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Exhibit 99.1
Second Amended and Restated
Distribution Agreement
by and between
Unitrin, Inc.
and
▇▇▇▇▇▇▇-▇▇▇▇▇▇ Corporation
dated as of August 17, 2001
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS...............................................................................2
Section 1.1 "General"......................................................................2
Section 1.2 References; Interpretation.....................................................9
ARTICLE II DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS AND
REPRESENTATIONS AND WARRANTIES...........................................................9
Section 2.1 The Distribution and Other Transactions........................................9
Section 2.2 Declaration Date and Distribution Date; Further Assurances....................15
Section 2.3 Representations and Warranties................................................16
Section 2.4 Certain Post-Distribution Transactions........................................20
ARTICLE III INDEMNIFICATION........................................................................21
Section 3.1 Indemnification by C-W........................................................21
Section 3.2 Indemnification by UNITRIN....................................................25
Section 3.3 Treatment of Payments.........................................................25
Section 3.4 Procedures for Indemnification................................................25
Section 3.5 Remedies Not Exclusive........................................................28
Section 3.6 Subrogation...................................................................28
Section 3.7 Indemnification Payments......................................................28
ARTICLE IV COVENANTS...............................................................................29
Section 4.1 Access to Information.........................................................29
Section 4.2 Confidentiality...............................................................30
Section 4.3 No Solicitation...............................................................30
Section 4.4 Certain Other Agreements......................................................31
Section 4.5 Public Announcements..........................................................32
Section 4.6 Required Consents.............................................................32
Section 4.7 Litigation Cooperation........................................................32
Section 4.8 Other Matters.................................................................33
ARTICLE V MISCELLANEOUS............................................................................33
Section 5.1 Complete Agreement; Construction..............................................33
Section 5.2 Counterparts..................................................................33
Section 5.3 Survival of Agreements........................................................33
Section 5.4 Expenses......................................................................33
Section 5.5 Notices.......................................................................33
Section 5.6 Waivers.......................................................................35
Section 5.7 Amendments....................................................................35
Section 5.8 Assignment....................................................................35
Section 5.9 Successors and Assigns........................................................35
Section 5.10 Termination..................................................................35
Section 5.11 Subsidiaries.................................................................37
Section 5.12 Third Party Beneficiaries....................................................37
Section 5.13 Title and Headings...........................................................37
Section 5.14 Exhibits and Schedules.......................................................37
Section 5.15 GOVERNING LAW................................................................37
Section 5.16 Consent to Jurisdiction......................................................37
Section 5.17 Severability.................................................................38
SECOND AMENDED AND RESTATED DISTRIBUTION AGREEMENT (this
"Agreement"), dated as November 6, 2000, as first amended and restated as
of January 11, 2001, and as further amended and restated as of August 17,
2001, between UNITRIN, INC, a Delaware corporation ("UNITRIN"), and
▇▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION, a Delaware corporation ("C-W").
WHEREAS, UNITRIN owns, as of the close of business on the date
hereof, 4,382,400 shares of common stock, par value $1.00 per share, of C-W
(the common stock of C-W is referred to herein as the "Common Stock");
WHEREAS, simultaneously with the execution hereof, C-W, UNITRIN
and CW DISPOSITION COMPANY, a Delaware corporation and a wholly owned
subsidiary of UNITRIN ("Merger Sub"), are entering into a Second Amended
and Restated Agreement and Plan of Merger dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the
"Recapitalization Agreement"), pursuant to which, among other things,
Merger Sub will merge with and into C-W (the "Merger") with the following
consequent capital stock changes: (a) 4,382,400 shares of Common Stock held
by UNITRIN will be contributed to Merger Sub and, as of the Effective Time
(as defined in the Recapitalization Agreement), will automatically be
canceled and retired with no securities or other consideration issued in
exchange therefore, (b) all the common stock of Merger Sub owned by UNITRIN
will be converted into 4,382,400 shares of a new Class B common stock, par
value $1.00 per share, of C-W ("Class B Common Stock"), which class of
common stock will be entitled to elect at least 80% of the members of the
Board of Directors of C-W and in all other respects will be substantially
identical to the Common Stock, and (c) all other shares of Common Stock
held by stockholders of C-W will remain issued and outstanding (the
"Recapitalization");
WHEREAS, the Board of Directors of UNITRIN has determined that it
is in the best interests of UNITRIN and its stockholders to distribute on
the Distribution Date (as defined herein) all the shares of Class B Common
Stock that UNITRIN will receive in the Recapitalization, on the terms and
subject to the conditions set forth in this Agreement, to the holders of
record of the common stock, par value $.01 per share, of UNITRIN ("UNITRIN
Common Stock"), as of the Distribution Record Date (as defined herein), on
a pro rata basis (the "Distribution");
WHEREAS, the Board of Directors of C-W has determined that it is
in the best interests of C-W and its stockholders that the Distribution be
consummated, and the Recapitalization is a necessary and desirable means to
enable the Distribution to occur;
WHEREAS, UNITRIN is expected to receive a ruling from the Internal
Revenue Service to the effect that the Distribution will be, to the extent
set forth therein, a tax-free distribution within the meaning of Section
355 of the Code (as defined herein); and
WHEREAS, each of UNITRIN and C-W has determined that it is
necessary and desirable to set forth the principal corporate transactions
required to effect the Distribution and the Recapitalization and to set
forth other agreements that will govern certain other matters following the
Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "General". As used in this Agreement, the following
terms shall have the following meanings:
(a) "Action" shall mean any action, suit, arbitration,
inquiry, proceeding or investigation by or before any court, any
governmental or other regulatory or administrative agency, body or
commission or any arbitration tribunal.
(b) "Acquisition Proposal" shall have the meaning set forth
in Section 4.3(a).
(c) "Affiliate" shall mean, when used with respect to a
specified person, another person that controls, is controlled by, or is
under common control with the person specified. As used herein, "control"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person, whether
through the ownership of voting securities or other interests, by contract
or otherwise.
(d) "Assets" shall mean assets, properties and rights
(including goodwill), wherever located (including in the possession of
vendors or other third parties or elsewhere), whether real, personal or
mixed, tangible, intangible or contingent, in each case whether or not
recorded or reflected or required to be recorded or reflected on the books
and records or financial statements of any Person.
(e) "Business Entity" shall mean any corporation,
partnership, limited liability company or other entity which may legally
hold title to Assets.
(f) "Certificate of Merger" shall have the meaning set forth
in the Recapitalization Agreement.
(g) "Class B Common Stock" shall have the meaning set forth
in the recitals hereto.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder, including any
successor legislation or regulations.
(i) "Commission" shall mean the U.S. Securities and Exchange
Commission.
(j) "Common Stock" shall have the meaning set forth in the
recitals hereto.
(k) "C-W" shall have the meaning set forth in the heading of
this Agreement.
(l) "C-W Business" shall mean each and every business
conducted at any time prior to, on or after the Distribution Date by C-W or
any current, former, or future Subsidiary of C-W or other Business Entity
controlled by C-W, whether or not such Subsidiary is a Subsidiary of C-W or
such Business Entity is controlled by C-W on the date hereof.
(m) "C-W Group" shall mean C-W and each Person that is a
Subsidiary of C-W immediately prior to the Distribution Date.
(n) "C-W Indemnitees" shall mean C-W, each member of the C-W
Group, each of their respective present and former directors, officers,
employees and agents and each of the heirs, executors, successors and
assigns of any of the foregoing.
(o) "C-W Liabilities" shall mean, collectively, any and all
Liabilities whatsoever that arise out of, result from or are related to the
operation of the C-W Business or the ownership of the assets of the C-W
Business by C-W, any predecessor entity of C-W (and all predecessors
thereto) or any Subsidiary of or Business Entity controlled by such
predecessor, any current, former or future Subsidiary of C-W or any
Business Entity controlled by C-W, whether such Liabilities arise before,
on or after the Distribution Date and whether known or unknown, fixed or
contingent, and shall include, without limitation:
(i) any and all Liabilities to which UNITRIN or its
predecessors and successors may become subject arising from or based
upon its status or alleged status as a "controlling person" (as
defined under Section 15 of the Securities Act and Section 20 of the
Exchange Act) of C-W or a stockholder of C-W relating to (A) the Proxy
Statement (or any amendment thereto) or any other solicitation
materials or any oral solicitations of proxies (except for liabilities
which C-W incurs as a result of, and to the extent resulting from,
information provided by UNITRIN relating to UNITRIN for inclusion in
the Proxy Statement (or any amendment thereto) or any such other
solicitation materials or oral solicitation); or (B) any other report
or document filed by C-W with the Commission at any time before, on or
after the Distribution Date (except for liabilities which C-W incurs
as a result of, and to the extent resulting from, information provided
by UNITRIN relating to UNITRIN for inclusion in such report or
document);
(ii) any Liabilities for a breach by C-W of any
representation, warranty or covenant herein or in the Recapitalization
Agreement; and
(iii) any and all Liabilities which UNITRIN incurs as a
result of, and to the extent resulting from, information provided by
C-W relating to C-W for inclusion in any information statement
provided by UNITRIN to its stockholders or any report or document
filed by UNITRIN with the Commission.
(p) "Declaration Date" shall mean the date on which the
UNITRIN Board of Directors shall declare the Distribution; provided that
the declaration and the payment of the Distribution shall be conditioned
upon and subject to the consummation of the Recapitalization, and the
payment of the Distribution shall consist of the shares of Class B Common
Stock received by UNITRIN in the Recapitalization and shall be after the
consummation of the Recapitalization on the day on which the
Recapitalization occurs.
(q) "DGCL" shall mean the General Corporation Law of the
State of Delaware.
(r) "Distribution" shall have the meaning set forth in the
recitals hereto.
(s) "Distribution Agent" shall mean the distribution agent
selected by UNITRIN to effect the Distribution, which shall be C-W's stock
transfer agent.
(t) "Distribution Date" shall mean the date determined by the
Board of Directors of UNITRIN for the mailing of certificates of Class B
Common Stock to stockholders of UNITRIN in the Distribution. The
Distribution Date shall be a date as soon as practicable following the
Declaration Date and shall be the day on which the Recapitalization occurs.
(u) "Distribution Record Date" shall mean the date determined
by the Board of Directors of UNITRIN as the record date for the
determination of the holders of record of UNITRIN Common Stock entitled to
receive shares of Class B Common Stock in the Distribution.
(v) "Established Liability" shall mean, with respect to each
UNITRIN stockholder, the amount of Tax Liability (including interest and
penalties) resulting from the Distribution, as evidenced by (i) an amended
tax return of such UNITRIN stockholder reflecting the amount of such Tax
Liability, together with proof of payment of such amount, or (ii) a
deficiency notice received by such UNITRIN stockholder from the IRS setting
forth the amount of such Tax Liability, together with proof of payment of
such amount.
(w) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
(x) "Form 8-A" shall mean a C-W registration statement on
Form 8-A pursuant to which the Class B Common Stock shall be registered
under the Exchange Act, including all amendments thereto.
(y) "Governmental Authority" shall mean any federal, state,
local, foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative or
governmental authority.
(z) "Governance Amendments" shall have the meaning set forth
in the Recapitalization Agreement.
(aa) "HSR Act" shall have the meaning set forth in Section
2.3(a)(iii).
(bb) "Indemnifying Party" shall have the meaning set forth in
Section 3.3.
(cc) "Indemnitee" shall have the meaning set forth in Section
3.3.
(dd) "IRS" shall mean the Internal Revenue Service.
(ee) "IRS Ruling" shall have the meaning set forth in Section
2.1(b)(i).
(ff) "Liabilities" shall mean any and all losses, claims,
charges, debts, demands, actions, causes of action, suits, damages,
obligations, payments, costs and expenses, sums of money, accounts,
reckonings, bonds, specialties, indemnities and similar obligations,
exonerations, covenants, contracts, controversies, agreements, promises,
omissions, variances, guarantees, make whole agreements and similar
obligations, and other liabilities, including all contractual obligations,
whether absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising, and
including those arising under any law, rule, regulation, Action, threatened
or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses, whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions
or threatened or contemplated Actions), order or consent decree of any
governmental or other regulatory or administrative agency, body or
commission or any award of any arbitrator or mediator of any kind, and
those arising under any contract, commitment or undertaking, including
those arising under this Agreement or the Recapitalization Agreement, in
each case, whether or not recorded or reflected or required to be recorded
or reflected on the books and records or financial statements of any
person.
(gg) "Material Adverse Effect" shall mean, with respect to
any Person, any change, effect, event, occurrence or development that is,
individually or in the aggregate, materially adverse to the business,
operations, assets, liabilities, condition (financial or otherwise),
results of operations or prospects of such Person.
(hh) "Merger" shall have the meaning set forth in the
recitals hereto.
(ii) "NYSE" shall mean the New York Stock Exchange, Inc.
(jj) "NYSE Listing Application" shall mean the application to
be submitted by C-W to the NYSE for the listing of the Class B Common
Stock.
(kk) "Person" shall mean any natural person, Business Entity,
corporation, business trust, joint venture, association, company,
partnership, other entity or government, or any agency or political
subdivision thereof.
(ll) "Proxy Statement" shall have the meaning set forth in
the Recapitalization Agreement.
(mm) "Recapitalization" shall have the meaning set forth in
the recitals hereto.
(nn) "Recapitalization Agreement" shall have the meaning set
forth in the recitals hereto.
(oo) "Required Consents" shall have the meaning set forth in
Section 4.5.
(pp) "Securities Act" shall mean the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
(qq) "Subsidiary" shall mean any corporation, limited
liability company, partnership or other entity of which another entity (i)
owns, directly or indirectly, ownership interests sufficient to elect a
majority of the Board of Directors (or persons performing similar
functions) (irrespective of whether at the time any other class or classes
of ownership interests of such corporation, partnership or other entity
shall or might have such voting power upon the occurrence of any
contingency) or (ii) is a general partner or an entity performing similar
functions (e.g., a trustee).
(rr) "Tax" or "Taxes" shall mean taxes of any kind, levies or
other like assessments, customs, duties, imposts, charges or fees,
including income, gross receipts, ad valorem, value added, excise, real or
personal property, asset, sales, use, license, payroll, transaction,
capital, net worth and franchise taxes, withholding, employment, social
security, workers compensation, utility, severance, production,
unemployment compensation, occupation, premium, windfall profits, transfer
and gains taxes or other governmental taxes imposed or payable to the
United States, or any state, county, local or foreign government or
subdivision or agency thereof, and in each instance such term shall include
any interest, penalties, additions to tax or additional amounts
attributable to any such tax.
(ss) "Tax Claim" shall have the meaning set forth in Section
3.3.
(tt) "Third Party Claim" shall have the meaning set forth in
Section 3.3.
(uu) "UNITRIN Business" shall mean each and every business
(except for the C-W Business) conducted at any time prior to, on or after
the Distribution Date by UNITRIN or any current, former or future
Subsidiary of UNITRIN (it being understood that the foregoing does not
include C-W and its Subsidiaries) or any Business Entity controlled by
UNITRIN (it being understood that the foregoing does not include C-W and
its Subsidiaries), whether or not such Subsidiary is a Subsidiary of
UNITRIN or such Business Entity is controlled by UNITRIN on the date
hereof.
(vv) "UNITRIN Common Stock" shall have the meaning set forth
in the recitals hereto.
(ww) "UNITRIN Group" shall mean UNITRIN and each Person
(other than any member of the C-W Group) that is a Subsidiary or Affiliate
of UNITRIN immediately prior to the Distribution Date.
(xx) "UNITRIN Indemnitees" shall mean UNITRIN, each member of
the UNITRIN Group, each of their respective present and former directors,
officers, employees and agents and each of the heirs, executors, successors
and assigns of any of the foregoing, except C-W Indemnitees who would not
otherwise be an UNITRIN Indemnitee.
(yy) "UNITRIN Liabilities" shall mean, collectively, any and
all Liabilities whatsoever that arise out of, result from or are related to
the operation of the UNITRIN Business or the ownership of the assets of the
UNITRIN Business by UNITRIN, any predecessor entity of UNITRIN (and all
predecessors thereto) or any Subsidiary of or Business Entity controlled by
any such predecessor, any current, former or future Subsidiary of UNITRIN
or any Business Entity controlled by UNITRIN (it being understood that the
foregoing does not include C-W and its Subsidiaries), whether such
Liabilities arise before, on or after the Distribution Date and whether
known or unknown, fixed or contingent, and shall include, without
limitation:
(i) any Liabilities for a breach by UNITRIN of any
representation, warranty or covenant herein or in the Recapitalization
Agreement; and
(ii) any and all Liabilities which C-W incurs as a
result of, and to the extent resulting from, information provided by
UNITRIN relating to UNITRIN for inclusion in the Proxy Statement (or
any amendment thereto), any other solicitation materials or any oral
solicitation of proxies or any report or document filed by C-W with
the Commission.
Section 1.2 References; Interpretation. References in this
Agreement to any gender include references to all genders, and references
to the singular include references to the plural and vice versa. The words
"include", "includes" and "including" when used in this Agreement shall be
deemed to be followed by the phrase "without limitation". Unless the
context otherwise requires, references in this Agreement to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement. Unless the
context otherwise requires, the words "hereof", "hereby" and "herein" and
words of similar meaning when used in this Agreement refer to this
Agreement in its entirety and not to any particular Article, Section or
provision of this Agreement.
ARTICLE II
DISTRIBUTION AND OTHER TRANSACTIONS; CERTAIN COVENANTS
AND REPRESENTATIONS AND WARRANTIES
Section 2.1 The Distribution and Other Transactions.
(a) The Distribution. Subject to the conditions set forth in
Section 2.1(b) of this Agreement, on the Declaration Date, the Board of
Directors of UNITRIN shall irrevocably declare the Distribution upon the
terms set forth in this Agreement. The declaration and the payment of the
Distribution shall be conditioned upon and subject to the consummation of
the Recapitalization, and the payment of the Distribution shall consist of
the shares of Class B Common Stock received by UNITRIN in the
Recapitalization, it being understood that the Distribution will occur
after, but on the same date as, the filing of the Certificate of Merger. To
effect the Distribution, UNITRIN shall cause the Distribution Agent to
distribute, on the Distribution Date, on a pro rata basis and taking into
account Section 2.1(c), to the holders of record of UNITRIN Common Stock on
the Distribution Record Date, the certificates representing the shares of
Class B Common Stock received by UNITRIN in the Recapitalization. During
the period commencing on the date the certificates representing shares of
Class B Common Stock are delivered to the Distribution Agent and ending
upon the date(s) on which certificates evidencing such shares are mailed to
holders of record of UNITRIN Common Stock on the Distribution Record Date
or on which fractional shares of Class B Common Stock are sold on behalf of
such holders, the Distribution Agent shall hold the certificates
representing shares of Class B Common Stock on behalf of such holders.
UNITRIN shall deliver to the Distribution Agent the share certificates
representing the shares of Class B Common Stock held by UNITRIN. UNITRIN
shall enter into an agreement with the Distribution Agent in connection
with the foregoing, and shall agree, among other things, to reimburse the
Distribution Agent for its reasonable costs, expenses and fees in
connection with the Distribution. C-W agrees, if requested by UNITRIN, to
provide such number of certificates evidencing shares of Class B Common
Stock that UNITRIN shall reasonably require in order to effect the
Distribution.
(b) Conditions to the Declaration and Distribution. The
UNITRIN Board of Directors shall irrevocably declare the Distribution, and
cause the Distribution to be effected on the Distribution Date, as soon as
reasonably practicable following the satisfaction or waiver, as determined
by UNITRIN in its sole discretion, of the conditions set forth below (which
conditions must be satisfied or waived on or prior to the Declaration Date
unless any such condition by its terms can only be satisfied after the
Declaration Date in which case such condition must be satisfied or waived
on or prior to the Distribution Date):
(i) the private letter ruling requested from the IRS
providing that, among other things, the Recapitalization and the
Distribution will qualify, to the extent set forth therein, as
tax-free transactions for federal income tax purposes under Sections
354 and 355 of the Code, respectively (the "IRS Ruling") shall have
been issued and shall continue in effect, such ruling shall be in form
and substance satisfactory to UNITRIN in its sole discretion, and C-W
shall have complied with all provisions set forth in the IRS Ruling
that are required to be complied with prior to the Declaration Date
and the Distribution Date;
(ii) no event outside the control of UNITRIN shall have
occurred or failed to occur that prevents the lawful
consummation of the Distribution;
(iii) the transactions contemplated hereby and by the
Recapitalization Agreement shall be in compliance in all material
respects with applicable federal and state securities and other
applicable laws;
(iv) each of C-W and UNITRIN shall have received all the
Required Consents;
(v) all conditions to the Recapitalization (including
those set forth in Article 4 of the Recapitalization Agreement) (other
than, in the case of the declaration, the declaration and consummation
of the Distribution) shall have been satisfied or waived by the
applicable party, in the case of the declaration, no circumstances
shall exist that would reasonably be expected to prevent the
consummation of the Recapitalization immediately prior to the
Distribution and, in the case of the Distribution, the
Recapitalization shall have been consummated;
(vi) the Form 8-A shall have been filed with the
Commission;
(vii) the Class B Common Stock shall have been approved for listing on the
NYSE, subject to official notice of issuance;
(viii) each of the representations and warranties (other
than the representation and warranty set forth in Section 2.3(a)(v) of
this Agreement) of C-W set forth in this Agreement and the
Recapitalization Agreement that are qualified as to materiality shall
be true and correct, and any such representations and warranties that
are not so qualified shall be true and correct in all material
respects, as of the Declaration Date and the Distribution Date and
UNITRIN shall have received a certificate of the chief executive
officer of C-W as to the foregoing;
(ix) C-W shall have performed or complied in all
material respects with all agreements and covenants required to be
performed by it under this Agreement and the Recapitalization
Agreement at or prior to the Declaration Date or, if applicable, the
Distribution Date and UNITRIN shall have received a certificate of the
chief executive officer of C-W as to the foregoing; and
(x) all actions and other documents and instruments
reasonably necessary in connection with the transactions contemplated
hereby and by the Recapitalization Agreement shall have been taken or
executed, as the case may be, in form and substance reasonably
satisfactory to UNITRIN.
The foregoing conditions are for the sole benefit of UNITRIN and shall not
give rise to or create any duty on the part of UNITRIN to waive or not
waive any such condition.
(c) Sale of Fractional Shares. UNITRIN shall appoint the
Distribution Agent as agent for each holder of record of UNITRIN Common
Stock who would otherwise be entitled to receive in the Distribution any
fractional share of Class B Common Stock. The Distribution Agent shall
aggregate all such fractional shares and sell them in an orderly manner as
soon as practicable after the Distribution Date in the open market and,
after completion of such sales, distribute a pro rata portion of the net
proceeds from such sales, based upon the gross selling price of all such
fractional shares net of all selling expenses, to each stockholder of
UNITRIN who would otherwise have received a fractional share. UNITRIN shall
reimburse the Distribution Agent for its reasonable costs, expenses and
fees (other than selling expenses) in connection with the sale of
fractional shares of Class B Common Stock and the distribution of the
proceeds thereof in accordance with this Section 2.1(c).
(d) Other Actions.
(i) UNITRIN shall prepare and mail, at such time as
determined by UNITRIN, to the holders of UNITRIN Common Stock, such
information concerning C-W, its business, operations and management,
the Distribution and the tax consequences thereof and such other
matters as UNITRIN shall reasonably determine or as may be required by
law. UNITRIN shall give C-W and its counsel reasonably appropriate
advance opportunity to review and comment upon such documents and
shall consider in good faith any comments C-W timely delivers to
UNITRIN with respect to such information. C-W agrees to cooperate with
UNITRIN in the preparation of, and provide any information reasonably
requested by UNITRIN for inclusion in, such mailing. C-W represents
that all information provided to UNITRIN for such mailing shall be
true and correct in all material respects. UNITRIN and C-W will
prepare, and C-W will, to the extent required under applicable law,
file with the Commission any such documentation, including any no
action letters or other requests for interpretive or regulatory
assistance, if any, which UNITRIN reasonably determines are necessary
or desirable to effectuate the Distribution and the other transactions
contemplated hereby and by the Recapitalization Agreement, and UNITRIN
and C-W shall each use all reasonable efforts to obtain all necessary
approvals from the Commission with respect thereto as soon as
practicable.
(ii) UNITRIN and C-W shall take all such action as may
be necessary or appropriate under the securities or blue sky laws of
the United States (and any comparable laws under any foreign
jurisdiction) in connection with the Distribution and the other
transactions contemplated hereby and by the Recapitalization
Agreement.
(iii) C-W shall prepare and file, and shall use all
reasonable efforts to have approved, an application for the listing on
the NYSE of the Class B Common Stock to be distributed in the
Distribution, subject to official notice of issuance.
(iv) C-W shall prepare and file the Form 8-A (which may
include or incorporate by reference information contained in the Proxy
Statement) with the Commission as promptly as practicable following
the execution hereof, and shall use all reasonable efforts to cause
the Form 8-A to become effective under the Exchange Act immediately
following the consummation of the Recapitalization or as soon
thereafter as practicable.
(v) On or prior to the Distribution Date, C-W shall,
from time to time as and to the extent reasonably requested by UNITRIN
or requested by the IRS, provide any documentation, certifications or
other information necessary to enable UNITRIN to obtain the IRS
Ruling.
(vi) On or prior to the Distribution Date, each of
UNITRIN and C-W shall take those actions and consummate those other
transactions in connection with the Distribution that are contemplated
by the IRS Ruling, the ruling request therefor or any related
submissions by UNITRIN to the IRS (which submissions C-W and its
counsel shall be given the opportunity to review and comment upon in
accordance with clause (viii) below).
(vii) In addition to those matters specifically set
forth above, UNITRIN and C-W also shall take all reasonable steps
necessary and appropriate to cause the conditions set forth in Section
2.1(b) to be satisfied prior to the Distribution Date and to effect
the Distribution on the Distribution Date.
(viii) UNITRIN will give C-W and its counsel reasonably
appropriate advance opportunity to review and comment upon filings to
be made by UNITRIN with the Commission or the IRS with respect to the
Distribution, this Agreement, the Recapitalization Agreement or any of
the transactions contemplated hereby or thereby and shall consider in
good faith any comments C-W timely delivers to UNITRIN with respect to
such filing.
(ix) C-W will give UNITRIN and its counsel reasonably
appropriate advance opportunity to review and comment upon filings to
be made by C-W with the Commission with respect to the Distribution,
this Agreement, the Recapitalization Agreement and any of the
transactions contemplated hereby or thereby and shall consider in good
faith any comments UNITRIN timely delivers to C-W with respect to such
filing.
(x) Prior to the Distribution Date, C-W shall not amend,
and the C-W Board of Directors shall not approve any amendment to,
C-W's Restated Certificate of Incorporation or By-Laws, other than the
Governance Amendments and the amendments to be effected upon the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware in connection with the Recapitalization and in
accordance with the terms of the Recapitalization Agreement.
(xi) UNITRIN agrees to be present, and agrees to cause
Merger Sub, as applicable, to be present, in person or by proxy at
each and every stockholders meeting of C-W at which the
Recapitalization and the Governance Amendments are submitted to the
stockholders of C-W for consideration at such meeting, and to vote, or
cause to be voted, all shares of Common Stock owned directly or
indirectly by it and its Subsidiaries in favor of the Recapitalization
and each of the Governance Amendments and similarly to execute any
written consent submitted by stockholders of C-W in favor of the
Recapitalization and each of the Governance Amendments; provided that
the Governance Amendments are to become effective solely upon the
effectiveness of the Merger.
(xii) On or prior to the Distribution Date, each of
UNITRIN and C-W, as the case may be, shall, from time to time and to
the extent reasonably requested by the other, provide any
documentation, certifications or other information to make required
filings in connection with the transactions contemplated by this
Agreement and the Recapitalization Agreement.
Section 2.2 Declaration Date and Distribution Date; Further
Assurances.
(a) The parties agree that the Declaration Date and the
Distribution Date, as applicable, shall occur as soon as reasonably
practicable following the satisfaction or waiver of the conditions set
forth in Section 2.1(b) hereof. The parties shall cause their respective
Boards of Directors to meet on the Declaration Date and each shall take
such corporate action at such meeting as shall be required to effect the
transactions contemplated hereby and by the Recapitalization Agreement. As
soon as reasonably practicable and in no event more than 10 days following
such meeting, C-W shall take all actions required to consummate the
Recapitalization in accordance with the terms of the Recapitalization
Agreement, including the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware on the Distribution Date.
(b) Subject to each of C-W's and UNITRIN's right to
terminate this Agreement in accordance with Section 5.10, in case at any
time after the date hereof any further action is reasonably necessary or
desirable to carry out the Distribution, the Recapitalization or any other
purpose of this Agreement or the Recapitalization Agreement, the proper
officers of each party to this Agreement shall take all such necessary
action. Without limiting the foregoing, UNITRIN and C-W shall use all
reasonable efforts promptly to obtain the IRS Ruling and all consents and
approvals, to enter into all amendatory agreements and to make all filings
and applications that may be required for the consummation of the
transactions contemplated by this Agreement and the Recapitalization
Agreement, including all applicable governmental and regulatory filings.
Section 2.3 Representations and Warranties.
(a) C-W hereby represents and warrants to UNITRIN as follows:
(i) Organization; Good Standing. C-W is a corporation
duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power required to
consummate the transactions contemplated hereby and by the
Recapitalization Agreement.
(ii) Authorization. The execution, delivery and
performance by C-W of this Agreement and the Recapitalization
Agreement and the consummation by C-W of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
corporate action on the part of C-W, other than the adoption of the
Recapitalization Agreement and the approval of each of the Governance
Amendments by the stockholders of C-W. Each of this Agreement and the
Recapitalization Agreement constitutes, and each other agreement or
instrument executed and delivered or to be executed and delivered by
C-W pursuant to this Agreement or the Recapitalization Agreement will,
upon such execution and delivery, constitute, a legal, valid and
binding obligation of C-W, enforceable against C-W in accordance with
its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, and general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
(iii) Consents and Filings. Except (A) for the filing of
the Certificate of Merger in connection with the Recapitalization and
any other filings required to be made with the Secretary of State of
the State of Delaware, (B) for the NYSE Listing Application and any
filings in connection therewith, (C) as required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and (D) for the filing of the Proxy Statement, the Form
8-A and any other reports or documents required to be filed under the
Exchange Act, no material consent of, or filing with, any Governmental
Authority which has not been obtained or made is required to be
obtained or made by C-W for or in connection with the execution and
delivery of this Agreement or the Recapitalization Agreement by C-W,
and the consummation by C-W of the transactions contemplated hereby or
thereby.
(iv) Noncontravention. Except in the case of any
consents that will be obtained prior to the Distribution Date, the
execution, delivery and performance of this Agreement and the
Recapitalization Agreement by C-W does not, and the consummation by
C-W of the transactions contemplated hereby and thereby will not, (A)
violate any applicable federal, state or local statute, law, rule or
regulation, (B) violate any provision of the Restated Certificate of
Incorporation or By-Laws of C-W or (C) violate any provision of, or
result in the termination or acceleration of, or entitle any party to
accelerate any obligation or indebtedness under, any mortgage, lease,
franchise, license, permit, agreement, instrument, law, order,
arbitration award, judgment or decree to which C-W or any of its
Subsidiaries is a party or by which any of them are bound, except for,
in the case of clause (C) above, such violations that, individually or
in the aggregate, would not (I) result in a Material Adverse Effect
with respect to C-W or (II) reasonably be expected to have a material
adverse effect on C-W's ability to consummate the transactions
contemplated by this Agreement or the Recapitalization Agreement.
(v) Litigation. There are no actions or suits against
C-W pending, or to the knowledge of C-W, threatened which seek to, and
C-W is not subject to any judgments, decrees or orders which, enjoin
or rescind the transactions contemplated by this Agreement or the
Recapitalization Agreement or otherwise prevent C-W from complying
with the terms and provisions of this Agreement or the
Recapitalization Agreement.
(vi) Change of Control Adjustments. Neither the
Recapitalization nor the Distribution or any of the other transactions
contemplated hereby or by the Recapitalization Agreement will (A)
constitute a "change of control" or otherwise result in the increase
or acceleration of any benefits, including to employees of C-W, under
any agreement to which C-W or any of its Subsidiaries is a party or by
which it or any of its Subsidiaries is bound or (B) result in any
adjustment of the number of shares subject to, or the terms of,
including exercise price, any outstanding employee stock options of
C-W.
(vii) Certain Transactions. Except for transactions that
are described in Schedule 2.3(a)(vii), neither C-W nor any other
member of the C-W Group has engaged in any transaction or taken any
other action, or engaged in any negotiations or discussions, involving
or relating to the issuance of stock of C-W or options, warrants or
other rights to acquire stock of C-W (other than compensatory stock
plan issuances). None of the transactions or other actions,
negotiations or discussions described in Schedule 2.3(a)(vii) were
undertaken by C-W in contemplation of the Distribution or are related
to the Distribution.
(b) UNITRIN hereby represents and warrants to C-W as
follows:
(i) Organization; Good Standing. UNITRIN is a corporation
duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all corporate power required to
consummate the transactions contemplated hereby and by the
Recapitalization Agreement.
(ii) Authorization. The execution, delivery and performance
by UNITRIN of this Agreement and the Recapitalization Agreement and
the consummation by UNITRIN of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate
action on the part of UNITRIN, other than the formal declaration of
the Distribution. Each of this Agreement and the Recapitalization
Agreement constitutes, and each other agreement or instrument executed
and delivered or to be executed and delivered by UNITRIN pursuant to
this Agreement or the Recapitalization Agreement will, upon such
execution and delivery, constitute, a legal, valid and binding
obligation of UNITRIN, enforceable against UNITRIN in accordance with
its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, and general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
(iii) Consents and Filings. Except (A) for the filing of the
Certificate of Merger in connection with the Recapitalization and any
other filings required to be made with the Secretary of State of the
State of Delaware, (B) as required under the HSR Act and (C) for any
reports or documents required to be filed under the Exchange Act, no
material consent of, or filing with, any Governmental Authority which
has not been obtained or made is required to be obtained or made by
UNITRIN for or in connection with the execution and delivery of this
Agreement or the Recapitalization Agreement by UNITRIN, and the
consummation by UNITRIN of the transactions contemplated hereby or
thereby.
(iv) Noncontravention. Except in the case of consents that
will be obtained on or prior to the Distribution Date, the execution,
delivery and performance of this Agreement and the Recapitalization
Agreement by UNITRIN does not, and the consummation by UNITRIN of the
transactions contemplated hereby and thereby will not, (A) violate any
applicable federal, state or local statute, law, rule or regulation,
(B) violate any provision of the Certificate of Incorporation or
By-Laws of UNITRIN or (C) violate any provision of, or result in the
termination or acceleration of, or entitle any party to accelerate any
obligation or indebtedness under, any mortgage, lease, franchise,
license, permit, agreement, instrument, law, order, arbitration award,
judgment or decree to which UNITRIN or any of its Subsidiaries is a
party or by which any of them are bound, except for, in the case of
clause (C) above, such violations that, individually or in the
aggregate, would not (I) result in a Material Adverse Effect with
respect to UNITRIN or (II) reasonably be expected to have a material
adverse effect on UNITRIN's ability to consummate the transactions
contemplated by this Agreement or the Recapitalization Agreement.
(v) Litigation. There are no actions or suits against
UNITRIN pending, or to the knowledge of UNITRIN, threatened which seek
to, and UNITRIN is not subject to any judgments, decrees or orders
which, enjoin or rescind the transactions contemplated by this
Agreement or the Recapitalization Agreement or otherwise prevent
UNITRIN from complying with the terms and provisions of this Agreement
or the Recapitalization Agreement.
(vi) Plan or Series of Related Transactions. As of the date
hereof, there is not, and as of the Distribution Date, there will not
be (except as permitted pursuant to Section 4.3 hereof and disclosed
to C-W in accordance with the terms of Section 4.3 and except for the
contemplated Distribution), any agreement, understanding, arrangement
or substantial negotiations involving UNITRIN and concerning the
acquisition by any party or parties of C-W or UNITRIN'S interest in
C-W.
Section 2.4 Certain Post-Distribution Transactions.
(a) (i) C-W and UNITRIN shall each comply with, and shall
cause its Subsidiaries to comply with, and otherwise not take, and prevent
any of its Subsidiaries from taking, during the relevant time period, any
action inconsistent with any representation made by such respective party
to the IRS in connection with the request by UNITRIN for the IRS Ruling
(other than, in the case of C-W, the representation contained in Section
IV.B.18 of the request for the IRS Ruling, provided that C-W has not
breached its obligations under Section 2.4(b) hereof that relate to Section
355(e) of the Code), and (ii) until two years after the Distribution Date,
C-W will maintain its status as a company engaged in the active conduct of
a trade or business, as defined in Section 355(b) of the Code.
(b) C-W agrees that (i) prior to the two year anniversary of
the Distribution Date, it shall not (A) merge or consolidate with or into
any other corporation, (B) liquidate or partially liquidate, (C) sell or
transfer all or substantially all of its assets (within the meaning of Rev.
Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of
transactions or (D) redeem or otherwise repurchase any C-W stock (other
than as described in Section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B.
696), and (ii) prior to the date that is six months after the Distribution
Date, it shall not take any action or actions (including, but not limited
to, entering into any agreements, understandings, arrangements or
substantial negotiations and including the issuance of options to acquire
stock of C-W or securities that are convertible into stock of C-W) (other
than the adoption of a stockholder rights plan in customary form and
amendments thereof), which in the aggregate would have the effect of
causing or permitting one or more persons to acquire directly or indirectly
stock representing a 50 percent or greater interest (within the meaning of
Section 355(e) of the Code) in C-W, unless prior to taking any such action
or actions set forth in clauses (i) or (ii), at the election of UNITRIN,
either C-W has obtained (and provided to UNITRIN) a written opinion in form
and substance reasonably acceptable to UNITRIN and C-W, or UNITRIN has
obtained (at the expense of C-W) a supplemental ruling from the IRS, that
such action or actions will not result in (1) the Distribution failing to
qualify under Section 355(a) of the Code or (2) the C-W shares failing to
qualify as qualified property for purposes of Section 355(c)(2) of the Code
by reason of Section 355(e) of the Code; provided, however, that if the
action or actions in question (I) occur after the date that is six months
after the Distribution Date, (II) were not, and are not similar to actions
that were, the subject of any agreement, understanding, arrangement or
substantial negotiations prior to that time and (III) would not result in a
direct or indirect acquisition of a 50% or greater interest in C-W stock
within the meaning of Section 355(e) of the Code but for any increase in
UNITRIN's voting power with respect to Common Stock as a result of the
Recapitalization, then the written opinion or supplemental ruling described
in clause (2) above will not be required. C-W further agrees that prior to
the five year anniversary of the Distribution Date, it shall not initiate
or support, or permit its stockholders to vote on, any action that would in
any way alter the ability of the holders of the Class B Common Stock to (i)
elect at least 80% of the members of the Board of Directors of C-W (to the
extent, and in the manner set forth in, the Restated Certificate of
Incorporation and By-Laws of C-W, as in effect immediately after the
consummation of the Recapitalization) or (ii) otherwise possess at least
80% of the total combined voting power of all classes of C-W stock entitled
to vote (as described in Section 368(c) of the Code), unless prior to
taking any such action, UNITRIN has obtained (at the expense of C-W) a
supplemental ruling from the IRS, that such action or actions will not
result in (A) the Distribution failing to qualify under Section 355(a) of
the Code or (B) the C-W shares failing to qualify as qualified property for
purposes of Section 355(c)(2) of the Code by reason of Section 355(e) of
the Code. UNITRIN agrees to cooperate with C-W in obtaining any opinion
pursuant to the terms of this clause (b) or, as the case may be, to use all
reasonable efforts in obtaining any supplemental ruling pursuant to the
terms of this clause (b), including, where appropriate, by providing
written representations as to factual events that transpired prior to the
Distribution Date.
ARTICLE III
INDEMNIFICATION
Section 3.1 Indemnification by C-W.
(a) C-W shall, to the fullest extent permitted by law,
indemnify, defend and hold harmless the UNITRIN Indemnitees from and
against any and all C-W Liabilities or third party allegations of C-W
Liabilities.
(b) Subject to Section 3.1(d)(i), C-W shall, to the fullest
extent permitted by law, indemnify, defend and hold harmless (i) UNITRIN,
(ii) each member of the consolidated group of corporations of which UNITRIN
is the common parent corporation (within the meaning of Section 1504 of the
Code) and (iii) each direct or indirect Subsidiary of UNITRIN (each Person
referred to in clauses (ii) and (iii), a "UNITRIN Member") from and against
(A) any actual Liability of UNITRIN or any UNITRIN Member (including any
actual Liability for Taxes to the extent that, in the absence of any
Liability for Taxes resulting from a determination that the Distribution
fails to qualify under Section 355(a) of the Code or that the C-W shares
fail to qualify as qualified property for purposes of Section 355(c)(2) of
the Code by reason of Section 355(e) of the Code, such Liability would
otherwise have been reduced or eliminated by a net operating loss deduction
(within the meaning of Section 172 of the Code and the Treasury regulations
thereunder)), and (B) any Established Liability of any stockholder of
UNITRIN (it being understood that any Established Liability of any
stockholder of UNITRIN shall be deemed to be an actual Liability of UNITRIN
for purposes of determining C-W's indemnification obligation hereunder,
regardless of whether such stockholder actually has or pursues a valid
claim for such Established Liability against UNITRIN), in each case arising
from any inaccuracy in, or failure by C-W to comply with, any
representation or undertaking made by C-W to the IRS in connection with the
request by UNITRIN for the IRS Ruling (other than any representation or
undertaking (express or otherwise) contained in Part III.B of UNITRIN's
letter request for the IRS Ruling) (referred to herein as a "C-W Failure"
(it being understood that a Clause (d) Failure (as defined below) shall not
constitute a C-W Failure for purposes of this Article 3)); provided,
however, that, notwithstanding the foregoing, C-W shall not indemnify
UNITRIN or any UNITRIN Member for any Liability or Established Liability
that results solely from a UNITRIN Failure (as defined in Section 3.2(b)
hereof) (except to the extent that any such UNITRIN Failure is in respect
of a representation based in whole or in part upon information provided by
C-W); and provided, further, that if any Liability or Established Liability
described in this clause (b) arises as a result of both a C-W Failure and a
UNITRIN failure, and each such failure is an independent cause of such
Liability or Established Liability, then C-W and UNITRIN shall allocate
such Liability or Established Liability between themselves in such
proportion as is appropriate to reflect the relative fault of C-W on the
one hand and UNITRIN on the other with respect to such Liability or
Established Liability.
(c) If C-W (or any of its Subsidiaries) fails to comply with
any of its obligations under Section 2.4(a) or (b) above or takes any
action or fails to take any action, and such failure to comply, action or
omission contributes to a determination that the Distribution fails to
qualify under Section 355(a) of the Code or that the C-W shares fail to
qualify as qualified property for purposes of Section 355(c)(2) of the Code
by reason of Section 355(e) of the Code (each a "355 Failure" (it being
understood that a Clause (d) Failure shall not constitute a 355 Failure for
purposes of this Article 3)), then C-W shall, to the fullest extent
permitted by law, indemnify, defend and hold harmless UNITRIN and each
UNITRIN Member from and against (i) any and all federal, state and local
Taxes, including any interest, penalties or additions to Tax, imposed upon
or incurred by UNITRIN and any UNITRIN Member and (ii) any Established
Liability of any stockholder of UNITRIN (it being understood that any
Established Liability of any stockholder of UNITRIN shall be deemed to be a
UNITRIN Tax Liability (as defined below) for purposes of determining C-W's
indemnification obligation hereunder, regardless of whether such
stockholder actually has or pursues a valid claim for such Established
Liability against UNITRIN), in each case as a result of the failure of the
Distribution to qualify under Section 355(a) of the Code or the application
of Section 355(e) (any such Tax, interest, penalty or addition to Tax,
together with any such Established Liability, a "UNITRIN Tax Liability");
provided, however, that, notwithstanding the foregoing, C-W shall not
indemnify UNITRIN or any UNITRIN Member for any UNITRIN Tax Liability that
results solely from a UNITRIN Failure (except to the extent that any such
UNITRIN Failure is in respect of a representation based in whole or in part
upon information provided by C-W); and provided, further, that if any
UNITRIN Tax Liability described in this clause (c) arises as a result of
both a 355 Failure and a UNITRIN Failure, and each such failure is an
independent cause of such UNITRIN Tax Liability, then C-W and UNITRIN shall
allocate such UNITRIN Tax Liability between themselves in such proportion
as is appropriate to reflect the relative fault of C-W on the one hand and
UNITRIN on the other with respect to such UNITRIN Tax Liability.
(d) Notwithstanding any other provision of this Agreement:
(i) C-W shall not be required to indemnify and hold
harmless, and shall have no liability to, UNITRIN or any UNITRIN
Member for any UNITRIN Tax Liability that would not have been imposed
or incurred but for the increase in UNITRIN's voting power with
respect to Common Stock as a result of the Recapitalization; provided,
however, that C-W shall be required to indemnify and hold UNITRIN and
any UNITRIN Member harmless for any UNITRIN Tax Liability that would
not have been imposed or incurred but for the aggregation of (A) the
increase in UNITRIN's voting power with respect to the Common Stock as
a result of the Recapitalization and (B) the direct or indirect
acquisition of C-W stock or securities pursuant to (1) a transaction
that occurs (or is the subject of any agreement, understanding,
arrangement or substantial negotiations) prior to the date that is six
months after the Distribution Date or (2) a transaction that occurs
after the date that is six months after the Distribution Date but is
similar to a transaction that was the subject of an agreement,
understanding, arrangement or substantial negotiations that occurred
prior to the date that is six months after the Distribution Date; and
(ii) Subject to the proviso hereto, C-W shall be
entitled to rely without limitation on any representations made by
UNITRIN in (A) Section 2.3(b)(vi) hereof or (B) its letter request for
the IRS Ruling with respect to sales by UNITRIN stockholders of stock
or securities of UNITRIN or C-W, and in the event that any such
representations are not true, correct and complete in all respects,
subject to the proviso hereto, C-W shall not indemnify UNITRIN or any
UNITRIN Member for any UNITRIN Tax Liability that would not have been
incurred but for the failure of any such representations to be true,
correct and complete in all respects; provided, however, that C-W
shall not be entitled to rely on, and will not be relieved of its
indemnification obligations hereunder as a result of inaccuracies or
failures in, or incompleteness of, the representations made by UNITRIN
in its letter request for the IRS Ruling with respect to sales by
UNITRIN stockholders of stock or securities of UNITRIN or C-W if,
before taking or failing to take any action, C-W has actual knowledge
of any such inaccuracy, failure or incompleteness.
The exceptions to C-W's indemnification obligations hereunder that are
referred to in subclauses (i) and (ii) of this clause (d) are referred to
herein as "Clause (d) Failures."
(e) Any indemnity payment made by C-W pursuant to either
clause (b) or (c) above shall be made on an after-tax basis, based on the
actual tax position of UNITRIN, the UNITRIN Member or UNITRIN stockholder,
as the case may be, in the taxable year such indemnity payment is received
and taking into account the deductibility for federal income tax purposes
of any state taxes. The aggregate amount to be paid by C-W pursuant to its
indemnity obligations set forth in clauses (b), (c), (d), (e) and (f) of
this Section 3.1 shall not exceed $135 million.
(f) In the event that C-W and UNITRIN are jointly liable
under either clause (b) or (c) above, C-W shall be required to indemnify
and pay UNITRIN or a UNITRIN Member, with respect to an Established
Liability of a UNITRIN stockholder, for C-W's proportionate share of such
Established Liability (if any) only if, and to the extent that, UNITRIN
shall have agreed (in form reasonably satisfactory to C-W) to pay such
UNITRIN stockholder for UNITRIN's proportionate share of such Established
Liability. In the event that UNITRIN does not actually pay such UNITRIN
stockholder for UNITRIN's proportionate share of such Established
Liability, then UNITRIN will reimburse C-W for any amounts paid by C-W to
UNITRIN in respect of C-W's proportionate share of such Established
Liability.
Section 3.2 Indemnification by UNITRIN.
(a) UNITRIN shall, to the fullest extent permitted by law,
indemnify, defend and hold harmless the C-W Indemnitees from and against
any and all UNITRIN Liabilities or third party allegations of UNITRIN
Liabilities.
(b) UNITRIN shall, to the fullest extent permitted by law,
indemnify, defend and hold harmless C-W and each member of the consolidated
group of corporations of which C-W is the common parent corporation (within
the meaning of Section 1504 of the Code) (each a C-W Member") from and
against any actual Liability of C-W or any C-W Member arising from any
inaccuracy in, or failure by UNITRIN to comply with, any representation or
undertaking made by UNITRIN to the IRS in connection with the request by
UNITRIN for the IRS Ruling or pursuant to Section 2.3(b)(vi) hereof
(referred to herein as a "UNITRIN Failure"); provided, however, that,
notwithstanding the foregoing, UNITRIN shall not indemnify C-W or any C-W
Member for any liability that results solely from a C-W Failure or a 355
Failure (except to the extent that any such failure is in respect of a
representation based in whole or in part upon information provided by
UNITRIN); and provided, further, that if any Liability described in this
clause (b) arises as a result of both a UNITRIN Failure and a C-W Failure
and/or a 355 Failure, and each such failure is an independent cause of such
Liability, then UNITRIN and C-W shall allocate such Liability between
themselves in such proportion as is appropriate to reflect the relative
fault of UNITRIN on the one hand and C-W on the other with respect to such
Liability.
Section 3.3 Treatment of Payments. UNITRIN agrees to consider in
good faith treating for federal income tax purposes any indemnity payments
it receives pursuant to this Agreement as payments to which Section 301 of
the Code applies.
Section 3.4 Procedures for Indemnification. (a) If (i) a claim or
demand is made against C-W, any C-W Indemnitee, any C-W Member, UNITRIN,
any UNITRIN Indemnitee or any UNITRIN Member (each, an "Indemnitee") by any
person who is not a party to this Agreement (each a "Third Party Claim") as
to which such Indemnitee is entitled to indemnification pursuant to this
Agreement, such Indemnitee shall notify the party which is or may be
required pursuant to the terms hereof to make such indemnification (the
"Indemnifying Party") in writing, and in reasonable detail, of the Third
Party Claim promptly (and in any event within 15 business days) after
receipt by such Indemnitee of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect
the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure. Thereafter, the Indemnitee shall deliver to the Indemnifying
Party, promptly (and in any event within five business days) after the
Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third
Party Claim.
If a Third Party Claim is made against an Indemnitee with respect
to which a claim for indemnification is made pursuant to Section 3.1 or
Section 3.2 hereof, the Indemnifying Party shall be entitled to participate
in the defense thereof and, if it so chooses and acknowledges in writing
its obligation to indemnify the Indemnitee therefor, to assume the defense
thereof with counsel selected by the Indemnifying Party; provided that such
counsel is not reasonably objected to by the Indemnitee. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party shall, within 30 days (or sooner if the nature of
the Third Party Claim so requires), notify the Indemnitee of its intent to
do so, and the Indemnifying Party shall thereafter not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, that such
Indemnitee shall have the right to employ counsel to represent such
Indemnitee if, in such Indemnitee's reasonable judgment, a conflict of
interest between such Indemnitee and such Indemnifying Party exists in
respect of such claim which would make representation of both such parties
by one counsel inappropriate, and in such event the reasonable fees and
expenses of such separate counsel shall be paid by such Indemnifying Party.
If the Indemnifying Party assumes such defense, the Indemnitee shall have
the right to participate in the defense thereof and to employ counsel,
subject to the proviso of the preceding sentence, at its own expense,
separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel
employed by the Indemnitee for any period during which the Indemnifying
Party has failed to assume the defense thereof. If the Indemnifying Party
so elects to assume the defense of any Third Party Claim, all of the
Indemnitees shall cooperate with the Indemnifying Party in the defense or
prosecution thereof, including by providing or causing to be provided,
records and witnesses as soon as reasonably practicable after receiving any
request therefor from or on behalf of the Indemnifying Party.
Unless otherwise required by law, in no event will an Indemnitee
admit any liability with respect to, or settle, compromise or discharge,
any Third Party Claim without the Indemnifying Party's prior written
consent (which will not be unreasonably withheld); provided, however, that
the Indemnitee shall have the right to settle, compromise or discharge such
Third Party Claim without the consent of the Indemnifying Party if the
Indemnitee releases the Indemnifying Party from its indemnification
obligation hereunder with respect to such Third Party Claim and such
settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for a Third Party Claim (as between the Indemnifying Party and
the Indemnitee), the Indemnifying Party shall be permitted to enter into,
and the Indemnitee will agree to, any settlement, compromise or discharge
of a Third Party Claim that the Indemnifying Party may recommend and that
by its terms obligates the Indemnifying Party to pay the full amount of the
liability in connection with such Third Party Claim and releases the
Indemnitee completely in connection with such Third Party Claim and that
would not otherwise adversely affect the Indemnitee; provided, however,
that the Indemnitee may refuse to agree to any such settlement, compromise
or discharge if the Indemnitee agrees that the Indemnifying Party's
indemnification obligation with respect to such Third Party Claim shall not
exceed the amount that would be required to be paid by or on behalf of the
Indemnifying Party in connection with such settlement, compromise or
discharge; and provided further that the Indemnifying Party shall not agree
to any other settlement, compromise or discharge of a Third Party Claim not
described above without the prior written consent of the Indemnitee, such
consent not to be unreasonably withheld. If an Indemnifying Party elects
not to assume the defense of a Third Party Claim, or fails to notify an
Indemnitee of its election to do so as provided herein, such Indemnitee may
compromise, settle or defend such Third Party Claim. In such case, the
Indemnifying Party shall be responsible for the cost of such compromise,
settlement or defense.
Notwithstanding the foregoing, the Indemnifying Party shall not
be entitled to assume the defense of any Third Party Claim (and shall be
liable for the reasonable fees and expenses of counsel incurred by the
Indemnitee in defending such Third Party Claim) if the Third Party Claim
seeks an order, injunction or other equitable relief or relief for other
than money damages against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its counsel, cannot be separated from any
related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages.
(b) In the event any Tax Claim (as defined below) is
disposed of pursuant to the provisions of this Section 3.4 or a Final
Determination has been made in circumstances that give rise to a Tax
Liability or an Established Liability on the part of UNITRIN, any UNITRIN
Member or any UNITRIN stockholder, as the case may be, then C-W shall pay
to UNITRIN all amounts in respect of any Tax Claim within twenty (20)
business days after such Tax Claim is disposed of or such Final
Determination has been made. For purposes of this Section 3.4(b), (i) "Tax
Claim" shall mean any notice of deficiency, proposed adjustment,
adjustment, assessment, audit, examination, suit, dispute or other written
claim which is commenced or initiated against UNITRIN, any UNITRIN Member
or any UNITRIN stockholder with respect to Taxes that are attributable to
the Recapitalization or Distribution and which result from any act or acts
of C-W or its Subsidiaries described in Section 2.4 of this Agreement or
the breach by C-W of any representation or warranty set forth in this
Agreement and (ii) "Final Determination" shall mean (1) the entry of a
decision of a court of competent jurisdiction at such time as an appeal may
no longer be taken from such decision or (2) the execution of a closing
agreement or its equivalent between the particular taxpayer and the
particular relevant taxing authority.
Section 3.5 Remedies Not Exclusive. The remedies provided in this
Article 3 shall be cumulative and shall not preclude assertion by any
Indemnitee of any other rights or the seeking of any and all other remedies
against any Indemnifying Party.
Section 3.6 Subrogation. In the event of payment by an
Indemnifying Party to any Indemnitee in connection with any Third Party
Claim, such Indemnifying Party shall be subrogated to and shall stand in
the place of such Indemnitee as to any events or circumstances in respect
of which such Indemnitee may have any right or claim relating to such Third
Party Claim. Such Indemnitee shall cooperate with such Indemnifying Party
in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
Section 3.7 Indemnification Payments. Indemnification required by
this Article 3 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or loss, liability, claim, damage or expense is incurred.
ARTICLE IV
COVENANTS
Section 4.1 Access to Information.
(a) Other than in circumstances in which indemnification is
sought pursuant to Article 3 (in which event the provisions of such Article
will govern), from and after the Distribution Date, each of C-W and UNITRIN
shall afford to the other and its authorized accountants, counsel and other
designated representatives reasonable access during normal business hours,
subject to appropriate restrictions for classified, privileged or
confidential information, to the personnel, properties, books and records
of such party and its Subsidiaries to the extent such access is reasonably
required by the other party in order to perform its obligations under this
Agreement or the Recapitalization Agreement or to comply with such party's
financial, tax and other reporting obligations.
(b) A party providing information or access to information
to the other party under this Article 4 shall be entitled to receive from
the recipient, upon the presentation of invoices therefor, payments for
such amounts, relating to supplies, disbursements and other out-of-pocket
expenses, as may be reasonably incurred in providing such information or
access to information.
(c) For a period of two years following the Distribution
Date, C-W shall provide to UNITRIN: (i) promptly following the date (the
"Target Date"), as of which there has been an aggregate change in the
outstanding equity or capital structure of C-W (measured during the period
beginning on the Distribution Date and ending on the Target Date and not
taking into account the Recapitalization or transfers of shares by C-W
stockholders, unless C-W participates in such transfers or such transfers
are reported on a Schedule 13D or 13G under the Exchange Act) that accounts
for at least 10% of the total outstanding equity of C-W as of the
Distribution Date written notice of such change and (ii) after the Target
Date, reasonably detailed reports delivered promptly following the
occurrence of each additional change or changes (if any) in the outstanding
equity or capital structure of C-W that, individually or in the aggregate
(not taking into account the Recapitalization or transfers of shares by C-W
stockholders, unless C-W participates in such transfers or such transfers
are reported on a Schedule 13D or 13G under the Exchange Act), account for
at least 5% of the total outstanding equity of C-W as of the Distribution
Date.
Section 4.2 Confidentiality. Each of C-W and its Subsidiaries and
UNITRIN and its Subsidiaries shall keep, and shall cause its employees,
consultants, advisors and agents to keep, confidential all information
concerning the other parties in its possession, its custody or under its
control (except to the extent that (a) such information is then in the
public domain through no fault of such party, (b) such information has been
lawfully acquired from other sources by such party or (c) this Agreement or
the Recapitalization Agreement or any other agreement entered into pursuant
hereto or thereto permits the use or disclosure of such information) and
each party shall not (without the prior written consent of the other)
otherwise release or disclose such information to any other Person, except
such party's auditors and attorneys, unless compelled to disclose such
information by judicial or administrative process or unless such disclosure
is required by law and such party has used all reasonable efforts to
consult with the other affected party or parties prior to such disclosure,
and in such case shall exercise all reasonable efforts to obtain reliable
assurance that such information will be accorded confidential treatment.
Section 4.3 No Solicitation.
(a) Subject to Sections 4.3(b) and 4.3(c), each of UNITRIN
and C-W agree not to directly or indirectly, through any officer, director,
employee, representative, securityholder or agent solicit, initiate or
encourage any inquiries, offers or proposals or any indication of interest
or the commencement of negotiations or continue any current negotiations or
conduct any negotiations or enter into any agreement or provide any
nonpublic information regarding or in connection with any proposal for the
acquisition by any third party of any shares of capital stock of C-W from
C-W or UNITRIN (other than issuances of common stock by C-W pursuant to
employee stock plans in the ordinary course of business) or the acquisition
of, or business combination with, C-W through any other means including a
merger or purchase of assets (an "Acquisition Proposal") until the earlier
to occur of the termination of this Agreement or the time at which the
Distribution is consummated; provided, however, that UNITRIN and C-W may
respond to any unsolicited inquiries or proposals solely to indicate that
it is bound by this Section 4.3. If either of C-W or UNITRIN receives any
such inquiry or proposal, then C-W or UNITRIN, as the case may be, shall
inform the other of the terms and conditions, if any, of such inquiry or
proposal and the identity of the Person making the proposal and shall keep
such party promptly advised of all further communications relating to such
inquiry or proposal.
(b) UNITRIN shall be relieved of its obligations under
Section 4.3(a) (in the case of clause (iii) below, only to the extent set
forth therein) if:
(i) the Board of Directors of C-W shall or shall
resolve to (A) not recommend, or withdraw its approval or
recommendation of, the Recapitalization, the Recapitalization
Agreement, this Agreement or any of the transactions contemplated
thereby or hereby, (B) modify any such approval or recommendation in a
manner adverse to UNITRIN or (C) approve, recommend or enter into any
agreement for any Acquisition Proposal;
(ii) C-W breaches or fails to comply with any of its
material obligations set forth in this Agreement or the
Recapitalization Agreement and fails to cure such breach or failure
within 30 days following notice from UNITRIN; or
(iii) after receipt of a bona fide written Acquisition
Proposal, the Board of Directors of UNITRIN in good faith determines,
after consultation with its outside counsel, that it would be
inconsistent with the Board's fiduciary duties to stockholders of
UNITRIN not to commence discussions or negotiations with, or provide
nonpublic information(other than nonpublic information with respect to
C-W) to the person making such Acquisition Proposal; provided,
however, that UNITRIN shall only be released from its obligations
under Section 4.3(a) pursuant to this Section 4.3(b)(iii) with respect
to such Acquisition Proposal.
(c) C-W shall be relieved of its obligations under Section
4.3(a) (to the extent specifically set forth in this Section 4.3(c)) if
after receipt of a bona fide written Acquisition Proposal, the Board of
Directors of C-W in good faith determines, after consultation with its
outside counsel, that it would be inconsistent with the Board's fiduciary
duties to stockholders of C-W not to commence discussions or negotiations
with, or provide nonpublic information to, the person making such
Acquisition Proposal; provided, however, that C-W shall only be released
from its obligations under Section 4.3(a) pursuant to this Section 4.3(c)
with respect to such Acquisition Proposal.
Section 4.4 Certain Other Agreements. During the period
commencing on the date hereof and continuing until the earlier of the
termination of this Agreement or the consummation of the Recapitalization,
UNITRIN hereby agrees that it shall not, and that it shall cause each of
its Affiliates not to, without the prior approval of the Board of Directors
of C-W, directly or indirectly, (a) make, or in any way participate in, any
"solicitation" of "proxies" (as such terms are defined or used in
Regulation 14A under the Exchange Act) to consent or vote or seek to advise
or influence any Person with respect to the voting of any shares of Common
Stock; (b) form, join or in any way participate in any Group (other than
with respect to its Affiliates) with respect to any of the shares of Common
Stock; (c) otherwise act, either alone or in concert with others, to seek
control of C-W, including by submitting any written consent in furtherance
of the foregoing or calling a special meeting of C-W stockholders; (d)
publicly disclose any intention, proposal, plan or arrangement with respect
to any foregoing; or (e) make any demand, request or proposal to amend,
waive or terminate any provision of this Section 4.4.
Section 4.5 Public Announcements. Each of UNITRIN and C-W agrees
that no public release or announcement concerning the Recapitalization or
the Distribution shall be issued by either party without the prior written
consent of the other (which shall not be unreasonably withheld), except as
such release or announcement may be required by law or the rules or
regulations of any United States securities exchange or the Nasdaq Stock
Market, in which case the party required to make the release or
announcement shall use all reasonable efforts to allow each other party
reasonable time to comment on each release or announcement in advance of
such issuance.
Section 4.6 Required Consents. Each of UNITRIN and C-W shall use
all reasonable efforts to obtain all of the consents, waivers or
authorizations required in connection with the completion of the
Recapitalization and the Distribution, including, without limitation, (a)
any material governmental approvals and consents necessary to consummate
the Distribution and the other transactions contemplated hereby and by the
Recapitalization Agreement and (b) those consents listed on Schedule 4.6
(collectively, the "Required Consents").
Section 4.7 Litigation Cooperation. Each of UNITRIN and C-W shall
use reasonable efforts to make available to the other party, upon written
request and at the expense of the other party, its officers, directors,
employees and agents as witnesses to the extent such Persons may reasonably
be required in connection with any Action arising out of (a) the business
of such other party and its predecessors, if any, in which the requesting
party may from time to time be involved; provided that such Action does not
involve a claim by either of UNITRIN or C-W against the other or (b) the
matters contained in Section 2.4 and Article 3 hereof.
Section 4.8 Other Matters. Each of UNITRIN and C-W shall
negotiate in good faith to execute prior to the Distribution Date such
further certificates, agreements and other documents which are reasonably
necessary to consummate or implement the transactions contemplated hereby
and by the Recapitalization Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.1 Complete Agreement; Construction. This Agreement and
the Recapitalization Agreement, including the Exhibits and Schedules hereto
and thereto, shall constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and shall supersede all
previous negotiations, commitments and writings with respect to such
subject matter.
Section 5.2 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts
have been signed by each of the parties and delivered to the other parties.
Section 5.3 Survival of Agreements. Except as otherwise
contemplated by this Agreement, all covenants, representations, warranties
and agreements of the parties contained in this Agreement shall survive the
Distribution Date.
Section 5.4 Expenses. Except as otherwise set forth in this
Agreement or in the Recapitalization Agreement, all costs and expenses
incurred in connection with the preparation, execution, delivery and
implementation of the Recapitalization, this Agreement, the
Recapitalization Agreement, the Distribution and the other transactions
contemplated hereby and thereby shall be charged to and paid by the party
incurring such costs and expenses.
Section 5.5 Notices. All notices and other communications
hereunder shall be in writing, shall be effective when received, and shall
be duly given if delivered by (a) hand delivery, (b) U.S. mail, postage
prepaid, for first class delivery, (c) Federal Express or similar carrier,
freight prepaid, for next business day delivery, or (d) electronic
transmission, provided that confirmation of transmission and receipt is
confirmed, to each party at the following respective addresses (or at such
other address for a party as shall be specified by like notice):
To UNITRIN:
UNITRIN, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Financial Officer
with a copy to:
UNITRIN, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
and with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois)
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
To C-W:
▇▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Section 5.6 Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement will not
waive or diminish that party's right to demand strict performance
thereafter of that or any other provision hereof.
Section 5.7 Amendments. This Agreement may not be modified or
amended except by an agreement in writing signed by each of the parties
hereto.
Section 5.8 Assignment. This Agreement shall not be assignable,
in whole or in part, directly or indirectly, by any party hereto without
the prior written consent of the other party hereto, and any attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void.
Section 5.9 Successors and Assigns. The provisions to this
Agreement shall be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and permitted assigns.
Section 5.10 Termination.
(a) Prior to the filing of the Certificate of Merger, this
Agreement may be terminated:
(i) by mutual written consent of UNITRIN and C-W;
(ii) by either UNITRIN or C-W if the other party is in
breach of any of its obligations or representations and warranties
herein or under the Recapitalization Agreement, which breach would
result in a Material Adverse Effect on such party after giving effect
to the Distribution, and such other party fails to cure such breach
within 30 days following notice;
(iii) by C-W if, following receipt of an Acquisition
Proposal, the Board of Directors of C-W is required by its fiduciary
duties to stockholders of C-W to terminate this Agreement or the
Recapitalization Agreement and accept such Acquisition Proposal;
provided that in such event C-W shall pay the reasonable documented
out-of-pocket fees and expenses incurred by UNITRIN in connection with
this Agreement, the Recapitalization Agreement and the transactions
contemplated hereby and thereby in an aggregate amount of up to $2.3
million, but only to the extent that UNITRIN does not agree to, or
otherwise vote in favor of, such Acquisition Proposal;
(iv) by UNITRIN if (A) the Board of Directors of C-W
shall or shall resolve to (I) not recommend, or withdraw its approval
or recommendation of, the Recapitalization, the Recapitalization
Agreement, this Agreement or any of the transactions contemplated
thereby or hereby, (II) modify any such approval or recommendation in
a manner adverse to UNITRIN or (III) approve, recommend or enter into
an agreement for any Acquisition Proposal, (B) the stockholders of C-W
shall not approve the Recapitalization or (C) following receipt of an
Acquisition Proposal, the Board of Directors of UNITRIN is required by
its fiduciary duties to stockholders of UNITRIN to terminate this
Agreement and accept such Acquisition Proposal; provided that (I) in
the case of clause (A) above, C-W shall pay the reasonable documented
out-of-pocket fees and expenses incurred by UNITRIN in connection with
this Agreement, the Recapitalization Agreement and the transactions
contemplated hereby or thereby in an aggregate amount of up to $2.3
million and (II) in the case of clause (C) above, UNITRIN shall pay
the reasonable documented out-of-pocket fees and expenses incurred by
C-W in connection with this Agreement, the Recapitalization Agreement
and the transactions contemplated hereby and thereby in an aggregate
amount of up to $2.3 million; or
(v) by either UNITRIN or C-W if the Recapitalization is
not consummated by October 26, 2001; provided that if the conditions
set forth in Section 4.1(a) and 4.2(a) of the Recapitalization
Agreement shall have been satisfied by October 26, 2001 but the
Recapitalization shall not have been consummated by such date, then
the time period set forth in this clause (v) shall be extended to the
date that is 30 days after the Stockholders Meeting at which the
conditions set forth in Section 4.1(a) and 4.2(a) of the
Recapitalization Agreement were satisfied; provided, further, that
this right shall not be available to any party that is in material
breach of its obligations under this Agreement or the Recapitalization
Agreement.
(b) This Agreement shall terminate automatically without any
action on the part of C-W or UNITRIN in the event the Recapitalization
Agreement is terminated in accordance with its terms.
(c) Except as specifically set forth in clause (a) above or
the Recapitalization Agreement and for any liability in respect of any
breach of this Agreement or the Recapitalization Agreement by either party,
no party shall have any liability of any kind to any other party or any
other person as a result of the termination of this Agreement. After the
filing of the Certificate of Merger relating to the Recapitalization, this
Agreement may not be terminated except by an agreement in writing signed by
both parties.
Section 5.11 Subsidiaries. Each of the parties hereto shall cause
to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any
Subsidiary of such party or by any entity that is contemplated to be a
Subsidiary of such party on or after the Distribution Date (it being
understood that C-W and its Subsidiaries shall not be considered a
Subsidiary of UNITRIN).
Section 5.12 Third Party Beneficiaries. Except as provided in
Article 3 relating to Indemnitees, this Agreement is solely for the benefit
of the parties hereto and should not be deemed to confer upon third parties
any remedy, claim, liability, reimbursement, claim of action or other right
in excess of those existing without reference to this Agreement.
Section 5.13 Title and Headings. Titles and headings to sections
herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 5.14 Exhibits and Schedules. The Exhibits and Schedules
shall be construed with and as an integral part of this Agreement to the
same extent as if the same had been set forth verbatim herein.
Section 5.15 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF DELAWARE.
Section 5.16 Consent to Jurisdiction. Each of the parties
irrevocably submits to the exclusive jurisdiction of any state court of the
State of Delaware and the United States District Court for the District of
Delaware, for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Each of the
parties agrees to commence any action, suit or proceeding relating hereto
in such Delaware court. Each of the parties further agrees that service of
any process, summons, notice or document by U.S. registered mail to such
party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in Delaware with respect to any
matters to which it has submitted to jurisdiction in this Section 5.16.
Each of the parties irrevocably and unconditionally waives any objection to
the laying of venue of any action, suit or proceeding arising out of this
Agreement or the transactions contemplated hereby in such Delaware court
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
Section 5.17 Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way
be affected or impaired thereby; provided, however, that the consummation
of the Recapitalization is conditioned upon and is not severable from the
Distribution, and that the Distribution is not severable from the
Recapitalization. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid
provisions, the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first above written.
UNITRIN, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President and Chief Financial Officer
▇▇▇▇▇▇▇-▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer