AGREEMENT AND PLAN OF MERGER
by and between
SWISS REINSURANCE COMPANY,
SRC ACQUISITION CORP.,
LIFE RE CORPORATION
and, if applicable,
SWISS RE AMERICA HOLDING CORPORATION
__________________
July 27, 1998
__________________
TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing; Effective Time . . . . . . . . . . . . . . . . . . . 2
1.3 Certificate of Incorporation . . . . . . . . . . . . . . . . 3
1.4 By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . 3
2.1 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Treasury Stock and Parent-Owned Stock . . . . . . . . . . . . 4
2.3 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Merger Sub Stock . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Exchange of Certificates . . . . . . . . . . . . . . . . . . 5
2.6 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 REPRESENTATIONS AND WARRANTIESOF THE COMPANY . . . . . . . . 9
3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . 10
3.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Authorization; Binding Agreement . . . . . . . . . . . . . 12
3.5 Noncontravention . . . . . . . . . . . . . . . . . . . . . 12
3.6 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7.A SEC Filings; Financial Statements . . . . . . . . . . . . . 14
3.7.B Insurance Subsidiary Statements . . . . . . . . . . . . . . 15
3.7.C No Undisclosed Liabilities . . . . . . . . . . . . . . . . 16
3.8 Absence of Certain Changes or Events . . . . . . . . . . . 17
3.9 Litigation, Judgments, No Default, Etc . . . . . . . . . . 19
3.10 Compliance . . . . . . . . . . . . . . . . . . . . . . . . 19
3.11 Tax Returns and Tax Payments . . . . . . . . . . . . . . . 20
3.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 21
3.13 Information Supplied . . . . . . . . . . . . . . . . . . . 26
3.14 Finders and Investment Bankers . . . . . . . . . . . . . . 27
3.15 Opinion of Financial Advisor . . . . . . . . . . . . . . . 27
3.16 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.17 Collective Bargaining Agreements . . . . . . . . . . . . . 29
3.18 No Default . . . . . . . . . . . . . . . . . . . . . . . . 29
3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.20 Related Parties . . . . . . . . . . . . . . . . . . . . . . 30
3.21 Proprietary Rights . . . . . . . . . . . . . . . . . . . . 31
3.22 Compliance with Law . . . . . . . . . . . . . . . . . . . . 31
3.23 Real Property . . . . . . . . . . . . . . . . . . . . . . . 32
3.24 Licenses and Permits . . . . . . . . . . . . . . . . . . . 33
3.25 Environmental Matters . . . . . . . . . . . . . . . . . . . 33
3.26 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
THE PARENT, HOLDING AND THE MERGER SUB . . . . . . . . . . 36
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . 36
4.2 Authorization; Binding Agreement . . . . . . . . . . . . . 36
4.3 Noncontravention . . . . . . . . . . . . . . . . . . . . . 37
4.4 Governmental Approvals . . . . . . . . . . . . . . . . . . 38
4.5 Finders and Investment Bankers . . . . . . . . . . . . . . 38
4.6 Information Supplied . . . . . . . . . . . . . . . . . . . 39
ARTICLE 5 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.1 Conduct of Business of the Company . . . . . . . . . . . . 39
5.2 Stockholder Approval; Proxy Statement . . . . . . . . . . . 42
5.3 Access and Information. . . . . . . . . . . . . . . . . . . 42
5.4 Takeover Statutes . . . . . . . . . . . . . . . . . . . . . 43
5.5 No Solicitation . . . . . . . . . . . . . . . . . . . . . . 44
5.6 Reasonable Efforts; Additional Actions. . . . . . . . . . 48
5.7 Notification of Certain Matters . . . . . . . . . . . . . . 49
5.8 Public Announcements . . . . . . . . . . . . . . . . . . . 50
5.9 Certain Employee Matters . . . . . . . . . . . . . . . . . 50
5.10 Investment Portfolio . . . . . . . . . . . . . . . . . . . 53
5.11 Swiss Re America Holding Corporation. . . . . . . . . . . . 53
5.12 Indemnification of Directors and Officers . . . . . . . . . 53
ARTICLE 6 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 56
6.1 Conditions to Each Party's Obligations . . . . . . . . . . 56
6.2 Conditions to Obligation of the Parent, Holding
and the Merger Sub . . . . . . . . . . . . . . . . . . . 58
6.3 Conditions to Obligation of the Company . . . . . . . . . . 58
ARTICLE 7 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 59
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 59
7.2 Procedure for and Effect of Termination . . . . . . . . . . 60
ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 61
8.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . 61
8.2 Amendment and Modification . . . . . . . . . . . . . . . . 63
8.3 Waiver of Compliance; Consents . . . . . . . . . . . . . . 63
8.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 65
8.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 65
8.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 66
8.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . 66
8.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 66
8.12 No Third Party Beneficiaries . . . . . . . . . . . . . . . 66
SCHEDULES
Schedule 3.2 - Capitalization
Schedule 3.3 - Subsidiaries
Schedule 3.5 - Consents
Schedule 3.7.C - No Undisclosed Liabilities
Schedule 3.8 - Certain Changes or Events
Schedule 3.9 - Litigation
Schedule 3.10 - Compliance
Schedule 3.12(b) - Employee Benefit Plans
Schedule 3.21 - Proprietary Rights
Schedule 3.25 - Environmental Matters
Schedule 5.9(b) - Employment and Severance Agreements
Schedule 5.9(c) - LTIP Payments
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 27, 1998 (the
"Agreement"), by and between Swiss Reinsurance Company, a Swiss corporation
(the "Parent"), SRC Acquisition Corp., a Delaware corporation wholly-owned
by the Parent (the "Merger Sub"), Life Re Corporation, a Delaware
corporation (the "Company") and, if applicable, Swiss Re America Holding
Corporation, a Delaware corporation wholly-owned by the Parent ("Holding").
WHEREAS, the respective boards of directors of the Parent, the
Merger Sub and the Company have approved this Agreement pursuant to which,
among other things, the Merger Sub will be merged with and into the Company
(the "Merger") on the terms and conditions contained herein and in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"); and
WHEREAS, the Parent, the Merger Sub and the Company desire to
make certain representations, warranties, covenants and agreements in
connection with the Merger and to prescribe various conditions to the
Merger;
NOW THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2) and in
accordance with the DGCL, the Merger Sub shall be merged with and into the
Company, which shall be the surviving corporation in the Merger (the
"Surviving Corporation"). At the Effective Time, the separate existence of
the Merger Sub shall cease and the other effects of the Merger shall be as
set forth in Section 259 of the DGCL. The Merger Sub and the Company are
sometimes collectively referred to herein as the "Constituent
Corporations."
1.2 Closing; Effective Time. Subject to the provisions of
Article 6, the closing of the Merger (the "Closing") shall take place in
New York City at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx,
as soon as practicable but in no event later than 10:00 a.m. New York City
time on the second business day after the date on which each of the
conditions set forth in Article 6 (other than conditions that are satisfied
by the delivery of documents or the payment of money at the Closing) have
been satisfied or waived by the party or parties entitled to the benefit of
such conditions, or at such other place, at such other time or on such
other date as the Parent and the Company may mutually agree.
Notwithstanding the foregoing, upon notice given to the Company by the
Parent, the Parent may delay the Closing until a business day not later
than January 8, 1999. The date on which the Closing actually occurs is
hereinafter referred to as the "Closing Date." At the Closing, the Merger
Sub and the Company shall cause a certificate of merger (the "Certificate
of Merger") to be executed and filed with the Secretary of State of the
State of Delaware in accordance with the DGCL. The Merger shall become
effective as of the date and time of such filing or as of such subsequent
date or time as the Parent and the Company shall agree to and shall be set
forth in the Certificate of Merger (the "Effective Time").
1.3 Certificate of Incorporation. The certificate of
incorporation of the Merger Sub, as in effect immediately prior to the
Effective Time, shall be, from and after the Effective Time, the
certificate of incorporation of the Surviving Corporation, until thereafter
altered, amended or repealed as provided therein and in accordance with
applicable law.
1.4 By-laws. The by-laws of the Merger Sub, as in effect
immediately prior to the Effective Time, shall become, from and after the
Effective Time, the by-laws of the Surviving Corporation, until thereafter
altered, amended or repealed as provided therein and in accordance with
applicable law.
1.5 Directors and Officers. The directors and officers of the
Merger Sub immediately prior to the Effective Time shall become, from and
after the Effective Time, the directors and officers of the Surviving
Corporation, until their respective successors are duly elected or
appointed and qualified or their earlier resignation or removal.
ARTICLE 2
CONVERSION OF SECURITIES; OPTIONS
2.1 Common Stock. Each share of Common Stock, par value $.001
per share, of the Company (the "Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other than Dissenting
Shares (as defined in Section 2.3) and Parent Shares (as defined in
Section 2.2), if any) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive
an amount in cash equal to $95.00 per share plus, if the Closing is delayed
by the Parent in accordance with Section 1.2, an additional payment per
share equal to $.0208 per day from, but not including, the date on which
the Closing would have occurred absent the exercise by the Parent of its
right to delay the Closing to, and including, the Closing Date (the "Common
Stock Price Per Share") payable to the holder thereof, without interest
thereon, upon surrender of the certificate formerly representing such share
of Company Common Stock in accordance with Section 2.5. Notwithstanding
the foregoing, if between the date of this Agreement and the Effective Time
the outstanding shares of the Company Common Stock shall have been changed
into a different number of shares or a different class, by reason of any
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Common Stock Price Per Share shall
be correspondingly adjusted on a per-share basis to reflect such stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
2.2 Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock held in the Company's treasury immediately prior to
the Effective Time, if any, and each share of Company Common Stock then
owned by the Parent, Holding, the Merger Sub or any other wholly-owned
subsidiary of the Parent (collectively, "Parent Shares"), if any, shall, by
virtue of the Merger, automatically be canceled and retired and cease to
exist and no consideration shall be delivered in exchange therefor.
2.3 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, each share of Company Common Stock that is
issued and outstanding immediately prior to the Effective Time and that is
held by a stockholder who has properly exercised and perfected appraisal
rights under Section 262 of the DGCL ("Dissenting Shares"), shall not be
converted into or exchangeable for the right to receive the Common Stock
Price Per Share, but shall be entitled to receive such consideration as
shall be determined pursuant to Section 262 of the DGCL; provided, however,
that if such holder shall have failed to perfect or shall have effectively
withdrawn or lost its right to appraisal and payment under the DGCL, each
share of Company Common Stock of such holder shall thereupon be deemed to
have been converted into and to have become exchangeable for, as of the
Effective Time, the right to receive the Common Stock Price Per Share,
without any interest thereon, in accordance with Section 2.5, and such
shares shall no longer be Dissenting Shares.
2.4 Merger Sub Stock. Each share of common stock and each share
of preferred stock of the Merger Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one share of
common stock and one share of preferred stock, respectively, of the
Surviving Corporation.
2.5 Exchange of Certificates.
2.5.1 On or before the Effective Time, the Parent shall
deposit or cause to be deposited in trust with a bank or trust company
mutually acceptable to the Parent and the Company (the "Exchange Agent")
cash in the aggregate amount required to make the payments in respect of
(i) the Company Common Stock issued and outstanding at the Effective Time
(other than Dissenting Shares and Parent Shares, if any), and (ii) the
Company Options (as defined in Section 2.6) (collectively, the "Merger
Consideration"), such sum being hereinafter referred to as the "Exchange
Fund." The Exchange Agent shall, pursuant to irrevocable instructions,
make the payments provided for in this Article 2 out of the Exchange Fund.
If any cash deposited with the Exchange Agent pursuant to this Section 2.5
remains unclaimed by the former stockholders or former option holders of
the Company following the expiration of nine months after the Effective
Time, such cash (together with all interest earned thereon) shall be
delivered, upon demand, to the Parent by the Exchange Agent and,
thereafter, any former stockholders and any former option holders of the
Company who have not heretofore complied with this Article 2 shall be
entitled to look only to the Parent (subject to abandoned property, escheat
or similar laws) as general creditors thereof with respect to the payment
of their claim for any Merger Consideration; provided, however, that the
term "former option holders" shall not include any holder of a Company
Option who has not consented to its cancellation in accordance with Section
2.5.3.
2.5.2 As soon as reasonably practicable following the
Closing Date, the Parent shall instruct the Exchange Agent to mail to each
holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of Company Common
Stock (collectively, the "Certificates") and to each holder of an agreement
evidencing a Company Option who has consented to its cancellation in
accordance with Section 2.5.3 (each such agreement as to which such consent
has been obtained being hereinafter called an "Option Agreement"), (i) a
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates and the Option Agreements
shall pass, only upon delivery of the Certificates and the Option
Agreements to the Exchange Agent and shall be in such form and have such
other provisions as the Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates and the
Option Agreements for payment therefor.
2.5.3 After the Effective Time, each holder of shares of
Company Common Stock or Option Agreements shall surrender and deliver the
Certificates or Option Agreements, as the case may be, to the Exchange
Agent together with a duly completed and executed transmittal letter. Upon
such surrender and delivery, following the Effective Time, the holder shall
be entitled to receive in exchange therefor, a check in the amount of the
cash payment which such holder is entitled to receive pursuant to this
Article 2, and such Certificates and Option Agreements shall forthwith be
canceled. No interest will be paid or accrued on the cash payable upon the
surrender of the Certificates or Option Agreements. If the payment is to
be made to a person other than the person in whose name a Certificate
surrendered is registered, it shall be a condition of payment that (a) the
Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and (b) the person requesting such payment shall
pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Parent that such tax has been paid or
is not applicable. Until so surrendered, each outstanding Certificate or
Option Agreement after the Effective Time shall be deemed for all purposes
to evidence the right to receive such payment of cash, without any interest
thereon.
2.5.4 Subject to applicable law with respect to any Company
Option whose holder has not consented to its cancellation in accordance
with Section 2.5.3, at the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of shares of Company Common Stock
shall be made thereafter. In the event that, after the Effective Time,
Certificates or Option Agreements are presented to the Surviving
Corporation or the Parent, they shall be canceled and exchanged for cash as
provided in this Article 2.
2.6 Options.
2.6.1 All outstanding options obligating the Company to
issue, transfer or sell any shares of Company Common Stock and issued
pursuant to the Company's 1992 Stock Option Plan, as amended (the "1992
Plan"), or the Company's 1993 Non-Employee Directors Stock Option Plan, as
amended (the "1993 Plan" and, together with the 1992 Plan, the "Company
Option Plans") (such options issued under both Company Option Plans, the
"Company Options"), are vested or, by action of the Stock Option Plan
Committee of the Board of Directors of the Company prior to the date
hereof, will become fully vested at the Effective Time. Each holder of a
Company Option shall be entitled to receive as soon as practicable after
the Effective Time, in settlement and cancellation of such Company Option,
a check in the amount of the product of (i) the excess of the Common Stock
Price Per Share over the exercise price (per share of Company Common Stock)
of each such Company Option, multiplied by (ii) the number of shares of
Company Common Stock covered by such Company Option.
2.6.2 Prior to the Effective Time, the Company, the Merger
Sub and the Parent shall cooperate and take such other action as may be
necessary to facilitate the cancellation of all outstanding Company Options
in consideration for the payment provided herein and to facilitate the
arrangements described in this Section 2.6.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to the Parent and the Merger
Sub and, if applicable, upon the Accession (as defined in Section 5.11), to
Holding, as follows:
3.1 Organization. The Company and each of its subsidiaries
(collectively, the "Subsidiaries") is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
The Company and each of its Subsidiaries is duly qualified or licensed to
do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that,
individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect (as defined in Section 8.1) on the
Company. The Company has previously delivered or made available to the
Parent correct and complete copies of the certificates of incorporation and
by-laws (or equivalent governing instruments) as currently in effect, of
the Company and each of its Subsidiaries.
3.2 Capitalization. As of the date hereof, the authorized
capital stock of the Company is as disclosed in the Company SEC Filings (as
defined in Section 3.7.A). Except as disclosed in the Company SEC Filings
or as set forth on Schedule 3.2, no shares of capital stock of the Company
are authorized, reserved for issuance or issued and outstanding and there
are no outstanding Company Options. All issued and outstanding shares of
Company Common Stock have been duly authorized and are validly issued,
fully paid, nonassessable and free of preemptive rights. Except as
disclosed in the Company SEC Filings or as set forth in Schedule 3.2, the
Company does not have outstanding any subscription, option, put, call,
warrant or other right or commitment to issue or any obligation or
commitment to redeem or purchase, any of its authorized capital stock or
any securities convertible into or exchangeable for any of its authorized
capital stock. Except as disclosed in the Company SEC Filings, there are
no shareholder agreements, voting agreements, voting trusts or other
similar arrangements to which the Company is a party which have the effect
of restricting or limiting the transfer, voting or other rights associated
with the capital stock of the Company.
3.3 Subsidiaries. Except as disclosed in the Company SEC
Filings, as set forth on Schedule 3.3 and its interest in its Subsidiaries,
the Company does not own, directly or indirectly, any material equity
interest in any person, domestic or foreign. All of the outstanding shares
of capital stock of each of the Subsidiaries that are owned by the Company
or any other Subsidiary (collectively, the "Company Subsidiary Shares")
have been duly authorized and are validly issued, fully paid and
nonassessable and free of preemptive rights. There are no irrevocable
proxies or similar obligations with respect to any of the Company
Subsidiary Shares and, except as set forth on Schedule 3.3, all of the
Company Subsidiary Shares are owned by the Company free and clear of all
liens, claims, charges, encumbrances or security interests (collectively,
"Liens") with respect thereto. Schedule 3.3 sets forth, with respect to
each Subsidiary (other than Life Re Capital Trust I and Life Re Capital
Trust II) as of the date hereof, (i) the number of authorized shares of
each class of its capital stock and (ii) the number of issued and
outstanding shares of each class of capital stock, with a true, correct and
complete list of the record and beneficial holders of such shares (subject
to such changes from the date hereof through the Closing Date as are
otherwise permitted by this Agreement). Except as set forth on
Schedule 3.3, no Subsidiary as of the date hereof has outstanding any
subscription, option, put, call, warrant or other right or commitment to
issue, nor any obligation or commitment to redeem or purchase, any of its
authorized capital stock, or any securities convertible into or
exchangeable for any of its authorized capital stock.
3.4 Authorization; Binding Agreement. The Company has the full
legal power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of the Company, subject to the adoption of
this Agreement by the stockholders of the Company in accordance with the
DGCL. This Agreement has been duly and validly executed and delivered by
the Company and (assuming the accuracy of the representations and
warranties in Section 4.2) constitutes a legal, valid and binding agreement
of the Company, enforceable against the Company in accordance with its
terms.
3.5 Noncontravention. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will (a) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws (or equivalent governing
instruments) of the Company or any of its Subsidiaries, (b) except as set
forth on Schedule 3.5, require any consent or approval under or conflict
with or result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation (collectively, "Contracts and
Other Agreements") to which the Company or any of its Subsidiaries is a
party or by which any of them or any portion of their properties or assets
may be bound or (c) violate any order, judgment, writ, injunction,
determination, award, decree, law, statute, rule or regulation
(collectively, "Legal Requirements") applicable to the Company or any of
its Subsidiaries or any portion of their properties or assets; provided
that no representation or warranty is made in the foregoing clause (b) with
respect to matters that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect on the
Company.
3.6 Approvals. No consent, approval or authorization of or
declaration or filing with any foreign, federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality (each, a "Government Entity") on the part of the Company or
any of its Subsidiaries that has not been obtained or made is required in
connection with the execution or delivery by the Company of this Agreement
or the consummation by the Company of the transactions contemplated hereby,
other than (a) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (b) filings and other applicable
requirements under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act") and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), (c) approvals, filings and/or notices
required under any applicable insurance or banking laws, and (d) consents,
approvals, authorizations, declarations or filings that, if not obtained or
made, could not reasonably be expected to result in a Material Adverse
Effect on the Company or prevent the Company from consummating the
transactions contemplated hereby.
3.7.A SEC Filings; Financial Statements. The Company has made
all filings required to be made with the Securities and Exchange Commission
(the "SEC") since January 1, 1996 and has delivered or made available to
the Parent true, correct and complete copies of the Company's (a) Annual
Reports on Form 10-K for the years ended December 31, 1996 and December 31,
1997 (the "Company 1996 Form 10-K" and the "Company 1997 Form 10-K,"
respectively), as filed with the SEC, (b) proxy statements relating to all
of the Company's meetings of stockholders (whether annual or special) since
December 31, 1996 and (c) all other reports, statements and registration
statements (including Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K) filed by the Company with the SEC since December 31, 1996
(collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein, the "Company SEC
Filings"). As of their respective dates, the Company SEC Filings did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company and its Subsidiaries
included or incorporated by reference in the Company 1996 Form 10-K, the
Company 1997 Form 10-K and the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 (the "Company 1998 First Quarter Form
10-Q") have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes to such financial statements) and
fairly present in all material respects the consolidated financial position
of the Company and its Subsidiaries at the respective dates thereof and the
consolidated results of operations and cash flows for the respective
periods then ended (subject, in the case of unaudited interim financial
statements, to normal year-end adjustments).
3.7.B Insurance Subsidiary Statements. The Company has
delivered or made available or, with respect to (c) below, will make
available, to the Parent true, correct and complete copies of (a) the
statutory financial statements filed in its state of domicile and, to the
extent applicable, the State of New York, for each of TexasRe Life
Insurance Company, Life Reassurance Corporation of America, Reassure
America Life Insurance Company and American Merchants Life Insurance
Company for the years 1995 (or, if later, the year in which such Subsidiary
became a Subsidiary) through 1997 and (b) the statutory financial
statements filed in its state of domicile and, to the extent applicable,
the State of New York, for each such Subsidiary referred to in (a) above as
well as for Mission Life Insurance Company for the quarter ending March 31,
1998, and (c) the statutory financial statements filed in its state of
domicile and, to the extent applicable, the State of New York, for all
quarters ending thereafter and prior to the Effective Time for all of the
Subsidiaries referred to in (a) above, Mission Life Insurance Company and
any Subsidiaries acquired or formed after the date hereof (to the extent
such acquired or newly formed Subsidiaries file statutory financial
statement after the date of the acquisition or formation of such Subsidiary
except, in the case of an acquired Subsidiary, where the statutory
financial statements are prepared by the seller and such seller indemnifies
the Company in respect of the contents thereof). All such statements shall
be referred to as the "Insurance Subsidiary Statements." The Insurance
Subsidiary Statements do (and, with respect to any Insurance Subsidiary
Statement for any quarter after March 31, 1998, and prior to the Effective
Time, will) present fairly, on a consistent basis and in accordance with
practices prescribed or permitted by the appropriate regulatory agencies of
each state in which the Insurance Subsidiary Statements have been filed or
may be required to be filed ("SAP"), the financial position at the date of
each such statement and results of each such Subsidiary's operations for
each such referenced periods. The exhibits and schedules included in the
Insurance Subsidiary Statements are fairly stated in all material respects
in relation to the subject Insurance Subsidiary Statements taken as a
whole, and the Insurance Subsidiary Statements comply in all material
respects with all applicable regulatory requirements.
3.7.C No Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liabilities or obligations (absolute, accrued,
contingent or otherwise) which are not reflected in its financial
statements referenced in Sections 3.7.A. or 3.7.B., except for
(i) liabilities and obligations incurred in the ordinary course of business
since March 31, 1998, none of which, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect on
the Company (or, to the knowledge of the Company as of the date hereof, has
resulted in or would reasonably be expected to result in a material loss to
the Company and its Subsidiaries, taken as a whole), (ii) liabilities or
obligations arising as a result of the transactions contemplated hereby, or
(iii) liabilities or obligations disclosed in Schedule 3.7.C.
3.8 Absence of Certain Changes or Events. Since December 31,
1997 (or, in the case of a Subsidiary acquired after such date, since the
acquisition date thereof), except as disclosed on Schedule 3.8 or in the
Company SEC Filings filed to the date hereof, the Company and the
Subsidiaries have conducted business only in the ordinary and usual course
and, without limiting the generality of the foregoing:
(a) There have been no changes, events or conditions which,
individually or in the aggregate, have had or would reasonably be expected
to have a Material Adverse Effect on the Company.
(b) As of the date hereof, no rating presently held by the
Company or any of its Subsidiaries has been, and the Company has no
knowledge of any reason to believe that any such rating will be, modified,
qualified, lowered or placed under surveillance for a possible downgrade
(except in connection with the transactions contemplated hereby).
(c) Neither the Company nor any Subsidiary has purchased,
redeemed or otherwise acquired or committed itself to acquire, directly or
indirectly, any of the capital stock of the Company or any Subsidiary;
provided, however, that the foregoing shall not prohibit mergers between
the Subsidiaries or the performance by the Company of its obligations under
that certain Put Agreement, dated September 30, 1997, between the Company
and X. Xxx Xxxxx.
(d) Neither the Company nor any Subsidiary has sold,
assigned, transferred or conveyed any Proprietary Right (as defined in
Section 3.21), except that the foregoing shall not prohibit mergers between
the Subsidiaries.
(e) Neither the Company nor any Subsidiary has effected any
amendment or supplement to, or extension of, any Plan (as defined in
Section 3.12(b)), excluding administrative or similar amendments that do
not increase the liability of the Company or any of its Subsidiaries under
any such Plan (other than immaterial adjustments).
(f) Neither the Company nor any Subsidiary has paid to or
for the benefit of any of its directors, officers or employees any
compensation of any kind other than wages, salaries, bonuses and benefits
at times and rates in effect prior to December 31, 1997, other than
scheduled increases and increases in the ordinary course of business
consistent with past practice.
(g) Neither the Company nor any Subsidiary has effected any
amendment or modification to its certificate of incorporation or by-laws
(or equivalent governing documents), except that the foregoing shall not
prohibit mergers between the Subsidiaries.
(h) Neither the Company nor any Subsidiary has made any
material change, and the Company has no knowledge of any change, in
accounting methods or principles used for financial or regulatory reporting
purposes, except for changes which are required of all life insurers or
life reinsurance companies.
3.9 Litigation, Judgments, No Default, Etc. Except as described
in Schedule 3.9, (a) there is no action or proceeding, pending or, to the
best knowledge of the Company, threatened before any federal or state court
or agency to which the Company or any Subsidiary is a party, the outcome of
which individually or in the aggregate would have a Material Adverse Effect
on the Company (or, to the knowledge of the Company as of the date hereof,
has resulted or would reasonably be expected to result in a material loss
to the Company and its Subsidiaries, taken as a whole), (b) there is no
judgment, decree, injunction, rule or order (collectively "Orders") of any
court, arbitrator or Government Entity outstanding against the Company or
any Subsidiary, or (c) to the best knowledge of the Company, there are no
facts that would result in any such claim, dispute, action, proceeding,
suit, appeal, investigation or inquiry which would have such a Material
Adverse Effect on the Company.
3.10 Compliance. Except as disclosed in the Company SEC Filings
or as set forth on Schedule 3.10, neither the Company nor any of its
Subsidiaries is in default or violation of any term, condition or provision
of (a) its certificate of incorporation or by-laws (or equivalent governing
instruments), or (b) any Contracts and Other Agreements to which the
Company or any of its Subsidiaries is a party or by which any of them or
any portion of their properties or assets may be bound; provided that no
representation or warranty is made in the foregoing clause (b) with respect
to matters that, individually or in the aggregate, have not had and would
not reasonably be expected to result in a Material Adverse Effect on the
Company.
3.11 Tax Returns and Tax Payments. The Company and its
Subsidiaries have timely filed (or, as to Subsidiaries, the Company has
filed on behalf of such Subsidiaries) all Tax Returns (as defined below)
required to be filed by it, except to the extent that any failure to have
filed would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. The Company and its Subsidiaries have paid (or, as
to Subsidiaries, the Company has paid on behalf of such Subsidiaries) all
Taxes (as defined below) shown to be due on such Tax Returns or has
provided (or, as to Subsidiaries, the Company has made provision on behalf
of such Subsidiaries) reserves in its financial statements for any Taxes
that have not been paid, whether or not shown as being due on any Tax
Returns, in each case, except to the extent that any failure so to pay or
reserve would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. No claim for unpaid Taxes has been asserted
against the Company or any of its Subsidiaries in writing by a Tax
authority which, if resolved in a manner unfavorable to the Company or any
of its Subsidiaries, as the case may be, would result, individually or in
the aggregate, (x) in the case of U.S. federal income taxes, in a material
Tax liability to the Company and its Subsidiaries, taken as a whole, and
(y) in all other cases a Tax liability having a Material Adverse Effect on
the Company. There are no material Liens for Taxes upon the assets of the
Company or any Subsidiary except for Liens for Taxes not yet due and
payable or for Taxes that are being disputed in good faith by appropriate
proceedings and with respect to which adequate reserves have been taken.
No audit of any Tax Return of the Company or any of its Subsidiaries is
being conducted by a Tax authority, which, if resolved in a manner
unfavorable to the Company or any of its Subsidiaries, as the case may be,
would result, individually or in the aggregate, in a Tax liability having a
Material Adverse Effect on the Company. No extension of the statute of
limitations on the assessment of any Federal income Taxes has been granted
by the Company or any of its Subsidiaries that is currently in effect. As
used herein, "Taxes" shall mean all taxes of any kind, including, without
limitation, those on or measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license, value added,
property or windfall profits taxes, customs, duties or similar fees,
assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein, "Tax Return"
shall mean any return, report or statement required to be filed with any
governmental authority with respect to Taxes.
3.12 Employee Benefit Plans.
(a) Except for the plans, programs or arrangements,
contractual or otherwise, previously made available to Parent (and except
for plans, programs and arrangements of Mission Life Insurance Company,
acquired in early 1998, which will all be terminated or assumed by a
successor entity other than the Company or any Subsidiary thereof as of
August 1, 1998 when the employment of all employees of Mission Life
Insurance Company is terminated), (i) neither the Company nor any
Subsidiary, with respect to employees, directors or officers of the Company
or any Subsidiary, maintains, sponsors or contributes to any plan, program
or arrangement providing for (A) payment of deferred compensation or
retirement benefits, (B) the accrual or payment of bonuses or special or
incentive compensation of any kind, (C) any severance or termination
payments, (D) loans, loan guarantees or other extensions of credit to
directors, officers or employees, (E) life, health, disability or other
welfare benefits, or (F) moving or other relocation expense benefits or
reimbursements; and (ii) neither the Company nor any Subsidiary, with
respect to employees, directors or officers of the Company or any
Subsidiary, maintains, sponsors or contributes to any other stock bonus,
stock option, stock incentive, employee stock ownership, stock purchase or
similar plans or practices, whether formal or informal. As soon as
practicable following the date hereof, the Company shall provide Parent
with a complete list of all Plans (as defined in Section 3.12(b) below),
which shall include any Plan that could give rise to the payment of any
money or other property or accelerate or provide for any other rights or
benefits to any employee or former employee of the Company or its
Subsidiaries as a result of the transactions contemplated by this
Agreement.
(b) With respect to any plan, program or arrangement of the
nature described in Section 3.12(a) above (hereinafter, the "Plans"),
except as disclosed on Schedule 3.12(b):
(i) the financial statements, if any, relating to the
Plans for the most recent plan year available have been furnished or
were made available to the Parent, have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved and are in accordance with the books
and records of such Plans, which books and records are correct and
complete in all material respects;
(ii) all such Plans comply in all material respects
with the applicable requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code
of 1986, as amended (the "Code") and the applicable requirements for
tax-exempt status under the Code and each Plan has been operated
substantially in accordance with its terms and no penalties or excise
taxes have been incurred under ERISA or the Code which would
reasonably be expected to result in a material liability to the
Company and its Subsidiaries, taken as a whole;
(iii) no material adverse change in the assets or
liabilities of any such Plan has occurred after the date of the most
recent financial statement available relating thereto (other than any
change resulting from the normal and anticipated accrual of benefits,
payment of benefits or receipt of contributions);
(iv) all required contributions to the Plans have been
timely made or, if not timely made, any such failure would not
reasonably be expected to result in a material liability to the
Company and its Subsidiaries, taken as a whole;
(v) all applicable reporting and disclosure
obligations to any governmental agency or entity and to any Plan
participant or beneficiary have been materially satisfied or, if not
satisfied, any such failure would not reasonably be expected to result
in a material liability to the Company and its Subsidiaries, taken as
a whole;
(vi) there have been no transactions between any such
Plan and any "party in interest" or "disqualified person," within the
meaning of ERISA or the Code, which might subject the Company or any
Subsidiary to a tax or penalty on prohibited transactions or to a
civil penalty under Section 502(i) of ERISA or, if any such
transactions have occurred, they would not reasonably be expected to
result in a material liability to the Company and its Subsidiaries,
taken as a whole;
(vii) all such Plans that are funded Plans have
sufficient assets to pay all accrued benefits, expenses and
liabilities;
(viii) the Internal Revenue Service ("IRS") has not
informed the Company in writing and, to the best knowledge of the
Company, no investigation or review by the IRS is pending or is
contemplated in which the IRS may assert, that any Plan is not
qualified under the Code or that any related trust, including any
trust for a welfare Plan, is not exempt from tax under Section 501 of
the Code. No assessment of any federal income taxes has been made or,
to the best knowledge of the Company, is contemplated against any of
the Company or any Subsidiary or any related trust of any such Plan on
the basis of failure of such qualification or exemption nor, to the
best knowledge of the Company, is there any basis for any such
investigation, review, assertion or assessment;
(ix) no event has occurred or, to the best knowledge
of the Company, is threatened or about to occur with respect to any
Plan for which is required to be filed a notice of a reportable event,
within the meaning of Section 4043(b) of ERISA and the Pension Benefit
Guaranty Corporation (the "PBGC") regulations issued thereunder. No
notice of termination has been filed by the Plan administrator
pursuant to Section 4041 of ERISA or issued by the PBGC pursuant to
Section 4042 of ERISA with respect to any such Plan nor is there any
basis for the issuance of any such notice of termination by the PBGC;
and
(x) after the Effective Time, neither the Company nor
any Subsidiary will have any liability with respect to any obligation
to contribute to, or any duty to provide any benefits under, any such
Plan except those liabilities accrued and duties assumed prior to or
at the Effective Time and those liabilities accrued and duties assumed
at or after the Effective Time by the Company (as the Surviving
Corporation) and its Subsidiaries.
(c) Neither the Company nor any Subsidiary is or has ever
been a contributing employer to any multi-employer pension plan (within the
meaning of Section 3(37) of ERISA); neither the Company nor any Subsidiary
is under any obligation to make contributions to any multi-employer pension
plan; and neither the Company nor any Subsidiary has actual or potential
liability under Section 4201 of ERISA for any complete or partial
withdrawal from any multi-employer pension plan.
(d) Neither the Company nor any Subsidiaries has any
current or projected liability in respect of post-employment or post-
retirement health or medical or life insurance benefits for retired, former
or current employees of the Company, except as required to avoid excise tax
under Section 4980B of the Code and to comply with Section 601 of ERISA.
(e) With respect to the Plans of Mission Life Insurance
Company, (i) to the best knowledge of the Company no such Plan (including,
without limitation, any termination thereof) would reasonably be expected
to result in a material liability to the Company and its Subsidiaries,
taken as a whole, and (ii) as soon as practicable following the date
hereof, the Company shall provide Parent with a list of all Plans of
Mission Life Insurance Company and shall make available all material
documents relating to such Plans.
3.13 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference
in the proxy statement (the "Proxy Statement") to be filed with the SEC by
the Company in connection with the meeting of the Company's stockholders
(the "Company Stockholders' Meeting") to be held in connection with the
Merger will, at the time the Proxy Statement is mailed to the Company's
stockholders or at the time of the Company Stockholders' Meeting, 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
not misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation is made
by the Company with respect to statements made therein based on information
supplied in writing by the Parent, Holding or the Merger Sub for inclusion
therein.
3.14 Finders and Investment Bankers. Neither the Company nor any
of its officers or directors has employed any investment banker, financial
advisor, broker or finder in connection with the transactions contemplated
by this Agreement, except for Xxxxxxx, Xxxxx & Co. ("Xxxxxxx Sachs"), or
incurred any liability for any investment banking, business consultancy,
financial advisory, brokerage or finders' fees or commissions in connection
with the transactions contemplated hereby, except for fees payable to
Xxxxxxx Xxxxx (including any fees for the opinion provided pursuant to
Section 3.15), all of which fees have been or will be paid by the Company
in accordance with the agreement between the Company and Xxxxxxx Sachs, a
copy of which has been made available to the Parent.
3.15 Opinion of Financial Advisor. The Company has received an
opinion of Xxxxxxx Xxxxx to the effect that, as of the date of this
Agreement, the consideration to be received by the stockholders of the
Company is fair from a financial point of view.
3.16 Reserves. All statutory reserves with respect to insurance
and annuities as established or reflected in the respective December 31,
1996 and 1997 Insurance Subsidiary Statements were determined in accordance
with SAP (applied on a consistent basis during the periods involved) and
generally accepted actuarial assumptions, and meet in all material respects
the requirements of the insurance laws of each state in which such
Subsidiaries are domiciled (and, if applicable, the State of New York).
All such reserves (when considered together with premiums to be received on
such insurance and annuities and investment income to be earned on assets
held in respect of such reserves and future premiums) were adequate, as of
December 31, 1997, to cover the total amount of all reasonably anticipated
matured and unmatured benefits, dividends, claims, and other liabilities
(as of December 31, 1997) of the respective Subsidiaries of the Company
chartered as insurance companies under state law under all insurance and
annuity contracts under which such Subsidiaries had any liability on
December 31, 1997 (including any liability arising under or as a result of
any reinsurance, coinsurance, or other similar contract). The reserves of
the Subsidiaries of the Company chartered as insurance companies under
state law established in respect of policies assumed since December 31,
1997 (when considered together with premiums to be received in respect of
such policies and investment income to be earned on assets held in respect
of such reserves and premiums) were adequate, as of the date of such
establishment, to cover the total amount of all reasonably anticipated
matured and unmatured benefits, dividends, claims and other liabilities (as
of such date) under the policies so assumed by each such Subsidiary. Each
Subsidiary of the Company chartered as an insurance company under state law
owns assets that qualify as legal reserve assets under applicable insurance
laws of the states of domicile of such Subsidiaries, in an amount,
determined in accordance with SAP, at least equal to all such statutory
reserves of such Subsidiary. Notwithstanding the foregoing, no
representation or warranty is made by the Company in this Section 3.16 to
the effect that benefits, dividends, and claims actually paid, and other
liabilities actually incurred, by any Subsidiary of the Company chartered
as an insurance company under state law under all insurance and annuity
contracts under which such Subsidiary has any liability (including any
liability arising under or as a result of any reinsurance, coinsurance or
other similar contract) will not exceed the statutory reserves established
therefor by the Subsidiary unless such benefits, dividends, claims, or
liabilities were reasonably anticipated as of December 31, 1997.
3.17 Collective Bargaining Agreements. Neither the Company nor
any Subsidiary is a party to or subject to any collective bargaining
agreement with any labor union. There are no labor controversies pending
or, to the best knowledge of the Company, threatened against the Company or
any Subsidiary which would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
3.18 No Default. Each of the Company and the Subsidiaries has in
all respects performed, or is now performing, the obligations of, and is
not in default (and would not by the lapse of time and/or the giving of
notice be in default), nor has it received notice of default, in respect
of, any Contract and Other Agreements, binding upon it or its assets or
properties, except where such nonperformance or default would not
reasonably be expected to result in a Material Adverse Effect on the
Company.
3.19 Insurance. Each of the Company and the Subsidiaries carries
insurance with insurers that, to the knowledge of the Company, are solvent,
in amount and types of coverage which are customary in the industry and
against risks and losses which are usually insured against by persons
holding or operating similar properties and similar businesses. No
material claims have been asserted under any of such insurance policies or
relating to the properties, assets or operations of the Company or any
Subsidiary since December 31, 1997.
3.20 Related Parties. Except as set forth in the Company SEC
Filings or otherwise disclosed in writing to the Parent prior to the date
hereof, (a) no officer or director of the Company or any Subsidiary, or any
affiliate of any such person, has, either directly or indirectly, a
beneficial interest, or alleges a claim of beneficial interest, in any
contract or agreement to which the Company or any Subsidiary may be bound
(excluding any reinsurance policies under which any officer or director may
be a policyholder or beneficiary) or (b) no officer or director of the
Company or any Subsidiary has, either directly or indirectly, an interest
in any corporation, partnership, firm or other person or entity which
furnishes or sells services or products which are similar to those
furnished or sold by the Company or any Subsidiary other than shares of
publicly held companies not in excess of 1% of such companies' outstanding
shares.
3.21 Proprietary Rights. Schedule 3.21 is a true, correct and
complete list of material patents, patent applications, trademarks,
trademark registrations, applications for trademark registrations, trade
secrets, service marks, service xxxx registrations, applications for
service xxxx registrations, trade names, copyright registrations or
applications for copyright registrations or copyrights (collectively
referred to as "Proprietary Rights") owned by the Company or the
Subsidiaries in their respective businesses. The Company and the
Subsidiaries own or possess adequate licenses or other rights to use the
Proprietary Rights and all other intellectual property rights material to
the Company and its Subsidiaries, and the same are sufficient to conduct
the business of the Company and the Subsidiaries as they are now being
conducted. The operations of the Company and the Subsidiaries do not
infringe and, to the best knowledge of the Company, no one has asserted to
the Company nor any Subsidiary that such operations infringe, any
Proprietary Rights owned, possessed or used by any third party. To the
best knowledge of the Company, there are no third parties whose operations
infringe nor has anyone asserted that such operations conflict with or
infringe, any Proprietary Rights owned, possessed or used by the Company or
any Subsidiary.
3.22 Compliance with Law. The businesses of the Company and each
Subsidiary have been conducted in all material respects in accordance with
all Legal Requirements applicable to the Company or any of its Subsidiaries
(excluding ERISA, which is covered by Section 3.12, and Environmental Laws,
which are covered by Section 3.25) and accepted insurance industry
practices applicable to the Company or any of its Subsidiaries, including
all insurance company holding laws, all laws, regulations and orders
relating to the ownership and operation of insurance companies (including
their reserving, marketing, investment, financial, claims, underwriting,
premium collection and refunding and other practices), insurance, antitrust
or trade regulation, employment and discrimination practices and
procedures, and the health and safety of employees, consumer credit and
other consumer protection laws; provided that no representation or warranty
is made in this sentence with respect to conduct not in accordance with any
of the foregoing (i) of which the Company does not have knowledge and (ii)
that could not reasonably be expected to result in the imposition of
material liability on, or to interfere materially with the business of, the
Company and its Subsidiaries, taken as a whole. Neither the Company nor
any Subsidiary has received any written notice of alleged violations of the
foregoing, other than written notices received prior to January 1, 1997
which have been cured or otherwise remedied or responded to, and there are
no pending or, to the best knowledge of the Company, threatened hearings or
investigations with respect to any of the foregoing.
3.23 Real Property. Except as disclosed in the Company SEC
Filings, each of the Company and its Subsidiaries has good, clear and
marketable title to all of the real property reflected in the December 31,
1997 Balance Sheet as being owned by the Company or one of its Subsidiaries
or acquired after the date thereof (except real property sold or otherwise
disposed of since the date thereof in the ordinary course of business),
free and clear of all Liens except (i) statutory liens securing payments
not yet due and (ii) such imperfections or irregularities of title or other
Liens (other than real property mortgages or deeds of trust) as do not
materially affect the use of the real property subject thereto or affected
thereby or otherwise materially impair business operations at such
properties.
3.24 Licenses and Permits. Each of the Company and the
Subsidiaries has obtained, and is in compliance in all material respects
with, all necessary licenses, permits, consents, approvals, orders,
certificates, authorizations, declarations and filings required by all
Government Entities (including, without limitation, any federal, state and
local laws and regulations and authorities or agencies regulating insurance
companies and their operations) and all courts and other tribunals for the
conduct of the businesses and operations of the Company and such Subsidiary
as now conducted (collectively, the "Required Licenses"), and there are no
proceedings pending or, to the best knowledge of the Company, threatened
which may result in the revocation, cancellation or suspension, or any
adverse modification, of any such Required License; provided that no
representation or warranty is made in this Section 3.24 with respect to
revocations, cancellations, suspensions or modifications of Required
Licenses (i) of which the Company does not have knowledge and (ii) that
could not reasonably be expected to result in the imposition of material
liability on, or interfere materially with the business of, the Company and
its Subsidiaries, taken as a whole.
3.25 Environmental Matters. Except as set forth on Schedule
3.25, there are no legal, administrative, arbitral or other proceedings,
claims, actions, causes of action, investigations or remediation activities
seeking to impose, or that reasonably could be expected to result in the
imposition, on the Company or any of its Subsidiaries of any liability or
obligations arising under common law standards relating to environmental
protection, human health or safety, or under any local, state or federal
environmental statute, regulation or ordinance relating to pollution or
protection of the environment, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (collectively,
"Environmental Laws"), pending or, to the best knowledge of the Company
threatened, against the Company or any of its Subsidiaries, which liability
or obligation would have or would reasonably be expected to have a Material
Adverse Effect on the Company. Except as set forth on Schedule 3.25, to
the best knowledge of the Company, there is no reasonable basis for any
such proceeding, claim, action or governmental investigation that would
impose any liability or obligation pursuant to Environmental Laws that
would have or would reasonably be expected to have a Material Adverse
Effect on the Company. Except as set forth on Schedule 3.25, to the
knowledge of the Company, during or prior to the period of (i) it or any of
its Subsidiaries' ownership or operation of any of their respective current
properties or (ii) its or any of its Subsidiaries' holding of a security
interest or other interest in any property, there has been no release of
hazardous, toxic or radioactive materials regulated under Environmental
Laws and there is no threat of such release in, on, under or affecting any
such property, which release or threat or release would reasonably be
expected to have a Material Adverse Effect on the Company. Except as set
forth on Schedule 3.25, to the best knowledge of the Company, neither the
Company nor any of its Subsidiaries is subject to any agreement, order,
judgment or decree by or with any Government Entity or third party imposing
any material liability or obligations pursuant to or under any
Environmental Law that would have or would reasonably be expected to have a
Material Adverse Effect on the Company.
3.26 Letters of Credit. The Subsidiaries of the Company
chartered as insurance companies under state law are beneficiaries under
letters of credit which provide security for all reinsurance ceded by such
Subsidiaries to unauthorized reinsurers that is not secured by trust
agreements and/or funds deposited by and withheld from reinsurers (copies
of which letters of credit will be provided to the Parent as soon as
reasonably practicable and in any event prior to the Closing Date), subject
to such exceptions as could not reasonably be expected to result in a
material loss to such Subsidiary. Such letters of credit are clean,
irrevocable letters of credit, containing an evergreen clause and issued by
a qualified United States financial institution, termed to be funds held
subject to withdrawal by and under control of the ceding insurer (in each
case as such terms are defined in the rules of the NAIC), subject to such
exceptions as could not reasonably be expected to result, individually or
in the aggregate, in a material loss to the Subsidiary that is the
beneficiary of such letters of credit.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE PARENT, HOLDING AND THE MERGER SUB
The Parent and the Merger Sub and, if applicable, upon the
Accession, Holding represent and warrant to the Company as follows,
provided that any representation and warranty relating to Holding shall be
as of the date Holding executes this Agreement:
4.1 Organization. Each of the Parent, Holding and the Merger
Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted. Each of the Parent and
Holding is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it
or the nature of the business conducted by it make such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that, individually or in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect on the
Parent or Holding, as the case may be. The Merger Sub is a newly formed,
directly and indirectly wholly-owned subsidiary of the Parent and, except
for activities incident to the acquisition of the Company, the Merger Sub
has not engaged in any business activities of any type or kind whatsoever.
4.2 Authorization; Binding Agreement. Each of the Parent,
Holding and the Merger Sub has the full legal power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of each of
the Parent, Holding and the Merger Sub. This Agreement has been duly and
validly executed and delivered by each of the Parent, Holding and the
Merger Sub and (assuming the accuracy of the representations and warranties
in Section 3.4) constitutes a legal, valid and binding agreement of each of
the Parent, Holding and the Merger Sub, enforceable against each of them in
accordance with its terms.
4.3 Noncontravention. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will (a) conflict with or result in any breach of any provision of the
certificate of incorporation or by-laws (or equivalent governing
instruments) of the Parent, Holding or the Merger Sub, (b) require any
consent, approval or notice under or conflict with or result in a violation
or breach of, or constitute (with or without notice or lapse of time or
both) a default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any
Contracts and Other Agreements to which the Parent, Holding or the Merger
Sub is a party or by which any of them or any material portion of their
properties or assets may be bound or (c) violate any Legal Requirements
applicable to the Parent, Holding or the Merger Sub or any material portion
of their properties or assets; provided that no representation or warranty
is made in the foregoing clause (b) with respect to matters that,
individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect on the Parent.
4.4 Governmental Approvals. No consent, approval or
authorization of, or declaration or filing with, any Governmental Entity on
the part of any of the Parent, Holding or the Merger Sub that has not been
obtained or made is required in connection with the execution or delivery
by the Parent, Holding or the Merger Sub of this Agreement or the
consummation by the Parent, Holding or the Merger Sub of the transactions
contemplated hereby, other than (a) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware, (b) filings under the
HSR Act and the Exchange Act, (c) approvals, filings and/or notices
required under any applicable insurance laws, and (d) consents, approvals,
authorizations, declarations or filings that, if not obtained or made,
could not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect on the Parent or prevent the Parent,
Holding or the Merger Sub from consummating the transactions contemplated
hereby.
4.5 Finders and Investment Bankers. None of the Parent, Holding
or the Merger Sub or any of their respective officers or directors has
employed any investment banker, financial advisor, broker or finder in
connection with the transactions contemplated by this Agreement, except for
Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx"), or incurred any
liability for any investment banking, business consultancy, financial
advisory, brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby, except for fees payable to Xxxxxx
Xxxxxxx, all of which fees have been or will be paid by the Parent or
Holding.
4.6 Information Supplied. None of the information supplied or
to be supplied by the Parent, Holding or the Merger Sub in writing for
inclusion or incorporation by reference in the Proxy Statement to be filed
with the SEC by the Company in connection with the Company Stockholders'
Meeting to be held in connection with the Merger will, at the time the
Proxy Statement is mailed to the Company's stockholders or at the time of
the Company Stockholders' Meeting, 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 not misleading.
ARTICLE 5
COVENANTS
5.1 Conduct of Business of the Company. Except as contemplated
by this Agreement, during the period commencing on the date hereof and
ending at the Effective Time, the Company shall, and shall cause each of
its Subsidiaries to, conduct its operations according to its ordinary
course of business consistent with past practice, and the Company shall,
and shall cause each of its Subsidiaries to, use all reasonable efforts to
preserve intact its business organization and to maintain satisfactory
relationships with its customers, suppliers and employees and others with
which it has business relationships. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this
Agreement, prior to the Effective Time, neither the Company nor any or its
Subsidiaries will, without the prior written consent of the Parent:
(a) amend or propose to amend its certificate of
incorporation or by-laws (or equivalent governing instruments) (other than
in connection with mergers between Subsidiaries of the Company);
(b) authorize for issuance, issue, sell, pledge, deliver or
agree or commit to issue, sell, pledge or deliver (whether through the
issuance or granting of any options, warrants, calls, subscriptions, stock
appreciation rights or other rights or other agreements) any capital stock
of any class or any securities convertible into or exchangeable for shares
of capital stock of any class of the Company, other than shares of Company
Common Stock issuable upon exercise of Company Options outstanding on the
date of this Agreement in accordance with the present terms thereof;
(c) split, combine or reclassify any shares of Company
Common Stock or declare, pay or set aside for payment any dividend (other
than regularly scheduled dividends on the Company Common Stock at their
current levels) or other distribution in respect of any Company Common
Stock, or redeem, purchase or otherwise acquire any shares of Company
Common Stock;
(d) increase or establish any Plan or otherwise increase in
any manner the compensation payable or to become payable by the Company or
any of its Subsidiaries to any of their respective directors, officers or
employees, other than in the ordinary course of business consistent with
past practice or as required under any existing employment agreement or
other Plan, or enter into any employment or severance agreement with or
grant any severance or termination pay to any director, officer or employee
of the Company or any of its Subsidiaries, other than in accordance with
existing Plans;
(e) enter into any other agreements, commitments or
contracts that are material to the Company and its Subsidiaries taken as a
whole, other than in the ordinary course of business consistent with past
practice;
(f) except as contemplated by this Agreement, without the
prior written consent of the Parent, otherwise take or cause to be taken
any action described in clauses (c) through (h) of Section 3.8 between the
date of this Agreement and the Effective Time;
(g) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of, or
by any other means, any business or any corporation, partnership, joint
venture, association, or other business organization or division thereof,
except that the foregoing shall not prohibit the acquisition of blocks of
life insurance in force (whether by reinsurance or stock acquisition) in
the ordinary course of business in amounts (calculated with respect to
reinsurance, as the ceding commission paid, and calculated with respect to
stock acquisitions, as the excess of the purchase price over the adjusted
capital and surplus acquired) not to exceed (unless the Parent otherwise
consents, which consent will not be unreasonably withheld) $50 million in
any single transaction or $200 million in the aggregate;
(h) incur or assume any indebtedness for borrowed money
except (i) borrowings in the ordinary course of business under that certain
Amended and Restated Credit Agreement dated as of November 2, 1995 among
the Company and the financial institutions party thereto, as amended to
date or (ii) reverse repurchase contracts in the ordinary course of
business consistent with past practice; or
(i) agree, commit or arrange to do any of the foregoing.
5.2 Stockholder Approval; Proxy Statement. The Company shall
take all action necessary in connection with applicable law to convene the
Company Stockholders' Meeting as promptly as practicable after the date
hereof to consider and vote upon this Agreement and the transactions
contemplated hereby, subject to the rights of its Board of Directors (the
"Company Board") under Section 5.5(b). The Company shall, through the
Company Board, recommend that its stockholders vote in favor of the
adoption of this Agreement and the transactions contemplated hereby,
subject to the Company Board's rights under Section 5.5(b).
5.3 Access and Information. Between the date of this Agreement
and the Effective Time, the Company shall, and shall cause its Subsidiaries
to, afford the Parent and its authorized representatives (including its
accountants, financial advisors and legal counsel) reasonable access during
normal business hours to all of the properties, personnel, Contracts and
Other Agreements, any documents relating to Tax Returns of the Company and
its Subsidiaries and other books and records of the Company and its
Subsidiaries and shall promptly deliver or make available to the Parent (a)
a copy of each report, schedule and other document filed by the Company
pursuant to the requirements of federal securities laws and (b) all other
information concerning the business, properties, assets and personnel of
the Company and its Subsidiaries as the Parent may from time to time
reasonably request, including access to outside counsel of the Company or
any Subsidiary in connection with the review of any claim, dispute, action,
proceeding, suit, appeal, investigation or inquiry pending or threatened
against the Company or any Subsidiary. In addition, the Company shall
utilize reasonable efforts to provide advance notice to the Parent of any
transaction permitted by the exception contained in Section 5.1(g) to the
extent the consideration to be paid equals or exceeds $25 million. The
Parent shall hold, and shall cause its Representatives (as defined in the
letter agreement dated July 6, 1998 (the "Company Confidentiality
Agreement") between the Company and the Parent) to hold, all Evaluation
Material (as defined in the Company Confidentiality Agreement) in
confidence in accordance with the terms of the Company Confidentiality
Agreement and, in the event of the termination of this Agreement for any
reason, the Parent promptly shall return or destroy all Evaluation Material
in accordance with the terms of the Company Confidentiality Agreement.
5.4 Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or
regulation shall become applicable to the transactions contemplated hereby,
the parties hereto and the members of their respective Boards of Directors
shall grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated hereby and otherwise
act to eliminate or minimize the effects of such statute or regulation on
the transactions contemplated hereby.
5.5 No Solicitation.
(a) The Company 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, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes a Takeover
Proposal (as defined in Section 5.5(e)) or (ii) participate in any
discussions or negotiations regarding any Takeover Proposal (it being
understood that the passive receipt of communications from third parties
shall not be deemed participation in discussions or negotiations);
provided, however, that if the Company Board determines in good faith,
after consultation with outside counsel, that it is necessary to do so in
order to act in a manner consistent with its fiduciary duties to the
Company's stockholders under applicable law, the Company may, in response
to any Superior Proposal (as defined in Section 5.5(e)) made prior to the
Stockholder Approval (as defined in Section 6.1(a)), which proposal was not
solicited by it and which did not otherwise result from a breach of this
Section 5.5(a), and subject to providing prior written notice of its
decision to take such action to the Parent and compliance with Section
5.5(c), (x) furnish information with respect to the Company and its
Subsidiaries to any person making a Superior Proposal pursuant to a
customary confidentiality agreement (as determined by the Company based on
the advice of its outside counsel) and (y) participate in discussions or
negotiations regarding such Superior Proposal.
(b) Except as expressly permitted by this Section 5.5,
neither the Company Board nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
the Parent and/or Merger Sub, the approval or recommendation by such
Company Board or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Takeover Proposal, or (iii) cause the Company to enter into any Acquisition
Agreement (as defined in Section 5.5(e)). Notwithstanding the foregoing,
the Company Board, to the extent that it determines in good faith, after
consultation with outside counsel, that in light of a Superior Proposal it
is necessary to do so in order to act in a manner consistent with its
fiduciary duties to the Company's stockholders under applicable law may
terminate this Agreement (and take any action prohibited by the first
sentence of this Section 5.1(b)) solely in order that the Company may
concurrently enter into an Acquisition Agreement with respect to any
Superior Proposal, but only at a time that is after the second business day
following the Parent's receipt of written notice advising the Parent that
the Company Board is prepared to accept a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal, all of which information will be kept
confidential by the Parent.
(c) In addition to the obligations of the Company set forth
in paragraphs (a) and (b) of this Section 5.5, the Company shall promptly
advise the Parent orally and in writing of any request for information or
any Takeover Proposal, the material terms and conditions of such request or
Takeover Proposal and the identity of the person making such request or
Takeover Proposal. The Company will keep the Parent reasonably informed of
the status and details (including amendments or proposed amendments) of any
such request or Takeover Proposal.
(d) Nothing contained in this Section 5.5 shall prohibit
the Company 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 the Company's stockholders if, in the good faith
judgment of the Company Board, after consultation with outside counsel and
based as to legal matters on the written advice of the Company's
independent legal counsel, failure so to disclose would be inconsistent
with its obligations under applicable law; provided, however, that, except
as contemplated by Section 5.5(b), neither the Company nor the Company
Board nor any committee thereof shall withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this Agreement
or the Merger or approve or recommend, or propose publicly to approve or
recommend, a Takeover Proposal.
(e) For purposes of this Agreement:
(i) "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 20% (or as used in Section
7.2(b), 50%) or more of the net revenues, net income or assets of the
Company and its Subsidiaries, taken as a whole, or 20% (or as used in
Section 7.2(b), 50%) or more of any class of equity securities of the
Company, any tender offer or exchange offer that if consummated would
result in any person beneficially owning 20% (or as used in Section
7.2(b), 50%) or more of any class of any equity securities of the
Company, or any merger, consolidation, business combination,
recapitalization, reorganization, liquidation, dissolution or similar
transaction involving the Company or any Subsidiary whose business
constitutes 20%(or as used in Section 7.2(b), 50%) or more of the net
revenues, net income or assets of the Company and its Subsidiaries,
taken as a whole, other than the transactions contemplated by this
Agreement.
(ii) "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, reorganization, liquidation,
dissolution or similar transaction, for consideration to the Company's
stockholders consisting of cash and/or securities, all of the shares
of the Company's capital stock then outstanding or all or
substantially all the assets of the Company, on terms which the
Company Board determines in its good faith judgment to be more
favorable to the Company's stockholders than the Merger and for which
financing, to the extent required, is then committed or which, in the
good faith judgment of the Company Board, is reasonably capable of
being obtained by such third party.
(iii) "Acquisition Agreement" means any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement related to any Takeover Proposal.
5.6 Reasonable Efforts; Additional Actions.
5.6.1 Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all action, 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 as promptly
as practicable the transactions contemplated by this Agreement, including
using all reasonable efforts to (a) obtain all consents, amendments to or
waivers under the terms of any of the Company's and the Parent's borrowing
or other contractual arrangements required by the transaction contemplated
by this Agreement, (b) effect promptly all necessary or appropriate
registrations and filings with Governmental Entities, including, filings
and submissions pursuant to the HSR Act, the Exchange Act and the DGCL, (c)
effect promptly and prosecute diligently (including responding to all
reasonable requests for supplemental information) all approvals, filings
and/or notices required under any applicable insurance laws for the
consummation of the transactions contemplated by this Agreement, (d) defend
any lawsuit or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transaction
contemplated hereby and (e) fulfill or cause the fulfillment of the
conditions to Closing set forth in Article 6.
5.6.2 If, at any time after the Effective Time, the
Surviving Corporation shall determine or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise
in the Surviving Corporation the right, title or interest in, to or under
any of the rights, properties or assets of either of the Constituent
Corporations acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of
each of the Constituent Corporations or otherwise, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any
and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
5.7 Notification of Certain Matters. The Company shall give
notice to the Parent, and the Parent and the Merger Sub shall give notice
to the Company, promptly upon becoming aware of (a) any occurrence, or
failure to occur, of any event, which occurrence or failure to occur has
caused or could reasonably be expected to cause any representation or
warranty in this Agreement to be untrue or inaccurate in any material
respect at any time after the date hereof and prior to the Effective Time
and (b) any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided that the delivery of any notice pursuant to this
Section 5.7 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.8 Public Announcements. The initial press release or releases
with respect to the transactions contemplated by this Agreement shall be in
the form agreed to by the Parent and the Company. Thereafter, for as long
as this Agreement is in effect, the Parent and the Merger Sub, on the one
hand, and the Company, on the other hand, shall not, and shall cause their
subsidiaries and affiliates not to, issue or cause the publication of any
press release or any other announcement (including without limitation
announcements to employees, agents or policyholders) with respect to the
Merger, this Agreement or the other transactions contemplated hereby
without the consent of the other, except where such release or announcement
is required by applicable law or pursuant to any listing agreement with, or
the rules or regulations of, any securities exchange or any other
regulatory requirements. By letters exchanged simultaneously with the
execution and delivery of this Agreement, the Parent and the Company have
identified representatives authorized to provide the consent contemplated
by the proceeding sentence.
5.9 Certain Employee Matters.
(a) The Company shall, at or prior to the Effective Time,
terminate all Plans providing for the granting of options or any securities
of the Company to any employee, director or consultant of the Company or
any of its Subsidiaries.
(b) Subject to any written agreement among Parent, Holding,
the Company and a payee executed prior to the Closing, Parent and Holding
shall cause the Surviving Corporation and its subsidiaries to honor all
employment and severance agreements of employees of the Company and its
Subsidiaries set forth on Schedule 5.9(b). Parent and Holding acknowledge
that consummation of the transactions contemplated by this Agreement will
constitute a change in control of the Company (to the extent such concept
is applicable) for the purpose of all the Plans.
(c) Subject to any written agreement among Parent, Holding,
the Company and a payee executed prior to the Closing, Parent, Holding and
the Company agree that payments calculated pursuant to the Life Re
Corporation Long-Term Incentive Plan (the "LTIP") and related arrangements
shall be made at the Closing (by wire transfer as directed by the
respective payees) in the amounts indicated and to the employees listed on
Schedule 5.9(c). The Company shall cause the LTIP to be terminated at the
Effective Time, subject to the making of such payments.
(d) For purposes of determining eligibility to participate,
vesting and accrual or entitlement to benefits where length of service is
relevant under any employee benefit plan or arrangement of the Surviving
Corporation and its subsidiaries (or of Parent, Holding and their
subsidiaries, to the extent an employee of the Company or its Subsidiaries
shall become eligible to participate therein), employees of the Company and
its Subsidiaries immediately prior to the Effective Time ("Affected
Employees") shall receive service credit for service with the Company and
any of its Subsidiaries to the same extent such service was credited under
similar employee benefit plans and arrangements of the Company and its
Subsidiaries; provided, however, that such service need not be credited to
the extent that it would result in a duplication of benefits.
(e) Parent, Holding and their respective subsidiaries will,
or will cause the Surviving Corporation and its subsidiaries to, (i) waive
all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Affected Employees under any welfare benefit plans that such
employees may be eligible to participate in after the Closing Date, other
than limitations or waiting periods that are already in effect with respect
to such employees and that have not been satisfied as of the Closing Date
under any welfare plan maintained for the Affected Employees immediately
prior to the Closing Date, and (ii) provide each Affected Employee with
credit for any co-payments and deductibles paid prior to the Closing Date
in satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to participate in after
the Closing Date.
(f) Nothing in this Agreement (other than the first
sentence of Section 5.9(b)) is intended to create any right of employment
for any person or to create any obligation for Parent, Holding, the
Surviving Corporation or their respective subsidiaries to continue any Plan
following the Effective Time.
5.10 Investment Portfolio. The Company shall cause the
investments of the Subsidiaries to be maintained prior to the Effective
Time in accordance with past investment policies and practices of the
Subsidiaries in the ordinary course of business.
5.11 Swiss Re America Holding Corporation. After the date
hereof, Holding may opt to become a party hereto and otherwise to be bound
by the terms hereof (the "Accession"). All references herein to the
Agreement shall, after the Accession, mean this Agreement as executed and
delivered by the Parent, the Company, the Merger Sub and Holding.
5.12 Indemnification of Directors and Officers.
(a) The certificate of incorporation and by-laws (or
equivalent governing instruments) of the Surviving Corporation and each of
its subsidiaries shall contain provisions no less favorable with respect to
indemnification than are set forth in the certificate of incorporation and
by-laws of the Company and its Subsidiaries, which provisions shall not be
amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at or prior to the Effective Time were
directors, officers, agents or employees of the Company or any of its
Subsidiaries or who were otherwise entitled to indemnification pursuant to
the certificate of incorporation and by-laws (or equivalent governing
instruments) of the Company or any of its Subsidiaries.
(b) Holding and the Surviving Corporation shall, jointly
and severally, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date of this Agreement or who becomes
prior to the Effective Time, a director or officer of the Company or any of
its Subsidiaries (individually, an "Indemnified Person," and collectively,
the "Indemnified Persons") against (i) all losses, claims, damages, costs,
expenses, liabilities or judgements arising out of or relating to, or
amounts that are paid in settlement (with the approval of the indemnifying
party, which approval shall not be unreasonably withheld) of, or in
connection with, any claim, action, suit, proceeding or investigation based
in whole or in part on or arising in whole or in part out of the fact that
such person is or was a director or officer or the Company or any of its
Subsidiaries, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to or at
or after, the Effective Time ("Indemnifiable Claims") and (ii) all
Indemnifiable Claims based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement, the Merger or any other
transaction contemplated hereby or thereby, in each case to the full extent
a corporation is permitted under the DGCL to indemnify its own directors or
officers, as the case may be (and Holding and the Surviving Corporation, as
the case may be, will pay expenses in advance of the final disposition of
any such claim, action, suit, proceeding or investigation to each
Indemnified Person to the full extent permitted by law, subject to receipt
of a written undertaking from such Indemnified Person to repay all amounts
advanced in the event a final and non-appealable judicial determination is
made that such person was not entitled to indemnification under DGCL). Any
Indemnified Person wishing to claim indemnification under this Section
5.12(b), upon learning of any such claim, action, suit, proceeding or
investigation, shall notify Holding and the Surviving Corporation (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 5.12(b) except to the extent
such failure prejudices such party). Indemnified Persons as a group may
retain only one law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct, a
conflict on any significant issue between the positions of any two or more
Indemnified Parties. Notwithstanding anything to the contrary contained
herein, if the Accession does not occur, all references to Holding in this
Section 5.12(b) shall instead by deemed to be to the Parent.
(c) For a period of six (6) years after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect directors'
and officers' liability insurance covering each Indemnified Person who is
currently covered by the Company's directors' and officers' insurance with
respect to claims arising from facts or events which occurred at or prior
to the Effective Time, which insurance shall be no less favorable than such
insurance maintained in effect by the Company on the date hereof in terms
of coverage and amounts; provided, however, that in no event shall the
Surviving Corporation be required to expend in any one year an amount in
excess of 150% of the annual premiums currently paid by the Company for
such insurance; and, provided, further, that if annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount.
(d) With respect to each Indemnified Person who is party
to, or the beneficiary of, an agreement with the Company or any of its
Subsidiaries providing for the indemnification of such person by the
Company or any of its Subsidiaries in effect on the date hereof, the
Surviving Corporation hereby agrees to be bound, and perform all
obligations required to be performed, by the Company or any of its
Subsidiaries under any such agreement.
(e) The provisions of this Section 5.12 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Person,
his or her heirs and representatives.
(f) With respect to the indemnification obligations of
Holding contained in Section 5.12(b), in the event Holding disposes of all
or substantially all of its assets or otherwise ceases to be sufficiently
creditworthy to meet its obligations under Section 5.12(b), Parent agrees
that it shall cause another of its wholly-owned Subsidiaries incorporated
in the United States which is sufficiently creditworthy to assume the
obligations of Holding under Section 5.12(b).
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been adopted by the
affirmative vote of the stockholders of the Company by the requisite vote
in accordance with applicable law (the "Stockholder Approval");
(b) no Legal Requirements shall have been enacted, entered,
promulgated or enforced by any court or Governmental Entity that prohibit
or prevent the consummation of the Merger;
(c) (i) all consents, authorizations, orders and approvals
of (or filings or registrations with) any Governmental Entity required in
connection with the execution, delivery and performance of this Agreement
shall have been obtained or made (as the case may be), except for filings
in connection with the Merger and any other documents required to be filed
after the Effective Time and except where the failure to have obtained or
made any such consent, authorization, order, approval, filing or
registration would not (A) have a Material Adverse Effect on the Company or
the Parent or (B) materially adversely affect the ability of the Company,
the Parent, Holding or the Merger Sub to perform their respective
obligations hereunder or the other agreements entered into in connection
herewith and (ii) such consents, authorizations, orders and approvals shall
be subject to no conditions other than (A) conditions customarily imposed
by insurance regulatory authorities or (B) other conditions that could not
reasonably be expected to have a Material Adverse Effect on the Company;
and
(d) any waiting period applicable to the Merger under the
HSR Act shall have expired or been terminated.
6.2 Conditions to Obligation of the Parent, Holding and the
Merger Sub. The obligation of the Parent, Holding and the Merger Sub to
effect the Merger shall be subject to the fulfillment or waiver at the
Effective Time of the following additional conditions:
(a) the Company shall have performed in all material
respects the covenants and obligations required to be performed by it under
this Agreement on or prior to the Effective Time;
(b) the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects on and as of the Effective Time as if made on and as of such date
(except to the extent that any such representation or warranty had by its
terms been made as of a specific date in which case such representation or
warranty shall have been true and correct as of such specific date); and
(c) the Parent shall have received a certificate signed by
an executive officer of the Company to the effect of Sections 6.2(a) and
(b).
6.3 Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger shall be subject to the fulfillment or
waiver at the Effective Time of the following additional conditions:
(a) the Parent, Holding and the Merger Sub shall have
performed in all material respects the covenants and obligations required
to be performed by them under this Agreement on or prior to the Effective
Time;
(b) the representations and warranties of the Parent,
Holding and the Merger Sub contained in this Agreement shall be true and
correct in all material respects on and as of the Effective Time as if made
on and as of such date; and
(c) the Company shall have received a certificate signed by
an executive officer of each of the Parent, Holding and Merger Sub to the
effect of Sections 6.3 (a) and (b).
ARTICLE 7
TERMINATION
7.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, whether before or after the Stockholder Approval:
(a) By the mutual written consent of the Parent, Holding,
the Merger Sub and the Company;
(b) By the Parent, Holding, the Merger Sub or the Company:
(i) if a court of competent jurisdiction or other
Governmental Entity shall have issued an Order or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
Merger and such Order or other action shall have become final and
nonappealable; or
(ii) if the Effective Time shall not have occurred on
or before January 31, 1999, provided, however, that the right to
terminate this Agreement under this Section 7.1(b)(ii) shall not be
available to any party whose failure to fulfill materially any
covenant or 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;
(c) By the Parent, Holding, the Merger Sub or the Company,
if the Stockholder Approval shall not have been obtained by reason of the
failure to obtain the requisite vote at a duly held meeting of stockholders
or at any adjournment thereof; and
(d) By the Company if the Company receives a Superior
Proposal and the Company Board determines in good faith, after consultation
with outside counsel, that failing to terminate this Agreement would
constitute a breach of the Company Board's fiduciary duty under applicable
law.
7.2 Procedure for and Effect of Termination.
(a) In the event that this Agreement is terminated and the
Merger is abandoned by the Parent, Holding or the Merger Sub, on the one
hand, or by the Company, on the other hand, pursuant to Section 7.1,
written notice of such termination and abandonment shall forthwith be given
to the other parties and this Agreement shall terminate and the Merger
shall be abandoned without any further action. If this Agreement is
terminated as provided herein, no party hereto shall have any liability or
further obligation to any other party under the terms of this Agreement
except (i) with respect to the willful breach by any party hereto, and
(ii) this Section 7.2, the third sentence of Section 5.3, and Article 8
shall survive the termination of this Agreement.
(b) In the event that (i) this Agreement is terminated by
the Company pursuant to Section 7.1(d) or (ii) (x) a Takeover Proposal
shall have been made to the Company or any of its Subsidiaries or
stockholders or any person shall have announced an intention (whether or
not conditional) to make a Takeover Proposal, (y) this Agreement is
thereafter terminated pursuant to Section 7.1(c) and (z) within 12 months
following such termination the Company or any Subsidiary enters into an
Acquisition Agreement with the person (or any affiliate of the person) who
made or announced the intention to make such Takeover Proposal, then the
Company shall promptly pay the Parent by wire transfer of same day funds a
fee equal to $60 million.
(c) The Company acknowledges that the agreements contained
in Section 7.2(b) are an integral part of the transactions contemplated by
this Agreement, and that the amounts to be paid pursuant thereto constitute
liquidated damages and not a penalty.
ARTICLE 8
MISCELLANEOUS
8.1 Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them in this
Section 8.1:
(a) "affiliate," with respect to any person, shall mean any
person controlling, controlled by or under common control with such person
and shall also include any person 10% or more of whose outstanding voting
power is owned by the specified person either directly or indirectly
through subsidiaries;
(b) "including" shall, unless the context clearly requires
otherwise, mean including but not limited to the items or things following
such term;
(c) "knowledge" or "best knowledge," with respect to the
Company, shall mean the actual knowledge of Xxxxxx X. Xxxxx, Xx., Xxxxxxx
X. Xxxxxx, Xxxxxxx X. XxXxxx, Xxxxx X. Xxxxxx, W. Xxxxxx Xxxxxx, Xxxx X.
Head and Xxxxxx X. Xxxxxxxxxx;
(d) "Material Adverse Effect," with respect to any person,
shall mean a material adverse effect on the business, assets, liabilities,
financial condition or results of operations of such person and its
subsidiaries taken as a whole; provided, that a change in economic
conditions (such as a movement in interest rates) that adversely affects
the insurance industry generally shall not, by itself, be deemed a Material
Adverse Effect in respect of the Company;
(e) "person" shall mean and include an individual, a
partnership, a joint venture, a limited liability company, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof; and
(f) "subsidiary," with respect to any person, shall mean
any corporation 50% or more of the outstanding voting power of which, or
any partnership, joint venture, limited liability company or other entity
50% or more of the total equity interest of which, is directly or
indirectly owned by such person. For purposes of this Agreement, all
references to "subsidiaries" of a person shall be deemed to mean
"subsidiary" if such person has only one subsidiary.
8.2 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented, whether before or after
stockholder approval, only by a written agreement signed by each of the
parties hereto at any time prior to the Effective Time with respect to any
of the terms contained herein; provided, however, that after this Agreement
is adopted by the Company's stockholders pursuant to Section 5.2, no such
amendment or modification shall (a) alter or change the amount or kind of
the consideration to be delivered to the stockholders of the Company,
(b) alter or change any term of the certificate of incorporation of the
Surviving Corporation to be effected by the Merger or (c) alter or change
any of the terms or conditions of this Agreement if such alteration or
change would adversely affect the stockholders of the Company.
8.3 Waiver of Compliance; Consents. Any failure of the Parent,
Holding or the Merger Sub, on the one hand, or the Company, on the other
hand, to comply with any obligation, covenant, agreement or condition
herein may be waived by the Parent, Holding, the Merger Sub or the Company,
respectively, only by a written instrument signed by the party granting
such waiver, 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.
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.
8.4 Survival. The respective representations and warranties of
the Parent, Holding, the Merger Sub and the Company contained herein shall
not survive the Closing hereunder.
8.5 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when
delivered in person, by telecopier (with a confirmed receipt thereof) or
registered or certified mail (postage prepaid, return receipt requested),
and on the next business day when sent by overnight courier service, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to the Parent, Holding or the Merger Sub, to:
Swiss Reinsurance Company
Xxxxxxxxxx 00/00
XX-0000 Xxxxxx
Xxxxxxxxxxx
Attention: Xxxxxx Xxxxxxxx
Telecopier: 000 000 0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Hand, Esq.
Xxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
(b) if to the Company, to:
Life Re Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: W. Xxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
8.6 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto without the prior written consent
of the other parties; provided, however, that the rights (but not the
obligations) of Holding or Merger Sub may be transferred to any direct or
indirect wholly owned subsidiary of the Parent with an appropriate
amendment to this Agreement.
8.7 Expenses. Whether or not the Merger is consummated, all
fees, charges and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring
such fees, charges or expenses.
8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable
to agreements made and to be performed entirely within such State, without
regard to the choice of law principles thereof.
8.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 Interpretation. 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 in any way affect the meaning or
interpretation of this Agreement.
8.11 Entire Agreement. This Agreement (including the schedules,
exhibits, documents or instruments referred to herein) and the
Confidentiality Agreement embody the entire agreement and understanding of
the parties hereto in respect of the subject matter hereof and thereof and
supersede all prior agreements and understandings, both written and oral,
among the parties, or between any of them, with respect to the subject
matter hereof and thereof.
8.12 No Third Party Beneficiaries. Except as provided in
Sections 5.9(b), 5.9(c) or 5.12, this Agreement is not intended to, and
does not, create any rights or benefits of any party other than the parties
hereto.
IN WITNESS WHEREOF, the Parent, the Merger Sub and the Company
have caused this Agreement to be signed by their respective duly authorized
officers as of the date first above written.
SWISS REINSURANCE COMPANY
By /s/ Xxxx X. Xxxxxxxxxxx
Name: Xxxx X. Xxxxxxxxxxx
Title: Member of Executive Board
By /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: Member of Senior Management and
General Counsel
SWISS RE AMERICA HOLDING CORPORATION
By
Name:
Title:
SRC ACQUISITION CORP.
By /s/ Xxxx X. Xxxxxxxxxxx
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President
LIFE RE CORPORATION
By /s/ Xxxxxx X. Xxxxx, Xx.
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman of the Board, Chief
Executive Officer and Office
of the Chairman
