Amount or (y) Purchaser shall pay to ABB in Swedish kronor, by
electronic transfer in immediately available funds and to the
account designated by ABB in writing, an amount equal to the amount,
if any, by which the Outstanding Retained Amount exceeds the
difference between the Audited Deficiency Amount and the Final
Deficiency Amount; or
(ii) less than the Audited Deficiency Amount, Purchaser shall
pay to ABB in Swedish kronor, by electronic transfer in immediately
available funds and to the account designated by Purchaser in
writing, an amount equal to the total of (x) the difference between
the Final Deficiency Amount and the Audited Deficiency Amount and
(y) the Outstanding Retained Amount; or
(iii) equal to Audited Deficiency Amount, Purchaser shall pay
to ABB, in Swedish kronor, by electronic transfer in immediately
available funds and to the account designated by ABB in writing, the
Outstanding Retained Amount; or
(e) if there is a Final Deficiency Amount and there was an Audited
Excess Amount, then:
(i) ABB shall pay to Purchaser, in Swedish kronor, by
electronic transfer in immediately available funds and to the
account designated by Purchaser in writing, the amount, if any, by
which (i) the total of the Final Deficiency Amount and the Audited
Excess Amount is greater than (ii) the Outstanding Retained Amount;
or
(ii) Purchaser shall pay to ABB, in Swedish kronor, by
electronic transfer in immediately available funds and to the
account designated by ABB in writing, the amount, if any, by which
(i) the Outstanding Retained Amount is greater than (ii) the total
of the Final Deficiency Amount and the Audited Excess Amount; or
(f) if there is a Final Deficiency Amount and there was neither an
Audited Excess Amount nor an Audited Deficiency Amount, then:
(i) Purchaser shall pay to ABB, in Swedish kronor, by
electronic transfer in immediately available funds and to the
account designated by ABB in writing, an amount equal to the amount,
if any, by which the Outstanding Retained Amount exceeds the Final
Deficiency Amount; or
(ii) ABB shall pay to Purchaser, in Swedish kronor, by
electronic transfer in immediately available funds and to the
account designated by Purchaser in writing, the amount, if any, by
which the Final Deficiency Amount exceeds the Outstanding Retained
Amount; or
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(g) if there is neither a Final Excess Amount nor a Final Deficiency
Amount and there was an Audited Excess Amount:
(i) less than the Outstanding Retained Amount, Purchaser shall
pay to ABB, in Swedish kronor, by electronic transfer in immediately
available funds and to the account designated by ABB in writing, an
amount equal to the difference between the Outstanding Retained
Amount and the Audited Excess Amount; or
(ii) greater than the Outstanding Retained Amount, ABB shall
pay to Purchaser, in Swedish kronor, by electronic transfer in
immediately available funds and to the account designated by
Purchaser in writing, an amount equal to the difference between the
Outstanding Retained Amount and the Audited Excess Amount; or
(h) if there is neither a Final Excess Amount nor a Final Deficiency
Amount and there was an Audited Deficiency Amount, then Purchaser shall
pay to ABB, in Swedish kronor, by electronic transfer in immediately
available funds and to the account designated by ABB in writing, an
amount equal to the total of the Outstanding Retained Amount and the
Audited Deficiency Amount; or
(i) if there is neither a Final Excess Amount nor a Final Deficiency
Amount and there was neither an Audited Excess Amount nor an Audited
Deficiency Amount, Purchaser shall pay to ABB, in Swedish kronor, by
electronic transfer in immediately available funds and to the account
designated by ABB in writing, the Outstanding Retained Amount.
3.5.5 Interest
(a) The aggregate amount payable by Purchaser at the Closing shall
be increased by the amount of simple interest accrued on Three Billion Two
Hundred and Twenty Million Swedish kronor (SEK 3,220,000,000) at an annual
rate of three percent (3%), calculated on the basis of the actual number of
days elapsed over 365, from January 1, 2004 to the Closing Date, compounded
annually.
(b) Any amount payable by Purchaser pursuant to Section 3.5.3 or
3.5.4 shall be paid with simple interest thereon at an annual rate of three
percent (3%), calculated on the basis of the actual number of days elapsed
over 365, from the Closing Date to the date of actual payment, compounded
annually. Any amount payable by ABB pursuant to Section 3.5.4 shall be paid
with simple interest thereon at an annual rate of three percent (3%),
calculated on the basis of the actual number of days elapsed over 365, from
the Closing Date to the date of actual payment, compounded annually.
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ARTICLE 4
CLOSING
4.1. Date and Place
4.1.1 U.S. Closing
The U.S. Closing shall take place at the offices of White Mountains
Insurance Group, Ltd. at ▇▇▇▇▇▇▇▇ House, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇,
▇▇▇▇▇▇▇ on the Closing Date immediately prior to the Closing.
4.1.2 Closing
The Closing shall take place at the offices of White Mountains
Insurance Group, Ltd. at ▇▇▇▇▇▇▇▇ House, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ ▇▇,
▇▇▇▇▇▇▇, at 10:00 a.m. on a date agreed by ABB and Purchaser that is not
earlier than two (2) Business Days and not later than ten (10) Business Days
following the satisfaction or waiver of the conditions set forth in Article 8
(other than those conditions that by their terms are to be satisfied or waived
at or immediately prior to the Closing); provided, however, that if all the
conditions set forth in Article 8 shall not have been satisfied or waived on
such a date, then the Closing shall take place on the first Business Day on
which all such conditions shall have been satisfied or waived.
4.2. Deliveries At the U.S.closing
4.2.1 Deliveries by Abb
At the U.S. Closing, ABB shall cause Sirius International to deliver
to U.S. Purchaser (duly executed where appropriate) all certificates or other
instruments representing the U.S. Shares, in each case duly signed and/or
endorsed and/or accompanied by other documents required under applicable Law
in order to transfer title to such U.S. Shares to U.S. Purchaser free and
clear of all Encumbrances.
4.2.2 Deliveries by Purchaser
At the U.S. Closing, Purchaser shall cause U.S. Purchaser to deliver
to Sirius International, an amount equal to the U.S. Purchase Price, in U.S.
Dollars, by electronic transfer in immediately available funds and to the
account of Sirius International designated by ABB in writing at least three
(3) Business Days prior to the U.S. Closing (such payment to be evidenced by
confirmation to Sirius International from the relevant bank that such funds
have been credited to such account).
4.3. Deliveries At the Closing
4.3.1 Deliveries by Abb
At the Closing, ABB shall (or shall cause its Affiliates to) deliver
to Purchaser (duly executed where appropriate):
(a) all certificates or other instruments representing the
International Shares, in each case duly signed and/or endorsed and/or
accompanied by other
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documents required under applicable Law in order to transfer title to
such International Shares to Purchaser free and clear of all
Encumbrances;
(b) unless otherwise requested by Purchaser at least seven (7)
Business Days prior to the Closing, resignations, effective as of the
Closing, of (i) each member and deputy member of the board of directors
(or other comparable managing body) of each Acquired Company (other than
any employee representative and any representative appointed by the
Swedish Financial Supervisory Authority or any insurance or regulatory
authority in any other jurisdiction) and (ii) the auditors of each
Acquired Company;
(c) a certificate signed by an authorized officer of ABB, dated as
of the Closing Date, to the effect that the conditions set out in
Sections 8.2(a), (b) and (f) are satisfied, provided that any
certifications therein with respect to Measurement Date Representations
and Warranties shall only be made for the purpose of Section 8.2(a) and
not Article 9;
(d) a good standing certificate for Sirius America and certified
commercial register extracts for Sirius Holding, Sirius International and
Sirius Ruck, in each case from the appropriate government official and
dated as of a date not earlier than ten (10) Business Days prior to the
Closing Date;
(e) a clean, irrevocable letter of credit or bank guaranty, issued
in favor of Purchaser by a bank or financial institution reasonably
satisfactory to Purchaser in the amount of $40,000,000, substantially in
the form set out in Annex 1; and
(f) a transitional services agreement duly executed by ABB,
substantially in the form attached as Annex 5.
4.3.2 Deliveries by Purchaser
At the Closing, Purchaser shall (or shall cause its Affiliates to)
deliver to ABB (duly executed where appropriate):
(a) Three Billion Two Hundred and Twenty Million Swedish kronor,
(SEK 3,220,000,000), subject to adjustment pursuant to Section 3.5, plus
interest pursuant to Section 3.5.5(a), by electronic transfer in
immediately available funds and to the account designated by ABB in
writing at least three (3) Business Days prior to the Closing (such
payment to be evidenced by confirmation to ABB from the relevant bank
that such funds have been credited to such account);
(b) a certificate signed by an authorized officer of Purchaser,
dated as of the Closing Date, to the effect that the conditions set out
in Sections 8.3(a) and (b) are satisfied; and
(c) a transitional services agreement duly executed by Purchaser
substantially in the form set out in Annex 5.
4.4. Escrow
If Section 3.5.1 applies to the Closing, on the Closing Date,
Purchaser and ABB shall enter into an escrow agreement with Citibank N.A., or
such other nationally
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recognized financial institution mutually acceptable to Purchaser and ABB (the
"Escrow Agent"), in substantially the form attached as Annex 2 (the "Escrow
Agreement"), and, upon consummation of the Closing, Purchaser shall deposit,
or cause to be deposited, with the Escrow Agent pursuant to the Escrow
Agreement an amount equal to the Retained Amount.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ABB
ABB represents and warrants to Purchaser, as of the date of this
Agreement and as of the Closing Date, as follows; provided, however, that,
solely with respect to Purchaser's indemnification rights under Article 9, the
Measurement Date Representations and Warranties instead shall be deemed to be
made only as of the date of this Agreement and as of the Measurement Date.
5.1. Organization
Each of ABB and each Acquired Company is a company duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization (except, in the case of good standing, for entities organized
under the laws of any jurisdiction that does not recognize such concept) and
has all requisite corporate or company power and authority to own its
properties and assets and to carry on its business as presently being
conducted. ABB has delivered to Purchaser complete and correct copies of (i)
the organizational documents of each Acquired Company, in each case as amended
through the date of this Agreement and (ii) the share transfer books and
minute books from January 1, 1999 to June 30, 2003, and if applicable,
certificates of good standing for each Acquired Company.
5.2. Authority
5.2.1 Corporate Power and Authority
ABB has all requisite corporate power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by ABB of this Agreement, the
consummation by ABB of the transactions contemplated hereby and the
performance by ABB of the provisions of this Agreement have been duly
authorized by all necessary corporate action (including actions of the board
of directors and, if required, the shareholders) on the part of ABB. This
Agreement has been duly executed and delivered by ABB and, assuming the due
authorization, execution and delivery of this Agreement by Purchaser, this
Agreement constitutes a legal, valid and binding obligation of ABB enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors
rights generally from time to time in effect and, where applicable, to general
principles of equity.
5.2.2 No Conflicts
The execution and delivery by ABB of this Agreement, the
consummation by ABB of the transactions contemplated hereby and the
performance by ABB of the provisions of this Agreement do not conflict with,
or result in any violation or breach of, or default (with or without notice or
lapse of time or both) under, or give rise to a right of, or result in,
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termination, cancellation or acceleration of any obligation or to a loss of a
material benefit under, or result in the creation of any Encumbrance on any of
the properties or assets of the Acquired Group under, or give rise to any
increased, additional or accelerated rights or entitlements under, any
provision of: (i) the organizational documents of ABB or any Acquired Company;
or (ii) subject to the governmental filings and other matters referred to in
Section 5.2.3 below, any (x) Law or (y) order, writ, injunction, decree, or
judgment by or legally binding agreement or stipulation with any governmental
authority (an "Order"), in each case, applicable to ABB or any Acquired
Company or any of their respective properties or assets, except, in the case
of clause (ii), for any such conflict, violation, breach or default, which,
individually or in the aggregate, has not had and is not reasonably likely to
result in a Material Adverse Effect.
5.2.3 Governmental Authorization
No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any governmental authority is
required to be obtained or made by or with respect to ABB or any of its
Affiliates in connection with the execution and delivery by ABB of this
Agreement, the consummation by ABB of the transactions contemplated hereby or
the performance by ABB of the provisions of this Agreement, except for: (i)
approvals under applicable competition Law, including the ▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇
"▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇" (act against restraints of
competition) and Law No. 8884/1994 and Resolution ▇▇. ▇▇/▇▇ (▇▇ ▇▇▇▇▇▇ ▇▇▇▇)
▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Brazil; (ii) the approval of the Swedish
Financial Supervisory Authority, the Malaysian insurance regulator, the
Bermuda insurance regulator, the Delaware Insurance Department, the New York
Insurance Department and the insurance department of any State in the United
States where any Acquired Company is deemed commercially domiciled under such
State's Law; and (iii) those the failure of which to obtain or make,
individually or in the aggregate, have not had and are not reasonably likely
to result in a Material Adverse Effect.
5.3. Capital Stock
5.3.1 Capital Stock
The registered share capital of Sirius Holding amounts to SEK
100,000 and consists of 1,000 shares issued at a par value per share of SEK
100. The maximum share capital permitted by the current articles of
association of Sirius Holding is SEK 400,000. The registered share capital of
Sirius International amounts to SEK 800,000,000 and consists of 8,000,000
shares issued at a par value per share of SEK 100. The maximum share capital
permitted by the current articles of association of Sirius International is
SEK 1,000,000,000. The issued and outstanding capital stock of Sirius Ruck
consists of 2 common shares. The authorized capital stock of Sirius America
consists of 50,000 ordinary shares, of which 42,000 are issued and
outstanding. The issued and outstanding capital stock of Sirius Belgium
consists of 700,000 common shares. The authorized, issued and outstanding
capital stock of Scandinavian Re consists of 50,000,000 common shares and
1,000 preference shares. All outstanding shares of capital stock of each
Acquired Company have been duly authorized and validly issued and are fully
paid and non-assessable and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of ABB, any Acquired Company or
any of their Affiliates having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
holders of the capital stock of any Acquired Company may vote. Except as set
forth above, there are no securities, options, warrants, calls, rights or
other Contracts of any kind obligating any Acquired Company, or
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obligating ABB or any of its Affiliates to cause any Acquired Company, to
issue, deliver or sell, or cause to be issued, delivered or sold, shares of
capital stock or other securities of any Acquired Company or obligating any
Acquired Company, or obligating ABB or any of its Affiliates to cause any
Acquired Company, to issue, grant, extend or enter into any such security,
option, warrant, call, right or other Contract. There are no outstanding
contractual or other legally binding obligations, or obligations intended to
be legally binding, of any Acquired Company to repurchase, redeem or otherwise
acquire any shares of capital stock or other securities of any Acquired
Company. Except as set forth in Section 5.3.1 of the Disclosure Schedule, ABB
owns the International Shares free and clear of any and all Encumbrances and
Sirius Holding owns 100% of the issued and outstanding shares of Sirius
International and Sirius Ruck, in each case free and clear of any and all
Encumbrances. All of the issued and outstanding shares of capital stock of
Sirius America, Sirius Belgium (in liquidation) and Scandinavian Re are owned
by Sirius International, in each case free and clear of any and all
Encumbrances. For the avoidance of doubt, any right over such capital stock
created in favor of Purchaser or its Affiliates by the agreement to sell the
International Shares and the U.S. Shares pursuant to terms of this Agreement
shall not be deemed an Encumbrance.
5.3.2 CAPITAL MAINTENANCE
The capital contributions for all of the capital stock of Sirius
Ruck have not been repaid, in part or in full, in violation of any
applicable capital maintenance Laws and other similar Laws.
5.4. SUBSIDIARIES AND BRANCH OFFICES
Section 5.4 of the Disclosure Schedule sets forth: (i) the
Subsidiaries (other than Sirius International, Sirius Ruck, Sirius America,
Sirius Belgium and Scandinavian Re) of each Acquired Company as of December
31, 2002 and the date of this Agreement; and (ii) the location of each branch
office of each Acquired Company as of the date of this Agreement.
5.5. Financial Information
5.5.1 Financial Statements
The Financial Statements have been prepared from the books and
records of the Acquired Group (other than Sirius Holding and Sirius Ruck)
and have been prepared in accordance with U.S. GAAP. The Financial Statements
fairly present in all material respects the consolidated financial condition
of the Acquired Group (excluding Sirius Holding and Sirius Ruck) as of the
date thereof and the results of operations of the Acquired Group (excluding
Sirius Holding and Sirius Ruck) for the period then ended, in each case in
accordance with U.S. GAAP. Subject to Section 9.13, nothing in this
representation and warranty shall be deemed to constitute a warranty as to the
adequacy of any Reserves.
5.5.2 Sirius Holding and Sirius Ruck
Sirius Holding was duly registered on November 26, 2002 and, since
that date, has not engaged in any business or activity other than the
ownership of shares of capital stock of Sirius International and Sirius
Ruck, activities incidental thereto and entry into the Facility Agreement
and the Pledge Agreement. Sirius Holding has no properties or assets other
than
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the capital stock of Sirius International and Sirius Ruck. As of the date of
this Agreement, except as set forth in Section 5.5.2 of the Disclosure
Schedule or in this Section 5.5.2, Sirius Holding has no debts, liabilities,
obligations or commitments of any kind whatsoever, whether accrued, fixed or
unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or unsecured,
contingent, absolute, known or unknown, determined, determinable or otherwise.
Except as set forth in Section 5.5.2 of the Disclosure Schedule, Sirius Ruck
has no debts, liabilities, obligations or commitments of any kind whatsoever,
whether accrued, fixed or unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or
unliquidated, secured or unsecured, contingent, absolute, known or unknown,
determined, determinable or otherwise, as of December 31, 2002 that would be
required to be reflected on a balance sheet (or in the notes thereto) prepared
in accordance with generally accepted accounting principles in Germany.
5.5.3 Undisclosed Liabilities
There are no debts, liabilities, obligations or commitments of the
Acquired Group of any kind whatsoever, whether accrued, fixed or unfixed,
▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or unsecured,
contingent, absolute, known or unknown, determined, determinable or otherwise,
that would be required, as of the date(s) this warranty is made, to be
reflected on a consolidated balance sheet (or in the notes thereto) prepared
in accordance with U.S. GAAP, other than liabilities or obligations:
(a) reflected or reserved against on the audited balance sheet
(or in the notes thereto) included in the Financial Statements or
the unaudited balance sheet (or in the notes thereto) included in
Section 5.5.2(2) of the Disclosure Schedule;
(b) incurred since December 31, 2002 in the ordinary course of
business and not otherwise in violation of this Agreement;
(c) for Taxes for periods in respect of which ABB is obliged to
indemnify Purchaser under Section 9.6; or
(d) reasonably evident from any documents or matters disclosed
in the Disclosure Schedule, or which are otherwise liabilities or
obligations to the extent arising from items specifically addressed
by any other warranties in this Article 5 but are not required to be
disclosed pursuant to such warranties (whether because they do not
rise to the materiality threshold in such warranties or fall outside
any date limitations in such warranties or are not required to be
disclosed due to knowledge limitations in such warranties or
otherwise).
Subject to Section 9.13, nothing in this representation and warranty shall be
deemed to constitute a guarantee of the adequacy of the Reserves.
5.5.4 Investments
Except as set forth in Section 5.5.4(1) of the Disclosure Schedule,
the Acquired Group has good and marketable title to all of the investments
constituting the Investment Portfolio, free and clear of all Encumbrances
other than Permitted Encumbrances. The execution and delivery by ABB of this
Agreement, the consummation by ABB of the transactions contemplated hereby and
the performance by ABB of the provisions of this Agreement do not, and will
not, result in the creation of any Encumbrance, other than a Permitted
Encumbrance, on any of the investments constituting the Investment Portfolio.
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Section 5.5.4(2) of the Disclosure Schedule sets forth a true and correct list
of all investments constituting the Investment Portfolio as of October 31,
2003, the issuer of such investments, the nominal amount owned of such
investments and the market value with respect to public investments (or
estimated market value with respect to private investments, determined on a
basis consistent with the past practice of the Acquired Group since January 1,
2002 of the Acquired Group) of such investments as of such date. Except as set
forth in Section 5.5.4(3) of the Disclosure Schedule, as of the date of this
Agreement, none of the investments constituting the Investment Portfolio which
are directly held by an Acquired Company is in default in the payment of
principal or interest or dividends. As of the date of this Agreement, all such
investments comply with the Investment Guidelines.
5.5.5 Affiliate Contracts
Section 5.5.5 of the Disclosure Schedule sets forth a true and
correct list, as of the date of this Agreement, of all Contracts representing
future liabilities or receivables in excess of SEK 500,000 (or its foreign
currency equivalent) (other than: (i) Assumed Reinsurance Agreements or Ceded
Reinsurance Agreements with an effective date commencing prior to January 1,
2001 or Direct Insurance Agreements with an effective date commencing prior to
January 1, 2002 (but not any such Contracts between members of the Acquired
Group, which shall be disclosed); (ii) Disclosed Insurance Agreements (but not
any such Disclosed Insurance Agreements between members of the Acquired Group,
which shall be disclosed); (iii) Insurance Policies; and (iv) the ABB
Instruments), between any Acquired Company, on the one hand, and ABB or any of
its Affiliates, on the other hand (collectively, the "Affiliate Contracts").
All of the Affiliate Contracts are valid, binding and enforceable against each
member of the ABB Group party thereto in accordance with their terms and
conditions, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors rights generally from time to
time in effect and, where applicable, to general principles of equity.
5.5.6 Affiliate Instruments
There are no commercial paper, notes, debentures, securities,
options, warrants, calls, puts, rights and other similar financial
instruments, issued by ABB or any of its Affiliates ("Affiliate Instruments")
and held or owned by an Acquired Company as of the date of this Agreement.
5.5.7 Subsequent Eventss
Except as set forth in Section 5.5.7 of the Disclosure Schedule,
from December 31, 2002 to the date of this Agreement, the Acquired Group has
conducted the Business in all material respects in the ordinary course of the
Acquired Group (other than as a result of ABB's agreement in Section 7.2.4(dd)
not to enter into any Contracts in respect of the Financial Risks Business or
the reaction of third parties, whether prior to or after the date of this
Agreement, to the Acquired Group's decision not to enter into any such
Contracts). Except as set forth in Section 5.5.7 of the Disclosure Schedule,
from December 31, 2002 to the date of this Agreement, there has not occurred
any circumstance, change in, or effect on the Acquired Group, taken as a
whole, that, individually or the aggregate, has had or is reasonably likely to
result in a Material Adverse Effect, other than changes or effects resulting
from (i) changes in general economic conditions or financial market conditions
(including currency rate fluctuations and interest rate changes), (ii) any
decline in the value of the Investment Portfolio, or (iii) catastrophe events
with an impact in the ordinary course of the Business. Without limiting the
generality of the first sentence, Section 5.5.7 of the
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Disclosure Schedule sets forth a description of each action taken by any
Acquired Company on or after January 1, 2003 and on or prior to the date of
this Agreement that would have been restricted pursuant to Section 7.2.4(d),
(f), (g), (i), (j)(iii), (w) or (z) if this Agreement were in effect during
such period.
5.5.8 Insurance Reserves
(a) None of the Reserves reflected on the audited balance sheet
included in the Financial Statements have been discounted. Subject to Section
9.13, nothing in this representation and warranty shall be deemed to
constitute a warranty as to the adequacy of any Reserves.
(b) ABB has delivered to Purchaser true and complete copies of any
and all actuarial reports, actuarial certificates, loss and loss adjustment
expense reserve reports and other reports prepared by any third party
actuarial consultant prior to the date of this Agreement on behalf of or made
available to ABB or any of its Affiliates, including any Acquired Company, in
each case relating to the adequacy or determination of the Reserves as of any
date after January 1, 2002.
5.5.9 Scandinavian Re Affiliate Commitments
Section 5.5.9 of the Disclosure Schedule sets forth (i) a true and
correct list of each Scandinavian Re Affiliate Commitment, (ii) details of the
liability as of November 30, 2003, of each Acquired Company under each
Scandinavian Re Affiliate Commitment, (iii) the amount of the maximum potential
liability of each Acquired Company under each Scandinavian Re Affiliate
Commitment and (iv) details of any Encumbrances on the properties or assets of
any Acquired Company relating to each Scandinavian Re Affiliate Commitment.
5.6. Compliance With Law
5.6.1 Applicable Law
Each Acquired Company and its respective properties, assets,
operations and businesses have been and are in compliance with: (i) the terms
of such Acquired Company's organizational documents; (ii) in all material
respects, all Laws applicable to such Acquired Company or its operations or
business, or by which any of its properties or assets are bound; (iii) all
applicable orders and finally binding writs, judgments, injunctions, awards
and decrees of any court or other governmental authority or any arbitrator;
and (iv) such Acquired Company's Permits, except, in the case of clauses (iii)
and (iv), where the failure to comply, individually or in the aggregate, has
not had, and is not reasonably likely to result in, a Material Adverse Effect.
5.6.2 Permits
Section 5.6.2(1) of the Disclosure Schedule sets forth all
governmental licenses, permits, approvals, determinations of eligibility and
authorizations ("Permits") held by the Acquired Group as of the date of this
Agreement, which are all the Permits required in connection with the conduct
of the Business as currently conducted by the Acquired Group and are, in all
material respects, valid and in full force and effect. For each Acquired
Company, Section 5.6.2(2) of the Disclosure Schedule lists all jurisdictions
in which such
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Acquired Company is licensed and authorized to write, and writes, insurance or
reinsurance as of the date of this Agreement. Between January 1, 2001 and the
date of this Agreement, no insurance regulator in any jurisdiction (other than
the jurisdiction in which it is incorporated) has notified any Acquired
Company, in writing, that such Acquired Company is commercially domiciled in
such jurisdiction. Neither ABB nor any of its Affiliates has received, between
January 1, 2001 and the date of this Agreement, any written notice from any
governmental authority that it has engaged in any activity which will cause
non-renewal, revocation or suspension of any Permit of the Acquired Group. All
material registrations and filings between January 1, 2001 and the date of
this Agreement to insurance regulatory authorities in relation to Permits by
or on behalf of each Acquired Company have complied in all material respects
with applicable Law in effect when filed, and no material deficiencies have
been asserted in writing between January 1, 2001 and the date of this
Agreement by any such regulatory authority with respect to such registrations
or filings that have not been satisfied.
5.6.3 Notice of Violations
Except as set forth in Section 5.6.3 of the Disclosure Schedule,
between January 1, 2001 and the date of this Agreement, neither ABB nor any of
its Affiliates has received any written notice from any governmental authority
alleging any violation in any material respect of any applicable Law by any
Acquired Company which remains unresolved.
5.6.4 Judgments, Decrees and Orders
None of the Acquired Companies nor, to the knowledge of ABB, any of
the directors of the Acquired Companies or Senior Executives (in their
capacity as such) is a party to or subject to any judgment, decree, order,
award, or injunction of any governmental authority or arbitrator that would
restrict in any material respect the future conduct of the Business.
5.6.5 Areas Covered by Other Provisions
This Section 5.6 does not relate to labor and employment matters (to
which Section 5.11 is applicable), employee benefits matters (to which Section
5.12 is applicable), Tax matters (to which Section 5.13 is applicable),
litigation matters (to which Section 5.14 is applicable), or environmental
matters (to which Section 5.15 is applicable).
5.7. Personal Property
Each Acquired Company has valid title to, or subsisting leasehold
interests in or licenses to, all material tangible personal property used or
held for use by it. Except as set forth in Section 5.7(1) of the Disclosure
Schedule, all such material personal property which is owned by such Acquired
Company is held by it free and clear of any and all Encumbrances other than
Permitted Encumbrances. With respect to all leases for material personal
property to which an Acquired Company is a party: (i) all such leases are
valid and subsisting and in full force and effect, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors rights generally from time to time in effect and, where applicable,
to general principles of equity; and (ii) neither ABB nor any of its
Affiliates has received between January 1, 2001 and the date of this Agreement
any written notice that it is, nor, to the knowledge of ABB, is any other
party, in material breach of or in material default under any such lease.
Except as set forth in Section 5.7(2) of the Disclosure
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Schedule, there is no tangible personal property which is owned, leased or
licensed by ABB or any of its Affiliates (other than an Acquired Company) and
used by the Acquired Group and is necessary for the operation of the Business
as operated by the Acquired Group as at the date of this Agreement that will
no longer be permitted to be used by the Acquired Group following the
consummation of the transactions contemplated hereby on substantially the same
terms as applicable to the Acquired Group immediately prior to the Closing.
5.8. Real Property
5.8.1 List of Real Property
Section 5.8.1 of the Disclosure Schedule sets forth a description of
all real property owned, leased or used by each Acquired Company as of the
date of this Agreement, describing: (i) any Acquired Company holding interests
in such real property; (ii) the street address of such real property; (iii)
whether such real property is owned or leased; (iv) any interests of ABB or
any of its Affiliates (other than the Acquired Group) in such real property;
and (v) any Encumbrances (other than Permitted Encumbrances and the
Encumbrances set forth in clauses (ii) and (iii) of Section 5.8.2) on such
Acquired Company's interest in such real property. Except as set forth in
Section 5.8.1 of the Disclosure Schedule, no portion of any real property
owned, leased or used by the Acquired Group is leased by the relevant member
of the Acquired Group to any third party.
5.8.2 Owned Real Property
The Acquired Group has valid title to all real property owned by it
("Owned Real Property"), in each case free and clear of any and all
Encumbrances other than: (i) Permitted Encumbrances; (ii) easements,
covenants, rights-of-way and similar restrictions that do not materially
affect the (x) use or (y) book value of such Owned Real Property if such
restrictions existed at the time it was acquired or the market value of such
Owned Real Property if such restrictions arose after it was acquired by the
Acquired Group; and (iii) zoning and building restrictions.
5.8.3 Leased Real Property
With respect to all real property leased by the Acquired Group and
all real property owned or leased by ABB or any of its Affiliates and used by
the Acquired Group (collectively, "Leased Real Property"), ABB has delivered
to Purchaser true and complete copies of all related leases, including all
amendments and modifications thereto. With respect to each Leased Real
Property: (i) each lease is valid and subsisting and in full force and effect,
subject to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors rights generally from time to time in effect
and where applicable to general principles of equity; and (ii) neither ABB nor
any of its Affiliates has received between January 1, 2001 and the date of
this Agreement any written notice that it is, nor, to the knowledge of ABB is
any other party thereto, in material breach of or in material default under
any lease relating to such Leased Real Property.
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5.9. Intellectual Property
5.9.1 Jointly Used Intellectual Property
Except as set forth in Section 5.9.1 of the Disclosure Schedule,
there is no Intellectual Property owned or licensed by ABB or any of its
Affiliates (other than an Acquired Company) which is used by the Acquired
Group and is necessary for the operation of the Business as operated by the
Acquired Group as at the date of this Agreement that will no longer be
permitted to be used by the Acquired Group following the consummation of the
transactions contemplated hereby on substantially the same terms as applicable
to the Acquired Group immediately prior to the Closing. There is no other
material Intellectual Property (other than shrink-wrap, off-the-shelf or other
software readily available commercially) which is used by the Acquired Group
and is necessary for the operation of the Business as operated by the Acquired
Group as at the date of this Agreement that will no longer be permitted to be
used by the Acquired Group following the consummation of the transactions
contemplated hereby on substantially the same terms as applicable to the
Acquired Group immediately prior to the Closing.
5.9.2 Registered Intellectual Property
(a) Section 5.9.2(1) of the Disclosure Schedule contains a true and
correct list of all patents, patent applications, registered trademarks,
trademark applications, registered designs and applications for registered
designs and Internet domain names of each Acquired Company as of the date of
this Agreement (collectively, "Registered Intellectual Property").
(b) The Registered Intellectual Property is owned by the Acquired
Group, free and clear of any and all Encumbrances other than Permitted
Encumbrances.
(c) All registration, renewal and other maintenance fees in respect
of the Registered Intellectual Property due and payable have been paid in
full.
(d) Except as set forth in Section 5.9.2(2) of the Disclosure
Schedule: (i) none of ABB and its Affiliates has received written notice of
any legal proceedings instituted or threatened in writing against an Acquired
Company in relation to any Registered Intellectual Property which is pending
as of the date of this Agreement; and (ii) to the knowledge of ABB, the use by
any Acquired Company of the Registered Intellectual Property does not infringe
the Intellectual Property of any third Person.
(e) To the knowledge of ABB, all Registered Intellectual Property is
valid and enforceable, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors rights generally
from time to time in effect and, where applicable, to general principles of
equity and is not being infringed or opposed by any Person.
(f) No Acquired Company has granted to any Person, including ABB or
any of its Affiliates (other than an Acquired Company), any license to use any
Registered Intellectual Property.
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5.9.3 Other Intellectual Property.
(a) All Intellectual Property used in the Business other than the
Registered Intellectual Property ("Other Intellectual Property") is owned by,
or licensed to or, to the knowledge of ABB, used under the authority of the
owner by, an Acquired Company.
(b) (i) Neither ABB nor any of its Affiliates has received written
notice of any legal proceedings instituted against an Acquired Company in
relation to any Other Intellectual Property which is pending as of the date of
this Agreement; and (ii) to the knowledge of ABB, the use by any Acquired
Company of any Other Intellectual Property does not infringe in any material
respect the Intellectual Property of any third Person.
(c) No Acquired Company has granted to any Person, including ABB or
any of its Affiliates (other than an Acquired Company), any express written
license to use any Other Intellectual Property.
5.9.4 Licensed Intellectual Property
(a) Section 5.9.4 of the Disclosure Schedule contains a true and
correct list as of the date of this Agreement of all material express licenses
from any Person under which Other Intellectual Property is used in the
Business by any Acquired Company as of the date of this Agreement (other than
shrink wrap or off-the-shelf software freely available commercially) (the
"Licensed Intellectual Property") and, except to the extent indicated in such
Section 5.9.4 of the Disclosure Schedule, ABB has delivered to Purchaser true
and complete copies of all related licenses, including all amendments and
modifications thereto.
(b) No notice of a material default has been sent or received,
between January 1, 2001 and the date of this Agreement, by ABB or any of its
Affiliates under any such license which remains uncured as of the date of this
Agreement.
5.10. Contracts
5.10.1 Direct Insurance and Reinsurance Agreements
(a) Set forth in Section 5.10.1(1) of the Disclosure Schedule is a
list, true and correct in all material respects, as of November 30, 2003, of
each Direct Insurance Agreement with an effective date commencing on or after
January 1, 2002 pursuant to which any Acquired Company (other than
Scandinavian Re) has continuing obligations or rights as of the date of this
Agreement, including a description of the name of either the insured (if such
information is available), or the agent, the name of the broker, type of
contract, inception date, estimated premium and limits.
(b) Set forth in Section 5.10.1(2) of the Disclosure Schedule is a
true and correct list, as of November 30, 2003, of each Assumed Reinsurance
Agreement with an effective date commencing on or after January 1, 2001
pursuant to which any Acquired Company (other than Scandinavian Re) has
continuing obligations or rights as of the date of this Agreement, including a
description of the name of the ceding company, the name of the broker, type of
contract, inception date, estimated premium and limits.
(c) Set forth in Section 5.10.1(3) of the Disclosure Schedule is a
true and correct list, as of November 30, 2003, of each Ceded Reinsurance
Agreement with an effective date commencing on or after January 1, 2001
pursuant to which any Acquired
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Company (other than Scandinavian Re) has continuing obligations or rights as
of the date of this Agreement, including a description of the name of the
reinsurers and retrocessionaires, type of contract, inception date, estimated
premium and limits.
(d) Set forth in Section 5.10.1(4) of the Disclosure Schedule is a
true and correct list, as of November 30, 2003, of (i) each reinsurance pool
to which an Acquired Company has assumed reinsurance risks currently in force
and (ii) all assigned pools in which an Acquired Company is participating
arising from the requirements of insurance Laws (collectively, "Reinsurance
Pools").
(e) Set forth in Section 5.10.1(5) of the Disclosure Schedule is a
true and correct list of (i) each Direct Insurance Agreement and each Assumed
Reinsurance Agreement to which Scandinavian Re is or has ever been a party and
(ii) as of November 30, 2003, each Ceded Reinsurance Agreement to which
Scandinavian Re is a party, including, in the case of sub-clauses (i) and (ii)
above, a description of the cedant or broker, the type of contract, inception
date, estimated premium, limits and whether any Acquired Company has any
continuing rights or obligations thereunder (in which case, such contract has
been described as "In force" in Section 5.10.1(5) of the Disclosure Schedule)
(collectively, the "Scan Re Agreements").
(f) Except as set forth in Section 5.10.1(6) of the Disclosure
Schedule, as of the date of this Agreement, (i) to the knowledge of ABB or any
Acquired Company, no reinsurer or retrocessionaire of an Acquired Company is
the subject of a rehabilitation, liquidation, conservatorship, receivership or
bankruptcy proceeding, and (ii) no written notice of intended cancellation has
been received by ABB or any of its Affiliates from any reinsurer or
retrocessionaire of an Acquired Company with respect to any Ceded Reinsurance
Agreement.
(g) The Direct Insurance Agreements, the Assumed Reinsurance
Agreements, the Ceded Reinsurance Agreements, Reinsurance Pools and the Scan
Re Agreements required to be listed in Sections 5.10.1(1), 5.10.1(2),
5.10.1(3), 5.10.1.(4) and 5.10.1(5) respectively, of the Disclosure Schedule
are collectively referred to hereinafter as the "Disclosed Insurance
Agreements".
(h) All of the Disclosed Insurance Agreements are valid, binding and
enforceable against the applicable Acquired Company and, to the knowledge of
ABB or any Acquired Company, against the other parties thereto in accordance
with their respective terms, subject in each case to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors
rights generally from time to time in effect and, where applicable, to general
principles of equity. Except as set forth in Section 5.10.1(7) of the
Disclosure Schedule, neither ABB nor any of its Affiliates has received (x)
between January 1, 2002 and the date of this Agreement with respect to Direct
Insurance Agreements or (y) between January 1, 2001 and the date of this
Agreement with respect to Assumed Reinsurance Agreements, Ceded Reinsurance
Agreements, Reinsurance Pool and Scan Re Agreements, any written notice that
it is, nor to the knowledge of ABB or any Acquired Company, is any other party
thereto, in default or breach (save in relation to the timely payment of
premiums or a liquidation, conservatorship, receivership or bankruptcy
proceeding to which a reinsurer or retrocessionaire is subject and otherwise
disclosed in Section 5.10.1(6) of the Disclosure Schedule), under:
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(i) any Direct Insurance Agreement required to be listed in
Section 5.10.1(1) of the Disclosure Schedule, except for defaults or
breaches which are not material, in the aggregate, with respect to
the total amount of annual premiums derived by the Acquired Group
from the particular agent to which such Direct Insurance Agreement
relates;
(ii) any Assumed Reinsurance Agreement required to be listed in
Section 5.10.1(2) of the Disclosure Schedule, except for defaults or
breaches which are not material with respect to such Assumed
Reinsurance Agreement; or
(iii) any Ceded Reinsurance Agreement, Reinsurance Pool or Scan
Re Agreement required to be listed in Section 5.10.1(3), Section
5.10.1(4) or Section 5.10.1(5), respectively, of the Disclosure
Schedule, except for defaults or breaches which are not material
with respect to such Ceded Reinsurance Agreement; provided that, for
the avoidance of doubt, defaults or breaches that affect the
collectibility of such Ceded Reinsurance Agreement (other than
arising from the liquidation, conservatorship, receivership or
bankruptcy proceeding to which a reinsurer or retrocessionaire is
subject and otherwise disclosed in Section 5.10.1(6) of the
Disclosure Schedule) shall be deemed material.
5.10.2 Material Contracts
(a) Set forth in Section 5.10.2(1) of the Disclosure Schedule is a
true and correct list, as of the date of this Agreement, of Contracts of the
following types under which, as of the date of this Agreement, any obligation
or liability exists (but excluding any Assumed Reinsurance Agreements, Ceded
Reinsurance Agreements, Direct Insurance Agreements or Reinsurance Pools) and
to which, at the date of this Agreement, any Acquired Company is a party
(each, a "Material Contract"):
(i) a Contract with any managing general agent, agent,
reinsurance intermediary, claims adjuster or claims administrator or
broker of an Acquired Company pursuant to which such party received
compensation or commissions of (x) SEK 8,000,000 (or its foreign
currency equivalent) or more in the fiscal year ended December 31,
2002 or (y) SEK 4,000,000 (or its foreign currency equivalent) in
the period from January 1, 2003 to June 30, 2003 or (z) to whom any
underwriting or claims settlement authority is delegated;
(ii) a Contract: (x) containing a provision limiting the
ability of any Acquired Company to engage in any line of insurance
or reinsurance business in any geographical area or to compete with
any Person; or (y) providing for "exclusivity" as a result of which
any Acquired Company is restricted with respect to distribution and
marketing;
(iii) a Contract which is otherwise required to be disclosed
under this Section 5.10.2 and pursuant to which the consummation of
any of the transactions contemplated hereby or the execution and
delivery, performance or effectiveness of this Agreement will
conflict with, result in a violation or breach of, or constitute a
default under (with or without notice or lapse of time
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or both), or give rise under such Contract to any right of, or
result in, a termination, right of first refusal, amendment,
revocation, cancellation or acceleration, or loss of material
benefit, or to increased, additional or accelerated rights or
entitlements of any Person;
(iv) a Contract preventing the solicitation for employment of
third parties by the applicable Acquired Company;
(v) a "standstill" Contract prohibiting an Acquired Company
from acquiring the assets or securities of any person;
(vi) a partnership, joint venture, shareholders or other
similar Contract with any Person;
(vii) all Contracts relating to the borrowing of money or the
deferred purchase price of Property in an amount in excess of SEK
4,000,000 (or its foreign currency equivalent) (other than
repurchase agreements and reverse repurchase agreements entered into
in the ordinary course of managing an Acquired Company's investments
and consistent with past practice), or the direct guarantee of any
obligation for, or Contracts to service the repayment of, borrowed
money or any other liability in respect of indebtedness for borrowed
money in an amount in excess of SEK 4,000,000 (or its foreign
currency equivalent) of any other Person;
(viii) a lease, sublease, license (excluding computer software
or Contracts disclosed in Section 5.9 of the Disclosure Schedule) or
rental or use Contract to which an Acquired Company is a party with
respect to personal property used by an Acquired Company in the
conduct of its Business, operations or affairs and providing for
annual rental or license payments to be paid by or on behalf of an
Acquired Company in excess of SEK 4,000,000 (or its foreign currency
equivalent);
(ix) a Contract relating to the future disposition or
acquisition, after the date of this Agreement, of any investment in
any Person or of any interest in any business enterprise (other than
the disposition or acquisition of investments in the ordinary course
of the business of the applicable Acquired Company, including the
acquisition of investments to form part of the Investment
Portfolio), or requiring an Acquired Company to purchase in the
future, after the date of this Agreement, any security (other than
the disposition or acquisition of investments in the ordinary course
of business of the applicable Acquired Company, including the
acquisition of investments to form part of the Investment
Portfolio);
(x) a Contract with a Person other than an Acquired Company
relating to computer software licenses (other than licences
disclosed in Sections 5.9.3 or 5.9.4 of the Disclosure Schedule),
data processing, information technology or other corporate
administrative services or computer hardware leases representing
non-terminable future liabilities in excess of SEK 4,000,000 (or its
foreign currency equivalent);
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(xi) a power of attorney given to a Person other than a
director, officer or Employee of an Acquired Company which is
currently effective and outstanding, other than powers of attorney
which are required by Law or which have been granted pursuant to
requirements of applicable insurance or securities rules and
regulations;
(xii) a Contract under which an Acquired Company has continuing
obligations entered into in connection with the settlement or other
resolution of any claim, action, suit, investigation, arbitration or
legal, administrative or other proceeding (other than settlements or
resolutions relating to a Direct Insurance Agreement, Assumed
Reinsurance Agreement, Ceded Reinsurance Agreement, Reinsurance Pool
or Scan Re Agreement); and
(xiii) a Contract (other than Contracts cancelable at will or
with no more than 90 days' notice, in each case without penalty) not
listed in clauses (i) to (xii) above, representing future
liabilities or receivables of more than SEK 8,000,000 (or its
foreign currency equivalent).
(b) All of the Material Contracts are valid, binding and enforceable
against the applicable Acquired Company and, to the knowledge of ABB or any
Acquired Company, against the other parties thereto in accordance with their
respective terms subject, in each case, to applicable bankruptcy,
reorganization, moratorium and other laws affecting creditors rights generally
from time to time in effect and, where applicable, to general principles of
equity. Neither ABB nor any of its Affiliates has received between January 1,
2001 and the date of this Agreement any written notice which remains
outstanding that it is, nor, to the knowledge of ABB or any Acquired Company,
is any other party thereto, in material breach or material default under any
Material Contract.
5.11. Employees
5.11.1 Agreements
Section 5.11.1 of the Disclosure Schedule lists, as of the date of
this Agreement: (i) each and every employment agreement relating to a current
or former Senior Executive under which any Acquired Company has any
outstanding future or contingent obligations or liabilities; and (ii) each and
every labor and collective bargaining agreement (other than national or
industry wide standard collective bargaining agreements or collective
bargaining agreements imposed by applicable Law) applicable to any Employee or
Former Employee under which any Acquired Company has any outstanding future or
contingent obligations or liabilities. ABB has delivered true and complete
copies of each agreement listed in Section 5.11.1 of the Disclosure Schedule
to Purchaser.
5.11.2 Labor Relations
There is no pending or, to the knowledge of ABB, threatened in
writing and since January 1, 2002, there has been no: (i) labor strike, work
stoppage or lockout against any Acquired Company; (ii) unfair labor practice
charge or complaint against any Acquired Company before any governmental
authority; (iii) material union grievance against any Acquired Company; (iv)
representation or certification proceeding or petition seeking a
representation or certification proceeding involving any Acquired Company; (v)
material employment discrimination charge (including as to pay or other
employment conditions)
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against any Acquired Company; or (vi) other material claim or proceeding
against any Acquired Company by an Employee or Former Employee, in each case
that has not been fully and finally resolved as of the date of this Agreement.
Each Acquired Company is in material compliance with all Laws related to
labor, employment, employment standards, discrimination (including as to pay
or other employment conditions) and health and safety.
5.11.3 Employees
Section 5.11.3 of the Disclosure Schedule sets out (i) the following
information, as of October 31, 2003 with respect to each Employee: name,
title, principal place of employment, base salary or wage rate and target
bonus amount and (ii) the aggregate annual base salary payroll as of October
31, 2003 for each Acquired Company.
5.11.4 No Changes in Compensation
Except as set forth in Section 5.11.4 of the Disclosure Schedule or
as required by applicable Law or currently effective collective bargaining
agreements, since December 31, 2002, no Acquired Company has (i) except as
permitted by Section 7.2.4(d), increased the salary or wage rate of any
Employee, other than increases in the ordinary course of the business of the
applicable Acquired Company, (ii) granted any increase in the basis of
calculation of any bonus entitlement for any Employee, or (iii) agreed or
committed to take any of the actions described in this Section 5.11.4.
5.12. Employee Benefit Plans
5.12.1 List of Employee Benefit Plans
Section 5.12.1(1) of the Disclosure Schedule contains a true and
correct list as of the date of this Agreement of all employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not such plans are covered by ERISA)
and all other material pension, retirement, termination indemnity, early
retirement, savings, deferred compensation, profit sharing, severance, change
in control, retention, bonus, incentive, stock option, restricted stock, stock
appreciation right, stock purchase, phantom equity, welfare benefit, retiree
medical and supplemental retirement, plans, programs or arrangements that
currently apply to (i) any group of Employees, (ii) any Senior Executive
listed in Section 5.12.1(2) of the Disclosure Schedule or (iii) with respect
to any such plan in Switzerland relating to Sirius International, a single
Employee, in each case in respect of any Employee's employment by any Acquired
Company or with respect to which any Acquired Company has any actual or
contingent liability, excluding any plan, program or arrangement sponsored by
any government, or governmental entity, union or employee organization or any
other Person other than a member of the ABB Group, such as social security or
similar programs or government- mandated programs (each, an "Employee Benefit
Plan"). There are no plans, programs or arrangements providing Retirement
Benefits for the Employees which will transfer to Purchaser or its Affiliates
after Closing by operation of laws or otherwise other than the Transferred
Plans. No Employee Benefit Plan shall partially transfer to Purchaser after
the Closing by operation of Law or otherwise. Each Employee Benefit Plan that
is not maintained or sponsored by ABB or any of its Affiliates is indicated as
such in Section 5.12.1 of the Disclosure Schedule. ABB has delivered to
Purchaser with data, records or information reasonably sufficient to identify
those Employee Benefit Plans that (i) provide defined benefit pension
benefits, or (ii) are intended to qualify for favorable Tax status
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conferred by the taxing authorities under the Laws of any jurisdiction that
are similar to Section 401(a) of the Code. ABB has delivered to Purchaser
copies of, to the extent applicable: (v) the currently effective plan document
(including all amendments thereto) and the most recent summary plan
description for each Employee Benefit Plan (or the most recent employee
handbook containing a description thereof), (w) a written description of each
unwritten Employee Benefit Plan, (x) any trust, insurance, group annuity
contract or other agreement related to the funding or financing of each
Employee Benefit Plan, (y) all filings required to be made with any
governmental authority during the three calendar years preceding the date of
this Agreement with respect to each Employee Benefit Plan, and (z) the three
most recent financial or actuarial valuations or funding reports prepared with
respect to each Employee Benefit Plan.
5.12.2 Compliance and Claims
Except as set forth in Section 5.12.2 of the Disclosure Schedule:
(i) each Employee Benefit Plan has been administered in all material respects
in accordance with its terms and complies in all material respects with all
applicable Laws; (ii) there are no pending, or to the knowledge of ABB, claims
or proceedings threatened in writing related to any Employee Benefit Plan
(other than claims for benefits in the ordinary course); (iii) there are no
pending, or to the knowledge of ABB, investigations by any governmental
authority threatened in writing in respect of any Employee Benefit Plan; (iv)
no event or condition has occurred or is reasonably likely to occur that has
or is reasonably likely to result in material liability under any Employee
Benefit Plan, other than for contributions or benefit payments in the ordinary
course of the applicable Acquired Company; (v) to the knowledge of ABB, each
Employee Benefit Plan that is intended to qualify for favorable Tax benefits
under the Laws of any jurisdiction is so qualified and, to the knowledge of
ABB, no event or condition exists that is reasonably likely to result in the
loss or revocation of such status; (vi) neither ABB nor any of its Affiliates
nor, to the knowledge of ABB, any other Person, has engaged in a transaction
with respect to any Employee Benefit Plan that is reasonably likely to give
rise to any material Tax or penalty under Chapter 43 of the Code or ERISA; and
(vii) all required consents and releases in connection with the amendment,
modification or termination of any Employee Benefit Plan have been validly
obtained and are effective. To the extent that this Section 5.12.2 relates to
any Employee Benefit Plan that is not maintained or sponsored by ABB or its
Affiliates, the representations contained herein are made to the knowledge of
ABB.
5.12.3 Contributions and Funding
All benefits, contributions and premiums relating to each Employee
Benefit Plan have been timely paid or made or accrued in accordance with the
terms of such Employee Benefit Plan and the terms of all applicable Laws and
no request has been made to waive or defer payment of any benefits,
contributions or premiums that would otherwise be required to be made to any
Employee Benefit Plan. Section 5.12.3 of the Disclosure Schedule identifies
each Transferred Plan that is not required to be funded under applicable Law.
5.12.4 Post-retirement Welfare Arrangements
Except as set forth in Section 5.12.4 of the Disclosure Schedule or
as required by applicable Law, no Employee Benefit Plan maintained or
sponsored by an Acquired Company provides life or medical insurance benefits
after the termination of employment.
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No provision of any Employee Benefit Plan required to be included in Section
5.12.4 of the Disclosure Schedule under the preceding sentence or
communication by ABB or its Affiliates to Employees with respect to any such
Employee Benefit Plan would prevent the amendment, modification or termination
after the Closing Date of any such Employee Benefit Plan without material
liability to any Acquired Company.
5.12.5 Severance and Change in Control Arrangements
(a) There are no payments, benefits or rights or increased and/or
accelerated payments, benefits or rights, to which any Employee or Former
Employee may be entitled as a result of any adjustment to the Purchase Price
pursuant to any provision of this Agreement.
(b) Except as set forth in Section 5.12.5 of the Disclosure
Schedule, (i) no Employee or Former Employee will be entitled to any payment,
benefit or right from an Acquired Company, or any increased and/or accelerated
payment, benefit or right, as a result of (x) such Employee's or Former
Employee's exercise of his/her right to terminate employment with any Acquired
Company or its respective Affiliates at any time before or after the Closing
Date (other than pension or retirement benefits under an Employee Benefit
Plan) arising as a result of the execution of this Agreement or the
consummation of the transactions contemplated hereby or (y) the execution of
this Agreement or the consummation of the transactions contemplated hereby and
(ii) the execution of this Agreement or the consummation of the transactions
contemplated hereby will not require accelerated funding of any Employee
Benefit Plan or give rise to any material liability in connection with any
Employee Benefit Plan, other than, in the case of (i) and (ii), pursuant to
applicable Law. No Employee or Former Employee is or will be entitled to
receive after the Closing any payment or benefit from Purchaser, any Acquired
Company or any of their Affiliates pursuant to any Contract or Employee
Benefit Plan in effect on the date of this Agreement that would not be
deductible to such entity for U.S. Federal income tax purposes as a result of
such payment or benefit constituting an "excess parachute payment" within the
meaning of Section 280G of the Code in connection with a change in the
ownership or effective control, of a corporation, or a substantial portion of
the assets or a corporation (within the meaning of Sections 280G of the Code,
in each case arising out of or resulting from the consummation of the
transactions contemplated by this Agreement.
(c) Any amounts due as set forth in Section 5.12.5 of the Disclosure
Schedule shall be paid as required by Section 7.5.
(d) No Employee or Former Employee will be entitled to any payment,
benefit or right from ABB or any Affiliate of ABB (other than an Acquired
Company) in connection with the execution of this Agreement or the
consummation of the transactions contemplated hereby, provided that any
amounts described in Section 7.5 which are required to be paid by the Acquired
Group are duly paid.
5.13. Taxes
5.13.1 Tax Returns
Except as set forth in Section 5.13.1 of the Disclosure Schedule,
all material Tax Returns that are required to be filed on or prior to the date
of this Agreement with respect to the assets, income or operations of any
Acquired Company have been filed when due,
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including any period of extension, and have been true, correct and complete in
all material respects.
5.13.2 Payment of Taxes
All material Taxes with respect to taxable periods covered by the
Tax Returns referred to in Section 5.13.1 have been paid when due and payable,
after giving effect to any applicable extensions.
5.13.3 Tax Controversies
Except as set forth in Section 5.13.3 of the Disclosure Schedule:
(i) since January 1, 2001 and until the date of this Agreement, there have
been no audits that resulted in a material adjustment to Taxes of the Acquired
Group; (ii) no audits or administrative proceedings or court proceedings are
pending as of the date of this Agreement with regard to Taxes or Tax Returns
of any Acquired Company; (iii) since January 1, 2001 and until the date of
this Agreement, no written notice of such audit, administrative proceeding or
court proceeding has been received by ABB or any of its Affiliates that
relates to any Acquired Company.
5.13.4 Tax Withholdings
Each Acquired Company has, within the time and manner prescribed by
Law, withheld and paid over to the proper governmental authorities all amounts
required to be so withheld and paid over by such Acquired Company under
applicable Laws.
5.13.5 Extensions
No Acquired Company has entered into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
Taxes of any Acquired Company that has not expired.
5.13.6 Tax Sharing Agreements
No Acquired Company is party to or bound by any written Tax sharing
agreement, Tax indemnity obligation or other similar Contract with respect to
Taxes, pursuant to which Purchaser or any Acquired Company could have Tax
liability after the Measurement Date. Except as set forth in Section 5.13.6 of
the Disclosure Schedule, no Acquired Company has been included in any
"consolidated," "unitary" or "combined" Tax Return provided for under the law
of the United States, any foreign jurisdiction or any state or locality with
respect to Taxes for any taxable period for which the statute of limitations
has not expired (other than a group of which the members of the Acquired Group
are the only members).
5.13.7 Inclusions Attributable to Prior Periods
Sirius America will not be required to include in a taxable period
ending after the Measurement Date taxable income attributable to income that
accrued in a prior taxable period but was not recognized in any prior taxable
period as a result of the installment method of accounting, the long- term
contract method of accounting, the cash method of accounting or Section 481 of
the Code or comparable provisions of applicable Law, or for any other reason.
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5.13.8 Jurisdictions
Since January 1, 2001 and until the date of this Agreement, no
written claim has been made by any taxing authority in a jurisdiction in which
an Acquired Company does not file Tax Returns that it is or may be subject to
material Taxes in that jurisdiction.
5.13.9 Distributions
Since January 1, 2001, Sirius America has not constituted either a
"distributing corporation" or a "controlled corporation" as such terms are
defined in Section 355(a)(1)(A) of the Code in a distribution of stock or
securities intended to qualify for Tax-free treatment (in whole or in part)
under Section 355 of the Code.
5.14. Litigation
Except as set forth in Section 5.14 of the Disclosure Schedule,
there are no claims, actions, suits, investigations of which ABB has
knowledge, arbitrations or legal, administrative or other proceedings pending
and, to the knowledge of ABB, none are presently threatened in writing against
any Acquired Company before or by any court, governmental authority or
arbitrator, except for any action, suit, proceeding or investigation (i) with
respect to claims under Direct Insurance Agreements to which Sirius America is
a party arising in the ordinary course of the business of Sirius America; or
(ii) which if adversely determined, individually, is not reasonably likely to
(x) require monetary payments by the Acquired Group, in the aggregate, of more
than SEK 5,000,000 (or its foreign currency equivalent); (y) result in an
order, injunction or other equitable relief or relief for non-monetary damages
against an Acquired Company which is reasonably likely to impede to any
material extent the operation of the Business as operated by such Acquired
Company at the date of this Agreement; or (z) result in a Material Adverse
Effect. Since January 1, 2003, except with respect to payments made in the
ordinary course in connection with Assumed Reinsurance Agreements, Ceded
Reinsurance Agreements, Direct Insurance Agreements or Reinsurance Pools,
there have been no payments in excess of the sum of SEK 5,000,000 (or its
foreign currency equivalent) with respect to any threatened or previously
outstanding individual action, suit, arbitration or other legal proceeding
made by or on behalf of any Acquired Company.
5.15. Environmental Matters
Other than pursuant to its obligations under Direct Insurance
Agreements, Assumed Reinsurance Agreements, Ceded Reinsurance Agreements or
Reinsurance Pools: (i) each Acquired Company is in compliance with, and since
January 1, 2001 has been in compliance with, all applicable Laws and Orders
relating to human health or the environment ("Environmental Laws"), and none
of the Acquired Companies has received (x) any written communication from a
governmental authority that alleges that the Acquired Company is in violation
of, or has liability under, any Environmental Law or (y) any written request
for information under any Environmental Law; (ii) each Acquired Company has
obtained, and is in compliance with, all Permits required under such
Environmental Laws; (iii) there are no proceedings, actions, claims, demands,
investigations of which ABB has knowledge or written notices of noncompliance
or violation arising out of or relating to Environmental Law ("Environmental
Claims") by any governmental authority or by any other Person pending or, to
the knowledge of ABB, threatened in writing against any Acquired Company; and
(iv) there has been no Release of any Hazardous Material that would reasonably
be expected to
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form the basis of an Environmental Claim against any of the Acquired
Companies, or against any Person whose liabilities for such Environmental
Claims an Acquired Company has, or may have, retained or assumed, either
contractually or by operation of Law.
5.16. Insurance
(a) Section 5.16 of the Disclosure Schedule contains a true and
correct list, as of the date of this Agreement, of all Insurance Policies
(excluding, for the avoidance of doubt, any Assumed Reinsurance Agreements,
Ceded Reinsurance Agreements, Direct Insurance Agreements or Reinsurance
Pools) in force as of the date of this Agreement. All such Insurance Policies
are, in all material respects, in full force and effect, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors rights generally from time to time in effect and, where applicable,
to general principles of equity.
(b) Since January 1, 2003, no Acquired Company, or any Person acting
on its behalf, has failed to give any material notice or to present any
material claim under any Insurance Policy or surety bond in due and timely
fashion, except where such failure has not, and is not reasonably likely to,
materially adversely affect the right to recover under such Insurance Policy.
ABB has delivered to Purchaser the reports, if any, prepared since December
31, 2002 for the Acquired Group on: (i) accidents, casualties or damages
occurring on or to the properties or assets of the Acquired Group; and (ii)
claims by the Acquired Group for damages, reimbursement of losses,
contribution or indemnification under any Insurance Policy and settlements or
negotiations of settlements relating thereto.
5.17. Agents
Section 5.17(1) of the Disclosure Schedule sets forth each agent,
broker, intermediary or producer who produced business for an Acquired Company
during either of the years ended December 31, 2001 and 2002 (other than those
brokers recorded in the Quantel system, which brokers generated aggregate
premia of less than SEK 10 million, in the two year period to December 31,
2002). Except as otherwise set forth in Section 5.17(2) of the Disclosure
Schedule, between January 1, 2002 and the date of this Agreement, no Person
listed in Section 5.17(1) of the Disclosure Schedule has given written notice
of termination to, or been given written notice of termination by, ABB or any
Acquired Company and neither ABB nor any of its Affiliates has received
written notice that any of the foregoing is not duly licensed.
5.18. Accounts With Financial Institutions
Section 5.18 of the Disclosure Schedule sets forth a true and
correct list, as of the date of this Agreement, of all safe deposit boxes,
active bank accounts and other time or demand deposits of the Acquired Group,
together with the names and addresses of the applicable financial institution
or other depository, the account number, the contact person at the applicable
financial institution and the names of all persons who are authorized to draw
thereon by any Acquired Company.
5.19. Continuing Business Relationships
Except as set forth in Section 5.19 of the Disclosure Schedule,
neither ABB nor any of its Affiliates has received, as at the date of this
Agreement, any written notice
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from any insured, reinsured, retrocedent or retrocessionaire of the Acquired
Group accounting for, or relating to, more than five percent (5%) of the gross
written premiums for the Acquired Group in 2002 that such entity will cease to
do business or materially adversely change its volume of business with any
Acquired Company as a result of this Agreement or the consummation of the
transactions contemplated hereby.
5.20. Brokers
Except for Deutsche Bank AG, no broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of ABB or any of its Affiliates. ABB and its
Affiliates (other than the Acquired Group) are solely responsible for the fees
and expenses of Deutsche Bank AG.
5.21. Solvency
Neither ABB nor any of its parent companies has ceased payment of
its debts when they fall due and none of them are insolvent or unable to pay
its debts according to the Federal Act of Switzerland of 11 April 1889 on Debt
Enforcement and Bankruptcy. No order has been notified and no resolution has
been passed for the winding up of ABB or any of its parent companies or for a
provisional liquidator to be appointed in respect of ABB or any of its parent
companies and no petition has been presented and no meeting has been convened
for the purpose of winding up ABB or any of its parent companies. No receiver,
including an administrative receiver, has been appointed in respect of ABB,
any of its parent companies or all or any of their respective assets. Neither
ABB nor any of its parent companies is subject to a composition plan or a
moratorium and no commissioner has been appointed in this respect.
5.22. Alstom Instruments
Section 5.22 of the Disclosure Schedule sets forth (i) a true and
correct list of each bond, note, debenture, security, right or other financial
instrument or financial guarantee that has been issued by any member of the
Acquired Group in connection with the Financial Risks Business and provides
insurance, reinsurance, indemnification or any other obligation (other than a
Direct Insurance Agreement providing first-party insurance coverage of the
property or assets of Alstom Schweiz AG, Alstom Sweden AB or their Affiliates,
successors and assigns (the "Alstom Group")) for the financial obligations,
losses or commitments of any Person who was a member of the Alstom Group at
the time such financial instrument or financial guarantee was issued
(collectively, the "Alstom Instruments") and (ii) the face value or policy
limit of each Alstom Instrument.
5.23. Abb Instruments
Section 5.23 of the Disclosure Schedule sets forth (i) a true and
correct list of each bond, note, debenture, security, right or other financial
instrument or financial guarantee that has been issued by any member of the
Acquired Group and provides insurance, reinsurance, indemnification or any
other obligation (other than a Direct Insurance Agreement providing
first-party insurance coverage of the property or assets of any member of the
ABB Group) for the financial obligations, losses or commitments of any Person
who was a member of the ABB Group at the time such financial instrument or
financial guarantee
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was issued (other than an Acquired Company) (collectively, the "ABB
Instruments") and (ii) the face value or policy limit of each ABB Instrument.
5.24. Sirius America Contracts
Except as set forth in Section 5.24 of the Disclosure Schedule,
Sirius America is not a party to any Contract: (i) containing a provision
limiting the ability of Sirius America or any Affiliate of Sirius America to
engage in any line of insurance or reinsurance business in any geographical
area or to compete with any Person; or (ii) providing for "exclusivity" as a
result of which Sirius America or any Affiliate of Sirius America is
restricted with respect to distribution and marketing.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to ABB, as of the date of this
Agreement and as of the Closing Date, as follows:
6.1. Organization
Purchaser is a company duly organized, validly existing and in good
standing under the laws of Sweden and has all requisite corporate power and
authority to own its properties and assets and to carry on its business as
presently being conducted.
6.2. Authority
6.2.1 Company Power and Authority
Purchaser has all requisite company power and authority to execute,
deliver and perform this Agreement, and to consummate the transactions
contemplated hereby. The execution and delivery by Purchaser of this
Agreement, the consummation by Purchaser of the transactions contemplated
hereby and the performance by Purchaser of the provisions of this Agreement
have been duly authorized by all necessary company action (including action of
the board of directors and, if required, the shareholders) on the part of
Purchaser. This Agreement has been duly executed and delivered by Purchaser
and, assuming the due authorization, execution and delivery of this Agreement
by ABB, this Agreement constitutes a legal, valid and binding obligation of
Purchaser enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other laws
affecting creditors rights generally from time to time in effect and, where
applicable, to general principles of equity.
6.2.2 No Conflicts
The execution and delivery by Purchaser of this Agreement, the
consummation by Purchaser and U.S. Purchaser of the transactions contemplated
hereby and the performance by Purchaser and U.S. Purchaser of the provisions
of this Agreement do not conflict with, or result in any violation or breach
of, or default (with or without notice or lapse of time or both) under, or
give rise to a right of, or result in, termination, cancellation or
acceleration of any obligation or to a loss of a material benefit under, or
result in the creation of any Encumbrance on any of the properties or assets
of Purchaser under, or give rise to any
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increased, additional or accelerated rights or entitlements under, any
provision of: (i) the organizational documents of Purchaser or U.S. Purchaser;
or (ii) subject to the governmental filings and other matters referred to in
Section 6.2.3 below, any Law or Order, in each case, applicable to Purchaser
or U.S. Purchaser or any of their respective properties or assets, except, in
the case of clause (ii) for any such conflict, violation, breach or default
which, individually or in the aggregate, does not and is not reasonably
expected to materially adversely affect the ability of Purchaser or U.S.
Purchaser to complete the transactions contemplated hereby.
6.2.3 Governmental Authorization
No consent, approval, license, permit, order or authorization of, or
registration, declaration or filing with, any governmental authority is
required to be obtained or made by or with respect to Purchaser or any of its
Affiliates in connection with the execution and delivery by Purchaser of this
Agreement, the consummation by Purchaser of the transactions contemplated
hereby or the performance by Purchaser of the provisions of this Agreement,
except for: (i) approvals under applicable competition Law, including the ▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇▇ "▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇" (act against
restraints of competition) and Law No. 8884/1994 and Resolution ▇▇. ▇▇/▇▇ (▇▇
▇▇▇▇▇▇ ▇▇▇▇) ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Brazil; (ii) the approval of the
Swedish Financial Supervisory Authority, the Malaysian insurance regulator,
the Bermuda insurance regulator, the Delaware Insurance Department, the New
York Insurance Department and the insurance department of any State in the
United States where any Acquired Company is deemed commercially domiciled
under such State's Law; and (iii) those the failure of which to obtain or
make, individually or in the aggregate, do not and are not reasonably expected
to materially impair the ability of Purchaser or any of its Affiliates to
perform its obligations under this Agreement.
6.3. Financing
Purchaser has sufficient funds for the financing of the payment in
full of the International Purchase Price and the U.S. Purchase Price and all
other amounts payable by U.S. Purchaser and Purchaser hereunder at the U.S.
Closing and the Closing.
6.4. Employees
As of the date of this Agreement, neither Purchaser nor any of its
Affiliates has entered into any Contract with any Employee.
ARTICLE 7
COVENANTS
7.1. General
Without limiting the generality of any other provision of this
Agreement, each of the parties will use all reasonable efforts to take all
action and to do all things necessary, proper or advisable (including
executing and delivering documents and papers) in order to consummate and make
effective the transactions contemplated hereby and to cause the Closing to
occur as promptly as practicable (including satisfaction, but not waiver, of
the closing conditions set forth in Article 8).
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7.2. Conduct of Business
7.2.1 Ordinary Course
From the date hereof until the Measurement Date, except as described
in Schedule 7.2.1 or except as otherwise specifically provided in or
specifically contemplated by this Agreement or to the extent that Purchaser
shall have otherwise given its prior written consent (which consent shall not
be unreasonably withheld or delayed), ABB shall cause each Acquired Company to
carry on the Business in the ordinary course of its business. From the
Measurement Date until the Closing, except as described in Schedule 7.2.1 or
except as otherwise specifically provided in or specifically contemplated by
this Agreement or to the extent that Purchaser shall have otherwise given its
prior written consent (which consent may be granted or withheld at Purchaser's
sole discretion), ABB shall cause each Acquired Company to carry on the
Business in the ordinary course of its business.
7.2.2 Preserve Business
Except as otherwise specifically provided in this Agreement, from
the date hereof until the Closing, ABB will cause each Acquired Company: (i)
to use all reasonable efforts to preserve its business organization, goodwill
and Permits; (ii) to take all reasonable steps to retain the services of its
Employees who comply with their employment contracts; (iii) to comply in all
material respects with all Laws applicable to such Acquired Company; (iv) to
take all reasonable steps to preserve the current relationships of such
Acquired Company with its brokers, reinsurance intermediaries, ceding
companies, reinsurers, agents, managing general agents or underwriters,
service providers, suppliers and other Persons with whom such Acquired Company
has significant business relationships; and (v) to use its reasonable efforts
to perform its obligations under all Contracts to which it is a party or by or
to which its Properties or assets are bound or subject; provided, however,
that nothing in clause (iv) above shall require an Acquired Company to take
any action, or desist from any action, which is contrary to the commercial
interests of the Acquired Company.
7.2.3 Maintain Books, Records and Properties
Prior to the Closing, ABB will cause each Acquired Company to: (i)
maintain its books and records in the usual, regular and ordinary manner
consistent with past practice; (ii) continue in full force and effect the
Insurance Policies listed in Section 5.16 of the Disclosure Schedule, or
comparable substitute Insurance Policies, and will promptly notify Purchaser
of any cancellation or non-renewal of such Insurance Policies; and (iii) use
reasonable efforts to maintain all of its properties and assets in such
repair, working order and operating condition as is consistent with past
practice of the Business (subject only to ordinary wear and tear).
7.2.4 Certain Restrictions
Without limiting the generality of Section 7.2.1, except as
otherwise specifically provided in or specifically contemplated by this
Agreement or as described in Schedule 7.2.1, ABB shall ensure that the
Acquired Group will not do any of the following from the date hereof until the
Measurement Date without the prior written consent of Purchaser (which consent
shall not be unreasonably withheld or delayed):
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(a) merge or consolidate any Acquired Company with or into any
Person or sell, lease or otherwise dispose of any properties or assets
with a value, in the aggregate, in excess of SEK 5,000,000 (or its
foreign currency equivalent) (other than ordinary course trading of the
Investment Portfolio);
(b) acquire any properties or assets with a value in the aggregate
in excess of SEK 5,000,000 (or its foreign currency equivalent), except
(i) in the ordinary course of business for fair value and (ii) in
ordinary course trading of the Investment Portfolio consistent with the
Investment Guidelines;
(c) amend the certificate of incorporation or by-laws or similar
organizational documents of any Acquired Company;
(d) make any wage or salary increase for, or otherwise amend or
terminate the employment agreement of, any Senior Executive, other than
(i) wage or salary increases in the ordinary course of the business of
the applicable Acquired Company and not in excess of five percent (5%)
per annum in the aggregate or (ii) pursuant to a Contract in existence on
the date hereof or entered into after the date of this Agreement and not
in violation of this Agreement;
(e) make, change or revoke any material Tax election or enter into
any Contract or settlement regarding material Taxes with any Tax
authority or amend any material Tax Returns;
(f) change the fiscal year or accounting methods, principles or
practices of any Acquired Company, except as required by generally
accepted accounting principles applicable in the jurisdiction of such
Acquired Company (provided that such revised principles or practices
shall not affect the preparation of the Closing Financial Statements) or,
to the extent inconsistent therewith, the statutory accounting rules
applicable to Sirius America;
(g) change in any material respect its underwriting, reinsurance,
marketing, establishment or release of Reserves, establishment or release
of safety reserves, investment or claims adjustment policies or practices
or the Investment Guidelines, except, in each case, as required by Law or
by any applicable insurance or other regulatory authority;
(h) declare, set aside or pay any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect
of any securities of any Acquired Company (except (i) dividends paid or
distributions made only to another Acquired Company, (ii) the ABB
Distribution and (iii) the Sirius Holding Dividend) or redeem, repurchase
or otherwise acquire any equity securities of any Acquired Company;
(i) revalue any of its properties or assets, including writing off
notes or accounts receivable, other than in the ordinary course of the
business of the applicable Acquired Company, or as required by applicable
Law or generally accepted accounting principles applicable in the
jurisdiction of the applicable Acquired Company (provided that such
revaluations shall not affect the preparation of the Closing Financial
Statements);
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(j) except as required by applicable Law or collective bargaining
agreement or other Contract: (i) enter into any new employment, bonus,
incentive or deferred compensation, severance or termination agreement
with any Senior Executive or director of such Acquired Company; (ii)
establish, adopt or enter into any collective bargaining agreement, or
adopt or amend in any material respect any Employee Benefit Plan; or
(iii) accelerate the vesting of any benefit provided under, or the
funding of, any Employee Benefit Plan;
(k) create, incur, assume or permit to come into existence any
Encumbrances on any property or asset of the Acquired Group other than
Permitted Encumbrances and, with respect to real property, Encumbrances
described in Sections 5.8.2(ii) and (iii);
(l) create, incur or assume any liabilities or obligations in
relation to indebtedness for borrowed money in excess of an aggregate of
SEK 1,000,000 (or its foreign currency equivalent);
(m) (excluding any obligation under Contracts entered into in
accordance with clause (q) below) guarantee to a third party the
liabilities or obligations of another Person, enter into any "keep well"
or other agreement to maintain the financial condition of another Person
or enter into any Contract having the economic effect of any of the
foregoing;
(n) except as permitted by Section 7.2.4(bb), pay or discharge any
material claim, liability or Encumbrance (whether absolute, accrued,
contingent or otherwise), or waive any material right, in each case other
than in the ordinary course of the business of the applicable Acquired
Company or pursuant to binding contractual obligations of an Acquired
Company in existence on the date hereof or otherwise permitted to be
entered into after the date of this Agreement;
(o) hire any new employees or consultants, except for (i) ten such
employees or consultants each earning less than SEK 800,000 (or its
foreign currency equivalent) per annum who are hired in the ordinary
course of business, (ii) employees earning less than SEK 800,000 (or its
foreign currency equivalent) per annum hired to replace departed
employees or (iii) any new employees hired to replace a departed Senior
Executive whose replacement is reasonably necessary for the operation of
the Business;
(p) make capital expenditures in fixed assets in excess of an
aggregate of SEK 1,000,000 (or its foreign currency equivalent);
(q) enter into any Contract (other than (i) Assumed Reinsurance
Agreements, Ceded Reinsurance Agreements, Direct Insurance Agreements or
Reinsurance Pools entered into in the ordinary course of the business of
the applicable Acquired Company and consistent with the underwriting
guidelines of the Acquired Group as of the date of this Agreement, or
(ii) Contracts with managing general agents, agents or brokers entered
into in the ordinary course of the business of the applicable Acquired
Company and not otherwise prohibited by clause (dd) below) which, if it
existed on the date hereof, would be required to be listed in Section
5.10.2 of the Disclosure Schedule;
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(r) other than in the ordinary course of the business of the
applicable Acquired Company and, if applicable, consistent with the
underwriting guidelines of the Acquired Group as of the date of this
Agreement, amend in any material respect or terminate any existing Direct
Insurance Agreement, Assumed Reinsurance Agreement, Ceded Reinsurance
Agreement, Reinsurance Pool or any Material Contract;
(s) commute any Direct Insurance Agreement, Assumed Reinsurance
Agreement or Ceded Reinsurance Agreement, other than in connection with
the cessation of the Financial Risks Business, resulting in a gain or
loss to such Acquired Company in excess of SEK 2,000,000 (or its foreign
currency equivalent), other than as required by Law or by any applicable
insurance or other regulatory authority;
(t) make any investment in any Affiliate Instrument;
(u) make any investment in non-investment grade securities;
(v) abandon, waive, terminate or otherwise change any of the Permits
of the Acquired Group, except as may be required by Law or by any
applicable insurance or other regulatory authority;
(w) make any loan, advance or capital contribution to any Person
(other than an Acquired Company);
(x) enter into or modify any Contract with ABB, any of its
Affiliates or any officer, director or employee of ABB or any of its
Affiliates (other than the Acquired Group);
(y) make any payment or distribution to, or abandon, waive,
terminate or otherwise change any right with respect to, ABB, any of its
Affiliates (except the Acquired Companies) or any officer, director or
employee of ABB or any of its Affiliates (except the Acquired Companies),
other than pursuant to binding contractual obligations of an Acquired
Company in existence on the date hereof or otherwise permitted to be
entered into after the date of this Agreement;
(z) other than with respect to Sirius Belgium, adopt a plan of
complete or partial liquidation, dissolution, rehabilitation,
restructuring, recapitalization, re-domestication or other
reorganization;
(aa) enter into any joint venture, partnership or similar Contract
with any Person;
(bb) settle or compromise any claims against an Acquired Company
resulting in a gain or loss to such Acquired Company in excess of SEK
5,000,000 (or its foreign currency equivalent) or any order, injunction
or equitable relief reasonably likely to impede, to any material extent,
the business of such Acquired Company (other than the settlement of
claims relating to Direct Insurance Agreements or under Assumed
Reinsurance Agreements, Ceded Reinsurance Agreements or Reinsurance
Pools, in each case in the ordinary course of the business of the
applicable Acquired Company);
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(cc) solely with respect to Sirius Holding, engage in any business
or activity or create, incur or assume any liability or obligation, in
each case other than (i) the ownership of shares of capital stock of
Sirius International and Sirius Ruck and activities incidental
thereto, (ii) the distribution of the Sirius Holding Dividend, (iii) the
payment of Taxes, and (iv) activities necessary to perform its
obligations under the Facility Agreement and Pledge Agreement or to
effect the termination or release of such obligations;
(dd) enter into any Contracts relating to the Financial Risks
Business, provided that this provision shall not limit the Acquired
Group's ability to enter into new Ceded Reinsurance Agreements relating
to Contracts in the Financial Risks Business in existence on or prior to
the date of this Agreement or to commute existing Contracts relating to
the Financial Risks Business;
(ee) take any action that is reasonably likely to result in any
representation or warranty of ABB contained herein being inaccurate in
any material respect at the Closing or omit to take any action necessary
to prevent any such representation or warranty from being inaccurate in
any material respect at such time; or
(ff) agree or make an offer capable of acceptance, whether in
writing or otherwise, to do any of the foregoing.
7.2.5 Purchaser's Representatives
Purchaser hereby designates ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
acting severally with authority to grant the approvals on behalf of Purchaser
that may be requested under this Section 7.2. Purchaser agrees to act promptly
in responding to requests for approvals.
7.2.6 Conduct of Business After the Measurement Date
Without limiting the generality of Section 7.2.1, except as
otherwise specifically provided in or specifically contemplated by this
Agreement, ABB shall ensure that the Acquired Group will not do any of the
following from the Measurement Date until the Closing without the prior
written consent of Purchaser (which consent may be granted or withheld at
Purchaser's sole discretion):
(a) enter into, amend, commute or terminate any Ceded Reinsurance
Agreement (other than in connection with the cessation of the Financial
Risks Business) or any Reinsurance Pool, other than as required by Law or
by any applicable insurance or regulatory authority;
(b) change in any respect its underwriting, reinsurance, marketing,
establishment or release of Reserves, establishment or release of safety
reserves, investment or claims adjustment policies or practices or the
Investment Guidelines, except, in each case, as required by Law or by any
applicable insurance or other regulatory authority;
(c) decrease the value of the Reserves relating to (i) the
EPIX/Hartford dispute identified as Treaty 260, all underwriting years,
in the Scan Re Memo, (ii) the Reliance Re dispute identified as Treaty
189, all underwriting years, in the Scan Re
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Memo, or (iii) any Scan Re Dispute, in each case below the value of such
Reserve as of the Measurement Date; or
(d) take any action described in Section 7.2.4, provided that (i)
the actions taken by the Acquired Group from the date of this Agreement
to the Measurement Date shall be included, as applicable, in calculating
the aggregate values described in Section 7.2.4 and (ii) any written
consent of Purchaser provided under Section 7.2.4 shall not apply to this
Section 7.2.6, including this clause (d).
7.3. Access to Information
From the date hereof until the Closing, upon reasonable advance
notice, ABB shall: (i) to the extent within its control, afford the officers,
employees and authorized agents and representatives of Purchaser such
reasonable access as Purchaser may from time to time reasonably request,
during normal business hours and in a manner which is not disruptive to the
operations of the Business or the business of ABB or any of its Affiliates, to
the offices, properties, assets, books and records of the Acquired Group and
to its and each member of the Acquired Group's respective officers, employees,
agents, accountants and actuaries, in each case solely for the purposes of
enabling Purchaser to (w) evaluate the satisfaction of the conditions set
forth in Article 8, (x) prepare for its assumption of operational
responsibility for the Business as from the Closing Date, (y) prepare for the
practicalities of consummating the transactions contemplated by this Agreement
and (z) prepare for implementing disclosure controls and procedures and
internal controls over financial reporting to its satisfaction from the
Closing; and (ii) furnish to Purchaser the following information: (x) the
monthly financial management reports regularly prepared for Sirius
International; (y) the monthly financial management reports regularly prepared
for Sirius America and Scandinavian Re; and (z) the unaudited quarterly
financial reports for the Acquired Group which have been prepared from the ABB
Group's ABACUS information, and such other information regarding the assets,
properties, goodwill and Business of each member of the Acquired Group as (A)
may exist (in the form in which it already exists), or (B) shall have been
prepared or compiled by or for ABB or any Acquired Company, or (C) which is
reasonably requested from time to time by Purchaser and in ABB's good faith
and reasonable judgment can be prepared by ABB or any Acquired Company without
undue burden or expense or disruption to the operations of the Business or
other matters required to be performed in accordance with this Agreement.
Neither ABB nor any of its Affiliates shall be under an obligation to disclose
to Purchaser or its representatives any information the disclosure of which,
according to the advice of ABB's legal counsel, is restricted by
confidentiality obligations or applicable Law or would jeopardize the legal
privilege, if any, accorded to any documents produced or prepared by the legal
representatives of ABB or its Affiliates. No investigation or access to
information pursuant to this Section 7.3 shall affect any representation or
warranty or covenant made by ABB to Purchaser hereunder or otherwise affect
the rights and remedies available to Purchaser hereunder.
7.4. Reasonable Efforts
7.4.1 Approvals
Each party hereto will use all reasonable efforts to obtain all
exemptions, authorizations, consents, orders, approvals and waivers of all
governmental authorities and third parties that are required by Law or which
ABB and Purchaser, acting reasonably, agree are necessary, for its execution
and delivery of, and the performance of its obligations
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pursuant to, this Agreement, and will reasonably cooperate fully with the
other party in promptly seeking to obtain all exemptions, authorizations,
consents, orders, approvals and waivers that are required by Law or which ABB
and Purchaser, acting reasonably, agree are necessary, of all governmental
authorities and third parties for such other party's execution and delivery
of, and the performance of such other party's obligations pursuant to, this
Agreement. Each party hereto agrees to make an appropriate filing of a
Notification and Report Form pursuant to the HSR Act and, to the extent
required by Law, comparable filings and notifications required to be made by
such party under other competition Laws with respect to the transactions
contemplated hereby, in each case as soon as reasonably practicable after the
date hereof, and to supply promptly any additional information and documentary
material that may be requested pursuant to the HSR Act or such other
competition Laws. ABB and Purchaser each agree to make all other appropriate
filings as such party may be required to make with the New York Insurance
Department, the Delaware Insurance Department, the Swedish Financial
Supervisory Authority and the Bermuda insurance regulator and such other
filings as such party may be required to make under the insurance and other
applicable Laws of the insurance department of any State in the United States
where any Acquired Company is deemed commercially domiciled under such State's
Law. The parties hereto will not knowingly take any action that will have the
effect of materially delaying, impairing or impeding the receipt of any
required approvals. Notwithstanding the foregoing or any other provision of
this Agreement to the contrary, in no event shall any party hereto be
obligated to: (i) agree or proffer to divest or hold separate, or enter into
any licensing or similar arrangement with respect to, (x) any properties or
assets (whether tangible or intangible), or any portion of any business, of
Purchaser or any of its Affiliates; or (y) any properties or assets (whether
tangible or intangible), or any portion of any business, of any Acquired
Company or any Subsidiary of an Acquired Company; or (ii) litigate any suit,
claim, action, investigation or proceeding, whether judicial or
administrative, brought by any governmental entity or third party, (x)
challenging or seeking to restrain or prohibit the consummation of any of the
transactions contemplated hereby; (y) seeking to prohibit or limit in any
material respect the ownership or operation by any Acquired Company, Purchaser
or any of their respective Affiliates, of a portion of the business or
properties or assets of any Acquired Company, Purchaser or any of their
respective Affiliates or to require any such Person to dispose of or hold
separate any portion of the business or properties or assets of any Acquired
Company, Purchaser or any of their respective Affiliates as a result of the
transactions contemplated hereby; or (z) seeking to prohibit Purchaser, any
Acquired Company or any of their respective Affiliates from effectively
controlling in any respect the business or operations of any Acquired Company.
7.4.2 Information, Assistance and Cooperation
(a) Each party shall furnish to the other party such necessary
information and reasonable assistance as the other party may request in
connection with its preparation of any filing, registration or declaration
which is necessary under applicable Law; provided, however, that no party
shall be obligated with respect to such assistance: (i) to expend any funds
except the payment of the fees and expenses of any applicable attorneys,
consultants or other advisors retained by it and applicable filing fees; or
(ii) to take any actions with respect to its respective businesses or the
Business which, in its reasonable judgment, is materially adverse. Each party
shall provide the other party with drafts of all notifications intended to be
submitted to any governmental authorities in connection with Section 7.4.1,
shall give the other party a reasonable opportunity to comment on such draft
notifications, shall consider in good faith such comments and shall not submit
such notifications without the prior approval
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of the other party (which approval shall not be unreasonably withheld or
delayed). Each party shall be entitled to attend any meetings with the
relevant governmental authorities and each party shall keep the other party
informed on a timely basis of all developments or discussions with such
governmental authorities.
(b) Notwithstanding anything to the contrary, Purchaser shall, and
shall cause the Acquired Group to, in accordance with applicable Law or if
none is applicable, the document retention policy of Purchaser and its
Affiliates, retain all books, records and other documents pertaining to the
businesses of the Acquired Group in existence on the Closing Date and to make
the same available for inspection and copying by ABB or its Affiliate or
representatives thereof during reasonable business hours, upon reasonable
request and upon reasonable notice. No such books, records or documents shall
be destroyed after the Closing Date by Purchaser or a member of the Acquired
Group without first advising ABB in writing and giving ABB a reasonable
opportunity to obtain possession thereof. Without limiting the generality of
the foregoing, Purchaser shall, and shall cause the Acquired Group to, make
available to ABB, its Affiliates and representatives all information
reasonably deemed necessary or desirable by ABB, its Affiliates or their
representatives in connection with (i) preparing their respective financial
statements and Tax Returns and conducting any audits in connection therewith
or (ii) claims, proceedings, actions, investigations, audits and other
regulatory or legal proceedings involving the operation of the businesses of
the Acquired Group before or after the Closing.
(c) Notwithstanding anything to the contrary, ABB shall, and shall
cause the ABB Group to, in accordance with applicable Law or, if none is
applicable, the ABB Group's document retention policy, retain all books,
records and other documents pertaining to the businesses of the Acquired Group
in existence on the Closing Date and which are held by ABB or any of its
Affiliates (other than an Acquired Company) and to make the same available for
inspection and copying by Purchaser or any of its Affiliates or
representatives thereof during reasonable business hours, upon reasonable
request and upon reasonable notice. No such books, records or documents shall
be destroyed after the Closing Date by ABB or any member of the ABB Group
without first advising Purchaser in writing and giving Purchaser a reasonable
opportunity to obtain possession thereof. Without limiting the generality of
the foregoing, ABB shall, and shall cause the ABB Group to, make available to
Purchaser, its Affiliates and their representatives all information reasonably
deemed necessary or desirable by Purchaser, its Affiliates or their
representatives in connection with (i) preparing their respective financial
statements and Tax Returns and conducting any audits in connection therewith
or (ii) claims, proceedings, actions, investigations, audits and other
regulatory or legal proceedings involving the operation of the businesses of
the Acquired Group (before or after the Closing).
7.5. Employee Benefit Plans
(a) Schedule 7.5(1) sets forth each plan, program or arrangement
providing benefits with respect to retirement, death, disability or voluntary
withdrawal from, or involuntary termination of, employment ("Retirement
Benefits") (whether funded or unfunded) which transfers to Purchaser or its
Affiliates in its entirety at or after the Closing by operation of law (each,
a "Transferred Plan"). With respect to the three pension plans set forth in
relation to Germany on Schedule 7.5(1), ABB shall include, as an accrued
liability, the amount derived in accordance with the accounting principles set
forth on Schedule 7.5(1) in the Unaudited Closing Financial Statements.
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(b) Schedule 7.5(2) sets forth each plan, program and arrangement
providing Retirement Benefits (whether funded or unfunded) maintained by ABB
or its Affiliates in which Employees or Former Employees participate but which
will be retained by ABB following the Closing ("Retained Plans"). With regard
to the Retained Plans, each Employee who participates in such Retained Plans
shall cease to be an active participant under each such plan effective as of
the Closing Date. ABB shall calculate and the parties shall use all reasonable
efforts to agree to a transfer payment amount with respect to each Employee
who participates in such Retained Plans in accordance with each such Retained
Plans' respective rules and applicable Law. Following the Closing, such
transfer payment amount shall be payable by ABB to an available plan operated
by the Purchaser or any of its Affiliates, of which the relevant Employee is a
member, or to another plan or arrangement nominated by such Employee.
(c) ABB shall cause the Acquired Group to include as an accrued
liability on the Audited Closing Financial Statements to the extent required
by U.S. GAAP any bonuses (other than those set forth on Section 5.12.5 of the
Disclosure Schedule) payable by an Acquired Company after the Measurement Date
to Employees in respect of periods prior to January 1, 2004.
(d) All liabilities of the Acquired Group as of the Measurement Date
relating to any payment, benefit or right or increased and/or accelerated
payment, benefit or right to which any Employee or Former Employee may be
entitled as a result of (i) any adjustment to the Purchase Price pursuant to
any provision of this Agreement or (ii) the execution of this Agreement or the
consummation of the transactions contemplated hereby, shall be fully accrued
on the Audited Closing Financial Statements to the extent required by U.S.
GAAP. Upon request and proof of payment, ABB shall reimburse the relevant
Acquired Company for any and all payments made after the Measurement Date and
not accrued on the Audited Closing Financial Statements required to be paid by
an Acquired Company under the arrangements set forth on Section 5.12.5 of the
Disclosure Schedule, except for payments made as a result of (i) the
termination by an Acquired Company of an Employee's employment with such
Acquired Company after the Closing, (ii) the termination by an Acquired
Company of an Employee's employment with such Acquired Company prior to the
Closing if done with the prior written consent of Purchaser, or (iii) the
requirements of collective bargaining agreements disclosed in Section 5.12.5
of the Disclosure Schedule.
7.6. Taxes
(a) ABB shall, in a manner consistent with past practice, cause, and
shall have the exclusive authority to cause, each Acquired Company to: (i)
file when due (x) all Tax Returns which are required to be filed with respect
to taxable periods ending on or prior to the date of this Agreement and (y)
any other Tax Returns that ABB determines are due on or prior to the Closing
Date, with respect to the assets, income or operations of each Acquired
Company; and (ii) pay all Taxes shown on such Tax Returns due and payable on
or prior to the Closing Date; provided, however, that ABB shall permit
Purchaser to review and comment on any Tax Return (to the extent, and only to
the extent, it relates to any period after the Measurement Date) prior to
filing and no Tax Returns which relate to any period after the Measurement
Date shall be filed without the written consent of Purchaser (which consent
shall not be unreasonably withheld or delayed).
(b) Except as provided in paragraph (a) of this Section 7.6,
Purchaser shall, after the Closing Date, file all other Tax Returns of the
Acquired Group; provided,
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however, that with respect to Tax Returns covering a taxable period beginning
on or prior to the Measurement Date and ending after the Measurement Date
("Straddle Period"), Purchaser shall treat items on such Tax Returns in
accordance with past practice of ABB and the Acquired Group and shall allow
ABB to review and comment on such Tax Returns prior to filing and no such Tax
Returns shall be filed without the prior written consent of ABB (which consent
shall not be unreasonably withheld or delayed).
(c) ABB shall cause each Acquired Company to terminate and discharge
on or prior to the Closing Date, without further liability or obligation
thereunder, any Tax sharing agreement, Tax indemnity obligation or similar
Contract of any Acquired Company with respect to Taxes.
(d) ABB shall cause Sirius International to furnish to Purchaser, on
or before the Closing Date, a certificate described in Treasury Regulation
Section 1.1445-2(c)(3)(i) stating that Sirius America is not a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
7.7. Replacement of Directors and Auditors
7.7.1 Election of New Board and Auditors
Promptly after the Closing and subject to applicable Law, Purchaser
shall cause each Acquired Company to hold such shareholders' meetings and take
such other actions as may be required in order to elect a new board of
directors (or other comparable managing body) and elect new auditors.
Purchaser shall ensure that, promptly thereafter, each Acquired Company makes
all necessary filings with the relevant governmental authorities and takes all
other necessary action to register in the applicable public registry, if
required, the resignation of the retiring board members and the matters
decided pursuant to this Section 7.7.1.
7.7.2 Discharge of Directors
Purchaser shall procure that, at the first shareholders' meeting or
otherwise whenever the question of discharge is raised after the Closing, each
member of the board and, where applicable, the managing director of each
Acquired Company is discharged in full from any liability as a member of the
board or managing director, as the case may be, in relation to the period
prior to the Closing, provided that the auditor of such Acquired Company has
recommended such discharge.
7.8. No Solicitation/no Hire of Employees
For a period of eighteen (18) months from the Closing, ABB shall
not, and shall cause its Affiliates not to, directly or indirectly, solicit
for employment or employ any Employee, without the prior written consent of
Purchaser; provided that: (i) the placing of an advertisement of a post
available to a member of the public generally, the hiring of any Employee in
response to such an advertisement shall not constitute a breach of this
Section 7.8; and (ii) this obligation shall not prevent ABB or any of its
Affiliates from employing, mandating or otherwise engaging any Employee whose
employment with Purchaser or its relevant Affiliate has been terminated by
Purchaser or any of its Affiliates.
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7.9. No Solicitation of Offers
From the date of this Agreement, ABB shall not, nor shall it permit
any of its Affiliates to, nor shall they authorize any of their directors,
officers or employees or any investment banker, financial advisor, attorney,
accountant or other representative retained by them or any of their Affiliates
to, and they shall use all reasonable efforts to ensure that such persons do
not, directly or indirectly, (i) solicit, initiate or encourage (including by
way of furnishing information), or take any other action designed to
facilitate, any inquiries or the making of any proposal which constitutes, or
is likely to lead to any proposal to acquire all or any significant portion of
any Acquired Company or (ii) participate in any discussions or negotiations
regarding any such proposal.
7.10. Notice of Certain Matters
7.10.1 Notices by ABB
(a) Up to the Closing Date, ABB covenants and agrees to give prompt
notice in writing to Purchaser of: (i) any information evidencing that any
representation or warranty given by it herein was not true and correct as of
the date hereof or will not be true and correct as of the Measurement Date or
the Closing Date, as applicable; (ii) the occurrence of any event which will,
or is reasonably likely to, result in the failure to satisfy a condition
specified in Section 8.1 or 8.2; (iii) any written notice or other written
communication from any third party alleging that the consent of such third
party is required in connection with the transactions contemplated by this
Agreement; (iv) except as prohibited by applicable Law, any notice or other
communication from any governmental entity in connection with the transactions
contemplated by this Agreement; (v) any written notice of, or other written
communication relating to, any default under any Disclosed Insurance Agreement
within the terms of Section 5.10.1(h) or any Material Contract; or (vi) any
change in the officers or directors of any Acquired Company.
(b) ABB covenants and agrees to notify Purchaser of any governmental
complaints, investigations or hearings or adjudicatory proceedings involving
any material property or asset of any Acquired Company and will keep Purchaser
reasonably informed of such events and permit Purchaser's representatives
reasonable access to all materials prepared by or on behalf of ABB or its
Affiliates in connection therewith (except where, in the good faith judgment
of ABB, the disclosure of any documents produced or prepared by the legal
representatives of ABB or its Affiliates would reasonably be expected to
jeopardize the legal privilege otherwise accorded such documents).
7.10.2 Notices by Purchaser
Purchaser covenants and agrees to give prompt notice in writing to
ABB of: (i) any information evidencing that any representation or warranty
given by it herein was not true and correct as of the date hereof or will not
be true and correct as of the Closing Date; (ii) the occurrence of any event
which will, or is reasonably likely to, result in the failure to satisfy a
condition specified in Section 8.1 or 8.3; or (iii) any written notice or
other written communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement.
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7.10.3 Consequences of Notices
The giving of any notice under this Section 7.10 shall in no way
change or modify ABB's or Purchaser's representations and warranties and
covenants or the conditions to any party's obligations contained herein or
otherwise affect the remedies available to Purchaser or ABB hereunder.
7.11. Intercompany Accounts
Except as otherwise specifically provided in this Agreement, ABB
shall cause all intercompany accounts receivable or payable (whether or not
currently due or payable) in an aggregate amount in excess of SEK 800,000 (or
its foreign currency equivalent), including any amounts receivable or payable
in connection with any Affiliate Contract, other than Direct Insurance
Agreements, Assumed Reinsurance Agreements or Ceded Reinsurance Agreements,
between (i) any member of the Acquired Group, on the one hand, and (ii) ABB,
any of its Affiliates (other than the Acquired Companies), or any of their
respective officers, directors or employees, on the other hand to be settled
in full (without any premium or penalty) at or prior to the Closing. Within
five (5) Business Days prior to the Closing, ABB shall prepare and deliver to
Purchaser a preliminary statement setting out in reasonable detail the
calculation of all such intercompany account balances as of such date based
upon the latest available financial information as of such date. ABB shall
deliver to Purchaser reasonable supporting documentation verifying the
underlying intercompany charges and transactions.
7.12. Investment Portfolio
Prior to the Closing Date, ABB shall deliver to Purchaser, within
fifteen (15) Business Days after the end of each calendar month, a true and
correct list of all investments constituting the Investment Portfolio as of
the end of such month, the issuer of such investments, the nominal amount
owned and the market value with respect to public investments (or book value
with respect to private investments) of such investments as of the end of such
month.
7.13. Assignment of Confidentiality Agreements
Prior to or at the Closing, ABB shall cause any confidentiality
agreements entered into by ABB or any of its Affiliates since January 1, 2002
relating solely to the Business or any properties, assets, liabilities or
activities of any Acquired Company in connection with a sale or disposition of
the Business or a part thereof that are not agreements to which an Acquired
Company is a party to be assigned to an Acquired Company unless prohibited by
the terms of such confidentiality agreement.
7.14. Amendment of Leases
Prior to the Closing, ABB shall use its reasonable efforts to cause
the leases under which ABB or any of its Affiliates (other than an Acquired
Company) leases any real property used by an Acquired Company immediately
prior to the execution of this Agreement to be amended, to the extent
necessary, to permit such Acquired Company to directly lease such real
property after the Closing on terms and conditions consistent in all material
respects with the terms under which ABB or its Affiliates lease such property.
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7.15. Sirius Belgium
After the Closing, Purchaser agrees that: (i) it shall not liquidate
Sirius Belgium prior to the full realization of all refunds, credits or
offsets of Taxes described in Section 9.6.4(b) (including the final settlement
of any Tax Claims relating thereto); and (ii) it shall reasonably cooperate
with ABB and follow ABB's reasonable instructions (at the expense of ABB) in
the liquidation of Sirius Belgium as soon as practicable after its receipt of
any refunds, credits or offsets contemplated in clause (i) above.
7.16. Access to Purchaser Auditors
From the delivery of the Audited Closing Financial Statements to ABB
and Purchaser pursuant to Section 3.4.2 until the Closing, ABB shall afford
Purchaser's auditors, employees and representatives such reasonable access as
they may from time to time reasonably request, during normal business hours
and in a manner which is not disruptive to the operations of the Business or
the business of ABB or any of its Affiliates to the Acquired Group's and each
member of the Acquired Group's respective officers, employees, agents,
accountants (including the Business Auditors) and actuaries and to the
premises, properties, books, accounting records and other documents (including
supporting contractual documentation and the work papers of the Business
Auditors relating to the audit of the Financial Statements and the Audited
Closing Financial Statements, provided that Purchaser's auditors, employees
and representatives have signed any release letter reasonably required by the
Business Auditors in connection therewith) of the Acquired Group or available
to the Acquired Group, in each case solely for the purpose of enabling
Purchaser's auditors, employees and representatives to prepare and audit a
consolidated balance sheet of the Acquired Group as of December 31, 2003,
together with related consolidated income statements and statements of cash
flow for the twelve month period then ended.
7.17. Facility Agreement
ABB shall promptly after the date of this Agreement commence such
actions as shall be reasonably necessary to enable it to obtain the
certificates from the Pledge Agent and Lenders required to be delivered
pursuant to Section 8.2(d).
7.18. Purchaser Disclosure Procedures
Prior to the Closing, ABB shall permit Purchaser to liaise with the
Senior Executives to ensure that such controls and procedures as Purchaser
intends to implement for the Acquired Group as and from the Closing to satisfy
its obligations under Rules 13a-15(e) and (f) and 15d-15(e) and (f)
promulgated under the U.S. Securities Exchange Act of 1934, as amended, can
reasonably be implemented with effect from the Closing. Nothing in this
Section 7.18 shall require ABB to implement any such controls and procedures
prior to the Closing.
7.19. Dividends
(a) In the event that ABB proposes to authorize any Acquired Company
to make the ABB Distribution prior to the delivery by ABB of the Unaudited
Closing Financial Statements pursuant to Section 3.4.1, ABB shall prepare in
good faith and in consultation with the Business Auditors: (i) an unaudited
consolidated balance sheet of the Acquired Group as of December 31, 2003,
together with a related unaudited consolidated income
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statement for the twelve month period then ended, each in accordance with U.S.
GAAP, as applied by the ABB Group in its U.S. GAAP ABACUS reporting system and
in the form of Schedule 3.4.1(2) (the "ABACUS Financial Statements"); and (ii)
a statement showing the calculation of Net Equity (the "ABACUS Net Equity"),
determined on the basis of the ABACUS Financial Statements and taking into
account the adjustments set out in Schedule 3.4.1(1) (the "ABACUS Net Equity
Statement"), and shall deliver such ABACUS Financial Statements and ABACUS Net
Equity Statement to Purchaser at least five (5) Business Days prior to the
date of the ABB Distribution.
(b) Within 30 days after the Measurement Date, ABB, after consulting
with its auditors, shall deliver to Purchaser a certificate setting forth the
maximum amount, in Swedish kronor (the "Permitted ABB Distribution Amount"),
that ABB in its good faith and reasonable judgment believes that the Acquired
Group may distribute to ABB or any of its Affiliates (other than the Acquired
Companies) under applicable Law. ABB shall cause a member of the Acquired
Group to pay a dividend or other distribution (the "ABB Distribution") to ABB
or any of its Affiliates (other than an Acquired Company) after the
Measurement Date and prior to the Closing but no earlier than five (5)
Business Days after delivery of (i) the Unaudited Closing Financial Statements
and Unaudited Closing Net Equity Statement pursuant to Section 3.4.1 or (ii)
the ABACUS Financial Statements and ABACUS Net Equity Statement pursuant to
this Section 7.19, which ABB Distribution shall be in an amount (the "ABB
Distribution Amount") equal to the lesser of:
(x) the Permitted ABB Distribution Amount;
(y) (A) the amount by which the ABACUS Net Equity exceeds the
Guaranteed Net Equity if the Unaudited Closing Financial Statements have
not been delivered to Purchaser at least five (5) Business Days prior to
the date of the ABB Distribution; (B) the amount by which the Unaudited
Net Equity exceeds the Guaranteed Net Equity, if the Audited Closing
Financial Statements have not been delivered to Purchaser at least five
(5) Business Days prior to the date of the ABB Distribution; (C) the
amount by which the Audited Net Equity exceeds the Guaranteed Net Equity,
if the Final Closing Financial Statements have not been delivered to
Purchaser at least five (5) Business Days prior to the date of the ABB
Distribution; or (D) the amount by which the Final Net Equity exceeds the
Guaranteed Net Equity, if the Final Closing Financial Statements have
been delivered to Purchaser at least five (5) Business Days prior to the
date of the ABB Distribution; or
(z) such lesser amount as ABB proposes and has been approved by
Purchaser (such approval not to be unreasonably withheld or delayed);
provided, however, that, without prejudice to Purchaser's right of
approval generally, it shall not be unreasonable for Purchaser to
withhold its consent if it or any of its Affiliates would (i) suffer any
economic loss (other than an immaterial loss) or (ii) incur any financing
costs.
(c) The parties agree that, notwithstanding any other provisions of
this Agreement, Sirius Holding may pay the Sirius Holding Dividend to ABB or
any of its Affiliates prior to the Measurement Date.
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7.20. Abb Intellectual Property
7.20.1 Branded Assets
To the extent any trademarks, registered or unregistered (including
logos or other devices), or any trading names owned by ABB or any of its
Affiliates (other than the Acquired Companies) (including, for the avoidance
of doubt, the words "ABB", "BBC", "Asea", "▇▇▇▇▇" or "Boveri") are included in
any business stationery, brochures, technical literature, drawings and other
documents, or are displayed on any premises, signs, vehicles or uniforms,
which are owned by any Acquired Company (collectively, "Branded Assets"),
Purchaser may, for a period of sixty (60) days after the Closing Date, use
such Branded Assets, after which date it shall cross out, ▇▇▇▇ over or
otherwise cover or redact such references and otherwise clearly indicate on
such Branded Assets that the Business is no longer owned by ABB or any of its
Affiliates (other than the Acquired Companies).
7.20.2 No Other Use
Except as permitted by Section 7.20.1, Purchaser shall not, and
shall procure that none of its Affiliates shall, after the Closing, use in any
way whatsoever any registered or unregistered trademarks, including any logos
or other devices, or any trading names which are owned by ABB or any of its
Affiliates (other than the Acquired Companies) (including, for the avoidance
of doubt, any reference to "ABB", "BBC", "Asea", "▇▇▇▇▇" or "Boveri").
7.21. Amendments to Certain Contracts
ABB shall use its reasonable efforts to cause each Contract set
forth on Schedule 7.21 to be amended, effective as of the Closing, to permit
each Acquired Company that is a party thereto to directly lease the personal
property subject to such Contract directly from the lessor on the terms
applicable to each Acquired Company under such Contract as at the date of this
Agreement; provided, however, that if amending any such Contract will cause
the aggregate amounts payable, determined on a monthly basis, by the Acquired
Companies that are a party to such amended Contract to increase by more than
20% over the aggregate amounts payable, determined on a monthly basis, by or
on behalf of the same Acquired Companies under the applicable Contract as at
the time immediately prior to the Closing, ABB shall be responsible for 50% of
such excess monthly amounts payable for a period starting from the Closing
Date and ending on the date on which such amended Contract would have
terminated in accordance with its terms and without penalty to any Acquired
Company that is a party thereto, assuming a notice of termination was provided
under such amended Contract on the Closing Date.
7.22. Employees
Purchaser agrees to promptly inform ABB of any Contract with any
Employee that it or any of its Affiliates enters into between the date of this
Agreement and the Closing Date that provides for any payments or benefits to
such Employee as a result of any adjustment to the Purchase Price pursuant to
any provision of this Agreement.
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ARTICLE 8
CONDITIONS TO CLOSING
8.1. Conditions of Both Parties
The obligation of each of ABB and Purchaser to consummate the
transactions contemplated hereby is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
(a) no injunction, restraining order or other order issued by any
court of competent jurisdiction or governmental authority or other legal
or regulatory restraint or prohibition preventing the consummation of the
transactions contemplated hereby shall be in effect;
(b) the consents and authorizations by or of, and filings with and
notifications to, governmental authorities set forth in Schedule 8.1
shall have been obtained or effected, and all applicable waiting periods
set forth in Schedule 8.1 shall have expired or been terminated and, in
the case of such consents and authorizations, shall be in full force and
effect;
(c) the U.S. Closing shall have occurred immediately prior to the
Closing; and
(d) at least fifteen (15) days shall have passed since the Business
Auditors delivered the Audited Closing Financial Statements and Audited
Closing Net Equity Statement to ABB and Purchaser.
8.2. Additional Conditions of Purchaser
The obligation of Purchaser to consummate the transactions
contemplated hereby is subject to the fulfillment of the following conditions
prior to or at the Closing (which may be waived by Purchaser in writing in its
sole discretion):
(a) the representations and warranties of ABB set forth herein shall
be true and correct, both when made and as of the Closing Date, as if
made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct,
individually or in the aggregate, has not had and is not reasonably
likely to result in a Material Adverse Effect (it being agreed that for
the purpose of calculating whether the effect of breaches of such
representations and warranties have had or are reasonably likely to
result in a Material Adverse Effect, but not for the determination of
breaches themselves, such representations and warranties shall be deemed
not qualified by any references therein to materiality or Material
Adverse Effect);
(b) ABB shall have performed and complied in all material respects
with all of its undertakings and agreements required by this Agreement to
be performed or complied with by it prior to the Closing;
(c) ABB shall have delivered to Purchaser a legal opinion from
Froriep ▇▇▇▇▇▇▇, counsel to ABB and ABB Ltd, substantially in the form of
Annex 3,
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addressed to Purchaser and White Mountains Insurance Group, Ltd. and date
the Closing Date;
(d) ABB shall have delivered to Purchaser either (i) if the Facility
Agreement and Pledge Agreement have not been terminated prior to the
Closing, certificates from the Pledge Agent and each Lender stating: (x)
the total amount required to be paid to the Lenders to cause them to
terminate in full the Facility Agreement and the Pledge Agreement (the
"Lenders' Payment"); and (y) that the Facility Agreement and Pledge
Agreement shall be deemed terminated as of the Closing Date upon the
Lenders receipt of the Lenders' Payment on such date, or (ii) if the
Facility Agreement and Pledge Agreement have been terminated prior to
Closing, certificates from the Pledge Agent and each Lender stating: (x)
the Facility Agreement and Pledge Agreement have been terminated; and (y)
neither the Facility Agent nor any Lender has any Encumbrances over the
shares of Sirius International;
(e) there shall not be pending any suit, action or proceeding
brought by any governmental authority (i) challenging or seeking to
restrain or prohibit the consummation of any of the transactions
contemplated hereby; (ii) seeking to prohibit or limit in any material
respect the ownership or operation by any Acquired Company, Purchaser or
any of their respective Affiliates of a portion of the business,
Properties or assets of any Acquired Company, any Subsidiary of an
Acquired Company, Purchaser or any Affiliate of Purchaser or to require
any such Person to dispose of or hold separate any portion of the
business, Properties or assets of any Acquired Company, any Subsidiary of
an Acquired Company, Purchaser or any Affiliate of Purchaser as a result
of the transactions contemplated hereby; or (iii) seeking to prohibit
Purchaser, any Acquired Company or any of their Affiliates from
effectively controlling in any respect the business or operations of any
Acquired Company or any Subsidiary of an Acquired Company; provided that
Purchaser or such of its Affiliates as are party to such suit, action or
proceeding shall use their reasonable efforts to obtain settlement or
discharge of such suit, action or proceeding, but provided further that
Purchaser or its Affiliates shall not be required to dispose of or hold
separate any portion of their businesses or properties or assets, or
those of the Acquired Group, or to accept any limitations upon the
ownership or operation by Purchaser or its Affiliates or any Acquired
Company of a portion of any of the business, properties or assets, in
connection with any such settlement or discharge; and
(f) since the date of this Agreement, there shall not have occurred
any change in, or effect on, the Acquired Group which individually or in
the aggregate is, or is reasonably likely to be, materially adverse to
the financial condition of the Acquired Group, taken as a whole, other
than changes or effects resulting from (i) changes in general economic
conditions or financial market conditions (including currency rate
fluctuations and interest rate changes), (ii) any decline in the value of
the Investment Portfolio, (iii) catastrophe events with an impact in the
ordinary course of the Business, (iv) legal or regulatory changes
affecting the property and casualty insurance or reinsurance industry
generally that do not specifically relate to any Acquired Company or
disproportionately affect any Acquired Company (by way of example and not
by way of limitation, the full extent of any change that specifically
relates to any Acquired Company or disproportionately affects any
Acquired Company shall be considered in determining whether there is, or
is reasonably likely to be, a material adverse change or effect on the
financial condition of the Acquired
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Group) or (v) the announcement of this Agreement or the consummation of
the transactions specifically contemplated hereby, including the cessation
of the Financial Risks Business pursuant to Section 7.2.4(dd).
8.3. Additional Conditions of ABB
The obligation of ABB to consummate the transactions contemplated
hereby is subject to the fulfillment of the following conditions prior to or
at the Closing (which may be waived by ABB in writing in its sole discretion):
(a) the representations and warranties of Purchaser set forth herein
shall be true and correct, both when made and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made as of
an earlier date, in which case as of such date) except where the failure
of such representations and warranties to be so true and correct,
individually or in the aggregate, has not materially adversely affected
and is not reasonably likely to materially adversely affect the ability
of Purchaser to complete the transactions contemplated hereby (it being
agreed that for the purpose of calculating whether the effect of breaches
of such representations and warranties has materially adversely affected
or is reasonably likely to materially adversely affect the ability of
Purchaser to complete the transactions contemplated hereby, but not for
the determination of breaches themselves, such representations and
warranties shall be deemed not qualified by any references therein to
materiality);
(b) Purchaser shall have performed and complied in all material
respects with all of its undertakings and agreements required by this
Agreement to be performed or complied with by it prior to the Closing;
(c) Purchaser shall have delivered to ABB a legal opinion from
Advokatfirman ▇▇▇▇▇ KB, counsel to Purchaser, substantially in the form
of Annex 4, addressed to ABB and dated the Closing Date; and
(d) Purchaser shall have delivered to ABB a legal opinion from
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to White Mountains Insurance Group,
Ltd., substantially in the form of Annex 6, addressed to ABB and dated
the Closing Date.
8.4. Frustration of Closing Conditions
No party may rely on the failure of any condition set forth in
Section 8.1, 8.2 or 8.3, as the case may be, to be satisfied if such failure
was caused by such party's failure, subject to the terms and conditions of this
Agreement, to use reasonable efforts to consummate the transactions
contemplated by this Agreement.
ARTICLE 9
LIABILITY AND RELATED MATTERS
9.1. Indemnification by ABB
From and after the Closing, ABB shall indemnify Purchaser and its
Affiliates (including, for the avoidance of doubt, the Acquired Companies) and
each of their respective officers, directors, employees, heirs, successors and
assigns against and hold them harmless
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from (whether in connection with a Third Party Claim or a Direct Claim) any
Loss (payable promptly upon agreement between ABB and Purchaser or upon final
determination of ABB's liability pursuant to the provisions of Section 11.10,
for such Third Party Claim or Direct Claim) by any such Indemnified Party
caused by or resulting from:
(a) any breach of any representation or warranty of ABB contained in
Article 5 or in any certificate delivered by or on behalf of ABB at the
Closing (it being agreed that for purposes of such indemnification, the
representations and warranties of ABB shall, with respect to calculation
of Losses only (but not for determination of breaches), be deemed not
qualified by any references therein to materiality or to the occurrence
or reasonable likelihood of a Material Adverse Effect);
(b) any breach of any obligation of ABB contained in this Agreement;
(c) the liabilities of Sirius Holding on a stand-alone basis
(disregarding any obligations or liabilities of any other Acquired
Company) incurred prior to the Closing;
(d) the Facility Agreement and the Pledge Agreement;
(e) the liabilities of Sirius Belgium (other than liabilities
incurred by Sirius Belgium after the Closing Date as a result of actions
taken after the Closing Date by Purchaser or its Affiliates (including
any Acquired Company) and not authorized in writing by ABB);
(f) any breaches of Law or Contract resulting from the Sirius
International Swedish defined contribution funded Retirement Plan having
been converted from a defined benefit plan to a defined contribution plan
(any claims alleged in connection with any such breaches to be
administered in accordance with Section 9.4);
(g) any obligation or liabilities relating exclusively to the ABB
Group (excluding the Acquired Group) for which Purchaser or any of its
Affiliates (including, for the avoidance of doubt, any Acquired Company)
becomes liable (excluding, for the avoidance of doubt, any obligations or
liabilities arising out of Contracts to which an Acquired Company is a
party); or
(h) any Retained Plan, other than a Loss resulting from liabilities
and obligations included in the calculation of the transfer payment
amounts applicable to such Retained Plan and agreed by Purchaser and ABB
in accordance with Section 7.5(b);
provided, however, that ABB shall not be required to indemnify or hold
harmless any Person, and shall not have any liability:
(i) under clause (a) of this Section 9.1, other than any
liability relating to a representation or warranty of ABB contained
in Sections 5.1, 5.2.1, 5.3, 5.4, 5.20 or 5.21 of this Agreement
(collectively, the "ABB Specified Claims"), (x) unless the aggregate
of all Losses relating thereto for which ABB would, but for this
proviso, be liable exceeds on a cumulative basis an amount equal to
SEK 55 million, and then only to the extent of any
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such excess; and (y) for any individual breach where the Loss with
respect to such individual breach is less than SEK 5 million,
provided, that (i) the term "individual breach" shall mean each
individual breach of a particular warranty and not the aggregation
of individual breaches of a particular warranty into a single breach
(e.g., if ABB failed to disclose five contracts under a particular
warranty, and the failure to disclose any one of those contracts
would be a breach, then the five contracts together would be
considered multiple breaches, of which each such undisclosed
contract would be an "individual breach"), and (ii) for purposes of
the calculation of the Loss with respect to such individual breach,
a series of separate Losses caused by or resulting from the same
individual breach shall be aggregated (e.g., if an individual breach
causes or results in two separate Losses of SEK 3 million each, such
Losses shall be aggregated to a sum of SEK 6 million for purposes of
determining whether the "Loss with respect to such individual
breach" is less than SEK 5 million), provided, however, that this
clause (i) shall not apply with respect to Losses in respect of a
failure to disclose in Section 5.10.1(1), 5.10.1(2), 5.10.1(3),
5.10.1.(4) or 5.10.1(5) of the Disclosure Schedule any Direct
Insurance Agreement, Assumed Reinsurance Agreement, Ceded
Reinsurance Agreement, Reinsurance Pool or Scan Re Agreement
required to be disclosed by ABB pursuant to Section 5.10.1 (the
"Insurance Agreement Claims"); and
(ii) under clause (a) of this Section 9.1 for any Losses in
excess of an amount equal to 80% of the International Purchase
Price; provided, however, that this limitation shall not apply to
any Losses relating to an ABB Specified Claim.
This Section 9.1 shall not apply to any claim for
indemnification with respect to any Taxes, which claims shall be
governed by Section 9.6.
9.2. Indemnification by Purchaser
From and after the Closing, Purchaser shall indemnify ABB and its
Affiliates, officers, directors, employees, heirs, successors and assigns
against and hold them harmless from (whether in connection with a Third Party
Claim or a Direct Claim) any Loss payable promptly upon agreement between ABB
and Purchaser or upon final determination of Purchaser's liability pursuant to
the provisions of Section 11.10, as applicable, for such Third Party Claim or
Direct Claim by any such Indemnified Party caused by or resulting from:
(a) any breach of any representation or warranty of Purchaser
contained in Article 6 or any certificate delivered by or on behalf of
Purchaser at the Closing (it being agreed that for the purposes of such
indemnification, the representations and warranties of Purchaser shall,
with respect to calculation of Losses only (but not for determination of
breaches), be deemed not qualified by any references therein to
materiality); or
(b) any breach of any obligation of Purchaser contained in this
Agreement;
(c) any of the employee benefit, bonus, incentive compensation,
severance, salary continuation, termination or retention pay, death
benefit, welfare benefit (including all obligations under Section 4980B
of the Code and Part 6 of Subtitle B of Title I of the Employee
Retirement Income Security Act of 1974, as
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amended), profit-sharing, pension, retirement, deferred compensation,
medical, life insurance, disability, accident, accrued leave, vacation,
sick pay, sick leave, unemployment benefit and fringe benefit plans,
programs and arrangements and employment, consulting, termination,
retirement and severance contracts and agreements, including the
Transferred Plans, which transfer to Purchaser or its Affiliates in their
entirety at or after the Closing by operation of Law, other than (i)
Losses caused by a failure by ABB and its Affiliates (including the
Acquired Group) prior to the Closing to comply with Law or the terms of
such plans, programs, arrangements, contracts or agreements or (ii)
Losses for which ABB has agreed to indemnify the Purchaser under Section
9.1;
provided, however, that Purchaser shall not be required to indemnify or hold
harmless any Person, and shall not have any liability:
(i) under clause (a) of this Section 9.2, other than any
liability relating to a representation or warranty of Purchaser
contained in Section 6.1 or 6.2.1 of this Agreement (collectively,
the "Purchaser Specified Claims"), (x) unless the aggregate of all
Losses relating thereto for which Purchaser would, but for this
proviso, be liable exceeds on a cumulative basis an amount equal to
SEK 55 million, and then only to the extent of any such excess; and
(y) for any individual breach where the Loss with respect to such
individual breach is less than SEK 5 million, provided, that (i) the
term "individual breach" shall mean each individual breach of a
particular warranty and not the aggregation of individual breaches
of a particular warranty into a single breach (e.g., if Purchaser
failed to disclose five contracts under a particular warranty, and
the failure to disclose any one of those contracts would be a
breach, then the five contracts together would be considered
multiple breaches, of which each such undisclosed contract would be
an "individual breach"), and (ii) for purposes of the calculation of
the Loss with respect to such individual breach, a series of
separate Losses caused by or resulting from the same individual
breach shall be aggregated (e.g., if an individual breach causes or
results in two separate Losses of SEK 3 million each, such Losses
shall be aggregated to a sum of SEK 6 million for purposes of
determining whether the "Loss with respect to such individual
breach" is less than SEK 5 million); and
(ii) under clause (a) of this Section 9.2 for any Losses in
excess of an amount equal to 80% of the International Purchase
Price; provided, however, that this limitation shall not apply to
any Losses relating to a Purchaser Specified Claim.
9.3. Termination of Indemnification
The obligations to indemnify and hold harmless any party:
(a) pursuant to clause (a) of each of Sections 9.1 and 9.2, other
than such obligations relating to the Insurance Agreement Claims, the ABB
Specified Claims or the Purchaser Specified Claims, shall terminate on
the second anniversary of the Closing Date; provided, however, that such
obligations to indemnify and hold harmless shall not terminate with
respect to any item as to which the Person to be indemnified
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shall have, before the second anniversary of the Closing Date, provided
notice with respect to a Third Party Claim or Direct Claim, as
applicable;
(b) pursuant to clause (a) of Section 9.1 for obligations relating
to the Insurance Agreement Claims shall terminate on the fifth
anniversary of the Closing Date; provided, however, that such obligations
to indemnify and hold harmless shall not terminate with respect to any
item as to which the Person to be indemnified shall have, before the
fifth anniversary of the Closing Date, provided notice with respect to a
Third Party Claim or Direct Claim, as applicable; and
(c) pursuant to: (i) clause (a) of Sections 9.1 and 9.2 for ABB
Specified Claims or Purchaser Specified Claims; (ii) pursuant to the
clauses of Sections 9.1 and 9.2 other than clause (a); (iii) Section 9.8;
(iv) Section 9.9; and (v) Section 9.10 shall not terminate with respect
to any item as to which the Person to be indemnified shall have, before
the expiration of the applicable statute of limitations, if any, provided
notice with respect to a Third Party Claim or Direct Claim, as
applicable.
9.4. PROCEDURES RELATING TO THIRD PARTY AND DIRECT INDEMNIFICATION CLAIMS
9.4.1 Third Party Claims
(a) In order for a Person (the "Indemnified Party") to be entitled
to any indemnification pursuant to this Article 9 in respect of, arising
out of or involving a claim or demand (other than a claim or demand
relating to Taxes) made by any Person other than a party hereto against
the Indemnified Party (a "Third Party Claim"), such Indemnified Party
must notify the Person obligated to provide indemnification pursuant to
this Article 9 (the "Indemnifying Party") in writing of the Third Party
Claim promptly, and in any event within thirty (30) days, after receipt
by such Indemnified Party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not
affect the indemnification provided under this Agreement except to the
extent the Indemnifying Party shall have been actually and materially
prejudiced as a result of such failure. Such written notice shall
describe in reasonable detail the facts and circumstances known to the
Indemnified Party with respect to the subject matter of such Third Party
Claim. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party promptly, and in any event within ten (10) Business
Days after the Indemnified Party's receipt thereof, copies of all notices
and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim; provided, however, that failure to
make such delivery shall not affect the indemnification provided under
this Agreement except to the extent the Indemnifying Party shall have
been actually and materially prejudiced as a result of such failure.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate in the defense
thereof and, if it so chooses and acknowledges its obligation to fully
indemnify the Indemnified Party therefor in accordance with this
Agreement, to assume and control the defense thereof with counsel
selected by the Indemnifying Party, the selection of whom shall be
subject to prior consultation and cooperation with the Indemnified Party
for a period of no less than ten (10) days (but not the consent of the
Indemnified Party) unless the Third Party Claim seeks an order or
injunction or other relief requiring a response from the Indemnifying
Party in less than ten (10) days, provided that the Indemnifying Party
keeps the Indemnified Party and its attorneys reasonably informed as to
the progress of the defense and any proposed settlement. If the
Indemnifying Party so elects to assume the defense of a Third Party
Claim, the
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Indemnifying Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof. If the Indemnifying Party assumes such defense,
the Indemnified Party shall have the right to participate in the defense
thereof and to employ at its own expense counsel not reasonably objected
to by the Indemnifying Party separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party shall
control such defense, subject to the remaining terms of this Section
9.4.1.
(c) The Indemnifying Party shall be liable for the reasonable fees
and expenses of one primary counsel, and to the extent reasonably
required in connection with such Third Party Claim, one or more local
counsel, and such other counsel as may be reasonably required due to a
conflict of interest among Indemnified Parties, in each case employed by
the Indemnified Party for any period during which the Indemnifying Party
has not assumed the defense thereof.
(d) If the Indemnifying Party chooses to defend or prosecute any
Third Party Claim, all the parties hereto shall reasonably cooperate and
shall cause their Affiliates to reasonably cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Party's request) the provision to the Indemnifying
Party of records and information that are reasonably relevant to such
Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder.
(e) Whether or not the Indemnifying Party assumes the defense of a
Third Party Claim, the Indemnified Party shall not admit any liability
with respect to, or settle, compromise or discharge, such Third Party
Claim without the Indemnifying Party's prior written consent (which
consent shall not be unreasonably withheld or delayed). If the
Indemnifying Party assumes the defense of a Third Party Claim, the
Indemnified Party shall agree to any settlement, compromise or discharge
of such Third Party Claim that the Indemnifying Party may recommend and
that by its terms (or pursuant to a binding commitment of the
Indemnifying Party) obligates the Indemnifying Party to pay the full
amount (subject to any limitation on payment contained in this Article 9)
of such liability in connection with such Third Party Claim which
releases the Indemnified Party completely in connection with such Third
Party Claim.
(f) Notwithstanding anything to the contrary in this Section 9.4.1,
the Indemnified Party may assume the exclusive right to defend any Third
Party Claim (and the Indemnifying Party shall be liable for the
reasonable fees and expenses of one primary counsel, and to the extent
reasonably required in connection with such Third Party Claim, one or
more local counsel, and such other counsel as may be reasonably required
due to a conflict of interest among Indemnified Parties, incurred by the
Indemnified Party in defending such Third Party Claim) if the Third Party
Claim seeks an order, injunction or other equitable relief or relief for
non-monetary damages against the Indemnified Party that cannot be
separated from any related claim for money damages; provided that upon
the non-appealable grant or dismissal of all such applications for an
order, injunction or other equitable relief or relief for non-monetary
damages, the Indemnifying Party may resume the exclusive right to defend
such Third Party Claim. If all of such injunctive, equitable and other
non-monetary relief portions 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. In the event
the Indemnified Party assumes the exclusive right to defend any such
Third Party Claim under this Section 9.4.1, the Indemnifying Party will
not be bound by any
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determination of such claim or proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld or delayed).
(g) If the Indemnifying Party shall fail to defend any claim or
proceeding for which it has assumed the defense hereunder, or if, after
commencing or undertaking any such defense, the Indemnifying Party fails
to diligently prosecute and defend or withdraws from such defense, then
the Indemnified Party may notify the Indemnifying Party of this
circumstance, and the Indemnifying Party shall have fifteen (15) days to
rectify this failure. If such failure is not rectified within such
period, then the Indemnified Party shall have the right to defend such
Third Party Claim by giving the Indemnifying Party written notice of such
decision within fifteen (15) days after the expiration of the fifteen-day
cure period referred to in the previous sentence; provided, however, that
the Indemnified Party shall not admit any liability or consent to the
entry of any judgment or enter into any settlement without the prior
written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed). If the Indemnified Party assumes the
defense of a Third Party claim pursuant to this Section 9.4.1, the
Indemnifying Party shall be entitled to (i) participate in the defense of
such Third Party Claim, and (ii) employ counsel, at its own expense,
separate from the counsel employed by Indemnified Party.
9.4.2 Direct Claims
In the event any Indemnified Party should have an indemnification
claim against any Indemnifying Party under this Agreement that does not
involve a Third Party Claim being asserted against or sought to be collected
from such Indemnified Party (a "Direct Claim"), the Indemnified Party shall
promptly deliver notice of such Direct Claim to the Indemnifying Party, which
notice must refer to this Section 9.4.2 and expressly state that the
Indemnifying Party's failure to dispute any such Direct Claim within thirty
(30) days following the Indemnifying Party's receipt of such notice shall
result in such Direct Claim being conclusively deemed a liability of the
Indemnifying Party pursuant to this Section 9.4.2. The failure by any
Indemnified Party so to notify the Indemnifying Party shall not relieve the
Indemnifying Party from any liability that it may have to such Indemnified
Party, except to the extent that the Indemnifying Party has been actually and
materially prejudiced by such failure. If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days following its receipt of
such notice that the Indemnifying Party disputes such Direct Claim, such
Direct Claim specified by the Indemnified Party in such notice shall be
conclusively deemed a liability of the Indemnifying Party under this Article
9, and the Indemnifying Party shall pay the amount of such liability to the
Indemnified Party on demand, or in the case of any notice in which the amount
of the Direct Claim is estimated, on such later date when the amount of such
Direct Claim is finally determined; provided that in any such case such
payment shall be made in accordance with Section 9.7. If the Indemnifying
Party disputes its liability with respect to such Direct Claim in a timely
manner, the Indemnifying Party and the Indemnified Party shall proceed in good
faith to negotiate a resolution of such dispute; provided, however, that
either party may at any time refer such dispute to arbitration pursuant to
Section 11.10.
9.5. Assignment of Rights
Promptly upon request by the Indemnifying Party after having paid in
full the Indemnified Party for any Loss in accordance with this Article 9, the
Indemnified Party shall use reasonable efforts to assign, or cause to be
assigned, to the Indemnifying Party or its designated Affiliate any and all
rights (including any rights to indemnification and
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reimbursement) of the Indemnified Party and its Affiliates against any Person
(other than an Affiliate of the Indemnified Party) in relation to and to the
extent of the Loss so indemnified by the Indemnifying Party.
9.6. Tax Indemnification and Related Matters
Notwithstanding anything in this Agreement to the contrary:
9.6.1 Tax Indemnification
(a) ABB shall indemnify Purchaser and its Affiliates and each of
their respective officers, directors, employees, heirs, successors and assigns
against and hold them harmless on an after-Tax basis from (i) all liability
for Taxes of each Acquired Company (including Taxes resulting from any Tax
sharing, allocation, indemnification or similar agreement between any Acquired
Company and any other Person) and each affiliated group of which any Acquired
Company is or has been a member with respect to any taxable period ending on
or before the Measurement Date or with respect to the portion ending on the
Measurement Date of any taxable period that includes (but does not end on)
such date (each, a "Pre-Measurement Tax Period"), to the extent such Taxes are
not reflected in the Final Closing Financial Statements, (ii) all Taxes
imposed on the Acquired Companies, as a result of United States Treasury
Regulation Section 1.1502-6(a) (or a similar provision of state, local or
foreign law), (iii) any Taxes in the form of value added tax imposed by any
taxing authority in Switzerland upon any Acquired Company after the
Measurement Date in connection with the Acquired Group being an Affiliate of
the ABB Group prior to the Closing, (iv) all liability for Taxes of ABB, the
Acquired Group and all of their Affiliates arising (directly or indirectly) as
a result of any merger, consolidation or other restructuring described in
Schedule 11.6 prior to the Closing and, except as provided in Section 11.12.2,
all liability for Taxes of ABB, the Acquired Group and all of their Affiliates
arising (directly or indirectly) as a result of the ABB Distribution or the
sale by ABB of the International Shares (but not, for the avoidance of doubt,
the sale of the U.S. Shares), (v) any breach of any representation or warranty
contained in Section 5.13 or a similar provision of state, local or foreign
law, and (vi) all liability for reasonable legal fees and expenses for any
item attributable to any item in clauses (i) through (v).
(b) In the case of a Straddle Period: (i) real, personal and
intangible property Taxes ("Property Taxes") for the Pre-Measurement Tax
Period shall be equal to the amount of such Property Taxes for such entire
Straddle Period multiplied by a fraction, the numerator of which is the number
of days during the Straddle Period that are in the Pre-Measurement Tax Period
and the denominator of which is the number of days in the Straddle Period; and
(ii) all other Taxes for the Pre-Measurement Tax Period shall be determined
based on an actual closing of the books as if such taxable period ended as of
the close of business on the Measurement Date and, in the case of any Taxes
attributable to the ownership of any equity interest in any partnership or
other "flow through" entity, based on an actual closing of the books as if the
taxable period of such partnership or other "flow through" entity ended as of
the close of business on the Measurement Date.
9.6.2 Tax Indemnity Payments
(a) Any Tax indemnity payment to be made hereunder shall be paid in
accordance with Section 9.7 and within ten (10) days after the Indemnified
Party makes written demand upon the Indemnifying Party, but in no case earlier
than five (5) Business
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Days prior to the date on which the relevant Taxes are required to be paid to
the relevant taxing authority (including as estimated Tax payments).
(b) For the avoidance of doubt, all indemnity payments under this
Section 9.6 shall be made on a one-for-one basis, without regard to any caps,
floors, baskets or other similar limitations.
9.6.3 Tax Claims
(a) If a claim shall be made by any taxing authority, which, if
successful, might result in an indemnity payment to the Indemnified Party
pursuant to this Section 9.6, the Indemnified Party shall notify in writing
the Indemnifying Party reasonably promptly of such claim (a "Tax Claim");
provided, however, that the failure to give such prompt written notice shall
not affect the indemnification provided hereunder except to the extent the
Indemnifying Party has actually and materially been prejudiced as a result of
such failure.
(b) With respect to any Tax Claim relating to Taxes with respect to
any taxable period ending on or before the Measurement Date, ABB shall control
all proceedings and may make all decisions in connection with such Tax Claim,
including initiating any claim for refund, amending any Tax Return and
contesting, resolving and defending against any assessment for additional
Taxes, notice of Tax deficiency or other adjustment of Taxes, provided that
Purchaser, and counsel of Purchaser's own choosing, shall have the right to
comment on all aspects of the prosecution or defense of such Tax Claim that
could affect the Taxes of Purchaser or any Acquired Company after the
Measurement Date, and provided further that ABB shall not settle any Tax Claim
that could affect the Taxes of Purchaser or any Acquired Company after the
Measurement Date without the prior written consent of Purchaser (which consent
shall not be unreasonably withheld or delayed). Except as provided in the
preceding sentence, Purchaser shall control all proceedings with respect to
all other Tax Claims and may make all decisions in connection with such Tax
Claims; provided, however, that Purchaser or any Affiliate or representative
thereof shall not settle any Tax Claim that could affect the Tax liability of
ABB or any Affiliate thereof before the Measurement Date without prior written
consent of ABB (which consent shall not be unreasonably withheld or delayed).
9.6.4 Tax Refunds
(a) Except as provided in Section 9.6.4(b), the amount or economic
benefit of any refunds, credits or offsets of Taxes (including any interest in
respect thereof) of any Acquired Company (including any foreign tax credits
for taxes incurred during any Pre-Measurement Tax Period) for any
Pre-Measurement Tax Period, to the extent not reflected in the Final Closing
Financial Statements, shall be for the account of ABB. Notwithstanding the
foregoing and provided that Sirius America cannot elect to waive a carryback
without causing its U.S. Affiliates to also waive a carryback, any such
refunds, credits or offsets of income Taxes shall be for the account of
Purchaser to the extent that such refunds, credits or offsets of income Taxes
are attributable (determined on a marginal basis) to the carryback from a
taxable period beginning after the Measurement Date (or the portion of a
Straddle Period that begins on the day after the Measurement Date) of items of
loss, deductions, or other Tax items, of any Acquired Company (or any of their
respective Affiliates, including Purchaser). The amount or economic benefit of
any refunds, credits or offsets of Taxes of any Acquired Company for any
taxable period beginning after the Measurement Date shall be for the account
of Purchaser. The amount or economic benefit of any refunds, credits or
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offsets of Taxes of any Acquired Company for any Straddle Period shall be
equitably apportioned between ABB and Purchaser; provided, however, that any
refunds, credits or offsets of Taxes (including any interest in respect
thereof) reflected in the Closing Financial Statements shall be excluded from
any such apportionment.
(b) Notwithstanding anything to the contrary, the amount or economic
benefit of any refunds, credits or offsets of Taxes (including any interest in
respect thereof) attributable to or resulting from Tax repayments claimed by
Sirius Belgium with respect to reassessments of Taxes with the Belgian tax
authorities for any Pre-Measurement Tax Period (the "Belgian Tax
Reassessments") shall be for the account of ABB. ABB and Purchaser agree that
ABB shall prepare and file all amended Tax Returns with respect to the Belgian
Tax Reassessments and shall control any Tax Claim arising therefrom. Purchaser
shall cooperate, so long as such cooperation in Purchaser's good faith and
reasonable judgment can be made without undue burden or expense or disruption
to the operations of the Business, with ABB's reasonable requests for
information held by an Acquired Company in order to enable ABB to prepare the
Tax Returns with respect to the Belgian Tax Reassessments. Purchaser shall be
under no obligation to utilize any refunds, credits or offsets of Taxes
attributable to or resulting from the liquidation of Sirius Belgium. If
Purchaser, in its sole discretion, determines that, after first taking into
account all other items of income, gain, loss, deduction, credit or reserve
(including safety reserve) that are available for the relevant taxable period
or periods, Sirius International or any affiliate or successor thereto
actually utilized any credits or offsets resulting from the liquidation of
Sirius Belgium and either (i) such utilization actually reduces the amount of
Taxes that Sirius International or any affiliate or successor thereto
otherwise would have been required to pay to a taxing authority had it not
utilized such credits or offsets or (ii) Sirius International or any affiliate
or successor thereto receives a refund or credit against its Taxes from a
taxing authority that it would not otherwise have received had it not utilized
such credits or offsets, then the amount of such reduction of Taxes paid or
the amount of such refund or credit shall be 80 percent for the account of ABB
and 20 percent for the account of Purchaser; provided, however, that ABB
agrees to repay to Purchaser its 80 percent portion of the amount of such
reduction or the amount of such refund or credit (plus any penalties, interest
or other charges imposed by a taxing authority) in the event that (x) it is
determined by a taxing authority that Sirius International was not entitled to
such reduction of Taxes paid or (y) Sirius International or any affiliate or
successor thereto is required to repay such refund to a taxing authority. ABB
and Purchaser agree that (i) ABB will provide reasonable instructions in the
preparation and filing of all Tax Returns that relate to the liquidation of
Sirius Belgium and (ii) all expenses relating to the liquidation of Sirius
Belgium and the preparation of such Tax Returns shall be borne solely by ABB.
For the avoidance of doubt, the amount or economic benefit of any refunds,
credits or offsets of Taxes attributable to or resulting from the Belgian Tax
Reassessments or the liquidation of Sirius Belgium shall not in any way
increase Net Equity.
(c) Each party shall forward, and shall cause its Affiliates to
forward, to the party entitled pursuant to this Section 9.6.4 to receive the
amount or economic benefit of a refund, credit or offset to Tax the amount of
such refund, or the economic benefit of such credit or offset to Tax, within
10 days after such refund is received or after such credit or offset is
allowed or applied against another Tax liability, as the case may be.
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9.6.5 Amended Tax Returns
None of Purchaser and the Acquired Group and any Affiliate thereof
shall file any amended Tax Returns with respect to any Pre-Measurement Tax
Period without prior written consent of ABB (which consent shall not be
unreasonably withheld or delayed).
9.6.6 Termination of Tax Indemnification
The representations and warranties contained in Section 5.13 shall
terminate upon the expiration of the applicable statute of limitations period.
The obligations to indemnify and hold harmless a party hereto pursuant to this
Section 9.6 shall terminate at the time the applicable statutes of limitations
with respect to the Tax liabilities in question expire (giving effect to any
extension thereof); provided, however, that such obligations to indemnify and
hold harmless shall not terminate with respect to any Tax as to which the
Indemnified Party shall have, before the expiration of the statute of
limitations, previously made a claim by delivering a notice of such claim
(stating in reasonable detail the basis of such claim) to the Indemnifying
Party.
9.7. Indemnity Payments
Any indemnity payment hereunder (i) shall be made to Purchaser or
ABB, as the case may be, by wire transfer to an account specified by the
Indemnified Party in Swedish kronor in immediately available funds together
with interest thereon from the date of delivery of notice of the Third Party
Claim or Direct Claim, as applicable, by any Indemnified Party to the date of
payment at an annual rate of 3% (such interest shall be calculated on the
basis of a year of 365 days and the actual number of days elapsed), compounded
annually and (ii) shall be treated as an adjustment to the International
Purchase Price for all Tax purposes to the extent permitted by Law.
9.8. Scandinavian Re Indemnity
9.8.1 Indemnity by ABB
(a) After the Closing and subject to clause (c) below, ABB agrees
to indemnify Purchaser and its Affiliates (including, for the avoidance of
doubt, the Acquired Companies) and each of their respective officers, directors,
employees, heirs, successors and assigns against, and hold them harmless from,
eighty percent (80%) of all Losses In Excess Of Reserves (as defined below)
incurred by any of them arising out of or relating to the following disputes
involving Scandinavian Re (the "Scan Re Disputes"):
(i) the BCS Insurance/NAWS dispute identified as item 180 in
the Scandinavian Re Running Reserve Memo dated July 22, 2003 (the
"Scan Re Memo");
(ii) the BIG/Superior National dispute identified as Treaty
201, all underwriting years, in the Scandinavian Re Memo;
(iii) the ▇▇▇▇▇▇▇ dispute identified as Treaty 193, all
underwriting years, in the Scan Re Memo; and
(iv) the Verzekerd dispute identified as Treaty 176, all
underwriting years, in the Scan Re Memo.
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(b) The term "Losses In Excess Of Reserves" means all Losses
incurred by Purchaser and any of its Affiliates (including the Acquired Group)
with respect to any Scan Re Dispute after the Measurement Date which are in
excess of any net loss Reserves and any net payables/receivables which are
specifically set forth in the balance sheet included in the Final Closing
Financial Statements with respect to the applicable Scan Re Dispute.
(c) Notwithstanding the fact that, pursuant to clause (a) above,
Purchaser shall be liable for twenty percent (20%) of all Losses In Excess Of
Reserves, if the aggregate liability of Purchaser and its Affiliates and each
of their respective officers, directors, employees, heirs, successors and
assigns for such twenty percent (20%) of Losses In Excess Of Reserves should
exceed $4,000,000, then ABB agrees to indemnify Purchaser and its Affiliates
and each of their respective officers, directors, employees, heirs, successors
and assigns for the portion of all amounts in excess of such $4,000,000.
9.8.2 Payments by Purchaser
(a) After the Closing, Purchaser agrees that it shall pay to ABB
eighty percent (80%) of all Gains (as defined below) obtained or otherwise
recognized by Purchaser or any of its Affiliates (including the Acquired
Group). Such payment shall be made to ABB or, at ABB's discretion, one of its
Affiliates, in Swedish kronor, by electronic transfer in immediately available
funds and to the account designated by ABB, within five (5) Business Days
after such Gain has been obtained. A Gain shall be deemed to have been
"obtained" by Purchaser or its Affiliates at the time that a final,
non-appealable and binding settlement or resolution of a Scan Re Dispute has
been paid.
(b) A "Gain" means the difference (assuming a positive number)
between: (i) the total amount of any net loss Reserves and any net
payables/receivables which have been established in the Final Closing
Financial Statements with respect to any Scan Re Dispute; and (ii) the amount
of Losses, if any, actually incurred or recognized by Scandinavian Re after
the Measurement Date under any final, non-appealable and binding settlement or
resolution of such Scan Re Dispute. For the avoidance of doubt, in no case
shall the Gain with respect to any Scan Re Dispute be greater than the total
amount of any net loss Reserves and any net payables/receivables which have
been established in the Final Closing Financial Statements with respect to
such Scan Re Dispute.
9.8.3 Prosecution and Settlement of Scan Re Disputes
(a) Notwithstanding anything to the contrary contained in this
Agreement, ABB shall have the right, in its sole and absolute discretion, to
settle or compromise any of the Scan Re Disputes prior to the Measurement
Date; provided, however, that ABB shall not enter into any such settlement
that imposes any injunctive or similar equitable obligations on any Acquired
Company without the prior written consent of Purchaser (which consent shall
not be unreasonably withheld or delayed).
(b) After the Measurement Date and up to the Closing Date, ABB
shall not settle or compromise any of the Scan Re Disputes without the prior
written consent of Purchaser (which consent shall not be unreasonably withheld
or delayed).
(c) After the Closing Date, the provisions of Section 9.4 shall
apply, mutatis mutandis, in connection with the defense and prosecution of any
remaining Scan Re Disputes; provided, however, that (i) Purchaser shall have
the sole right to control the defense
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and prosecution of any remaining Scan Re Disputes and ABB shall not be able to
assume the defense or prosecution of any such Scan Re Dispute and (ii)
Purchaser's obligation to obtain ABB's consent (which shall not be
unreasonably withheld or delayed) prior to settling, compromising, or
discharging any Scan Re Dispute shall be conditional on ABB's diligent review
on an ongoing basis of the facts and law with respect to such Scan Re Dispute
and ABB's employment (at ABB's sole expense) of counsel qualified in insurance
and reinsurance litigation to review facts and law with respect to such Scan
Re Dispute on behalf of ABB (the selection of which counsel shall be subject
to the prior consultation and cooperation with Purchaser (but not the consent
of Purchaser)) for a period of no less than ten (10) days unless the proposed
settlement, comprise or discharge of such Scan Re Dispute requires a response
from ABB in less than ten (10) days. Notwithstanding any other provision of
this Agreement, if Purchaser does not accept any settlement, compromise or
discharge of any Scan Re Dispute due to ABB withholding its consent with
respect to such settlement, compromise or discharge, ABB shall indemnify
Purchaser for 100% of any Losses resulting from the applicable Scan Re Dispute
that are in excess of the Losses that would have resulted from such Scan Re
Dispute had such settlement, compromise or discharge been accepted.
9.9. Special Indemnity in Respect of Alstom Instruments
(a) After the Closing, ABB agrees to indemnify Purchaser and its
Affiliates (including, for the avoidance of doubt, the Acquired Companies) and
each of their respective officers, directors, employees, heirs, successors and
assigns (the "Alstom Indemnified Parties") against, and hold them harmless
from, all Losses (the "Alstom Losses") arising out of or relating to each
Alstom Instrument listed or required to be listed in Section 5.22 of the
Disclosure Schedule, other than Losses resulting from any action taken by the
Alstom Indemnified Parties to transfer their obligations under such Alstom
Instrument to any Person other than an Affiliate.
(b) Notwithstanding clause (a) above, ABB shall have no obligation
to indemnify Purchaser and its officers, directors, employees, heirs,
successors and assigns against, and hold them harmless from, any Alstom Losses
unless Purchaser and its Affiliates shall have exhausted all remedies
available to them (including prosecuting an action or otherwise litigating),
whether in law and/or equity, to prevent such Alstom Losses from arising or to
recover such Alstom Losses from the Alstom Group; provided, however, that if
any member of the Alstom Group should become the subject of a rehabilitation,
liquidation, conservatorship, receivership, bankruptcy, proceeding for relief
or composition of debts or similar proceeding and such proceeding shall not
have been terminated within sixty (60) days from commencement, Purchaser and
its Affiliates shall be deemed to have exhausted all remedies available to
them if Purchaser or any of its Affiliates files a claim with respect to the
Alstom Instrument in connection with such proceeding.
9.10. Special Indemnity in Respect of ABB Instruments
After the Closing, ABB agrees to indemnify Purchaser and its
Affiliates (including, for the avoidance of doubt, the Acquired Companies) and
each of their respective officers, directors, employees, heirs, successors and
assigns against, and hold them harmless from, all Losses arising out of or
relating to each ABB Instrument listed or required to be listed in Section
5.23 of the Disclosure Schedule.
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9.11. Other Limitations; Indemnity Provisions
9.11.1 Losses Accounted for in Final Closing Financial Statements
ABB's liability hereunder for Losses shall be reduced to the extent
of the amount of (i) any specific provision or reserve in respect of the
relevant Losses established in the Final Closing Financial Statements and (ii)
any general or bulk reserve pool in the Final Closing Financial Statements
that ABB demonstrates was established in respect of the relevant Losses.
9.11.2 Insurance Proceeds
The amounts which, but for this Section 9.11.2, would be recoverable
under this Agreement, shall be reduced when and to the extent any insurance
proceeds are recovered in respect thereof by the Indemnified Party or any of
its Affiliates under any policy of insurance carried by any of them (net of
all reasonable out-of-pocket expenses incurred in obtaining such recovery and
net of any increase in the relevant insurance premium directly attributable to
such recovery as verified in writing by the relevant insurance carrier at the
time of recovery).
9.11.3 Subsequent Recovery
If the Indemnifying Party pays an amount in discharge of any claim
under this Agreement and the Indemnified Party or any of its Affiliates
subsequently recovers from a third Person a sum which is attributable to the
subject matter of the claim, the Indemnified Party shall promptly pay to the
Indemnifying Party an amount equal to all amounts recovered up to the
aggregate amount thus paid by the Indemnifying Party hereunder.
9.11.4 Claims Satisfied Under Other Provisions
For the avoidance of doubt, it is understood and agreed that to the
extent that a claim with respect to a Loss has been satisfied under a
provision of this Agreement, a claim for indemnification or reimbursement for
such Loss may not be made under any other provision of this Agreement.
9.11.5 Tax Savings
The amounts which, but for this Section 9.11.5, would be recoverable
under this Article 9 from an Indemnifying Party shall be (i) increased by any
net Tax cost incurred by the Indemnified Party or any of its Affiliates
arising from receipt of indemnity payments hereunder and (ii) reduced by any
net Tax benefits arising from the incurrence or payment of any Loss. In
computing the amount of any such Tax cost or Tax benefit, the Indemnified
Party shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt of
any indemnified Loss. Any indemnification payment hereunder shall initially be
calculated without regard to this Section 9.11.5 and shall be increased or
reduced to reflect any such net Tax cost or net Tax benefit only after the
Indemnified Party has actually realized such cost or benefit. For purposes of
this Agreement, an Indemnified Party shall be deemed to have "actually
realized" a net Tax cost or a net Tax benefit when and to the extent that the
amount of Taxes payable by such Indemnified Party is increased above or
reduced below, as the case may be, the amount of Taxes that such Indemnified
Party would be required to pay but for the receipt of the
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indemnity payment or the incurrence or payment of such Loss. If a Tax benefit
arising from the incurrence or payment of a Loss is actually realized prior to
the fifth anniversary of the date of the related payment or payments made by
ABB under this Article 9 in respect of such Loss ("Prior ABB Payments"),
Purchaser shall pay to ABB the amount of such Tax benefit (up to the amount of
the Prior ABB Payments) no later than 15 days after such Tax benefit is
actually realized, and any excess of such Tax benefit over the Prior ABB
Payments shall be applied to reduce any future payments to be made by ABB
pursuant to Article 9; provided that if Purchaser is required to refund any
part of such Tax benefit to any taxing authority for which ABB received the
benefit prior to the fifth anniversary of the related payment made under this
Article 9, ABB shall reimburse Purchaser for the amount of such refund.
9.11.6 Mitigation
Neither party shall have liability hereunder for Losses from a
breach of any of its representations, warranties or covenants to the extent
that such Losses would not have arisen but for a failure by the other party or
any of its Affiliates, upon becoming aware of such breach, to use reasonable
efforts to mitigate the Losses resulting from such breach.
9.11.7 Changes in Laws
An Indemnifying Party shall have no liability hereunder to the
extent that any alteration or repeal or enactment of any applicable Law after
the Closing Date increases the Losses resulting from a failure of any of its
representations or warranties in Article 5 or Article 6.
9.11.8 Right to Cure
Each party agrees that it will promptly inform the other party of
any breach of representation, warranty or covenant in this Agreement by such
other party which may lead to a Direct Claim or a Third Party Claim upon
becoming aware of such breach, so that the other party may commence remedial
action; provided, however, that this Section 9.11.8 shall not in any way
affect either party's right to indemnification under this Article 9.
9.11.9 Exclusive Remedy
Each party acknowledges and agrees that its sole and exclusive
remedy with respect to any and all claims relating to the subject matter of
this Agreement made after the Closing shall be pursuant to the indemnification
and other provisions set forth in this Article 9, or elsewhere in this
Agreement, and hereby waives, to the fullest extent permitted under applicable
Law, any and all rights, claims, causes of action and remedies (including but
not limited to any right to rescind this Agreement) it may have against the
other party under applicable Law in connection with the transactions
contemplated hereby (other than claims for fraud). Nothing in this Section
9.11.9 shall limit the right, if any, of such party to (i) obtain specific
performance of this Agreement in the event of the other party's breach of its
obligations hereunder or (ii) pursue its rights under common law prior to the
Closing with respect to claims relating to the subject matter of this
Agreement.
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9.12. Survival of Representations and Warranties and Covenants
Except as otherwise expressly stated in this Agreement, the
representations, warranties, covenants and agreements of each party contained
in this Agreement shall survive the Closing indefinitely.
9.13. Reliance On Representations and Warranties
Each party acknowledges for purposes of any claim by it with respect
to this Agreement that it has not relied on any representations or warranties
of the other party in connection with the transactions contemplated hereby
other than those expressly made in this Agreement or any certificate delivered
by or on behalf of the other party at the Closing; provided that this Section
9.13 shall not prejudice any rights Purchaser may have in connection with
claims for fraud under applicable Law in connection with the transactions
contemplated hereby.
9.14. ABB's Disclosure
Each representation or warranty given by ABB in Article 5 is
qualified by any matter which is fairly disclosed in or pursuant to the
Disclosure Schedule (but only to the extent that such disclosure specifically
refers to the Section of this Agreement containing such representation or
warranty) and any matter expressly provided for under the terms of this
Agreement. Certain information set forth in the Disclosure Schedule or other
Schedules is included for informational purposes and may not be required to be
disclosed pursuant to this Agreement. The disclosure of any information shall
not be deemed to constitute an acknowledgement that such information is
required to be disclosed in connection with the representations and warranties
made by ABB in this Agreement or that it is material, nor shall such
information be deemed to establish a standard of materiality.
ARTICLE 10
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination
10.1.1 Termination Events
Notwithstanding anything to the contrary in this Agreement, this
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing:
(a) by the written consent of ABB and Purchaser;
(b) by either ABB or Purchaser, if the Closing shall not have been
consummated by July 31, 2004; provided, however, that the right to
terminate this Agreement under this clause (b) shall not be available to
a party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on
or before such date;
(c) by ABB, if Purchaser in any material respect shall have
breached or failed to perform or comply with any of its representations,
warranties, covenants or
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other agreements contained in this Agreement, which breach or failure to
perform or comply: (i) would give rise to the failure of a condition set
forth in Section 8.3; and (ii) has not been, or is incapable of being,
cured by Purchaser within 30 days of Purchaser's receipt of written
notice thereof from ABB;
(d) by Purchaser, if ABB in any material respect shall have
breached or failed to perform or comply with any of its representations,
warranties, covenants or other agreements contained in this Agreement,
which breach or failure to perform or comply: (i) would give rise to the
failure of a condition set forth in Section 8.2; and (ii) has not been,
or is incapable of being, cured by ABB within 30 days of ABB's receipt of
written notice thereof from Purchaser;
(e) by Purchaser, if there has occurred any change in, or effect
on, the Acquired Group which (i) would give rise to the failure of the
condition set forth in Section 8.2(f); and (ii) has not been, or is
incapable of being, cured by ABB within 30 days of ABB's receipt of
written notice thereof from Purchaser;
(f) by Purchaser, if any proceeding is instituted by ABB (or any
parent company of ABB), or ABB (or such parent company) publicly
announces an intention to institute such a proceeding, to adjudicate any
of them bankrupt or insolvent, or seeking liquidation, winding up or
reorganization arrangements, or adjustment, protection, relief or
composition of its debts under any Law relating to bankruptcy, insolvency
or reorganization (but excluding, for the avoidance of doubt, the merger
contemplated by Schedule 11.6 of this Agreement); and
(g) by ABB, if any proceeding is instituted by Purchaser (or any
parent company of Purchaser), or Purchaser (or such parent company)
publicly announces an intention to institute such a proceeding, to
adjudicate any of them bankrupt or insolvent, or seeking liquidation,
winding up or reorganization arrangement, adjustment, protection, relief
or composition of its debts under any Law relating to bankruptcy,
insolvency or reorganization.
10.1.2 Notice of Termination
Termination by either party pursuant to this Section 10.1 shall be
effected by the giving of written notice thereof to the other party.
10.1.3 Effects of Termination
If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 10.1, this Agreement shall
become null and void and of no further force and effect, except for the
provisions of this Agreement relating to expenses (including but not limited
to Section 11.12), this Section 10.1, and Articles 9 and 11. Nothing in this
Section 10.1 shall be deemed to release either party from any liability for
any breach by such party of the terms and provisions of this Agreement prior
to termination.
10.1.4 Return or Destruction of Documents
If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Section 10.1, Purchaser shall
promptly return to ABB or certify the destruction of: (i) all documents and
other material received by Purchaser or any
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of its Affiliates from ABB and/or its Affiliates relating to such
transactions, whether so obtained before or after the execution hereof; and
(ii) all written information received by Purchaser with respect to the
Business and the other operations of ABB and/or its Affiliates (in each case
together with all copies thereof); provided, however, that Purchaser may
retain any documents that it reasonably determines are relevant in connection
with prosecuting or defending claims arising hereunder.
10.2. Amendments and Waivers
10.2.1 Amendments
This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto by their duly authorized
representatives.
10.2.2 Waivers
No delay or failure on the part of any party to exercise any right,
power or remedy in respect of this Agreement shall constitute a waiver thereof
(other than a failure to provide a notice or take any action which is subject
to a time limit as specified in this Agreement).
ARTICLE 11
GENERAL PROVISIONS
11.1. No Announcement; Confidentiality
11.1.1 No Announcement
Each party hereto agrees to keep the existence and content of this
Agreement confidential and will make no public announcement or other
disclosure with respect thereto: (i) without the prior written approval of the
other party (such approval not to be unreasonably withheld or delayed); (ii)
except disclosure made in connection with an offering of notes, debentures,
equity or other securities by either party or any of its Affiliates and deemed
by such party's counsel to be reasonably necessary or advisable to comply with
applicable Law or (iii) except as required by Law. ABB, on behalf of itself
and its Affiliates, hereby consents to the disclosure of Confidential
Information in respect of the Acquired Group (but not any member of the ABB
Group) by Purchaser and its Affiliates in connection with the disclosure
described in Section 11.1.1(ii).
11.1.2 Confidentiality
(a) Neither party hereto shall, and each party hereto shall use
all reasonable efforts to ensure that none of its Affiliates will, for a period
of three (3) years from the Closing Date, disclose any information of a
confidential nature relating to the Business or any Acquired Company (in the
case of ABB) or to ABB (in the case of Purchaser) to any third Person. The
obligation of either party under this Section 11.1.2 shall not apply to any of
the following: (i) disclosure of such confidential information required by
applicable Law; (ii) disclosure of such confidential information to such
party's professional advisors who have been made aware of the confidential
nature of such information; (iii) disclosure of such confidential information
for the purpose of defending any claim against the other party under
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this Agreement or enforcing its rights hereunder (including making any claims
or counterclaims against third parties pursuant to Section 9.4); or (iv)
disclosure of such confidential information which is or comes into the public
domain other than as a result of the breach by such party of this Section
11.1.2.
(b) Each party shall have the right to retain copies of all
documents delivered or made available by or to such party or its Affiliates in
connection with the transactions contemplated hereby to the extent reasonably
required for the purpose of defending any claim against it under this
Agreement or enforcing its rights hereunder (including making any claims or
counterclaims against third parties pursuant to Section 9.4).
(c) Notwithstanding any other provision of this Agreement to the
contrary, any party to this Agreement (and any employee, representative or
other agent of such party) may disclose to any and all persons, without
limitation of any kind, the U.S. federal, state and local income Tax treatment
and U.S. federal income tax structure of the transactions contemplated by this
Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure, except that: (i) U.S. federal, state and local income tax treatment
and U.S. federal, state and local income tax structure shall not include the
identity of any existing or future party (or any affiliate of such party) to
this Agreement except to the extent necessary to disclose the tax treatment or
the tax structure of the transactions contemplated by this Agreement; and (ii)
this provision shall not permit disclosure to the extent that nondisclosure is
reasonably necessary in order to comply with applicable securities Laws.
Nothing in this Agreement shall in any way limit any party's ability to
consult any tax advisor (including a tax advisor independent from all other
entities involved in the transactions contemplated by this Agreement)
regarding the U.S. federal, state and local income tax treatment or U.S.
federal, state and local income tax structure of the transactions contemplated
by this Agreement.
11.2. Cooperation
Unless otherwise expressly provided in this Agreement, whenever the
parties are required to cooperate for any particular purpose hereunder,
neither party, nor their respective Affiliates, shall be required to make any
material monetary expenditure, commence or be a plaintiff in any litigation or
offer or grant any material accommodation or concession (financial or
otherwise) to any Person.
11.3. Entire Agreement
This Agreement and the confidentiality undertaking dated March 20,
2003 given by White Mountains Insurance Group, Ltd. in favor of Deutsche Bank
AG (on behalf of ABB Asea ▇▇▇▇▇ Boveri Ltd) (the "Confidentiality Agreement")
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede and cancel all prior agreements
and negotiations, of the parties, respecting such subject matter. There are no
representations or warranties of any party hereto with respect to the
transactions contemplated hereby other than those set forth in Articles 5 and
6 herein or made hereunder, in or under the Confidentiality Agreement or in or
under any certificate delivered by or on behalf of either party at the
Closing. There are no agreements of any party hereto with respect to the
transactions contemplated hereby other than those set forth herein or made
hereunder or in or under the Confidentiality Agreement.
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11.4. Severability
If at any time any provision of this Agreement is or becomes
invalid, illegal or unenforceable under the laws of the State of New York, the
validity, legality and enforceability of the remainder of this Agreement shall
not be affected. In the event any provision is held in any proceeding pursuant
to Section 11.9 or 11.10 to be invalid, illegal or unenforceable, the parties
shall replace that provision with a new provision permitted by the laws of the
State of New York and having an economic effect as close as possible to the
deficient provision.
11.5. No Third Party Beneficiaries
Except for the provisions of this Agreement relating to Indemnified
Parties, this Agreement shall be directed and interpreted to the advantage of
the parties only and their permitted assignees, and no third Person shall
obtain any rights by virtue hereof.
11.6. Assignment
Neither party may assign its rights or obligations under this
Agreement to any third Person without the prior written consent of the other
party; provided, however, that such consent shall not be unreasonably withheld
or delayed in relation to assignment of rights if the assignment is to an
Affiliate of such party. The parties agree that the merger under applicable
Law of either party with any of its Affiliates as described in Schedule 11.6
pursuant to which the obligations under this Agreement vest in the surviving
party shall not constitute an assignment within this Section 11.6.
11.7. Notices
All notices and other communications that are required or permitted
to be given under this Agreement shall be in writing, in the English language
and shall be deemed to have been duly give or made as of: (i) the time
delivered, if delivered personally against written receipt; or (ii) the time
faxed to the recipient (if the appropriate answerback or fax confirmation
shall have been received). All such notices and communications shall be
delivered to the following addresses or numbers (or at such other address or
number for a party as shall be specified by like notice):
If to ABB:
ABB Holding AG, Zurich
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Fax No.: + ▇▇ ▇▇ ▇▇▇ ▇▇▇▇
Attention: General Counsel
If to Purchaser :
Lagrummet December nr 919 AB
(under change of name to "Fund American Holdings AB")
Reg. No. 556651-1084
▇▇▇▇▇▇▇▇▇▇ ▇▇,
- ▇▇ -
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇
Fax No.: + ▇▇-▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Heynes
Copied to:
White Mountains Insurance Group, Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
U.S.A
Fax No.: + ▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President & General Counsel
11.8. Governing Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
11.9. Pre-closing Dispute Resolution
11.9.1 Jurisdiction; Service of Process
Any action or proceeding initiated prior to the Closing and arising
out of or relating to this Agreement or any transaction contemplated hereby
shall be brought in the United States District Court for the Southern District
of New York, or, if a party cannot acquire jurisdiction in such federal court,
shall be brought in the courts of the State of New York, County of New York,
Borough of Manhattan (and the parties shall seek to have the matter tried by
the Special Commercial Part of the New York Supreme Court), and each of the
parties irrevocably submits to the exclusive jurisdiction of each such court
in any such action or proceeding, waives any objection it may now or hereafter
have to venue or to convenience of forum, agrees that all claims in respect of
the action or proceeding shall be heard and determined only in any such court
and agrees not to bring any action or proceeding arising out of or relating to
this Agreement or any transaction contemplated hereby in any other court;
provided, however, that any such action or proceeding which remains
outstanding at the Closing shall be withdrawn from such court on or prior to
the Closing Date and submitted to arbitration pursuant to Section 11.10.1
without prejudicing in any way any claim of either party thereto. For the
avoidance of doubt, any action or proceeding brought under this Section 11.9.1
for which a judgment has been rendered shall not be deemed an outstanding
action or proceeding at the Closing and neither party may submit such judgment
to arbitration under Section 11.10.1 after the Closing or otherwise appeal or
seek to review such judgment. The parties agree that any or all of them may
file a copy of this paragraph with any court as written evidence of the
knowing, voluntary and bargained agreement among the parties irrevocably to
waive any objections to venue or to convenience of forum. Process in any
action or proceeding referred to in the first sentence of this Section may be
served on any party anywhere in the world.
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11.9.2 Waiver of Jury Trial
Each party hereby waives, to the fullest extent permitted by
applicable Law, any right it may have to a trial by jury in respect of any
action or proceeding initiated prior to the Closing and arising out of or
relating to this Agreement or any transaction contemplated hereby. Each party
(i) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such party would not, in the event
of any action, suit or proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it and the other parties have been induced to enter
into this Agreement, by, among other things, the mutual waiver and
certifications in this Section 11.9.
11.10. Post-closing Dispute Resolution
11.10.1 Arbitration
Subject to the last sentence of this Section 11.10.1, any action or
proceeding initiated after the Closing and out of or relating to this
Agreement or any transaction contemplated hereby shall be determined, at the
request of either party, by arbitration in the English language conducted in
London, England, in accordance with the then-existing International
Arbitration Rules of the American Arbitration Association (the "Rules"). The
arbitration shall be conducted by three (3) arbitrators, of which each party
shall appoint one (1) arbitrator and the two (2) arbitrators thus appointed
shall appoint the presiding arbitrator (the "Chairman"). The Chairman shall
(i) be admitted to practice as an attorney and counselor at law in the State
of New York; (ii) be a partner or of counsel or retired partner or retired of
counsel at a prominent United States-based law firm; and (iii) have expertise
in mergers and acquisitions and international arbitration. The arbitrators
shall permit the parties to adduce expert testimony in connection with any
action or proceeding under this Section 11.10.1 and shall consider such expert
testimony in rendering their awards. The arbitrators shall give reasonably
detailed justifications for their awards in any proceeding and any judgment or
award rendered by the arbitrator shall be final, binding and unappealable and
may be entered by any court having jurisdiction thereof. The parties hereby
agree to the institution of any available "fast track" or other mechanisms or
procedures that would have the effect of streamlining or increasing the speed
of the arbitration. Subject to the last sentence of this Section 11.10.1, any
controversy concerning whether a dispute is an arbitrable dispute, whether
arbitration has been waived, whether an assignee of this Agreement is bound to
arbitrate, or as to the interpretation or enforceability of this paragraph
shall be determined by the arbitrators. In their award, the arbitrators shall
allocate, in their discretion, among the parties to the arbitration, all costs
of the arbitration, including the fees and expenses of the arbitration
proceedings and reasonable attorneys' fees, costs and expert witness expenses
of the parties. The parties hereto agree to comply with any award made in any
such arbitration proceedings that has become final in accordance with the
Rules and agree to the entry of a judgment in any jurisdiction upon any award
rendered in such proceedings becoming final under the Rules. The arbitrators
shall be entitled, if appropriate, to award any remedy in such proceedings,
including monetary damages, specific performance and all other forms of legal
and equitable relief, including punitive damages (to the extent not prohibited
by this Agreement). The provisions of this Section 11.10.1 shall not apply to
the matters provided for in Section 3.4 of this Agreement.
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11.11. Enforcement
The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached.
11.12. Costs, Expenses, Transfer Taxes and Fees
11.12.1 Costs and Expenses
Unless otherwise expressly provided in this Agreement, all costs and
expenses incurred in connection with the preparation, negotiation and
implementation of this Agreement and the transactions contemplated hereby
shall be borne by the party incurring such costs and expenses.
11.12.2 Transfer Taxes and Fees
All Transfer Taxes and all notarial, registration and filing fees
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne 25% by Purchaser and 75% by ABB whether or not the
Closing shall have occurred.
11.13. No Set-Off
11.13.1 No Set-Off
Subject to Section 11.13.2, under no circumstances shall any amounts
payable by Purchaser or any of its Affiliates to ABB or any of its Affiliates
or by ABB or any of its Affiliates to Purchaser or any of its Affiliates,
pursuant to this Agreement be set off against each other.
11.13.2 Exceptions
Each party hereto may set off a sum equal to the amount of all
claims it may have against the other party hereto pursuant to this Agreement,
provided such claims have either been agreed by such other party or been
finally determined to be due in accordance with the provisions of Section 3.4
or finally adjudged by the arbitrators pursuant to Section 11.9, against
amounts payable by such first party to such other party pursuant to this
Agreement.
11.14. Further Assurances
After the Closing Date, the parties shall execute such other
documents or take, or cause to be taken, such other actions to the extent they
have not been accomplished on or by the Closing Date, as may be required to
transfer the U.S. Shares to U.S. Purchaser or to transfer the International
Shares to Purchaser in accordance with the terms and conditions of this
Agreement.
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11.15. Certain Insurance
11.15.1 Purchaser Insurance
Notwithstanding any provision of this Agreement to the contrary,
each of Purchaser, any of its Affiliates or any of their respective officers,
directors, employees, stockholders (or security or rights holders), agents,
representatives, heirs, successors and assigns under this Agreement may enter
into insurance policies or any other Contract or purchase or otherwise acquire
any financial instruments to indemnify Purchaser, any of its Affiliates and/or
any of their respective officers, directors, employees, stockholders (or
security or rights holders), agents, representatives, heirs, successors and
assigns under this Agreement from any liabilities, contingent or otherwise,
arising from or related to the transactions contemplated by this Agreement.
Notwithstanding any provision of this Agreement to the contrary, including
Section 9.11.2, the parties agree that no benefit from such insurance
policies, Contracts or financial instruments shall inure to the benefit of ABB
or any of its Affiliates (except for the Acquired Group).
11.15.2 ABB Insurance
Notwithstanding any provision of this Agreement to the contrary,
each of ABB, any of its Affiliates or any of its respective officers,
directors, employees, stockholders (or security or rights holders), agents,
representatives, heirs, successors and assigns under this Agreement may enter
into insurance policies or any other Contract or purchase or otherwise acquire
any financial instruments to indemnify ABB, any of its Affiliates and/or any
of its respective officers, directors, employees, stockholders (or security or
rights holders), agents, representatives, heirs, successors and assigns under
this Agreement from any liabilities, contingent or otherwise, arising from or
related to the transactions contemplated by this Agreement. Notwithstanding
any provision of this Agreement to the contrary, including Section 9.11.2, the
parties agree that no benefit from such insurance policies, Contracts or
financial instruments shall inure to the benefit of Purchaser and its
Affiliates.
[signature page immediately follows]
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Each of the parties hereto has caused this Agreement to be executed
by its duly authorized representatives on the date first set forth above.
ABB HOLDING AG, ZURICH LAGRUMMET DECEMBER NR 919
AB (under change of name to "FUND
AMERICAN HOLDINGS AB")
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------- ------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Group Vice President Title: Director of the Board
By: /s/ ▇▇▇▇▇▇ Shindleman By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Heynes
--------------------------- ------------------------------
Name: ▇▇▇▇▇▇ Shindleman Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Heynes
Title: Title: Director of the Board