Exhibit 99.2
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
MMI COMPANIES, INC.,
THE ST. ▇▇▇▇ COMPANIES, INC.
and
▇▇▇▇▇▇ ACQUISITION CORP.
Dated as of December 20, 1999
Table of Contents
Page
RECITALS
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1. The Merger 1
1.2. Closing 1
1.3. Effective Time 1
ARTICLE II
CHARTER AND BY-LAWS OF THE SURVIVING CORPORATION
2.1. The Charter 2
2.2. The By-Laws 2
ARTICLE III
OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
3.1. Directors 2
3.2. Officers 2
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES
4.1. Effect on Capital Stock 2
(a)Merger Consideration 2
(b)Dissenting Shares 3
(c)Cancellation of Shares 3
(d)Merger Subsidiary 3
4.2. Exchange of Cash for Shares 4
(a) Paying Agent. 4
(b) Payment Procedures 4
(c) Transfers 4
(d) Termination of Exchange Fund 4
(e) Lost, Stolen or Destroyed Certificates 5
4.3. Adjustments to Prevent Dilution 5
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company 5
(a)Organization, Good Standing and Qualification 5
(b)Capital Structure 6
(c)Corporate Authority; Approval and Fairness 7
(d)Governmental Filings; No Violations 8
(e)Company Reports; Financial Statements 9
(f)Absence of Certain Changes 11
(g)Litigation and Liabilities 11
(h)Employee Benefits 12
(i)Compliance with Laws; Permits 14
(j)Takeover Statutes 15
(k)Environmental Matters 15
(l)Taxes 16
(m)Labor Matters 17
(n)Intellectual Property; Year 2000 18
(o)Material Contracts. 19
(p)Rights Plan 20
(q)Title to Assets; Liens. 20
(r)Insurance Matters 20
(s)Liabilities and Reserves 23
(t)Brokers and Finders. 23
(u)Separate Account; Investment Advisor 23
(v)Joint Ventures 24
5.2.Representations and Warranties of Parent
and Merger Subsidiary 24
(a)Capitalization of Merger Subsidiary 24
(b)Organization, Good Standing and Qualification 24
(c)Corporate Authority 25
(d)Governmental Filings; No Violations 25
(e)Financing 26
(f)Brokers and Finders 26
(g)Share Ownership 26
ARTICLE VI
COVENANTS
6.1. Interim Operations 26
6.2. Acquisition Proposals 28
6.3. Stockholders Meetings 29
6.4. Filings; Other Actions; Notification 30
6.5. Access 31
6.6. Stock Exchange De-listing 32
6.7. Publicity 32
6.8. Benefits 32
(a)Stock Options and Stock Plans 32
(b)Employee Benefits 33
6.9. Expenses 33
6.10. Indemnification; Directors'
and Officers'Insurance 33
6.11. Assumption of Debentures 35
6.12. Other Actions by the Company and Parent 35
(a)Rights 35
(b)Takeover Statute 35
ARTICLE VII
CONDITIONS
7.1.Conditions to Each Party's Obligation to
Effect the Merger 35
(a)Stockholder Approval 35
(b)Regulatory Consents 35
(c)Certain U.K. and Ireland Consents 36
(d)Litigation 37
7.2.Conditions to Obligations of Parent and
Merger Subsidiary 37
(a)Representations and Warranties 37
(b)Performance of Obligations of the Company 37
(c)Consents 37
7.3. Conditions to Obligation of the Company 37
(a)Representations and Warranties 37
(b)Performance of Obligations of Parent
and Merger Subsidiary 38
(c)Stockholder Approval 38
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent 38
8.2. Termination by Either Parent or the Company 38
8.3. Termination by the Company 38
8.4. Termination by Parent 39
8.5. Effect of Termination and Abandonment 39
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. Survival 40
9.2. Modification or Amendment 41
9.3. Waiver of Conditions 41
9.4. Counterparts 41
9.5. Governing Law; Waiver Of Jury Trial 41
9.6. Notices 42
9.7. Entire Agreement; No Other Representations 43
9.8. No Third Party Beneficiaries 43
9.9. Obligations of Parent and of the Company 43
9.10 Severability. 43
9.11 Interpretation 43
9.12 Assignment 43
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated
as of December 20, 1999, among MMI COMPANIES, INC., a Delaware
corporation (the "Company"), THE ST. ▇▇▇▇ COMPANIES, INC., a
Minnesota corporation ("Parent"), and ▇▇▇▇▇▇ ACQUISITION CORP., a
Delaware corporation and a wholly-owned indirect subsidiary of
Parent ("Merger Subsidiary") (the Company and Merger Subsidiary
sometimes being hereinafter collectively referred to as the
"Constituent Corporations.")
RECITALS
WHEREAS, the respective boards of directors of each of
Parent, Merger Subsidiary and the Company have determined that
the merger of Merger Subsidiary with and into the Company (the
"Merger") upon the terms and subject to the conditions set forth
in this Agreement is advisable and have approved the Merger; and
WHEREAS, the Company, Parent and Merger Subsidiary
desire to make certain representations, warranties, covenants and
agreements as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, and
of the representations, warranties, covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
I.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3) Merger Subsidiary shall be merged with
and into the Company and the separate corporate existence of
Merger Subsidiary shall thereupon cease. The Company shall be
the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"), and the separate
corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue
unaffected by the Merger, except as set forth in Article IV. The
Merger shall have the effects specified in the Delaware General
Corporation Law, as amended (the "DGCL").
I.2. Closing. The closing of the Merger (the "Closing")
shall take place (i) at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 9:00 A.M. on the second
business day on which the last to be fulfilled or waived of the
conditions set forth in Article VII shall be satisfied or waived
in accordance with this Agreement (other than those conditions
that by their nature are to be satisfied at the Closing, but
subject to the fulfillment or waiver of those conditions) or
(ii) at such other place and time and/or on such other date as
the Company and Parent may agree in writing (the "Closing Date").
I.3. Effective Time. As soon as practicable following the
Closing on the Closing Date, the Company and Parent will cause a
certificate of merger (the "Certificate of Merger") to be
executed, acknowledged and filed with the Secretary of State of
the State of Delaware (the "Secretary") as provided in
Section 251 of the DGCL. The Merger shall become effective at
the time the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such later
time agreed by the parties and established under the Certificate
of Merger (the "Effective Time").
ARTICLE II
CHARTER AND BY-LAWS
OF THE SURVIVING CORPORATION
II.1. The Charter. The Certificate of Incorporation of
the Company as in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving
Corporation (the "Charter"), until duly amended as provided
therein or by applicable Law (as defined below).
II.2. The By-Laws. The by-laws of the Company as in
effect immediately prior to the Effective Time shall be the by-
laws of the Surviving Corporation (the "By-Laws"), until duly
amended as provided therein or by applicable Law.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
III.1. Directors. The directors of Merger Subsidiary at
the Effective Time shall, from and after the Effective Time, be
the directors of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Charter and the By-Laws.
III.2. Officers. The officers of the Company at the
Effective Time shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Charter and the By-Laws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
IV.1. Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the
holder of any capital stock of the Company:
(a) Merger Consideration. Each share of the common stock,
par value $0.10 per share, of the Company (the "Common Stock"),
including the associated right to purchase one one-hundredth of a
share of Series B Junior Participating Preferred Stock, par value
$20 per share, of the Company ("Series B Preferred Stock"), or,
in certain circumstances, Common Stock or to receive other
securities (each a "Right" and together with the Common Stock, a
"Share" and, collectively, the "Shares") issued pursuant to the
Amended and Restated Rights Agreement, dated as of September 24,
1998, by and between the Company and ▇▇▇▇▇ ▇▇▇▇▇▇ Shareholder
Services L.L.C., as Rights Agent (the "Rights Agreement"), issued
and outstanding immediately prior to the Effective Time (other
than Shares owned by Parent, Merger Sub or any other direct or
indirect Subsidiary of Parent (collectively, the "Parent
Companies")) or Shares that are owned by the Company or any
direct or indirect Subsidiary of the Company and in each case not
held on behalf of third parties or Shares ("Dissenting Shares")
that are owned by shareholders ("Dissenting Shareholders") who do
not vote to approve the Merger and comply with all the provisions
of the DGCL concerning the right of holders of Shares to dissent
from the Merger and require payment of fair value (as that term
is used in the DGCL) for their Shares (each, an "Excluded Share"
and collectively, "Excluded Shares")) shall be converted into the
right to receive $10.00 in cash (the "Merger Consideration"). At
the Effective Time, all Shares shall no longer be outstanding and
shall be canceled and retired and shall cease to exist, and each
certificate (a "Certificate") formerly representing any of such
Shares (other than Excluded Shares) shall thereafter represent
only the right to receive the Merger Consideration.
(b) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, any Shares held by a Person (a
"Dissenting Shareholder") who does not vote to approve the Merger
and complies with all the provisions of the DGCL concerning the
right of holders of Shares to dissent from the Merger and require
payment of fair value (as that term is used in the DGCL) for
their Shares ("Dissenting Shares") shall not be converted as
described in Section 4.1(a), but shall be converted into the
right to receive such consideration as may be determined to be
due to such Dissenting Shareholder pursuant to the DGCL. If,
after the Effective Time, such Dissenting Shareholder withdraws
his demand or fails to perfect or otherwise loses his rights as a
Dissenting Shareholder to payment of fair value, in any case
pursuant to the DGCL, his Shares shall be deemed to be converted
as of the Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of
any demands for fair value for Shares received by the Company and
(ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands.
The Company shall not, without the prior written consent of Parent,
make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
(c) Cancellation of Shares. Each Share issued and
outstanding immediately prior to the Effective Time and owned by
any of the Parent Companies or owned by the Company or any direct
or indirect Subsidiary of the Company (in each case other than
Shares that are owned on behalf of third parties), shall, by
virtue of the Merger and without any action on the part of the
holder thereof, cease to be outstanding, shall be canceled and
retired without payment of any consideration therefor and shall
cease to exist.
(d) Merger Subsidiary. At the Effective Time, each share
of Common Stock, par value $.01 per share, of Merger Subsidiary
issued and outstanding immediately prior to the Effective Time
shall be converted into one share of common stock of the
Surviving Corporation.
IV.2. Exchange of Cash for Shares.
(a) Paying Agent. As of the Effective Time, Parent shall
cause one of its Subsidiaries to deposit with a bank or trust
company selected by Parent with the Company's prior approval,
which shall not be unreasonably withheld or delayed (the "Paying
Agent"), for the benefit of the holders of Shares, cash
sufficient to pay the aggregate Merger Consideration in exchange
for Shares outstanding immediately prior to the Effective Time
(other than Excluded Shares) upon due surrender of the
Certificates (or affidavits of loss in lieu thereof) pursuant to
the provisions of this Article IV (such cash being hereinafter
referred to as the "Exchange Fund"). The funds deposited with
the Paying Agent shall be invested by the Paying Agent as Parent
reasonably directs and any net profit resulting from, or interest
or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs.
(b) Payment Procedures. Promptly after the Effective Time,
the Surviving Corporation shall cause the Paying Agent to mail to
each holder of record of Shares (other than holders of Excluded
Shares) (i) a letter of transmittal specifying that delivery
shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates (or affidavits
of loss in lieu thereof) to the Paying Agent, such letter of
transmittal to be in such form and have such other provisions as
Parent and the Company may reasonably agree, and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate (or affidavit of loss in lieu thereof)
for cancellation to the Paying Agent together with such letter of
transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor a check in the amount
(after giving effect to any required tax withholdings) of the
number of Shares represented by such Certificate (or affidavit of
loss in lieu thereof) multiplied by the Merger Consideration, and
the Certificate so surrendered shall forthwith be canceled. No
interest will be paid or accrued on any amount payable upon due
surrender of the Certificates. In the event of a transfer of
ownership of Shares that is not registered in the transfer
records of the Company, a check for any cash to be paid upon due
surrender of the Certificate may be paid to such a transferee if
the Certificate formerly representing such Shares is presented to
the Paying Agent, accompanied by all documents required to evidence
and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid or are not applicable.
For the purposes of this Agreement, the term "Person" shall
mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, Governmental
Entity (as defined in Section 5.1(d)) or other entity of any kind
or nature organized or existing under the Laws of any
jurisdiction.
(c) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the
Shares that were outstanding immediately prior to the Effective
Time.
(d) Termination of Exchange Fund. Any portion of the
Exchange Fund (including the proceeds of any investments thereof)
that remains unclaimed by the shareholders of the Company for 180
days after the Effective Time shall be returned to Parent. Any
shareholders of the Company who have not theretofore complied
with this Article IV shall thereafter look only to Parent for
payment of (after giving effect to any required tax withholdings)
the Merger Consideration upon due surrender of their Certificates
(or affidavits of loss in lieu thereof) without any interest
thereon. Notwithstanding the foregoing, none of Parent, the
Surviving Corporation, the Paying Agent or any other Person shall
be liable to any former holder of Shares for any amount properly
delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws.
(e) Lost, Stolen or Destroyed Certificates. In the event
any Certificates shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming
such Certificates to be lost, stolen or destroyed and, if
required by Parent, the posting by such Person of a bond in
customary amount as indemnity against any claim that may be made
against it with respect to such Certificates, the Paying Agent
will issue in exchange for such lost, stolen or destroyed
Certificates a check in the amount (after giving effect to any
required tax withholdings) of the number of Shares represented by
such lost, stolen or destroyed Certificate multiplied by the
Merger Consideration upon due surrender of, and deliverable in
respect of, the Shares represented by such Certificates pursuant
to this Agreement.
IV.3. Adjustments to Prevent Dilution. In the event
that the Company changes the number of Shares issued and
outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse stock split),
stock dividend or distribution, recapitalization, merger,
subdivision, issuer tender or exchange offer, or other similar
transaction, the Merger Consideration shall be equitably adjusted
to reflect such change.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
V.1. Representations and Warranties of the Company. Except
as set forth in the corresponding sections or subsections of the
disclosure letter delivered to Parent by the Company on or prior
to entering into this Agreement (the "Company Disclosure Letter")
or in any Company Report (as defined in Section 5.1(e)(i)) filed
during the period beginning on March 1, 1999, and ending on the
date hereof, including the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 and the Company's Quarterly
Reports on Form 10-Q for the periods ended March 31, 1999, June
30, 1999 and September 30, 1999, excluding any exhibits thereto
or documents incorporated by reference therein (collectively, the
"1999 Company Reports") (provided, however, the 1999 Company
Reports shall not qualify any of the representations and
warranties of the Company set forth in Sections 5.1(a), 5.1(b),
5.1(c), 5.1(d), 5.1(e), 5.1(p), 5.1(t), or 5.1(u) contained
herein), the Company hereby represents and warrants to Parent and
Merger Subsidiary that:
(a) Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware and each of
its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of its respective
jurisdiction of organization. Each of the Company and its
Subsidiaries has all requisite corporate or similar power and
authority to own and operate its properties and assets and to
carry on its business as presently conducted and is qualified to
do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in
good standing, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect (as
defined below). The Company has made available to Parent a
complete and correct copy of articles or certificate of
incorporation and by-laws, or other similar governing documents
or local equivalent, each as amended to date (collectively, the
"Governing Documents"), of the Company and each of its
Subsidiaries. The Company's and its Subsidiaries' Governing
Documents so made available are in full force and effect.
As used in this Agreement, the term (i) "Subsidiary" means,
with respect to the Company, Parent or Merger Subsidiary, as the
case may be, any entity, whether incorporated or unincorporated,
of which at least a majority of the securities or ownership
interests having by their terms ordinary voting power to elect a
majority of the board of directors or other Persons performing
similar functions is directly or indirectly owned or controlled
by such party or by one or more of its respective Subsidiaries or
by such party and any one or more of its respective Subsidiaries,
and (ii) "Company Material Adverse Effect" means a material
adverse effect on the financial condition, business, operations
or results of operations of the Company and its Subsidiaries,
taken as a whole, or any effect which prevents or materially
impairs the ability of the Company to consummate the transactions
contemplated by this Agreement; provided, however, that the term
"Company Material Adverse Effect" shall not be deemed to include
any (i) changes in the property and casualty insurance industry in
general, (ii) events resulting from changes in general United
States, United Kingdom or global economic or financial market
conditions, (iii) changes in GAAP or SAP, (iv) non-renewal of
premiums due primarily and directly to the execution of this
Agreement and the announcement of the transaction and the
identity of Parent and/or Merger Subsidiary, (v) changes
resulting from actions of the Parent or Merger Subsidiary in
breach of this Agreement, or (vi) adverse changes in the
Company's financial condition or results of operations following
the date hereof resulting from the matters set forth in Section
5.1(a) of the Company Disclosure Letter.
The Company conducts its insurance operations through the
Subsidiaries set forth in Section 5.1(a) of the Company
Disclosure Letter (the "Company Insurance Subsidiaries"). Each
of the Company Insurance Subsidiaries is, where applicable, (i)
duly licensed or authorized as an insurance company and, where
applicable, a reinsurer, in its jurisdiction of incorporation,
(ii) duly licensed or authorized as an insurance company and,
where applicable, a reinsurer, in each other jurisdiction where
it is required to be so licensed or authorized, and (iii) duly
authorized in its jurisdiction of incorporation and each other
applicable jurisdiction to write each line of business reported
as being written in the Company SAP Statements (as defined
below), except, in any such case, where the failure to be so
licensed or authorized, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect. The
Company has made all required filings under applicable insurance
holding company statutes except where the failure to file,
individually or in the aggregate, is not reasonably likely to
have a Company Material Adverse Effect.
(b) Capital Structure. The authorized stock of the Company
consists of 30,000,000 shares of Common Stock, of which
19,150,270 were outstanding as of the close of business on
December 17, 1999, and 5,000,000 shares of preferred stock (the
"Preferred Shares"), $20 par value, of which 300,000 shares have
been authorized as Series B Junior Participating Preferred Stock,
none of which were outstanding as of December 17, 1999. All of
the outstanding shares of Common Stock have been duly authorized
and are validly issued, fully paid and non-assessable. The
Company has no commitments to issue or deliver shares of Common
Stock, except that, as of December 17, 1999, there were not more
than 3,160,888 shares of Common Stock subject to issuance
pursuant to the Company's 1999 Stock Option Plan, 1993 Stock
Plan, 1993 Non-Employee Director Formula Stock Option Plan and
the 1997 Long Term Incentive Plan and 100,000 shares of Common
Stock reserved for issuance pursuant to the Company's Savings
Related Share Option Scheme (collectively referred to as, the
"Company Stock Plans"). The Company has no commitments to issue
or deliver Preferred Shares, except that as of the date hereof,
there were 300,000 shares of Series B Junior Participating
Preferred Stock subject to issuance pursuant to the Rights
Agreement. The Company Disclosure Letter contains a correct and
complete list of each outstanding option to purchase or acquire
shares of Common Stock under each of the Company Stock Plans
(each a "Company Option"), including the plan, the holder, date
of grant, exercise price and number of Shares subject thereto.
Each of the outstanding shares of capital stock or other
securities of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and non-assessable and
owned by the Company or a direct or indirect wholly-owned
Subsidiary of the Company, free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as set
forth above, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights,
redemption rights, repurchase rights, agreements, arrangements or
commitments to issue, sell, repurchase, redeem or otherwise
acquire any shares of capital stock or other securities of the
Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any
securities of the Company or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized,
issued or outstanding. There are no outstanding contractual
obligations of the Company to vote any shares of the capital
stock or other securities of any of its Subsidiaries. The
Company does not have outstanding any bonds, debentures, notes or
other obligations the holders of which have the right to vote (or
which are convertible into or exercisable for securities having
the right to vote) with the stockholders of the Company on any
matter.
(c) Corporate Authority; Approval and Fairness.
(i) The Company has the requisite corporate power and
authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under
this Agreement and to consummate the Merger, subject only to
approval of the Merger by the holders of at least a majority
of the outstanding shares of Common Stock (the "Company
Requisite Vote"). This Agreement is the valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar Laws of general applicability relating to or
affecting creditors' rights and to general equity principles
(the "Bankruptcy and Equity Exception").
(ii) The board of directors of the Company, at a
meeting duly called and held prior to the execution hereof,
(A) has unanimously (with respect to those directors present
at such meeting, which number of directors constituted a
quorum) declared that the Agreement, the Merger and the
other transactions contemplated hereby are advisable, fair
to and in the best interests of the Company and its
stockholders, (B) has authorized, approved and adopted in
all respects this Agreement, the Merger and the other
transactions contemplated hereby, (C) has recommended the
approval of this Agreement and the Merger by the holders of
the shares of Common Stock and directed that the Merger be
submitted for consideration by the Company's stockholders at
the Stockholder Meeting (as defined in Section 6.3) and (D)
has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Inc., its
financial advisors, a copy of which has been delivered to
Parent, to the effect that the consideration to be received
by the holders of the Shares in the Merger is fair from a
financial point of view to such holders.
(d) Governmental Filings; No Violations.
(i) Other than the filings, reports and/or notices
(A) pursuant to Section 1.3, (B) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the Securities Act of 1933, as amended
(the "Securities Act"), (C) to comply with state securities
or "blue-sky" Laws, (D) required to be made with the New
York Stock Exchange (the "NYSE"), and (E) the filing of
appropriate documents with, and approval of, the respective
Commissioners of Insurance or similar regulatory authorities
of the states set forth in Section 5.1(d) of the Company
Disclosure Letter and (F) required to be made with the
United Kingdom ("UK") Office of Fair Trading or the
Commission of the European Communities, the UK Financial
Services Authority, the Council of Lloyds and the Minister
for Enterprise Trade and Employment of Ireland and such
notices and consents and expiry of waiting periods as may be
required under the insurance company controller laws of the
UK and under the antitrust notification or insurance Laws of
any state or country in which the Company, Parent or any of
their respective Subsidiaries is domiciled or does business,
no notices, reports or other filings are required to be made
by the Company or its Subsidiaries or Joint Ventures with,
nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company or its
Subsidiaries or Joint Ventures from, any foreign or domestic
governmental or regulatory authority, agency, commission,
body or other governmental entity ("Governmental Entity"),
in connection with the execution and delivery of this
Agreement by the Company and the consummation by the Company
of the Merger and the other transactions contemplated
hereby, except those that the failure to make or obtain are
not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(ii) Except as set forth in Section 5.1(d)(ii) of the
Company Disclosure Letter, the execution, delivery and
performance of this Agreement by the Company do not, and the
consummation by the Company of the Merger and the other
transactions contemplated hereby will not, constitute or
result in (A) a breach or violation of, or a default under,
any Governing Document of the Company or any of its
Subsidiaries or Joint Ventures, (B) a breach or violation
of, or a default under, the right of cancellation, the
termination or the acceleration of any obligations by any
Person or the creation of a lien, pledge, security interest,
claim or other encumbrance on the properties or assets of
the Company or any of its Subsidiaries or Joint Ventures
(with or without notice, lapse of time or both) pursuant to,
any agreement, lease, license permit, contract, note,
mortgage, indenture, arrangement or other obligation
("Contracts") binding upon the Company or any of its
Subsidiaries or Joint Ventures (provided, as to
consummation, the filings and notices are made, and
approvals are obtained, as referred to in Section
5.1(d)(i)), a violation of any Law (as defined in
Section 5.1(i)) or governmental or non-governmental permit
or license to which the Company or any of its Subsidiaries
or Joint Ventures is subject or (C) any change in the rights
or obligations of any party pursuant to any of the
Contracts, except, in the case of clause (B) or (C) above,
for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect or materially
impair the ability of Parent or any of its Affiliates (as defined
below), including the Company, its Subsidiaries and Joint
Ventures, following the Effective Time, to conduct its
business in the manner as such business is being conducted
as of the date of this Agreement. None of the Company or
any of its Subsidiaries or Joint Ventures is a party to any
Contract pursuant to which consents or waivers are or may be
required of any other Person in connection with the
execution and delivery of this Agreement by the Company or
the performance by the Company of its obligations hereunder,
except those the failure to obtain, individually or in the
aggregate, is not reasonably likely to have a Company
Material Adverse Effect.
As used herein, "Joint Venture" of a Person shall mean any
corporation or other Person, together with any Subsidiaries
therof, that is not a Subsidiary of such Person, in which such
Person owns directly or indirectly an equity, voting or other
membership interest, other than equity, voting or other
membership interests representing less than 5% of each class of
the outstanding voting securities or equity or other voting or
membership interests of any such Person and owned for passive
investment purposes.
Any representations and warranties made herein as to the
Company's Joint Ventures shall be made in reference to and
limited to the knowledge of the Chief Executive Officer and the
Chief Financial Officer of both the Company and Unionamerica
Holdings, PLC, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, which knowledge shall include
the knowledge that such persons would have obtained after due
inquiry with respect to those areas of the business for which
they are responsible.
(e) Company Reports; Financial Statements.
(i) The Company has delivered or made available to
Parent each registration statement, report, proxy statement
or information statement prepared by it since December 31,
1997 including (A) the Company's Annual Report on Form 10-K
for the year ended December 31, 1998 (the "Audit Date"), and
(B) the Company's Quarterly Reports on Form 10-Q for the
periods ended March 31, 1999, June 30, 1999 and September
30, 1999, each in the form (including exhibits, annexes and
any amendments thereto) filed with the Securities and
Exchange Commission (the "SEC") (collectively, including any
such reports filed subsequent to the date hereof, the
"Company Reports"). As of their respective dates, the
Company Reports complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be,
and did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in
which they were made, not misleading. The financial
statements of the Company included in the Company Reports
comply in all material respects as to form with applicable
accounting requirements and the published rules and
regulations of the SEC with respect thereto. Each of the
consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related
notes and schedules) presents fairly, or will present
fairly, the consolidated financial position of the Company
and its Subsidiaries as of its respective date and each of
the consolidated statements of income and of stockholders'
equity and of cash flows included in or incorporated by
reference into the Company Reports (including any related
notes and schedules) fairly presents, or will fairly
present, the results of operations, retained earnings and
cash flows, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to notes and normal year-
end audit adjustments that will not be material in amount or
effect), in each case in accordance with generally accepted
accounting principles ("GAAP") consistently applied during
the periods indicated, except as may be noted therein.
(ii) The Company has made available or provided to
Parent true and complete copies of the annual and quarterly
statements of each of the Company Insurance Subsidiaries as
filed with the applicable insurance regulatory authorities
for the years ended December 31, 1996, 1997 and 1998 and the
quarterly periods ended March 31, 1999, June 30, 1999 and
September 30, 1999, including all exhibits, interrogatories,
notes, schedules and any actuarial opinions, affirmations or
certifications or other supporting documents filed in
connection therewith, or the local equivalent in its
respective jurisdiction (collectively with any such
statement filed subsequent to the date hereof, the "Company
SAP Statements"). The Company SAP Statements were and will
be prepared in conformity with statutory accounting
practices prescribed or permitted by the applicable
insurance regulatory authority ("SAP") consistently applied
for the periods covered thereby, were and will be prepared
in accordance with the books and records of the Company or
the Company Insurance Subsidiary, as the case may be, and
present fairly the statutory financial position of such
Company Insurance Subsidiaries as at the respective dates
thereof and the results of operations of such Subsidiaries
for the respective periods then ended. The Company SAP
Statements complied and will comply in all material respects
with all applicable Laws, rules and regulations when filed,
and no material deficiency has been asserted with respect to
any Company SAP Statements by the applicable insurance
regulatory body or any other governmental agency or body.
Except as indicated therein, all assets that are reflected
on the Company Prepared SAP Statements comply with all
applicable foreign, federal, state and local statutes and
regulations regulating the business and products of
insurance and all applicable Insurance Laws (as defined in
Section 5.1(i)) with respect to admitted assets and are in
an amount at least equal to the minimum amounts required by
Insurance Laws. The annual statutory balance sheets and
income statements included in the Company SAP Statements
have been audited by Ernst & Young LLP, and the Company has
provided to Parent true and complete copies of all audit
opinions related thereto. The Company has provided to Parent
true and complete copies of all examination reports of
insurance departments and any insurance regulatory agencies
since January 1, 1995 relating to the Company Insurance
Subsidiaries and a list of all pending market conduct
examinations, or the local equivalent in its respective
jurisdiction.
(f) Absence of Certain Changes. Except as set forth in
Section 5.1(f) of the Company Disclosure Letter, since the Audit
Date, the Company and its Subsidiaries and Joint Ventures have
conducted their businesses only in, and have not engaged in any
material transaction other than according to, the ordinary and
usual course of such businesses and there has not been (i) any
change, event, circumstance, development or combination of
events, circumstances and developments which, individually or in
the aggregate, has had or is reasonably likely to have a Company
Material Adverse Effect; (ii) any declaration, setting aside or
payment of any dividend or other distribution in cash, stock or
property in respect of the capital stock of the Company, except
for regular quarterly cash dividends on its shares of Common
Stock publicly announced prior to the date hereof; (iii) any
change by the Company in accounting principles, practices or
methods other than those required by GAAP or SAP or the local
equivalent in its respective jurisdiction; (iv) any material
addition, or any development involving a prospective material
addition, to the Company's consolidated reserves for future
policy benefits or other policy claims and benefits; or (v) any
change in the accounting, actuarial, investment, reserving,
underwriting or claims administration policies, practices,
procedures, methods, assumptions or principles of any Company
Insurance Subsidiary. Since the Audit Date, except as expressly
provided for herein, or as set forth in Section 5.1(f) of the
Company Disclosure Letter, there has not been any: (i) increase
in the compensation payable or that could become payable by the
Company or any of its Subsidiaries to officers or key employees;
(ii) any amendment of any of the Compensation and Benefit Plans
(as hereinafter below) other than amendments in the ordinary
course which are generally applicable to employees of the
Company; (iii) adoption of any new employee benefit plan or
agreement providing for severance benefits or other benefits; or
(iv) stock option grants to officers and key employees of the
Company or any of its Subsidiaries other than in the ordinary
course.
(g) Litigation and Liabilities. Except as disclosed in the
1999 Company Reports, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations
or proceedings pending or, to the Knowledge of the Company (as
defined below), threatened against the Company or any of its
Affiliates (as defined below), (ii) orders, judgments, decrees,
injunctions or rules of any Governmental Entity to which the
Company or any of its Subsidiaries or Joint Ventures is subject,
(iii) except as incurred in the ordinary course of business
consistent with past practice, obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or
not required to be disclosed, or any facts or circumstances that
is reasonably likely to result in any claims against, or
obligations or liabilities of, the Company or any of its
Affiliates or (iv) developments since the date of such Company
Reports with respect to such disclosed actions, suits, claims,
hearings, investigations or proceedings, except, in each case,
for those that, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect. As
used herein, the term "Affiliate" shall have the meaning ascribed
to such term in Rule 12b-2 under the Exchange Act, and "Knowledge
of the Company" shall mean the knowledge of those persons
referred to in Section 5.1(g) of the Company Disclosure Letter,
which knowledge shall include the knowledge that such persons
would have obtained after due inquiry with respect to those areas
of the business of the Company for which they are
responsible.
(h) Employee Benefits.
(i) A copy of each bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, employment, termination,
severance, change of control, compensation, medical, health
or other plan, agreement, policy or arrangement that covers
employees, directors, former employees or former directors
of the Company and its Subsidiaries (the "Compensation and
Benefit Plans") and any trust agreement or insurance
contract forming a part of such Compensation and Benefit
Plans has been provided to Parent prior to the date hereof.
The Compensation and Benefit Plans are listed in
Section 5.1(h) of the Company Disclosure Letter and any
"change of control" or similar provisions therein are
specifically identified in Section 5.1(h)(i) of the Company
Disclosure Letter. All bonus accruals in respect of the
employees of the Company and its Subsidiaries have been
disclosed to Parent either in the most recent consolidated
balance sheet or in Section 5.1(h)(i) of the Company
Disclosure Letter.
(ii) All Compensation and Benefit Plans are in
substantial compliance with all applicable Law, including
the Internal Revenue Code of 1986, as amended (the "Code"),
and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Each Compensation and Benefit Plan that
is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the
Internal Revenue Service (the "IRS") with respect to "TRA"
(as defined in Section 1 of Rev. Proc. 93-39), and the
Company is not aware of any circumstances reasonably likely
to result in revocation of any such favorable determination
letter. The Unionamerica (1993) Pension Scheme and the
Unionamerica (1993) Death Benefits Scheme are approved by
Inland Revenue for the purposes of Chapter I Part XIV of the
Income and Corporation Taxes Act 1988 and the Company is not
aware of any circumstances reasonably likely to result in
the withdrawal of such approval. There is no pending or, to
the Knowledge of the Company, threatened material litigation
relating to the Compensation and Benefit Plans. Neither the
Company nor any of its Subsidiaries has engaged in a
transaction with respect to any Compensation and Benefit
Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject the Company or
any of its Subsidiaries to a material tax or penalty imposed
by either Section 4975 of the Code or Section 502 of ERISA.
(iii) No liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by
the Company or any Subsidiary with respect to any ongoing,
frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the
Company under Section 4001 of ERISA or Section 414 of the
Code (an "ERISA Affiliate"). The Company and its
Subsidiaries have not contributed, or been obligated to
contribute, to a multi-employer plan under Subtitle E of
Title IV of ERISA at any time since September 26, 1980. No
notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be
filed for any Pension Plan by the Company or by any ERISA
Affiliate within the 12-month period ending on the date
hereof or will be required to be filed in connection with
the transactions contemplated by this Agreement.
(iv) All contributions required to be made under the
terms of any Compensation and Benefit Plan as of the date
hereof have been timely made or have been reflected on the
most recent consolidated balance sheet included or
incorporated by reference in the Company Reports prior to
the date hereof. Neither any Pension Plan nor any single-
employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA.
Neither the Company nor its Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any
single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code. The Unionamerica 1993
Pension Scheme is sufficiently funded on an ongoing basis,
using actuarial assumptions within the range of generally
accepted actuarial practice to secure all benefits
currently, prospectively and contingently payable under the
1993 Scheme as of the Closing Date.
(v) Under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended
prior to the date hereof, the actuarially determined present
value of all "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Pension Plan's
most recent actuarial valuation), did not exceed the then
current value of the assets of such Pension Plan, and there
has been no material change in the financial condition of
such Pension Plan since the last day of the most recent plan
year.
(vi) Neither the Company nor its Subsidiaries have any
obligations for retiree health and life benefits under any
Compensation and Benefit Plan, except as set forth in
Section 5.1(h)(vi) of the Company Disclosure Letter. The
Company or its Subsidiaries may amend or terminate any such
plan under the terms of such plan at any time without
incurring any material liability thereunder.
(vii) Except as described in Section 5.1(h)(vii) of
the Company Disclosure Letter or as otherwise provided in
this Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement, either alone or
in connection with a subsequent termination of employment,
will not (x) entitle any employees of the Company or its
Subsidiaries to severance or redundancy pay, (y) accelerate
the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of
the Compensation and Benefit Plans or (z) result in any
breach or violation of, or a default under, any of the
Compensation and Benefit Plans.
(viii) Except as provided in Section 5.1(h)(viii) of
the Company Disclosure Letter, no amount that could be
received (whether in cash, options or property or the
vesting of cash, options or property) directly or indirectly
as a result of any of the transactions contemplated by this
Agreement by any employee, officer, director or independent
contractor of the Company who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation
Section 1.280G-1) will fail to be deductible under Section
280G of the Code.
(ix) Except as set forth in Section 5.1(h)(ix) of the
Company Disclosure Letter, no employees are seconded or
leased to the Company or any of its Subsidiaries.
(i) Compliance with Laws; Permits. (i) The business and
operations of the Company and the Company Insurance Subsidiaries
have been conducted in compliance with all applicable statutes,
regulations and rules of any jurisdiction of which each is
respectively subject regulating the business of insurance and all
applicable orders and directives of insurance regulatory
authorities and market conduct recommendations resulting from
market conduct examinations of insurance regulatory authorities
(collectively, "Insurance Laws"), except where the failure to so
conduct such business and operations is not, individually or in
the aggregate, reasonably likely to have a Company Material
Adverse Effect. Notwithstanding the generality of the foregoing,
except where the failure to do so is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse
Effect, each Company Insurance Subsidiary and its agents have
marketed, sold and issued insurance products in compliance, in
all respects, with Insurance Laws applicable to the business of
such Company Insurance Subsidiary and in the respective
jurisdictions in which such products have been sold, including,
without limitation, in compliance with (i) all applicable
published prohibitions against "redlining" or withdrawal of
business lines, (ii) all applicable published requirements
relating to the disclosure of the nature of insurance products as
policies of insurance and (iii) all applicable published
requirements relating to insurance product projections and
illustrations. In addition, (i) there is no pending or, to the
Knowledge of the Company, threatened charge by any insurance
regulatory authority that any of the Company Insurance
Subsidiaries has violated, nor any pending or, to the Knowledge
of the Company, threatened investigation by any insurance
regulatory authority with respect to possible violations of, any
applicable Insurance Laws where such violations are, individually
or in the aggregate, reasonably likely to have a Company Material
Adverse Effect; (ii) none of the Company Insurance Subsidiaries
is subject to any order or decree of any insurance regulatory
authority or limitation of license or restriction to conduct its
business relating specifically to such Company Insurance
Subsidiary which is, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect; and (iii) the
Company Insurance Subsidiaries have filed all reports required to
be filed with any insurance regulatory authority on or before the
date hereof as to which the failure to file such reports is,
individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect.
In addition to Insurance Laws, the businesses of each of
the Company, its Subsidiaries and Joint Ventures have not been,
and are not being, conducted in violation of any federal, state,
local or foreign Law, statute, ordinance, rule, regulation,
judgment, default under or non-compliance with order, injunction,
decree, arbitration award, agency requirement, writ, franchise, variance,
exemption, approval, license or permit of any Governmental Entity
(collectively with Insurance Laws, "Laws"), except for
violations, defaults or non-compliance that are not, individually
or in the aggregate, reasonably likely to have a Company
Material Adverse Effect. No investigation or review by any
Governmental Entity with respect to the Company or any of its
Subsidiaries or Joint Ventures is pending or, to the Knowledge of
the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, except for those the
outcome of which are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect. No
material change is required in the Company's or any of its
Subsidiaries' or any of its Joint Ventures' processes, properties
or procedures in connection with any such Laws, and the Company
has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of
the date hereof. The Company and its Subsidiaries and Joint
Ventures each has all permits, licenses, trademarks, patents,
trade names, domain names, copyrights, service marks, franchises,
variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its
business as presently conducted except those the absence of which
are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(j) Takeover Statutes. The board of directors of the
Company has adopted, approved and found advisable the Merger and
the other transactions contemplated by this Agreement, and such
adoptions, approvals and findings are sufficient to render
inapplicable to the Merger and the other transactions
contemplated by this Agreement the provisions of Section 203 of
the DGCL, the Rights Plan and the Rights. To the Knowledge of
the Company, no other "fair price", "moratorium", "control share
acquisition" or other form of anti-takeover statute or regulation
or similar Law (collectively, the "Takeover Statutes"), or any
provision of the Company's Certificate or By-Laws, applies or
purports to apply to the Merger or any of the transactions
contemplated by this Agreement.
(k) Environmental Matters. Except for such matters as are
not, individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect or as set forth in Section
5.1(k) to the Company Disclosure Letter: (i) to the Knowledge of
the Company, there are no liabilities of the Company or any of
its Subsidiaries or Joint Ventures of any kind whatsoever,
whether accrued, contingent, absolute, determined or otherwise
arising or relating to any Environmental Law, and there are no
facts, conditions, situations or set of circumstances that would
reasonably be expected to result in or be the basis for any such
liability; (ii) neither the Company nor any of its Subsidiaries
or Joint Ventures has received any notice, demand, letter, claim
or request for information alleging that the Company or any of
its Subsidiaries may be in violation of or liable under any
Environmental Law; or (iii) neither the Company nor any of its
Subsidiaries or Joint Ventures is subject to any orders, decrees,
injunctions or other written arrangements with any Governmental
Entity relating to liability under any Environmental Law or
relating to Hazardous Substances.
As used herein, the term "Environmental Law" means any
federal, state, local or foreign law, statute, ordinance,
regulation, judgment, order, decree, arbitration award or
common law, relating to: (A) the protection, investigation
or restoration of the environment, health and safety,
wildlife or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, odor, wetlands, pollution
or environmental contamination.
As used herein, the term "Hazardous Substance" means
any substance that is: (A) listed, classified or regulated
pursuant to any Environmental Law or (B) any petroleum
product or byproduct, asbestos-containing material, lead-
containing paint, polychlorinated biphenyls, radioactive
materials or radon.
(l) Taxes. Except as set forth in Section 5.1(l) of the
Company Disclosure Letter:
(i) the Company and each of its Subsidiaries have
filed all material Tax Returns (as defined below) that are
required by all applicable Laws to be filed by them, and
such Tax Returns are correct and complete, and have paid, or
made adequate provision for the payment of, all material
Taxes (as defined below) which have or may become due and
payable pursuant to said Tax Returns and all other Taxes,
governmental charges or assessments received to date other
than those Taxes being contested in good faith for which
adequate provision has been made on the most recent balance
sheet included in the Company Reports. The Tax Returns of
the Company and its Subsidiaries have been prepared, in all
material respects, in accordance with all applicable Laws
consistently applied;
(ii) all material Taxes which the Company and its
Subsidiaries are required by Law to withhold and collect
have been duly withheld and collected, and have been paid
over, in a timely manner, to the proper Taxing Authorities
(as defined below) to the extent due and payable;
(iii) no liens for a material amount of Taxes
exists with respect to any of the assets or properties of
the Company or its Subsidiaries, except for statutory liens
for Taxes not yet due and payable or that are being
contested in good faith;
(iv) neither the Company nor any of its Subsidiaries
have executed any written waiver to extend the applicable
statute of limitations in respect of any material Tax
liabilities of the Company or its Subsidiaries;
(v) neither the Company nor any of its Subsidiaries is
a party to any tax sharing agreement or arrangement, other
than between or among the Company and its Subsidiaries;
(vi) all of the federal income Tax Returns filed by or
on behalf of each of the Company and its Subsidiaries have
been examined by and settled with the IRS or the statute of
limitations with respect to the relevant Tax liability has
expired, for all taxable periods through and including the
period ended on December 31, 1995;
(vii) all material Taxes of the Company and its
Subsidiaries due with respect to any completed audit,
examination or deficiency litigation with any Taxing
Authority have been paid in full;
(viii) there is no suit, claim, dispute, audit,
deficiency or refund litigation pending with respect to
material Taxes of the Company or any of its Subsidiaries for
which adequate provision has not been made on the most
recent balance sheet included in the Company Reports;
(ix) none of the Company or any of its Subsidiaries is
bound by any currently effective private ruling, closing
agreement or similar agreement with any Taxing Authority
relating to a material amount of Taxes;
(x) none of the Company or any of its Subsidiaries is
a "consenting corporation" within the meaning of Section
341(f) of the Code;
(xi) any material liability of the Company or any of
its Subsidiaries for Taxes not yet due and payable have been
provided for on the most recent balance sheet included in
the Company Reports, in accordance with GAAP; and
(xii) the Company does not own any material
interests in real property located in the United States or
the Virgin Islands and to the best of the knowledge and
belief of the corporate officers with knowledge of the tax
affairs of the Company, the Company has not been a United
States real property holding corporation within the meaning
of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(l)(A)(ii) of the Code.
As used in this Agreement, (A) the term "Tax" (including,
with correlative meaning, the terms "Taxes" and "Taxable") shall
mean, with respect to any Person, (a) all taxes, domestic or
foreign, including without limitation any income (net, gross or
other, including recapture of any tax items such as investment
tax credits), alternative or add-on minimum tax, gross income,
gross receipts, premium, gains, sales, use, leasing, lease, user,
ad valorem, transfer, recording, franchise, profits, property
(real or personal, tangible or intangible), fuel, license,
withholding (whether on amounts paid to or by such Person),
payroll, employment, unemployment, social security, excise,
severance, stamp, occupation, windfall profit or environmental
tax, customs, duties, or other tax, or like assessments or
charges of any kind whatsoever, together with any interest,
levies, assessments, charges, penalties, additions or additional
amounts imposed with respect thereto (including, without
limitation, penalties for failure to file Tax Returns, or
interest on such amounts), (b) any known joint or several
liability of such Person with any other Person for the payment of
any amounts of the type described in clause (a) hereof, including
as a result of being, or having been at any time, a member of an
affiliated, consolidated, combined or unitary group, and (c) any
material liability of such Person for the payment in respect of
any amounts of the type described in (a) as a result of any
express or implied obligation to reimburse or
indemnify any other Person, including pursuant to any tax sharing
agreement or tax indemnity arrangement; (B) the term "Tax
Return(s)" shall mean all reports, statements and returns,
consolidated, combined, unitary or otherwise (including without
limitation informational returns), required to be filed with any
Taxing Authority; and (C) the term "Taxing Authority" shall mean
any Governmental Entity responsible for the imposition,
collection or administration of any Tax.
(m) Labor Matters.
(i) Except as set forth in Section 5.1(m) of the
Company Disclosure Letter, (a) the Company and each of its
Subsidiaries are in substantial compliance with all
applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and
hours; (b) neither the Company nor its Subsidiaries have
received written notice of any material investigation,
charge or complaint against the Company or its Subsidiaries
pending before the Equal Employment Opportunity Commission,
the National Labor Relations Board, or any other
Governmental Entity or court or other tribunal regarding an
unlawful employment practice; (c) there are no material
complaints, lawsuits or other proceedings pending, or to the
Knowledge of the Company, threatened by or on behalf of any
present or former employee of the Company, or any of its
Subsidiaries alleging breach of any express or implied
contract of employment; (d) neither the Company nor its
Subsidiaries have received notice that any material
representation petition respecting the employees of the
Company or its Subsidiaries has been filed with the National
Labor Relations Board; (e) the Company and each of its
Subsidiaries are and have been in substantial compliance
with all notice and other requirements under the Worker
Adjustment and Retaining Notification Act or similar state
statute. The Company or its Subsidiaries are not party to
any collective bargaining agreement and there is no pending
or threatened, nor has there been any since January 1, 1997,
labor strike, slowdown or stoppage against or affecting the
Company and its Subsidiaries.
(ii) Except as set forth in the Company Disclosure
Letter, the Company is not aware that any officer or key
employee, or that any group of key employees, intends to
terminate their employment with the Company or any of its
Subsidiaries, nor does the Company have a present intention
to terminate the employment of any of the foregoing.
(iii) The Company has distributed to Parent a true,
complete and accurate list containing the following
information: as of the date hereof, the number of employees
employed by the Company and its Subsidiaries (by employer or
location) including such employee's date of hire (or period
of service) and current base salary or rate of pay.
(n) Intellectual Property; Year 2000.
(i) The Company and/or each of its Subsidiaries and
Joint Ventures owns, or is licensed or otherwise possesses
legally enforceable rights to use all patents, trademarks,
brand marks, brand names, trade names, domain names, service
marks, copyrights, and any applications therefor,
technology, know-how, computer software programs, databases
or applications, and tangible or intangible proprietary
information or materials that are used in the business of
the Company and its Subsidiaries as currently conducted,
except for any such failures to own, be licensed or possess
that are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect. To the
Knowledge of the Company, all patents, trademarks, trade
names, domain names, service marks and copyrights held by
the Company and/or its Subsidiaries are valid and
subsisting.
(ii) All computer systems and computer software used by
the Company or any of its Subsidiaries, and, to the
Knowledge of the Company, the material computer systems and
computer software of its material commercial counterparties,
recognize the advent of the year A.D. 2000 and can correctly
recognize and manipulate date information relating to dates
on or after January 1, 2000 and the operation and
functionality of such computer systems and such computer
software has not been and will not be adversely affected by
the advent of the year A.D. 2000 or any manipulation of data
featuring information relating to dates before, on or after
January 1, 2000 ("Millennium Functionality"), except in each
case for such computer systems and computer software, the
failure of which to achieve Millennium Functionality,
individually or in the aggregate, has not had and is not
reasonably likely to have a Company Material Adverse Effect.
The costs of the adaptions necessary to achieve Millennium
Functionality have not had and are not reasonably likely to
have a Company Material Adverse Effect.
(iii) Except as are not, individually or in the
aggregate, reasonably likely to have a Company Material
Adverse Effect:
(A) the Company, its Subsidiaries and Joint
Ventures is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses,
sublicenses and other agreements as to which the Company is
a party and pursuant to which the Company is authorized to
use any third-party patents, trademarks, domain names,
service marks, and copyrights ("Third-Party Intellectual
Property Rights");
(B) no claims with respect to (I) the patents,
registered and material unregistered trademarks, domain
names and service marks, registered copyrights, trade names,
and any applications therefor owned by the Company or any
its Subsidiaries (the "Company Intellectual Property
Rights"); (II) any trade secret material to the Company; or
(III) Third-Party Intellectual Property Rights are currently
pending or, to the Knowledge of the Company, are threatened
by any Person;
(C) to the Knowledge of the Company, there are
no valid grounds for any bona fide claims (I) to the effect
that the sale, licensing or use of any product as now used,
sold or licensed or proposed for use, sale or license by the
Company or any of its Subsidiaries, infringes on any
copyright, patent, trademark, service ▇▇▇▇ or trade secret;
(II) against the use by the Company or any of its
Subsidiaries, of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer
software programs and applications used in the business of
the Company or any of its Subsidiaries as currently
conducted or as proposed to be conducted; (III) challenging
the ownership, validity or effectiveness of any of the
Company Intellectual Property Rights or other trade secret
material to the Company; or (IV) challenging the license or
legally enforceable right to use of the Third-Party
Intellectual Rights by the Company or any of its
Subsidiaries; and
(D) to the Knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of
the Company Intellectual Property Rights by any third party,
including any employee or former employee of the Company or
any of its Subsidiaries.
(o) Material Contracts. Except as set forth in Section
5.1(o) of the Company Disclosure Letter, all of the material
Contracts of the Company and its Subsidiaries that are required
to be described in the Company Reports or the Company SAP
Statements, or to be filed as exhibits thereto, are described in
the Company Reports or filed as exhibits thereto. Each material
Contract is valid, binding and enforceable against the Company
and its Subsidiaries in accordance with its terms and is in full
force and effect. True and complete copies of all such material
Contracts have been delivered or have been made available by the
Company to Parent. Neither the Company nor any of its
Subsidiaries nor, to the Knowledge of the Company, any other
party is in breach of or in default under any such Contract
except for such breaches and defaults as are not, individually or
in the aggregate, reasonably likely to have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries
is party to any Contract containing any provision or covenant
limiting in any respect the ability of the Company or any of its
Subsidiaries or, except as specifically identified on Section
5.1(o) of the Company Disclosure Letter, assuming the
consummation of the transactions contemplated by this Agreement,
Parent or any of its Subsidiaries to (i) sell any products or
services of or to any other Person, (ii) engage in any line of
business or (iii) compete with or to obtain products or services
from any Person or limiting the ability of any Person to provide
products or services to the Company or any of its Subsidiaries.
(p) Rights Plan.
(i) Prior to Parent entering into this Agreement, the
Company has taken all actions necessary such that, for all
purposes under the Rights Agreement, Parent shall not be
deemed an Acquiring Person (as defined in the Rights
Agreement), the Distribution Date (as defined in the Rights
Agreement) shall not be deemed to occur and the rights issuable
pursuant to the Rights Agreement (the "Rights") will not separate
from the shares of Common Stock, as a result of Parent's entering
into this Agreement or consummating the Merger and/or the
other transactions contemplated hereby.
(ii) The Company has taken all necessary action with
respect to all of the outstanding Rights so that, as of
immediately prior to the Effective Time, (A) neither the
Company, Parent nor Merger Subsidiary will have any
obligations under the Rights or the Rights Agreement and (B)
the holders of the Rights will have no rights under the
Rights or the Rights Agreement.
(q) Title to Assets; Liens. Except as set forth in Section
5.1(q) of the Company Disclosure Letter, the Company and its
Subsidiaries and Joint Ventures have good and marketable title to
all of their respective premium balances receivable, property,
equipment and other assets, and such assets are free and clear of
any mortgages, liens, charges, encumbrances, or title defects of
any nature whatsoever, except for (i) such mortgages, liens
charges, encumbrances or title defects which are not reasonably
likely, individually or in the aggregate, to have a Company
Material Adverse Effect and (ii) liens for Taxes not yet due or
payable or that are being contested in good faith. The Company
and its Subsidiaries have valid and enforceable leases for the
material premises and the equipment, furniture and fixtures
purported to be leased by them.
(r) Insurance Matters.
(i) Except as otherwise are not, individually or in
the aggregate, reasonably likely to have a Company Material
Adverse Effect, all policies, binders, slips, certificates,
annuity contracts, participation agreements and agents,
brokers, managing general agents agreements and other
agreements of insurance, whether individual or group,
(including all applications, supplements, endorsements,
riders and ancillary agreements in connection therewith)
that are or have been issued by the Company Insurance
Subsidiaries (the "Company Insurance Contracts") and any and
all marketing materials, are, and have been, to the extent
required under applicable Law, on forms approved by
applicable insurance regulatory authorities or which have
been filed and not objected to by such authorities within
the period provided for objection, and such forms comply in
all material respects with the insurance statutes,
regulations and rules applicable thereto and, as to premium
rates established by the Company or any Company Insurance
Subsidiary which are required to be filed with or approved
by insurance regulatory authorities, the rates have been so
filed or approved, the premiums charged conform thereto in
all material respects, and such premiums comply in all
material respects with the insurance statutes, regulations
and rules applicable thereto.
(ii) All reinsurance and coinsurance treaties or agreements,
including retrocessional agreements, to which the Company or any
Company Insurance Subsidiary is a party or under which the
Company or any Company Insurance Subsidiary has any
existing rights, obligations or liabilities are in full
force and effect, except for such treaties or agreements the
failure to be in full force and effect of which are not,
individually or in the aggregate, reasonably likely to have
a Company Material Adverse Effect. Neither the Company nor
any Company Insurance Subsidiary, nor, to the Knowledge of
the Company, any other party to a reinsurance or coinsurance
treaty or binder or other agreement to which the Company or
any Company Insurance Subsidiary is a party, is in default
in any material respect as to any provision thereof, and no
such agreement contains any provision providing that the
other party thereto may terminate such agreement by reason
of the transactions contemplated by this Agreement. The
Company has not received any notice to the effect that the
financial condition of any other party to any such agreement
is impaired with the result that a default thereunder may
reasonably be anticipated, whether or not such default may
be cured by the operation of any offset clause in such
agreement. No broker, insurer or reinsurer or group of
affiliated insurers or reinsurers accounted for the
direction to the Company and the Company Insurance
Subsidiaries or the ceding by the Company and the Company
Insurance Subsidiaries of insurance or reinsurance business
in an aggregate amount equal to two percent or more of the
consolidated gross premium income of the Company and the
Company Insurance Subsidiaries for the year ended
December 31, 1998. The Company SAP Statements accurately
reflect the extent to which, pursuant to Insurance Laws, the
Company and/or the Company Insurance Subsidiaries are
entitled to take credit for reinsurance.
(iii) Prior to the date hereof, the Company has
provided to Parent a true and complete copy of all actuarial
reports prepared by actuaries, independent or otherwise,
with respect to the Company or any Company Insurance
Subsidiary since December 31, 1996, and all attachments,
addenda, supplements and modifications thereto (the "Company
Actuarial Analyses"). The information and data furnished by
the Company or any Company Insurance Subsidiary to its
independent actuaries in connection with the preparation of
the Company Actuarial Analyses were accurate in all material
respects. Each Company Actuarial Analysis was based upon an
accurate inventory of policies in force for the Company and
the Company Insurance Subsidiaries, as the case may be, at
the relevant time of preparation, was prepared using
appropriate modeling procedures accurately applied and in
conformity with generally accepted actuarial standards
consistently applied, and the projections contained therein
were properly prepared in accordance with the assumptions
stated therein.
(iv) Except as set forth in Section 5.1(r)(iv) of the
Company Disclosure Letter, none of Standard & Poor's
Corporation, ▇▇▇▇▇'▇ Investors Service, Inc. or A.M. Best
Company has announced that it has under surveillance or
review its rating of the financial strength or claims-paying
ability of any Company Insurance Subsidiary and the Company,
as of the date hereof, has no Knowledge that any rating
presently held by the Company Insurance Subsidiaries is
likely to be modified, qualified, lowered or placed under
such surveillance for any reason, including as a result of
the transactions contemplated hereby.
(v) Except as is not reasonably likely to have a
Company Material Adverse Effect, all annuity contracts and
life insurance policies issued by each Company Insurance
Subsidiary to an annuity holder domiciled in the United
States meet all definitional or other requirements for
qualification under the Code section applicable (or intended
to be applicable) to such annuity contracts or life
insurance policies, including, without limitation, the
following: (A) each life insurance policy meets the
requirements of sections 101(f), 817(h) or 7702 of the Code,
as applicable; (B) no life insurance contract issued by any
Company Insurance Company is a "modified endowment contract"
within the meaning of section 7702A of the Code unless and
to the extent that the holders of the policies have been
notified of their classification; (C) each annuity contract
issued, entered into or sold by any Company Insurance
Subsidiary qualifies as an annuity under federal tax Law;
(D) each annuity contract meets the requirements of, and has
been administered consistent with section 817(h) and 72 of
the Code including but not limited to section 72(s) of the
Code (except for those contracts specifically excluded from
such requirement pursuant to section 72(s)(5) of the Code);
(E) each annuity contract intended to qualify under
sections 130, 403(a), 403(b) or 408(b) of the Code contains
all provisions required for qualification under such
sections of the Code; (F) each annuity contract marketed as,
or in connection with, plans that are intended to qualify
under section 401, 403, 408 or 457 of the Code complies with
the requirements of such section; and (G) none of the
Company Insurance Subsidiaries have entered into any
agreement or are involved in any discussions or negotiations
and there are no audits, examinations, investigations or
other proceedings with the IRS with respect to the failure
of any life insurance policy under section 7702 or 817(h) of
the Code or the failure of any annuity contract to meet the
requirements of section 72(s) of the Code. There are no
"hold harmless" indemnification agreements respecting the
tax qualification or treatment of any product or plan sold,
issued, entered into or administered by the Company
Insurance Subsidiaries, and there have been no claims
asserted by any Person under such "hold harmless"
indemnification agreements so set forth.
(vi) All material insurance policies maintained by the
Company or any of its Subsidiaries or Joint Ventures are
with reputable insurance carriers, provide reasonable
coverage for all normal risks incident to the business and
are, to the Knowledge of the Company, in character and
amount at least equivalent to that carried by Persons
engaged in similar businesses and subject to the same or
similar perils or hazards, and are sufficient for compliance
with all Laws currently applicable to the Company or any of
its Subsidiaries or Joint Ventures, except for any such
failures to maintain insurance policies that, individually
or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect. Neither the Company nor
any of its Subsidiaries or Joint Ventures has received any
notice of cancellation or termination with respect to any
insurance policy of the Company or any of its Subsidiaries
or Joint Ventures.
(s) Liabilities and Reserves.
(i) The reserves carried on the Company SAP Statements
of each Company Insurance Subsidiary for future insurance
policy benefits, losses, claims and similar purposes were,
as of the respective dates of such Company SAP Statements,
in compliance in all material respects with the requirements
for reserves established by the insurance departments of the
state of domicile of such Company Insurance Subsidiary, were
determined in all material respects in accordance with
generally accepted actuarial standards and principles
consistently applied, and were fairly stated in all material
respects in accordance with sound actuarial and statutory
accounting principles. Except as set forth in Section 5(r)
of the Company Disclosure Letter, such reserves were
adequate in the aggregate to cover the total amount of all
reasonably anticipated liabilities of the Company and each
Company Insurance Subsidiary under all outstanding
insurance, reinsurance and other applicable agreements as of
the respective dates of such Company SAP Statements. The
admitted assets of each Company Insurance Subsidiary as
determined under applicable Laws are in an amount at least
equal to the minimum amounts required by such applicable
Laws. In addition, the Company provided to Parent copies of
substantially all work papers used as the basis for
establishing the reserves for the Company and the Company
Insurance Subsidiaries at December 31, 1997 and December 31,
1998, respectively.
(ii) Except for regular periodic assessments in the
ordinary course of business or assessments based on
developments which are publicly known within the insurance
industry no claim or assessment is pending or, to the
Knowledge of the Company, threatened against any Company
Insurance Subsidiary which is peculiar or unique to such
Company Insurance Subsidiary by any state insurance guaranty
associations in connection with such association's fund
relating to insolvent insurers which if determined
adversely, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect.
(t) Brokers and Finders. Neither the Company nor any of
its officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the Merger or the
other transactions contemplated in this Agreement except that the
Company has employed ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. as its financial
advisor, the arrangements with which have been disclosed to
Parent prior to the date hereof.
(u) Separate Account; Investment Advisor. None of the
Company Insurance Subsidiaries maintains any separate accounts.
Neither the Company nor any of its Subsidiaries conducts
activities of or is otherwise deemed under applicable Law to
control an "investment advisor" as such term is defined in
Section 2(a)(20) of the 1940 Act, whether or not registered under
the Investment Advisers Act of 1940, as amended. Neither the
Company nor any of its Subsidiaries is an "investment company" as
defined under the 1940 Act, and neither the Company nor any of
its Subsidiaries sponsors any Person that is such an investment
company.
(v) Joint Ventures. Section 5.1(v) of the Company
Disclosure Letter sets forth a correct and complete list of the
Company's Joint Ventures, including, for each such entity (i) its
name and the Company's interest therein, (ii) a brief description
of its principal line of business, (iii) a summary of all
restrictions (contractual, regulatory or otherwise) which are
reasonably likely to have a Parent Material Adverse Effect (as
defined in Section 5.2(b)), and (iv) a summary of any commitment
(whether or not contingent) for future investment of capital or
otherwise to be directly or indirectly made by Parent, the
Company or any of their respective Subsidiaries. With respect to
each of the Company's Joint Ventures, the Company has made
available to Parent correct and complete copies (or descriptions
of oral agreements, if any) of all agreements which (i) have
affected or are reasonably likely to affect the ability of
Parent, together with the remaining co-owners of each such
entity, to direct and control its business operations after
consummation of the Merger or (ii) evidence any commitment
(whether or not contingent) for future investment of capital or
otherwise to be directly or indirectly made by Parent, the
Company or any of their respective Subsidiaries.
V.2. Representations and Warranties of Parent and Merger
Subsidiary. Except as set forth in the corresponding sections or
subsections of the disclosure letter delivered to the Company by
Parent on or prior to entering into this Agreement (the "Parent
Disclosure Letter") or in any Parent Report (as hereinafter
defined) filed prior to the date hereof, Parent and Merger
Subsidiary each hereby represent and warrant to the Company that:
(a) Capitalization of Merger Subsidiary. The authorized
stock of Merger Subsidiary consists of 1,000 shares of Common
Stock, par value $.01 per share, all of which are duly
authorized, validly issued and outstanding, fully paid and non-
assessable. All of the issued and outstanding stock of Merger
Subsidiary is, and at the Effective Time will be, owned directly
or indirectly by Parent, and there are (i) no other shares of
stock or voting securities of Merger Subsidiary, (ii) no
securities of Merger Subsidiary convertible into or exchangeable
for shares of stock or voting securities of Merger Subsidiary and
(iii) no options or other rights to acquire from Merger
Subsidiary, and no obligations of Merger Subsidiary to issue or
deliver, any stock, voting securities or securities convertible
into or exchangeable for stock or voting securities of Merger
Subsidiary. Merger Subsidiary has not conducted any business
prior to the date hereof and has no, and prior to the Effective
Time will have no, assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant to
this Agreement and the Merger and the other transactions
contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of
Parent and Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the Laws of its
jurisdiction of incorporation and has all requisite corporate
power and authority to own and operate its properties and assets
and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation
of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in
such good standing, is not reasonably likely, individually or in
the aggregate, to have a Parent Material Adverse Effect (as
defined below).
As used in this Agreement, the term "Parent Material Adverse
Effect" means a material adverse effect on the condition
(financial or otherwise), assets, properties, business,
operations, results of operations or prospects of Parent and its
Subsidiaries taken as a whole, or any effect which prevents,
materially delays or materially impairs the ability of Parent or
Merger Subsidiary to consummate the transactions contemplated by
this Agreement.
(c) Corporate Authority. Each of Parent and Merger
Subsidiary has all requisite corporate power and authority and
has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to
consummate the Merger. This Agreement is a valid and binding
agreement of Parent and Merger Subsidiary, enforceable against
each of Parent and Merger Subsidiary in accordance with its
terms, subject to the Bankruptcy and Equity Exception.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant
to Section 1.3, (B) under the HSR Act, the Securities Act
and the Exchange Act, (C) to comply with state securities or
"blue sky" Laws, (D) required to be made with the NYSE, and
(E) the filing of appropriate documents with, and approval
of, the respective Commissioners of Insurance of the states
set forth in Section 5.1(d) of the Company Disclosure
Letter, and (F) required to be made with the UK Office of
Fair Trading or the Commission of the European Communities,
the UK Financial Services Authority, the Council of Lloyds
and the Minister for Enterprise Trade and Employment of
Ireland, and such notices and consents and expiry of waiting
periods as may be required under the antitrust notification
insurance Laws of any state in which the Company, Parent or
any of their respective subsidiaries is domiciled or does
business, no notices, reports or other filings are required
to be made by Parent or Merger Subsidiary with, nor are any
consents, registrations, approvals, permits or
authorizations required to be obtained by Parent or Merger
Subsidiary from, any Governmental Entity, in connection with
the execution and delivery of this Agreement by Parent and
Merger Subsidiary and the consummation by Parent and Merger
Subsidiary of the Merger and the other transactions
contemplated hereby, except those that the failure to make
or obtain are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect.
(ii) The execution, delivery and performance of this
Agreement by Parent and Merger Subsidiary do not, and the
consummation by Parent and Merger Subsidiary of the Merger
and the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a
default under, the Governing Documents of Parent and Merger
Subsidiary or the comparable governing instruments of any of
its Subsidiaries, (B) a breach or violation of, or a default
under, the acceleration of any obligations or the creation
of a lien, pledge, security interest or other encumbrance on
the assets of Parent or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to any
Contracts binding upon Parent or any of its Subsidiaries or
(provided, as to consummation, the filings and notices are
made, and approvals are obtained, as referred to in Section
5.2(d)(i)) or any Law or governmental or non-governmental
permit or license to which Parent or any of its Subsidiaries
is subject or (C) any change in the rights or obligations of
any party under any of the Contracts, except, in the case of
clause (B) or (C) above, for breach, violation, default,
acceleration, creation or change that is not, individually
or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(e) Financing. Parent has, or will have prior to the
Effective Time, sufficient funds available to pay the Merger
Consideration and all fees and expenses related to the
transactions contemplated by this Agreement.
(f) Brokers and Finders. Neither Parent nor any of its
officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finders, fees in connection with the Merger or the
other transactions contemplated by this Agreement, except that
Parent has employed Credit Suisse First Boston as its financial
advisors.
(g) Share Ownership. Parent, Merger Subsidiary and their
respective Subsidiaries beneficially own in the aggregate 484,500
shares of Common Stock.
ARTICLE VI
COVENANTS
VI.1. Interim Operations. Except as set forth in
Section 6.1 of the Company Disclosure Letter, the Company
covenants and agrees as to itself and its Subsidiaries and
undertakes as to itself and its Subsidiaries to use commercially
reasonable efforts in relation to its Joint Ventures as though
for the purpose of the remainder of this Article VI its Joint
Ventures were Subsidiaries that, after the date hereof and prior
to the Effective Time (unless Parent shall otherwise approve in
writing, which shall not be unreasonably withheld or delayed, and
except as otherwise expressly contemplated by this Agreement):
(a) its and its Subsidiaries' businesses shall be conducted in
the ordinary and usual course (it being understood and agreed
that nothing contained herein shall permit the Company to enter
into or engage in (through acquisition, product extension or
otherwise) the business of selling any products or services
materially different from existing products or services of the
Company and its Subsidiaries, to enter into or engage in new
lines of business, to utilize new distribution methods, expand
into new geographic territories outside of the United States, or
to exit any current business of the Company or its Subsidiaries,
without Parent's prior written approval);
(b) to the extent consistent with (a) above it and its
Subsidiaries shall use their respective reasonable best efforts
to preserve its business organization intact and maintain its
existing relations and goodwill with customers, suppliers,
reinsurers, distributors, creditors, lessors, employees and
business associates;
(c) it shall not (i) issue, sell, pledge, dispose of or
encumber any capital stock owned by it in any of its
Subsidiaries; (ii) amend its Charter or by-laws or amend, modify
or terminate the Rights Agreement except as contemplated by
Section 5.1(o)(ii); (iii) split, combine or reclassify its
outstanding shares of capital stock; (iv) authorize, declare, set
aside or pay any dividend payable in cash, stock or property in
respect of any capital stock other than dividends from its direct
or indirect wholly-owned Subsidiaries and other than regular
quarterly dividends paid by the Company on its Common Shares not
in excess of $.09 per share, with usual record and payment dates
and in accordance with the Company's past dividend policy; or
(v) repurchase, redeem or otherwise acquire, except in connection
with any of the Company Stock Plans, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its
stock or any securities convertible into or exchangeable or
exercisable for any shares of its stock;
(d) neither it nor any of its Subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights of any kind to acquire,
any shares of its capital stock of any class or any other
property or assets (other than Shares issuable pursuant to
options outstanding on the date hereof under any of the Company
Stock Plans); (ii) other than in the ordinary and usual course of
business, transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of or encumber any other property or assets
(including capital stock of any of its Subsidiaries) or incur or
modify any material indebtedness or other liability; (iii) make
or authorize or commit for any capital expenditures, including
entering into capital lease obligations, other than in amounts
not exceeding $1 million in the aggregate or, by any means, make
any acquisition of, or investment in, assets or stock of any
other Person or entity, including by way of assumption
reinsurance, in excess of $100,000 individually or $1 million in
the aggregate (other than in connection with ordinary course
investment and reinsurance activities); (iv) enter into, amend or
terminate any material Contract or (v) permit any insurance
policy naming it as a beneficiary or loss-payable payee to be
canceled or terminated except in the ordinary and usual course of
business;
(e) neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards
under, amend or otherwise modify, any employee benefit or
incentive plan or employment or other agreement (including the
Compensation and Benefit Plans) or hire or terminate the
employment of key employees, or increase the salary, wage, bonus
or other compensation of any employees except increases occurring
in the ordinary and usual course of business (which shall include
normal periodic performance reviews and related compensation and
benefit increases);
(f) neither it nor any of its Subsidiaries shall pay,
discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge,
settlement or satisfaction of claims, liabilities or obligations
legally due and payable and arising in the ordinary and usual
course of business and such other claims, liabilities or
obligations as shall not exceed $1 million in the aggregate and
other than regular semi-annual payments paid by MMI Capital Trust
I on its 7 5/8% Series B Capital Trust Securities (the "Trust
Securities") pursuant to the Indenture, dated December 23, 1997,
between The Chase Manhattan Bank and the Company, pursuant to
which the Trust Securities were issued;
(g) neither it nor any of its Subsidiaries shall make,
change or revoke any Tax election, settle or compromise any
material Tax liability arising in any audit, change its method of
accounting if such change would have a material impact on Taxes,
enter into any closing or other agreement with respect to a
material amount of Taxes, file a request for refund of a material
amount of Taxes (but not including the prosecution of any refund
claim pending on the date hereof), or file an amended Tax Return
if such Tax Return is materially different from the original
return to which it relates, except, in each case, (i) in the
ordinary course of business and consistent with the Company's
past practice in respect of the Tax at issue in the jurisdiction
in question or (ii) with the consent of Parent, such consent not
to be unreasonably withheld;
(h) neither it nor any of its Subsidiaries shall enter into
any agreement containing any provision or covenant limiting in
any material respect the ability of the Company or any Subsidiary
or Affiliate to (A) sell any products or services of or to any
other Person, (B) engage in any line of business or (C) compete
with or to obtain products or services from any Person or
limiting the ability of any Person to provide products or
services to the Company or any of its Subsidiaries or Affiliates;
(i) neither it nor any of its Subsidiaries shall enter into
any new quota share or other reinsurance transaction (A) which
does not contain standard cancellation and termination
provisions, (B) which, except in the ordinary course of business,
materially increases or reduces the Company Insurance
Subsidiaries' consolidated ratio of net written premiums to gross
written premiums or (C) pursuant to which $1 million or more in
gross written premiums are ceded by the Company Insurance
Subsidiaries to any Person other than the Company or any of its
Subsidiaries;
(j) neither it nor any of its Subsidiaries shall take any
action or omit to take any action that would cause any of its
representations and warranties herein to become untrue in any
material respect;
(k) neither it nor any of the Company Insurance Subsidiaries
will alter or amend in any material respect their existing
underwriting, claim handling, loss control, investment,
actuarial, financial reporting or accounting practices,
guidelines or policies or in any material assumption underlying
an actuarial practice or policy, except as may be required by
GAAP or SAP; and
(l) neither it nor any of its Subsidiaries will authorize
or enter into an agreement to do any of the foregoing.
VI.2. Acquisition Proposals. The Company will not, and
will not permit or cause any of its Subsidiaries or any of their
officers and directors to, and shall direct its and its
Subsidiaries' employees, agents and Representatives (as defined
below) not to, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to (i) a merger,
reorganization, share exchange, consolidation, business
combination, recapitalization or similar transaction involving
the Company, (ii) the purchase of 15% or more of the assets
(including equity securities of the Company's subsidiaries) of
the Company and its subsidiaries taken as a whole, or (iii) the
purchase of Shares not in the ordinary course (purchases pursuant
to a Compensation and Benefit Plan being in the ordinary course),
but not, in any case, including the matters set forth in Section
6.2(a) of the Company Disclosure Letter (any such proposal or
offer being hereinafter referred to as an "Acquisition
Proposal"). The Company will not, and will not permit or cause
any of its Subsidiaries to, and will use commercially reasonable
efforts to cause any of the officers and directors of it or its
Subsidiaries not to and shall direct its and its Subsidiaries'
employees, agents and Representatives not to, directly or
indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions
with, any Person relating to an Acquisition Proposal, whether
made before or after the date of this Agreement, or otherwise
facilitate any effort or attempt to make or implement an
Acquisition Proposal (including, without limitation, by means of
an amendment to the Rights Agreement); provided, however, that
nothing contained in this Agreement shall prevent the Company or
its board of directors from (i) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition
Proposal or (ii) if the Merger shall not have been approved by
the Company Requisite Vote by such date (A) providing information
in response to a request therefor by a Person who has made an
unsolicited bona fide written Acquisition Proposal if the board
of directors receives from the Person so requesting such
information an executed confidentiality agreement on terms
substantially equivalent to those contained in the
Confidentiality Agreement (as defined below); (B) engaging in any
negotiations or discussions with any Person who has made an
unsolicited bona fide written Acquisition Proposal; or
(C) recommending such an Acquisition Proposal to the stockholders
of the Company, if and only to the extent that, (i) in each such
case referred to in clause (A), (B) or (C) above, the board of
directors of the Company determines in good faith after
consultation with outside legal counsel that such action is
necessary in order for its directors to comply with their
respective fiduciary duties under applicable Law and (ii) in each
case referred to in clause (B) or (C) above, the board of
directors of the Company determines in good faith (after
consultation with its financial advisor) that such Acquisition
Proposal, if accepted, is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects
of the proposal and the Person making the proposal and would, if
consummated, be reasonably likely to result in a more favorable
transaction than the transaction contemplated by this Agreement
(any such more favorable Acquisition Proposal being referred to
in this Agreement as a "Superior Proposal"). The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing. The Company agrees that it will take
the necessary steps to promptly inform the individuals or entities
referred to in the first sentence hereof of the obligations undertaken in
this Section 6.2 and in the Confidentiality Agreement (as defined
in Section 9.7). The Company will notify Parent promptly, but in
any event not later than one day following receipt, if any such
inquiries, proposals or offers are received by, any such
information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, any of
its Representatives indicating, in connection with such notice,
the name of such Person and the material terms and conditions of
any proposals or offers and thereafter shall keep Parent
informed, on a current basis, of the status and terms of any such
proposals or offers and the status of any such negotiations or
discussions.
VI.3. Stockholders Meetings. The Company will take, in
accordance with its Charter and by-laws, all action necessary to
convene a meeting of the holders of shares of Common Stock (the
"Stockholders Meeting") as promptly as practicable, but in no
event more than 35 days (to the extent legally permissible),
after the Proxy Statement (as defined in Section 6.4) is first
mailed to stockholders to consider and vote upon the approval of
the Merger. Subject to fiduciary obligations under applicable
Law, the Company's board of directors shall recommend such
approval, shall not withdraw or modify such recommendation and
shall take all lawful action to solicit such approval. Without
limiting the generality of the foregoing, in the event that the
Company's board of directors withdraws or modifies its
recommendation, the Company nonetheless shall cause the
Stockholders Meeting to be convened and a vote taken with respect
to the Merger and the board of directors shall communicate to the
Company's stockholders its basis for such withdrawal or
modification as contemplated by Section 251 of the DGCL.
VI.4. Filings; Other Actions; Notification.
(a) In connection with the Stockholders Meeting, the
Company shall prepare and deliver to Parent as promptly as
practicable after the date hereof a draft of a proxy statement
(the "Proxy Statement"). Thereafter, the Company and Parent
shall use their reasonable efforts to cooperate fully to make
such changes to the Proxy Statement as may be reasonably
requested by Parent or otherwise may be appropriate, file the
Proxy Statement with the SEC as soon as practicable, and respond
promptly to any SEC comments. Upon filing the final, definitive
Proxy Statement with the SEC, the Company shall mail such Proxy
Statement to its stockholders.
(b) The Company and Parent shall use and shall cause their
"ultimate parent entities," (if applicable) to use, their
reasonable best efforts to as promptly as practicable file
notifications under the HSR Act in connection with the Merger and
the transactions contemplated hereby, and to respond as promptly
as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of
Justice for additional information or documentation and to
respond as promptly as practicable to all inquiries and requests
received from any State Attorney General or other Governmental
Entity in connection with antitrust matters.
(c) The Company and Parent shall cooperate with each other
and use (and shall cause their respective Subsidiaries to use)
all reasonable efforts (i) to cause to be done all things,
necessary, proper or advisable on its part under this Agreement
and applicable Laws to consummate and make effective the
transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary notices,
reports and other filings, and (ii) to obtain as promptly as
practicable all consents, registrations, approvals, permits and
authorizations necessary or advisable to be obtained from any
third party and/or any Governmental Entity in connection with, as
a result of or in order to consummate the transactions
contemplated by this Agreement; provided, however, that nothing
in this Section 6.5 shall require, or be construed to require,
Parent, in connection with the receipt of any regulatory
approval, to proffer to, or agree to any conditions relating to,
or changes or restriction in, the operations of any such assets
or businesses which, in either case, individually or in the
aggregate with all other agreements, changes and restrictions,
could, in the reasonable judgment of the board of directors of
Parent, materially and adversely impact the economic or business
benefits to Parent and its Subsidiaries of the transactions
contemplated by this Agreement or materially impair the ability
of any Parent Company (including the Company following the
Effective Time), to conduct its business in the manner as such
business is now being conducted. Parent and Merger Subsidiary
shall use reasonable best efforts to cause to be filed such
statements on Form A as are required to be filed with the
Governmental Entities identified in Section 5.1(d) of the Company
Disclosure Letter by January 21, 2000. It is expressly
understood by the parties hereto that the representatives of the
Company and Parent respectively shall have the right to attend
and participate in any hearing, proceeding, meeting or conference
before or with a Governmental Entity relating to the transactions
contemplated hereby. In furtherance of the foregoing, the Company
and Parent shall provide each other reasonable advance notice of
any such hearing, proceeding, meeting or conference. Subject to
applicable Laws relating to the exchange of information, Parent
and the Company shall have the right to review in advance, and to
the extent practicable each will consult the other on, all the
information relating to Parent or the Company, as the case may
be, and any of their respective Subsidiaries, that appear in any
filing made with, or written materials submitted to any
Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement. In exercising the
foregoing right, each of the Company and Parent shall act
reasonably and as promptly as practicable.
(d) The Company and Parent each shall, upon request by the
other, furnish the other with all information concerning itself,
its Subsidiaries, directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in
connection with the Proxy Statement or any other statement,
filing, notice or application made by or on behalf of Parent, the
Company or any of their respective Subsidiaries to any third
party and/or any Governmental Entity in connection with the
Merger and the other transactions contemplated by this Agreement.
(e) (i) The Company and Parent each shall keep the other
apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing
the other with copies of notices or other communications received
by Parent or the Company, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Entity
with respect to the Merger and the other transactions
contemplated by this Agreement. The Company and Parent each
shall give prompt notice to the other of any change that is
reasonably likely to result in a Company Material Adverse Effect
or a Parent Material Adverse Effect, respectively.
(ii) The Company and Parent each shall give prompt
notice to the other of
(A) the occurrence, or nonoccurrence, of any
event the occurrence, or nonoccurrence, of which would be
likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material
respect at or prior to the Effective Time and (B) any
material failure of any party to comply with or satisfy any
covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the
delivery of notice pursuant to this Section 6.4(e)(ii) shall
not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
VI.5. Access.
Upon reasonable notice, and except as may otherwise be
required by applicable Law, the Company shall (and shall cause
its Subsidiaries to) afford Parent's directors, officers,
employees, counsel, accountants, financial advisors,
environmental consultants, and other authorized agents and
representatives ("Representatives") reasonable access, during
normal business hours throughout the period prior to the earlier
of the termination of this Agreement or the Effective Time, to
the Company's and its Subsidiaries' management, properties,
books, contracts, records and personnel (and will use
commercially reasonable efforts to provide access to its auditors
(including such auditors' work papers)) and, during such period,
shall (and shall cause its Subsidiaries to) furnish promptly to
Parent all information concerning the Company's and its
Subsidiaries' business, properties and personnel as may
reasonably be requested; provided that no investigation pursuant
to this Section shall affect or be deemed to modify any
representation or warranty made by the Company, and provided,
further, that the foregoing shall not require the Company to
permit any inspection, or to disclose any information, that in
the reasonable judgment of the board of directors of the Company
would result in the disclosure of any trade secrets of third
parties or violate any of its obligations with respect to
confidentiality if the Company shall have used all reasonable
efforts to obtain the consent of such third party to such
inspection or disclosure. All requests for information made
pursuant to this Section 6.5(a) shall be directed to an executive
officer of the Company or such Person as may be designated by the
Company's officers. All such information shall be governed by
the terms of the Confidentiality Agreement (as defined below).
VI.6. Stock Exchange De-listing. The Surviving
Corporation shall use its best efforts to cause the shares of
Common Stock to be de-listed from the NYSE and de-registered
under the Exchange Act as soon as practicable following the
Effective Time.
VI.7. Publicity. The initial press release relating to
the transaction contemplated by this Agreement shall be a joint
press release and thereafter the Company and Parent shall consult
with each other prior to issuing any press releases or otherwise
making public announcements with respect to the Merger and the
other transactions contemplated by this Agreement and prior to
making any filings with any third party and/or any Governmental
Entity (including any national securities exchange) with respect
thereto, except as may be required by Law or by obligations
pursuant to any listing agreement with or rules of any national
or foreign securities exchange.
VI.8. Benefits.
(a) Stock Options and Stock Plans. Prior to the Effective
Time, the Company shall take all such actions as may be necessary
to cause each Company Option outstanding pursuant to the Company
Stock Plans, whether or not then exercisable, to be canceled as
of the Effective Time and to thereafter only entitle the holder
thereof, upon surrender thereof, to receive an amount in cash
equal to the excess, if any, of the Merger Consideration over the
exercise price per Share of such Company Option multiplied by the
number of Shares previously subject to such Company Option, less
any required withholding taxes. As promptly as practicable
following the execution of this Agreement, the Company shall mail
to each Person who is a holder of outstanding Company Options
granted pursuant to the Company Stock Plans (regardless of
whether such stock options are vested or exercisable at the time)
a letter in a form acceptable to Parent which describes the
treatment of and payment for such options pursuant to this
Section 6.8(a) and provides instructions for use in obtaining
payment for such options hereunder. Each such holder shall sign
a release by which such holder effectively relinquishes all
rights with respect to such holder's outstanding stock options
upon payment therefor in accordance with this Section 6.8(a)
prior to or as soon as practicable following the Closing. The
Company shall take all actions necessary to cause the Company
Stock Plans to be terminated effective as of the Effective Time.
(b) Employee Benefits. Parent agrees that, during the
period commencing at the Effective Time and ending on the first
anniversary thereof, the employees of the Company and its
Subsidiaries will continue to be provided with benefits (other
than benefits involving the issuance of Shares) that are no less
favorable in the aggregate than those currently provided by the
Company and its Subsidiaries to such employees under the
Company's and its Subsidiaries' existing employee benefit plans
which are listed in Section 6.8(b) of the Company Disclosure
Letter. To the extent that employees of the Company and its
Subsidiaries become participants in any plans maintained by
Parent or its Subsidiaries, (i) any such employees will receive
credit under such plans of Parent or any of its Subsidiaries for
service with the Company or any of its Subsidiaries or
predecessors (to the extent service with such predecessors was
credited under the Compensation and Benefit Plans disclosed in the Company
Disclosure Letter) prior to the Effective Time for the purpose of
determining eligibility and vesting, but not for purposes of
benefit accrual, and (ii) and Parent shall cause any and all pre-
existing condition limitations (to the extent such limitations
did not apply to a pre-existing condition under the Compensation
and Benefit Plans) and eligibility waiting periods under group
health plans of the Parent or any of its Subsidiaries to be
waived with respect to such participants and their eligible
dependents. With respect to any plan maintained by Parent or its
Subsidiaries which covers employees of the Company or its
Subsidiaries prior to January 1, 2001, Parent shall, or shall
cause the Surviving Corporation to, provide each employee with
credit for any co-payments and deductibles paid prior to the plan
entry date in satisfying any applicable deductible or out-of-
pocket requirements under any welfare plans that such employees
are eligible to participate in after the plan entry date. All
discretionary awards and benefits under any employee benefit
plans of Parent or any of its Subsidiaries shall be subject to
the discretion of the Persons or committee administering such
plans.
VI.9. Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Exchange Agent, in
connection with the transactions contemplated in Article IV.
Except as otherwise provided in Section 8.5(b), whether or not
the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the
party incurring such expense, except that expenses incurred in
connection with the printing and mailing of the Proxy Statement
shall be shared equally by Parent and the Company, up to a
maximum of $150,000 by Parent.
VI.10. Indemnification; Directors' and Officers'
Insurance.
(a) From and after the Effective Time, Parent agrees that
it will indemnify and hold harmless each present and former
director and officer of the Company (when acting in such
capacity), determined as of the Effective Time (each, an
Indemnified Party and, collectively, the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to
the fullest extent that the Company would have been permitted
under Delaware Law and its Charter or by-laws in effect on the
date hereof to indemnify such Person (and Parent shall also
advance expenses as incurred to the fullest extent permitted
under applicable Law provided the Person to whom expenses are
advanced provides a written affirmation of his or her good faith
belief that the standard of conduct necessary for indemnification
has been met), and an undertaking to repay such advances if it is
ultimately determined that such Person is not entitled to
indemnification). In addition, from and after the Effective
Time, Parent agrees that it will not make any changes to the
Charter or by-laws of the Company and/or its Subsidiaries that
would adversely affect the indemnification provided to any
Persons under its Charter or by-laws in effect on the date
hereof.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 6.10, upon learning of any
such claim, action, suit, proceeding or investigation, shall
promptly notify Parent thereof, but the failure to so notify
shall not relieve Parent of any liability it may have to such
Indemnified Party if such failure does not materially prejudice
the indemnifying party. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) Parent or the Surviving
Corporation shall have the right to assume the defense thereof
and Parent shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection
with the defense thereof, except that if Parent or the Surviving
Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are issues which raise
conflicts of interest between Parent or the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Parent or the Surviving
Corporation shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements
therefor are received; provided, however, that Parent shall be
obligated pursuant to this paragraph (b) to pay for only one firm
of counsel for all Indemnified Parties in any jurisdiction unless
the use of one counsel for such Indemnified Parties would present
such counsel with a conflict of interest, (ii) the Indemnified
Parties will cooperate in the defense of any such matter and
(iii) Parent shall not be liable for any settlement effected
without its prior written consent; and provided, further, that
Parent shall not have any obligation hereunder to any Indemnified
Party if and when a court of competent jurisdiction shall
ultimately determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable Law.
(c) The Surviving Corporation shall maintain the Company's
existing officers' and directors' liability insurance ("D&O
Insurance") or D&O Insurance that is substantially comparable to
the Company's existing D&O Insurance for a period of six years
after the Effective Time so long as the annual premium therefor
is not in excess of 300% of the last annual premium paid prior to
the date hereof (such last annual premium being hereinafter
referred to as the "Current Premium"); provided, however, that if
the existing D&O Insurance or substantially comparable D&O
Insurance cannot be acquired during the six-year period for not
in excess of 300% of the Current Premium, then the Surviving
Corporation will obtain as much D&O Insurance as can be obtained
for the remainder of such period for a premium not in excess (on
an annualized basis) of 300% of the Current Premium.
(d) The provisions of this Section are intended to be for
the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
VI.11. Assumption of Debentures. The Company and Parent
each agrees that the Surviving Corporation shall continue to
assume the payment of the principal and redemption price of and
interest on the Series A Debentures and Series B Debentures (the
"Debentures") issued under the Indenture dated as of December 23,
1997 (the "Indenture") between the Company and The Chase Manhattan Bank,
as trustee (the "Trustee"),if required under the terms of the Indenture,
according to their tenor and the due and punctual performance and observance
of all the covenants and conditions of the Indenture kept or performed
by the Company. The Surviving Corporation, if required under the
terms of the Indenture, shall execute and deliver to the Trustee
a supplemental indenture (which shall conform to the provisions
of the Trust Indenture Act, as then in effect) satisfactory in
form to the Trustee, whereupon the Surviving Corporation shall
succeed to and be substituted for the Company and the Company
thereupon shall be relieved of any further liability or
obligation thereunder or upon the Debentures.
VI.12. Other Actions by the Company and Parent.
(a) Rights. If requested by Parent prior to the Effective
Time, the board of directors of the Company shall take all
necessary action to terminate all of the outstanding Rights and
to terminate the Rights Agreement, effective immediately prior to
the Effective Time.
(b) Takeover Statute. If any Takeover Statute is or may
become applicable to the Merger or the other transactions
contemplated by this Agreement, each of Parent and the Company
and its board of directors shall grant such approvals and take
such actions as are necessary so that such transactions may be
consummated as promptly as practicable on the terms contemplated
by this Agreement or by the Merger and otherwise act to eliminate
or minimize the effects of such statute or regulation on such
transactions.
ARTICLE VII
CONDITIONS
VII.1. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect
the Merger is subject to the satisfaction or waiver at or prior
to the Effective Time of each of the following conditions:
(a) Stockholder Approval. The Merger shall have been duly
approved by holders of Shares constituting the Company Requisite
Vote.
(b) Regulatory Consents. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have
expired or been terminated, and, other than the filing provided
for in Section 1.3, all notices, reports and other filings
required to be made prior to the Effective Time by the Company or
Parent or any of their respective Subsidiaries with, and all
consents, registrations, approvals, permits and authorizations
required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries and
Joint Ventures from, and the expiry of all waiting periods
imposed by, any Governmental Entity (collectively, "Governmental
Consents"), in connection with the execution and delivery of this
agreement and the consummation of the Merger and the other
transactions contemplated hereby shall have been made or obtained
(as the case may be), except for any non-insurance related and/or
non-HSR Act related Governmental Consents for which the failure
to obtain such consents or approvals would not reasonably be expected,
individually or in the aggregate, to have a material adverse
effect on the Surviving Corporation.
(c) Certain U.K. and Ireland Consents.
(i) Either (i) The UK Office of Fair Trading shall
have indicated, in terms reasonably satisfactory to the
Company and Parent, that the Secretary of State for Trade
and Industry does not intend to refer the proposed
acquisition of the Common Shares or any matter relating
thereto to the Competition Commission; or (ii) the
Commission of the European Communities shall have (x) issued
a decision pursuant to article 6(l)(b), article 6(2) or
article 8.2 of Council Regulation 4064/S 9 as amended by the
Council Regulation 13 10/97 ("Regulation 4064/89") that the
proposed acquisition of Common Shares falls within the scope
of Regulation 4064/89 but is compatible with the common
market (and, if such decision is given subject to
conditions, such conditions shall have been approved by
Parent in its reasonable discretion) and no prior decision
pursuant to article 9(3)(b) shall have been made; or (y)
issued a decision pursuant to article 6(1)(a) of Regulation
4064/89 that the proposed acquisition of the Common Shares
does not fall within the scope of Regulation 4064/89 and the
competent national authorities in the European Union the
consent, approval, clearance or confirmation of which is
either required or considered by Parent to be desirable
shall have granted all such consents, approvals, clearances
or confirmations on terms satisfactory to the parties; or
(z) issued a decision pursuant to article 9(3)(b) and the
competent authorities of the member state concerned granting
their consent, approval, clearance or confirmation on terms
reasonably satisfactory to Parent;)
(ii) the UK Financial Services Authority shall have
confirmed in accordance with Section 61 of the UK Insurance
Companies ▇▇▇ ▇▇▇▇ (the "1982 Act") that there is no
objection to Parent and any relevant stockholders or
officers of Parent becoming controllers of any relevant
Person or, in the absence of such confirmation in relation
to any such Person, the period during which the UK Financial
Services Authority may serve a notice of objection pursuant
to Section 61 of the 1982 Act in relation to such Person
shall have elapsed without the UK Financial Services
Authority having served any such notice of objection;
(iii) the Council of Lloyd's shall have consented
in accordance with paragraph 13A of the Underwriting Agents
Bylaw (No 4 of 1984 (as amended)) to Parent and any relevant
stockholders or officers of Parent becoming controllers of
any relevant Person or, in the absence of such consent in
relation to any such Person, the period during
which the Council of Lloyd's may serve a notice of objection
pursuant to such Bylaw in relation to such Person having
elapsed without the Council of Lloyd's having served any
such notice of objection;
(iv) the Council of Lloyd's shall have consented in
accordance with paragraph 14 of the Membership Bylaw (No 17
of 1993 (as amended)) to Parent and any relevant
stockholders or officers of Buyer becoming controllers of
any relevant Person or, in the absence of such consent in
relation to any such Person, the period during which the
Council of Lloyd's may serve a notice of objection pursuant
to such Bylaw in relation to such Person shall have elapsed
without the Council of Lloyd's having served any such notice
of objection.
(d) Litigation. No court or Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any Law, statute, ordinance, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the
Merger (collectively, an "Order").
VII.2. Conditions to Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to
effect the Merger are also subject to the satisfaction or waiver
by Parent at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall
be true and correct in all material respects as of the date of
this Agreement; and the representations and warranties of the
Company set forth in this Agreement shall be true and correct as
of the Closing Date as though made on and as of the Closing Date
(except to the extent any such representation or warranty
expressly speaks as of an earlier date) except where the failure
of such representations and warranties to be so true and correct
(without giving effect to any qualifications as to "Company
Material Adverse Effect", "material" or similar qualifications)
are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect, and Parent shall have
received a certificate signed on behalf of the Company by an
executive officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior
to the Closing Date, and Parent shall have received a certificate
signed on behalf of the Company by an executive officer of the
Company to such effect.
(c) Consents. The Company shall have obtained the consent
or approval of each Person whose consent or approval shall be
required under any Contract to which the Company or any of its
Subsidiaries is a party, except those for which the failure to
obtain such consents or approvals is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse
Effect; and no such consent or approval, and no Governmental
Consent shall impose any condition or conditions relating to, or
requiring changes or restrictions in, the operations of any asset
or businesses of the Company, Parent or their respective
Subsidiaries which would be reasonably likely, individually or in
the aggregate, to materially impact the economic or business
benefits to Parent and its Subsidiaries of the transactions
contemplated by this Agreement.
VII.3. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to
the satisfaction or waiver by the Company at or prior to the
Effective Time of the following conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Merger Subsidiary set forth in this
Agreement shall be true and correct in all material respects as
of the date of this Agreement; and the representations and
warranties of Parent and Merger Subsidiary set forth in this
Agreement shall be true and correct as of the Closing Date as
though made on and as of the Closing Date (except to the extent
any such representation or warranty expressly speaks as of an
earlier date) except where the failure of such representations
and warranties to be so true and correct (without giving effect
to any qualifications as to "Parent Material Adverse Effect",
"material" or similar qualifications) are not, individually or in
the aggregate, reasonably likely to have a Parent Material
Adverse Effect, and the Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent and
on behalf of Merger Subsidiary by an executive officer of Merger
Subsidiary to such effect.
(b) Performance of Obligations of Parent and Merger
Subsidiary. Each of Parent and Merger Subsidiary shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent and on behalf
of Merger Subsidiary by an executive officer of Merger Subsidiary
to such effect.
(c) Stockholder Approval. The Merger shall have been duly
approved by the sole stockholder of Merger Subsidiary in
accordance with applicable Law.
ARTICLE VIII
TERMINATION
VIII.1. Termination by Mutual Consent. This Agreement may
be terminated and the Merger may be abandoned at any time prior
to the Effective Time, whether before or after the approval by
stockholders of the Company and Parent referred to in
Section 7.1(a), by mutual written consent of the Company and
Parent by action of their respective boards of directors.
VIII.2. Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned
(i) by action of the board of directors of either Parent or the
Company if the Merger shall not have been consummated by August
31, 2000, whether such date is before or after the date of
approval by the stockholders of the Company (the "Termination
Date"), (ii) by action of the board of directors of Parent or the
Company, if the Company Requisite Vote shall not have been
obtained at a meeting duly convened therefor or at any
adjournment or postponement thereof, or (iii) by action of the
board of directors of either Parent or the Company if any Order
permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable
(whether before or after the approval by the stockholders of the
Company or Parent); provided, that the right to terminate this
Agreement pursuant to clause (i) above shall not be available to
any party that has breached in any material respect its
obligations under this Agreement in any manner that shall have
proximately contributed to the occurrence of the failure of the
Merger to be consummated.
VIII.3. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time, by action of the board of directors of the
Company:
(a) if (i) the Company is not in material breach of any of
the terms of this Agreement, (ii) the Merger shall not have been
approved by the Company Requisite Vote, (iii) the board of
directors of the Company authorizes the Company, subject to
complying with the terms of this Agreement, to enter into a
binding written agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Parent
in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement to such
notice, (iv) Parent does not make, prior to four business days
after receipt of the Company's written notification of its
intention to enter into a binding agreement for a Superior
Proposal (the "Alternative Transaction Notice"), an offer that
the board of directors of the Company determines, in good faith
after consultation with its financial advisors, is at least as
favorable, as the Superior Proposal, and (v) the Company prior to
such termination pays to Parent in immediately available funds
the fees required to be paid pursuant to Section 8.5.
(b) if there has been a material breach by Parent or Merger
Subsidiary of any representation, warranty, covenant or agreement
contained in this Agreement that would cause the condition set
forth in Section 7.3(a) or (b) not to be satisfied or not capable
of being satisfied, and such breach is not curable or, if
curable, is not cured within 20 days after written notice of such
breach is given by the Company to the party committing such
breach.
VIII.4. Termination by Parent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time, whether before or after the approval by the
stockholders of the Company referred to in Section 7.1(a), by
action of the board of directors of Parent if (a) the Company
enters into a binding agreement for a Superior Proposal or the
board of directors of the Company shall have withdrawn or
adversely modified its approval or recommendation of this Agreement,
(b) there has been a material breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement that would
cause the condition set forth in Section 7.2(a) or (b) not to be satisfied
or not capable of being satisfied, and such breach is not curable
or, if curable, is not cured within 20 days after written notice
of such breach is given by Parent to the party committing such
breach.
VIII.5. Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this
Agreement (other than as set forth in Section 9.1) shall become
void and of no effect with no liability on the part of any party
hereto (or of any of its directors, officers, employees, agents,
legal and financial advisors or other representatives); provided,
however, except as otherwise provided herein, no such termination
shall relieve any party hereto of any liability or damages
resulting from any breach of this Agreement.
(b) In the event that this Agreement is terminated by
Parent or the Company pursuant to Section 8.2(ii), the Company
shall pay Parent, Parent's reasonable, documented, out-of-pocket
expenses incurred in connection with this Agreement and the
transactions contemplated hereby, up to $1 million, within two
business days of receiving documentation therefore.
In the event that this Agreement is terminated (i) by Parent
or the Company pursuant to Section 8.2(ii) and prior to or at the
time of the meeting referred to therein any Person shall have
publicly made, or shall have publicly announced an intention
(whether or not conditional) to make, and not shall not have
withdrawn, a bona fide proposal with respect to an Alternative
Transaction (as defined below), and within 12 months of
termination the Company enters into a definitive agreement with
respect to an Alternative Transaction or an Alternative
Transaction is consummated, (ii) by the Company pursuant to
Section 8.3(a) or (iii) by Parent pursuant to Section 8.4(a),
then the Company shall pay Parent a termination fee of
$7.5 million, payable by wire transfer of same day funds,
provided that, in the case of clause (i), the amount of such fee
shall be multiplied by a percentage equal to the percentage of
the stock of the Company or the assets of the Company and its
subsidiaries taken as a whole represented by the Alternative
Transaction with respect to which an agreement is signed or which
is consummated. Any fee payable pursuant to this paragraph shall
be decreased by the expenses paid or to be paid pursuant to the
immediately preceding paragraph (appropriate adjustment shall be
made if the fee contemplated by this paragraph is due before the
expenses contemplated by the preceding paragraph). In no event
shall the aggregate amount paid pursuant to this paragraph and
the immediately preceding paragraph exceed $7.5 million. For
purposes of this paragraph, an "Alternative Transaction" shall
mean (i) a merger, reorganization, share exchange, consolidation,
business combination, recapitalization or similar transaction
involving the Company, (ii) the purchase of 15% or more of the
assets of the Company and its subsidiaries taken as a whole, or
(iii) the purchase of 15% or more of the outstanding Shares, but
shall not include the matters set forth in Section 6.2(a) of the
Company Disclosure Schedule.
The fee contemplated by Section 8.5(b) shall be paid (x) in
the case of Section 8.5(b)(i), within one business day of the
earlier of the date the Company enters into an agreement or
consummates a transaction contemplated thereby, (y) in the case
of Section 8.5(b)(ii), no later than simultaneously with such
termination and (z) in the case of Section 8.5(b)(iii), no later
than two business days following the date the Company enters into
a definitive agreement with respect to an Alternative Transaction
or consummates an Alternative Transaction.
The Company acknowledges that the agreements contained in
this Section 8.5(b) are an integral part of the transactions con
templated by this Agreement, and that, without these agreements,
Parent and Merger Subsidiary would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 8.5(b), and, in order to obtain such pay
ment, Parent or Merger Subsidiary commences a suit against the
Company for such payment, the prevailing party shall be paid its
costs and expenses (including attorneys' fees) in connection with
such suit. Any amounts payable pursuant to this Section 8.5(b)
shall be paid with interest thereon at the prime rate of The
Chase Manhattan Bank, in effect from time to time during the
period such amounts are owing plus two percent.
ARTICLE IX
MISCELLANEOUS AND GENERAL
IX.1. Survival. This Article IX and the agreements of
the Company, Parent and Merger Subsidiary contained in Section
6.8 (Benefits), and Section 6.10 (Indemnification; Directors' and
Officers' Insurance) shall survive the consummation of the
Merger. This Article IX, the agreements of the Company, Parent
and Merger Subsidiary contained in Section 6.7 (Access), insofar
as it relates to the Company's and Parent's respective
confidentiality obligations, Section 6.9 (Expenses) and
Section 8.5 (Effect of Termination and Abandonment) shall survive
the termination of this Agreement. All other representations,
warranties, covenants and agreements in this Agreement shall not
survive the consummation of the Merger or the termination of this
Agreement.
IX.2. Modification or Amendment. Subject to the
provisions of applicable Law, at any time prior to the Effective
Time, the parties hereto may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized
officers of the respective parties.
IX.3. Waiver of Conditions. The conditions to each of
the parties' obligations to consummate the Merger are for the
sole benefit of such party and may be waived by such party in
whole or in part to the extent permitted by applicable Law.
IX.4. Counterparts. This Agreement may be executed in
any number of counterparts, each such counterpart being deemed to
be an original instrument, and all such counterparts shall
together constitute the same agreement.
IX.5. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.5.
(c) THE COMPANY AND MERGER SUBSIDIARY EACH AGREES THAT, IN
CONNECTION WITH ANY LEGAL SUIT OR PROCEEDING ARISING WITH RESPECT
TO THIS AGREEMENT, IT SHALL SUBMIT TO THE JURISDICTION OF THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE OR THE
STATE COURTS OF THE STATE OF DELAWARE AND AGREES TO VENUE IN SUCH
COURTS. THE COMPANY AND MERGER SUBSIDIARY EACH HEREBY APPOINTS
THE SECRETARY OF THE COMPANY AND MERGER SUBSIDIARY, RESPECTIVELY,
AS ITS AGENT FOR SERVICE OF PROCESS FOR PURPOSES OF THE FOREGOING
SENTENCE ONLY.
IX.6. Notices. Any notice, request, instruction or
other document to be given hereunder by any party to the others
shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, or by facsimile:
if to Parent or Merger Subsidiary
▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Executive Vice President and
General Counsel
The St. ▇▇▇▇ Companies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
MMI Companies, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Wildman, Harrold, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Persons or addresses as may be designated in
writing by the party to receive such notice as provided above.
All notices shall be effective upon receipt.
IX.7. Entire Agreement; No Other Representations. This
Agreement (including any exhibits hereto), the Company Disclosure
Letter, the Parent Disclosure Letter and the Confidentiality
Agreement between Parent and the Company (the "Confidentiality
Agreement") constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect
to the subject matter hereof.
IX.8. No Third Party Beneficiaries. Except as provided
in Section 6.10 (Indemnification; Directors' and Officers'
Insurance), this Agreement is not intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
IX.9. Obligations of Parent and of the Company.
Whenever this Agreement requires a Subsidiary of Parent to take
any action, such requirement shall be deemed to include an
undertaking on the part of Parent to cause such Subsidiary to
take such action. Whenever this Agreement requires a Subsidiary
of the Company to take any action, such requirement shall be
deemed to include an undertaking on the part of the Company to
cause such Subsidiary to take such action and, after the
Effective Time, on the part of the Surviving Corporation to cause
such Subsidiary to take such action.
IX.10. Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability
of any provision shall not affect the validity or enforceability
or the other provisions hereof. If any provision of this
Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to
carry out, so far as may be valid and enforceable, the intent and
purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision
to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
IX.11. Interpretation. The table of contents and
headings herein are for convenience of reference only, do not
constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof. Where a
reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement
unless otherwise indicated. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation." The
definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such
term.
IX.12. Assignment. This Agreement shall not be
assignable by operation of Law or otherwise; provided, however,
that Parent may designate, by written notice to the Company,
another wholly-owned direct or indirect Subsidiary to be a
Constituent Corporation in lieu of Merger Subsidiary, in which
event all references herein to Merger Subsidiary shall be deemed
references to such other Subsidiary, except that all
representations and warranties made herein with respect to Merger
Subsidiary as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other
Subsidiary as of the date of such designation.
IN WITNESS WHEREOF, this Agreement has been duly
executed and delivered by the duly authorized officers of the
parties hereto as of the date first written above.
MMI COMPANIES, INC.
By: /s/ B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: B. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title:Chairman and Chief
Executive Officer
THE ST. ▇▇▇▇ COMPANIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
▇▇▇▇▇▇ ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer