AMENDED AND RESTATED
AGREEMENT,
SCHEMES OF ARRANGEMENT
AND
PLAN OF REORGANIZATION
BY AND AMONG
LASALLE RE HOLDINGS LIMITED,
LASALLE RE LIMITED,
TRENWICK GROUP INC.
AND
▇▇▇▇▇ HOLDINGS INTERNATIONAL LIMITED
DATED AS OF MARCH 20, 2000
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TABLE OF CONTENTS
||
ARTICLE 1 CERTAIN DEFINITIONS...............................................2
Section 1.1. Certain Definitions...................................2
ARTICLE 2 THE PLANS ........................................................6
Section 2.1. The Plans.............................................6
Section 2.2. Application to the Court; Shareholder Meetings;
Effective Time of the Plans; Closing..................7
Section 2.3. Effects of the Plans..................................8
Section 2.4. Governing Documents...................................8
Section 2.5. Board of Directors of New Holdings....................9
Section 2.6. Terms of the Schemes of Arrangement:
Exchange of Securities................................9
Section 2.7. Terms of the Plan of Reorganization:
Issuance of Securities...............................10
Section 2.8. Terms of the Schemes of Arrangement:
Surrender and Payment................................10
Section 2.9. Terms of the Plan of Reorganization:
Surrender and Payment................................12
Section 2.10. Voting...............................................14
Section 2.11. Lost Certificates....................................14
Section 2.12. No Fractional Shares.................................14
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TRENWICK.......................15
Section 3.1. Corporation; Organization............................15
Section 3.2. Authority; Approval and Fairness.....................16
Section 3.3. Capital Structure....................................16
Section 3.4. SEC Reports; Financial Statements....................18
Section 3.5. Absence of Certain Changes or Events.................19
Section 3.6. Certain Fees.........................................19
Section 3.7. No Defaults..........................................19
Section 3.8. Consents.............................................20
Section 3.9. Compliance with Applicable Law.......................20
Section 3.10. Information Supplied.................................21
Section 3.11. Material Contracts...................................21
Section 3.12. Taxes................................................22
Section 3.13. Litigation...........................................23
Section 3.14. Title to Properties; Leases..........................24
Section 3.15. Employees............................................24
Section 3.16. Benefit Plans........................................25
Section 3.17. Intellectual Property................................31
Section 3.18. Takeover Statutes....................................31
Section 3.19. Opinion of Financial Advisor.........................32
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Section 3.20. Rights Agreement.....................................32
Section 3.21. Insurance Matters....................................32
Section 3.22. Liabilities and Reserves.............................33
Section 3.23. Investment Company...................................33
Section 3.24. Finite Risk Reinsurance..............................34
Section 3.25. Reinsurance Contracts, Coverholders and MGAs.........34
Section 3.26. Derivatives. .......................................35
Section 3.27. Related Party Transactions. ........................35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
LASALLE HOLDINGS.................................................35
Section 4.1. Corporation; Organization............................35
Section 4.2. Authority; Approval and Fairness.....................36
Section 4.3. Capital Structure....................................37
Section 4.4. SEC Reports; Financial Statements....................38
Section 4.5. Absence of Certain Changes or Events.................39
Section 4.6. Certain Fees.........................................40
Section 4.7. No Defaults..........................................40
Section 4.8. Consents.............................................41
Section 4.9. Compliance with Applicable Law.......................41
Section 4.10. Information Supplied.................................42
Section 4.11. Material Contracts...................................42
Section 4.12. Taxes................................................43
Section 4.13. Litigation...........................................44
Section 4.14. Title to Properties; Leases..........................44
Section 4.15. Approval of Schemes of Arrangement...................45
Section 4.16. Employees............................................45
Section 4.17. Intellectual Property................................46
Section 4.18. Takeover Statutes....................................47
Section 4.19. Opinions of Financial Advisors.......................47
Section 4.20. Insurance Matters....................................48
Section 4.21. Liabilities and Reserves.............................48
Section 4.22. Investment Company...................................48
Section 4.23. Reinsurance Contracts, Coverholders and MGAs.........49
Section 4.24. Derivatives..........................................50
Section 4.25. Related Party Transactions. .........................50
Section 4.26. Finite Risk Reinsurance..............................50
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ARTICLE 5 COVENANTS........................................................50
Section 5.1. Conduct of Business of Trenwick......................50
Section 5.2. Conduct of Business of LaSalle Holdings..............53
Section 5.3. No Solicitation......................................57
Section 5.4. Access to Information; Confidentiality...............61
Section 5.5. Form S-4; Regulatory Matters.........................61
Section 5.6. Public Announcements.................................62
Section 5.7. Supplemental Information.............................62
Section 5.8. Shareholders' Meetings...............................62
Section 5.9. Trenwick Options, LaSalle Holdings Options,
LaSalle Re Options and Trenwick Warrants.............63
Section 5.10. Takeover Laws........................................65
Section 5.11. Affiliates...........................................65
Section 5.12. Stock Exchange Listing...............................66
Section 5.13. Indemnification and Insurance........................66
Section 5.14. Commercially Reasonable Efforts......................67
Section 5.15. Post-Closing Matters.................................68
Section 5.16. Employee Benefit Plans; Existing Agreements..........68
Section 5.17. Letters from Accountants.............................69
Section 5.18. Litigation. ........................................70
Section 5.19. Advice of Changes. .................................70
Section 5.20. Trenwick Rights Agreement. .........................70
Section 5.21. New Holdings Rights Agreement. .....................70
Section 5.22. Assumption of Non-Voting Share Conversion
Obligation...........................................70
Section 5.23. Assumption of Series B Preferred Share Conversion
Obligation. ........................................70
Section 5.24. Tax-Free Reorganization. ...........................71
ARTICLE 6 CONDITIONS TO THE PLANS..........................................71
Section 6.1. Conditions to Each Party's Obligation to Effect
the Plans............................................71
Section 6.2. Additional Conditions to Trenwick's Obligation to
Effect the Plans.....................................73
Section 6.3. Additional Conditions to LaSalle Holdings'
Obligation to Effect the Plans.......................74
ARTICLE 7 TERMINATION AND ABANDONMENT......................................76
Section 7.1. Termination by Trenwick or LaSalle Holdings..........76
Section 7.2. Termination by Trenwick..............................77
Section 7.3. Termination by LaSalle Holdings......................78
Section 7.4. Procedure and Effect of Termination..................78
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ARTICLE 8 MISCELLANEOUS PROVISIONS.........................................79
Section 8.1. Non-Survival of Representations, Warranties, Covenants
and Agreements.......................................79
Section 8.2. Amendment and Modification...........................79
Section 8.3. Waiver of Compliance; Consents.......................80
Section 8.4. Severability and Validity............................80
Section 8.5. Expenses and Obligations.............................80
Section 8.6. Parties in Interest..................................81
Section 8.7. Notices..............................................81
Section 8.8. Governing Law........................................82
Section 8.9. Counterparts.........................................83
Section 8.10. Headings.............................................83
Section 8.11. Entire Agreement; Assignment.........................83
Section 8.12. Interpretation. ....................................83
||
SCHEDULES AND EXHIBITS
Schedule I Minority Shareholders
Exhibit A-1 LaSalle Stock Option Agreement
Exhibit A-2 Trenwick Stock Option Agreement
Exhibit B-1 Memorandum of Association of New Holdings
Exhibit B-2 Bye-Laws of New Holdings
Exhibit C New Holdings Directors
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AMENDED AND RESTATED AGREEMENT,
SCHEMES OF ARRANGEMENT AND PLAN OF REORGANIZATION
This Amended and Restated Agreement, Schemes of Arrangement and
Plan of Reorganization (this "Agreement") is made as of the 20th day of
March, 2000, by and among LaSalle Re Holdings Limited, a company organized
under the laws of Bermuda ("LaSalle Holdings"), LaSalle Re Limited, a
company organized under the laws of Bermuda and a majority- owned
Subsidiary (as defined herein) of LaSalle Holdings ("LaSalle Re"), Trenwick
Group Inc., a Delaware corporation ("Trenwick") and ▇▇▇▇▇ Holdings
International Limited, a company organized under the laws of Bermuda which
will be changing its name to Trenwick Group Ltd. prior to the Effective
Time, as defined herein, ("New Holdings"), and amends and restates the
Agreement, Scheme of Arrangement, Plan of Merger and Plan of Reorganization
(the "Original Agreement") dated as of December 19, 1999 by and among
LaSalle Holdings, LaSalle Re, Trenwick, Trenwick Group (Delaware) Inc., a
Delaware corporation and New Holdings.
WHEREAS, the issued share capital of LaSalle Re consists of voting
common shares, par value $1.00 per share ("Voting Shares"), all of which
are beneficially owned by LaSalle Holdings, and non-voting common shares,
par value $1.00 per share (the "Non-Voting Shares"), all of which are
beneficially owned by LaSalle Holdings and the shareholders of LaSalle Re
listed on Schedule I hereto (the "Minority Shareholders"). LaSalle Holdings
owns 15,603,570 Voting Shares and Non- Voting Shares in the aggregate. The
Minority Shareholders own 4,725,546 Non-Voting Shares in the aggregate (the
"Minority Shares").
WHEREAS, the respective Boards of Directors of LaSalle Holdings,
LaSalle Re, Trenwick and New Holdings (a) deem it advisable and in the best
interests of their respective companies and shareholders to enter into this
Agreement whereby (i) each of LaSalle Holdings and LaSalle Re become
Subsidiaries of New Holdings pursuant to a scheme of arrangement between
LaSalle Holdings and the holders of its common shares, par value $1.00 per
share (the "LaSalle Holdings Shares") (the "LaSalle Holdings Scheme of
Arrangement"), and a scheme of arrangement between LaSalle Re and the
holders of the Non-Voting Shares (the "LaSalle Re Scheme of Arrangement,"
and together with the LaSalle Holdings Scheme, the "Schemes of
Arrangement") and (ii) the assets of Trenwick are transferred to New
Holdings pursuant to a plan of reorganization described in Section 2.1(b)
(the "Plan of Reorganization," and together with the Schemes of
Arrangement, the "Plans") as provided for herein and (b) have adopted
resolutions approving this Agreement, the Plans and the transactions
contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of LaSalle
Holdings and Trenwick to enter into this Agreement, LaSalle Holdings and
Trenwick have entered into (i) a Stock Option Agreement dated as of the
date of the Original Agreement and attached hereto as Exhibit A-1 (the
"LaSalle Stock Option Agreement"), pursuant to which Trenwick has granted
LaSalle Holdings an option to purchase a number of shares equal to 19.9% of
the then outstanding Common Stock, par value $0.10 per share, of Trenwick
("Trenwick Shares", which shall refer to all such outstanding shares) and
(ii)
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a Stock Option Agreement dated as of the date of the Original Agreement and
attached hereto as Exhibit A-2 (the "Trenwick Stock Option Agreement" and
together with the LaSalle Stock Option Agreement, the "Stock Option
Agreements"), pursuant to which LaSalle Holdings has granted Trenwick an
option to purchase a number of shares equal to 19.9% of the then
outstanding LaSalle Holdings Shares;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Trenwick
to enter into this Agreement, Trenwick and the Minority Shareholders have
entered into a Shareholders Agreement pertaining to the voting of shares
held of record and beneficially in favor of the transactions contemplated
hereby; and
WHEREAS, the parties hereto intend that each of the Plans shall
qualify as tax-free under the United States Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. Certain capitalized terms used in
this Agreement shall have the meaning set forth below:
(a) An "Affiliate" of, or a Person "affiliated" with, a specified
Person means any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, the Person specified.
(b) "Average Closing Price" means an amount equal to the average
per share closing price of a Trenwick Share as reported on the NYSE for the
ten (10) NYSE trading days immediately preceding the three (3) NYSE trading
days prior to the Effective Date (as defined below).
(c) "Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banks in Bermuda or in the State of
Connecticut in the United States of America are authorized or required by
law to be closed.
(d) "Confidentiality Letters" means the letter agreements between
LaSalle Holdings and Trenwick, dated as of August 30, 1999 and November 19,
1999.
(e) "Control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used
with respect to any Person, means the possession,
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direct or indirect, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
(f) "Dollars" or "$" means the lawful currency of the United
States of America.
(g) "Employee Benefit Plan" means
(i) any "employee welfare benefit plan" or
"employee pension benefit plan" (as those terms
are defined in sections 3(1) and 3(2) of ERISA,
respectively), other than a "multiemployer plan"
(as defined in Section 3(37) of ERISA);
(ii) any retirement or deferred compensation
plan, incentive compensation plan, stock plan,
unemployment compensation plan, vacation pay,
severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any
other fringe benefit arrangements for any
current or former employee, director, consultant
or agent, whether pursuant to contract,
arrangement, custom or informal understanding,
which does not constitute an employee benefit
plan (as defined in Section 3(3) of ERISA); or
(iii) any employment agreement or consulting
agreement.
(h) "ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended.
(i) "Exchange Act" means the United States Securities Exchange
Act of 1934, as amended.
(j) "GAAP" means generally accepted accounting principles as in
effect in the United States of America (as such principles may change from
time to time).
(k) "Governmental Authority" means any governmental,
quasi-governmental, judicial or regulatory agency or entity or subdivision
thereof with jurisdiction over Trenwick, LaSalle Holdings, LaSalle Re, New
Holdings or any of their respective Subsidiaries or any of the transactions
contemplated by this Agreement (including, without limitation, the
Corporation of Lloyd's ("Lloyd's")).
(l) "Knowledge" (i) an individual will be considered to have
"Knowledge" of a fact or matter if the individual is actually aware of the
fact or matter; (ii) an entity will be considered to have "Knowledge" of a
fact or matter if any individual who is serving, or who has at any time
served, as a senior executive of such entity has, or at any time had,
Knowledge of the fact or matter; and Trenwick and LaSalle Holdings will be
considered to have "Knowledge" of a fact or matter if
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Trenwick or its Subsidiaries or LaSalle Holdings or its Subsidiaries, as
the case may be, has Knowledge of the fact or matter.
(m) "LaSalle Disclosure Letter" means the letter, dated as of the
date of the Original Agreement, from LaSalle Holdings to Trenwick regarding
certain matters related to this Agreement.
(n) "LaSalle Fair Market Value" means the product of (i) the
average of the closing sale price as reported on the NYSE Composite Tape
for the LaSalle Holdings Shares for the thirty (30) trading days
immediately preceding the Effective Date multiplied by (ii) the aggregate
number of issued and outstanding Voting Shares and Non-Voting Shares on the
Effective Date.
(o) "Lien" means any mortgage, lien, security interest, pledge,
lease or other charge or encumbrance of any kind, including, without
limitation, the lien or retained security title of a purchase money
creditor or conditional vendor, and any easement, right of way or other
encumbrance on title to real property, and any agreement to give any of the
foregoing.
(p) "Material Adverse Change" or "Material Adverse Effect" means,
with respect to any Person, any change, effect, event, condition or
development, occurrence or state of facts that is materially adverse to the
business, assets, results of operations, properties, financial or operating
condition of such party and its Subsidiaries, taken as a whole or the
ability to perform obligations under this Agreement; provided, however,
that any change, effect, event, condition or development, occurrence or
state of facts resulting from or arising in connection with (i) this
Agreement, the Schemes of Arrangement, the Plan of Reorganization or the
transactions contemplated hereby or the public announcement thereof, (ii)
changes generally affecting the insurance, reinsurance or financial
services industry (including, without limitation, the impact of any natural
catastrophes causing a Net Loss from a single loss occurrence and not in
the aggregate to such Persons of $100,000,000 or less, (iii) changes in the
value of portfolio investments resulting from changes in prevailing
interest rates, (iv) changes in economic or market conditions generally,
(v) changes in laws, regulations, accounting principles, or regulations or
policies of general applicability or (vi) changes resulting from actions or
omissions of a party hereto taken with the prior written consent of the
other parties in contemplation of the Schemes of Arrangement and associated
transactions contemplated by this Agreement shall not constitute a Material
Adverse Effect for purposes of this Agreement.
(q) "Net Loss" means, with respect to any Person, the estimated
amount of all losses and loss adjustment expenses incurred or to be
incurred by such Person and its Subsidiaries in connection with the
occurrence of a single natural catastrophe occurring between the date of
the Original Agreement and the Effective Time, net of all applicable
reinsurance recoverables, determined in accordance with GAAP and generally
accepted actuarial standards of practice as applied in the insurance
industry, each as in effect on the date of determination of such Net Loss.
Net Loss shall be determined as soon as reasonably practicable following
the occurrence of a natural catastrophe by the Settlement Auditor. In the
event that there is more than one Person serving as the Settlement Auditor,
Net Loss shall be determined by taking the average of the Net Loss
determinations established by each Settlement Auditor.
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(r) "NYSE" means The New York Stock Exchange, Inc.
(s) "Permitted Liens" means, with respect to Trenwick or LaSalle
Holdings (as the case may be), (i) Liens for Taxes or other assessments or
charges of Governmental Authorities that are not yet delinquent or that are
being contested in good faith by appropriate proceedings, in each case,
with respect to which adequate reserves or other appropriate provisions are
being maintained to the extent required by GAAP; (ii) statutory Liens of
landlords and mortgagees of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law and created in the
ordinary course of business for amounts not yet more than thirty (30) days
overdue or which are being contested in good faith by appropriate
proceedings, in each case, with respect to which adequate reserves or other
appropriate provisions are being maintained to the extent required by GAAP;
(iii) leases or subleases, easements, rights-of-way, covenants, consents
and Liens which do not interfere materially with the ordinary conduct of
the business of Trenwick or LaSalle Holdings (as the case may be) and their
respective Subsidiaries, taken as a whole, or detract materially from the
value of the property to which they attach or materially impair the use
thereof to such party and its Subsidiaries; and (iv) Liens granted by
Trenwick or LaSalle Holdings (as the case may be) or any of their
respective Subsidiaries to lenders pursuant to credit agreements in
existence on the date of the Original Agreement.
(t) "Person" means any individual, company, corporation, estate,
limited liability company, partnership, joint venture, association, joint
stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof or other entity.
(u) "SEC" means the United States Securities and Exchange Commission.
(v) "Securities Act" means the United States Securities Act of 1933,
as amended.
(w) "Settlement Auditor" means either Ernst & Young LLP or Paragon
Risk Management Services, Inc., as shall be mutually agreed by LaSalle
Holdings and Trenwick. In the event LaSalle Holdings and Trenwick are
unable to agree upon a Settlement Auditor within 30 calendar days following
the completion of a natural catastrophe, both Ernst & Young LLP and Paragon
Risk Management Services, Inc. shall serve as the Settlement Auditor.
(x) "Subsidiary" means, with respect to a specified Person, each
company, partnership or other entity in which the specified Person owns or
controls, directly or indirectly through one or more intermediaries, fifty
percent (50%) or more of the shares or other interests having general
voting power in the election of directors or Persons performing similar
functions or rights to fifty percent (50%) or more of any distributions.
(y) "Tax" or "Taxes" means any Bermuda or United States federal,
state, local, foreign or other income, share capital, employees' income
withholding, foreign Person withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer or other
tax,
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including any interest, penalties or other additions to tax in respect to
the foregoing, whether disputed or not.
(z) "Trenwick Disclosure Letter" means the letter, dated as of the
date of the Original Agreement, from Trenwick to LaSalle Holdings regarding
certain matters related to this Agreement.
(aa) "Trenwick Fair Market Value" means the product of (i) the
average of the closing sale price as reported on the NYSE Composite Tape
for the Trenwick Shares for the thirty (30) trading days immediately
preceding the Effective Date multiplied by (ii) the number of issued and
outstanding Trenwick Shares on the Effective Date.
ARTICLE 2
THE PLANS
Section 2.1. The Plans.
---------
(a) The Schemes of Arrangement. At the Effective Time (as defined
herein), and upon the terms and subject to the conditions hereof and
subject to the Supreme Court of the Islands of Bermuda (the "Court")
exercising its discretion and sanctioning the Schemes of Arrangement
pursuant to Section 99(2) of The Companies Act, 1981 of Bermuda, as amended
(the "Companies Act"), and making such facilitating orders as are
appropriate pursuant to Section 101 of the Companies Act, all of the issued
and outstanding LaSalle Holdings Shares and all of the issued and
outstanding Minority Shares shall be transferred to New Holdings, and
holders of LaSalle Holdings Shares and Minority Shares shall become holders
of common shares of New Holdings ("New Holdings Shares") in accordance with
the terms of this Agreement.
(b) The Plan of Reorganization. At the Effective Time, upon the terms
and subject to the conditions hereof, New Holdings shall acquire all of the
assets of and shall assume all of the liabilities of Trenwick, pursuant to
Section 271 of the GCL, in exchange for New Holdings Shares which shall be
distributed to the holders of Trenwick Shares in complete liquidation of
Trenwick pursuant to Section 275 of the GCL, in a transaction intended to
qualify as a tax-free reorganization under Section 368(a) of the Code.
Section 2.2. Application to the Court; Shareholder Meetings; Effective
Time of the Plans; Closing.
(a) As soon as practicable after the date hereof, LaSalle Holdings
and LaSalle Re, acting through their respective Boards of Directors, in
accordance with applicable law shall:
(i) cause an application to be made to the Court, pursuant to
Section 99(1) of the Companies Act, requesting the Court to
summon such class meetings of members of LaSalle Holdings and
LaSalle Re as the Court may direct;
6
(ii) give notice of, convene and hold such class meetings for the
purpose of obtaining such approvals of the Schemes of Arrangement
as may be required under Section 99(2) of the Companies Act; and
(iii) subject to such approvals being obtained, cause a petition
to be presented to the Court seeking the sanctioning of the Schemes
of Arrangement pursuant to Section 99 of the Companies Act and
file such otherts as are required to be duly filed with the Court
to effect the Schemes of Arrangement.
(b) As soon as practicable after the date hereof, Trenwick, acting
through its Board of Directors, in accordance with applicable law shall
duly call, give notice of, convene and hold an annual or special meeting of
its stockholders for the purpose of obtaining their approval of this
Agreement and the Plan of Reorganization.
(c) Upon receipt of orders from the Court sanctioning the Schemes
of Arrangement, upon approval by the stockholders of Trenwick of this
Agreement and the Plan of Reorganization and upon the terms and subject to
the satisfaction or waiver, if permissible, of the conditions hereof, the
orders sanctioning the Schemes of Arrangement shall be duly filed with the
Registrar of Companies of Bermuda (the "Registrar"). The Schemes of
Arrangement shall become effective upon the filing of the orders of the
Court with respect to the Schemes of Arrangement with the Registrar (the
time of such filing being the "Effective Time" and the date of such filing
being the "Effective Date"). The Plan of Reorganization shall become
effective at the Effective Time. Immediately prior to such filings, a
closing (the "Closing") shall be held at such time as the last condition
set forth hereunder shall be fulfilled or waived, at the New York office of
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, at 9:00
a.m. or such other place and/or time as the parties shall agree, for the
purpose of confirming the satisfaction or waiver of the conditions set
forth in Article 5. The date upon which the Closing shall occur is referred
to herein as the "Closing Date."
Section 2.3. Effects of the Plans.
--------------------
(a) Effect of the Schemes of Arrangement. As of the Effective
Time, LaSalle Holdings shall be a wholly-owned Subsidiary of New Holdings
and LaSalle Re shall be, directly and indirectly through LaSalle Holdings,
a wholly-owned Subsidiary of New Holdings, and holders of LaSalle Holdings
Shares and Minority Shares shall only have the right to receive the LaSalle
Consideration as set forth in Section 2.6(c).
(b) Effect of the Plan of Reorganization. As of the Effective
Time, Trenwick shall have transferred all of its assets to New Holdings and
New Holdings shall have assumed all the liabilities of Trenwick and the
holders of Trenwick Shares shall only have the right to receive the
Trenwick Consideration as set forth in Section 2.7(b).
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Section 2.4. Governing Documents.
-------------------
(a) New Holdings.
------------
(i) At or prior to the Closing, the memorandum of
association of New Holdings shall be in the form set
forth in Exhibit B(i) attached hereto.
(ii) At or prior to the Closing, the bye-laws of New
Holdings shall be in the form set forth in Exhibit B(ii)
attached hereto.
(b) LaSalle Holdings.
----------------
(i) The memorandum of association of LaSalle Holdings in
effect at the Effective Time shall continue to be the
memorandum of association of LaSalle Holdings until
thereafter amended or restated as provided therein and by
law.
(ii) The bye-laws of LaSalle Holdings in effect at the
Effective Time, shall continue to be the bye-laws of
LaSalle Holdings until thereafter amended or restated as
provided therein and by law.
(c) LaSalle Re.
----------
(i) The memorandum of association of LaSalle Re in effect
at the Effective Time shall continue to be the memorandum
of association of LaSalle Re until thereafter amended or
restated as provided therein and by law.
(ii) The bye-laws of LaSalle Re in effect at the
Effective Time shall continue to be the bye-laws of
LaSalle Re until thereafter amended or restated as
provided therein and by law.
Section 2.5. Board of Directors of New Holdings. The parties
hereto shall procure that at or prior to the Closing, the directors of New
Holdings shall be the individuals designated in Exhibit C attached hereto,
which such directors shall constitute the entire Board of Directors of New
Holdings at such time, each of such directors to hold office in accordance
with the applicable provisions of the bye-laws of New Holdings and until
their successors shall be elected or appointed and shall duly qualify.
Section 2.6. Terms of the Schemes of Arrangement: Exchange of
Securities. Subject to Section 2.6(e), at the Effective Time, by virtue of the
Schemes of Arrangement and without any action on the part of LaSalle Holdings,
LaSalle Re or the holder of any of the following securities:
(a) Subject to Section 2.6(c) and Section 2.12, each LaSalle
Holdings Share and each Minority Share that is issued and outstanding
immediately prior to the Effective Time shall be
8
transferred to New Holdings and there shall be allotted and issued to the
holder thereof such number of fully paid and nonassessable New Holdings
Shares as is equal to the LaSalle Exchange Ratio, as defined below (the
"LaSalle Consideration"). The "LaSalle Exchange Ratio" means the product of
(i) 1.0 multiplied by (ii) the quotient of (A) the LaSalle Fair Market
Value minus 50% of the amount by which any Net Loss experienced by LaSalle
Holdings exceeds $40,000,000 and is less than or equal to $60,000,000 and
minus 100% of the amount by which any Net Loss experienced by LaSalle
Holdings exceeds $60,000,000 and is less than or equal to $100,000,000,
divided by (B) the LaSalle Fair Market Value. New Holdings shall issue the
New Holdings Shares to be received as LaSalle Consideration and register
the Persons to whom New Holdings Shares are issued on New Holdings'
register of members. The Non-Voting Shares held by LaSalle Holdings shall
not be affected by the Schemes of Arrangement.
(b) Each LaSalle Holdings Option (as defined herein) and each
LaSalle Re Option (as defined herein) outstanding as of the Effective Time
shall be treated in accordance with the provisions of Section 5.9.
(c) Each LaSalle Holdings Share that is issued and outstanding
immediately prior to the Effective Time that is owned by LaSalle Holdings,
LaSalle Re, Trenwick, New Holdings or any Subsidiary of either of the
foregoing shall be automatically cancelled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
(d) Each Series A Preferred Share of LaSalle Holdings or LaSalle
Re that is issued and outstanding immediately prior to the Effective Time
shall remain unchanged as a Series A Preferred Share of LaSalle Holdings or
LaSalle Re, as the case may be.
(e) In the event that this Agreement and the LaSalle Re Scheme of
Arrangement are not approved by the vote specified in Section 4.15(b), then
the LaSalle Re Scheme of Arrangement shall not be effected and the
provisions of Section 5.9(c) shall not apply.
Section 2.7. Terms of the Plan of Reorganization: Issuance of
Securities. At the Effective Time, by virtue of the Plan of Reorganization
and without any action on the part of Trenwick or the holder of any of the
following securities:
(a) Subject to Section 2.7(c) and Section 2.12, there shall be
allotted and issued to each holder of Trenwick Shares a number of fully
paid and nonassessable New Holdings Shares as is equal to the Trenwick
Exchange Ratio, as defined below (the "Trenwick Consideration"). The
"Trenwick Exchange Ratio" means the product of (i) 1.0 multiplied by (ii)
the quotient of (A) the Trenwick Fair Market Value minus 50% of the amount
by which any Net Loss experienced by Trenwick exceeds $40,000,000 and is
less than or equal to $60,000,000 and minus 100% of the amount by which any
Net Loss experienced by Trenwick exceeds $60,000,000 and is less than or
equal to $100,000,000, divided by (B) the Trenwick Fair Market Value. If
prior to the Effective Time either Trenwick, LaSalle Holdings or LaSalle Re
should split or combine the Trenwick Shares, the LaSalle Re Shares or the
Minority Shares, as applicable, pay a stock dividend or otherwise
9
change the Trenwick Shares, the LaSalle Re Shares or the Minority Shares,
as applicable, into any other securities, or make any other dividend or
distribution on the Trenwick Shares, the LaSalle Re Shares or the Minority
Shares, as applicable, then the Trenwick Exchange Ratio will be
appropriately adjusted to reflect such split, combination, dividend or
other distribution or changes. New Holdings shall issue the New Holdings
Shares to be received as Trenwick Consideration and register the Persons to
whom such New Holdings Shares are issued in New Holdings' register of
members.
(b) Each Trenwick Option (as defined herein) outstanding as of the
Effective Time shall be treated in accordance with the provisions of
Section 5.9.
(c) Each Trenwick Share that is issued and outstanding immediately
prior to the Effective Time that is owned by LaSalle Holdings, LaSalle Re,
Trenwick, New Holdings or any Subsidiary of any of the foregoing (together,
in each case, with the associated Right (as defined in Section 3.3(a))
shall be automatically cancelled and retired and shall cease to exist, and
no cash or other consideration shall be delivered or deliverable in
exchange therefor.
Section 2.8. Terms of the Schemes of Arrangement: Surrender and
Payment.
---------------------------------------------------
(a) Promptly after the Effective Time, New Holdings shall (i)
appoint an agent (the "LaSalle Exchange Agent") for the purpose of
exchanging certificates representing LaSalle Holdings Shares and Minority
Shares for New Holdings Shares pursuant to Section 2.6(a), (ii) deposit
with the LaSalle Exchange Agent certificates representing the aggregate
LaSalle Consideration to be paid in respect of the LaSalle Holdings Shares
and the Minority Shares (together with any dividends or distributions with
respect thereto) and (iii) send, or cause the LaSalle Exchange Agent to
send, to each holder of LaSalle Holdings Shares and each holder of Minority
Shares at the Effective Time a letter of transmittal for use in such
exchange (which shall specify that the delivery shall be effected, and risk
of loss and title shall pass, only upon proper delivery of the certificates
representing LaSalle Holdings Shares or Minority Shares (as applicable) to
the LaSalle Exchange Agent).
(b) Each holder of LaSalle Holdings Shares or Minority Shares that
have been transferred to New Holdings pursuant to the Schemes of
Arrangement, upon surrender to the LaSalle Exchange Agent of a certificate
or certificates representing such shares, together with a properly
completed letter of transmittal covering such shares, shall be entitled to
receive the LaSalle Consideration payable in respect of such shares. Until
so surrendered, each such certificate shall, after the Effective Time,
represent for all purposes only the right to receive such LaSalle
Consideration.
(c) If any portion of the LaSalle Consideration is to be paid to a
Person other than the registered holder of the LaSalle Holdings Shares or
Minority Shares (as applicable) represented by the certificate or
certificates surrendered in exchange therefor, it shall be a condition to
such payment that the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay to the LaSalle Exchange Agent any
transfer or other Taxes required as a result of such payment to a Person
other than the
10
registered holder of such shares or establish to the satisfaction of the
LaSalle Exchange Agent that such Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further
registrations of transfers of LaSalle Holdings Shares or Minority Shares
other than the registration of LaSalle Holdings Shares and Minority Shares
in the name of New Holdings pursuant to Section 2.6(a). If, after the
Effective Time, certificates representing LaSalle Holdings Shares or
Minority Shares are presented to LaSalle Holdings or, subject to the
provisions of Section 2.8(e), the LaSalle Exchange Agent, they shall be
cancelled and exchanged for the LaSalle Consideration in accordance with
the procedures set forth in this Section 2.8.
(e) Any portion of the LaSalle Consideration (together with any
dividends or distributions with respect to the New Holdings Shares)
deposited with the LaSalle Exchange Agent pursuant to Section 2.8(a) and
any cash payment for a fractional New Holdings Share pursuant to Section
2.12, that remains unclaimed by the holders of LaSalle Holdings Shares or
the holders of Minority Shares twelve months after the Effective Time shall
be returned to New Holdings or an Affiliate designated by New Holdings,
upon demand, and any such holder who has not exchanged his LaSalle Holdings
Shares or Minority Shares for the LaSalle Consideration in accordance with
this Section 2.8 prior to that time shall thereafter look only to New
Holdings for his claim for New Holdings Shares and any dividends or
distributions with respect to New Holdings Shares. Notwithstanding the
foregoing, New Holdings shall not be liable to any holder of LaSalle
Holdings Shares or any holder of Minority Shares for any amount paid to a
public official pursuant to applicable abandoned property laws.
(f) No dividends or other distributions with respect to the New
Holdings Shares constituting part of the LaSalle Consideration shall be
paid to the holder of any unsurrendered certificates representing LaSalle
Holdings Shares or Minority Shares until such certificates are surrendered
as provided in this Section 2.8. Upon such surrender, there shall be paid,
without interest, to the Person in whose name the certificates representing
the New Holdings Shares received in exchange for such LaSalle Holdings
Shares or Minority Shares (as applicable) are registered, (i) all dividends
and other distributions in respect of New Holdings Shares that are payable
on a date subsequent to, and the record date for which occurs after, the
Effective Time and (ii) all dividends or other distributions in respect of
LaSalle Holdings Shares or Minority Shares (as applicable) that are payable
on a date subsequent to, and the record date for which occurs on or before,
the Effective Time.
(g) At and after the Effective Time, each holder of a certificate
or certificates that represented issued and outstanding LaSalle Holdings
Shares or Minority Shares immediately prior to the Effective Time shall
cease to have any rights as a shareholder of LaSalle Holdings or LaSalle Re
(as applicable), except for the right to surrender its certificate or
certificates in exchange for the LaSalle Consideration as provided in this
Section 2.8.
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Section 2.9. Terms of the Plan of Reorganization: Surrender and
Payment.
---------------------------------------------------
(a) Promptly after the Effective Time, New Holdings shall (i)
appoint an agent (the "Trenwick Exchange Agent") for the purpose of
exchanging certificates representing Trenwick Shares for New Holdings
Shares pursuant to Section 2.7, (ii) deposit with the Trenwick Exchange
Agent certificates representing the aggregate Trenwick Consideration to be
paid in exchange for the Trenwick Shares (together with any dividends or
distributions with respect thereto) and (iii) send, or cause the Trenwick
Exchange Agent to send, to each holder of Trenwick Shares at the Effective
Time a letter of transmittal for use in such exchange (which shall specify
that the delivery shall be effected, and risk of loss and title shall pass,
only upon proper delivery of the certificates representing Trenwick Shares
to the Trenwick Exchange Agent).
(b) Each holder of Trenwick Shares that has the right to receive
the Trenwick Consideration pursuant to the Plan of Reorganization, upon
surrender to the Trenwick Exchange Agent of a certificate or certificates
representing such Trenwick Shares, together with a properly completed
letter of transmittal covering such Trenwick Shares, shall be entitled to
receive the Trenwick Consideration payable in respect of such Trenwick
Shares. Until so surrendered, each such certificate shall, after the
Effective Time, represent for all purposes only the right to receive such
Trenwick Consideration.
(c) If any portion of the Trenwick Consideration is to be paid to
a Person other than the registered holder of the Trenwick Shares
represented by the certificate or certificates surrendered in exchange
therefor, it shall be a condition to such payment that the certificate or
certificates so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the Person requesting such payment shall
pay to the Trenwick Exchange Agent any transfer or other Taxes required as
a result of such payment to a Person other than the registered holder of
such Trenwick Shares or establish to the satisfaction of the Trenwick
Exchange Agent that such Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further
registrations of transfers of Trenwick Shares. If, after the Effective
Time, certificates representing Trenwick Shares are presented to Trenwick
or, subject to the provisions of Section 2.9(e), the Trenwick Exchange
Agent, they shall be cancelled and exchanged for the Trenwick Consideration
in accordance with the procedures set forth in this Section 2.9.
(e) Any portion of the Trenwick Consideration (together with any
dividends or distributions with respect to the New Holdings Shares)
deposited with the Trenwick Exchange Agent pursuant to Section 2.9(a), and
any cash payment for a fractional New Holdings Share pursuant to Section
2.12, that remains unclaimed by the holders of Trenwick Shares twelve
months after the Effective Time shall be returned to New Holdings or an
Affiliate designated by New Holdings, upon demand, and any such holder who
has not exchanged his Trenwick Shares for the Trenwick Consideration in
accordance with this Section 2.9 prior to that time shall thereafter look
only to New Holdings for his claim for New Holdings Shares, any cash in
lieu of fractional New Holdings Shares
12
and any dividends or distributions with respect to New Holdings Shares.
Notwithstanding the foregoing, New Holdings shall not be liable to any
holder of Trenwick Shares for any amount paid to a public official pursuant
to applicable abandoned property laws.
(f) No dividends or other distributions with respect to the New
Holdings Shares constituting part of the Trenwick Consideration shall be
paid to the holder of any unsurrendered certificates representing Trenwick
Shares until such certificates are surrendered as provided in this Section
2.9. Upon such surrender, there shall be paid, without interest, to the
Person in whose name the certificates representing the New Holdings Shares
allotted in exchange for such Trenwick Shares are registered, (i) all
dividends and other distributions in respect of New Holdings Shares that
are payable on a date subsequent to, and the record date for which occurs
after, the Effective Time and (ii) all dividends or other distributions in
respect of Trenwick Shares that are payable on a date subsequent to, and
the record date for which occurs on or before, the Effective Time.
(g) At and after the Effective Time, each holder of a certificate
or certificates that represented issued and outstanding Trenwick Shares
immediately prior to the Effective Time shall cease to have any rights as a
stockholder of Trenwick, except for the right to surrender its certificate
or certificates in exchange for the Trenwick Consideration as provided in
this Section 2.9.
Section 2.10. Voting. In determining shareholders of New Holdings
entitled to notice of and to vote at meetings of shareholders of New
Holdings, former shareholders of record of LaSalle Holdings, LaSalle Re and
Trenwick shall not be deemed shareholders of record until the register of
members of New Holdings is amended to reflect the allotment and issue of
the New Holdings Shares to such former shareholders.
Section 2.11. Lost Certificates. If any certificate representing
Trenwick Shares, LaSalle Holdings Shares or Non-Voting Shares shall have
been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such certificate to be lost, stolen or
destroyed and, if required by New Holdings, the posting by such Person of a
bond in such reasonable amount as the New Holdings may direct as indemnity
against any claim that may be made against it with respect to such
certificate, the Trenwick Exchange Agent or LaSalle Exchange Agent, as the
case may be, will deliver in exchange for such lost, stolen or destroyed
certificate the Trenwick Consideration or LaSalle Consideration, as the
case may be, with respect to the Trenwick Shares, LaSalle Holdings Shares
or Non-Voting Shares formerly represented thereby, without any interest
thereon.
Section 2.12. No Fractional Shares. No certificates or scrip
representing fractional New Holdings Shares shall be issued in exchange for
Trenwick Shares, LaSalle Holding Shares, or Non- Voting Shares, but in lieu
thereof each holder otherwise entitled to a fractional New Holdings Share
(after taking into account all Trenwick Shares, LaSalle Holdings Shares or
Non-Voting Shares, as applicable, owned by such holder) shall be entitled
to receive, from the Trenwick Exchange Agent or the LaSalle Exchange Agent,
as applicable, in accordance with the provisions of this Section 2.12, a
cash payment in lieu of such fractional New Holdings Share representing the
value of such fraction, which for this purpose shall be calculated by (i)
multiplying such fraction by the product of the
13
Average Closing Price and the Trenwick Exchange Ratio in the case of
Trenwick Shares and (ii) multiplying such fraction by the product of the
Average Closing Price and the LaSalle Exchange Ratio in the case of LaSalle
Holdings Shares and Non-Voting Shares. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
Trenwick Shares, LaSalle Holdings Shares, or Non-Voting Shares, as
applicable, in lieu of any fractional New Holdings Share, the Trenwick
Exchange Agent or the LaSalle Exchange Agent, as applicable, shall promptly
pay without interest to all holders of Trenwick Shares, LaSalle Holdings
Shares, or Non-Voting Shares, as applicable, entitled thereto all such
amounts. Holders of interests representing fractional New Holdings Shares
shall not be entitled to vote such interests or to any other rights as a
shareholder of New Holdings.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TRENWICK
Trenwick hereby represents and warrants to LaSalle Holdings that
as of the date of the Original Agreement (except to the extent that a
representation or warranty speaks as of an earlier date), with references
to "the date hereof" or the "date of this Agreement" in this Article 3
being deemed to be references to the date of the Original Agreement:
Section 3.1. Corporation; Organization.
-------------------------
(a) Except as set forth in Section 3.1(a) of the Trenwick
Disclosure Letter, each of Trenwick and its Subsidiaries is a company duly
incorporated, validly existing and in good standing (with respect to
jurisdictions that recognize such concept) under the laws of the
jurisdiction of its incorporation. Each of Trenwick and its Subsidiaries
(i) is qualified, licensed or domesticated as a foreign corporation in all
jurisdictions where such qualification, license or domestication is
required to own and operate its properties and conduct its business in the
manner and at the places presently conducted; (ii) holds all franchises,
grants, licenses, certificates, permits, consents and orders, all of which
are valid and in full force and effect, from all applicable regulatory
authorities necessary to own and operate its properties and to conduct its
business in the manner and at the places presently conducted; and (iii) has
full power and authority (corporate and other) to own, lease and operate
its respective properties and assets and to carry on its business as
presently conducted and as proposed to be conducted, except where the
failure to be so qualified, licensed or domesticated or to hold such
franchises, grants, licenses, certificates, permits, consents and orders or
to have such power and authority would not, when taken together with all
other such failures, reasonably be expected to have a Material Adverse
Effect on Trenwick. Trenwick has furnished to LaSalle Holdings complete and
correct copies of its certificate of incorporation and by-laws as in effect
on the date hereof. Such certificate of incorporation and by-laws are in
full force and effect and no other constitutional documents are applicable
to or binding upon Trenwick.
14
(b) Trenwick conducts its insurance and reinsurance operations
through the Subsidiaries set forth in Section 3.1(b) of the Trenwick
Disclosure Letter (collectively, the "Trenwick Insurance Subsidiaries").
Each of the Trenwick Insurance Subsidiaries is (i) duly licensed or
authorized as an insurance company or (as applicable) a reinsurer in its
jurisdiction of incorporation or duly licensed to operate in the insurance
or reinsurance business (as applicable) in its jurisdiction of
incorporation, (ii) duly licensed or authorized as an insurance company and
(as applicable) a reinsurer in each other jurisdiction where it is required
to be so licensed or authorized or duly licensed to operate in the
insurance or reinsurance business (as applicable) in each other
jurisdiction where it is required to be so licensed and (iii) duly
authorized in its jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business currently written by such
Trenwick Insurance Subsidiaries, except, in any such case, where the
failure to be so licensed or authorized is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Trenwick.
Except as set forth in Section 3.1(b) of the Trenwick Disclosure Letter,
Trenwick has made all required filings under applicable insurance holding
company statutes except where the failure to file is not reasonably
expected to have a Material Adverse Effect on Trenwick.
Section 3.2. Authority; Approval and Fairness.
--------------------------------
(a) Trenwick has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the due approval and
adoption of this Agreement by its stockholders, to perform its obligations
hereunder and consummate the transactions contemplated hereby. Trenwick has
all requisite corporate power and authority to enter into the Stock Option
Agreements and to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement by Trenwick, the performance by
Trenwick of its obligations hereunder and the consummation by Trenwick of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Trenwick, subject only to
compliance with the provisions of Sections 271 and 275 of the GCL. No other
corporate proceedings on the part of Trenwick are necessary for the
execution and delivery of this Agreement by Trenwick and, subject to
compliance with the provisions of Sections 271 and 275 of the GCL, the
performance by Trenwick of its obligations hereunder and the consummation
by Trenwick of the transactions contemplated hereby. This Agreement and the
Stock Option Agreements have been duly executed and delivered by Trenwick
and (assuming the due authorization, execution and delivery of this
Agreement and the Stock Option Agreements by LaSalle Holdings, LaSalle Re),
subject to the provisions of Sections 271 and 275 of the GCL, constitute
legal, valid and binding obligations of Trenwick, enforceable against
Trenwick in accordance its terms, subject with respect to enforceability to
the effect of bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or similar laws now or hereafter affecting the
enforcement of creditors' rights generally and to the availability of
equitable remedies.
(b) The Board of Directors of Trenwick (the "Trenwick Board") (i)
has unanimously (by all directors present at a meeting duly called and
held) declared that it considers this Agreement, the Plan of Reorganization
and the other transactions contemplated hereby to be advisable and in the
best interests of Trenwick and its stockholders, and (ii) has authorized
and approved in all respects this Agreement, the Plans and the other
transactions contemplated hereby.
15
Section 3.3. Capital Structure.
-----------------
(a) As of the date hereof, the authorized capital stock of
Trenwick consists of 30,000,000 shares of common stock with a par value of
$0.10 per share and 2,000,000 shares of preferred stock with a par value of
$0.10 per share. As of December 15, 1999, (i) 17,388,981 shares of common
stock were issued and outstanding, (ii) no shares of common stock were held
as treasury shares or by Subsidiaries of Trenwick, (iv) 200,000 shares of
Series B Junior Participating Preferred Stock were reserved for issuance
upon exercise of the rights (the "Rights") distributed to the holders of
shares of common stock pursuant to the Rights Agreement dated as of
September 24, 1997 (the "Rights Agreement"), between Trenwick and First
Chicago Trust Company of New York, as Rights Agent, and (v) no shares of
preferred stock were issued or outstanding. Section 3.3(a) of the Trenwick
Disclosure Letter sets forth each plan, arrangement or agreement pursuant
to which options or stock appreciation rights with respect to Trenwick
Shares may be granted or under which such options or stock appreciation
rights have been granted and are outstanding (the "Trenwick Option Plans")
and in the aggregate the maximum number of options and stock appreciation
rights outstanding as of the date hereof and the class and number of
Trenwick Shares reserved for issue pursuant to the Trenwick Option Plans
(such options and rights being herein collectively referred to as the
"Trenwick Options"), together with a listing of the aggregate number of
such Trenwick Options which shall vest at the Effective Time as a result of
the Plan of Reorganization. Each of the outstanding shares of capital stock
of each Subsidiary of Trenwick, other than the 110,000 redeemable preferred
capital securities (liquidation amount $1,000 per security) issued by
Trenwick Capital Trust I, a Delaware statutory business trust ("Trenwick
Capital"), and other than as set forth in Section 3.3(a) of the Trenwick
Disclosure Letter, is directly or indirectly owned by Trenwick, free and
clear of all Liens.
(b) Except as described in Section 3.3(b) of the Trenwick
Disclosure Letter, no bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having
the right to vote) on any matters on which stockholders may vote ("Voting
Debt") of Trenwick or any of its Subsidiaries are issued or outstanding.
(c) Except as described in Sections 3.3(a), (b) or (c) of the
Trenwick Disclosure Letter, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Trenwick or any of its
Subsidiaries is a party or by which any of them is bound obligating
Trenwick or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or any
Voting Debt of Trenwick or any of its Subsidiaries or obligating Trenwick
or any of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Except as set forth in this
Agreement or in Section 3.3(c) of the Trenwick Disclosure Letter, there are
no outstanding contractual obligations of Trenwick or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Trenwick or any of its Subsidiaries.
16
(d) Except as described in Section 3.3(d) of the Trenwick
Disclosure Letter or as specifically described in this Agreement and except
for quarterly dividends in an amount not in excess of $0.26 per share,
since September 30, 1999, Trenwick has not (i) made or agreed to make any
share split or share dividend, or issued or permitted or agreed to permit
to be issued any shares, or securities exercisable for or convertible into
shares, of capital stock of Trenwick other than pursuant to and as required
by the terms of any Trenwick Option; (ii) repurchased, redeemed or
otherwise acquired any shares of capital stock of Trenwick; or (iii)
declared, set aside, made or paid to the stockholders of Trenwick dividends
or other distributions on the outstanding shares of capital stock of
Trenwick.
Section 3.4. SEC Reports; Financial Statements.
----------------------------------
(a) Trenwick has delivered or made available to LaSalle Holdings a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement or information statement (including exhibits)
filed by Trenwick or Chartwell Re Corporation ("Chartwell") with the SEC in
respect of their respective fiscal years ending December 31, 1997 and 1998
and their respective quarters ending after December 31, 1998 under the
Securities Act and the Exchange Act and will deliver to LaSalle Holdings
promptly upon the filing thereof with the SEC all such reports, schedules,
registration statements and proxy statements (including exhibits) as may be
filed after the date hereof and prior to the Effective Time (as such
documents have since the time of their filing been amended, including
without limitation, amendments reflected in the Joint Proxy
Statement/Prospectus dated September 7, 1999 or may after their filing, if
after the date hereof, be amended, the "Trenwick SEC Reports"), which are
or will be all the documents that Trenwick was or will be required to file
with the SEC. Except as disclosed in Section 3.4(a) of the Trenwick
Disclosure Letter, as of their respective dates, the Trenwick SEC Reports
complied or will comply in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to the Trenwick SEC
Reports, and none of the Trenwick SEC Reports contained or will contain any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made or will be made, not misleading.
(b) As of their respective dates, the financial statements of
Trenwick included or to be included in the Trenwick SEC Reports (the
"Trenwick Financial Statements") complied or will comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, and
presented or will present fairly in all material respects the consolidated
financial position of Trenwick and its Subsidiaries and the consolidated
results of operations, changes in stockholders' equity and cash flows of
Trenwick and its Subsidiaries as of the dates and for the periods
indicated, in accordance with GAAP applied on a consistent basis, subject
in the case of interim financial statements to normal year-end adjustments
and except for the absence of certain footnote information in the unaudited
statements.
17
(c) Except as set forth in, or arising out of facts or
circumstances disclosed in, filings by Trenwick with the SEC prior to the
date hereof, Trenwick and its Subsidiaries have no liabilities, debts,
claims or obligations of any nature on the date hereof, whether accrued,
absolute, direct or indirect, contingent or otherwise, whether due or to
become due, that would be required to be included on a balance sheet
prepared in accordance with GAAP ("Trenwick Liabilities"), and there is no
existing condition or set of circumstances which would reasonably be
expected to result in a Trenwick Liability, except for (i) Trenwick
Liabilities incurred in the ordinary and usual course of business and
consistent with past practice since September 30, 1999, (ii) Trenwick
Liabilities incurred in connection with or as a result of the transactions
contemplated by this Agreement and (iii) Trenwick Liabilities that would
not reasonably be expected to have a Material Adverse Effect on Trenwick.
Section 3.5. Absence of Certain Changes or Events. Except in
connection with this Agreement, the Plans, the Stock Option Agreements and
the transactions contemplated hereby and thereby or except as described in
Section 3.5 of the Trenwick Disclosure Letter, as disclosed in the Trenwick
SEC Reports filed and publicly available prior to the date of this
Agreement (the "Filed Trenwick SEC Reports") since the date of the most
recent audited financial statements included in the Filed Trenwick SEC
Reports, Trenwick and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice, and there has not occurred
(i) any event or change having individually or in the aggregate a Material
Adverse Effect on Trenwick, (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property)
with respect to any of Trenwick's outstanding capital stock, other than
regular quarterly cash dividends of not more than $0.26 per share on the
Trenwick Shares and dividends paid by wholly owned subsidiaries, (iii) (A)
any granting by Trenwick or any of its Subsidiaries to any current or
former director or officer of Trenwick or its Subsidiaries of any increase
in compensation, bonus or other benefits, except for normal increases in
the ordinary course of business, (B) any granting by Trenwick or any of its
Subsidiaries to any such current or former director or officer of any
increase in severance or termination pay or (C) any entry by Trenwick or
any of its Subsidiaries into, or any amendments of, any employment,
deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director or
officer, (iv) any tax election that individually or in the aggregate would
have a Material Adverse Effect on Trenwick or any of its tax attributes or
any settlement or compromise of any material income tax liability, or (v)
any change in accounting methods, principles or practices by Trenwick or
any of its Subsidiaries materially affecting their assets, liabilities or
business, except insofar as may have been required or permitted by a change
in applicable accounting principles (including statutory accounting
practices ("SAP")).
Section 3.6. Certain Fees. No finder, broker, agent, financial
advisor or other intermediary other than DLJ has acted on behalf of
Trenwick in connection with this Agreement or the transactions contemplated
hereby, or is entitled to any payment in connection herewith. Trenwick has
provided to LaSalle Holdings copies of Trenwick's engagement letter with
DLJ in connection with this Agreement and the transactions contemplated
hereby.
18
Section 3.7. No Defaults. Neither Trenwick nor any of its
Subsidiaries is in default or violation (and no event has occurred which
with notice or lapse of time or both would constitute a default or
violation) of its certificate of incorporation or by-laws or other
governing document, or any material agreement, mortgage, indenture,
debenture, trust, lease, license or other instrument or obligation to or by
which it or any of its properties is subject or bound (the "Trenwick
Instruments"), except for such defaults or violations as would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Trenwick. Except as set forth in Section 3.7 of
the Trenwick Disclosure Letter, the execution, delivery and performance of
this Agreement and the taking of any other action contemplated by this
Agreement will not (i) result in any violation of or be in conflict with or
constitute a breach or default (with or without notice or lapse of time or
both) under (a) the certificate of incorporation or by-laws of Trenwick or
its Subsidiaries or (b) any of the other Trenwick Instruments, except for
any such violation of, conflict with, breach of or default under which
would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Trenwick, (ii) result in or constitute an
event entitling any party to a Trenwick Instrument to effect an
acceleration of the maturity of any indebtedness of Trenwick or any of its
Subsidiaries or an increase in the rate of interest presently in effect
with respect to such indebtedness, except for any such accelerations or
increases which would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Trenwick or (iii) result in
the creation of any Lien upon any of the properties or assets of Trenwick,
except for Permitted Liens and any Liens which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Trenwick.
Section 3.8. Consents.
--------
(a) Except as set forth in Section 3.8 of the Trenwick Disclosure
Letter and except for compliance with the provisions of Sections 271 and
275 of the GCL and the approval of Lloyd's, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or filing with, any Governmental Authority ("Consent") is required on the
part of Trenwick or any of its Subsidiaries in connection with the
execution, delivery and performance by Trenwick of this Agreement and the
consummation by Trenwick of the transactions contemplated hereby, except
those required by (i) compliance with any applicable requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) United States federal and state securities or "Blue Sky" laws
and (iii) where failure to obtain such Consent would not be reasonably
expected to have a Material Adverse Effect on Trenwick.
(b) Other than the affirmative vote of the holders of more than
50% of the issued and outstanding Trenwick Shares (with each share having
one vote per share) required to approve and adopt this Agreement and the
Plan of Reorganization, there is no other vote, consent or approval of the
holders of any class of shares of Trenwick necessary to approve and adopt
this Agreement, the Plan of Reorganization and the transactions
contemplated hereby.
Section 3.9. Compliance with Applicable Law. Each of Trenwick and
its Subsidiaries is n compliance with all licenses, permits and other
authorizations, domestic or foreign, necessary to
19
conduct its respective business, except where failure to have or comply
with such licenses, permits and authorizations would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Trenwick. Neither Trenwick nor any of its Subsidiaries is in
default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any
judgment, decree, order, law, statute, rule or regulation of any
Governmental Authority, except for such defaults or violations as would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Trenwick. Subject to obtaining the Consents
referred to in Section 3.8, the execution, delivery and performance of this
Agreement by Trenwick and the consummation by Trenwick of the transactions
contemplated hereby prior to the date or dates as of which the
representations and warranties herein are made or deemed made, will not
result in any default or violation of any judgment, decree, order, law,
statute, rule or regulation of any Governmental Authority applicable to
Trenwick or its Subsidiaries, except for such defaults or violations as
would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Trenwick.
Section 3.10. Information Supplied. None of the information
supplied or to be supplied by Trenwick for inclusion or incorporation by
reference in the Registration Statement on Form S-4 (the "Form S-4") to be
filed with the SEC by New Holdings relating to the New Holdings Shares
comprising LaSalle Consideration and Trenwick Consideration will, at the
time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading. The letters to shareholders, notices
of meetings, proxy statements and forms of proxies to be distributed to
shareholders of LaSalle Holdings and stockholders of Trenwick,
respectively, in connection with the Plans and the transactions
contemplated hereby, except information supplied by LaSalle Holdings in
writing for inclusion in the Joint Proxy Statement (as defined herein),
will not, as of the date the Joint Proxy Statement is first mailed to such
shareholders and on the date of the meetings of Trenwick's stockholders or
LaSalle Holdings' shareholders, as the case may be, and the date of any
postponement or adjournment thereof, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
information and documents referred to in the previous two sentences are
herein referred to as the "Joint Proxy Statement." All documents that
Trenwick is responsible for filing with any Governmental Authority in
connection with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of any applicable law.
Section 3.11. Material Contracts. Except as set forth in Section
3.11 of the Trenwick isclosure Letter:
(a) All of the contracts of Trenwick and its Subsidiaries that are
required to be described in the Trenwick SEC Reports or to be filed as exhibits
thereto (including, without limitation,
20
contracts of Chartwell) are described in the Trenwick SEC Reports or filed
as exhibits thereto and are in full force and effect.
(b) Neither Trenwick nor any of its Subsidiaries is a party to any
agreement containing any provision or covenant limiting in any material
respect the ability of Trenwick or any of its Subsidiaries (or New Holdings
or any of its Subsidiaries subsequent to the Effective Time) to (i) sell
any products or services of or to any other Person, (ii) engage in any line
of business in any geographical area 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 Trenwick or any of its Subsidiaries.
(c) Neither Trenwick nor any of its Subsidiaries is a party to or
bound by any contract, agreement or arrangement which would cause the
rights or obligations of any party thereto to change in the event of the
Plans, except for any such contract, agreement or arrangement which would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Trenwick.
Section 3.12. Taxes. Except as provided in Section 3.12 of the
Trenwick Disclosure Letter:
(a) Trenwick and its Subsidiaries have filed or caused to be filed
with the appropriate United States federal, state, local, foreign and other
Governmental Authorities, all Tax returns, information returns and reports
required to be filed on or prior to the date hereof (taking into account
all valid extensions). All such Tax returns, information returns and
reports are complete and accurate in all material respects.
(b) Trenwick and its Subsidiaries have paid in full or made
adequate provision (in accordance with GAAP) for the payment of all Taxes
shown to be due on the Tax returns referred to in Section 3.12(a). All
material written assessments of Taxes due and payable by or on behalf of
Trenwick or any of its Subsidiaries have either been paid or provided for
(in accordance with GAAP) or are being contested in good faith by
appropriate proceedings.
(c) There are no material Tax claims pending against Trenwick or
any of its Subsidiaries and Trenwick does not know of any threatened claim
for Tax deficiencies or any basis for such claims, no material issues have
been raised in any examination by any taxing authority with respect to
Trenwick or any of its Subsidiaries which, by application of similar
principles, reasonably could be expected to result in a proposed deficiency
for any other period not so examined, and there are not now in force any
waivers or agreements by Trenwick or any of its Subsidiaries for the
extension of time for the assessment of any material Tax, nor has any such
waiver or agreement been requested by any taxing authority. Neither
Trenwick nor any of its Subsidiaries has any liability for any material
United States federal, state, local, foreign or other Taxes of any
corporation or entity other than Trenwick and its Subsidiaries.
21
(d) There are no Liens on any of the assets of Trenwick or any of
its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Taxes (other than Taxes that are not due as of the date
hereof).
(e) Trenwick and its Subsidiaries have withheld and paid all
United States federal, state, local, foreign and other Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party.
(f) To Trenwick's knowledge, Section 3.12(f) of the Trenwick
Disclosure Letter discloses, with respect to the year ended December 31,
1998 and for the period commencing January 1, 1999 and ending on the date
of the Trenwick Disclosure Letter, (i) each insurance or reinsurance
transaction by Trenwick or any of its Subsidiaries directly with
stockholders of Trenwick and (ii) each insurance or reinsurance transaction
by Trenwick or any of its Subsidiaries directly or indirectly with Persons
related to stockholders of Trenwick and not disclosed in clause (i) above,
which would cause Trenwick or any of its Subsidiaries to have any "related
person insurance income" within the meaning of Section 953(c)(2) of the
Code.
(g) To Trenwick's knowledge, Trenwick and its Subsidiaries did not
have for the year ended December 31, 1998, and Trenwick does not expect
Trenwick or any of its Subsidiaries to have for the period ending at the
Effective Time (treating such period as if it were a taxable year),
"related person insurance income" within the meaning of Section 953(c)(2)
of the Code in excess of the exceptions provided in Sections 953(c)(3)(A)
and (B) of the Code.
(h) To Trenwick's knowledge, except as disclosed in Section
3.12(h) of the Trenwick Disclosure Letter, neither Trenwick nor any of its
Subsidiaries is, nor has Trenwick or any of its Subsidiaries ever been, a
"controlled foreign corporation" within the meaning of Section 957(a) or
957(b) of the Code.
(i) A representation with respect to Taxes contained in this
Section 3.12 shall be deemed to be accurate unless an inaccuracy contained
therein would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Trenwick.
Section 3.13. Litigation. Except as disclosed in the Trenwick SEC
Reports filed prior to the date hereof or in Section 3.13 of the Trenwick
Disclosure Letter, there are no actions, suits, claims, proceedings or
investigations pending against or, to the knowledge of Trenwick, threatened
against or affecting, Trenwick or any of its Subsidiaries or any of their
respective properties or any syndicates managed by a Lloyd's or other
managing agency which is a Subsidiary of Trenwick ("Trenwick Managing
Agency") before any Governmental Authority or otherwise which (a) would be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Trenwick, (b) in any manner challenges or seeks to prevent,
enjoin, alter or delay the transactions contemplated hereby or (c) alleges
criminal action or inaction. As of the date hereof, neither Trenwick nor
its Subsidiaries or any of their respective properties is subject to any
order, writ, judgment, injunction, decree, determination or award having,
or which would reasonably be expected to have, a Material
22
Adverse Effect on Trenwick or which would prevent or delay the consummation
of the transactions contemplated hereby. Except as disclosed in the
Trenwick SEC Reports filed prior to the date hereof, there are no pending
or, to the knowledge of Trenwick, threatened claims for indemnification by
Trenwick or any of its Subsidiaries in favor of directors, officers,
employees and agents of Trenwick or any of its Subsidiaries.
Section 3.14. Title to Properties; Leases. Except as set forth in
Section 3.14(a) of the Trenwick Disclosure Letter, each of Trenwick and its
Subsidiaries has good and marketable title to, and is the lawful owner of,
or has the right to use pursuant to a license or otherwise, all of the
tangible and intangible assets, properties and rights used in its
businesses and all tangible and intangible assets, properties and rights
reflected on the balance sheet of Trenwick dated September 30, 1999 or
acquired since September 30, 1999, free and clear of all Liens (other than
Permitted Liens) and material defects. Trenwick and its Subsidiaries own no
real property. Section 3.14(b) of the Trenwick Disclosure Letter sets forth
all material real property and personal property leases of Trenwick and its
Subsidiaries. All such leases are valid, binding and enforceable against
Trenwick or its Subsidiaries (and, to the knowledge of Trenwick and its
Subsidiaries, each other party thereto) in accordance with their respective
terms, and there does not exist, under any lease of real property or
personal property, any material defect or any event which, with notice or
lapse of time or both, would constitute a material default by the Trenwick
or its Subsidiaries, as the case may be, or, to the knowledge of Trenwick
and its Subsidiaries, by any other party thereto.
Section 3.15. Employees.
---------
(a) Section 3.15(a) of the Trenwick Disclosure Letter lists all
employment contracts and similar arrangements between Trenwick or any of
its Subsidiaries and their respective executive officers and all plans and
arrangements pursuant to which Trenwick or any of its Subsidiaries is
obligated to make any payment or confer any material benefit upon any
officer, director, employee or agent of Trenwick or any of its Subsidiaries
as a result of or in connection with any of the transactions contemplated
by this Agreement or any transaction or transactions resulting in a change
of control of Trenwick or any of its Subsidiaries (including as a result of
a termination of employment in connection with any of such events). Except
as described in Section 3.15(a) of the Trenwick Disclosure Letter and
except as would not reasonably be expected to have a Material Adverse
Effect on Trenwick, (a) Trenwick and its Subsidiaries have complied with
all laws relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity and collective bargaining and
(b) no labor dispute with employees of Trenwick or any of its Subsidiaries
exists or, to the knowledge of Trenwick, is threatened. The severance costs
associated with the acquisition of Chartwell and related workforce
reductions have been identified and are as set forth in Section 3.15(a) of
the Trenwick Disclosure Letter.
(b) Except as set forth in Section 3.15(b) of the Trenwick
Disclosure Letter, neither Trenwick nor any of its Subsidiaries is a party
to any collective bargaining or other labor union contract applicable to
Persons employed by Trenwick or any of its Subsidiaries, no collective
bargaining agreement is being negotiated by Trenwick or any of its
Subsidiaries and Trenwick has
23
no knowledge of any activities or proceedings of any labor union to
organize any of their respective employees. There is no labor dispute,
strike or work stoppage against Trenwick or any of its Subsidiaries pending
or, to Trenwick's knowledge, threatened which may interfere with the
respective business activities of Trenwick or any of its Subsidiaries,
except where such dispute, strike or work stoppage would not reasonably be
expected to have a Material Adverse Effect on Trenwick.
(c) Trenwick has made all necessary notifications to and received
all necessary consents from Lloyd's and the Financial Services Authority
with respect to the employment of personnel requiring such notification or
consents.
Section 3.16. Benefit Plans.
------------
(a) (i) Each Employee Benefit Plan maintained or contributed to,
or required to be maintained or contributed to, by Trenwick or any of its
Subsidiaries for the benefit of any present or former U.S. officer,
employee or director of Trenwick or any of its Subsidiaries (all the
foregoing collectively referred to hereinafter as "Trenwick Benefit Plans")
has been administered substantially in accordance with its terms and any
related trust agreement or insurance contract has been administered
substantially in accordance with its terms. Trenwick, its Subsidiaries and
all the Trenwick Benefit Plans, and any related trust agreements or
insurance contracts, are in substantial compliance with the applicable
provisions of ERISA, the Code, all other applicable laws and all applicable
collective bargaining agreements.
(ii) None of Trenwick or any other person or entity that
together with Trenwick is treated as a single employer
under Section 414 of the Code (each a "Trenwick Commonly
Controlled Entity") has incurred any material liability
under Title IV of ERISA (other than for the payment of
benefits or the timely payment of Pension Benefit
Guaranty Corporation insurance premiums, in either case
in the ordinary course) or under Section 412(f) or 412(n)
of the Code, and no condition exists which could
reasonably be expected to present a risk of Trenwick or
any Commonly Controlled Entity incurring such a material
liability.
(iii) Neither Trenwick nor any Trenwick Commonly
Controlled Entity is obligated to contribute to any
"multiemployer plan" (as defined in Section 3(37) or
Section 4001(a)(3) of ERISA) or has any material
liability, including current or potential withdrawal
liability (within the meaning of Section 4201 of ERISA)
with respect to any multiemployer plan.
(iv) Except as contemplated by Section 2.4 or as
disclosed in the Filed Trenwick SEC Documents or in
Section 3.16(a)(iv) of the Trenwick Disclosure Schedule,
since the date of the most recent audited financial
statements included in the Filed Trenwick SEC Documents,
there has not been any adoption or amendment by Trenwick
or any of its Subsidiaries of any collective bargaining
agreement or any
24
Trenwick Benefit Plan. Except as disclosed in the Filed
Trenwick SEC Documents or in Section 3.16(a)(iv) of the
Trenwick Disclosure Schedule, there exist no employment,
consulting, change in control, severance, termination or
indemnification agreements, arrangements or
understandings between Trenwick or any Subsidiary and any
current or former employee, officer or director of
Trenwick or any Subsidiary or any Trenwick Benefit Plan.
(v) All material contributions and other payments
required to be made by Trenwick and its subsidiaries to
any Trenwick Benefit Plan prior to the date hereof have
been made and all accruals required to be made under any
Trenwick Benefit Plan have been made. There is no claim,
dispute, grievance, charge, complaint, restraining or
injunctive order, litigation or proceeding pending, or,
to the knowledge of Trenwick, threatened or anticipated
(other than routine claims for benefits) against or
relating to any Trenwick Benefit Plan or against the
assets of any Trenwick Benefit Plan which could
reasonably be expected to result in the imposition of any
material liability of Trenwick. Neither Trenwick nor any
of its Subsidiaries has communicated generally to
employees or specifically to any employee regarding any
future increase of benefit levels (or future creations of
new benefits) with respect to any Trenwick Benefit Plans.
(vi) Each Trenwick Benefit Plan can be terminated or
otherwise discontinued without any liability to Trenwick
or any Subsidiary that would reasonably be expected to
have a Material Adverse Effect. With respect to each
Trenwick Benefit Plan subject to Title IV of ERISA and
with respect to each plan of a Trenwick Commonly
Controlled Entity subject to Title IV of ERISA (each a
"Trenwick Defined Benefit Plan") Trenwick Defined Benefit
Plan (i) no termination of any Trenwick Defined Benefit
Plan has occurred pursuant to which all liabilities have
not been satisfied in full, and no event has occurred and
no condition exists that could reasonably be expected to
result in Trenwick or any Trenwick Commonly Controlled
Entity incurring liability under Title IV of ERISA or
could constitute grounds for terminating any Trenwick
Defined Benefit Plan; (ii) each Trenwick Defined Benefit
Plan which is subject to Part 3 of Subtitle B of Title I
of ERISA or Section 412 of the Code, has been maintained
in compliance with the minimum funding standards of ERISA
and the Code and no such Trenwick Defined Benefit Plan
has incurred any "accumulated funding deficiency," as
defined in Section 412 of the Code and Section 302 of
ERISA, whether or not waived; (iii) neither Trenwick nor
any Trenwick Commonly Controlled Entity has sought or
received a waiver of its funding requirements with
respect to any Trenwick Defined Benefit Plan and all
material contributions payable with respect to each
Defined Benefit Plan have been timely made; (iv) no
reportable event, within the meaning of Section 4043 of
ERISA, and no event described in Section 4062 or 4063 of
ERISA, has occurred with respect to any Trenwick Defined
Benefit Plan; (v) the aggregate accumulated benefit
obligations of each Trenwick Defined Benefit Plan subject
to Title IV of ERISA (as
25
of the date of the most recent actuarial valuation
prepared for such Trenwick Defined Benefit Plan) do not
exceed the fair market value of the assets of such
Trenwick Defined Benefit Plan (as of the date of such
valuation); and (vi) no amendment has been made to any
Trenwick Defined Benefit Plan that has required or would
require the provision of security under ERISA Section 307
or Code Section 401(a)(29).
(vii) The execution, delivery and performance of this
Agreement and the transactions contemplated hereby will
not in and of themselves result in the imposition of any
federal excise tax with respect to any Trenwick Benefit
Plan.
(viii) Neither Trenwick nor any Subsidiary maintains or
contributes (or has maintained or contributed to) any
Trenwick Benefit Plan which provides, or has a liability
to provide, life insurance, medical, severance, or other
employee welfare benefits to any employee upon his
retirement or termination of employment, except as may be
required by Section 4980B of the Code.
(ix) Neither Trenwick nor any of its subsidiaries
maintains or contributes to a trust, organization or
association described in any of the Sections 501(c)(9),
501(c)(17) or 501(c)(2) of the Code.
(x) Favorable determination letters have been received
from the Internal Revenue Service with respect to each
Trenwick Benefit Plan which is intended to comply with
the provisions of Section 401(a) of the Code, and each
such Trenwick Benefit Plan complies in form and in
operation in all material respects with the requirements
of a "qualified plan" under Section 401(a) of the Code.
(xi) Neither Trenwick nor any of its Subsidiaries, nor
any of their respective directors, officers, employees
or, to the knowledge of Trenwick any other "fiduciary,"
as such term is defined in Section 3(21) of ERISA, has
any liability for failure to comply with ERISA or the
Code for any action or failure to act in connection with
the administration or investment of the Trenwick Benefit
Plans.
(xii) There has been no act or acts which would result in
a disallowance of a deduction or the imposition of a tax
pursuant to Section 4980B, or with regard to plan years
beginning before December 31, 1988, Section 162(i) of the
Code as in effect immediately prior to the enactment of
the Technical and Miscellaneous Revenue Act of 1988, or
any regulations promulgated thereunder, whether final,
temporary or proposed. No event has occurred with respect
to which Trenwick or any of its subsidiaries could be
liable for a tax imposed by Chapter 43 of Subtitle A of
the Code, or for a civil penalty or other liability under
Section 502(c) or Section 501(l) of ERISA. Each Trenwick
Benefit Plan that is a "group health plan" as defined in
Section 607 of ERISA complies in all material respects
and has been
26
operated in substantial compliance in all respects with
Part 7 of Title I, Subtitle B of ERISA and Subtitle K of
the Code.
(xiii) With respect to each of the Trenwick Benefit
Plans, Trenwick has delivered to LaSalle Holdings true
and complete copies of: (a) the plan documents, including
any related trust agreements, insurance contracts or
other funding arrangements, or a written summary of the
terms and conditions of the plan if there is no written
plan document; (b) the most recent determination letter
received from the Internal Revenue Service; (c) the most
recent IRS Form 5500; (d) the most recent actuarial
valuation; (e) the most recent financial statement; (f)
all material correspondence with the Internal Revenue
Service, the Department of Labor and the Pension Benefit
Guaranty Corporation with respect to the past three plan
years other than IRS Form 5500 filings and PBGC premium
payments; and (g) the most recent summary plan
description.
(xiv) None of the payments contemplated by any Trenwick
Employee Benefit Plans would, in the aggregate,
constitute excess parachute payments (as defined in
Section 280G of the Code (without regard to subsection
(b)(4) thereof)).
(xv) Except as disclosed in the Section 3.16(a)(xv) of
the Trenwick Disclosure Letter, the consummation of the
Plan of Reorganization (or the approval thereof by the
parties' respective shareholders) and the other
transactions contemplated by this Agreement, will not (x)
entitle any employees or directors of Trenwick or of any
Trenwick Commonly Controlled Entity, directly or
indirectly to severance pay; (y) accelerate the time of
payment or vesting or trigger any payment of compensation
or benefits under, or increase the amount payable or
trigger any other material obligation pursuant to, any of
the Trenwick Benefit Plans; or (z) result in any breach
or violation of, or default under any of the Trenwick
Benefit Plans.
(b) Except as would not have a Material Adverse Effect on
Trenwick, except as set forth in Section 3.16(b) of the Trenwick Disclosure
Letter and so far as ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. English, ▇▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, who are senior management of Trenwick's international
operations, are aware:
(i) There is no existing or threatened or pending
industrial or trade dispute involving Trenwick
International Limited ("Trenwick International") and any
of the employees of Trenwick International and there are
no facts known or which would on reasonable inquiry be
known to Trenwick International which might indicate that
there may be any such dispute (excluding the Plan of
Reorganization and the transactions contemplated by this
Agreement). There are no agreements or arrangements
(whether oral or in writing or existing by reason of
custom and practice and whether or not legally binding)
between Trenwick International and any trade union or
other employees' representatives or organization
concerning or affecting the
27
employees of Trenwick International and there are no
trade unions or other employees' representatives whom
Trenwick International recognizes to any extent for
collective bargaining purposes nor, so far as Trenwick
International is aware, has Trenwick International done
any act which might be construed as recognition.
(ii) Trenwick International has given no notice of any
redundancies to the U.K. Secretary of State nor started
consultations with any independent trade union or
employees' representatives within the preceding period of
one year in relation to any employees of Trenwick
International. No circumstances have arisen under which
Trenwick International is likely to be required to pay
damages for wrongful dismissal or breach of contract, to
make any contractual or statutory redundancy payment or
make or pay any compensation in respect of unfair
dismissal, to make any other payment under any employment
protection legislation or to reinstate or re-engage any
former employee. No circumstances have arisen under which
Trenwick International is likely to be required to pay
damages or compensation, or suffer any penalty or be
required to take corrective action or be subject to any
form of discipline under the Employment Rights ▇▇▇ ▇▇▇▇,
the Trade Union and Labor Relations (Consolidation) ▇▇▇
▇▇▇▇, the Transfer of Undertakings (Protection of
Employment) Regulations 1981, the Sex Discrimination ▇▇▇
▇▇▇▇, the Equal Pay ▇▇▇ ▇▇▇▇, the Treaty of Rome or any
Directive or recommendation made pursuant to it, the Race
Relations ▇▇▇ ▇▇▇▇ or the Disability Discrimination ▇▇▇
▇▇▇▇. So far as Trenwick International is aware, there
are no current, pending or threatened claims of any type
against Trenwick International by any existing or former
employees or directors of Trenwick International or by
any existing or former consultants to Trenwick
International.
(iii) There are no existing service or other agreements
or contracts between Trenwick International and any of
its directors or executives or employees which cannot be
lawfully terminated by six calendar months' notice or
less without giving rise to any claim for damages or
compensation other than a statutory redundancy payment or
a claim for unfair dismissal depending on the
circumstances of the termination. Trenwick International
has complied with all its material obligations under all
legislation, regulations and other requirements having
the force of law (including, without limitation, orders
and awards) in connection with its employees, directors
and consultants.
(iv) Trenwick International is not involved in
negotiations (whether with employees or any trade union
or other employees' representatives) to vary the terms
and conditions of employment or engagement of any of its
employees, directors or consultants and has not made any
representations, promises, offers or proposals to any of
its employees, directors or consultants or to any trade
union or other employees' representatives concerning or
affecting the terms and conditions of employment or
engagement of any of its employees, directors or
consultants.
28
(v) Trenwick International has discharged its obligations
in full in relation to salary, wages, fees, commission,
bonuses, overtime pay, holiday pay, sick pay and all
other benefits and emoluments relating to its employees,
consultants and directors in respect of all prior
periods.
(vi) There are no pension, share option, share incentive,
life assurance, disability or similar schemes,
arrangements or obligations for any employees or
directors of Trenwick International, and Trenwick
International has no obligations (whether legally binding
or established by custom) to pay any pension or make any
other payment after retirement or death or otherwise to
provide "relevant benefits" within the meaning of Section
612 of the U.K. Income and Corporation Taxes Act 1988 or
to make any payment for the purpose of providing such
"relevant benefits" to or in respect of any person who is
now or has been an officer or employee of Trenwick
International and is not a party to any scheme or
arrangement having as its purpose or one of its purposes
the making of such payments or the provision of such
benefits.
(vii) All Employee Benefit Plans comply with and have at
all times complied with the provisions of the relevant
legislation and the requirements of the Pension Schemes
Office and the Contributions Agency affecting schemes
approved under Chapter I of Part XIV of the U.K. Income
and Corporation Taxes ▇▇▇ ▇▇▇▇. Trenwick International
and the trustees of such schemes have duly complied with
their respective obligations under the trust deeds and
the rules thereof and under the aforementioned
legislation and requirements. All amounts due to the
trustees thereof or to any insurance company in
connection therewith have been paid.
(viii) Neither Trenwick International nor the trustees of
any pension scheme is engaged in any litigation or
arbitration proceedings in respect of any Employee
Benefit Plan or any benefit provided thereunder in
relation to the employees or former employees of Trenwick
International and there are no current submissions or
referrals to the Pensions Ombudsman or to the
Occupational Pensions Advisory Service in respect of
Trenwick International or any pension scheme.
(ix) No Employee Benefit Plan in which employees or
former employees of Trenwick International participate or
have participated has been or is in the process of being
(or is proposed to be) wound up (in whole or in part) or
closed to new entrants (in whole or in part).
Section 3.17. Intellectual Property. Trenwick and its Subsidiaries
own or possess, or have all necessary rights and licenses in, all patents,
patent rights, licenses, inventions (whether or not patentable or reduced
to practice), copyrights (whether registered or unregistered), know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), registered
and unregistered trademarks, service marks and trade names and other
intellectual property rights (collectively, "Intellectual Property")
necessary to
29
conduct their business as conducted and proposed to be conducted except to
the extent that the failure of Trenwick or its Subsidiaries to own or have
such rights and licenses in such Intellectual Property would not reasonably
be expected to have a Material Adverse Effect on Trenwick. Neither Trenwick
nor any of its Subsidiaries have received any unresolved notice of, or is
aware of any fact or circumstance that would give any Person a right to
assert, infringement or misappropriation of, or conflict with, asserted
rights of others or invalidity or unenforceability of any Intellectual
Property owned by Trenwick or any of its Subsidiaries with respect to any
of the foregoing which, singly or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Trenwick. To the knowledge of
Trenwick, the use of such Intellectual Property to conduct the business and
operations of Trenwick and its Subsidiaries as conducted or proposed to be
conducted does not infringe on the rights of any person in any case where
such infringement would reasonably be expected to have a Material Adverse
Effect on Trenwick. To the knowledge of Trenwick, no person is challenging,
infringing on or otherwise violating any right of Trenwick or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Trenwick or any of its Subsidiaries. Except as set forth in
Section 3.17 of the Trenwick Disclosure Letter, neither the execution of
this Agreement or the Stock Option Agreements nor the consummation of the
transactions contemplated hereby or thereby will result in a loss or
limitation in the rights and licenses of Trenwick to use or enjoy the
benefit of any Intellectual Property employed by Trenwick or any of its
Subsidiaries in connection with its business as conducted or proposed to be
conducted where such loss or limitation, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on Trenwick.
Following the Effective Date, Trenwick's Intellectual Property may be used
by New Holdings or any of its Subsidiaries, except to the extent that
failure to be so able to use Trenwick's Intellectual Property would not
have a Material Adverse Effect on New Holdings or any of its Subsidiaries.
Section 3.18. Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation enacted under any Delaware law is applicable to the Plans, the
Stock Option Agreements or the other transactions contemplated hereby or
thereby. Trenwick has taken all corporate action necessary to render the
provisions of Section 203 of the GCL inapplicable to the Plans, the Stock
Option Agreements and the other transactions contemplated hereby and
thereby.
Section 3.19. Opinion of Financial Advisor. Trenwick has received
the written opinion of ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ ("DLJ"), dated December
16, 1999, to the effect that, as of such date, the Trenwick Exchange Ratio
is fair to Trenwick from a financial point of view, a copy of which written
opinion will be delivered to LaSalle Holdings.
Section 3.20. Rights Agreement.
----------------
(a) Trenwick and its Board of Directors have taken all necessary
actions, including the amendment to the Rights Agreement, so that the
execution and delivery of this Agreement, the LaSalle Stock Option
Agreement or the consummation of the transactions contemplated hereby and
thereby will not (i) cause any of the Rights to become exercisable, (ii)
cause LaSalle Holdings or
30
New Holdings to be an Acquiring Person (as defined in the Rights Agreement)
or (iii) trigger other provisions of the Rights Agreement, including giving
rise to a Distribution Date (as defined in the Rights Agreement), and the
Expiration Date (as defined in the Rights Agreement) of the Rights shall
occur immediately prior to the Effective Time. Such amendment shall be in
full force and effect from and after the date hereof.
(b) Trenwick has taken all necessary action with respect to all of
the outstanding Rights so that, as of immediately prior to the Effective
Time, (i) none of Trenwick, New Holdings, LaSalle Holdings, LaSalle Re and
Acquisition will have any obligations under the Rights or the Rights
Agreement and (ii) the holders of the Rights will have no rights under the
Rights or the Rights Agreement.
Section 3.21. Insurance Matters.
-----------------
(a) All insurance, reinsurance and coinsurance treaties or
agreements, including retrocessional agreements, to which Trenwick or any
Trenwick Insurance Subsidiary or any syndicate managed by any Trenwick
Managing Agency is a party or under which Trenwick or any Trenwick
Insurance Subsidiary or any syndicate managed by any Trenwick Managing
Agency, 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 reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Trenwick.
(b) Prior to the date hereof, Trenwick has delivered or made
available to LaSalle Holdings a true and complete copy of the most recent
actuarial reports prepared by actuaries, independent or otherwise, with
respect to Trenwick or any Trenwick Insurance Subsidiary since December 31,
1998 and all attachments, addenda, supplements and modifications thereto
(the "Trenwick Actuarial Analyses"). The information and data furnished by
Trenwick or any Trenwick Insurance Subsidiary to its independent actuaries
in connection with the preparation of Trenwick Actuarial Analyses were
accurate in all material respects.
(c) Except as disclosed in Section 3.21 of the Trenwick Disclosure
Letter:
(i) All in-force primary insurance policies issued by
Trenwick or any of its Insurance Subsidiaries are, to the
extent required under applicable insurance laws, rules or
regulations, on forms and at rates approved by the
insurance regulatory authority of the jurisdiction where
issued or have been filed with and not objected to by
such authority within the period provided for objection,
except as would not individually or in the aggregate have
a Material Adverse Effect on Trenwick.
(ii) To the knowledge of Trenwick, except as would not
individually or in the aggregate have a Material Adverse
Effect on Trenwick, each insurance agent or solicitor,
including, without limitation, salaried employees of
Trenwick or any Insurance Subsidiary appointed as an
insurance agent or solicitor, at the time which
31
agent or solicitor wrote, sold, solicited or produced
business for such insurer since January 1, 1996, was duly
licensed as an insurance agent (for the type of business
written, sold, solicited or produced by such insurance
agent or solicitor in the particular jurisdiction in
which such agent or solicitor wrote, sold, solicited or
produced such business).
Section 3.22. Liabilities and Reserves. Except for instances where
the failure of the following statements to be true would not reasonably be
expected to have a Material Adverse Effect on Trenwick, (a) the reserves
carried on the financial statements of each Trenwick Insurance Subsidiary
for future insurance policy benefits, losses, claims and similar purposes
were, as of the respective dates of such financial statements, in
compliance with the requirements for reserves established by the insurance
departments of the jurisdiction of such Trenwick Insurance Subsidiary or
(as the case may be) by Lloyd's, were determined in accordance with
generally accepted actuarial standards and principles consistently applied
and were fairly stated in accordance with sound actuarial and statutory
accounting principles (it being understood that no representation or
warranty is made in this Agreement to the effect that such reserves will
prove to be adequate to cover the actual amount of liabilities that are
eventually paid after the date hereof); and (b) the admitted assets of each
Trenwick Insurance Subsidiary as determined under applicable laws or under
Lloyd's regulations are in an amount at least equal to the minimum amounts
required by applicable laws or regulations.
Section 3.23. Investment Company. Neither Trenwick nor any of its
Subsidiaries conducts activities of, or is otherwise deemed under
applicable law to control, an "investment adviser" as such term is defined
in Section 2(a)(20) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), whether or not registered under the Investment
Advisers Act of 1940, as amended (the "Investment Advisers Act"). Neither
Trenwick nor any of its Subsidiaries is an "investment company" as defined
under the Investment Company Act and neither Trenwick nor any of its
Subsidiaries sponsors any Person that is such an investment company.
Section 3.24. Finite Risk Reinsurance. Except as set forth in
Section 3.24 of the Trenwick Disclosure Letter, none of Trenwick's
Insurance Subsidiaries has ceded business pursuant to a reinsurance
agreement that does not meet the conditions for reinsurance accounting as
provided by the Statement of Financial Accounting Standards No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and Long-Term
Contracts."
Section 3.25. Reinsurance Contracts, Coverholders and MGAs.
---------------------------------------------
(a) Section 3.25 of the Trenwick Disclosure Letter contains a true
and complete list of all managing general agents ("MGAs") and coverholders
with whom each Subsidiary of Trenwick does business that have been
appointed within the twelve (12) months preceding the date of this
Agreement and all in force contracts, treaties or arrangements regarding
the credit of reinsurance, coinsurance, excess insurance (collectively, the
"Reinsurance Contracts") which generate premium income in excess of
$1,000,000 . Except as would not, individually or in the aggregate, have a
32
Material Adverse Effect on Trenwick: (i) each of the foregoing Reinsurance
Contracts is valid and binding in accordance with its terms, and is in full
force and effect and (ii) neither the Subsidiaries of Trenwick nor, to the
knowledge of Trenwick, or other party thereto, is in default in any
material respect with respect to any such Reinsurance Contract, nor to the
knowledge of Trenwick does any condition exist that with notice or lapse of
time or both would constitute such a material default thereunder. Except as
set forth in Section 3.25 of the Trenwick Disclosure Letter, none of the
contracts, treaties or arrangements which generate premium income in excess
of $1,000,000 involving the MGAs or coverholders with whom each Subsidiary
of Trenwick does business contain "change of control" provisions and no
such Reinsurance Contract contains any provision providing that any such
other party thereto may terminate, cancel or commute the same by reason of
the transactions contemplated by this Agreement or any other provision
which would be altered or otherwise become applicable by reason of such
transactions, and no party has given notice of termination, cancellation or
commutation of any such Reinsurance Contract or that it intends to
terminate, cancel or commute any such Reinsurance Contract as a result of
the transactions contemplated hereby.
(b) Except as set forth in Section 3.25 of the Trenwick Disclosure
Letter, Trenwick America Reinsurance Company ("TARCO") is entitled under
applicable insurance laws, rules and regulations to take credit in its
statutory financial statements in accordance with Chapter 22 of the NAIC
Accounting Practices and Procedures Manual for Property and Casualty
Insurance Companies as in effect on the date hereof, with respect to those
Reinsurance Contracts to which it is a party and all such amounts are
properly reflected in the statutory financial statements of TARCO. Except
as set forth in Section 3.25 of the Trenwick Disclosure Letter, Trenwick
International is entitled under applicable insurance laws, rules and
regulations to take credit in its statutory financial statements in
accordance with Lloyd's regulations as in effect on the date hereof, with
respect to those Reinsurance Contracts to which it is a party and all such
amounts are properly reflected in the statutory financial statements of
Trenwick International. Each of Trenwick, TARCO and Trenwick International
has no knowledge of any disputes as to reinsurance or retrocessional
coverage under, or any terms of provisions of, any such Reinsurance
Contract except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Trenwick. To the
knowledge of Trenwick and TARCO and Trenwick International, the financial
condition of any other party to any such Reinsurance Contract is not
impaired to the extent that a default thereunder could reasonably be
expected to occur.
Section 3.26. Derivatives. As of the date hereof, other than as
set forth in Section 3.26 of the Trenwick Disclosure Letter, neither
Trenwick nor any of its Subsidiaries is a party to any futures or option
contracts, swaps, ▇▇▇▇▇▇ or similar instruments which, individually or in
the aggregate, could have a Material Adverse Effect on Trenwick.
Section 3.27. Related Party Transactions. Except as set forth in
Section 3.27 of the Trenwick Disclosure Letter, since September 30, 1999,
there have been no transactions, agreements, arrangements or understandings
between Trenwick and its Subsidiaries, on the one hand, and Trenwick
affiliates (other than wholly-owned Subsidiaries of Trenwick) or other
Person, on the other
33
hand, in existence as of the date hereof that are or would be required to
be disclosed in the Trenwick SEC Reports in accordance with Item 404 of
Regulation S-K under the Securities Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF LASALLE HOLDINGS
LaSalle Holdings hereby represents and warrants to Trenwick and
the Minority Shareholders that as of the date of the Original Agreement
(except to the extent that a representation or warranty speaks as of an
earlier date), with references to "the date hereof" or the "date of this
Agreement" in this Article 4 being deemed to be references to the date of
the Original Agreement:
Section 4.1. Corporation; Organization.
-------------------------
(a) Except as set forth in Section 4.1(a) of the LaSalle
Disclosure Letter, each of LaSalle Holdings and its Subsidiaries is a
company duly organized, validly existing and in good standing (with respect
to jurisdictions that recognize such concept) under the laws of the
jurisdiction of its organization. Each of LaSalle Holdings and its
Subsidiaries (i) is qualified, licensed or domesticated as a foreign
company in all jurisdictions where such qualification, license or
domestication is required to own and operate its properties and conduct its
business in the manner and at the places presently conducted; (ii) holds
all franchises, grants, licenses, certificates, permits, consents and
orders, all of which are valid and in full force and effect, from all
applicable Bermuda and foreign regulatory authorities necessary to own and
operate its properties and to conduct its business in the manner and at the
places presently conducted; and (iii) has full power and authority
(corporate and other) to own, lease and operate its respective properties
and assets and to carry on its business as presently conducted and as
proposed to be conducted, except where the failure to be so qualified,
licensed or domesticated or to hold such franchises, grants, licenses,
certificates, permits, consents and orders or to have such power and
authority would not, when taken together with all other such failures,
reasonably be expected to have a Material Adverse Effect on LaSalle
Holdings. LaSalle Holdings has furnished to Trenwick complete and correct
copies of its memorandum of association and bye-laws as in effect on the
date hereof. Such memorandum of association and bye-laws are in full force
and effect and no other constitutional documents are applicable to or
binding upon LaSalle Holdings.
(b) LaSalle Holdings conducts its reinsurance operations through
the Subsidiaries set forth in Section 4.1(b) of the LaSalle Disclosure
Letter (collectively, the "LaSalle Reinsurance Subsidiaries"). Each of the
LaSalle Reinsurance Subsidiaries is (i) duly licensed or authorized as a
reinsurer in its jurisdiction of organization or duly licensed to operate
in the reinsurance business (as applicable) in its jurisdiction of
organization, (ii) duly licensed or authorized as a reinsurer in each other
jurisdiction where it is required to be so licensed or authorized or duly
licensed to operate in the reinsurance business in each other jurisdiction
where it is required to be so licensed and (iii) duly authorized in its
jurisdiction of organization and each other applicable jurisdiction to
write each line
34
of business currently written by such LaSalle Reinsurance Subsidiaries,
except, in any such case, where the failure to be so licensed or authorized
is not reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on LaSalle Holdings. Except as set forth in Section
4.1(b) of the LaSalle Disclosure Letter, LaSalle Holdings has made all
required filings under applicable insurance holding company statutes except
where the failure to file is not reasonably expected to have a Material
Adverse Effect on LaSalle Holdings.
Section 4.2. Authority; Approval and Fairness.
--------------------------------
(a) LaSalle Holdings has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to the due
approval and adoption of this Agreement by its shareholders, to perform its
obligations hereunder and consummate the transactions contemplated hereby.
LaSalle Holdings has all requisite corporate power and authority to enter
into the Stock Option Agreements and to consummate the transactions
contemplated thereby. The execution and delivery of this Agreement by
LaSalle Holdings, the performance by LaSalle Holdings of its obligations
hereunder and the consummation by LaSalle Holdings of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of LaSalle Holdings, subject only to compliance with the
provisions of Section 99 of the Companies Act. No other corporate
proceedings on the part of LaSalle Holdings are necessary for the execution
and delivery of this Agreement by LaSalle Holdings and, subject to
compliance with the provisions of Section 99 of the Companies Act, the
performance by LaSalle Holdings of its obligations hereunder and the
consummation by LaSalle Holdings of the transactions contemplated hereby.
This Agreement and the Stock Option Agreements have been duly executed and
delivered by LaSalle Holdings and, assuming the due authorization,
execution and delivery hereof and thereof by Trenwick, New Holdings and
Acquisition, and subject to the provisions of Section 99 of the Companies
Act constitutes the legal, valid and binding obligations of LaSalle
Holdings, enforceable against LaSalle Holdings in accordance its terms,
subject with respect to enforceability to the effect of bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or similar
laws now or hereafter affecting the enforcement of creditors' rights
generally and to the availability of equitable remedies.
(b) The Board of Directors of LaSalle Holdings (the "LaSalle
Board") (i) has unanimously (by all directors present at a meeting duly
called and held) declared that it considers this Agreement, the Schemes of
Arrangement and the other transactions contemplated hereby to be advisable
and in the best interests of LaSalle Holdings and its shareholders and (ii)
has authorized and approved in all respects this Agreement, the Plans and
the other transactions contemplated hereby.
Section 4.3. Capital Structure.
-----------------
(a) As of the date hereof, the authorized share capital of LaSalle
Holdings is $100,000,000 comprised of 100,000,000 shares with a par value
of $1.00 per share. As of December 15, 1999, (i) 15,603,652 LaSalle
Holdings Shares were issued and outstanding, (ii) no LaSalle Holdings
Shares were held as treasury shares or by Subsidiaries of LaSalle Holdings
and (ii)
35
3,000,000 Series A Preferred Shares were issued and outstanding. In
addition, there are 4,000,000 Series B Preferred Shares of LaSalle Holdings
reserved for issuance pursuant to the CatEPut, which shares are convertible
into LaSalle Holdings Shares. Section 4.3(a) of the LaSalle Disclosure
Letter sets forth each plan, arrangement or agreement pursuant to which
options or stock appreciation rights with respect to LaSalle Holdings
Shares or shares of LaSalle Re may be granted or under which such options
or stock appreciation rights have been granted and are outstanding (the
"LaSalle Option Plans") and in the aggregate the maximum number of options
and stock appreciation rights outstanding as of the date hereof and the
class and number of LaSalle Holdings Shares or shares of LaSalle Re
reserved for issuance pursuant to the plan, arrangement or agreement (such
options and rights being herein collectively referred to as the "LaSalle
Holdings Options" and the "LaSalle Re Options," as the case may be),
together with a listing of the aggregate number of such LaSalle Holdings
Options and LaSalle Re Options which shall vest at the Effective Time as a
result of the Schemes of Arrangement. Except as set forth in Section 4.3(a)
of the LaSalle Disclosure Letter, each of the outstanding shares of each
Subsidiary of LaSalle Holdings, other than the Non-Voting Shares owned by
the Minority Shareholders, is directly or indirectly owned by LaSalle
Holdings, free and clear of all Liens.
(b) Except as described in Section 4.3(b) of the LaSalle
Disclosure Letter, as of the date hereof, no Voting Debt of LaSalle
Holdings or any of its Subsidiaries is issued or outstanding.
(c) Except as described in Section 4.3(a), (b) or (c) of the
LaSalle Disclosure Letter, as of the date hereof, there are no options,
warrants, calls, rights, commitments or agreements of any character to
which LaSalle Holdings or any of its Subsidiaries is a party or by which
any of them is bound obligating LaSalle Holdings or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares or any Voting Debt or obligating LaSalle Holdings or any
of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Except as set forth in this
Agreement or in Section 4.3(c) of the LaSalle Disclosure Letter, as of the
date hereof, there are no outstanding contractual obligations of LaSalle
Holdings or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of LaSalle Holdings or any of its Subsidiaries.
(d) Except as described in Section 4.3(d) of the LaSalle
Disclosure Letter or as specifically described in this Agreement and except
for quarterly dividends in an amount not in excess of $0.375 per LaSalle
Holdings Share and $1.0938 per Series A Preferred Share, since June 30,
1999, LaSalle Holdings has not (i) made or agreed to make any share split
or share dividend, or issued or permitted or agreed to permit to be issued
any shares, or securities exercisable for or convertible into shares, of
LaSalle Holdings other than pursuant to and as required by the terms of any
LaSalle Holdings Option; (ii) repurchased, redeemed or otherwise acquired
any shares of LaSalle Holdings; or (iii) declared, set aside, made or paid
to the shareholders of LaSalle Holdings dividends or other distributions on
the outstanding shares of LaSalle Holdings.
(e) Except as described in Section 4.3(e) of the LaSalle Disclosure
Letter or as specifically described in this Agreement and except for quarterly
dividends in an amount not in
36
excess of $0.375 per Minority Share, since June 30, 1999, LaSalle Re has
not (i) made or agreed to make any share split or share dividend, or issued
or permitted or agreed to permit to be issued any shares, or securities
exercisable for or convertible into shares, of LaSalle Re other than
pursuant to and as required by the terms of any LaSalle Re Option; (ii)
repurchased, redeemed or otherwise acquired any shares of LaSalle Re; or
(iii) declared, set aside, made or paid to the shareholders of LaSalle Re
(other than LaSalle Holdings) dividends or other distributions on the
outstanding shares of LaSalle Re.
Section 4.4. SEC Reports; Financial Statements. Except as set forth
in Section 4.4 of the LaSalle Disclosure Letter,
(a) LaSalle Holdings has delivered or made available to Trenwick a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement or information statement (including exhibits)
filed by LaSalle Holdings with the SEC in respect of its fiscal years
ending September 30, 1997 and 1998 and its quarters ending after September
30, 1998 under the Securities Act and the Exchange Act and will deliver to
Trenwick promptly upon the filing thereof with the SEC all such reports,
schedules, registration statements and proxy statements (including
exhibits) as may be filed after the date hereof and prior to the Effective
Time (as such documents have since the time of their filing been amended or
may after their filing, if after the date hereof, be amended, the "LaSalle
SEC Reports"), which are or will be all the documents that LaSalle Holdings
was or will be required to file with the SEC. Except as disclosed in
Section 4.4(a) of the LaSalle Disclosure Letter, as of their respective
dates, the LaSalle SEC Reports complied or will comply in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to the LaSalle SEC Reports, and none of the LaSalle SEC Reports
contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made or will be made, not misleading.
(b) As of their respective dates, the financial statements of
LaSalle Holdings included or to be included in the LaSalle SEC Reports (the
"LaSalle Financial Statements") complied or will comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and present
or will present fairly in all material respects the consolidated financial
position of LaSalle Holdings and its Subsidiaries and the consolidated
results of operations, changes in shareholders' equity and cash flows of
LaSalle Holdings and its Subsidiaries as of the dates and for the periods
indicated, in accordance with GAAP applied on a consistent basis, subject
in the case of interim financial statements to normal year-end adjustments
and except for the absence of certain footnote information in the unaudited
statements.
(c) Except as set forth in, or arising out of facts or
circumstances disclosed in, filings by LaSalle Holdings with the SEC prior
to the date hereof, LaSalle Holdings and its Subsidiaries have no
liabilities, debts, claims or obligations of any nature on the date hereof,
whether accrued, absolute, direct or indirect, contingent or otherwise,
whether due or to become due, that would be required to
37
be included on a balance sheet prepared in accordance with GAAP ("LaSalle
Liabilities"), and there is no existing condition or set of circumstances
which would reasonably be expected to result in a LaSalle Liability, except
for (i) LaSalle Liabilities incurred in the ordinary and usual course of
business and consistent with past practice since June 30, 1998, (ii)
LaSalle Liabilities incurred in connection with or as a result of the
transactions contemplated by this Agreement and (iii) LaSalle Liabilities
that would not reasonably be expected to have a Material Adverse Effect on
LaSalle Holdings.
Section 4.5. Absence of Certain Changes or Events. Except in
connection with this Agreement, the Plans, the Stock Option Agreements and
the transactions contemplated hereby and thereby, as disclosed in the
LaSalle SEC Reports filed and publicly available prior to the date of this
Agreement (the "Filed LaSalle SEC Reports") since the date of the most
recent audited financial statements included in the Filed LaSalle SEC
Reports, LaSalle Holdings and its Subsidiaries have conducted their
business in the ordinary course consistent with past practice, and there
has not occurred (i) any event or change having individually or in the
aggregate a Material Adverse Effect on LaSalle Holdings, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of LaSalle
Holdings's outstanding capital stock, other than regular quarterly
dividends in an amount payable in cash not in excess of $1.0938 per Series
A Preferred Share and quarterly dividends in an amount payable in cash not
in excess of $0.375 per LaSalle Holdings Share, Voting Share and Non-Voting
Share and dividends paid by wholly owned Subsidiaries, (iii) (A) any
granting by LaSalle Holdings or any of its Subsidiaries to any current or
former director or officer of LaSalle Holdings or its Subsidiaries of any
increase in compensation, bonus or other benefits, except for normal
increases in the ordinary course of business, (B) any granting by LaSalle
Holdings or any of its Subsidiaries to any such current or former director
or officer of any increase in severance or termination pay or (C) any entry
by LaSalle Holdings or any of its Subsidiaries into, or any amendments of,
any employment, deferred compensation, consulting, severance, termination
or indemnification agreement with any such current or former director or
officer, (iv) any tax election that individually or in the aggregate would
have a Material Adverse Effect on LaSalle Holdings or any of its tax
attributes or any settlement or compromise of any material income tax
liability, or (v) any change in accounting methods, principles or practices
by LaSalle Holdings or any of its Subsidiaries materially affecting their
assets, liabilities or business, except insofar as may have been required
or permitted by a change in applicable accounting principles (including
SAP).
Section 4.6. Certain Fees. No finder, broker, agent, financial
advisor or other intermediary, other than Lazard Freres & Co. LLC, ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and Aon Capital Markets, have acted on behalf of LaSalle
Holdings in connection with this Agreement or the transactions
contemplated hereby or is entitled to any payment in connection herewith.
LaSalle Holdings has provided to Trenwick copies of LaSalle Holdings'
engagement letters with Lazard Freres & Co. LLC, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and
Aon Capital Markets in connection with this Agreement and the transactions
contemplated hereby.
38
Section 4.7. No Defaults. Neither LaSalle Holdings nor any of its
Subsidiaries is in default or violation (and no event has occurred which
with notice or lapse of time or both would constitute a default or
violation) of its memorandum of association or bye-laws or other governing
document or any material agreement, mortgage, indenture, debenture, trust,
lease, license or other instrument or obligation to or by which it or any
of its properties is subject or bound (the "LaSalle Instruments"), except
for such defaults or violations as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
LaSalle Holdings. Except as set forth in Section 4.7 of the LaSalle
Disclosure Letter, the execution, delivery and performance of this
Agreement and the taking of any other action contemplated by this Agreement
will not (i) result in any violation of or be in conflict with or
constitute a breach or default (with or without notice or lapse of time or
both) under (a) the memorandum of association or bye-laws of LaSalle
Holdings or its Subsidiaries or (b) any of the other LaSalle Instruments,
except for any such violation of, conflict with, breach of or default under
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on LaSalle Holdings, (ii) result in or
constitute an event entitling any party to a LaSalle Holdings Instrument to
effect an acceleration of the maturity of any indebtedness of LaSalle
Holdings or any of its Subsidiaries or an increase in the rate of interest
presently in effect with respect to such indebtedness, except for any such
accelerations or increases which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on LaSalle
Holdings or (iii) result in the creation of any Lien upon any of the
properties or assets of LaSalle Holdings, except for Permitted Liens and
any Liens which would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on LaSalle Holdings.
Section 4.8. Consents. Except as set forth in Section 4.8 of the
LaSalle Disclosure Letter and except for compliance with the provisions of
Section 99 of the Companies Act, the approval of Lloyd's, the consent of
the Court to the Plans and the filing of the order or orders of the Court
pursuant to Section 2.2 of this Agreement, no Consent is required on the
part of LaSalle Holdings or any of its Subsidiaries in connection with the
execution, delivery and performance by LaSalle Holdings of this Agreement
and the consummation by LaSalle Holdings of the transactions contemplated
hereby, except those required by (i) compliance with any applicable
requirements of the HSR Act, (ii) United States federal and state
securities or "Blue Sky" laws and (iii) where failure to obtain such
Consent would not reasonably be expected to have a Material Adverse Effect
on LaSalle Holdings.
Section 4.9. Compliance with Applicable Law. Each of LaSalle
Holdings and its Subsidiaries is in compliance with all licenses, permits
and other authorizations, domestic or foreign, necessary to conduct its
respective business, except where failure to have or comply with such
licenses, permits and authorizations would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
LaSalle Holdings. Neither LaSalle Holdings nor any of its Subsidiaries is
in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any
judgment, decree, order, law, statute, rule or regulation of any
Governmental Authority, except for such defaults or violations as would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on
39
LaSalle Holdings. Subject to obtaining the Consents referred to in Section
4.8, the execution, delivery and performance of this Agreement by LaSalle
Holdings and the consummation by LaSalle Holdings of the transactions
contemplated hereby prior to the date or dates as of which the
representations and warranties herein are made or deemed made, will not
result in any default or violation of any judgment, decree, order, law,
statute, rule or regulation of any Governmental Authority applicable to
LaSalle Holdings or its Subsidiaries, except for such defaults or
violations as would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on LaSalle Holdings.
Section 4.10. Information Supplied. None of the information
supplied or to be supplied by LaSalle Holdings for inclusion or
incorporation by reference in the Form S-4 to be filed with the SEC by New
Holdings relating to the New Holdings Shares comprising LaSalle
Consideration and Trenwick Consideration will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements were made, not misleading.
The letters to shareholders, notices of meetings, proxy statements and
forms of proxies to be distributed to shareholders of LaSalle Holdings and
stockholders of Trenwick, respectively, in connection with the Plans and
the transactions contemplated hereby, except information supplied by
Trenwick in writing for inclusion in the Joint Proxy Statement, will not,
as of the date the Joint Proxy Statement is first mailed to such
shareholders and on the date of the meetings of LaSalle Holdings'
shareholders or Trenwick's stockholders, as the case may be, and the date
of any postponement or adjournment thereof, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All documents
that LaSalle Holdings is responsible for filing with any Governmental
Authority in connection with the transactions contemplated hereby will
comply as to form in all material respects with the provisions of any
applicable law.
Section 4.11. Material Contracts. Except as set forth in Section 4.11
of the LaSalle Disclosure Letter:
(a) All of the contracts of LaSalle Holdings and its Subsidiaries
that are required to be described in the LaSalle SEC Reports or to be filed
as exhibits thereto are described in the LaSalle SEC Reports or filed as
exhibits thereto and are in full force and effect.
(b) Neither LaSalle Holdings nor any of its Subsidiaries is, as of
the date hereof, party to any agreement containing any provision or
covenant limiting in any material respect the ability of LaSalle Holdings
or any of its Subsidiaries (or New Holdings or any of its Subsidiaries
subsequent to the Effective Time) to (i) sell any products or services of
or to any other Person, (ii) engage in any line of business in any
geographical area 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 LaSalle Holdings or any of its Subsidiaries.
40
(c) Neither LaSalle Holdings nor any of its Subsidiaries is a
party to or bound by any contract, agreement or arrangement which would
cause the rights or obligations of any party thereto to change in the event
of the Plans, except for any such contract, agreement or arrangement which
would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on LaSalle Holdings.
Section 4.12. Taxes. Except as provided in Section 4.12 of the
LaSalle Disclosure Letter:
(a) To LaSalle Holdings' knowledge, neither LaSalle Holdings nor
any of its Subsidiaries has, nor has it had, any income which is, or has
been, subject to the United States federal income tax as income which is
effectively connected with the conduct of a trade or business within the
United States, within the meaning of Section 882(a)(1) of the Code. LaSalle
Holdings and its Subsidiaries have filed or caused to be filed with the
appropriate United States federal, state, local, foreign and other
Governmental Authorities, all Tax returns, information returns and reports
required to be filed on or prior to the date hereof (taking into account
all valid extensions). All such Tax returns, information returns and
reports are complete and accurate in all material respects.
(b) LaSalle Holdings and its Subsidiaries have paid in full or
made adequate provision (in accordance with GAAP) for the payment of all
Taxes shown to be due on the Tax returns referred to in Section 4.12(a).
All material written assessments of Taxes due and payable by or on behalf
of LaSalle Holdings or any of its Subsidiaries have either been paid or
provided for (in accordance with GAAP) or are being contested in good faith
by appropriate proceedings.
(c) There are no material Tax claims pending against LaSalle
Holdings or any of its Subsidiaries and LaSalle Holdings does not know of
any threatened claim for Tax deficiencies or any basis for such claims, no
material issues have been raised in any examination by any taxing authority
with respect to LaSalle Holdings or any of its Subsidiaries which, by
application of similar principles, reasonably could be expected to result
in a proposed deficiency for any other period not so examined, and there
are not now in force any waivers or agreements by LaSalle Holdings or any
of its Subsidiaries for the extension of time for the assessment of any
material Tax, nor has any such waiver or agreement been requested by any
taxing authority. Neither LaSalle Holdings nor any of its Subsidiaries has
any liability for any material United States federal, state, local, foreign
or other Taxes of any corporation or entity other than LaSalle Holdings and
its Subsidiaries.
(d) There are no Liens on any of the assets of LaSalle Holdings or
any of its Subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Taxes (other than Taxes that are not due as of
the date hereof).
(e) LaSalle Holdings and its Subsidiaries have withheld and paid
all United States federal, state, local, foreign and other Taxes required
to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third
party.
41
(f) To LaSalle Holdings' knowledge, Section 4.12(f) of the LaSalle
Disclosure Letter discloses, with respect to the year ended September 30,
1998 and for the period commencing October 1, 1998 and ending on the date
of the LaSalle Disclosure Letter, (i) each insurance or reinsurance
transaction by LaSalle Holdings or any of its Subsidiaries directly with
shareholders of LaSalle Holdings and (ii) each insurance or reinsurance
transaction by LaSalle Holdings or any of its Subsidiaries directly or
indirectly with Persons related to shareholders of LaSalle Holdings and not
disclosed in clause (i) above, which would cause LaSalle Holdings or any of
its Subsidiaries to have any "related person insurance income" within the
meaning of Section 953(c)(2) of the Code.
(g) To LaSalle Holdings' knowledge, LaSalle Holdings and its
Subsidiaries did not have for the year ended September 30, 1998, and
LaSalle Holdings does not expect LaSalle Holdings or any of its
Subsidiaries to have for the period ending at the Effective Time (treating
such period as if it were a taxable year), "related person insurance
income" within the meaning of Section 953(c)(2) of the Code in excess of
the exceptions provided in Sections 953(c)(3)(A) and (B) of the Code.
(h) To LaSalle Holdings' knowledge, neither LaSalle Holdings nor
any of its Subsidiaries is, nor has LaSalle Holdings or any of its
Subsidiaries ever been, a "controlled foreign corporation" within the
meaning of Section 957(a) or 957(b) of the Code.
(i) A representation with respect to Taxes contained in this
Section 4.12 shall be deemed to be accurate unless an inaccuracy contained
therein would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on LaSalle Holdings.
Section 4.13. Litigation. Except as disclosed in the LaSalle SEC
Reports filed prior to the date hereof or in Section 4.13 of the LaSalle
Disclosure Letter, there are no actions, suits, claims, proceedings or
investigations pending against or, to the knowledge of LaSalle Holdings,
threatened against or affecting, LaSalle Holdings or any of its
Subsidiaries or any of their respective properties before any Governmental
Authority or otherwise which (a) would be expected to have, individually or
in the aggregate, a Material Adverse Effect on LaSalle Holdings, (b) in any
manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated hereby or (c) alleges criminal action or
inaction. As of the date hereof, neither LaSalle Holdings nor its
Subsidiaries or any of their respective properties is subject to any order,
writ, judgment, injunction, decree, determination or award having, or which
would reasonably be expected to have, a Material Adverse Effect on LaSalle
Holdings or which would prevent or delay the consummation of the
transactions contemplated hereby. Except as disclosed in the LaSalle SEC
Reports filed prior to the date hereof, there are no pending or, to the
knowledge of LaSalle Holdings, threatened claims for indemnification by
LaSalle Holdings or any of its Subsidiaries in favor of directors,
officers, employees and agents of LaSalle Holdings or any of its
Subsidiaries.
Section 4.14. Title to Properties; Leases. Except as set forth in
Section 4.14(a) of the LaSalle Disclosure Letter, each of LaSalle Holdings and
its Subsidiaries has good and marketable title to, and is the lawful owner of,
or has the right to use pursuant to a license or otherwise, all of
42
the tangible and intangible assets, properties and rights used in its
businesses and all tangible and intangible assets, properties and rights
reflected on the balance sheet of LaSalle Holdings dated June 30, 1999 or
acquired since June 30, 1999, free and clear of all Liens (other than
Permitted Liens) and material defects. LaSalle Holdings and its
Subsidiaries own no real property. Section 4.14(c) of the LaSalle
Disclosure Letter sets forth all material real property and personal
property leases of LaSalle Holdings and its Subsidiaries. All such leases
are valid, binding and enforceable against LaSalle Holdings or its
Subsidiaries (and, to the knowledge of LaSalle Holdings and its
Subsidiaries, each other party thereto) in accordance with their respective
terms, and there does not exist, under any lease of real property or
personal property, any material defect or any event which, with notice or
lapse of time or both, would constitute a material default by the LaSalle
Holdings or its Subsidiaries, as the case may be, or, to the knowledge of
LaSalle Holdings and its Subsidiaries, by any other party thereto.
Section 4.15. Approval of Schemes of Arrangement. Other than (a)
the affirmative vote of the holders of at least seventy-five percent (75%)
of the LaSalle Holdings Shares that are represented and voted, either in
person or by proxy, at the shareholder meeting and class meeting called for
the purpose of approving and adopting this Agreement and the LaSalle
Holdings Scheme of Arrangement, which holders must also constitute a
majority of the record holders who are present and voting, either in person
or by proxy, at each such meeting, and (b) the affirmative vote of the
holders of at least seventy-five percent (75%) of the Non-Voting Shares
that are represented and voted, either in person or by proxy, at the
shareholder meeting and class meeting called for the purpose of approving
and adopting this Agreement and the LaSalle Re Scheme of Arrangement, which
holders must also constitute a majority of the record holders who are
present and voting, either in person or by proxy, at each such meeting,
there is no other vote, consent or approval of the holders of any class of
shares of LaSalle Holdings or LaSalle Re necessary to approve and adopt
this Agreement, the Schemes of Arrangement and the transactions
contemplated hereby.
Section 4.16. Employees.
---------
(a) Section 4.16(a) of the LaSalle Disclosure Letter lists, as of
the date hereof, all employment contracts and similar arrangements between
LaSalle Holdings or any of its Subsidiaries and their respective executive
officers and all plans and arrangements pursuant to which LaSalle Holdings
or any of its Subsidiaries is obligated to make any payment or confer any
material benefit upon any officer, director, employee or agent of LaSalle
Holdings or any of its Subsidiaries as a result of or in connection with
any of the transactions contemplated by this Agreement or any transaction
or transactions resulting in a change of control of LaSalle Holdings or any
of its Subsidiaries (including as a result of a termination of employment
in connection with any of such events). Except as described in Section
4.16(a) of the LaSalle Disclosure Letter and except as would not reasonably
be expected to have a Material Adverse Effect on LaSalle Holdings, (i)
LaSalle Holdings and its Subsidiaries have complied with all laws relating
to the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity and collective bargaining, (ii) no labor dispute
with employees of LaSalle Holdings or any of its Subsidiaries exists or, to
the knowledge of LaSalle Holdings, is threatened, (iii) each Employee
Benefit Plan maintained by
43
LaSalle Holdings or any of its Subsidiaries (each a "LaSalle Employee
Benefit Plan") conforms to, and its administration is in conformity with,
all applicable laws, no liability has been or is expected to be incurred by
LaSalle Holdings or any of its Subsidiaries with respect to any LaSalle
Employee Benefit Plan, except as expressly provided by such plan, (iv) no
LaSalle Employee Benefit Plan is subject to ERISA, (v) LaSalle Holdings has
made available to Trenwick a true and correct copy of each of the LaSalle
Employee Benefit Plans and all applicable trust agreements and all
contracts relating thereto or to the funding thereof, (vi) all LaSalle
Employee Benefit Plans intended to satisfy applicable Tax qualification
requirements, or other requirements necessary to secure favorable Tax or
other legal treatment, comply in all material respects with such
requirements and (vii) adequate accruals for all obligations under the
LaSalle Employee Benefit Plans are reflected in the LaSalle Financial
Statements. Except as described in Section 4.16(a) of the LaSalle
Disclosure Letter, no agreement, contract or arrangement to which LaSalle
Holdings or any of its Subsidiaries is a party would result in a payment
that would not be deductible as a result of Section 280G of the Code.
(b) Except as set forth in Section 4.16(b) of the LaSalle
Disclosure Letter, neither LaSalle Holdings nor any of its Subsidiaries is
a party to any collective bargaining or other labor union contract
applicable to Persons employed by LaSalle Holdings or any of its
Subsidiaries, no collective bargaining agreement is being negotiated by
LaSalle Holdings or any of its Subsidiaries and LaSalle Holdings has no
knowledge of any activities or proceedings of any labor union to organize
any of their respective employees. There is no labor dispute, strike or
work stoppage against LaSalle Holdings or any of its Subsidiaries pending
or, to LaSalle Holdings' knowledge, threatened which may interfere with the
respective business activities of LaSalle Holdings or any of its
Subsidiaries, except where such dispute, strike or work stoppage would not
reasonably be expected to have a Material Adverse Effect on LaSalle
Holdings.
(c) Except as disclosed in the Section 4.16(c) of the LaSalle
Disclosure Letter, the consummation of the Schemes of Arrangement (or the
approval thereof by the parties' respective shareholders) and the other
transactions contemplated by this Agreement, will not (x) entitle any
employees or directors of LaSalle or of any LaSalle Holdings Commonly
Controlled Entity, directly or indirectly to severance pay; (y) accelerate
the time of payment or vesting or trigger any payment of compensation or
benefits under, or increase the amount payable or trigger any other
material obligation pursuant to, any of the LaSalle Benefit Plans; or (z)
result in any breach or violation of, or default under any of the LaSalle
Benefit Plans.
Section 4.17. Intellectual Property. LaSalle Holdings and its
Subsidiaries own or possess, or have all necessary rights and licenses in,
all Intellectual Property necessary to conduct their business as conducted
and proposed to be conducted except to the extent that the failure of
LaSalle Holdings or its Subsidiaries to own or have such rights and
licenses in such Intellectual Property would not reasonably be expected to
have a Material Adverse Effect on LaSalle Holdings. Neither LaSalle
Holdings nor any of its Subsidiaries have received any unresolved notice
of, or is aware of any fact or circumstance that would give any Person a
right to assert, infringement or misappropriation of, or conflict with,
asserted rights of others or invalidity or unenforceability of any
Intellectual Property owned by LaSalle Holdings or any of its Subsidiaries
with respect to any of the
44
foregoing which, singly or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on LaSalle Holdings. To the knowledge of
LaSalle Holdings, the use of such Intellectual Property to conduct the
business and operations of LaSalle Holdings and its Subsidiaries as
conducted or proposed to be conducted does not infringe on the rights of
any person in any case where such infringement would reasonably be expected
to have a Material Adverse Effect on LaSalle Holdings. To the knowledge of
LaSalle Holdings, no person is challenging, infringing on or otherwise
violating any right of LaSalle Holdings or any of its Subsidiaries with
respect to any Intellectual Property owned by and/or licensed to LaSalle
Holdings or any of its Subsidiaries. Except as set forth in Section 4.17 of
the LaSalle Disclosure Letter, neither the execution of this Agreement or
the LaSalle Stock Option Agreement nor the consummation of the transactions
contemplated hereby or thereby will result in a loss or limitation in the
rights and licenses of LaSalle Holdings to use or enjoy the benefit of any
Intellectual Property employed by LaSalle Holdings or any of its
Subsidiaries in connection with its business as conducted or proposed to be
conducted where such loss or limitation, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on LaSalle
Holdings. Following the Effective Date, LaSalle Holdings Intellectual
Property may be used by New Holdings or any of its Subsidiaries, except to
the extent that failure to be so able to use LaSalle's Intellectual
Property would not have a Material Adverse Effect on New Holdings or any of
its Subsidiaries.
Section 4.18. Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation enacted under any Bermuda law is applicable to the Plans, the
Stock Option Agreements or the other transactions contemplated hereby or
thereby.
Section 4.19. Opinions of Financial Advisors. The LaSalle Board
has received the separate opinions of Lazard Freres & Co. LLC and ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ Inc., dated December 16, 1999, to the effect that, as of such
date, the LaSalle Exchange Ratio is fair to the holders of LaSalle Holdings
Shares from a financial point of view, copies of the written opinions of
which will be delivered to Trenwick.
Section 4.20. Insurance Matters.
-----------------
(a) All insurance, reinsurance and coinsurance treaties or
agreements, including retrocessional agreements, to which LaSalle Holdings
or any LaSalle Holdings Reinsurance Subsidiary is a party or under which
LaSalle Holdings or any LaSalle Holdings Reinsurance 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 reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on LaSalle Holdings.
(b) Prior to the date hereof, LaSalle Holdings has delivered or
made available to Trenwick a true and complete copy of the most recent
actuarial reports prepared by actuaries, independent or otherwise, with
respect to LaSalle Holdings or any LaSalle Holdings Reinsurance Subsidiary
since September 30, 1998 and all attachments, addenda, supplements and
modifications thereto (the "LaSalle Actuarial Analyses"). The information
and data furnished by LaSalle Holdings
45
or any LaSalle Holdings Reinsurance Subsidiary to its independent actuaries
in connection with the preparation of the LaSalle Actuarial Analyses were
accurate in all material respects.
(c) LaSalle Re does not currently issue and has not issued any
primary insurance policiesin the United States.
Section 4.21. Liabilities and Reserves.
------------------------
Except for instances where the failure of the following statements
to be true would not reasonably be expected to have a Material Adverse
Effect on LaSalle Holdings, (a) the reserves carried on the financial
statements of each LaSalle Holdings Reinsurance Subsidiary for future
insurance policy benefits, losses, claims and similar purposes were, as of
the respective dates of such financial statements, in compliance with the
requirements for reserves established by the insurance departments of the
jurisdiction of such LaSalle Holdings Reinsurance Subsidiary or (as the
case may be) by Lloyd's, were determined in accordance with generally
accepted actuarial standards and principles consistently applied, and were
fairly stated in accordance with sound actuarial and statutory accounting
principles (it being understood that no representation or warranty is made
in this Agreement to the effect that such reserves were in fact adequate to
cover the actual amount of liabilities that are eventually paid after the
date hereof); and (b) the admitted assets of each LaSalle Holdings
Reinsurance Subsidiary as determined under applicable laws or under Lloyd's
regulations are in an amount at least equal to the minimum amounts required
by applicable laws or regulations.
Section 4.22. Investment Company. Neither LaSalle Holdings nor any
of its Subsidiaries conducts activities of, or is otherwise deemed under
applicable law to control, an "investment adviser" as such term is defined
in Section 2(a)(20) of the Investment Company Act, whether or not
registered under the Investment Advisers Act. Neither LaSalle Holdings nor
any of its Subsidiaries is an "investment company" as defined under the
Investment Company Act and neither LaSalle Holdings nor any of its
Subsidiaries sponsors any Person that is such an investment company.
Section 4.23. Reinsurance Contracts, Coverholders and MGAs.
--------------------------------------------
(a) Section 4.23 of the LaSalle Disclosure Letter contains a true
and complete list of all MGAs and coverholders with whom each Subsidiary of
LaSalle Holdings does business that have been appointed within the twelve
(12) months preceding the date of this Agreement and all in force
Reinsurance Contracts which generate premium income in excess of $1,000,000
to which each Subsidiary of LaSalle Holdings is a party as the cedent
thereunder or by or to which each Subsidiary of LaSalle Holdings is bound
or subject as the cedent thereunder, as each such Reinsurance Contract may
have been amended, modified or supplemented. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on LaSalle
Holdings: (i) each of the foregoing Reinsurance Contracts is valid and
binding in accordance with its terms, and is in full force and effect and
(ii) neither the Subsidiaries of LaSalle Holdings nor, to the knowledge of
LaSalle Holdings, or other party thereto, is in default in any material
respect with respect to any such Reinsurance Contract, nor to the knowledge
of LaSalle Holdings does any condition exist that with
46
notice or lapse of time or both would constitute such a material default
thereunder. Except as set forth in Section 4.23 of the LaSalle Disclosure
Letter, none of the contracts, treaties or arrangements involving the MGAs
or coverholders which generate premium income in excess of $1,000,000 with
whom each Subsidiary of LaSalle Holdings does business contain "change of
control" provisions and no such Reinsurance Contract contains any provision
providing that any such other party thereto may terminate, cancel or
commute the same by reason of the transactions contemplated by this
Agreement or any other provision which would be altered or otherwise become
applicable by reason of such transactions, and no party has given notice of
termination, cancellation or commutation of any such Reinsurance Contract
or that it intends to terminate, cancel or commute any such Reinsurance
Contract as a result of the transactions contemplated hereby.
(b) Except as set forth in Section 4.23 of the LaSalle Disclosure
Letter, LaSalle Re is entitled under applicable insurance laws, rules and
regulations to take credit in its statutory financial statements in
accordance with applicable Bermuda law as in effect on the date hereof,
with respect to the Reinsurance Contracts listed in Section 4.23 of the
LaSalle Disclosure Letter and all such amounts are properly reflected in
the statutory financial statements of LaSalle Re. Each of LaSalle Holdings
and LaSalle Re has no knowledge of any disputes as to reinsurance or
retrocessional coverage under, or any terms of provisions of, any such
Reinsurance Contract. To the knowledge of LaSalle Holdings and LaSalle Re,
the financial condition of any other party to any such Reinsurance Contract
is not impaired to the extent that a default thereunder could reasonably be
expected to occur.
Section 4.24. Derivatives. As of the date hereof, other than as
set forth in Section 4.24 of the LaSalle Disclosure Letter, neither LaSalle
Holdings nor any of its Subsidiaries is a party to any futures or option
contracts, swaps, ▇▇▇▇▇▇ or similar instruments which, individually or in
the aggregate, could have a Material Adverse Effect on LaSalle Holdings.
Section 4.25. Related Party Transactions. Except as set forth in
Section 4.25 of the LaSalle Disclosure Letter, since June 30, 1999, there
have been no transactions, agreements, arrangements or understandings
between LaSalle Holdings and its Subsidiaries, on the one hand, and LaSalle
Holdings' affiliates (other than wholly-owned Subsidiaries of LaSalle
Holdings) or other Persons, on the other hand, in existence as of the date
hereof that are or would be required to be disclosed in the LaSalle SEC
Reports in accordance with Item 404 of Regulation S-K under the Securities
Act.
Section 4.26. Finite Risk Reinsurance. Except as set forth in
Section 4.26 of the LaSalle Disclosure Letter, none of LaSalle's
Reinsurance Subsidiaries has ceded business pursuant to a reinsurance
agreement that does not meet the conditions for reinsurance accounting as
provided by the Statement of Financial Accounting Standards No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and Long-Term
Contracts."
47
ARTICLE 5
COVENANTS
Section 5.1. Conduct of Business of Trenwick. Except as expressly
contemplated by this Agreement, the Stock Option Agreements, as set forth
in Section 5.1 of the Trenwick Disclosure Letter or as consented to in
writing by LaSalle Holdings, during the period from the date of the
Original Agreement to the Effective Time, Trenwick shall, and shall cause
each of its Subsidiaries to, conduct its operations and (to the extent it
is able to control them) the operations of the syndicates managed by the
Trenwick Managing Agencies only in, and neither Trenwick nor any of its
Subsidiaries shall take any action and shall not take any action in
relation to the syndicates managed by the Trenwick Managing Agencies (to
the extent they are able to control them) except in, the ordinary and usual
course of business and consistent with past practice, and Trenwick and its
Subsidiaries will use all commercially reasonable efforts to preserve
intact their business organization, to keep available the services of their
officers and employees and to maintain advantageous relationships with and
the goodwill of their customers, business partners and others having
business relationships with Trenwick or its Subsidiaries or the syndicates
managed by the Trenwick Managing Agencies, as the case may be. Without
limiting the generality of the foregoing, prior to the Effective Time,
neither Trenwick nor any of its Subsidiaries will, except as expressly
contemplated by this Agreement, without the prior written consent of
LaSalle Holdings:
(a) split, combine or reclassify any shares of its capital stock,
declare, pay or set aside for payment any dividend or other distribution
payable in cash, stock, property or otherwise in respect of its capital
stock or directly or indirectly redeem, purchase or otherwise acquire any
shares of any class of capital stock or other securities, other than
regular quarterly dividends (other than those payable to Trenwick) in an
amount payable in cash not in excess of $0.26 per share; after the date of
the Original Agreement, LaSalle Holdings and Trenwick will coordinate with
each other regarding the declaration of dividends in respect of the
Trenwick Shares and the record dates and payment dates relating thereto, it
being the intention of the parties that holders of Trenwick Shares will not
receive two dividends, or fail to receive one dividend, for any single
calendar quarter with respect to their Trenwick Shares and the New Holdings
Shares any such holder receives in exchange therefor in accordance with the
Plans;
(b) authorize for issuance, issue, sell, grant, pledge, dispose of
or encumber, deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issue or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any shares of
any class of capital stock of Trenwick or any Subsidiary or any securities
convertible into or exercisable or exchangeable for shares of any class of
capital stock of Trenwick, except as required by agreements as in effect as
of the date of the Original Agreement and disclosed in Section 5.1(b) of
the Trenwick Disclosure Letter, or amend any of the terms of any such
securities or agreements outstanding as of the date of the Original
Agreement;
48
(c) (i) incur or assume any debt, except for borrowings, in each
case, in the ordinary course of business consistent with past practices,
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person, except in the ordinary course of business, (iii) make any
loans or advances to any Person other than loans or advances of
out-of-pocket expenses incurred in connection with the business of Trenwick
or its Subsidiaries, (iv) pledge or otherwise encumber shares of capital
stock of Trenwick or its Subsidiaries or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create any Lien thereupon other
than Permitted Liens;
(d) except as may be required by law or as contemplated by this
Agreement, including Section 5.9, enter into, adopt or amend or terminate
any bonus, profit sharing, compensation, severance, termination, change of
control, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, consulting, fringe benefit,
severance or other Employee Benefit Plan; or enter into or amend any
employment or severance agreement with any director, officer, employee or
agent of Trenwick or any of its Subsidiaries; or increase in any manner the
salary, wages, bonus, commission or other compensation or benefits of any
director, officer, employee or agent of Trenwick or any of its
Subsidiaries, except, (i) in connection with the promotion of any director,
officer, employee or agent of Trenwick or any of its Subsidiaries or (ii)
for increases in the ordinary course of business and consistent with past
practice which in the aggregate do not exceed 10%; or hire employees at the
level of Vice President or above; or pay any benefit not required by any
plan and arrangement as in effect as of the date of the Original Agreement
(including, without limitation, the granting of stock options, stock
appreciation rights or performance units);
(e) acquire (by merger, amalgamation, consolidation or acquisition
of stock or assets or otherwise) any corporation, partnership, joint
venture, association or other business organization or division thereof or
make any material investment either by purchase of stock or securities,
contributions to capital, property transfer or acquisition (including by
lease) of any material amount of properties or assets of any other Person,
except for the purchase of investment stock or securities in the ordinary
course of business;
(f) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) against Trenwick
or any of its Subsidiaries, its directors, officers, employees or agents,
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of claims for contractual
benefits under any insurance or reinsurance contract under which Trenwick
or any of its Subsidiaries or syndicates managed by any of its Subsidiaries
is the insurer or reinsurer;
(g) amend or propose to amend the certificate of incorporation,
by-laws or any similar document of Trenwick or any of its Subsidiaries;
49
(h) adopt a plan or resolutions providing for the complete or partial
liquidation, dissolution, amalgamation, consolidation, restructuring,
recapitalization or other reorganization of Trenwick or any of its Subsidiaries;
(i) except as set forth in Section 5.1(i) of the Trenwick
Disclosure Letter, enter into any new lines of business (other than in or
related to the insurance or reinsurance business) or otherwise make
material changes to the operation of its business or its loss reserve;
(j) except as set forth in Section 5.1(j) of the Trenwick
Disclosure Letter, sell (whether by amalgamation, consolidation or
otherwise), lease, transfer or dispose of any material assets (including
without limitation, rights of renewal) outside the ordinary course of
business consistent with past practice or enter into any material
commitment or transaction outside the ordinary course of business
consistent with past practices;
(k) authorize or make or commit to make any capital expenditures,
except for transactions in the ordinary course of business consistent with
past practice (but in no event in excess of $1,000,000 in the aggregate) or
pursuant to agreements or commitments entered into by Trenwick or any of
its Subsidiaries prior to the date of the Original Agreement;
(l) make any Tax elections or settle or compromise any material
United States federal, state, local or other foreign income Tax liability,
or waive or extend the statute of limitations in respect of any such Taxes;
(m) except as may be required as a result of a change in law or in
GAAP, change any of the accounting principles or practices used by it;
(n) amend the Rights or the Rights Agreement in any manner adverse
to LaSalle Holdings;
(o) enter into any agreement providing for the acceleration of
payment or performance or other consequence as a result of a change in control
of Trenwick or any of its Subsidiaries;
(p) resolve, commit or agree to take any of the foregoing actions
or any action which would make any representation or warranty in Article 3
materially untrue or incorrect;
(q) make any material change in its retrocessional agreements or
arrangements, including without limitation converting any of its funds
withheld stop loss reinsurance agreements into another type of reinsurance
agreement or entering into new funds withheld stop loss reinsurance
agreements or arrangements or stop loss reinsurance agreements or
arrangements that attach at an attachment point less than the expected loss
ratio;
(r) make any material change in its reinsurance agreements or
arrangements;
50
(s) enter into any agreement or arrangement that limits or
otherwise restricts Trenwick or any of its Subsidiaries or any successor
thereto or that could, after the Effective Time, limit or restrict New
Holdings and its Subsidiaries or any successor thereto, from engaging or
competing in any line of business or in any geographic area; or
(t) enter into any new transaction, agreement, arrangement or
understanding with any other Persons that would be required to be disclosed
in the Trenwick SEC Reports in accordance with Item 404 of Schedule S-K
under the Securities Act.
Section 5.2. Conduct of Business of LaSalle Holdings. Except as
expressly contemplated by this Agreement, the Stock Option Agreements or as
set forth in Section 5.2 of the LaSalle Disclosure Letter or as consented
to in writing by Trenwick, during the period from the date of the Original
Agreement to the Effective Time, LaSalle Holdings shall, and shall cause
each of its Subsidiaries to, conduct its operations only in, and neither
LaSalle Holdings nor any of its Subsidiaries shall take any action except
in, the ordinary and usual course of business and consistent with past
practice, and LaSalle Holdings and its Subsidiaries will use all
commercially reasonable efforts to preserve intact their business
organization, to keep available the services of their officers and
employees and to maintain advantageous relationships with and the goodwill
of their customers, business partners and others having business
relationships with LaSalle Holdings or its Subsidiaries, as the case may
be. Without limiting the generality of the foregoing, prior to the
Effective Time, neither LaSalle Holdings nor any of its Subsidiaries will,
except as expressly contemplated by this Agreement, without the prior
written consent of Trenwick:
(a) split, combine or reclassify any shares, declare, pay or set
aside for payment any dividend or other distribution payable in cash,
shares, property or otherwise in respect of its shares or directly or
indirectly redeem, purchase or otherwise acquire any shares of any class of
capital stock or other securities, other than regular quarterly dividends
(other than those payable to LaSalle Holdings) in an amount payable in cash
not in excess of $1.0938 per Series A Preferred Share and quarterly
dividends in an amount payable in cash not in excess of $0.375 per LaSalle
Holdings Share and Non-Voting Share; after the date of the Original
Agreement, LaSalle Holdings and Trenwick will coordinate with each other
regarding the declaration of dividends (other than those payable to LaSalle
Holdings) in respect of the Series A Preferred Shares, LaSalle Holdings
Shares and Non- Voting Shares and the record dates and payment dates
relating thereto, it being the intention of the parties that holders of
LaSalle Holdings Shares and Non-Voting Shares will not receive two
dividends for any single calendar quarter with respect to their LaSalle
Holdings Shares and Non- Voting Shares and the New Holdings Shares any such
holder receives in exchange therefor in accordance with the Plans;
(b) authorize for issuance, issue, sell, grant, pledge, dispose of
or encumber, deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issue or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any shares of
any class of LaSalle Holdings or any Subsidiary or any securities
convertible into or exercisable or exchangeable for shares of any class of
LaSalle Holdings, except as required by agreements as in
51
effect as of the date of the Original Agreement and disclosed in Section
5.2(b) of the LaSalle Disclosure Letter, or amend any of the terms of any
such securities or agreements outstanding as of the date of the Original
Agreement;
(c) (i) incur or assume any debt, except for borrowings, in each
case, in the ordinary course of business consistent with past practices,
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person, except in the ordinary course of business, (iii) make any
loans or advances to any Person other than loans or advances of
out-of-pocket expenses incurred in connection with the business of LaSalle
Holdings or its Subsidiaries, (iv) pledge or otherwise encumber shares of
LaSalle Holdings or its Subsidiaries or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create any Lien thereupon other
than Permitted Liens;
(d) except as may be required by law or as contemplated by this
Agreement, including Section 5.9, enter into, adopt or amend or terminate
any bonus, profit sharing, compensation, severance, termination, change of
control, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, consulting, fringe benefit,
severance or other Employee Benefit Plan; or enter into or amend any
employment or severance agreement with any director, officer, employee or
agent of LaSalle Holdings or any of its Subsidiaries; or increase in any
manner the salary, wages, bonus, commission or other compensation or
benefits of any director, officer, employee or agent of LaSalle Holdings or
any of its Subsidiaries, except, (i) in connection with the promotion of
any director, officer, employee or agent of LaSalle Holdings or any of its
Subsidiaries or (ii) for increases in the ordinary course of business and
consistent with past practice for employees below the level of Vice
President, in the aggregate case not to exceed 5%; or hire employees at the
level of Vice President or above; or pay any benefit not required by any
plan and arrangement as in effect as of the date of the Original Agreement
(including, without limitation, the granting of stock options, stock
appreciation rights or performance units);
(e) acquire (by merger, amalgamation, consolidation or acquisition
of stock or assets or otherwise) any corporation, partnership, joint
venture, association or other business organization or division thereof or
make any material investment either by purchase of stock or securities,
contributions to capital, property transfer or acquisition (including by
lease) of any material amount of properties or assets of any other Person,
except for the purchase of investment stock or securities in the ordinary
course of business;
(f) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) against LaSalle
Holdings or any of its Subsidiaries, its directors, officers, employees or
agents, other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of claims for
contractual benefits under any insurance or reinsurance contract under
which LaSalle Holdings or any of its Subsidiaries or any syndicates managed
by any of its Subsidiaries is the insurer or reinsurer;
52
(g) amend or propose to amend the memorandum of association, bye-laws
or any similar document of LaSalle Holdings or any of its Subsidiaries;
(h) propose to adopt a plan or resolutions providing for the
complete or partial liquidation, dissolution, amalgamation, consolidation,
restructuring, recapitalization or other reorganization of LaSalle Holdings
or any of its Subsidiaries;
(i) except as set forth in Section 5.2(i) of the LaSalle
Disclosure Letter, enter into any new lines of business (whether or not
part of the insurance or reinsurance business) or change any policy forms,
investment policies or guidelines or otherwise make material changes to the
operation of its business or its loss reserve;
(j) except as set forth in Section 5.2(j) of the LaSalle
Disclosure Letter, sell (whether by amalgamation, consolidation or
otherwise), lease, transfer or dispose of any material assets (including
without limitation, rights of renewal) outside the ordinary course of
business consistent with past practice or enter into any material
commitment or transaction outside the ordinary course of business
consistent with past practices;
(k) authorize or make or commit to make any capital expenditures,
except for transactions in the ordinary course of business consistent with
past practice (but in no event in excess of $350,000 in the aggregate) or
pursuant to agreements or commitments entered into by LaSalle Holdings or
any of its Subsidiaries prior to the date of the Original Agreement;
(l) make any Tax elections or settle or compromise any material
Bermuda, United States federal, state, local or other foreign income Tax
liability, or waive or extend the statute of limitations in respect of any
such Taxes;
(m) except as may be required as a result of a change in law or in
GAAP, change any of the accounting principles or practices used by it;
(n) enter into any agreement providing for the acceleration of
payment or performance or other consequence as a result of a change in control
of LaSalle Holdings or any of its Subsidiaries;
(o) resolve, commit or agree to take any of the foregoing actions
or any action which would make any representation or warranty in Article 4
materially untrue or incorrect;
(p) make any material change in its retrocessional agreements or
arrangements, including without limitation converting any of its funds
withheld stop loss reinsurance agreements into another type of reinsurance
agreement or entering into new funds withheld stop loss reinsurance
agreements or arrangements or stop loss reinsurance agreements or
arrangements that attach at an attachment point less than the expected loss
ratio;
(q) make any material change in its reinsurance agreements or
arrangements;
53
(r) enter into any agreement or arrangement that limits or
otherwise restricts LaSalle Holdings or any of its Subsidiaries or any
successor thereto or that could, after the Effective Time, limit or
restrict New Holdings and its Subsidiaries or any successor thereto, from
engaging or competing in any line of business or in any geographic area; or
(s) enter into any new transaction, agreement, arrangement or
understanding with any other Persons that would be required to be disclosed
in the LaSalle SEC Reports (excluding the amendment to the CatEPut) in
accordance with Item 404 of Schedule S-K under the Securities Act.
Nothing in this Section 5.2 shall preclude LaSalle Holdings or
LaSalle Re from implementing a new pension plan or amending existing
pension plans, to comply with Bermuda law.
Section 5.3. No Solicitation.
---------------
(a) No Solicitation by Trenwick.
---------------------------
(i) Trenwick shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of
its directors, officers or employees or any investment
banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries
to, and it shall use commercially reasonable efforts to
ensure that such Persons do not directly or indirectly,
(x) solicit, initiate or encourage (including by way of
furnishing information), or take any other action
designed to facilitate, any inquiries or the making of
any proposal which constitutes any Trenwick Takeover
Proposal (as defined below) or (y) participate in any
discussions or negotiations regarding any Trenwick
Takeover Proposal; provided, however, that if, at any
time the Board of Directors of Trenwick determines in
good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its
fiduciary duties to the stockholders of Trenwick under
applicable law, Trenwick may, in response to a Trenwick
Superior Proposal (as defined in Section 5.3(a)(ii))
which was not solicited by it or which did not otherwise
result from a breach of this Section 5.3(a)(i), and
subject to providing prior written notice of its decision
to take such action to LaSalle Holdings and compliance
with Section 5.3(a)(iii), (x) furnish information with
respect to Trenwick and its Subsidiaries to any Person
making a Trenwick Superior Proposal pursuant to a
customary confidentiality agreement (as determined by
Trenwick after consultation with its outside counsel) and
(y) participate in discussions or negotiations regarding
such Trenwick Superior Proposal. For purposes of this
Agreement, "Trenwick Takeover Proposal" means any
inquiry, proposal or offer from any Person relating to
any direct or indirect acquisition or purchase of a
business that constitutes 15% or more of the net
revenues, net income or assets of Trenwick and its
Subsidiaries, taken as a whole, or 15% or more of any
class of equity securities of Trenwick or any of its
Subsidiaries, any tender offer or exchange offer that if
consummated would result in any Person beneficially
owning
54
15% or more of any class of equity securities of Trenwick
or any of its Subsidiaries, or any merger, consolidation,
amalgamation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving
Trenwick or any of its Subsidiaries, other than the
transactions contemplated by this Agreement or the Stock
Option Agreements.
(ii) Except as expressly permitted by this Section
5.3(a), neither the Board of Directors of Trenwick nor
any committee thereof shall (x) withdraw or modify, or
propose publicly to withdraw or modify, in a manner
adverse to LaSalle Holdings, the approval or
recommendation by such Board of Directors or such
committee of this Agreement and the transactions
contemplated hereby, (y) approve or recommend, or propose
publicly to approve or recommend, any Trenwick Takeover
Proposal, or (z) cause Trenwick to enter into any letter
of intent, agreement in principle, acquisition agreement
or other similar agreement (each a "Trenwick Acquisition
Agreement") related to any Trenwick Takeover Proposal.
Notwithstanding the foregoing, the Board of Directors of
Trenwick (x) may withdraw or modify its approval and
recommendation of this Agreement and the transactions
contemplated hereby if the Board of Directors of Trenwick
determines in good faith that it has the fiduciary duty
to do so under applicable law and (y) may terminate this
Agreement and concurrently with or after such
termination, if it so chooses, cause Trenwick to enter
into any Trenwick Acquisition Agreement with respect to
any Trenwick Superior Proposal, but only at a time that
is after the fifth business day following LaSalle
Holdings' receipt of written notice advising LaSalle
Holdings that the Board of Directors of Trenwick is
prepared to accept a Trenwick Superior Proposal,
specifying the material terms and conditions of such
Trenwick Superior Proposal and identifying the person
making such Trenwick Superior Proposal. For purposes of
this Agreement, a "Trenwick Superior Proposal" means any
proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined
voting power of the Trenwick Shares then outstanding or
all or substantially all the assets of Trenwick and
otherwise on terms which the Board of Directors of
Trenwick determines in its good faith judgment (after
receiving the advice of a financial advisor of nationally
recognized reputation) to be more favorable to Trenwick's
stockholders than this Agreement and the transactions
contemplated hereby and for which financing, to the
extent required, is then committed or which, in the good
faith judgment of the Board of Directors of Trenwick, is
reasonably capable of being obtained by such third party.
(iii) In addition to the obligations of Trenwick set
forth in subparagraphs (a) (i) and (a) (ii) of this
Section 5.3, Trenwick shall immediately advise LaSalle
Holdings orally and in writing of any request for
information or of any Trenwick Takeover Proposal, the
material terms and conditions of such request or Trenwick
Takeover
55
Proposal and the identity of the Person making such
request or Trenwick Takeover Proposal. Trenwick will keep
LaSalle Holdings reasonably informed of the status and
details (including amendments or proposed amendments) of
any such request or Trenwick Takeover Proposal.
(iv) Nothing contained in this Section 5.3(a) shall
prohibit Trenwick from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any
disclosure to Trenwick's stockholders if, in the good
faith judgment of the Board of Directors of Trenwick,
after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under
applicable law.
(b) No Solicitation by LaSalle Holdings.
-----------------------------------
(i) LaSalle Holdings shall not, nor shall it permit any
of its Subsidiaries to, nor shall it authorize or permit
any of its directors, officers or employees or any
investment banker, financial advisor, attorney,
accountant or other representative retained by it or any
of its Subsidiaries to, and it shall use commercially
reasonable efforts to ensure that such Persons do not
directly or indirectly, (x) solicit, initiate or
encourage (including by way of furnishing information),
or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes
any LaSalle Holdings Takeover Proposal (as defined below)
or (y) participate in any discussions or negotiations
regarding any LaSalle Holdings Takeover Proposal;
provided, however, that if, at any time the Board of
Directors of LaSalle Holdings determines in good faith,
after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary
duties to shareholders of LaSalle Holdings under
applicable law, LaSalle Holdings may, in response to a
LaSalle Holdings Superior Proposal (as defined in Section
5.3(b)(ii)) which was not solicited by it or which did
not otherwise result from a breach of this Section
5.3(b)(i), and subject to providing prior written notice
of its decision to take such action to Trenwick and
compliance with Section 5.3(b)(iii), (x) furnish
information with respect to LaSalle Holdings and its
Subsidiaries to any Person making a LaSalle Holdings
Superior Proposal pursuant to a customary confidentiality
agreement (as determined by LaSalle Holdings after
consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such
LaSalle Holdings Superior Proposal. For purposes of this
Agreement, "LaSalle Holdings Takeover Proposal" means any
inquiry, proposal or offer from any Person relating to
any direct or indirect acquisition or purchase of a
business that constitutes 15% or more of the net
revenues, net income or assets of LaSalle Holdings and
its Subsidiaries, taken as a whole, or 15% or more of any
class of equity securities of LaSalle Holdings or any of
its Subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of
LaSalle Holdings or any of its Subsidiaries, or any
merger, consolidation,
56
amalgamation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving
LaSalle Holdings or any of its Subsidiaries, other than
the transactions contemplated by this Agreement or the
Stock Option Agreements.
(ii) Except as expressly permitted by this Section
5.3(b), neither the Board of Directors of LaSalle
Holdings nor any committee thereof shall (x) withdraw or
modify, or propose publicly to withdraw or modify, in a
manner adverse to Trenwick, the approval or
recommendation by such Board of Directors or such
committee of this Agreement and the transactions
contemplated hereby, (y) approve or recommend, or propose
publicly to approve or recommend, any LaSalle Holdings
Takeover Proposal, or (z) cause LaSalle Holdings to enter
into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each a
"LaSalle Holdings Acquisition Agreement") related to any
LaSalle Holdings Takeover Proposal. Notwithstanding the
foregoing, the Board of Directors of LaSalle Holdings (x)
may withdraw or modify its approval and recommendation of
this Agreement and the transactions contemplated hereby
if the Board of Directors of LaSalle Holdings determines
in good faith that it has the fiduciary duty to do so
under applicable law and (y) may terminate this Agreement
and concurrently with or after such termination, if it so
chooses, cause LaSalle Holdings to enter into any LaSalle
Holdings Acquisition Agreement with respect to any
LaSalle Holdings Superior Proposal, but only at a time
that is after the fifth business day following Trenwick's
receipt of written notice advising Trenwick that the
Board of Directors of LaSalle Holdings is prepared to
accept a LaSalle Holdings Superior Proposal, specifying
the material terms and conditions of such LaSalle
Holdings Superior Proposal and identifying the person
making such LaSalle Holdings Superior Proposal. For
purposes of this Agreement, a "LaSalle Holdings Superior
Proposal" means any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation,
amalgamation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more
than 50% of the combined voting power of LaSalle Holdings
Shares then outstanding or all or substantially all the
assets of LaSalle Holdings and otherwise on terms which
the Board of Directors of LaSalle Holdings determines in
its good faith judgment (after receiving the advice of a
financial advisor of nationally recognized reputation) to
be more favorable to LaSalle Holdings' stockholders than
this Agreement and the transactions contemplated hereby
and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the
Board of Directors of LaSalle Holdings, is reasonably
capable of being obtained by such third party.
(iii) In addition to the obligations of LaSalle Holdings
set forth in subparagraphs (b)(i) and (b)(ii) of this
Section 5.3, LaSalle Holdings shall immediately advise
Trenwick orally and in writing of any request for
information or of any LaSalle Holdings Takeover Proposal,
the material terms and conditions of such request or
57
LaSalle Holdings Takeover Proposal and the identity of
the person making such request or LaSalle Holdings
Takeover Proposal. LaSalle Holdings will keep Trenwick
reasonably informed of the status and details (including
amendments or proposed amendments) of any such request or
LaSalle Holdings Takeover Proposal.
(iv) Nothing contained in this Section 5.3(b) shall
prohibit LaSalle Holdings from taking and disclosing to
its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any
disclosure to LaSalle Holdings' shareholders if, in the
good faith judgment of the Board of Directors of LaSalle
Holdings, after consultation with outside counsel,
failure so to disclose would be inconsistent with its
obligations under applicable law.
Section 5.4. Access to Information; Confidentiality. Between the
date of the Original Agreement and the Effective Time, each of LaSalle
Holdings and Trenwick shall, and shall cause each of its respective
Subsidiaries to, afford the other party and its officer, employees and
authorized representatives (including, without limitation, attorneys,
auditors, financial advisors and actuaries) of the other reasonable access
during normal business hours during the period prior to the Effective Time
to all its personnel, offices and other facilities and to its books and
records and will permit such party and its authorized representatives to
make such inspections of its financial and operating data and other
information with respect to its business and properties as such party and
its authorized representatives may from time to time reasonably request. No
information or knowledge obtained in any investigation pursuant to this
Section 5.4 shall affect or be deemed to modify any representation or
warranty contained in the Agreement or the conditions to the obligations of
the parties to consummate the Plans. The confidentiality of all such
documents and information furnished in connection with the transactions
contemplated by this Agreement shall be governed by the terms of the
Confidentiality Letter.
Section 5.5. Form S-4; Regulatory Matters. As soon as is
reasonably practicable following the date of the Original Agreement,
LaSalle Holdings and Trenwick shall prepare and file with the SEC, pursuant
to Rule 14a-6(a) under the Exchange Act, the Joint Proxy Statement and a
registration statement of New Holdings on Form S-4 with respect to the
transactions contemplated by this Agreement. LaSalle Holdings and Trenwick
shall cause New Holdings to file the Form S-4 promptly after the conclusion
of the SEC's review of the Joint Proxy Statement. Each of LaSalle Holdings
and Trenwick shall provide reasonable opportunity for the other to review
and comment upon the contents of the Joint Proxy Statement and the Form S-4
and shall not include therein or omit therefrom any information or
supplement to which counsel to the other shall reasonably object or
specifically request (as the case may be). After the date of the mailing of
the Joint Proxy Statement, each of LaSalle Holdings and Trenwick agrees
promptly to notify the other of and to correct or supplement any
information which either of them shall have furnished for inclusion in the
Joint Proxy Statement that shall have become false or misleading in any
material respect. Trenwick and LaSalle Holdings shall use all commercially
reasonable efforts to have the Joint Proxy Statement cleared by the SEC
under the Exchange Act and the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. New Holdings
shall also take any action (other than
58
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to
be taken under any applicable state securities and "Blue Sky" laws in
connection with the issue of New Holdings Shares in accordance with the
Plans and upon the exercise of New Holdings Options (as defined herein) and
each of LaSalle Holdings and Trenwick shall furnish all information
concerning itself and its shareholders as may reasonably be requested in
connection with any such action.
Section 5.6. Public Announcements. LaSalle Holdings and Trenwick
shall not issue any press release or otherwise make any public statements
with respect to the Plans, this Agreement or the transactions contemplated
hereby without first consulting with each other, and providing each other
the opportunity to review, comment upon and concur as to the wording,
timing and media for such press release or statement, except for any press
release or statement as may be required by applicable law, court process or
the obligation pursuant to any listing statement with any national
securities exchange, in which case notice shall be given to the other party
prior to the issuance of such press release or the dissemination of such
written material. The parties agree that the initial press release, if any,
to be issued with respect to the execution of this Agreement and the
transactions contemplated hereby shall be in a form agreed to by the
parties.
Section 5.7. Supplemental Information. Prior to the Effective
Time, each party will promptly disclose in writing to the other parties any
matter hereafter arising which, if existing, occurring or known at the date
of the Original Agreement would have been required to be disclosed to such
other parties. Each party shall promptly advise the other parties of such
party's knowledge of any Material Adverse Effect. Except where prohibited
by applicable statutes and regulations, each party shall promptly provide
the other (or its counsel) with copies of all filings, material notices or
material communications made by such party with any Governmental Authority
(including the SEC or NYSE) in connection with this Agreement or the Stock
Option Agreements, or the transactions contemplated hereby or thereby. No
information provided to a party pursuant to this Section 5.7 shall be
deemed to cure any breach of any representation of or warranty made in this
Agreement unless the party receiving such information specifically agrees
thereto in writing.
Section 5.8. Shareholders' Meetings. LaSalle Holdings and LaSalle
Re shall each request the Court to convene a special meeting of its
respective shareholders (and, if necessary, classes of shareholders), with
the meeting of LaSalle Holdings to occur first, and Trenwick, acting
through its Board of Directors, shall in accordance with the GCL call a
special meeting of its stockholders (and, if necessary, classes of
stockholders), and shall give notice of, convene and hold such special
meetings as soon as practicable, but in no event more than 45 days, after
the Form S-4 is declared effective by the SEC for the purpose of approving
this Agreement and all actions contemplated hereby. In connection with such
meetings, each of LaSalle Holdings, LaSalle Re and Trenwick shall mail the
Joint Proxy Statement to its respective shareholders as promptly as
practicable. The respective Boards of Directors of each of LaSalle
Holdings, LaSalle Re and Trenwick shall submit for approval and adoption by
its respective shareholders the matters to be voted upon at such meetings
and shall, subject to their fiduciary duties after having consulted with
and considered the advice of outside counsel, include in the Joint Proxy
Statement the recommendation of its respective
59
Board of Directors that the shareholders vote in favor of the approval and
adoption of this Agreement and the Plans and each such party shall (subject
to the fiduciary duties of its Board of Directors) use all commercially
reasonable efforts to secure such approval and adoption. LaSalle Holdings,
LaSalle Re and Trenwick shall coordinate and cooperate with respect to the
timing of such meetings and shall endeavor to hold such meetings on the
same day.
Section 5.9. Trenwick Options, LaSalle Holdings Options, LaSalle
Re Options and Trenwick Warrants.
(a) Trenwick Options.
----------------
(i) At the Effective Time, each outstanding Trenwick
Option shall be replaced by an option (a "New Holdings
Option") to acquire New Holdings Shares, the terms of
which shall be no less favorable than the terms currently
applicable to such Trenwick Option, under a new stock
option plan to be established by New Holdings for such
purposes before the Closing Date (the "New Holdings
Option Plan"), all as provided in Section 5.9(a)(ii).
(ii) The cancellation of Trenwick Options and replacement
with New Holdings Options shall comply in all respects
with, and shall be performed in accordance with, the
methodology prescribed by the provisions of Section
424(a) of the Code and the regulations thereunder and
each New Holdings Option shall provide the option holder
with termination rights that are no less favorable to
such holder than were provided under the Trenwick Option
for which it was replaced as of the Effective Time. The
parties contemplate that, consistent with the methodology
prescribed by Section 424(a) of the Code and the
applicable regulations thereunder (A) the number of New
Holdings Shares subject to such New Holdings Option will
be determined by multiplying the number of Trenwick
Shares subject to Trenwick Options by the Trenwick
Exchange Ratio (rounded to the next higher whole number
with respect to each holder thereof) and (B) the exercise
price under such New Holdings Option will be determined
by dividing the exercise price per share under the
Trenwick Option in effect immediately prior to the
Effective Time by the Trenwick Exchange Ratio and
rounding the exercise price thus determined to the
nearest whole cent (a half-cent shall be rounded to the
next higher whole cent).
(iii) As promptly as practicable after the Effective
Time, New Holdings shall issue to each holder of an
outstanding Trenwick Option a document evidencing the New
Holdings Option having the terms provided for in Sections
5.9(a)(i) and (ii) and effective as of the Effective
Time.
60
(b) LaSalle Holdings Options.
------------------------
(i) At the Effective Time, each outstanding LaSalle
Holdings Option shall be replaced by a New Holdings
Option, the terms of which shall be no less favorable
than the terms currently applicable to such LaSalle
Holdings Option, under the New Holdings Option Plan, all
as provided in Section 5.9(b)(ii).
(ii) The cancellation of LaSalle Holdings Options and
replacement with New Holdings Options shall comply in all
respects with, and shall be performed in accordance with,
the methodology prescribed by the provisions of Section
424(a) of the Code and the regulations thereunder and
each New Holdings Option shall provide the option holder
with termination rights that are no less favorable to
such holder than were provided under the LaSalle Holdings
Option for which it was replaced as of the Effective
Time. The parties contemplate that, consistent with the
methodology prescribed by Section 424(a) of the Code and
the applicable regulations thereunder (A) the number of
New Holdings Shares subject to such New Holdings Option
will be determined by multiplying the number of LaSalle
Holdings Shares subject to LaSalle Holdings Options by
the LaSalle Exchange Ratio (rounded to the next higher
whole number with respect to each holder thereof) and (B)
the exercise price under such New Holdings Option will be
determined by dividing the exercise price per share under
the LaSalle Holdings Option in effect immediately prior
to the Effective Time by the LaSalle Exchange Ratio and
rounding the exercise price thus determined to the
nearest whole cent (a half-cent shall be rounded to the
next higher whole cent).
(iii) As promptly as practicable after the Effective
Time, New Holdings shall issue to each holder of an
outstanding LaSalle Holdings Option a document evidencing
the New Holdings Option having the terms provided for in
Sections 5.9(b)(i) and (ii) and effective as of the
Effective Time.
(c) LaSalle Re Options. Subject to Section 2.6(e):
------------------ --------------
(i) Pursuant to Section 2(H) of that certain Amended and
Restated Option Agreement dated November 27, 1995 among
LaSalle Holdings, LaSalle Re and each of the
optionholders listed on Schedule I thereto, from and
after the Effective Time, each holder of an outstanding
option to acquire Non-Voting Shares shall be entitled,
upon payment of the exercise price thereof, to receive,
at such holder's election, either (i) the number of
Non-Voting Shares covered by such option or (ii) the
number of New Holdings Shares that such holder would have
received pursuant to Section 2.6(a) (plus, if applicable,
the amount of cash payable in lieu of a fractional share
that such holder would have received pursuant to Section
2.12) if such holder had exercised such option
immediately prior to the Effective Time. LaSalle Re
undertakes to use commercially reasonable efforts to
obtain the consent of each of the holders of such options
to the cancellation of such options and replacement
61
thereof with New Holdings Options, the terms of which
shall be no less favorable than the terms currently
applicable to such options.
(ii) Pursuant to Section 2(F) of that certain Stock
Appreciation Rights Agreement dated as of April 1, 1994
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and LaSalle Re, if ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ exercises any of his stock appreciation rights
during the period beginning at the Effective Time and
ending on November 22, 2003, he shall be entitled to
receive the number of New Holdings Shares that he would
have received pursuant to Section 2.6(a) (plus, if
applicable, the amount of cash payable in lieu of a
fractional share that he would have received pursuant to
Section 2.12) if he had exercised such stock appreciation
rights immediately prior to the Effective Time.
(d) Registration of Options. If the New Holdings Options issued
pursuant to Sections 5.9(a), (b) and (c) are not already covered by an
effective registration statement, New Holdings will file a registration
statement as promptly as practicable after the Effective Time, which
registration statement will cover the New Holdings Shares issuable upon
exercise of the New Holdings Options granted in substitution of Trenwick
Options, LaSalle Holdings Options and LaSalle Re Options, and New Holdings
will use all commercially reasonable efforts to cause such registration
statement to become effective under the Securities Act and to maintain such
registration statement in effect until the exercise or termination of all
such New Holdings Options.
(e) Trenwick Warrants. At the Effective Time, each then outstanding
warrant of Trenwick shall be assumed by New Holdings in accordance with its
terms.
Section 5.10. Takeover Laws. The parties shall use all
commercially reasonable efforts to exempt the transactions contemplated by
this Agreement from, and otherwise act to eliminate or minimize the effects
of any applicable takeover or change of control law.
Section 5.11. Affiliates.
----------
(a) At least five days prior to the Closing Date, Trenwick shall
deliver to LaSalle Holdings a letter identifying all persons who are
anticipated to be, at the time of the Trenwick stockholders meeting,
"affiliates" of Trenwick for purposes of Rule 145 under the Securities Act
("Rule 145"). Trenwick shall furnish such information and documents as
LaSalle Holdings may reasonably request for the purpose of reviewing such
letter. Trenwick shall use all commercially reasonable efforts to cause
each Person who is identified as an "affiliate" in such letter to deliver
to LaSalle Holdings, prior to the Closing Date, a written agreement in
connection with restrictions on affiliates under Rule 145, in a form
mutually agreeable to Trenwick and LaSalle Holdings.
(b) At least five days prior to the Closing Date, LaSalle Holdings
shall deliver to Trenwick a letter identifying all Persons who are
anticipated to be, at the time of the LaSalle Holdings shareholders
meeting, "affiliates" of LaSalle Holdings for purposes of Rule 145. LaSalle
Holdings shall furnish such information and documents as Trenwick may
reasonably request for the
62
purpose of reviewing such letter. LaSalle Holdings shall use all
commercially reasonable efforts to cause each Person who is identified as
an "affiliate" in such letter to deliver to Trenwick, prior to the Closing
Date, a written agreement in connection with restrictions on affiliates
under Rule 145, in a form mutually agreeable to Trenwick and LaSalle
Holdings.
Section 5.12. Stock Exchange Listing. Trenwick, LaSalle Holdings
and New Holdings shall use all commercially reasonable efforts to cause the
New Holdings Shares to be issued in accordance with the Plans and the New
Holdings Shares to be reserved for issue upon exercise of New Holdings
Options to be approved for listing on the NYSE, subject to official notice
of issuance, prior to the Closing Date.
Section 5.13. Indemnification and Insurance.
-----------------------------
(a) From and after the Effective Time, New Holdings shall
indemnify, defend and hold harmless each Person who is, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time,
an officer or director of Trenwick and LaSalle Holdings (the "Indemnified
Parties") against all losses, expenses, claims, damages and liabilities
arising out of the transactions contemplated by this Agreement to the
fullest extent permitted or required under applicable law (including,
without limitation, reasonable attorneys' fees). Subject to any limitations
imposed by Bermuda law and public policy, to the extent applicable, New
Holdings agrees that all rights to indemnification existing in favor of
current and former directors and officers of Trenwick, LaSalle Holdings or
any of their respective Subsidiaries as provided in such corporation's
certificate of incorporation or by-laws (or analogous documents) or
existing indemnification agreements, as in effect as of the date of the
Original Agreement, with respect to matters occurring through the Effective
Time, shall survive the Plans and shall continue in full force and effect,
and New Holdings shall guarantee the obligations of Trenwick and LaSalle
Holdings in respect thereof; provided, however, that this shall not limit
the ability of New Holdings to effect any corporate restructuring of its
Subsidiaries.
(b) New Holdings shall cause to be maintained for a period of not
less than six years from the Effective Time the directors' and officers'
insurance and, fiduciary liability insurance indemnification policies
currently maintained by Trenwick and LaSalle Holdings to the extent that
such policies provide coverage for events occurring prior to the Effective
Time (the "D&O Insurance") for any of the Indemnified Parties so long as
the annual premium therefor would not be in excess of two hundred percent
(200%) of the last annual premium paid prior to the date of the Original
Agreement (two hundred percent (200%) of such premium, the "Maximum
Premium"); provided, however, that New Holdings may, in lieu of maintaining
such existing D&O Insurance as provided above, cause no less favorable
coverage to be provided under any policy maintained for the benefit of the
directors and officers of Trenwick, LaSalle Holdings or any of their
respective Subsidiaries, so long as (i) the insurance company providing
such coverage thereof has an A.M. Best Company rating of A or better and
(ii) the material terms thereof are no less advantageous to the Indemnified
Parties than the existing D&O Insurance. If the existing D&O Insurance
expires, is terminated or cancelled or if the premium for such D&O
Insurance exceeds the Maximum Premium
63
during such six-year period, New Holdings will cause to be obtained, to the
extent commercially available, replacement D&O Insurance as can be obtained
for the remainder of such six-year period for a premium not in excess of
the Maximum Premium on terms and conditions no less advantageous to the
Indemnified Parties than the existing D&O Insurance.
(c) The provisions of Section 5.13 are in addition to, and not in
substitution for any rights that an Indemnified Party may have under the
applicable certificate of incorporation, memorandum of association, or
by-laws, bye-laws or agreements with Trenwick and LaSalle Holdings or any
of their respective Subsidiaries or under applicable law. New Holdings
agrees to pay all costs and expenses (including fees and expenses of
counsel) that may be incurred by an Indemnified Party in successfully
enforcing the indemnity or other obligations under this Section 5.13. The
provisions of this Section 5.13 shall survive the Closing and are intended
for the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
Section 5.14. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions and other agreements set forth in this Agreement,
each of the parties hereto will use commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner possible, the transactions contemplated by this
Agreement (including with respect to Trenwick, the reduction of any
taxation of Trenwick arising from the Plan of Reorganization) and shall use
all commercially reasonable efforts to obtain all waivers, permits,
consents and approvals and to effect all registrations, filings and notices
with or to third parties or Governmental Authorities which are necessary or
desirable in connection with the transactions contemplated by this
Agreement. If, at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the
proper officers or directors of each of the parties hereto shall take such
action.
Section 5.15. Post-Closing Matters.
--------------------
(a) LaSalle Holdings, Trenwick and their respective Affiliates
shall (and, following the Effective Time, New Holdings shall) take no
action with respect to the stock, assets or liabilities of LaSalle Holdings
or Trenwick, including, without limitation, the filing of Tax returns or
reports, that would be inconsistent with the qualification of the Plans as
tax-free under Section 351 of the Code; provided, however, that Trenwick,
LaSalle Holdings and their respective Affiliates may file with the
appropriate Governmental Authorities and execute all documents necessary to
consummate the Plans and other transactions contemplated by this Agreement.
(b) Upon request, New Holdings shall use commercially reasonable
efforts to cooperate with any LaSalle Holdings shareholder or any Trenwick
stockholder in the completion and administration of a gain recognition
agreement under Section 367 of the Code.
Section 5.16. Employee Benefit Plans; Existing Agreements.
-------------------------------------------
64
(a) For a period of at least one year after the Effective Time,
New Holdings will cause (i) the employees of Trenwick and its Subsidiaries
who are employed immediately after the Effective Time ("Trenwick
Employees") to be provided with employee benefits under Employee Benefit
Plans maintained by New Holdings ("New Holdings Plans") which are no less
favorable in the aggregate than benefits provided to Trenwick Employees
immediately prior to the Effective Time; and (ii) the employees of LaSalle
Holdings and its Subsidiaries who are employed immediately after the
Effective Time ("LaSalle Holdings Employees") to be provided with employee
benefits under the New Holdings Plans which are no less favorable in the
aggregate than benefits provided to LaSalle Holdings Employees immediately
prior to the Effective Time, except for the termination of the LaSalle Re
Holdings Limited Employee Stock Purchase Plan.
(b) With respect to each New Holdings Plan, for purposes of
determining eligibility to participate, vesting and entitlement to
benefits, including for severance benefits and vacation entitlement (but
not for accrual of pension benefits except to the extent that past service
credit is provided in a similar manner to both Trenwick Employees and
LaSalle Holdings Employees), service with Trenwick and its Subsidiaries by
Trenwick Employees employed immediately after the Effective Time shall be
treated as service with New Holdings and service with LaSalle Holdings and
its Subsidiaries by LaSalle Holdings Employees employed immediately after
the Effective Time shall be treated as service with New Holdings; provided,
however, that such service shall not be recognized to the extent that such
recognition would result in a duplication of benefits. Such service also
shall apply for purposes of satisfying any waiting periods, evidence of
insurability requirements or the application of any preexisting condition
limitations. Trenwick Employees and LaSalle Holdings Employees shall be
given credit for amounts paid under a corresponding benefit plan during the
same period for purposes of applying deductibles, copayments and
out-of-pocket maximums as though such amounts had been paid in accordance
with the terms and conditions of the New Holdings Plan.
(c) Except with respect to those plans and arrangements listed in
Section 5.16 of the Trenwick Disclosure Letter or the LaSalle Disclosure
Letter (as applicable), following the Effective Time, New Holdings shall
honor in accordance with their terms (i) all employment, severance and
other compensation agreements and arrangements existing on or prior to the
execution of this Agreement which are between Trenwick and any director,
officer or employee thereof and which have been disclosed in Section 3.16
of the Trenwick Disclosure Letter and previously have been delivered to
LaSalle Holdings and (ii) all employment, severance and other compensation
agreements and arrangements existing on or prior to the execution of this
Agreement which are between LaSalle Holdings and any director, officer or
employee thereof and which have been disclosed in Section 4.16(a) of the
LaSalle Disclosure Letter and previously have been delivered to Trenwick.
(d) It is understood and agreed between the parties that all
provisions contained in this Agreement with respect to employee benefit
plans or employee compensation are included for the sole benefit of the
respective parties hereto and do not and shall not create any right in any
other
65
person, including, but not limited to, any LaSalle Holdings Employee or any
Trenwick Employee, any participant in any benefit or compensation plan or
any beneficiary thereof.
Section 5.17. Letters from Accountants.
------------------------
(a) LaSalle Holdings shall use all commercially reasonable efforts
to cause to be delivered to Trenwick two letters from Deloitte & Touche
LLP, its independent public accountants, one dated a date within two
business days before the date on which the Form S-4 shall become effective
and one dated a date within two business days before the Effective Date,
each addressed to Trenwick, in form and substance reasonably satisfactory
to Trenwick and comparable in scope and substance to comfort letters
customarily delivered by independent public accountants in connection with
registration statements similar to the Form S-4 and transactions such as
those contemplated by this Agreement.
(b) Trenwick shall use its best efforts to cause to be delivered
to LaSalle Holdings two letters of PricewaterhouseCoopers LLP, its
independent public accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective and one dated
a date within two business days before the Effective Date, each addressed
to LaSalle Holdings, in form and substance reasonably satisfactory to
LaSalle Holdings and comparable in scope and substance to comfort letters
customarily delivered by independent public accountants in connection with
registration statements similar to the Form S-4 and transactions such as
those contemplated by this Agreement.
Section 5.18. Litigation. Each of Trenwick and LaSalle Holdings
shall (to the extent their interests do not diverge) cooperate in the
defense of any litigation against Trenwick or LaSalle Holdings, as
applicable, and its directors and officers relating to the transactions
contemplated by this Agreement, the Plans and the Stock Option Agreements.
Section 5.19. Advice of Changes. Each of Trenwick and LaSalle
Holdings agrees that it shall give the other party prompt notice of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Section 5.20. Trenwick Rights Agreement. The Board of Directors of
Trenwick shall take all further action (in addition to that referred to in
Section 3.20) reasonably requested in writing by LaSalle Holdings in order
to render the Trenwick Rights inapplicable to transactions contemplated by
this Agreement, the Plans and the Stock Option Agreements to the extent
provided herein and in the Trenwick Rights Plan amendment.
66
Section 5.21. New Holdings Rights Agreement. The Board of
Directors of New Holdings shall take all action necessary to implement a
shareholders rights plan (the "New Holdings Rights Agreement"),
substantially similar to the Trenwick Rights Agreement and Trenwick Rights,
except as otherwise contemplated by Section 5.21 of the Trenwick Disclosure
Letter or as otherwise agreed by Trenwick and LaSalle Holdings, with such
other changes as are set forth on Section 5.21 of the Trenwick Disclosure
Letter and such changes therein as may be agreed by Trenwick and LaSalle
Holdings, effective as of the Effective Time.
Section 5.22. Assumption of Non-Voting Share Conversion
Obligation. In the event that this Agreement and the LaSalle Re Scheme of
Arrangement are not approved by the vote specified in Section 4.15(b),
then, prior to the consummation of the LaSalle Holdings Scheme of
Arrangement, New Holdings shall assume by written instrument the obligation
to deliver one New Holdings Share in exchange for each Non-Voting Share
surrendered for exchange pursuant to that certain Conversion Agreement
dated as of November 27, 1995 among LaSalle Holdings, LaSalle Re and each
of the Persons listed on Schedule I thereto.
Section 5.23. Assumption of Series B Preferred Share Conversion
Obligation. Prior to the Effective Time, New Holdings shall assume by
written instrument the obligation to deliver to the holders of any Series B
Preferred Shares, par value $1.00 per share, of LaSalle Holdings ("Series B
Preferred Shares"), upon the basis and upon the terms and conditions
specified in the Certificate of Designation, Preferences and Rights of the
Series B Preferred Shares with respect to the conversion of such Series B
Preferred Shares, and in lieu of the LaSalle Holdings Shares immediately
theretofore receivable upon such conversion, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of LaSalle Holdings Shares equal to the number of
LaSalle Holdings Shares immediately theretofore so receivable had the
Schemes of Arrangement not been consummated.
Section 5.24. Tax-Free Reorganization. Trenwick, New Holdings and
LaSalle Holdings shall each use its best efforts to cause the exchange
described in Section 2.1(b) to be treated as a reorganization within the
meaning of Section 368(a) of the Code and to cause the Schemes of
Arrangement to be treated as tax-free under Section 351 of the Code and to
cause the delivery of the certificates of officers and opinions upon which
the opinions of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ under Section 6.1(h), Section 6.2(g) and
Section 6.3(h) will rely and upon which the opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
under Section 6.1(g) will rely.
67
ARTICLE 6
CONDITIONS TO THE PLANS
Section 6.1. Conditions to Each Party's Obligation to Effect the
Plans. The respective obligations of each party to this Agreement to
consummate the Plans and to effect the actions referred to in Section
2.2(c) shall be subject to the following conditions:
(a) Stockholder Approvals. This Agreement, the Plans and the other
transactions contemplated hereby shall have been approved and adopted by
any requisite vote or consent of (i) the relevant classes of Trenwick's
stockholders as required by the GCL, Trenwick's certificate of
incorporation and by-laws and (if applicable), the NYSE and (ii) the
relevant classes of LaSalle Holdings' shareholders as required by the
Companies Act and (if applicable) the NYSE and LaSalle Holdings' bye-laws,
and orders of the Court sanctioning the Schemes of Arrangement shall have
been obtained.
(b) Third Party Consents.
--------------------
(i) Both of Trenwick and LaSalle Holdings shall have
received all consents and approvals required by any
lender or equity provider as further set forth in Section
6.1(b) of the Trenwick Disclosure Letter and the LaSalle
Disclosure Letter, respectively.
(ii) Those regulatory and other approvals required to
consummate the Plans and the other transactions
contemplated hereby, including but not limited to any
applicable Lloyd's approval and those approvals specified
in Section 3.8 of the Trenwick Disclosure Letter and
Section 4.8 of the LaSalle Disclosure Letter, shall have
been obtained (without any terms or conditions to such
approvals which would impose material and adverse
limitations on the ability of New Holdings and its
Subsidiaries to conduct their business after the
Effective Time, which would require changes to the terms
of the Plans which would be material and adverse to New
Holdings, LaSalle Holdings or Trenwick or which would
change the consideration payable to shareholders in
accordance with the Plans) and shall remain in full force
and effect and all statutory waiting periods in respect
thereof shall have expired.
(c) No Injunctions or Restraints. No order, decree or injunction
of any court or agency of competent jurisdiction shall be in effect, and no
law, statute or regulation shall have been enacted or adopted, that
enjoins, prohibits or makes illegal consummation of any of the transactions
contemplated hereby; provided, however, that each of LaSalle Holdings and
Trenwick shall have used all commercially reasonable efforts to prevent any
such rule, regulation, injunction, decree or other order, and to appeal as
promptly as possible any injunction, decree or other order that may be
entered.
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(d) Form S-4. The Form S-4 shall have been declared effective by
the SEC and shall not be subject to a stop order or threatened stop order.
(e) HSR Act. Any waiting period (and any extension thereof)
applicable to the Plans under the HSR Act shall have terminated or expired.
(f) NYSE Listing. The New Holdings Shares to be issued to holders
of Trenwick Shares, LaSalle Holdings Shares and Minority Shares upon
consummation of the Plans shall have been authorized for trading on the
NYSE, subject to official notice of issuance.
(g) ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ Opinion. New Holdings and LaSalle
Holdings shall have received an opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, dated the
Effective Date, on the basis of facts, representations and assumptions set
forth in such opinion that are consistent with the facts existing on the
Effective Date, substantially to the effect that (i) the Schemes of
Arrangement will qualify as an exchange under Section 351(a) of the Code,
(ii) no gain or loss will be recognized by United States transferors of
LaSalle Holdings Shares who, actually or constructively within the meaning
of Section 958 of the Code, own less than 5% of both the total voting power
and the total value of the shares of New Holdings immediately after the
Plans upon the receipt of solely New Holdings Shares pursuant to the
Schemes of Arrangement, (iii) no gain or loss will be recognized by United
States transferors of LaSalle Holdings Shares who own 5% or more of the
total voting power or the total value of the New Holdings Shares
immediately after the Plans upon the receipt of solely New Holdings Shares
pursuant to the Schemes of Arrangement, provided that such United States
transferors enter into gain recognition agreements meeting the requirements
of United States Treasury Regulation ss.1.367(a)-8, (iv) no gain or loss
will be recognized by United States transferors of Non-Voting Shares who,
actually or constructively within the meaning of Section 958 of the Code,
own less than 5% of both the total voting power and the total value of the
shares of New Holdings immediately after the Plans upon the receipt of
solely New Holdings Shares pursuant to the Schemes of Arrangement, and (v)
no gain or loss will be recognized by United States transferors of
Non-Voting Shares who own 5%, actually or constructively within the meaning
of Section 958 of the Code, or more of the total voting power or the total
value of the New Holdings Shares immediately after the Plans upon the
receipt of solely New Holdings Shares pursuant to the Schemes of
Arrangement, provided that such United States transferors enter into gain
recognition agreements meeting the requirements of United States Treasury
Regulation 1.367(a)-8. In rendering such opinion, counsel may require and
rely upon representations contained in certificates of officers of LaSalle
Holdings, LaSalle Re, Trenwick, New Holdings, foreign counsel and others.
(h) ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Opinion. New Holdings and Trenwick shall have
received an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated the Effective Date, on the
basis of facts, representations and assumptions set forth in such opinion
that are consistent with the facts existing on the Effective Date
substantially to the effect that (i) no gain or loss will be recognized by
United States shareholders of Trenwick upon the receipt of solely New
Holdings Shares pursuant to the Plan of Reorganization (except with respect
to cash received in lieu of a fractional share interest in New Holdings
Shares), and (ii) the Plan of Reorganization will qualify as a tax-free
reorganization within the meaning of
69
Section 368(a). In rendering such opinion, counsel may require and rely
upon representations contained in certificates of officers of LaSalle
Holdings, LaSalle Re, Trenwick and New Holdings.
Section 6.2. Additional Conditions to Trenwick's Obligation to
Effect the Plans. The obligation of Trenwick to consummate the Plans and to
effect the actions referred to in Section 2.2(c) shall be further subject
to the following conditions unless waived in accordance with Section 8.3:
(a) Performance of Obligations of LaSalle Holdings. LaSalle
Holdings shall have performed in all material respects the obligations and
covenants to be performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of LaSalle Holdings contained in this Agreement that are
qualified as to materiality shall be true and correct and the
representations and warranties of LaSalle Holdings contained in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of the Original Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made as of and on the
Closing Date, except for such failure or failures to be true and correct
(or true and correct in all material respects) as would not have or be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on LaSalle Holdings.
(c) Compliance with Conditions. Trenwick shall receive customary
closing documents in form and substance reasonably satisfactory to it,
including a certificate of an executive officer of LaSalle Holdings
certifying compliance with the conditions set forth in Sections 6.2(a) and
(b).
(d) Comfort Letters. Trenwick shall have received from Deloitte &
Touche LLP the letters described in Section 5.17(a).
(e) Consents and Approvals. Trenwick shall have received evidence,
in form and substance reasonably satisfactory to it, that all consents and
approvals set forth in Section 4.8 of the LaSalle Disclosure Letter have
been obtained.
(f) Fiduciary Duties. The Board of Directors of LaSalle Holdings
shall not have (A) withdrawn or modified or changed in a manner adverse to
Trenwick its approval or recommendation of this Agreement in order to
approve and permit LaSalle Holdings to execute a definitive agreement
relating to a LaSalle Holdings Superior Proposal (as defined in Section
5.3(b)(ii)), and (B) determined in good faith, after consultation with
outside legal counsel to LaSalle Holdings that the failure to take such
action as set forth in the preceding clause (A) is reasonably likely to
result in the breach of the respective Board of Directors' fiduciary duties
under applicable law.
(g) ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Opinion. New Holdings and Trenwick shall have
received an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated the Effective Date, on the
basis of facts, representations and assumptions set forth in such opinion
that are consistent with the facts existing on the Effective Date
70
substantially to the effect that Trenwick shall treat the Plan of
Reorganization as a taxable disposition of assets directly held by
Trenwick, but that Trenwick shall not be subject to U.S. federal income tax
in excess of $60.0 million with respect to such gain. In rendering such
opinion, counsel may require and rely upon representations contained in
certificates of officers of LaSalle Holdings, LaSalle Re, Trenwick and New
Holdings, including representations regarding the adjusted tax basis of the
assets of Trenwick. In addition, in rendering such opinion, counsel may
require and rely upon opinions prepared by valuation experts, including
opinions regarding the fair market value of the assets of Trenwick, foreign
counsel and others.
(h) No Material Adverse Change. At any time after the date of the
Original Agreement there shall not have occurred any Material Adverse
Change relating to LaSalle Holdings; provided, that this condition shall no
longer be applicable following the approval of the LaSalle Holdings'
shareholders.
Section 6.3. Additional Conditions to LaSalle Holdings' Obligation
to Effect the Plans. The obligation of LaSalle Holdings to consummate the
Plans and to effect the actions referred to in Section 2.2(c) shall be
further subject to the following conditions unless waived in accordance
with Section 8.3:
(a) Performance of Obligations of Trenwick. Trenwick shall have
performed in all material respects the obligations and covenants to be
performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of Trenwick contained in this Agreement that are qualified as to
materiality shall be true and correct and the representations and
warranties of Trenwick contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of the Original Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date (immediately prior to the Effective Time and after giving
effect to any internal reorganizations of Trenwick and its Subsidiaries),
as though made as of and on the Closing Date (immediately prior to the
Effective Time and after giving effect to any internal reorganizations of
Trenwick and its Subsidiaries), except for such failure or failures to be
true and correct (or true and correct in all material respects) as would
not have or be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on Trenwick.
(c) Compliance with Conditions. LaSalle Holdings shall receive
customary closing documents in form and substance reasonably satisfactory
to it, including a certificate of an executive officer of Trenwick
certifying compliance with the conditions set forth in Sections 6.3(a) and
(b).
(d) Comfort Letters. LaSalle Holdings shall have received from
PricewaterhouseCoopers LLP the letters described in Section 5.17(b).
71
(e) Consents and Approvals. LaSalle Holdings shall have received
evidence, in form and substance reasonably satisfactory to it, that all
consents and approvals set forth in Section 3.8 of the Trenwick Disclosure
Letter have been obtained.
(f) Rights Agreement. Trenwick shall have taken all necessary
action pursuant to Section 3.20 so that, as of immediately prior to the
Effective Time, (i) none of Trenwick, New Holdings and LaSalle Holdings
will have any obligations under the Rights or the Rights Agreement and (ii)
the holders of the Rights will have no rights under the Rights or the
Rights Agreement.
(g) Fiduciary Duties. The Board of Directors of Trenwick shall not
have (A) withdrawn or modified or changed in a manner adverse to LaSalle
Holdings its approval or recommendation of this Agreement in order to
approve and permit Trenwick to execute a definitive agreement relating to a
Trenwick Superior Proposal (as defined in Section 5.3(a)(ii)), and (B)
determined in good faith, after consultation with outside legal counsel to
Trenwick that the failure to take such action as set forth in the preceding
clause (A) is reasonably likely to result in the breach of the respective
Board of Directors' fiduciary duties under applicable law.
(h) ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Opinion. In addition to those matters set
forth in Section 6.3(h) of the Trenwick Disclosure Letter, New Holdings and
Trenwick shall have received an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, dated the
Effective Date, on the basis of facts, representations and assumptions set
forth in such opinion that are consistent with the facts existing on the
Effective Date substantially to the effect that Trenwick shall treat the
Plan of Reorganization as a taxable disposition of assets directly held by
Trenwick, but that Trenwick shall not be subject to U.S. federal income tax
in excess of $40.0 million with respect to such gain. In rendering such
opinion, counsel may require and rely upon representations contained in
certificates of officers of LaSalle Holdings, LaSalle Re, Trenwick and New
Holdings, including representations regarding the adjusted tax basis of the
assets of Trenwick. In addition, in rendering such opinion, counsel may
require and rely upon opinions prepared by valuation experts, including
opinions regarding the fair market value of the assets of Trenwick, foreign
counsel and others.
(i) No Material Adverse Change. At any time after the date of the
Original Agreement, there shall not have occurred any Material Adverse
Change relating to Trenwick; provided, that this condition shall no longer
be applicable following the approval of the Trenwick stockholders.
ARTICLE 7
TERMINATION AND ABANDONMENT
Section 7.1. Termination by Trenwick or LaSalle Holdings. Anything
herein contained to the contrary notwithstanding, this Agreement may be
terminated and the Plans contemplated hereby may be abandoned at any time
prior to the Effective Time, whether before or after approval of the
72
Plans by the shareholders of LaSalle Holdings and LaSalle Re or the
stockholders of Trenwick, respectively:
(a) by the mutual written consent of LaSalle Holdings and Trenwick;
(b) by either LaSalle Holdings or Trenwick by written notice to the
other:
(i) if the Effective Time shall not have occurred on or
before June 30, 2000; provided, however, that the right
to terminate this Agreement under this Section 7.1(b)(i)
shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective
Time to occur on or before such date;
(ii) if a Governmental Authority shall have issued a
final and nonappealable order, decree or ruling or taken
any other action (which order, decree, ruling or other
action the parties hereto shall use their commercially
reasonable efforts to lift), in each case, permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become
final and nonappealable;
(iii) if the required approval of the classes of
stockholders of Trenwick shall not have been obtained by
reason of the failure to obtain the required vote at a
duly held meeting of such stockholders or at any
adjournment or postponement thereof; provided, that, if
the terminating party is Trenwick, Trenwick shall not be
in material breach of its obligations under Section 5.8;
(iv) if the required approval of the shareholders of
LaSalle Holdings and LaSalle Re shall not have been
obtained by reason of the failure to obtain the required
vote at a duly held meeting of such shareholders or at
any adjournment or postponement thereof; provided, that,
if the terminating party is LaSalle Holdings, LaSalle
Holdings shall not be in material breach of its
obligations under Section 5.8; or
(v) if any single natural catastrophe shall have occurred
which would result in Net Losses to LaSalle Holdings and
its Subsidiaries or to Trenwick and its Subsidiaries of
$100,000,000 or more.
Section 7.2. Termination by Trenwick.
-----------------------
(a) Trenwick may terminate this Agreement prior to the Effective
Time if LaSalle Holdings (x) breaches or fails in any material respect to
perform or comply with any of its covenants and agreements contained herein
or (y) breaches its representations or warranties and such breach would
have or would be reasonably likely to have a Material Adverse Effect on
LaSalle Holdings and its Subsidiaries, in each case such that the
conditions set forth in Section 6.2(a) or 6.2(b) would
73
not be satisfied; provided, however, that if such breach is cured by the
breaching party within ten (10) days following the discovery of such
breach, Trenwick may not terminate this Agreement pursuant to this Section
7.2.
(b) Trenwick may terminate this Agreement prior to the Effective
Time if LaSalle Holdings has (A) withdrawn or modified or changed in a
manner adverse to Trenwick its approval or recommendation of this
Agreement, or (B) determined in good faith, after consultation with outside
legal counsel to LaSalle Holdings that the failure to take such action as
set forth in the preceding clause (A) is reasonably likely to result in the
breach of the respective Board of Directors' fiduciary duties under
applicable law.
(c) Prior to the Effective Time, Trenwick may terminate this
Agreement as provided in Section 5.3(a)(ii); provided, that Trenwick shall
have given LaSalle Holdings forty-eight (48) hours advance notice of any
termination pursuant to this Section 7.2(b) and that Trenwick shall have
paid LaSalle Holdings the Trenwick Termination Fee required to be paid by
Trenwick pursuant to Section 7.4(b) hereof. Trenwick agrees to notify
LaSalle Holdings promptly if it is no longer prepared to accept the
Trenwick Superior Proposal.
Section 7.3. Termination by LaSalle Holdings.
-------------------------------
(a) LaSalle Holdings may terminate this Agreement prior to the
Effective Time if Trenwick (x) breaches or fails in any material respect to
perform or comply with any of its covenants and agreements contained herein
or (y) breaches its representations or warranties and such breach would
have or would be reasonably likely to have a Material Adverse Effect on
Trenwick and its Subsidiaries, in each case such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied; provided,
however, that if such breach is cured by the breaching party within ten
(10) days following the discovery of such breach, LaSalle Holdings may not
terminate this Agreement pursuant to this Section 7.3(a).
(b) LaSalle Holdings may terminate this Agreement prior to the
Effective Time if Trenwick has (A) withdrawn or modified or changed in a
manner adverse to LaSalle Holdings its approval or recommendation of this
Agreement, or (B) determined in good faith, after consultation with outside
legal counsel to Trenwick that the failure to take such actions as set
forth in the preceding clause (A) is reasonably likely to result in the
breach of the respective Board of Directors' fiduciary duties under
applicable law.
(c) Prior to the Effective Time, LaSalle Holdings may terminate
this Agreement as provided in Section 5.3(b)(ii); provided, that LaSalle
Holdings shall have given Trenwick forty-eight (48) hours advance notice of
any termination pursuant to this Section 7.3(b) and that LaSalle Holdings
shall have paid Trenwick the LaSalle Termination Fee required to be paid by
LaSalle Holdings pursuant to Section 7.4(c) hereof. LaSalle Holdings agrees
to notify Trenwick promptly if it is no longer prepared to accept the
LaSalle Holdings Superior Proposal.
74
Section 7.4. Procedure and Effect of Termination.
-----------------------------------
(a) In the event of the termination of this Agreement, except as
set forth in Section 7.4(b) and Section 7.4(c), none of the parties hereto
shall have any obligation to perform hereunder from and after the date of
such termination, except that Sections 5.4 (the last sentence only)
(Confidentiality), 5.6 (Public Announcements), 8.5 (Expenses and
Obligations), 8.7 (Notices) and 8.8 (Governing Law) shall survive such
termination and remain in full force and effect notwithstanding such
termination. No termination hereof shall relieve any party from any
liability resulting from any breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
(b) If this Agreement is terminated by (i) any party pursuant to
Section 7.1(b)(i) or 7.1(b)(iii), and in either case there shall have been
made or commenced a Trenwick Takeover Proposal, which Trenwick Takeover
Proposal shall not have been absolutely and unconditionally withdrawn and
abandoned as of the date of such termination, (ii) Trenwick pursuant to
Section 7.2(c) or (iii) LaSalle Holdings pursuant to Section 7.3(a) if
there is a Trenwick Takeover Proposal outstanding at the time of the breach
or 7.3(b), then Trenwick shall pay LaSalle Holdings a non- refundable
termination fee of $12,000,000, plus expenses not to exceed $2,000,000 (the
"Trenwick Termination Fee"), which amount shall be payable by wire transfer
of same-day funds prior to, and as a condition of, the effectiveness of
such termination.
(c) If this Agreement is terminated by (i) any party pursuant to
Section 7.1(b)(i) or 7.1(b)(iii), and in either case there shall have been
made or commenced a LaSalle Holdings Takeover Proposal, which LaSalle
Holdings Takeover Proposal shall not have been absolutely and
unconditionally withdrawn and abandoned as of the date of such termination,
(ii) LaSalle Holdings pursuant to Section 7.3(c) or (iii) Trenwick pursuant
to Section 7.2(a) if there is a LaSalle Holdings Takeover Proposal
outstanding at the time of the breach or 7.2(b), then LaSalle Holdings
shall pay Trenwick a non-refundable termination fee of $12,000,000, plus
expenses not to exceed $2,000,000 (the "LaSalle Termination Fee"), which
amount shall be payable by wire transfer of same-day funds prior to, and as
a condition of, the effectiveness of such termination.
ARTICLE 8
MISCELLANEOUS PROVISIONS
Section 8.1. Non-Survival of Representations, Warranties,
Covenants and Agreements. None of the representations, warranties,
covenants or agreements contained in this Agreement or in any Disclosure
Letter, Exhibit or any document delivered pursuant to this Agreement shall
survive the Closing, except for those covenants and agreements contained in
this Agreement that by their terms apply or are to be performed in whole or
in part after the Closing.
75
Section 8.2. Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified or supplemented only by
written agreement signed on behalf of each party hereto at any time prior
to the Effective Time with respect to any of the terms contained herein
except that (i) after the meetings of the stockholders of Trenwick as
contemplated by Section 5.8, Trenwick Consideration to be paid pursuant to
this Agreement to the holders of Trenwick Shares shall in no event be
decreased and the form of consideration to be received by the holders of
such Trenwick Shares in the Plan of Reorganization shall in no event be
altered without the approval of such holders, (ii) after the meetings of
the shareholders of LaSalle Holdings as contemplated by Section 5.8,
LaSalle Consideration to be paid pursuant to this Agreement to the holders
of LaSalle Holdings Shares shall in no event be decreased and the form of
consideration to be received by the holders of such LaSalle Holdings Shares
in the Schemes of Arrangement shall in no event be altered without the
approval of such holders, and (iii) after the meetings of the stockholders
of Trenwick, LaSalle Holdings or LaSalle Re as contemplated by Section 5.8,
there shall be made no amendment that by law requires further approval by
such stockholders without the further approval of such stockholders.
Section 8.3. Waiver of Compliance; Consents.
------------------------------
(a) Any failure of any party to this Agreement to comply with any
obligation, covenant, agreement or condition herein may be waived by
written instrument executed by each other party to this Agreement, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
(b) Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set
forth in this Section 8.3.
Section 8.4. Severability and Validity. The provisions set forth
in this Agreement are severable. If any term, provision, covenant or
restriction of this Agreement is held by record of competent jurisdiction
or other authority to be invalid, void or unenforceable in any jurisdiction
or against its regulatory or public policy, the remainder of this
Agreement, and the application of such provision to other Persons or
circumstances, shall not be affected thereby and shall remain valid and
enforceable in such jurisdiction, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. Upon a
determination that any term, provision, covenant or restriction is invalid,
void or unenforceable or against the regulatory or public policy of the
governing jurisdiction, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law in an
acceptable manner to the end that the transactions contemplated by this
Agreement are fulfilled to the extent possible.
Section 8.5. Expenses and Obligations. Each of the parties shall pay
its own expenses incurred in connection with the negotiation and preparation of
the Original Agreement and this
76
Agreement, the performance of its covenants herein and therein and the
effectuation of the transactions contemplated hereby and thereby,
including, without limitation, all fees and disbursements of its respective
legal counsel, advisors and accountants; provided, however, that nothing in
this Section 8.5 shall negate any obligation of either LaSalle Holdings or
Trenwick to pay the termination fee specified in Sections 7.4(b) and (c).
Each of the LaSalle Holdings and Trenwick shall bear and pay one-half of
the filing fees, printing expenses and mailing costs incurred in connection
with (1) the filing, printing and mailing of the Form S-4 and the Joint
Proxy Statement (including SEC filing fees) and (2) the filings of any
required premerger notification and report forms under the HSR Act
(including filing fees) and one-half of the fees of the Settlement Auditor.
In the event that the transactions contemplated by this Agreement are not
consummated, each of the parties shall indemnify and hold harmless the
other parties against any claim for fees or commissions of brokers,
finders, agents or bankers retained or purportedly retained by the
indemnitor party in connection with the transactions contemplated by this
Agreement.
Section 8.6. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and nothing in
this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason
of this Agreement, except for Section 5.13 (which is intended to be for the
benefit of the Persons referred to therein and may be enforced by such
Persons).
Section 8.7. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by facsimile (which is confirmed) or sent by overnight courier
(providing proof of delivery) or by registered or certified mail (postage
prepaid, return receipt requested), to the other party at the following
address (or at such other address for a party as shall be specified by like
notice):
if to LaSalle Holdings before the Effective Date, to:
LaSalle Re Holdings Limited
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ FX, Bermuda
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
77
if to Trenwick before the Effective Date, to:
Trenwick Group Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Del Col, Esq.
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
if to LaSalle Holdings, Trenwick or New Holdings after the Effective
Date:
▇▇▇▇▇ Holdings International Limited
c/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box HM 1178
▇▇▇▇▇▇▇▇ ▇▇ EX, Bermuda
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
Section 8.8. Governing Law. Except for Article 2, which shall be
governed by and construed in accordance with the laws of Bermuda and
Delaware, as applicable according to the context thereof (i.e., with
matters relating to the Schemes of Arrangement being governed by Bermuda
law and matters relating to the Plan of Reorganization being governed by
Delaware law), this Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of laws rules thereof. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Delaware
Court in the event any
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dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement and (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction or venue by motion or other
request for leave from any such Delaware Court, and (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than any Delaware Court.
Section 8.9. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original, and all of which
shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party.
Section 8.10. Headings. The Article and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of
the agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. References to Articles or Sections,
unless otherwise specified, are to Articles and Sections of this Agreement.
Section 8.11. Entire Agreement; Assignment. This Agreement,
including the documents and instruments referred to herein and therein, and
the Confidentiality Letters embodies the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein and
therein. There are no agreements, restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matters.
This Agreement shall not be assigned by operation of law or otherwise,
except with the prior written consent of each other party hereto; provided,
that the transactions contemplated by Section 2.1(b) shall not be
considered an assignment by operation of law or otherwise for purposes of
this Section 8.11. Any assignment in violation of the preceding sentence
shall be void. Subject to the preceding two sentences, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 8.12. Interpretation. When a reference is made in this
Agreement to an Article, Section, Exhibit, Letter or Schedule, such
reference shall be to an Article or Section of, or an Exhibit, Letter or
Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. 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 phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
The words "hereof", "herein" and "hereunder" and the words or similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. All terms defined in
this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise
defined therein. 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. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent
and (in the case of statutes) by succession of comparable successor statutes.
References to a person are also to its permitted successors and assigns.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed and sealed on its behalf by its duly authorized
officers, all as of the day and year first above written.
LASALLE RE HOLDINGS LIMITED
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President & CEO
LASALLE RE LIMITED
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President & CEO
▇▇▇▇▇ HOLDINGS INTERNATIONAL LIMITED
By: /s/ ▇▇▇▇ ▇. Del Col
Name: ▇▇▇▇ ▇. Del Col
Title: Director
TRENWICK GROUP INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman, President and CEO
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IN WITNESS WHEREOF, Trenwick Group (Delaware) Inc. has caused this
Agreement to be signed and sealed on its behalf by its duly authorized
officer, all as of the day and year first written above in accordance with
Section 8.2 of the Original Agreement to reflect its agreement to the
amendment and restatement of the Original Agreement but agrees that it is
no longer a party to this Agreement.
TRENWICK GROUP (DELAWARE) INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Its: Chairman, President and CEO
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