Exhibit 2.1
STRATEGIC ALLIANCE AGREEMENT
By And Between
CONTINENTAL CASUALTY COMPANY
And
IGF INSURANCE COMPANY
IGF HOLDINGS, INC.
▇▇▇▇▇▇ INTERNATIONAL GROUP, INC.
February 28, 1998
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS..........................................................1
ARTICLE 2
CLOSING.............................................................15
2.1 Time of Closing...............................................15
2.2 Transfer of Employees and Assets..............................16
2.3 Transition Teams..............................................16
2.4 Acts of Closing...............................................16
2.5 Break-Up Fee..................................................16
ARTICLE 3
TRANSFER OF MANAGEMENT RESPONSIBILITY;
MPCI AND CROP HAIL BUSINESS.........................................16
3.1 Assumption of Management......................................16
3.2 Transfer of Supporting Policies, Data, and Assets.............17
3.3 Employment of Personnel.......................................17
3.4 Execution of Ancillary Agreements.............................17
3.5 No Assumption of Liabilities..................................17
3.6 Maintenance of SRAs...........................................18
3.7 Underwriting Committee........................................18
3.8 Special Sale and Purchase Rights..............................18
A. In General................................................18
B. CNA's Put Mechanisms......................................19
C. IGF Call Mechanisms.......................................20
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CNA...............................21
4.1 Existence and Good Standing...................................21
4.2 Due Authorization.............................................21
4.3 No Liens......................................................22
4.4 No Violation..................................................22
4.5 Foreign Status................................................22
4.6 No Broker Transactions........................................22
4.7 Litigation, Actions and Proceedings...........................22
4.8 Good Title....................................................23
4.9 Approvals.....................................................23
4.10 Software......................................................23
4.11 Licenses......................................................23
4.12 Leased Premises...............................................23
4.13 Environmental Matters.........................................23
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4.14 MPCI Premium Volume...........................................24
4.15 Crop Hail Premium Volume......................................24
4.16 Agency Contracts..............................................24
4.17 Production Costs..............................................24
4.18 Standard Reinsurance Agreements...............................24
4.19 Federal Crop Insurance Corporation............................24
4.20 Governmental Authority........................................24
4.21 Compliance with Laws..........................................25
4.22 Insurance Contracts...........................................25
4.23 Regulatory Filings............................................25
4.24 Reinsurance...................................................26
4.25 Conduct of Business...........................................26
4.26 Other Sale Arrangements.......................................26
4.27 Contracts.....................................................26
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF IGFH..............................26
5.1 Existence and Good Standing...................................26
5.2 Due Authorization.............................................26
5.3 No Violation..................................................27
5.4 No Broker Transactions........................................27
5.5 Litigation, Actions and Proceedings...........................27
5.6 Approvals.....................................................27
5.7 Reinsurance Agreements........................................27
5.8 Compliance With Laws..........................................28
5.9 Permits, Licenses and Franchises..............................28
ARTICLE 6
COVENANTS...........................................................28
6.1 Execution of Agreements.......................................28
6.2 Conduct of Business...........................................28
6.3 Certain Transactions..........................................29
6.4 Due Diligence.................................................29
6.5 Post-Closing Access...........................................30
6.6 Consents and Reasonable Efforts...............................30
6.7 Representation and Warranties.................................31
6.8 Further Assurances............................................31
6.9 Expenses......................................................31
6.10 Code Section 338(h)(10) Election..............................31
6.11 Exclusivity...................................................31
6.12 NACU..........................................................31
6.13 Non-Competition...............................................31
6.14 Replacement Ancillary Agreements..............................32
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6.15 Confidentiality...............................................32
6.16 Intellectual Property and Trade Secrets.......................32
6.17 IGFH Employees................................................32
6.18 ERISA and Employment-Related Matters..........................32
6.19 Licenses......................................................32
6.20 Fronting......................................................32
6.21 Reinsurance Agreements........................................33
6.22 Leased Premises...............................................33
6.23 NACU..........................................................33
ARTICLE 7
CLOSING CONDITIONS..................................................33
7.1 Conditions to Obligations of the Parties......................33
A. Bring Down of Representations and Warranties...........33
B. Performance and Compliance.............................33
C. Opinion of Counsel.....................................33
D. Regulatory Approval....................................33
E. Required Consents......................................33
F. Litigation.............................................33
G. No Material Adverse Effect.............................34
H. Incumbency Certificate.................................34
I. Certificates of Existence and Licensure................34
J. Certified Copies of Resolutions........................34
K. Catastrophic Events....................................34
M. Ancillary Agreements...................................35
ARTICLE 8
EMPLOYEES AND EMPLOYMENT MATTERS....................................35
8.1 Employment Transfer...........................................35
8.2 No Liability for Prior Service................................35
8.3 Hold Harmless.................................................35
ARTICLE 9
TERM AND TERMINATION................................................35
9.1 Duration......................................................35
9.2 Termination Prior to Closing..................................35
9.3 Survival......................................................35
9.4 Put/Call Termination..........................................36
ARTICLE 10
INDEMNIFICATION.....................................................36
10.1 Indemnification by IGFH.......................................36
10.2 Indemnification by CNA........................................36
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10.3 Indemnification by CNA for Employment Related Matters.........37
10.4 Indemnification Procedures....................................37
10.5 Stamford Financial............................................38
ARTICLE 11
MISCELLANEOUS.......................................................38
11.1 Further Actions...............................................38
11.2 Costs.........................................................38
11.3 Public Announcements..........................................38
11.4 Survival......................................................38
11.5 Amendment and Modification....................................38
11.6 Waiver........................................................39
11.7 Governing Law; Venue..........................................39
11.8 Notice........................................................39
11.9 Severability..................................................40
11.10 Successors and Assigns........................................40
11.11 Captions......................................................40
11.12 Gender and Tense..............................................41
11.13 Entire Agreement..............................................41
11.14 Negative Inference............................................41
11.15 Counterparts; Facsimile Signatures............................41
11.17 Recitals......................................................41
11.18 Future Cooperation............................................41
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EXHIBITS....................................................................E-1
Exhibit A
MPCI Quota Share Reinsurance Contract.................................E-2
Exhibit B
MPCI Quota Share Reinsurance Agreement................................E-3
Exhibit C
Crop Hail Insurance Quota Share Contract..............................E-4
Exhibit D
Crop Hail Insurance Quota Share Agreement.............................E-5
Exhibit E
Crop Hail Insurances Services and Indemnity Agreement.................E-6
Exhibit F
Multiple Peril Crop Insurance Services and Indemnity Agreement........E-7
Exhibit G
Letter of Intent and Term Sheet Dated February 2, 1998................E-8
Exhibit H
LLC Operating Agreement...............................................E-9
Exhibit I
General Conveyance, Assignment and ▇▇▇▇ of Sale......................E-10
Exhibit J
REAP Software License Agreement......................................E-11
Exhibit K
Assignment and Assumption Agreement..................................E-12
Exhibit 2.3
Transition Plan Master Schedule......................................E-13
Exhibit 7.1A
Form of Bring-Down Certificate.......................................E-14
Exhibit 7.1C
Opinion of Counsel...................................................E-15
Exhibit 7.1H
Form of Incumbency Certificate.......................................E-16
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SCHEDULES..................................................................E-17
Schedule 2.2
CNA Employees........................................................E-18
Schedule 3.2
CNA's Assets.........................................................E-19
Schedule 4.7
Outstanding Litigation, Actions and
Proceedings Relative to CNA MPCI Crop................................E-20
Schedule 4.10
CNA's Computer Software Programs and
Intellectual Property Re: Crop - Other than REAP.....................E-21
Schedule 4.11
CNA Licenses.........................................................E-22
Schedule 4.12
Schedule of Leases...................................................E-23
Schedule 4.14
CNA's MPCI Gross and Net Written
Premiums for 1995, 1996 and 1997.....................................E-24
Schedule 4.15
CNA's Crop Hail Gross and Net Premiums
Written for 1995, 1996 and 1997......................................E-25
Schedule 4.21
Schedule of Agency Contracts.........................................E-26
Schedule 4.22
Line Item Production Costs of CNA for MPCI
and Crop Hail Business for 1995, 1996 and 1997.......................E-27
Schedule 4.27
Forms of Insurance Contracts Available for Issuance..................E-28
Schedule 4.32
Other Contracts......................................................E-29
Schedule 5.9
Licenses.............................................................E-30
Schedule 7.1E
Schedule of Required Consents........................................E-31
Schedule 10.3
Schedule of Former Employee
Litigation Relative to CNA Crop......................................E-32
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STRATEGIC ALLIANCE AGREEMENT
This Strategic Alliance Agreement ("Agreement") is entered into this
28th day of February, 1998 by and between Continental Casualty Company, an
Illinois insurance corporation, (including its Affiliates, "CNA") and IGF
Holdings, Inc., an Indiana corporation, IGF Insurance Company, an Indiana
insurance corporation and ▇▇▇▇▇▇ International Group, Inc., an Indiana
corporation.
WITNESSETH:
WHEREAS, CNA and IGFH, through their respective Insurance Subsidiaries
provide crop insurance coverage to the agricultural community; and
WHEREAS, CNA and IGFH desire that IGFH manage the MPCI and Crop Hail
business of CNA and both parties have agreed to mechanisms for the buy-out of
such Business by IGFH; and
WHEREAS, both CNA and IGFH, either directly or through Insurance
Subsidiaries, have executed Standard Reinsurance Agreements with the Federal
Crop Insurance Corporation for Crop Years 1998 and before; and
WHEREAS, CNA and IGFH mutually desire to work together in the
development and marketing of new crop insurance coverages and risk management
products; and
WHEREAS, the parties hereto seek to maximize the management and
operational efficiencies of their respective crop insurance operations; and
WHEREAS, the parties hereto each recognize and acknowledge that the
other possesses unique strengths and resources necessary to the efficient
operational management of crop insurance operations.
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, and further in consideration of the execution of the
Closing Agreements by the parties hereto, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise defined herein, for purposes of this Agreement, all
defined terms used herein shall have the meaning assigned to them in this
Article 1 and, where appropriate, include the plural as well as the singular,
and the words "herein", "hereof", and "hereunder" and other words of similar
report refer to this Agreement as a whole and not to any particular Article,
Section or other Subsection.
1
"90-Day T-▇▇▇▇ Rate" means the 90 Day Treasury ▇▇▇▇ Interest Rate as published
in the Midwest Edition of "The Wall Street Journal".
"A & O Subsidy" means the subsidy for the administrative and operating expenses
authorized by the Act and paid by FCIC on behalf of a producer or insured to a
reinsured company holding an SRA with FCIC.
"Actual Production History" or "APH" means a plan of MPCI which provides the
yield component and yield forecast of an insured by utilizing the insured's
historic yield record. CRC plans use the policy terms and conditions of the APH
as its basic provisions of coverage.
"Act" means the Federal Crop Insurance Act, as amended (7 U.S.C. 1501 et seq).
"Additional Coverage" means a Multiple-Peril Crop Insurance Policy, including
revenue-based products, providing coverage in excess of that provided by CAT
Coverage or companion covers.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, the Company shall not be
deemed to include the Trust. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"A.M. Best" means the A.M. Best Company, Inc., a rating agency and publisher for
the insurance industry.
"Ancillary Agreements" means the MPCI ISA, the Crop Hail ISA, the MPCI
Reinsurance Agreement, the MPCI Contract, the Crop Hail Agreement, the Crop Hail
Contract, the LLC Operating Agreement, the REAP Agreement, the Supplemental
Intellectual Property Transfer Agreement and the Assignment and Assumption
Agreement.
"Annual Settlement" means the settlement of accounts between an insurer holding
an FCIC SRA and the FCIC for the Reinsurance Year, beginning with the February
monthly transaction cut-off date following the Reinsurance Year and continuing
thereafter as necessary.
"Assignment and Assumption Agreement" means Exhibit K hereto.
"Assumed Obligations" means those obligations of CNA assumed by IGF pursuant to
the Ancillary Agreements.
2
"Average Pre-Tax Income" for 1998 and future years means:
Crop Year Computation of Average Pre-Tax Income
1998: The Change of Control Average Pre-Tax Income.
1999: The Change of Control Average Pre-Tax Income.
2000: The Change of Control Average Pre-Tax Income.
2001: The four (4) year Olympic Average of the 1997 through
2000 Pre-Tax Incomes.
2002 and beyond: The five-year Olympic Average of Pre-Tax Incomes of
the five (5) years preceding the year in which the
computation is being made.
"Board of Directors" or "Board" means with respect to CNA, the Company or a
Subsidiary, or New Field, as the case may be, the board of directors of such
company (or other body performing functions similar to any of those performed by
a board of directors).
"Break-Up Fee" shall have the meaning ascribed in Section 2.6 hereof.
"Business" shall have the meaning ascribed in Section 3.1 hereof and shall refer
to the Business to be transferred to IGFH pursuant to this Agreement and the
Ancillary Agreements.
"Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking institutions in the City of New York are authorized or required
by law or executive order to remain closed.
"Buy-up Coverage" means Multiple-Peril Crop Insurance replaced by an Additional
Coverage policy providing coverage in excess of that provided by CAT Coverage.
Buy-up Coverage is offered only through private insurers.
"Call Right" or "Call Mechanism" means the right of IGFH to terminate, pursuant
to a Change of Control or otherwise, the MPCI Reinsurance Agreement and the Crop
Hail Agreement pursuant to the provisions of Article 3 as of the end of the most
recently completed Crop Year.
"Call Note" means the note payable through which SIG or IGFH may pay CNA if SIG
or IGFH exercises its rights under the Call Mechanism or the Change of Control
Call Mechanism.
"Canadian Hail" means Palliser Insurance Company, Saskatoon, Saskatchewan.
"Capital Stock" of any Person means any and all shares, interests, rights to
purchase, warrants, options, participation or other equivalents of or interests
in (however designed) equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
"Casualty Insurance" means insurance which is primarily concerned with the
losses caused by injuries to third persons (i.e., not the policyholder) and the
legal liability imposed on the insured resulting therefrom. It includes, but is
not limited to, employers' liability, workers' compensation,
3
public liability, automobile liability, personal liability and aviation
liability insurance. It excludes certain types of loss that by law or custom are
considered as being exclusively within the scope of other types of insurance,
such as fire or marine.
"Catastrophic Coverage" or "CAT Coverage" or "CAT" means the minimum available
level of Multiple-Peril Crop Insurance, providing coverage for fifty percent
(50%) of a ▇▇▇▇▇▇'▇ historical yield for eligible crops at sixty percent (60%)
of the price per commodity unit for such crop set by the FCIC. CAT Coverage
currently is offered through private insurers and, in certain states prior to
Crop Year 1998, was offered by USDA field offices.
"CAT Administrative Fee" means the processing fee the policyholder must pay for
CAT Coverage in accordance with the Act and 7 C.F.R. Chapter IV. The CAT
Administrative Fee is the only payment an insured makes for such coverage; there
is no premium billing.
"CAT LAE Reimbursement Payment"means an LAE Reimbursement Payment made by the
FCIC to an insurer holding an SRA with the FCIC equal to four and seven-tenths
percent (4.7%) of the total net book premium for eligible CAT crop insurance
contracts computed at sixty-five percent (65%) of the recorded or appraised
average yield indemnified at one hundred percent (100%) of the projected market
price, or equivalent coverage or such other amount as may be contained in the
SRA governing the Crop Year.
"Cede" means (i) the method (or agreement) by which an insurance company
reinsures its risk with another insurance company, it "Cedes" business and is
referred to as the "Ceding Company" or (ii) to pass on to another insurer (the
reinsurer) all or part of the insurance written by an insurer (the Ceding
Company) with the object of reducing the possible liability of the latter.
"Ceding Company" means an insurance company that Cedes business to another
company or reinsurer.
"Change of Control" means any transaction or series of transactions in which any
Person or group (within the meaning of Rule 13d-5 under the Exchange Act and
Section 13(d) and 14(d) of the Exchange Act) other than G. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and members of the ▇▇▇▇▇▇ family or entities
directly or indirectly controlled by them acquires all or substantially all of
the assets of the Company, IGFH or IGF, or becomes the direct or indirect
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), by way of
merger, consolidation, other business combination or otherwise, of greater than
fifty percent (50%) of the total voting power (on a fully diluted basis as if
all convertible securities had been converted and all options and warrants had
been exercised) entitled to vote in the election of Directors of the Company,
IGFH, IGF or the Surviving Person (if other than the Company, IGFH or IGF).
"Change of Control Average Pre-Tax Income" for 1998 and future years means the
Weighted Average of the Pre-Tax Incomes for 1997, 1998, and 1999 if the Change
of Control Put or Call Mechanisms are triggered before January 1, 2000 and the
Weighted Average of the Pre-Tax Incomes
4
for 1997, 1998, 1999 and 2000 if those same Mechanisms are triggered after
January 1, 2000 but prior to June 30, 2000.
"Change of Control Call Mechanism" means a Call Mechanism triggered by a Change
of Control.
"Change of Control Put Mechanism" means a Put Mechanism triggered by a Change of
Control.
"Change of Control Triggering Event" means a Change of Control.
"Closing" means the date and event(s) at which this Agreement, if not already
executed, and all of the Ancillary Agreements are executed and the applicable
requirements outlined in Articles 2 and 7 are fulfilled.
"Closing Agreements" means this Agreement, the Reinsurance Agreements, the LLC
Operating Agreement, the REAP Agreement, the MPCI ISA, the Crop Hail ISA, the
Supplemental Intellectual Property Transfer Agreement, the General Conveyance
Assignment and ▇▇▇▇ of Sale and Transfer of Assets, and the Assignment and
Assumption Agreement.
"Closing Date" shall have the meaning ascribed in Section 2.1 hereof.
"CNA" means Continental Casualty Company, an Illinois insurance corporation,
including but not limited to its Affiliates.
"CNA AgTech" means CNA Agriculture Technology and Services, Inc., an Illinois
corporation.
"CNA's Assets" means those Assets detailed on Schedule 3.2 hereto.
"CNA Crop Hail Gross Book Premium" means the gross premiums for Crop Hail
policies and related endorsements written (less any return premiums) on paper
excluding business fronted for IGF of CNA Affiliates for the 1998 Crop Year,
plus or minus the amount of premiums on such business Ceded to CNA by Producers
Lloyds and Canadian Hail Entity. For 1999 and future years, this term shall mean
the CNA Crop Hail Gross Book Premium as computed for the 1998 Crop Year
multiplied by one (1) plus the percentage change from 1998 to the future year in
Total Industry Crop Hail Writings as determined and reported by NCIS. Note that
the percentage change can be either positive or negative and thus a future year
CNA Crop Hail Gross book Premium may be more or less than the 1998 amount. This
definition may change if the reinsurance arrangement with Producers Lloyds
changes as outlined in that section.
"CNA Crop Hail Policies" means primary coverage Crop Hail insurance policies or
other Crop Hail risk management products written or sold by CNA or its
Affiliates.
"CNA Crop Hail Proportion" for a given year means the ratio of the CNA Crop Hail
Gross Book Premium for that year to Combined CNA/IGF Crop Hail Gross Book
Premium for that year.
5
"CNA Employee" means those Persons listed on Schedule 2.2.
"CNA Field Offices" means the current office locations of CNA Agriculture which
offices are located in Spokane, Washington, Cary, North Carolina, Amarillo,
Texas, Springfield, Illinois and Overland Park, Kansas.
"CNA MPCI Net Book Premium" means for the 1998 Crop Year the MPCI Net Book
Premium written by CNA under its 1998 SRA as reported in the Operations Report
plus the MPCI Net Book Premium written by Producers Lloyds under its 1998 FCIC
SRA that is Ceded to CNA. For 1999 and future Crop Years, this term shall mean
the CNA MPCI Net Book Premium as computed for the 1998 Crop Year multiplied by
one (1) plus the percentage change from 1998 to the future year in Total
Industry MPCI Writings as determined and reported in the Summary of Business
Reports. The percentage change can be either positive or negative and thus a
future year CNA MPCI Net Book Premium may be more or less than the 1998 amount.
"CNA MPCI Policies" means all primary coverage insurance policies or other risk
management products written or sold by CNA or its Affiliates that are written,
designed, reinsured, and/or subsidized under the authority of the Act through an
SRA or other agreement with FCIC.
"CNA MPCI Proportion" for a particular Crop Year means the ratio of CNA MPCI Net
Book Premium for such year to Combined CNA/IGF MPCI Net Book Premium for that
year.
"CNA Policies" means CNA MPCI Policies and CNA Crop Hail Policies.
"CNA Producers Lloyds Reinsurance Agreement" means that certain MPCI Reinsurance
Agreement by and between CNA and Producers Lloyds dated August 29, 1997
(#0929-00-0017) and any successor thereto.
"Code" means the Internal Revenue Code of 1986, as amended, and effective as of
the date hereof.
"Combined CNA/IGF MPCI Net Book Premium" means the sum of MPCI Net Book Premium
from the SRA(s) held by each of IGF and CNA in the Crop Year in which a
computation is made.
"Combined CNA/IGF Crop Hail Gross Book Premium" means the sum of Crop Hail Gross
Book Premiums written by each of IGF and CNA in the Crop Year in which a
computation is made.
"Combined Net Underwriting Gain (Loss)" means the sum of (i) the underwriting
gain (loss) on the IGF FCIC SRA and CNA FCIC SRA, if any, as reported on the
Operations Report, and (ii) that amount of underwriting gain (loss) on the
Producers Lloyds FCIC SRA, if any, reported on the Operations Report that is
Ceded to CNA. This Combined Net Underwriting Gain (Loss) shall be reduced
(increased) by any gain (loss) shared under any third-party profit sharing
agreements such as with NACU but excluding the costs of third party reinsurance
agreements.
6
"Company" or "SIG" means ▇▇▇▇▇▇ International Group, Inc. and its Subsidiaries,
unless the context indicates otherwise.
"Confidential Information" shall have the meaning as is ascribed to such term in
Section 6.15 hereof.
"Crop Hail" means a policy of insurance indemnifying a crop producer for crop
damage caused by the perils of hail and fire, including perils recognized and
approved as Crop Hail by NCIS, all policy endorsements involving such perils,
HAILPLUS(TM) marketed by IGF, any and all non-NCIS approved basic policies
written by CNA covering the perils of hail and fire marketed as a substitute
policy for the NCIS approved basic policies, and nonstandard endorsements such
as IGF's Production Guarantee endorsement marketed by IGF or CNA as substitutes
for NCIS approved basic endorsements. Excluded from this definition is named
peril hail insurance or hail insurance written as a component of MPCI.
"Crop Hail Agreement" means the Crop Hail Insurance Quota Share Agreement,
attached hereto as Exhibit D.
"Crop Hail Contract" means the Crop Hail Insurance Quota Share Contract attached
hereto as Exhibit C.
"Crop Hail Crop Year" means the calendar year.
"Crop Hail Gross Book Premium" means the total of amount of Crop Hail and
related endorsement premiums written in a given year by an insurer that is
reported to NCIS for statistical purposes.
"Crop Hail ISA" or "Crop Hail Fronting Agreement" means that Crop Hail Insurance
Services and Indemnity Agreement attached hereto as Exhibit E.
"Crop Insurance Business" means MPCI and Crop Hail, but shall specifically
exclude named peril and speciality risks insured by IGF.
"Crop Revenue Coverage" or "CRC" means the revenue-based insurance policy by
this name approved by FCIC for reinsurance and subsidy and reinsured under the
SRA which provides an insured with a guaranteed revenue stream by combining both
yield and price variability protection.
"Crop Year" means, with respect MPCI, the MPCI Crop Year, and with respect to
Crop Hail, the Crop Hail Crop Year.
"Due Diligence Period" means that period which ends fifteen (15) business days
from February 3, 1998 or such other time as may be mutually agreed by the
parties.
"Effective Time" means 12:01 A.M. on March 17, 1998, or such other time as may
be mutually agreed to by the parties hereto.
7
"Employment-Related Liability" means any and all loss, cost, damages, liability,
claim, obligation, judgment, payment, set-off, set-aside, remedial action,
defense cost (including, but not limited to, attorneys' fees), accommodation,
arrangement, accrual, annuity, or burden (financial or otherwise), resulting or
arising from or related to (i) any benefit, pension, vacation, welfare,
retirement, cafeteria, supplemental, compensation (including, but not limited
to, deferred compensation), savings, stock, option (including traditional stock
options and derivative-type plans such as stock appreciation rights and phantom
stock), investment or any other plan (whether qualified or non-qualified,
written or not), (ii) any written or oral contract of employment, or (iii) any
right, at law or equity as (i), (ii) or (iii) above pertains to any CNA
Employee.
"Environmental Laws" means any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law), regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Federal Crop Insurance Corporation" or "FCIC" means the wholly-owned government
corporation within the USDA created by Section 503 of the Act (7 U.S.C. 1503)
and authorized to carry out all actions and programs authorized by the Act.
"Front" means a contractual arrangement whereby one licensed insurer issues a
policy on a risk for and at the request of one or more other insurers with the
intent of passing all or virtually all of risk by way of reinsurance to the
other insurer(s). The licensed insurer is considered the organization in front
of the insurance transaction.
"Fronting Company" means a licensed insurer that enters into an agreement with
an insurer to issue policies in a state on behalf of another insurer.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
(including, without limitation, the NAIC).
"Gross Premiums Written" means direct premiums written (less cancellations and
returns) plus premiums collected in respect of policies assumed, in whole or in
part.
"IGF" means IGF Insurance Company, an Indiana insurance corporation, and an
indirect, wholly-owned Subsidiary of the Company.
8
"IGFH" or "IGF Holdings" means IGF Holdings, Inc., an Indiana corporation, and a
wholly-owned Subsidiary of the Company.
"IGF MPCI Policies" means all insurance policies or other risk management
products written, sold, or reinsured by IGF or its Affiliates that are written,
designed, reinsured and/or subsidized under the authority of the Act through an
SRA or other agreement with FCIC.
"Industry MPCI Gross Written Premium" means the total MPCI Premium reported by
FCIC on its Summary of Business Reports written by reinsured companies holding
SRAs with FCIC. This amount includes premiums from Additional Coverage plus CAT
Coverage and all premiums from revenue-based products, pilot projects, and other
products covered by the SRA or amendments thereto.
"Insurance Subsidiary" means any regulated insurance company which is a
wholly-owned Subsidiary of either CNA or IGF.
"Letter of Intent" means that Letter of Intent and Term Sheet dated February 2,
1998 and attached hereto as Exhibit G.
"LLC Operating Agreement" means the Limited Liability Company Agreement of [New
Field] LLC attached hereto as Exhibit H.
"Loss Adjustment Expenses" or "LAE" means external expenses incurred in the
settlement of claims, including outside adjustment expenses, (including, but not
limited to, part-time adjusters), legal fees and other costs associated with the
claims adjustment process, but not including general overhead expenses.
"Loss and LAE Reserves" means liabilities established by insurers to reflect the
ultimate estimated cost of claim payments as of a given date.
"Losses Paid and/or Reserved" means the sum total of claims payments made to
insureds plus those amounts reserved, according to standard underwriting
procedures and regulations, for the payment of pending or expected claims.
"Material Adverse Effect" means a material adverse effect on (i) the business,
assets, property, condition (financial or otherwise) or prospects of either of
the parties hereto (including, without limitation, their Affiliates and
Subsidiaries) taken as a whole, or (ii) the validity or enforceability of this
Agreement or any of the rights or remedies of the parties hereto arising from
this Agreement.
"Materials of Environmental Concern" means any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any hazardous or
toxic substances, materials or wastes, defined or regulated as such in or under
any Environmental Law, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
9
"MPCI Contract" means the Multiple Peril Crop Insurance Quota Share Contract
attached hereto as Exhibit A.
"MPCI Crop Year" means the twelve (12) month period commencing on July 1 and
ending on June 30 of the following year. This definition is synonymous with the
Reinsurance Year established by FCIC in its SRA and any change in the FCIC SRA
definition of Reinsurance Year will control the definition of Crop Year herein.
For avoidance of doubt, the "2000 MPCI Crop Year" is the Crop Year that begins
July 1, 1999 and ends June 30, 2000.
"MPCI Excess Loss Adjustment Expense" or "XLAE" means an excess LAE payment made
by FCIC to an insurer holding an SRA with FCIC as reimbursement for LAE in
excess of normal LAE expenses that are otherwise covered in the Federal crop
insurance program by the A & O Subsidy and the CAT LAE provisions of the SRA.
This XLAE has historically been paid as a percent of premiums written on a per
state, per reinsurance fund basis to the extent loss ratios on a per state, per
reinsurance fund basis exceed specified levels. The 1998 FCIC SRA includes XLAE
provisions for both additional coverage and CAT Coverage. The 1999 FCIC SRA
includes provisions providing only for XLAE on CAT Coverage. Future SRAs may
include both or neither.
"MPCI Imputed Premium" means, for purposes of the profit/loss sharing formulas,
LAE and XLAE Reimbursement and other provisions in the FCIC SRA, that amount of
premium actuarially determined by FCIC to be appropriate for CAT Coverage
although no premium is charged to the insured. It is the amount of premium a
▇▇▇▇▇▇ would pay for the coverage if they were so charged.
"MPCI ISA" or "MPCI Fronting Agreement" means the Multiple Peril Crop Insurance
Services and Indemnity Agreement attached hereto as Exhibit F.
"MPCI Net Book Premium" means the total premium calculated for all eligible crop
insurance contracts, less A & O Subsidy, cancellations and adjustments that are
written under a FCIC SRA. This premium includes the Risk Premium Subsidy,
premiums paid by insureds, MPCI Imputed Premium, and insured-paid premiums and
Risk Premium Subsidy from all revenue-based or other nonstandard MPCI contracts
included within the SRA for reinsurance and subsidy.
"MPCI Policies" means, collectively, all IGF MPCI Policies, CNA MPCI Policies,
Producers Lloyds MPCI Policies, and any other MPCI Policies the risk on which is
assumed by IGF or CNA.
"MPCI Premium" means, for purposes of the profit/loss sharing arrangement with
the federal government, the amount of premiums for all Buy-up Coverage sold,
consisting of amounts paid by farmers plus the amount of any related federal
premium subsidies.
"MPCI Reinsurance Agreement" means the Multiple Peril Crop Insurance Quota Share
Agreement attached hereto as Exhibit B.
10
"MPCI Retention" means the MPCI Net Book Premium reduced by premiums Ceded in
respect of liability reinsured by FCIC under the SRA. This is the MPCI Premium
on which the insurer bears, before third party reinsurance, one hundred percent
(100%) of the risk of loss.
"MPCI Underwriting Gain (Loss)" means (i) the CNA MPCI Proportion multiplied by
(ii) the Combined CNA/IGF Net Underwriting Gain (Loss).
"Multiple-Peril Crop Insurance" or "MPCI" means a federally-regulated,
subsidized and reinsured crop insurance program that provides producers of crops
with varying levels of insurance protection against substantially all natural
perils to growing crops.
"NAIC" means the National Association of Insurance Commissioners.
"NACU" means the North American Crop Underwriters, Inc.
"NCIS" means the National Crop Insurance Services, Inc., the actuarial data
facility for the commercial crop insurance industry.
"Net Premiums Earned" means Net Premiums Written less unearned premium.
"Net Premiums Written" means the total premiums for insurance written (less any
return premiums) during a given period, reduced by premiums Ceded in respect of
liability reinsured by other insurers or the FCIC.
"Net Retained Premiums" means the MPCI Net Book Premium reduced by premiums
Ceded in respect of liability reinsured by FCIC under the SRA. These are the
MPCI Premiums on which the insurer bears, before third party reinsurance, one
hundred percent (100%) if the risk of loss.
"New Field" means the joint venture project, to be organized as a limited
liability company ("LLC") between CNA and IGF.
"Olympic Average" means the average determined for a particular set of numbers
which is calculated after excluding the single highest number within the set and
the single lowest number within the set prior to ascertaining the average (i.e.,
a five- year Olympic Average would be the average of three (3) years of numbers
after the high and low years' numbers were excluded).
"Operations Report" means the official monthly accounting report and
reconciliation furnished to an SRA holder by FCIC.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof, or any other entity.
11
"Plan of Operation" means that document and supporting documents submitted to
FCIC as described in and required by the SRA and Appendix 2 thereto.
"Policies-In-Force" means policies written and recorded on the books of an
insurer which are unexpired as of a given date.
"Pre-Tax Income" for each Crop Year, with the exception of 1997, means the sum
of the payments, on a pre-tax basis, received by CNA through the MPCI
Reinsurance Agreement and Crop Hail Agreement in such year, including recoveries
(net of costs) under any third party reinsurance agreement to which CNA is a
party and inures to the benefit of CNA and IGF. For 1997, Pre-Tax Income means
$5.4 million.
"Price Election" means the maximum per unit commodity price by crop to be used
in computing MPCI Premiums, determined annually by the FCIC.
"Producers Lloyds" means Producers Lloyds Insurance Company headquartered in
Amarillo, Texas which writes both MPCI and Crop Hail and, as of 1998, holds an
SRA with FCIC and a private reinsurance agreement with CNA.
"Producers Lloyds MPCI Policies" means all insurance policies or other risk
management products written, sold or reinsured by Producers Lloyds or its
Affiliates that are written, designed, reinsured and/or subsidized under the
authority of the Act through an SRA or other agreement with FCIC.
"Pure CNA Crop Hail Gross Book Premium" means the total amount of Crop Hail and
related endorsement premiums written in a given year on the paper of CNA
(excluding business fronted for IGF) which is reported to NCIS for statistical
purposes; it does not include any premiums assumed under any Reinsurance
Agreements nor does it include, beyond 1998, any premiums written on CNA paper
through the Insurance Services Agreement on behalf of IGF.
"Put Note" means the note payable through which SIG, IGFH or IGF may pay CNA if
CNA exercises its rights under the Put Mechanism or the Change of Control Put
Mechanism. The terms of the note for each such Mechanism are outlined in
subsections 3.8.B.i and 3.8.B.ii, respectively.
"Put Right" or "Put Mechanism" means the right of CNA to terminate, due to a
Change of Control or otherwise, the MPCI Reinsurance Agreement and Crop Hail
Agreement pursuant to the provisions of Article 3 as of the end of the most
recently completed Crop Year.
"Quota Share Reinsurance" means a form of reinsurance in which the reinsurer
shares a proportional part of both the original premiums and the losses of the
reinsured.
"REAP" means the software program developed by CNA or at its expense through
which its agents can electronically transmit MPCI, Crop Hail and other insurance
policy data to CNA.
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"REAP Agreement" means the Software License Agreement attached hereto as Exhibit
J.
"Reinsurance" means the practice whereby a company called the "reinsurer"
assumes, for a share of the premium, all or part of a risk originally undertaken
by a Ceding Company.
"Reinsurance Account" means an account maintained by FCIC in which a portion of
the underwriting gains earned under the terms of the FCIC SRA are deposited and
held, in the insurer's name, for future distribution under the terms of the SRA.
"Reinsurance Agreements" means the MPCI Reinsurance Agreement, the MPCI
Contract, the Crop Hail Agreement and the Crop Hail Contract and any successor
agreements thereto entered into pursuant to this Agreement. Reinsurance
Agreement does not include any third party reinsurance agreements, including but
not limited to, the CNA agreements with Producers Lloyds and Canadian Hail, the
Multi-year Stop Loss MPCI and Crop Hail Agreements held by IGF, and any Named
Peril Quota Share or Stop Loss Agreement(s) held by IGF at the time of Closing.
"Reinsurance Year" means the period so stated in the appropriate Reinsurance
Agreement.
"Related Business" means the business of providing property and casualty
insurance to individuals or farms and any business related, ancillary or
complementary to such business.
"Reporting Organization" means the term utilized by the FCIC to refer to those
entities that have entered into an SRA with the FCIC and, therefore, report
premiums and losses on MPCI to the FCIC.
"Requirements of Law" means, as to any Person, the certificate of incorporation
and bylaws or other organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Retention" means the amount of liability, premiums or losses which an insurance
company retains for its own account after reinsurance.
"Risk Premium Subsidy" means the amount of subsidy paid by the FCIC, pursuant to
the Act, on the eligible insured's behalf to help make MPCI and other authorized
products more affordable. This subsidy is comprised and computed based solely on
premiums associated with the risk of loss as distinguished from premiums that
may be associated with any program administrative or operating (A&O) costs. FCIC
does provide an A&O Subsidy in addition to the Risk Premium Subsidy.
"Service Agreements" means the MPCI ISA and the Crop Hail ISA and any other
agreements entered into pursuant to this Agreement that involve the service and
management of policies written hereunder or written by CNA in previous years.
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"SIG" or "Company" means ▇▇▇▇▇▇ International Group, Inc., an Indiana
corporation and its Subsidiaries, unless the context indicates otherwise.
"Standard Reinsurance Agreement", "SRA" or "FCIC SRA" means the agreement that
establishes the terms and conditions under which the FCIC will provide subsidy
and reinsurance on eligible crop insurance contracts written pursuant to plans
of insurance authorized by the Act and regulations promulgated thereunder and
sold or reinsured by private insurance companies. The term includes any
mandatory or optional amendments to the SRA.
"Statutory Accounting Practices" or "SAP" means the accounting practices which
consist of recording transactions and preparing financial statements in
accordance with the accounting rules and procedures prescribed or permitted by
state regulatory authorities.
"Subsidiary" means any corporation, association, partnership or other business
entity of which more than fifty percent (50%) of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by a corporation or by one or more its
subsidiaries, or by a corporation and one or more of its subsidiaries.
"Summary of Business Reports" means the weekly updated reports published by FCIC
indicating, among other things, MPCI Additional Coverage and CAT Premiums
Written along with associated liability levels, Risk Premium Subsidies,
indemnities paid, loss ratio, and acreage insured.
"Supplemental Intellectual Property Transfer Agreement" means that document to
be entered into to transfer the intellectual property (other than REAP) of the
CNA Assets.
"Surviving Person" means, with respect to any Person involved in any merger,
consolidation or other business combination or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets, the Person formed by or surviving such transaction or the
Person to which such disposition is made.
"Term" means the term of this Agreement, as more fully set forth in Article 11.
"Territory(ies)" means all states of the United States and all provinces and
territories of the Dominion of Canada.
"Total Industry Crop Hail Writings" means the gross premiums on Crop Hail
policies and related endorsements written by all licensed insurers on crops
grown in the United States as reported to and published by NCIS on an annual
basis.
14
"Total Industry MPCI Writings" means the gross premiums on MPCI policies and
related endorsements written by all licensed insurers on crops grown in the
United States as reported to and published by NCIS on an annual basis.
"Trade Secrets" shall the meaning ascribed in Section 6.16 hereof.
"Transition Plan" means that document jointly developed by IGF and CNA which is
attached as Exhibit 2.3 hereto.
"Trust" means SIG Capital Trust I.
"Underwriting" means the insurer's or reinsurer's process of reviewing
applications submitted for insurance coverage, accepting or denying all or part
of the coverage requested and determining the applicable premiums.
"Underwriting Committee" means the group of not less than four (4) people,
including one CNA representative, to be formed pursuant to Article 3 of this
Agreement that will have the responsibility of establishing underwriting
guidelines for the MPCI and Crop Hail written pursuant to this Agreement.
"USDA" means the United States Department of Agriculture.
"Voting Stock" of a Person means all classes of Capital Stock or other interests
(including partnership interests) of such Person then outstanding and normally
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof.
"Weighted Average" means the average of a set of numbers arrived at by
multiplying the highest and lowest numbers in the set by fifty percent (50%) and
adding those products with the other numbers in the set and then dividing the
entire sum by a number equal to the total number of numbers in the set less one.
For avoidance of doubt, the weighted average of the following set of numbers
would be as illustrated: Set: 10, 15, 8, 20; Formula: (20*.5) + (8*.5) + 10 + 15
= 39 all divided by 3 with the result being 13.
"Wholly-Owned Subsidiary" means a Subsidiary all the Capital Stock (other than
director's qualifying shares and shares held by other Persons, to the extent
such shares are required by applicable law to be held by a Person other than the
Company or a Subsidiary) of which is owned by the Company or by one or more
Wholly-Owned Subsidiaries.
ARTICLE 2
CLOSING
2.1 Time of Closing. Unless otherwise agreed by the parties hereto, the Closing
of the transactions contemplated by this Agreement will occur at the Effective
Time ("Closing Date"). If,
15
however, at the Effective Time the parties hereto are working in good faith
towards finalizing all Ancillary Agreements and are preparing for Closing and
the parties hereto agree that it appears reasonably likely that the finalization
of such Ancillary Agreements will take place within thirty (30) days of the
Effective Time, the period for closing this transaction shall be extended to a
time mutually agreed by the parties.
2.2 Transfer of Employees and Assets. At the Effective Time the CNA
Employees will become employees of IGFH. Possession and right of use of CNA's
Assets will be transferred to IGFH at the Effective Time.
2.3 Transition Teams. As of the date hereof, the transition teams
outlined in the Transition Plan Master Schedule, Exhibit 2.3 hereto, will
immediately begin work in good faith to accomplish the objectives as are set
forth in Exhibit 2.3. IGF shall have access from the date hereof until the
Effective Time to CNA Employees and the physical facilities used by CNA to
manage the Business.
2.4 Acts of Closing. At the Closing, the parties hereto shall execute
and deliver the Closing Agreements and all other instruments required or
contemplated by this Agreement or shall be reasonably necessary to carry out the
purposes of this Agreement to be so executed and not theretofore executed and
delivered. All actions taken at Closing shall be deemed to have occurred
simultaneously.
2.5 Break-Up Fee. If at the conclusion of the Due Diligence Period this
Agreement is unexecuted and the parties hereto nonetheless mutually agree to go
forward with the transactions contemplated hereby, and thereafter this Agreement
is not executed within thirty (30) days of the conclusion of the Due Diligence
Period (or such other time as the parties hereto may mutually agree) through no
fault of CNA, then IGFH shall pay CNA the sum of five hundred thousand dollars
($500,000) ("Break-Up Fee") as full and complete compensation for IGFH's failure
to execute this Agreement. Notwithstanding the foregoing sentence, IGFH shall
not be responsible to pay the Break-Up Fee to CNA if this Agreement is not
executed due to strikes, acts of God, governmental restrictions, enemy action,
civil commotion, fire, unavoidable casualty or other similar causes beyond the
control of IGFH and its Affiliates.
ARTICLE 3
TRANSFER OF MANAGEMENT RESPONSIBILITY;
MPCI AND CROP HAIL BUSINESS
3.1 Assumption of Management. At the Effective Time, CNA shall transfer
to IGF and IGF shall assume the management responsibilities of the entire MPCI
and Crop Hail books of business of CNA (the "Business"). Management
responsibilities shall include, but are not limited to, sales, underwriting,
loss adjustment, claims processing, agent (representative) relations and
contracting, policy generation, policy, form and rate development and filing and
all other activities incidental to and necessary for the management of the
Business as is contemplated hereby. Subject
16
to the Service Agreements, at the Effective Time CNA shall cease management
responsibility and control of management decisions relating to the Business.
3.2 Transfer of Supporting Policies, Data, and Assets. At the Effective
Time, CNA shall transfer to IGF and IGF shall receive from CNA all policy forms,
insurance data and supporting capital assets used by CNA in the Business. The
supporting capital assets include, but are not limited to those outlined in
Schedule 3.2 ("CNA's Assets"). It is expressly understood that IGF shall receive
from CNA, among other things, licenses (at no cost to IGF) to use all software
and hardware currently used by CNA in the Business, including the REAP system.
It is expressly agreed and understood that the REAP system may be used by IGF at
no cost to IGF, only to process CNA Policies until June 30, 1999. All other
software transferred to IGF as part of CNA's Assets may be utilized by IGF, at
no cost, until June 30, 199 9.
3.3 Employment of Personnel. Unless otherwise agreed by the parties,
the CNA Employees will become employees of IGFH at the Effective Time, and shall
have available all employee benefits available to all current IGFH employees. No
third party beneficiary rights are hereby created in any CNA Employee.
3.4 Execution of Ancillary Agreements. CNA and IGFH will execute the
Ancillary Agreements.
3.5 No Assumption of Liabilities. Except for the Assumed Obligations
IGF does not and shall not assume, nor does or shall it take subject to or
become or be liable, obligated or responsible for, any debts, liabilities or
obligations of CNA of any kind or nature whatsoever, known or unknown, whether
by the execution, delivery or the performance of this Agreement, by the receipt
of CNA's Assets, by employment of the CNA Employees, by the exercise of any
rights or possession with respect to CNA's Assets or otherwise, and whether now
or hereafter arising or whether contingent or liquidated in amount, and whether
relating to or arising out of the ownership or operation by CNA of the Business
or CNA's Assets, including, without limitation, any debts, liabilities or
obligations of CNA for wages, salaries, commissions, Employment-Related
Liabilities, unemployment compensation or other compensation or benefits of any
kind, or any debts, liabilities or obligations arising out of any accounts
payable, tax liabilities, product liabilities, errors and omissions liabilities,
contracts, agreements, liabilities of CNA arising under any reinsurance
agreements with third parties (including the FCIC), any policies of insurance
issued by CNA, any products written under the Excess Lines, any pending or
future investigations by the Compliance Division of Risk Management Agency or
its successor, the USDA, the U.S. Department of Justice, or any Governmental
Authority related to the Business or the Ancillary Agreements for Crop Years
prior to 1998 and for business written in Crop Year 1998 prior to the date of
Closing where the liability is unrelated to any action taken by IGFH with
respect to such Business after the date of Closing, any Service or Managing
General Agency Agreement related to any Business.
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3.6 Maintenance of SRAs.
A. CNA will use its commercially reasonable best efforts to
remain an SRA holder and will cooperate to such extent requested by IGF
and will amend its 1998 Plan of Operations with FCIC as shall be
necessary to fulfill the terms of this Agreement and the Ancillary
Agreements and to satisfy the FCIC with the objective that CNA remains
an SRA holder for the entire 1998 Reinsurance Year.
B. CNA will consult with IGF and will cooperate in the
administration of the CNA SRA in accordance with the Reinsurance
Agreements and the Service Agreements.
C. In the event the FCIC will permit CNA to retain its SRA
beyond the 1998 Crop Year, CNA may do so only upon the express written
consent of IGF.
D. Unless the option to maintain two SRAs is available and
exercised by IGF, then for 1999 and future Reinsurance Years, IGF shall
hold the SRA through which all of the Business is written with the
exception of the portion of the Business Ceded to CNA written under the
Producers Lloyds SRA.
E. In the event that Producers Lloyds decides not to maintain
its SRA CNA will use its commercially reasonable best efforts to assist
IGF in persuading Producers Lloyds to accept IGF as its insurance
carrier thereby maintaining the Producers Lloyds MPCI Premium within
the Combined CNA/IGF MPCI Net Book Premium.
3.7 Underwriting Committee. IGF shall form the Underwriting Committee
of four (4) individuals which shall establish underwriting guidelines for the
Business. CNA shall have the right to select one (1) member of the Underwriting
Committee. IGF shall have the exclusive right to approve, disapprove, or modify
the guidelines established by the Underwriting Committee.
3.8 Special Sale and Purchase Rights.
A. In General. The following provisions shall apply to all
Put and Call Mechanisms and Change of Control Put and Change of Control
Call Mechanisms described in this Article:
i. Termination of Certain Ancillary Agreements. The
exercise of a Put or Call Mechanism or Change of Control Put
or Change of Control Call Mechanism (collectively
"Mechanisms") authorized under this Section shall terminate
the MPCI Reinsurance Agreement and Crop Hail Agreement as of
the end of the most recently completed Crop Year. For purposes
of this Agreement, the last Crop Year included for purposes of
calculating Average Pre-Tax Income in the case of a Put or
Call Mechanism other than a Change of Control Put or Call
Mechanism shall be the Crop Year ending immediately prior to
the date of exercise of such Put or Call Right. This
18
termination shall not terminate any obligations that may
survive the termination of this Agreement and the Ancillary
Agreements.
ii. Effective Period.
a. Any Put or Call Mechanism shall only be
effective for the 2001 Crop Year and subsequent Crop
Years.
b. Any Change of Control Put or Change of
Control Call Mechanism shall only be effective if
exercised prior to the 2001 Crop Year.
iii. Estimate of Amounts Due; Notice. In computing
any of the amounts due and any of the figures (i.e., Pre-Tax
Income and Average Pre-Tax Income) necessary to compute such
amounts under any of the Mechanisms outlined in this Article,
the parties may, upon mutual agreement, estimate any and all
necessary amounts subject to adjustment as the parties may
mutually agree. IGF shall receive written notice from CNA
forty-five days (45) days in advance of any exercise of a Put
Right.
iv. Non-competition Period. The payment of funds
pursuant to the Mechanisms outlined in this Section by any
party shall give rise to and begin to toll the periods of
non-competition outlined in Article 6 of this Agreement, which
shall survive such termination.
B. CNA's Put Mechanisms.
i. Put Mechanism. From the 2001 Crop Year and
forward, CNA will have the ability to terminate the MPCI
Reinsurance Agreement and the Crop Hail Agreement and receive
from IGF the compensation provided for in subsection
3.8.B.i.a.
a. Sales Price. In the event CNA shall
exercise the Put Mechanism, IGFH shall be obligated
to pay CNA an amount equal to 5.85 times the Average
Pre-Tax Income as computed pursuant to this Section.
b. Sales Terms. Within thirty (30) days
notice of exercise of the Put Mechanism by CNA, IGF
will execute a promissory note payable to CNA in the
principal amount equal to the amount owed to CNA as
specified in this subsection, which shall be dated as
of the date exercise of the Put Mechanism. The
principal and accrued interest under the note, if
any, thereon shall be due and payable if not sooner
paid, on the date which is six (6) months from the
date of the note. The note shall not bear interest
for the first ninety (90) days thereof. Thereafter
the note shall bear simple interest
19
at the rate which is equal to the 90 Day T-▇▇▇▇ rate
in effect on the date which is ninety-one (91) days
subsequent to the date of the note.
ii. Change of Control Put Mechanism. Upon the
occurrence of a Change of Control prior to the 2001 MPCI Crop
Year, CNA will have the ability to terminate the MPCI
Reinsurance Agreement and the Crop Hail Agreement and receive
from IGF compensation as provided for in this Article.
a. Sales Price. In the event CNA shall
exercise a Change of Control Put Mechanism, IGF shall
be obligated to pay CNA an amount equal to 5.85 times
the Average Pre-Tax Income as computed pursuant to
this Section.
b. Sales Terms. Upon the exercise of a
Change of Control Put Mechanism by CNA, IGF will
execute a promissory note payable to CNA in the
principal amount equal to the amount owed to CNA as
specified in this subsection, which shall be dated as
of the date of exercise of the Change of Control Put
Mechanism. The principal shall be due and payable if
not sooner paid, on the date which is six (6) months
from the date of the note. The note shall not bear
any interest for the full term thereof.
C. IGF Call Mechanisms.
i. Call Mechanism. From the 2001 Crop Year and
forward, IGF will have the ability to terminate the MPCI
Reinsurance Agreement and the Crop Hail Agreement and shall
pay CNA compensation as is provided for in subsection
3.8.C.i.a.
a. Sales Price. In the event SIG or IGF
shall exercise the Call Mechanism, SIG or IGF shall
pay CNA an amount equal to 6.70 times the Average
Pre-Tax Income as computed pursuant to this Section.
b. Sales Terms. Upon the exercise of the
Call Mechanism by SIG or IGF, SIG or IGF will execute
a promissory note payable to CNA in the principal
amount equal to the amount owed to CNA as specified
in this subsection, which shall be dated as of the
date of the exercise of the Call Mechanism. The
principal shall be due and payable if not sooner
paid, on the date which is thirty (30) days from the
date of the note. The note shall not bear any
interest for the full term thereof.
ii. Change of Control Call Mechanism. Upon the
occurrence of a Change of Control prior to the 2001 MPCI Crop
Year, IGF shall have the ability to
20
terminate the MPCI Reinsurance Agreement and the Crop Hail
Agreement and shall pay to CNA the compensation as is provided
for in subsection 3.8.C.ii.a.
a. Sales Price. In the event SIG or IGF
shall exercise a Change of Control Call Mechanism,
SIG or IGF shall be obligated to pay CNA an amount
equal to 6.70 times the Average Pre-Tax Income as
computed pursuant to this Section; provided, however,
that if SIG or IGFH exercises its the Call Mechanism
in Crop Years 1998, 1999 or 2000, the amount paid to
CNA shall not be less than fifteen million dollars
($15,000,000).
b. Sales Terms. Upon the exercise of a
Change of Control Call Mechanism by SIG or IGF, SIG
or IGF may either pay the amount owed to CNA as
specified in this subsection with the proceeds from
the Change of Control event (to the extent relevant)
or SIG or IGF may execute a promissory note payable
to CNA in the principal amount equal to the amount
owed to CNA as specified in this subsection, which
shall be dated as of the date of the exercise of the
Change of Control Call Mechanism. The principal and
any accrued interest, thereon shall be due and
payable if not sooner paid, on the date which is six
(6) months from the date of the note. The note shall
not bear interest for the first ninety (90) days
thereof. Thereafter the note shall bear interest at
the rate which is equal to the 90 Day T-▇▇▇▇ rate in
effect on the date which is ninety-one (91) days
subsequent to the date of the note.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CNA
CNA and its Affiliates, jointly and severally, represent and warrant to
IGFH as follows:
4.1 Existence and Good Standing. CNA is duly organized, validly
existing and in good standing under the laws of their respective states of
incorporation and CNA has all requisite power and authority to carry on its
operations as they are now being conducted, except where the failure to have
such authority would not, individually, or in the aggregate, have a Material
Adverse Effect on the business to be transferred pursuant to this Agreement. CNA
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary, except for
those jurisdictions where the failure to be so qualified would not,
individually, or in the aggregate, have a Material Adverse Effect on the
business to be transferred pursuant to this Agreement.
4.2 Due Authorization. CNA has the requisite corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Ancillary Agreements the performance by CNA of its
obligations under this Agreement and the Ancillary Agreements have been duly and
validly authorized by all necessary corporate action on the part of CNA. No
other
21
corporate or shareholder approval on the part of CNA is necessary for CNA to
enter into this Agreement and the Ancillary Agreements or to consummate the
transactions contemplated hereby. This Agreement (and when executed, the
Ancillary Agreements) has been duly and validly executed and delivered by CNA
and constitutes its valid and binding obligations, enforceable against them in
accordance with its terms, subject to the affect of any applicable bankruptcy,
reorganization, insolvency, moratorium, or similar law affecting creditors'
rights generally and subject to the affect of general principles of equity.
4.3 No Liens. Except as may be set forth in the Reinsurance Agreements
the rights transferred by CNA to IGFH pursuant to this Agreement shall be free
and clear of all liens, claims, demands and encumbrances whatsoever.
4.4 No Violation. The execution and delivery of this Agreement or the
Ancillary Agreements by CNA will not, and the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements and the compliance
with the terms, conditions and provisions of this Agreement or the Ancillary
Agreements by CNA and its Affiliates will not:
A. violate or conflict with any provision of the articles of
incorporation, bylaws, articles of organization or other organizing
documents of CNA; or
B. conflict with or result in the breach or termination of, or
otherwise give any contracting party the right to change the terms of
or to terminate or accelerate the maturity of, or constitute a default
under the terms of any indenture, mortgage, loan or credit agreement or
any other material agreement or instrument to which CNA is a party or
by which it or any of its assets may be bound or affected, except to
the extent that any of the foregoing would not have a Material Adverse
Effect on CNA or its ability to perform its obligations hereunder.
4.5 Foreign Status. CNA is not a "foreign person" within the
meaning of Section 1445 of the Code.
4.6 No Broker Transactions. CNA has not made any agreement or taken any
action which might cause any person or entity to become entitled to a broker's
fee or commission as a result of the transactions contemplated by this
Agreement.
4.7 Litigation, Actions and Proceedings. Except as disclosed on
Schedule 4.7 hereto, there are no outstanding orders, decrees or judgments by or
with any court or Governmental Authority before which CNA was a party that,
individually and or in the aggregate, have a Material Adverse Effect on the
Business. Except as disclosed on Schedule 4.7 hereto, there are no actions,
suits, arbitrations or legal, administrative or other proceedings pending or, to
the knowledge of CNA, threatened against CNA, at law or in equity, or before any
Governmental Authority which, if adversely determined, would individually or in
the aggregate, have a Material Adverse Effect on the Business.
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4.8 Good Title. With the exception of those applicable provisions of
the Reinsurance Agreements and those provisions contained in Article 3
pertaining to the Put Mechanism and Call Mechanism, CNA will deliver good and
clear title to CNA's Assets and the Business including, but not limited to,
policyholder lists, extant leases, miscellaneous fixed assets and any and all
other assets and/or business contemplated hereby, all free and clear of all
claims, liens, demands and encumbrances whatsoever.
4.9 Approvals. The transfer by CNA of the Business and CNA's Assets
pursuant to this Agreement does not require any consent, approval or
authorization of any Governmental Authority.
4.10 Software. CNA has set forth on Schedule 4.10 hereto a true and
complete listing, to the best knowledge of CNA, of all computer software
programs used principally in the conduct of the Business. Schedule 4.10 hereto
also sets forth whether each such computer software program is owned by CNA or
licensed by CNA from a third party. CNA has either ownership of or the right to
use all software listed on Schedule 4.10, free and clear of any royalty or other
similar payment or obligations, claims of infringement or alleged infringement
or other lien, charge, claim or other encumbrance of any kind (other than
applicable license agreements). CNA is not in conflict with or in violation or
infringement of, nor, to the knowledge of CNA, has CNA received any notice of
any such conflict with or violation or infringement of, any asserted rights of
any other Person with respect to the software and other intellectual property
listed on Schedule 4.10.
4.11 Licenses. CNA has the requisite licenses and other necessary
approvals of Governmental Authority to engage in the Business in the
jurisdictions as set forth on Schedule 4.11 to this Agreement. CNA has been duly
authorized by the relevant Governmental Authority in each jurisdiction listed on
Schedule 4.11 to issue the contracts of insurance that it is currently writing
and which are the subject of the Business, and CNA was duly authorized to issue
such contracts in the respective jurisdictions in which it conducts the
Business. Except as set forth on Schedule 4.11, CNA has all other permits and
approvals from relevant Governmental Authority to conduct the Business in the
manner and in the areas in which the Business is presently being conducted and
all such permits and authorizations are valid and in full force and effect.
4.12 Leased Premises. CNA has the right pursuant to each and every
lease for the office location set forth on Schedule 4.12 to assign the benefits
and burdens (excluding overhead) of such lease to IGFH and pursuant to such
assignment, IGFH shall be entitled to take possession of such premises at a
rental rate which is not in excess of that paid by CNA.
4.13 Environmental Matters. CNA has not in the course of its occupancy
of the CNA Field Offices committed any act that would give rise to liability
under any Environmental Law and CNA has no knowledge of any act of any Person
concerning the CNA Field Offices that could give rise to liability under any
Environmental Law. No judicial proceeding or governmental or administrative
action is pending, or, to the best of CNA's knowledge, threatened, under any
Environmental Law to which CNA is or will be named as a party with respect to
the CNA Field Offices, nor are there any consent decrees or other decrees,
consent orders, administrative orders or
23
other orders or other administrative or judicial requirements outstanding under
any Environmental Law with respect to any CNA Field Office that affect CNA's
occupancy thereof. CNA's obligation to indemnify IGF with respect to the
foregoing representation under Article 10 of this Agreement shall be limited to
claims arising (i) from acts or omissions of CNA that occurred during CNA's
occupancy of the premises, and (ii) claims arising from acts or omissions of
third persons, liability for which is attributed under applicable law to IGF or
IGFH as tenant of the premises and which are asserted against IGF or IGFH or
discovered by IGF or IGFH within the initial ninety (90) day period of IGF's or
IGFH's occupancy of the premises.
4.14 MPCI Premium Volume. CNA's MPCI Gross Premiums Written and CNA's
MPCI Net Premiums Written for Crop Years 1995, 1996 and 1997 are as listed on
Schedule 4.14.
4.15 Crop Hail Premium Volume. CNA's Crop Hail Gross Premiums Written
and CNA's Crop Hail Net Premiums Written for Crop Years 1995, 1996 and 1997 are
as listed on Schedule 4.15.
4.16 Agency Contracts. Schedule 4.16 contains an accurate and complete
listing of all agreements (including the party and date of such agreement) that
CNA has with agents, managing general agents or others who produce business for
CNA (including, but not limited to, Producers Lloyds, NACU and Canadian Hail)
that is the subject of this Agreement. CNA will use its commercially reasonably
best efforts to cause such agreements to be assigned to IGFH.
4.17 Production Costs. Schedule 4.17 accurately and completely sets
forth all costs, by line item (in accordance with CNA's management reporting
procedures) incurred by CNA in producing and servicing its Crop Hail and MPCI
business for Crop Years 1996 and 1997.
4.18 Standard Reinsurance Agreements. CNA's MPCI Standard Reinsurance
Agreement is in full force and effect with the FCIC for Crop Year 1998 and CNA
is unaware of any issue, notice or other event or matter that would limit,
prohibit or otherwise frustrate the transactions contemplated herein as respects
and as is effected by CNA's 1998 Standard Reinsurance Agreement. CNA also has no
notice, knowledge, information or other data (other than the normal application
and approval process) to indicate that its Standard Reinsurance Agreement for
the 1999 Crop Year will not be approved.
4.19 Federal Crop Insurance Corporation. The FCIC is not conducting,
nor has during the last five (5) years conducted, any investigation, inquiry,
audit or proceeding concerning CNA's compliance with the rules and regulations
of the FCIC which would, in the aggregate constitute a Material Adverse Effect.
4.20 Governmental Authority. There is no investigation, audit, inquiry
or demand for information of CNA by any Governmental Authority (including, but
not limited to, the United States Department of Justice) of CNA during the last
five (5) years which has, or CNA believes will have, in the aggregate, a
Material Adverse Effect.
24
4.21 Compliance with Laws. Except with respect to those violations, if
any, which would not, individually or in the aggregate, have a Material Adverse
Effect on the Business, (i) CNA is not in violation of any Federal, state, local
or foreign law, ordinance or regulation or any other requirement of Governmental
Authority, court or arbitrator applicable to the Business, nor to the knowledge
of CNA, has CNA received any written notice that such violation is being
alleged, and (ii) without limiting the generality of the foregoing, in
connection with CNA's most recently completed or any on-going examination or
audit of any Governmental Authority, CNA has not, to its best knowledge,
received any notice nor is CNA aware of the intention of any Governmental
Authority to send any notice alleging any violation of any such law, ordinance
or regulation or directing CNA to take any remedial action with respect to any
such law, ordinance or regulation as such may pertain to the Business.
4.22 Insurance Contracts. The forms of insurance contracts available
for issuance which relate to the Business, and the states in which such forms
are authorized for issuance on the date hereof are listed on Schedule 4.22. All
such insurance contract forms have been approved by all applicable Governmental
Authority and such forms comply in all material respects with the insurance
statutes, regulations and rules applicable thereto. To the knowledge of CNA, at
any time wherein CNA paid commissions to any broker or agent within the past
thirty-six (36) months in connection with the sale of any insurance contract
which is the subject of the Business, each such broker or agent was duly
licensed as an insurance broker or agent in the particular jurisdiction in which
such broker or agent sold such business for CNA and was licensed or otherwise
authorized to sell, on behalf of CNA, the type of insurance contract which is
the subject of the Business. Further, no such broker or agent violated (or with
or without notice or lapse of time or both would have violated) any federal,
state, local or foreign law, ordinance or regulation or other requirement of any
Governmental Authority, court or arbitrator applicable to the Business, except
where such failure would not, individually or in the aggregate, have a Material
Adverse Effect on the Business. Neither the manner in which CNA compensates any
Person involved in the sale or servicing of such insurance contracts that is not
registered as a broker-dealer or insurance agent, as applicable, nor, to the
knowledge of CNA, the conduct of any such Person, renders such Person a
broker-dealer or insurance agent under any applicable Federal or state law, and
the manner in which CNA compensates each Person involved in the sale or
servicing of such insurance contracts is in compliance with all applicable
Federal or state laws except where such manner of compensation or conduct having
such effect or the failure to be so in compliance would not, individually or in
the aggregate, have a Material Adverse Effect on the Business.
4.23 Regulatory Filings. CNA has filed all reports, statements,
documents, registrations, filings or submissions (including, without limitation,
any sales material) required to be filed by CNA with any Governmental Authority
to the extent they relate to the Business, except where the failure to make such
filings would not, individually or in the aggregate, have a Material Adverse
Effect on the Business. All such registrations, filings and submissions were in
compliance in all material respects with applicable law when filed or as amended
or supplemented, and CNA knows of no material deficiencies have been asserted by
any Governmental Authority with respect to such registrations, filings or
submissions that have not been satisfied.
25
4.24 Reinsurance. To the best knowledge of CNA, there are no
agreements, written or oral, pursuant to which CNA Cedes or retro-Cedes risks
assumed under any insurance contracts which are the subject of the Business.
4.25 Conduct of Business. Since December 31, 1997, CNA has generally
conducted the Business only in the ordinary course consistent with past
practices, and there has not been any material change in the underwriting,
pricing, actuarial, reserving, investment, sales, marketing or agency practices
or policies of the Business.
4.26 Other Sale Arrangements. CNA is not obligated or liable,
contingently or otherwise, for or with respect to negotiations, letters of
intent or commitments for the sale or transfer of all or any part of the
Business, whether directly or indirectly.
4.27 Contracts. Schedule 4.27 lists and briefly describes, each and
every written contract, agreement, lease, license, commitment or arrangements,
including the parties to and the date and subject matter of, and each and every
oral contract, agreement, commitment or arrangement to which CNA is a party or
which is binding upon CNA that is material to the Business excluding those
agreements and documents which are disclosed in other Schedules to this
Agreement. Each of the contracts listed on Schedule 4.27 is in full force and
effect, and constitutes a legal, valid and binding obligation of CNA, as the
case may be, of each other Person that is a party thereto. Except as is set
forth on Schedule 4.27, CNA, to its best knowledge, nor any other party to such
contract, is in violation, breach or default of any such contract or, with or
without notice or lapse of time or both, would be in violation, breach or
default of any such contract, except for such violations, breaches or defaults
that would not, individually or in the aggregate, have a Material Adverse Effect
on the Business. Except as set forth on Schedule 4.27, to the best knowledge of
CNA, no such contract contains any provision providing that any party thereto,
other than CNA, may terminate such contract by reason of the execution of this
Agreement or the Ancillary Agreements or the transactions contemplated thereby.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF IGFH
IGF and its Affiliates, jointly and severally, represent and warrant to
CNA as follows:
5.1 Existence and Good Standing. IGFH is a corporation duly organized
and validly existing under the laws of the State of Indiana and has all
requisite power and authority to own, lease and operate its assets, properties
and business and to carry on the operations of its business as they are now
being conducted, except where such authority is not material to such operations.
5.2 Due Authorization. IGFH has the requisite corporate power and
authority to execute and deliver this Agreement (and, when executed, the
Ancillary Agreements) and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the Ancillary Agreements and
the performance by IGFH of its obligations under this Agreement and the
Ancillary
26
Agreements, has been duly and validly authorized by all necessary corporate
action on the part of IGFH. No other corporate or shareholder approval on the
part of IGFH is necessary for IGFH to enter into this Agreement or to consummate
the transactions contemplated thereby. This Agreement (and, when executed, the
Ancillary Agreements) has been duly and validly executed and delivered by IGFH
and constitutes its valid and binding obligations, enforceable against them in
accordance with its terms, subject to the affect of any applicable bankruptcy,
reorganization, insolvency, moratorium, or similar law affecting creditors'
rights generally and subject to the affect of general principles of equity.
5.3 No Violation. The execution and delivery of this Agreement or the
Ancillary Agreements by IGFH will not, and the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements and the compliance
with the terms, conditions and provisions of this Agreement or the Ancillary
Agreements by IGFH and its Affiliates will not:
A. violate or conflict with any provision of the articles of
incorporation, bylaws, articles of organization or other organizing
documents of IGFH; or
B. conflict with or result in the breach or termination of, or
otherwise give any contracting party the right to change the terms of
or to terminate or accelerate the maturity of, or constitute a default
under the terms of any indenture, mortgage, loan or credit agreement or
any other material agreement or instrument to which IGFH is a party or
by which it or any of its assets may be bound or affected, except to
the extent that any of the foregoing would not have a Material Adverse
Effect on IGFH or its ability to perform its obligations hereunder.
5.4 No Broker Transactions. Other than with ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ for which IGFH is responsible, IGFH has not made any agreement or taken
any action which might cause any person or entity to become entitled to a
broker's fee or commission as a result of the transactions contemplated by this
Agreement.
5.5 Litigation, Actions and Proceedings. There are no outstanding
orders, decrees or judgments by or with any court, Governmental Authority or
arbitration tribunal before which IGFH was a party that, individually or in the
aggregate, have a Material Adverse Effect on the operations of IGFH. There are
no actions, suits, arbitrations or legal, administrative or other proceedings
pending or, to the best knowledge of IGFH, threatened against IGFH at law or in
equity or before any Governmental Authority or before any arbitrator of any kind
which, if adversely determined, would individually or in the aggregate, have a
Material Adverse Effect on the operations of IGFH.
5.6 Approvals. The execution of this Agreement by IGFH does not require
any consent, approval or authorization of any Governmental Authority.
5.7 Reinsurance Agreements. IGF will execute the Reinsurance
Agreements.
27
5.8 Compliance With Laws. Except with respect to those violations, if
any, that will be cured by IGFH prior to, or by the act of, the Closing of this
transaction or which individually or in the aggregate would not have a Material
Adverse Effect on the operation of IGFH, IGFH is not in violation of any
Federal, state, local or foreign law, ordinance or regulation or any other
requirement of any Governmental Authority, court or arbitrator and IGFH has not
received any written notice that any such violation is being alleged.
5.9 Permits, Licenses and Franchises. IGFH has been duly authorized by
the relevant state Governmental Authority to transact each of the lines of
insurance business in each of the jurisdictions as set forth on Schedule 5.9
hereto. Except as listed on Schedule 5.9 hereto, IGFH has all permits and
licenses necessary to conduct its business in the manner and in the areas in
which such business is presently being conducted, and all such permits and
licenses are valid and in full force and effect, except where the failure to
have such a permit or license would not, individually or in the aggregate, have
a Material Adverse Effect on the operations of IGFH. Except as listed on
Schedule 5.9 hereto, IGFH has not engaged in any activity which would cause
revocation or suspension of any such permit or license and no action or
proceeding looking to or contemplating the revocation or suspension of any such
permit or license is pending or threatened.
5.10 Additional License and Permits. In those states or jurisdictions
in which IGFH is not licensed as an insurance company, IGFH will comply with all
relevant Governmental Authority with respect to its status as a third party
administrator or claims adjuster or other licensing laws in connection with the
administration of the Business pursuant to this Agreement.
ARTICLE 6
COVENANTS
6.1 Execution of Agreements. The parties hereto will execute the
Ancillary Agreements (including, but not limited to, the Reinsurance
Agreements).
6.2 Conduct of Business. Prior to the Closing, CNA shall in all
material respects operate the Business as presently operated and only in the
ordinary course and consistent with past practice (including, but not limited
to, past underwriting standards), and CNA further covenants to use commercially
reasonable best efforts to preserve the value of the Business (including, but
not limited to, its relationships with and the good will of CNA's agents,
brokers, customers, suppliers, CNA Employees and other Persons having business
dealings with CNA in connection with the Business). Without limiting the
generality of the foregoing and except as otherwise expressly provided in this
Agreement, CNA will not, without the prior written consent of IGFH:
A. enter into any contract or other agreement other than in
the ordinary course of business (which is consistent with past practice
of CNA) with respect to the Business;
28
B. acquire or dispose of CNA's Assets that would otherwise be
transferred to IGFH in the transactions contemplated hereby (excepting
those acquisitions or dispositions of CNA's Assets which are in the
ordinary course of the Business);
C. enter into, adopt or terminate any plan, arrangement or
contract affecting CNA Employees which could give rise to an
Employment-Related Liability (except to the extent that IGFH is fully
and completely indemnified by CNA therefore);
D. pay, discharge or satisfy any material claims, liabilities
or obligations associated with the Business (absolute, asserted or
unasserted, contingent or otherwise) other than the payment, discharge
or satisfaction in the ordinary course of business which is consistent
with CNA's past practice; and
E. enter into any contract of reinsurance for the Business.
6.3 Certain Transactions. From the date of this Agreement through
Closing, neither CNA, nor any of its officers, Employees, representatives or
agents will, directly or indirectly, solicit, encourage or initiate any
negotiations or discussions with, or provide any information to or otherwise
cooperate in any other manner with, any Person concerning any direct or indirect
sale or other disposition of the Business (whether by stock or asset transfer or
otherwise).
6.4 Due Diligence. Prior to the execution of this Agreement, IGFH shall
have been entitled, through its employees and representatives, to make such
investigations of the Business and operation of the Business, as IGFH may
reasonably request. CNA and its Employees and representatives (including,
without limitation, its counsel, investment bankers and independent public
accountants) shall have cooperated with such reasonable requests of IGFH in
connection with such review and examination. CNA shall have provided IGFH with
full and complete access to every aspect of the Business, subject only to any
applicable legal limitations. Without limiting the generality of the foregoing,
CNA shall have provided IGFH
A. with access to individuals reasonably specified by IGFH to
plan the transition of the Business;
B. the names of certain individuals (subject to IGFH's
reasonable approval) to serve as members of transition teams and cause
such individuals to devote reasonable time to transition matters;
C. reasonable resources to transition matters (such resources
to include, without limitation, office accommodations and related
facilities for substantial and continuing presence of IGFH's transition
team members on CNA's premises);
29
D. cooperation in connection with IGFH's filing of policy and
contract forms to enable IGFH to issue policies and contracts
substantially similar to those included in the Business; and
E. full cooperation in carrying out of the Transition Plan.
In conjunction with the foregoing, CNA hereby acknowledges that the
Transition Plan is critical to the success of the transactions contemplated by
this Agreement and the Ancillary Agreements.
6.5 Post-Closing Access. Following the Closing, CNA shall allow IGFH,
upon reasonable prior notice and during regular business hours, to examine and
make copies of any books and records retained by CNA to the extent that such
relate to the Business, for any reasonable business purpose, including, without
limitation, the preparation or examination of IGFH's tax returns, regulatory
filings and financial statements and the conduct of any litigation or regulatory
dispute resolution, whether pending or threatened, concerning the conduct of the
Business prior to the Closing Date. CNA will further maintain such books and
records for IGFH's examination and copying. Access to such books and records
shall be at IGFH's expense and may not unreasonably interfere with CNA's
business operations.
Following the Closing, IGFH shall allow CNA, upon reasonable and prior
notice and during regular business hours, the right, at CNA's expense, to
examine and make copies of any books and records transferred to IGFH after
Closing, for any reasonable business purpose, including, without limitation, the
preparation or examination of tax returns, regulatory filings and financial
statements and the conduct of any litigation or the conduct of any regulatory,
contract holder, participant or other dispute resolution whether pending or
threatened, and IGFH will maintain such books and records for CNA's examination
and copying. Access to such books and records shall be at CNA's expense and may
not unreasonably interfere with IGFH's business operations.
6.6 Consents and Reasonable Efforts. CNA and IGFH shall cooperate fully
with one another and use commercially reasonable best efforts to obtain all
necessary consents, approvals and agreements of, and to give and make all
notices and filings with, any applicable Governmental Authority which may be
necessary to authorize, approve or permit the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements (including, but not
limited to, any such consents, approvals and agreements which may be necessary
from Governmental Authority at the exercise of either the Put or Call Right
provided for herein). CNA shall use commercially reasonable best efforts to
obtain, and IGFH will cooperate with CNA in obtaining, all other approvals and
consents to the transactions contemplated by this Agreement and the Ancillary
Agreements respecting the consents, approvals and transfers necessary from third
parties under contracts to be assigned. In the event third party consents under
contracts to be assigned cannot be obtained, CNA agrees to use commercially
reasonable best efforts, in cooperating with IGFH, to obtain comparable benefits
for IGFH for the period of this Agreement.
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6.7 Representation and Warranties. From the date hereof through the
Closing Date, CNA and IGFH will use commercially reasonable best efforts to
conduct their affairs in such a manner so that, except as otherwise contemplated
or permitted by this Agreement or the Ancillary Agreements, the representations
and warranties of the respective parties contained herein shall continue to be
true, complete and correct in all material respects on and as of the Closing
Date as if made on and of the Closing Date. Further, CNA and IGF shall promptly
notify the other of any event, condition or circumstance known to them occurring
from the date hereof through the Closing Date that would constitute a violation
or breach of this Agreement. Prior to Closing, the parties hereto shall provide
the other with updates of the Schedules to this Agreement so that such Schedules
shall be complete and accurate, to the best of knowledge of such party, as of
the date of Closing.
6.8 Further Assurances. The parties hereto shall use all commercially
reasonable best efforts to take, or cause to be taken, all actions or to do, or
cause to be done, all things or to execute any documents necessary, proper or
advisable under applicable laws and regulations, to consummate and make
effective the transactions contemplated by this Agreement and the Ancillary
Agreements, irrespective of whether such actions are necessary on or after the
Closing Date.
6.9 Expenses. Except as otherwise specifically provided in this
Agreement, each party shall bear their own respective expenses incurred in
connection with the preparation, execution and performance of this Agreement and
the Ancillary Agreements and the transactions contemplated hereby.
6.10 Code Section 338(h)(10) Election. Should IGFH, in its sole and
absolute discretion, decide that it is to its benefit to make a Section
338(h)(10) election with respect to the transactions contemplated by this
Agreement and the Ancillary Agreements, CNA shall cooperate fully with IGFH in
making such election.
6.11 Exclusivity. During the pendency of this Agreement, IGFH will
engage in the Crop Insurance Business only through the procedures and mechanisms
called for and contemplated in this Agreement and the Ancillary Agreements.
Notwithstanding any other provision of this Agreement to the contrary, violation
of this covenant by IGFH shall entitle CNA to the right to immediately exercise
its Put Right.
6.12 NACU. Until the parties hereto shall mutually agree to the
contrary, from and after the Effective Time, CNA shall use its commercially
reasonable best efforts to cause (i) all MPCI and Crop Hail business of NACU to
be placed with IGF; and (ii) the underwriting of such NACU business to be in
accordance with CNA underwriting guidelines.
6.13 Non-Competition. From and after the Effective Time, CNA shall not
compete with IGFH in any MPCI or Crop Hail business, or in the Business, or
either of them for a period which shall be either (i) twenty-four (24) months
from the exercise of the Put Right by CNA; or (ii) thirty-six (36) months from
the exercise of the Call Right by IGFH.
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6.14 Replacement Ancillary Agreements. The parties agree that, as is
necessary during the Term of this Agreement to give effect to the provisions
contained herein, the parties shall execute any and all agreements as may be
necessary to amend or replace (due to changed circumstances, the passage of time
or otherwise) Ancillary Agreements.
6.15 Confidentiality. CNA will not disclose or reveal to any individual
(other than to officers, directors, and employees of CNA), corporation,
partnership, association, entity or business, any proprietary or confidential
technology, trade secret, confidential information, data, processes, strategies,
techniques, philosophies, software, other proprietary intellectual property or
other proprietary or confidential information ("Confidential Information") used
by IGFH or IGF in any of its businesses, and CNA hereby agrees that the
Confidential Information is the exclusive property of IGFH.
6.16 Intellectual Property and Trade Secrets. CNA will allow IGFH, at
no cost to IGFH, to utilize all Trade Secrets, proprietary information, software
and other formula, data, processes, strategies, techniques, philosophies, other
proprietary intellectual property or other proprietary or confidential
information (including, but not limited to, the REAP system) (collectively,
"Trade Secrets") utilized by CNA in the management and operation of the
Business. Further, IGFH is the only business, corporation, partnership,
association, or entity which is or will be allowed to utilize the Trade Secrets.
At the Closing, CNA will transfer all such rights it has in and to the computer
software and intellectual property listed on Schedule 4.10 to IGFH.
6.17 IGFH Employees. CNA has not, and for a period of two (2) years
from the date hereof, will not directly (for themselves or others) employ, offer
employment to, or solicit the service of any current or future employee of IGFH.
6.18 ERISA and Employment-Related Matters. CNA shall remain solely
responsible, on a first-dollar basis and in accordance with Article 10
(Indemnification) hereof, for Employment-Related Liabilities whereby any CNA
Employee, has or claims any right to current or future payments by virtue of
their status as an employee (including that of a former employee) of CNA.
6.19 Licenses. CNA will, at no charge or cost to IGFH, allow IGFH to
utilize the licenses of CNA in the jurisdictions set forth on Schedule 4.11 so
that IGF may continue the Business in the jurisdictions set forth on Schedule
4.11. As a consequence of the transfer of the Business, CNA shall allow IGFH to
file rates on its behalf and to otherwise establish the pricing for the products
and coverages which are to be written through CNA's licenses.
6.20 Fronting. CNA will front for IGF in all Territories and CNA will
further keep in effect during the pendency of this Agreement all necessary
licenses so that CNA may act as a fronting company for IGFH in the types of
business contemplated by this Agreement. CNA will use its best efforts to keep
such licenses in place during the pendency of this Agreement. In the event of
the exercise of a Put or Call Right, the Fronting arrangement shall cease as of
the last day of the current Crop Year in which the Put or Call Right is
exercised.
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6.21 Reinsurance Agreements. CNA will execute the Reinsurance
Agreements.
6.22 Leased Premises. CNA will assign all its right, title and interest
to its leaseholds for the office locations currently utilized (excluding
Overland Park, Kansas) in the Business and as set forth in Schedule 4.12.
6.23 NACU. CNA will use its commercially reasonable best efforts to
cause one or more IGF Executives to be named to the NACU Underwriting Committee
at the earliest time (in CNA judgment) which is practicable.
ARTICLE 7
CLOSING CONDITIONS
7.1 Conditions to Obligations of the Parties. The obligations of the
parties hereto to proceed with Closing pursuant to this Agreement are subject to
the fulfillment prior to or at Closing of the following conditions (any one or
more of which may be waived in whole or in part by the party benefitting from
such Closing condition):
A. Bring Down of Representations and Warranties. The
representations and warranties of the parties hereto contained in this
Agreement shall be true and correct in all material respects on and as
of the time of Closing, with the same force and effect as such
representations and warranties had been made on, as of and with
reference to such time and each party shall have received a certificate
to such effect signed by an authorized officer of the other, in form
and substance similar to Exhibit 7.1A.
B. Performance and Compliance. The parties hereto shall have
performed in all material respects all of the covenants and complied
with all of the provisions required by this Agreement to be performed
or complied with by them on or before Closing and each shall have
received a certificate to such effect signed by an authorized officer
of the other.
C. Opinion of Counsel. Each party hereto shall have received
an opinion of counsel from counsel to the other, dated as of the
Closing Date, in substantially the form of Exhibit 7.1C hereto.
D. Regulatory Approval. All applicable approvals and/or
waivers, if any, from all pertinent Governmental Authority for the
transactions contemplated by this Agreement shall have been received.
E. Required Consents. All consents listed on Schedule 7.1E
shall have been obtained.
F. Litigation. No order of any court or any Governmental
Authority shall be in effect which enjoins or prohibits the
transactions contemplated hereby or which would have
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a Material Adverse Effect, and there shall have not been threatened,
nor shall there be pending, any action or proceeding by or before any
court or Governmental Authority.
i. reasonably likely to enjoin or prohibit any of
the transactions contemplated by this Agreement or seeking
significant monetary relief by reason of the consummation of
such transaction, or
ii. which might have a Material Adverse Effect on the
future conduct of the business and transactions contemplated
herein.
G. No Material Adverse Effect. There shall not have occurred
any Material Adverse Effect.
H. Incumbency Certificate. Each of the parties hereto shall
have delivered to the other an incumbency certificate (in form and
substance substantially similar to Exhibit 7.1H) dated as of the
Closing Date certifying the incumbency of all officers of such party
who have executed this Agreement or any of the Ancillary Agreements,
documents or other instruments required to be delivered hereunder.
These certificates shall contain specimens of the signatures of each of
such officers and shall be executed by the Secretary of the party
proffering such certificate.
I. Certificates of Existence and Licensure. Each party hereto
shall have delivered to the other a certificate of the Secretary of
State of the state in which each such party is incorporated, dated not
more than fifteen (15) days before the Closing Date, stating that such
party is a corporation in existence under the laws of such state and
has paid all applicable taxes due to such state. In addition, CNA shall
have delivered to IGFH a certificate of licensure, dated not more than
thirty (30) days before the Closing Date, issued by the insurance
regulatory authority in each state in which the business proposed to be
transferred pursuant to this Agreement is currently conducted by CNA,
with such certificate stating that CNA is authorized to conduct the
type of business transferred pursuant to this Agreement in such state.
J. Certified Copies of Resolutions. Each party hereto shall
have delivered to the other copies, certified by the duly qualified and
acting secretary or assistant secretary of such other party, of
resolutions adopted by the Board of Directors of such party approving
this Agreement and the consummation of the transactions contemplated
hereby (including, but not limited to, execution of the Ancillary
Agreements).
K. Catastrophic Events. There shall not have occurred any
outbreak of war or any banking moratorium.
L. Transfer of Assets. CNA shall have delivered to IGFH at the
Effective Time possession of all of CNA's Assets to be transferred
pursuant to this Agreement and the
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Ancillary Agreements, reflecting a transfer of all of CNA's right,
title and interest in and to CNA's Assets as provided in this Agreement
and the Ancillary Agreements.
M. Ancillary Agreements. The parties hereto shall have
executed the Ancillary Agreements.
ARTICLE 8
EMPLOYEES AND EMPLOYMENT MATTERS
8.1 Employment Transfer. Unless otherwise agreed by the parties, CNA
will cease the employment of all CNA Employees and IGFH shall commence
employment of all such individuals on March 17, 1998. Upon employment by IGFH
all CNA Employees shall become eligible to receive and participate in all plans,
programs and benefits applicable to employees of IGFH.
8.2 No Liability for Prior Service. IGFH shall have no liability or
responsibility for any Employment-Related Liability (and CNA shall retain all
such liability), which is or may become owing to any CNA Employee which is a
result of such person's prior employment or service with CNA. CNA will indemnify
IGFH, on a first-dollar basis, for any Employment-Related Liability.
8.3 Hold Harmless. As more fully set forth in Article 10, and not
limited by this Section 8.3, CNA will indemnify and hold harmless, on a
first-dollar basis, IGFH from and against any and all liability whatsoever
(including, but not limited to IGFH's internal cost and its cost of all retained
advisors and experts in defending such matter) arising from any
Employment-Related Liability, including, but not limited to, any suit, case,
claim or administrative proceeding, whether pre-existing or hereafter commenced,
which in any way relates to such person's employment with CNA or the terms,
conditions or method of such person's termination from CNA and employment by
IGFH.
ARTICLE 9
TERM AND TERMINATION
9.1 Duration. Unless otherwise terminated as provided for herein, the
term of this Agreement shall be perpetual (the "Term').
9.2 Termination Prior to Closing. Unless the parties shall mutually
agree in writing to the contrary, this Agreement shall automatically terminate
at such time which is thirty (30) days from the Effective Time; provided,
however, that the provisions of this Section 9.2 shall be invalid upon the
execution of the Ancillary Agreements.
9.3 Survival. If this Agreement shall be terminated as provided for
herein, this Agreement shall become null and void and of no further force and
effect except for provisions relating to (i) non-competition, (ii)
indemnification, (iii) expenses, (iv) public announcements and the provisions of
this Section.
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9.4 Put/Call Termination. This Agreement shall terminate upon the
exercise of any Put Right, Change of Control Put Mechanism or Change of Control
Call Mechanism.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification by IGFH. IGFH hereby agrees to indemnify, defend
and hold harmless CNA from and against any loss, liability, claim, obligation,
damages or deficiency arising out of or resulting from any misrepresentation,
breach of warranty or nonfulfillment of any covenant or agreement on the part of
IGFH contained in this Agreement. Such indemnification shall include, but not be
limited to, judgments, costs and expenses (including reasonable attorneys' fees
and all other expenses incurred in investigating, preparing or defending any
litigation or proceeding, commenced or threatened) incident to the foregoing
sentence, provided, however, that the provisions of this Section shall not apply
to any loss, liability, claim, obligation, damage or deficiency or any judgment,
costs, and expenses (including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing or defending any litigation or proceeding,
commenced or threatened) incident thereto that arise from the breach of any
misrepresentation, warranty or the nonfulfillment of any covenant or agreement
if, at the time of Closing, CNA was aware of the breach or other noncompliance
of such representation, warranty, covenant or other agreement and the
transactions contemplated hereby closed while CNA was in possession of such
knowledge and had waived such compliance. The indemnity granted by this Section
hereby does not apply until the aggregate of all loss, liability, claim,
obligation, damage or deficiency (including judgments and other costs related
thereto) exceeds three hundred thousand dollars ($300,000) and then the said
indemnity applies only to indemnified amounts that exceed the aggregate three
hundred thousand dollars ($300,000). Further, no action or claim for indemnity
pursuant to this Section shall be brought or made after February 15, 2000.
10.2 Indemnification by CNA. CNA hereby agrees to indemnify, defend and
hold harmless IGFH from and against any loss, liability, claim, obligation,
damages or deficiency arising out of or resulting from any misrepresentation,
breach of warranty or nonfulfillment of any covenant or agreement on the part of
CNA contained in this Agreement. Such indemnification shall include, but not be
limited to, judgments, costs and expenses (including reasonable attorneys' fees
and all other expenses incurred in investigating, preparing or defending any
litigation or proceeding, commenced or threatened) incident to the foregoing
sentence, provided, however, that the provisions of this Section shall not apply
to any loss, liability, claim, obligation, damage or deficiency or any judgment,
costs, and expenses (including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing or defending any litigation or proceeding,
commenced or threatened) incident thereto that arise from the breach of any
misrepresentation, warranty or the nonfulfillment of any covenant or agreement
if, at the time of Closing, IGFH was aware of the breach or other noncompliance
of such representation, warranty, covenant or other agreement and the
transactions contemplated hereby closed while IGFH was in possession of such
knowledge and had waived such compliance. The indemnity granted by this Section
does not apply until the aggregate of all loss, liability, claim, obligation,
damage or deficiency (including judgments and other costs related
36
thereto) exceeds three hundred thousand dollars ($300,000) and then the said
indemnity applies only to indemnified amounts that exceed the aggregate three
hundred thousand dollars ($300,000). Further, no action or claim for indemnity
pursuant to this Section shall be brought or made after February 15, 2000.
10.3 Indemnification by CNA for Employment Related Matters.
Notwithstanding any other provision of this Agreement, CNA agrees to indemnify,
defend and hold harmless, on a first-dollar basis, IGFH from and against any and
all loss, liability, claims, obligation, damage or deficiency, including any
judgments, costs and expenses (including reasonable attorneys' fees and all
other expenses incurred in investigating, preparing or defending any litigation
or proceeding, commenced or threatened) arising out of or related to any
litigation, suit, cause of action or proceeding (whether administrative or
judicial) before any court or Governmental Authority brought by any former
employee of CNA listed on Schedule 10.3 hereto. Additionally, and not in
limitation of any foregoing provision of this Section, CNA hereby agrees to
indemnify, defend and hold harmless IGFH from and against any and all loss,
liability, claim, obligation, damage or deficiency and any judgments, costs and
expenses (including reasonable attorneys' fees and all other expenses incurred
in investigating, preparing or defending any litigation or proceeding, commenced
or threatened) which arise from or pertain to any alleged benefit, payment,
inurement, pension, benefit plan, pension plan, vacation pay plan or any other
employee benefit of any type or kind sought by any former employee of CNA listed
on Schedule 10.3.
10.4 Indemnification Procedures. In the event that either party hereto
wishes to assert a claim for indemnification pursuant to this Article, such
party seeking indemnification shall deliver a written notice to the other party
no later than ten (10) business days after such claim becomes known to such
party seeking indemnification, specifying the facts constituting the basis for,
and the amount (if known) of the claim asserted. Failure to deliver such a
notice as is provided for in the preceding sentence in a timely manner shall not
be deemed a waiver of right to indemnification hereunder in connection with such
claim, but the amount of reimbursement to which such party may be entitled shall
be reduced by the amount, if any, by which such amount could have been mitigated
had such notice been delivered in a timely manner. If a party seeking
indemnification pursuant to this Article because of a claim or demand made, or
an action, proceeding or investigation instituted by any Person that is not a
party to this Agreement, and such claim, demand, action, proceeding or
investigation may result in indemnification pursuant to this Article, the party
seeking indemnification shall deliver to the other party hereto a notice with
respect thereto, with such notice specifying the claimant or other third party,
the facts surrounding such potential claim for indemnification and the best
estimate (which is non-binding of the party seeking indemnification) of the
amount of such potential claim by such third party. Such notice as is provided
for in the preceding sentence shall be delivered to the party from whom
indemnification is sought within twenty (20) business days of the actual
knowledge of such party seeking indemnification of such claim. The party from
whom indemnification is sought shall have the right, upon written notice to the
other, to investigate, contest, defend or settle any matter to which a notice
for indemnification due to a claim by a third party has been made.
Notwithstanding the foregoing sentence, the party seeking indemnification may,
at its option and at its own expense, participate in the investigation,
contesting, defense or
37
settlement of any such claim through representatives and counsel of its own
choosing; provided, however, that the party from whom indemnification is sought
shall have the sole and exclusive right to investigate, contest, defend or
settle any such claim from a third party on terms, and in the manner, it shall,
in its sole discretion, determine. Notwithstanding the foregoing, the party
seeking indemnification has the unilateral right to investigate, contest, defend
or settle any claim by a third party, but if such party seeking indemnification
shall exercise the right provided for in this sentence, it expressly shall
forfeit any right of indemnification provided for in this Article.
10.5 Stamford Financial. CNA and IGFH hereby agree that if either of
them shall have entered into any agreement with Stamford Financial, by virtue of
which Stamford Financial claims a fee for the transactions contemplated in this
Agreement and the Ancillary Agreements, the party entering into such agreement
with Stamford Financial will indemnify, defend and hold harmless the other from
and against any and all monetary costs (including, without limitation, legal
fees) which may be incurred by the party which did not so enter into such
agreement with Stamford Financial.
ARTICLE 11
MISCELLANEOUS
11.1 Further Actions. Each of the parties hereto agrees to use all
reasonable effort to take, or cause to be taken, all reasonable actions and to
do, or cause to be done, all reasonable things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement. None of the parties
hereto will take or permit to be taken any action that would be in breach of the
terms or provisions of this Agreement or that would cause any of the
representations contained herein to be or to become untrue.
11.2 Costs. Irrespective of whether Closing occurs, except as otherwise
stated or hereinafter agreed, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.
11.3 Public Announcements. Excepting comments in filings required by
the SEC, or Governmental Authority, the content and timing of any press release
or other public announcement proposed to be made concerning the transactions
contemplated by this Agreement must be consented to in advance by each party
prior to the public dissemination of such press release or public announcement,
with such consent not being unreasonably withheld or delayed.
11.4 Survival. The representations, warranties, covenants and
agreements of the parties hereto contained in this Agreement shall survive the
Closing and shall not merge in the performance of any obligation by any party
hereto.
11.5 Amendment and Modification. This Agreement may not be amended or
modified without the prior written consent of all parties hereto.
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11.6 Waiver. The failure to insist upon strict compliance with any of
the terms and conditions to this Agreement at any one time shall not be deemed a
waiver of such term or condition at any other time, nor shall any waiver or
relinquishment of any right or power granted herein at any time be deemed a
waiver or relinquishment of the same or any other right or power at any other
time.
11.7 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana without giving
effect to the principles of conflicts of laws. Each of the parties hereto
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the courts of the United States of America located in ▇▇▇▇▇▇ County, Indiana
(and if such courts do not have appropriate jurisdiction, the courts of the
State of Indiana), for any action, proceeding or investigation in any court or
before any Governmental Authority arising out of or relating to this Agreement
and the transactions contemplated hereby. The parties further agree that service
of any process, summons, notice or document by United States Registered Mail to
its respective address as set forth in this Agreement shall be effective service
of process for any litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection to
the laying of venue in any matter arising out of this Agreement or the
transactions contemplated hereby in the courts of the United States of America
located in ▇▇▇▇▇▇ County, Indiana (and if such courts do not have appropriate
jurisdiction, the courts of the State of Indiana), and the parties hereto hereby
further irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such litigation brought in any such court has been
brought in an inconvenient forum.
11.8 Notice. Any notice or other communication to be given hereunder
shall be in writing and shall be deemed sufficient when it is:
A. mailed by United States Certified Mail, Return Receipt
Requested;
B. mailed by overnight express mail or other airborne courier;
C. sent by facsimile or telecopy machine, followed by
confirmation mailed by First Class mail or overnight express mail or
airborne courier; or
D. delivered in person, at the address set forth below or such
other address as a party hereto may provide to the other in writing.
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Notices pursuant to this Agreement shall be sent to:
If to IGFH:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Operating Officer
IGF Holdings, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Vice President, General Counsel and Secretary
▇▇▇▇▇▇ International Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to CNA:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Operating Officer
CNA Agriculture
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
Secretary
Continental Casualty Company
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11.9 Severability. If any provision of this Agreement shall be
determined to be invalid or unenforceable, this Agreement shall be deemed to
amended to delete such provision and the remainder of this Agreement shall be
enforceable by its terms.
11.10 Successors and Assigns. This Agreement shall be binding and inure
to the benefit of the parties hereto and their respective permitted successors
and assigns.
11.11 Captions. Headings and captions contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or prescribe the scope of this Agreement or the intent of
any provision.
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11.12 Gender and Tense. The masculine gender shall include the feminine
and neuter genders and the singular shall include the plural.
11.13 Entire Agreement. This Agreement and the Ancillary Agreements,
taken as a whole, constitute the entire agreement of the parties with respect to
the matters set forth herein and supersedes any and all prior understandings or
agreements, oral or written, with respect to such matters.
11.14 Negative Inference. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party hereto,
whether under any rule of construction or otherwise. No party shall be
considered the draftsman of this Agreement. On the contrary, this Agreement has
been reviewed, negotiated and accepted by all parties hereto and their
respective counsel and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.
11.15 Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be an original, and
all such counterparts shall constitute one in the same Agreement, binding on all
the parties notwithstanding that all the parties are not signatories to the same
counterparts. The execution of this Agreement may be accomplished by signature
transmitted via facsimile.
11.16 Certain Definitions. Certain defined terms outlined in Article 1
hereof are not used herein but have application to certain Ancillary Agreements.
In the event that a conflict exists between any term defined herein and also in
any Ancillary Agreement, the definition and meaning contained herein shall be
controlling.
11.17 Recitals. The recitals contained hereinabove are incorporated by
reference as those repeated verbatim.
11.18 Future Cooperation. The parties agree to work together in good
faith from the date hereof through the Closing Date to correct or amend any
provisions herein or in the Ancillary Agreements which are inconsistent with the
parties intent.
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Strategic Alliance Agreement
Signature Pages
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
▇▇▇▇▇▇ INTERNATIONAL GROUP, INC.
By:___________________________________
Its:___________________________________
42
Strategic Alliance Agreement
Signature Pages [continued]
IGF HOLDINGS, INC.
By:___________________________________
Its:___________________________________
43
Strategic Alliance Agreement
Signature Pages [continued]
IGF INSURANCE COMPANY
By:___________________________________
Its:___________________________________
44
Strategic Alliance Agreement
Signature Pages [continued]
CONTINENTAL CASUALTY COMPANY
By:___________________________________
Its:___________________________________
45