Exhibit 10(xxvi)
PURCHASE AGREEMENT
BY AND BETWEEN
SUN ALLIANCE USA INC.
AND
ORION CAPITAL CORPORATION
Dated as of June 30, 1995
TABLE OF CONTENTS
Page
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I. THE TRANSACTION . . . . . . . . . . . . . . . . . 1
1.1 Purchase of Common Stock . . . . . . . . . 1
1.2 Consideration . . . . . . . . . . . . . . 1
II. THE CLOSING . . . . . . . . . . . . . . . . . . 2
2.1 Closing . . . . . . . . . . . . . . . . . . 2
III. REPRESENTATIONS AND WARRANTIES OF SUN . . . . . . 2
3.1 Organization and Good Standing. . . . . . 2
3.2 Capitalization . . . . . . . . . . . . . . 3
3.3 Regulatory Status . . . . . . . . . . . . 4
3.4 Authorization . . . . . . . . . . . . . . 4
3.5 Books and Records . . . . . . . . . . . . 5
3.6 No Adverse Change . . . . . . . . . . . . 5
3.7 Litigation and Other Proceedings . . . . 5
3.8 Title to Properties . . . . . . . . . . . 6
3.9 No Materially Adverse Agreements . . . . 7
3.10 No Conflicts . . . . . . . . . . . . . . 8
3.11 Taxes . . . . . . . . . . . . . . . . . . 9
3.12 Investments . . . . . . . . . . . . . . . 12
3.13 Employment Matters . . . . . . . . . . . 12
3.14 Employee Benefit Plans; ERISA . . . . . . 13
3.15 Contracts . . . . . . . . . . . . . . . . 17
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3.16 Capital Expenditures . . . . . . . . . . 18
3.17 Banks . . . . . . . . . . . . . . . . . . 18
3.18 Agents and Brokers . . . . . . . . . . . 18
3.19 Approved Forms of Policies . . . . . . . 18
3.20 Insurance . . . . . . . . . . . . . . . . 19
3.21 Absence of Material Changes and
Adverse Factors . . . . . . . . . . . . . 19
3.22 Environmental Matters . . . . . . . . . . 19
3.23 Finders and Brokers . . . . . . . . . . . 20
3.24 Disclosure . . . . . . . . . . . . . . . . 21
3.25 Canadian Bank Act . . . . . . . . . . . . 21
IV. REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF ORION . . . . . . . . . . . . . . . 21
4.1 Organization and Standing . . . . . . . . 21
4.2 Certificate of Incorporation and . . . . . 21
By-Laws
4.3 Authority . . . . . . . . . . . . . . . . 21
4.4 Finders and Brokers . . . . . . . . . . . 22
4.5 Investor Status . . . . . . . . . . . . . 22
4.6 Bank or Banking Institutions . . . . . . . 22
V. COVENANTS OF ORION AND SUN . . . . . . . . . . . . 23
5.1 Access to Properties, Books and
Records . . . . . . . . . . . . . . . . 23
5.2 Conduct of Business . . . . . . . . . . . 23
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5.3 Regulatory and Other Filings and
Approvals . . . . . . . . . . . . . . . . 27
5.4 Premerger Notification and Clearance . . . 27
5.5 Bermuda Company . . . . . . . . . . . . . 28
5.6 Further Assurances . . . . . . . . . . . . 29
5.7 Pension Plan Matters . . . . . . . . . . . 29
5.8 Tax Matters . . . . . . . . . . . . . . . 31
VI. AGREEMENTS WITH RESPECT
TO POOL OPERATION . . . . . . . . . . . . . . . . 36
6.1 Pool Participations; Reinsurance . . . . . 36
6.2 Underwriting Operations of the Pool . . . 39
VII. CONDITIONS TO OBLIGATIONS OF ORION . . . . . . . 43
7.1 Covenants . . . . . . . . . . . . . . . . 43
7.2 Representations and Warranties . . . . . . 43
7.3 Absence of Litigation and Required
Regulatory Approvals . . . . . . . . . . . 43
7.4 Premerger Notification . . . . . . . . . . 44
7.5 No Material Adverse Effect . . . . . . . . 44
7.6 Employment and Consulting Agreements . . . 44
7.7 Management and Reinsurance Agreements . . . 44
7.8 Unfair Competition and Confidentiality
Agreements . . . . . . . . . . . . . . . 44
7.9 Opinion of Counsel for Sun and XxXxx . . . 45
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VIII. CONDITIONS TO OBLIGATIONS OF SUN . . . . . . . 45
8.1 Covenants . . . . . . . . . . . . . . . 45
8.2 Representations and Warranties . . . . . 45
8.3 Absence of Litigation and Required
Regulatory Approvals . . . . . . . . . 45
8.4 Premerger Notification . . . . . . . . . 46
8.5 Management and Reinsurance Agreements . . 46
8.6 Opinion of Counsel for Orion . . . . . . 46
IX. TERMINATION . . . . . . . . . . . . . . . . . . 46
9.1 Termination . . . . . . . . . . . . . . . 46
9.2 Effect of Termination . . . . . . . . . . 47
9.3 Conduct Following Termination . . . . . . 47
X. AMENDMENT; WAIVERS . . . . . . . . . . . . . . . . 47
10.1 Amendments, Modifications, Etc. . . . . . 47
10.2 Waivers . . . . . . . . . . . . . . . . . 48
XI. DEFINED TERMS . . . . . . . . . . . . . . . . . . 48
XII. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . 52
12.1 Expenses . . . . . . . . . . . . . . . . 52
12.2 Notices . . . . . . . . . . . . . . . . 52
12.3 Entire Agreement . . . . . . . . . . . . 53
12.4 No Assignment . . . . . . . . . . . . . . 53
12.5 Survival of Representations and
Warranties and Covenants . . . . . . . . 54
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12.6 Governing Law . . . . . . . . . . . . . . 54
12.7 Dispute Resolution . . . . . . . . . . . 54
12.8 Press Releases . . . . . . . . . . . . . 55
12.9 Counterparts . . . . . . . . . . . . . . 55
12.10 Headings . . . . . . . . . . . . . . . . 55
EXHIBITS
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Exhibit A - Bermuda Management Agreement
Exhibit B - Quota Share Retrocession Agreement
in Respect of Period From
January 1, 1995 to December 31, 1995
Exhibit C - Pool Management Agreement
Exhibit D - Option Agreement in Respect of
Sun Bermuda
Exhibit E-1 - Employment Continuation Agreement
Exhibit E-2 - Consulting Agreement
Exhibit F - Agreement With Respect To
Confidentiality and Competition
SCHEDULES
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Schedule 3.2 Capitalization of XxXxx and Subsidiaries
Schedule 3.7 Litigation and Other Proceedings
Schedule 3.8 Properties of XxXxx
Schedule 3.10 Consents and Approvals of Sun
Schedule 3.12 Investments
Schedule 3.13 Employment Matters
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Schedule 3.14 ERISA
Schedule 3.15 Contracts
Schedule 3.16 Capital Expenditures
Schedule 3.17 Banks
Schedule 3.18 Agents and Brokers
Schedule 3.20 Insurance
Schedule 4.3 Consents and Approvals of Orion
Schedule 5.2 Conduct of Business
Schedule 6.2 Business Plan Outline
Schedule 11 Syndicates
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AGREEMENT (the "Agreement"), dated June 30, 1995, by and
between ORION CAPITAL CORPORATION, a Delaware corporation
("Orion"), as purchaser, and SUN ALLIANCE USA INC., a New York
corporation ("Sun") as seller,
W I T N E S S E T H:
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WHEREAS, Sun is the direct or indirect owner of 100% of
the outstanding shares of capital stock of each of Phoenix
Assurance Company of New York, a New Hampshire corporation
("Phoenix") and Marine Indemnity Insurance Company of America, a
New York corporation ("Marine"); and
WHEREAS, Sun Alliance Insurance Overseas Limited, an
affiliate of Sun, owns 100% of the capital stock of The London
Assurance, an English corporation, the Canadian Branch of which is
hereinafter referred to as "London"; and
WHEREAS, Wm. X. XxXxx & Co., Inc. ("XxXxx") is a
corporation duly organized and validly existing under the laws of
the State of New York, having outstanding capital stock consisting
of 4,400 shares of common stock, without par value (the "Common
Stock"); and
WHEREAS, Sun and Phoenix own in the aggregate 100% of the
Common Stock, all of which is to be sold to and purchased by Orion
pursuant hereto;
NOW, THEREFORE, the parties hereto agree as follows,
intending that defined terms used herein shall have the meanings
set forth in Article XI:
I.
THE TRANSACTION
----------------
Section 0.1 PURCHASE OF COMMON STOCK. Upon the terms
and subject to all of the conditions set forth herein, Sun agrees
to sell, and to cause Phoenix to sell, to Orion and Orion agrees to
acquire from Sun and Phoenix on the Closing Date 100% of the Common
Stock.
Section 0.2 CONSIDERATION. In full consideration for
the sale of the Common Stock by Sun and Phoenix to Orion provided
for herein, together with the other undertakings and commitments
made and delivered by Sun to Orion herein, at the Closing Orion
shall deliver to Sun the sum of Seventeen Million and 00/100
($17,000,000.00) Dollars in immediately available funds and shall
deliver to Phoenix the sum of Five Million and 00/100 ($5,000,000)
Dollars in immediately available funds.
II.
THE CLOSING
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Section 1.1 CLOSING. The closing of the transactions
provided for herein (the "Closing") shall occur at the offices of
Sun at 00 Xxxx 00xx Xxxxxx xx Xxx Xxxx Xxxx or at such other place
as shall be determined by Orion and Sun, on June 30, 1995;
provided, however, that if any of the conditions provided for in
Articles VII and VIII hereof shall not have been met or waived by
Sun or by Orion, as the case may be, by the scheduled Closing, then
the party which is unable to meet such condition or conditions
shall be entitled to postpone the Closing by notice to the other
party to such effect until such condition or conditions shall have
been met (which such party will seek to cause to happen at the
earliest practicable date) or waived (such postponed Closing to be
held on five business days notice from the postponing party to the
other party), but in no event shall such postponements extend past
August 15, 1995. At the Closing, Sun and Orion shall deliver, or
cause to be delivered, to the other such certificates, receipts or
other documents or instruments, in addition to those specifically
provided for herein, as may reasonably be requested by the other
and as are customary for transactions of the type contemplated
hereunder. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
III.
REPRESENTATIONS AND WARRANTIES OF SUN
--------------------------------------
Sun represents and warrants to Orion that:
2.1 ORGANIZATION AND GOOD STANDING. XxXxx is a
corporation duly organized and existing and in good standing under
the laws of the State of New York, has the corporate power to carry
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on its business as it is now being conducted and is duly qualified
to do business as a foreign corporation in each jurisdiction in
which such qualification is required and where the failure so to
qualify would have a material adverse effect on the business,
properties or financial condition of XxXxx and its Subsidiaries
taken as a whole or the ability of any of them to carry on the
business of the Pool (a "Material Adverse Effect"). Each
Subsidiary of XxXxx is a corporation duly organized and existing
and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business
as it is now being conducted and is duly qualified to do business
as a foreign corporation in each jurisdiction in which such
qualification is required and where the failure so to qualify would
have a Material Adverse Effect. To Sun's Knowledge, Sun has
heretofore made available to Orion true and complete copies of (a)
the Certificate of Incorporation and By-laws of XxXxx and each of
its Subsidiaries, (b) all minutes of the meetings and copies of
resolutions of stockholders, the board of directors and each
committee of the board of directors of XxXxx and each of its
Subsidiaries held since the date of its incorporation or
organization and (c) all powers of attorney, if any, issued by
XxXxx or any of its Subsidiaries.
Section 2.2 CAPITALIZATION. XxXxx has an authorized
capital stock consisting of 11,000 shares of Common Stock, without
par value, of which, as of the date hereof, 4,400 shares are issued
and outstanding. No shares of XxXxx Common Stock are held in
treasury. All of the issued and outstanding stock of XxXxx is duly
authorized, validly issued, fully paid and non-assessable and is
owned by Sun and Phoenix as set forth in Schedule 3.2 hereto, free
and clear (except as otherwise shown on Schedule 3.2) of any and
all claims, liens, restrictions, pledges, charges, rights of third
parties or other encumbrances. Neither Sun nor XxXxx is a party to
or is bound by any agreement or has since September 8, 1987 (i)
made any commitment to sell or issue any securities of XxXxx other
than the Common Stock which is the subject of this Agreement, or
(ii) taken any corporate action to approve, or in contemplation of,
any of the foregoing except for the approval of this Agreement.
Holders of Common Stock have no preemptive rights and the Common
Stock is subject to no voting trust, proxy or similar agreement.
Schedule 3.2 correctly identifies each of XxXxx'x Subsidiaries, its
jurisdiction of incorporation and the percentage of its voting
stock owned by XxXxx and each other Subsidiary. XxXxx is the legal
and beneficial owner of all of the shares of voting stock it
purports to own of each Subsidiary of XxXxx, and such ownership is
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free and clear (except as otherwise shown on Schedule 3.2) of any
and all claims, liens, restrictions, pledges, charges, rights of
third parties or other encumbrances. All such shares have been
duly authorized, validly issued and are fully paid and
non-assessable. No Subsidiary of XxXxx has any common or preferred
stock authorized or outstanding other than as set forth on Schedule
3.2 and neither XxXxx nor Sun nor any such Subsidiary is a party to
or is bound by any agreement or commitment to sell or issue any
securities of any Subsidiary of XxXxx or has taken any corporate
action to approve, or in contemplation of, any of the foregoing.
Section 2.3 REGULATORY STATUS. To Sun's Knowledge,
XxXxx and each of its Subsidiaries has (and has caused each of its
officers and employees to have) all requisite power and authority,
and all necessary licenses, permits, franchises and other
governmental authorizations necessary to own and operate its
properties and to carry on its business as now conducted. To Sun's
Knowledge, all filings required to have been made with any
insurance or other regulatory agency by XxXxx or any of its
Subsidiaries (whether on its own behalf or on behalf of the Pool)
have been properly prepared and duly and timely filed except where
the failure to have made such filings could not reasonably be
expected to have a Material Adverse Effect. Such filings made
since January, 1990 have been delivered by Sun to Orion or made
available for inspection, or copies thereof have been sent by Sun
or made available to Orion. Immediately after, and after giving
effect to, the execution and delivery of this Agreement, XxXxx and
each of its Subsidiaries will be in compliance with each law, rule,
regulation, ordinance, code, order, judgment and decree applicable
to it or affecting its business, property or financial affairs,
failure to comply with which could reasonably be expected to have
a Material Adverse Effect.
Section 2.4 AUTHORIZATION. (a) This Agreement has been
duly authorized by all necessary corporate action of Sun and
Phoenix. Neither this Agreement nor any of the transactions
provided for herein violates any provision of the Certificate of
Incorporation or By-Laws of Sun or XxXxx or any Subsidiary of XxXxx
or any agreement by which any of them or any of their respective
properties is bound. This Agreement will, when duly executed and
delivered, be a valid and binding agreement of Sun, enforceable
against Sun in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors'
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rights generally, and except that the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the equitable discretion of
the court before which any proceeding therefor may be brought.
(b) Each of the Ancillary Agreements to which Phoenix,
London, Marine or Sun Bermuda is a party has been or, prior to the
Closing, will be duly authorized by all necessary corporate action
of Phoenix, London, Marine or Sun Bermuda, as the case may be.
None of the Ancillary Agreements to which any such Subsidiary of
Sun is a party, nor any of the transactions provided for therein,
violates any provision of the Certificate of Incorporation, or
similar charter document, or By-Laws of such Subsidiary or any
agreement by which such Subsidiary or its properties is bound.
Each of the Ancillary Agreements to which Phoenix, London, Marine
or Sun Bermuda is a party will, when duly executed and delivered,
be a valid and binding agreement of Phoenix, London, Marine or Sun
Bermuda, as the case may be, enforceable against it in accordance
with the terms thereof, except as limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally, and except that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the equitable discretion of the court
before which any proceeding therefor may be brought.
Section 2.5 BOOKS AND RECORDS. The consolidated balance
sheets of XxXxx and its Subsidiaries as of December 31, 1994 and
the related consolidated statements of income, stockholders' equity
and cash flows for the fiscal year ended on such date, all of which
were audited by independent certified public accountants, and the
consolidated balance sheet of XxXxx and its Subsidiaries as of
March 31, 1995 and the related statement of income for the three
months ended on such date, copies of which have been delivered by
Sun to Orion, have been prepared in accordance with generally
accepted accounting principles consistently applied (except that
the March 31, 1995 financial statements are subject to normal year-
end adjustments and do not contain full footnote disclosures in
accordance with generally accepted accounting principles) and
present fairly the financial position of XxXxx and its Subsidiaries
as of such dates and the results of their operations for such
periods. Sun has also delivered or made available to Orion all
management letters for years beginning after December 31, 1990
which were received by Sun, XxXxx or any Subsidiary of XxXxx from
its independent certified public accountants.
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Section 2.6 NO ADVERSE CHANGE. Since December 31, 1994,
there has been no event or occurrence (or absence thereof), or
combination of the foregoing, which has had a Material Adverse
Effect.
Section 2.7 LITIGATION AND OTHER PROCEEDINGS. Except
as set forth in Schedule 3.7, there are no actions, suits,
investigations or proceedings pending against, or to Sun's
Knowledge threatened against, the Pool (provided that this
representation shall not extend to actions, suits, investigations
or proceedings against the Pool which arise solely out of claims
under insurance coverage issued by or for the Pool), XxXxx or its
Subsidiaries or any of their respective officers or employees or
their respective businesses, properties or assets, by any person,
governmental body or agency or by any securities exchange or
national securities association, which action, suit, investigation
or proceeding is reasonably likely to have a Material Adverse
Effect. Neither Sun nor XxXxx nor any Subsidiary of XxXxx is in
default with respect to any order of any court, governmental
authority or agency or arbitration board or tribunal or in
violation of any laws or governmental rules or regulations where
such default or violation is reasonably likely to have a Material
Adverse Effect. Neither XxXxx nor any of its Subsidiaries is in
default under any contract or commitment which default has had or
is reasonably likely to have a Material Adverse Effect.
Section 2.8 TITLE TO PROPERTIES. XxXxx and each
Subsidiary of XxXxx has good and marketable title to all the
property it purports to own, including that reflected in the most
recent balance sheet referred to in Section 3.5 and:
(i) All real property owned or leased by XxXxx or any
Subsidiary of XxXxx and, in the case of leased property, the
lease pursuant to which it is leased, is listed and described
on Schedule 3.8. XxXxx has good and marketable fee title to
all owned real property reflected on Schedule 3.8, free and
clear of all liens, charges and encumbrances, other than
rights of way and easements of record, and subject only to
liens of current real and personal property taxes, and such
minor defects of title of a nature generally found in
properties of similar character which do not in any material
way affect the marketability of such real properties or
interfere with the ownership and use of such real properties.
To Sun's Knowledge, each lease reflected on Schedule 3.8 is
valid and subsisting in accordance with its terms, no default
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by any party thereto has occurred, no event, act or omission
has occurred which constitutes or with notice or passage of
time or both would constitute a default and all such leases
are free and clear of any and all charges, liens, claims,
rights of third parties and other encumbrances. To Sun's
Knowledge, neither XxXxx nor any of its Subsidiaries leases
any real property to or from any, parent, affiliate, officer
or director or any person related to or owned or controlled by
any parent, affiliate, officer or director of XxXxx or any of
its Subsidiaries.
(ii) Schedule 3.8 contains a true and complete summary,
by office location and type of property, of all items of
personal property (other than investments reflected in
Schedule 3.12) having a value in excess of $10,000 which are
used by XxXxx or any Subsidiary of XxXxx in its business.
Except as set forth in Schedule 3.8, all such personal
property is owned or leased by XxXxx or a Subsidiary free and
clear of any and all liens, charges or encumbrances, except
for liens for current taxes not yet due and payable and except
for those which do not materially detract from the value of
the property subject thereto or interfere with the ownership
and use of such property. All such personal property is in
good operating condition and repair, ordinary wear and tear
excepted, and capable of performing the functions for which it
is now used. To Sun's Knowledge, neither XxXxx nor any
Subsidiary of XxXxx leases any personal property to or from
any officer or director of, or any person related to or owned
or controlled by any officer or director of, XxXxx or any
Subsidiary of XxXxx.
(iii) To Sun's Knowledge, Schedule 3.8 contains a true
and complete description of all copyrights, patents,
trademarks, trade names, franchises, computer and other
programs processes and applications and other intellectual
property owned or licensed by, and applications for any of the
foregoing made by, XxXxx and each Subsidiary of XxXxx. To
Sun's Knowledge, none of such property is subject to any lien,
charge, encumbrance or adverse claim of any kind. To Sun's
Knowledge, and except as set forth in Schedule 3.8, all such
rights are valid, subsisting and in full force and effect in
accordance with their terms without interference with, or
infringement on or by, the rights of any other person (in each
case which are material to the business and operations of
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XxXxx and its Subsidiaries, taken as a whole). To Sun's
Knowledge, neither XxXxx nor any Subsidiary of XxXxx is
engaged in any infringement or unlawful use of any trademark,
service xxxx, trade name, copyright, program, process or
application or other intangible property right owned or
alleged to be owned by others.
Section 2.9 NO MATERIALLY ADVERSE AGREEMENTS. To Sun's
Knowledge, neither XxXxx nor any of its Subsidiaries is a party to
any agreement or instrument or subject to any charter or other
corporate restriction which has a Material Adverse Effect or in the
future is reasonably likely (so far as Sun can now reasonably
foresee) to have a Material Adverse Effect.
Section 2.10 NO CONFLICTS. Neither the execution nor
the delivery by Sun of this Agreement, nor the consummation of the
transactions contemplated hereby, nor the compliance with or
fulfillment of the terms and provisions hereof by Sun, will:
(i) conflict with or result in a breach or violation of any of the
terms, conditions or provisions of the Certificate of Incorporation
or By-Laws of Sun or XxXxx or any of XxXxx'x Subsidiaries; or (ii)
conflict with or result in a breach or violation of, or default or
loss of a material benefit under, or permit the acceleration of any
obligation under any provision of any agreement, indenture,
mortgage, lien, lease or other instrument or restriction of any
kind to which Sun, XxXxx or any Subsidiary of XxXxx is a party or
by which it or any of its assets or properties is otherwise bound;
or (iii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Sun or XxXxx or any of the Subsidiaries
of XxXxx or any of the assets or properties of any of them; which
conflict, breach, violation, default, loss or other result, in the
case of each of clauses (ii) and (iii), is reasonably likely to
have a Material Adverse Effect or a material adverse effect on the
ability of Sun to perform its obligations hereunder. Except as set
forth in Schedule 3.10 hereto, no consent, approval or
authorization of, or filing, registration or qualification with,
any governmental authority on the part of Sun or XxXxx or any
Subsidiary of XxXxx is required in connection with the execution,
delivery and performance of this Agreement or the offer, sale or
delivery of the Common Stock as provided herein.
(b) Neither the execution nor the delivery by any
Subsidiary of Sun of any of the Ancillary Agreements to which such
Subsidiary is a party, nor the consummation by any such Subsidiary
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of the transactions contemplated by any Ancillary Agreement to
which it is a party, nor the compliance with or fulfillment by any
such Subsidiary of the terms and provisions of any Ancillary
Agreement to which it is a party, will: (i) conflict with or
result in a breach or violation of any of the terms, conditions or
provisions of the Certificate of Incorporation or By-Laws of such
Subsidiary; or (ii) conflict with or result in a breach or
violation of, or default or loss of a material benefit under, or
permit the acceleration of any obligation under any provision of
any agreement, indenture, mortgage, lien, lease or other instrument
or restriction of any kind to which such Subsidiary is a party or
by which it or any of its assets or properties is otherwise bound;
or (iii) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to such Subsidiary or any of its assets or
properties; which conflict, breach, violation, default, loss or
other result, in the case of each of clauses (ii) and (iii), is
reasonably likely to have a Material Adverse Effect or a material
adverse effect on the ability of such Subsidiary to perform its
obligations under any of the Ancillary Agreements to which it is a
party.
Section 2.11 TAXES. Except as disclosed in Schedule
3.11:
a. To Sun's Knowledge, each of XxXxx and its Subsidiaries
(and with respect to federal income Taxes, every other entity
included in a consolidated federal Tax Return including XxXxx and
its Subsidiaries (collectively, the "Consolidated Group")) has duly
and timely filed (either separately or as part of a consolidated
group) with the appropriate government agencies, all federal,
state, local and foreign returns, filings and reports with respect
to Taxes (the "Tax Returns") which are due. The term "Taxes," as
used in this Agreement, shall mean all federal, state, local and
foreign income and capital taxes, value added taxes, sales and use
taxes, assessments, withholdings, duties, levies, fees and other
governmental charges or impositions of each and every kind, and
interest, penalties and additions to tax with respect thereto.
b. To Sun's Knowledge, neither XxXxx nor any of its
Subsidiaries is delinquent in the payment of any Taxes nor has any
of them requested any extension of time within which to pay any
such Taxes or file any Tax Return with respect thereto except to
the extent that such Taxes have since been paid or such Tax Return
has since been filed.
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c. To Sun's Knowledge, there is no agreement, waiver or
consent providing for an extension of time with respect to (1) the
filing of any Tax Return, election or designation, (2) the payment
or issuance of any assessment of any Tax or (3) the issuance of any
deficiency against XxXxx or any of its Subsidiaries with respect to
Taxes. In addition, no power of attorney has been granted by XxXxx
or any of its Subsidiaries with respect to any tax matter which is
currently in force.
d. To Sun's Knowledge, there is no (i) claim or
deficiency for any Taxes which has been threatened or asserted
against XxXxx or any of its Subsidiaries or the Consolidated Group,
(ii) action, suit, proceeding, investigation, audit or claim
threatened or now pending against, or with respect to, XxXxx or any
of its Subsidiaries or the Consolidated Group with regard to any
Taxes, or (iii) claim for additional amounts or assessments of such
Taxes asserted by any such authority.
e. The federal income Tax Returns of XxXxx and its
Subsidiaries (including any Tax Return filed by the Consolidated
Group) have been examined by the Internal Revenue Service for all
periods to and including 1989 and all deficiencies asserted as a
result of such examinations have been paid or finally settled and
to Sun's knowledge no issue has been raised by the Internal Revenue
Service in any such examination which, by application of the same
or similar principles, reasonably could be expected to result in a
proposed deficiency for any other period not so examined. Revenue
Canada, Taxation has mailed a notice of an original assessment in
respect of the Canadian federal income tax liability of the
Canadian Subsidiary of XxXxx for all fiscal years up to and
including the fiscal year ended 1993. To Sun's knowledge, no issue
has been raised by any Canadian federal or provincial taxation
authority in any examination which, by application of the same or
similar principles, reasonably could be expected to result in a
proposed deficiency for any other period not so examined.
f. To Sun's Knowledge, (i) XxXxx and each of its
Subsidiaries has not filed an election, consent or agreement under
Section 341(f) of the Code; (ii) no indebtedness of XxXxx or any of
its Subsidiaries consists of "corporate acquisition indebtedness"
within the meaning of Section 279 of the Code; (iii) since
September 8, 1987, there has not been an "ownership change," "owner
shift involving a five-percent shareholder" or an "equity structure
shift" relating to XxXxx or any of its Subsidiaries within the
meaning of Section 382(g) of the Code and since September 8, 1987,
- 10 -
there has not been an acquisition of control of XxXxx or any of its
Subsidiaries within the meaning of the Income Tax Act (Canada);
(iv) no property of XxXxx or any of its Subsidiaries is "tax-exempt
use property" within the meaning of Section 168(h) of the Code nor
property that Orion will be required to treat as being owned by
another person pursuant to section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect immediately prior to
the enactment of the Tax Reform Act of 1986; (v) neither XxXxx nor
any of its Subsidiaries is a party to any agreement which would
require them, by reason of the transactions contemplated in this
Agreement or other related agreements executed on the Closing Date,
to make any payment which would constitute a "parachute payment"
for purposes of Sections 28OG and 4999 of the Code; (vi) neither
XxXxx nor any of its Subsidiaries has made any election pursuant to
state or foreign tax laws that is currently binding on Sun; (vii)
neither XxXxx nor any of its Subsidiaries is a "gain corporation"
within the meaning of Section 384(c)(4) of the Code; (viii) no
member of the federal consolidated group of which XxXxx is a member
has made an affirmative action carryover election within the
meaning of Section 1.338-4T(f)(6)(i) of the Treasury Regulations;
(ix) neither Sun nor Phoenix is a "foreign person" within the
meaning of Section 1445 of the Code; (x) no deferred intercompany
transactions within the meaning of Section 1.1502-13 of the
Treasury Regulations have occurred between the members of the
Consolidated Group and XxXxx and its Subsidiaries; and (xi) XxXxx
does not have an excess loss account as defined in Section
1.1502-19 of the Treasury Regulations with respect to any of its
Subsidiaries.
g. To Sun's Knowledge:
(i) Each of XxXxx and its Subsidiaries has withheld
from each payment made to any of its officers, directors,
former directors, and employees and former employees the
amount of all taxes and other deductions (including without
limitation, income taxes, unemployment, disability, and other
required taxes and contributions) required to be withheld and
has timely paid such withholding (together with its required
employer's amount, if any) and has timely and properly filed
all required information returns and Tax Returns with respect
thereto.
(ii) Neither XxXxx nor the Canadian Subsidiary of
XxXxx has, prior to the date hereof, made or filed any
elections for purposes of the Income Tax Act (Canada).
- 11 -
(iii) Neither XxXxx nor the Canadian Subsidiary of
XxXxx has, prior to the date hereof, acquired property from or
disposed of property for proceeds less than the fair market
value thereof to, any person, firm or corporation with whom it
does not deal at arm's length as the term is construed under
the Income Tax Act (Canada).
(iv) The Canadian Subsidiary of XxXxx has no
outstanding loans or indebtedness incurred by directors,
former directors, officers, shareholders (including Sun,
Phoenix, London and Marine) of that company or by any person
or corporation not dealing at arm's length (as the term is
construed under the Income Tax Act (Canada)) with any of the
foregoing.
(v) The taxation year end of the Canadian Subsidiary
of XxXxx for income tax purposes is December 31. The taxation
year end of the Canadian Subsidiary of XxXxx has not been
changed except as a result of the transactions contemplated by
this Agreement.
(vi) XxXxx does not carry on business in Canada
through a permanent establishment within the meaning of that
term in the Canada-U.S. Income Tax Convention.
h. All representations and warranties of Sun as to Taxes
or matters with respect thereto are provided for in this Section
3.11, and no other section of this Article III shall be construed
or interpreted as a representation or warranty of Sun as to Taxes
or matters with respect thereto.
i. All representations and warranties set forth in this
Section 3.11 shall be considered true and correct unless the breach
thereof would have a Material Adverse Effect.
Section 2.2 INVESTMENTS. Schedule 3.12, lists (and
shows the custodial location of) all investments in bonds, stocks
and other securities owned by XxXxx and each of its Subsidiaries as
at the second business day prior to the date hereof, all of which
comply in all material respects with laws and regulations
applicable to the ownership of the same by XxXxx and its respective
Subsidiaries. XxXxx and each of its Subsidiaries has good and
marketable title to all its investments, free and clear of any and
all liens, charges, claims, restrictions, pledges, rights of third
parties and other encumbrances.
- 12 -
Section 2.13 EMPLOYMENT MATTERS. Schedule 3.13 contains
a true and complete list of the names and total compensation of all
officers, directors and employees of XxXxx and each of its
Subsidiaries whose current annual rate of compensation (including
bonuses and commissions paid or committed to such individuals)
exceeds $100,000, together with a summary of the bonuses,
additional remuneration and other benefits, if any, paid or payable
to each such listed person for the years commencing on January 1,
1994 and January 1, 1995. To Sun's Knowledge, XxXxx has no
employment or labor contracts relating to any officers, directors
or employees of XxXxx or any of its Subsidiaries and no employee of
XxXxx or any of its Subsidiaries is represented by a labor
organization of any type. To Sun's Knowledge, there are, and has
not since September 8, 1987 been, any effort to unionize or
organize any employees of XxXxx or any of its Subsidiaries, and no
claim under any federal, state, provincial or local employment
related law, order, ordinance or regulation, or unfair labor
practice, discrimination, wage-and-hour or employment equity claim
is pending or, to Sun's Knowledge, threatened against or with
respect to XxXxx or any of its Subsidiaries.
Section 2.14 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Schedule 3.14 sets forth a true and complete list of
all employee benefit plans, agreements, commitments, practices or
arrangements of any type (including, but not limited to, plans
described in Section 3(3) of ERISA) maintained by XxXxx or any of
its Subsidiaries for the benefit of current or former employees or
directors, or with respect to which XxXxx or any of its Sub-
sidiaries has a liability, whether direct or indirect, actual or
contingent (including, but not limited to, liabilities arising from
affiliation under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA) (the "Benefit Plans"). There are no benefit
plans, agreements, commitments, practices or arrangements of any
type providing benefits to employees or directors of XxXxx or its
Subsidiaries for which XxXxx or its Subsidiaries could have any
liability other than the Benefit Plans.
(b) No Benefit Plan is a "multiemployer plan" (within
the meaning of Section 3(37) or Section 4001(a)(3) of ERISA) or a
"multiple employer plan" (within the meaning of Section 4064 of
ERISA or Section 413(c) of the Code). Neither XxXxx nor any of its
Subsidiaries has a current or potential liability or obligation,
whether direct or indirect, with respect to any multiemployer plan
- 13 -
or multiple employer plan. Except as set forth on Schedule 3.14,
no Benefit Plan is a foreign benefit plan (a plan established or
maintained outside the United States of America for the benefit of
employees substantially all of whom are aliens not residing in the
United States of America).
(c) Sun has delivered or made available to Orion, true
and complete copies of the following documents, as they may have
been amended to the date hereof, embodying or relating to the
Benefit Plans:
(i) each of the Benefit Plans listed in Schedule 3.14,
including all amendments thereto, any related trust agreements,
group annuity contracts, insurance policies or other funding
agreements or arrangements;
(ii) the most recent determination letter, if any, as to
qualification under Section 401(a) or 403(a) of the Code,
received from the Internal Revenue Service ("IRS") with
respect to each of the Benefit Plans;
(iii) the actuarial valuation, if any, prepared with
respect to each of the Benefit Plans for the two most recent
plan years and the most recent annual and periodic accountings
of Benefit Plan assets, if applicable;
(iv) the current summary plan description, if any, for
each of the Benefit Plans and any material modifications
thereto; and
(v) the annual return/report on IRS Form 5500, 5500-C/R,
5500-C or 5500-R, if any, for each of the Benefit Plans for
the two most recent plan years.
(d) Except as provided for in this Agreement or as set
forth in Schedule 3.14, since December 31, 1994, neither Sun nor
XxXxx (i) has adopted, entered into, or amended any Benefit Plan
that is a defined benefit pension plan, including any change in the
assumptions or factors used in determining benefit equivalencies
under any Benefit Plan, or (ii) since the date of the most recent
actuarial valuation report, made any change in the actuarial
methods or assumptions used in funding any Benefit Plan that is a
defined benefit pension plan subject to ERISA, in the case of (i)
or (ii) other than as required by the applicable Benefit Plan, or
- 14 -
as may be required to maintain compliance with the law or in
accordance with contracts or agreements elsewhere disclosed in this
Agreement.
(e) Except as set forth in Schedule 3.14, (i) the
written terms of each of the Benefit Plans and any related trust
agreement, group annuity contract, insurance policy or other
funding arrangement are in substantial compliance with the
applicable requirements, if any, of ERISA, the Code and any other
applicable law, and, to Sun's Knowledge, each of the Benefit Plans
has been administered in material compliance with such requirements
and in accordance with its terms; (ii) there are no contributions,
premiums or other payment obligations concerning the Benefit Plans
which were due and payable on or before the date hereof which have
not been made in full and in proper form, and adequate accruals
have been provided for in the financial statements for all other
contributions or amounts as may be required to be paid to the
Benefit Plans with respect to periods which include the Closing
Date or which ended prior thereto; (iii) neither Sun nor XxXxx has
made or agreed to make, nor is required (in order to bring any of
the Benefit Plans into substantial compliance with the applicable
requirements, if any, of ERISA, the Code or other applicable law)
to make, any change in benefits that would materially increase the
costs of maintaining any of the Benefit Plans, except as provided
for in Section 5.7(c) of this Agreement; (iv) no prohibited
transaction has occurred with respect to which XxXxx or any
Subsidiary of XxXxx may be directly or indirectly liable for any
excise tax or penalty under Section 4975 of the Code or Section
502(i) of ERISA; (v) each of the Benefit Plans for which Sun or
XxXxx has claimed a deduction under Section 404(a)(1), (2) or (3)
of the Code has received a favorable determination letter from the
IRS as to the tax qualification of such Benefit Plan (or has a
pending request for such a letter, which request was filed within
the period described in Section 401(b) of the Code), and such
favorable determination has not been modified, revoked or limited
by failure to satisfy any condition thereof or by a subsequent
amendment to, or failure to amend, such Benefit Plan and any
related trust is exempt from taxation under Section 501(a) of the
Code; (vi) as of the date hereof, there are no actions, suits,
disputes, arbitrations or claims pending (other than routine claims
for benefits) or legal, administrative or other proceedings or
governmental investigations pending or, to the knowledge of Sun or
XxXxx, threatened against any Benefit Plan or against the assets of
any Benefit Plan; (vii) all premiums, interest charges, and
- 15 -
penalties for late payment, if any, due to the PBGC as of the date
hereof with respect to the Plans have been paid; (viii) no Benefit
Plan has been partially terminated under Section 411(d)(3) of the
Code (except that no representation is being made as to whether a
partial termination occurs solely by reason of the cash-out of
participants provided for under Section 5.7(c) of this Agreement)
and no Benefit Plan that is subject to Title IV of ERISA has been
terminated at any time during the seven-calendar-year period
immediately preceding the date hereof, and no proceeding has been
initiated, to the knowledge of Sun or XxXxx, to terminate any
Benefit Plan or to terminate any "employee benefit plan" (as
defined in Section 3(3) of ERISA) subject to Title IV of ERISA
sponsored by a member of a controlled group including Sun or XxXxx,
and XxXxx has neither incurred nor reasonably expects to incur, any
liability under Title IV of ERISA in respect of any termination of
any Benefit Plan or any employee benefit plan; (ix) to Sun's
Knowledge, XxXxx has satisfied any bond coverage requirement of
ERISA and all reporting and disclosure obligations under ERISA, the
Code or other applicable law with respect to each of the Benefit
Plans and the related trust, group annuity contract, insurance
policy or other funding arrangement; (x) no "reportable event"
within the meaning of Section 4043(b) of ERISA (as amended by GATT)
has occurred with respect to any Benefit Plan subject to ERISA
(other than those that may result from the transactions
contemplated by this Agreement and disregarding any such events for
which no report is required to be filed); (xi) no breach of
fiduciary duty has occurred with respect to which XxXxx, its
Subsidiaries, or any Benefit Plan may be liable or otherwise
damaged; (xii) all contributions made or required to be made under
each Benefit Plan for which a federal income tax deduction has been
claimed meet the requirements for deductibility under the Code;
(xiii) to the extent permitted by applicable law, XxXxx has
expressly reserved in itself the right to amend, modify or
terminate each written Benefit Plan which is subject to ERISA and
each written foreign benefit plan, or any portion of it, without
liability to itself; (xiv) no Benefit Plan that is subject to Part
2, Subtitle B of Title I of ERISA has invested in: (1) insurance or
annuity contracts issued by an insurance company with an A.M. Best
rating below A as of December 31, 1994, or (2) employer securities
or employer real property; (xv) no Benefit Plan requires XxXxx or
its Subsidiaries to continue to employ any employee, director or
consultant; (xvi) with respect to each Benefit Plan subject to
either Section 412 of the Code or Section 302 of ERISA: (1) such
plan's actuary has determined that such plan uses a funding method
permissible under ERISA and the actuarial assumptions used in
- 16 -
connection therewith are reasonable, both individually and in the
aggregate, (2) no such plan has any accumulated funding deficiency,
whether or not waived; and (xvii) to Sun's knowledge, the most
recent actuarial valuation report for each Benefit Plan which is a
defined benefit plan, including any foreign defined benefit plan,
is based on information provided by XxXxx (or Sun, with respect to
employees of Sun Alliance Services USA Inc.) which was accurate and
complete in all material respects.
(f) Except as set forth in Schedule 3.14, with respect
to each Benefit Plan which is a welfare plan described in Section
3(1) of ERISA: (i) no such plan provides medical or death benefits
with respect to current or former employees or directors of XxXxx
beyond their termination of employment, other than coverage
mandated by Sections 601-608 of ERISA and 4980B(f) of the Code,
(ii) each such plan has been administered in compliance with
Sections 601-608 of ERISA and 4980B(f) of the Code; (iii) no such
plan has undisclosed reserves, assets, surpluses or prepaid
premiums; and (iv) no communication to any employee or former
employee made by or on behalf of Sun, XxXxx, any plan committee,
any plan fiduciary or any plan administrator has been inconsistent
with the documents or actual operation of each such plan or could
be reasonably construed to infringe on XxXxx'x right to modify,
terminate or amend each such plan, to the extent such right exists.
(g) The consummation of the transactions contemplated by
this Agreement will not (i) entitle any individual to severance
pay, or (ii) except as provided for in Section 5.7 of this
Agreement, accelerate the time of payment or vesting, or increase
the amount, of compensation due to any individual. No payment made
or contemplated under any Benefit Plan constitutes an "excess
parachute payment" within the meaning of Section 280G of the Code.
Section 2.5 CONTRACTS. Schedule 3.15 contains a list
and description of all contracts, agreements, undertakings and
indebtedness (written or oral) to which, to Sun's Knowledge, XxXxx
or any Subsidiary of XxXxx is a party or by which it or its
property is bound and which (i) involve aggregate indebtedness, or
an aggregate commitment, of $50,000 or more or have a remaining
term which cannot be terminated on not more than ninety days'
notice or (ii) relate to XxXxx'x operation of the Pool (but
excluding contracts of insurance and reinsurance by or on behalf of
the Pool) or the relationships between and among Pool Participants.
To Sun's Knowledge, all such contracts, agreements, undertakings
and indebtedness are free of any default or breach or any alleged
- 17 -
default or breach by XxXxx, any Subsidiary of XxXxx or any other
party thereto and no event, act or omission has occurred which,
with the giving of notice or the passage of time or both, would
constitute a breach or default by XxXxx or any Subsidiary of XxXxx
or any other party thereto of any of such contracts, leases,
agreements, undertakings or indebtedness. To Sun's Knowledge, and
except as listed and described in Schedule 3.15, neither XxXxx nor
any Subsidiary of XxXxx is a party to or is bound by any contract
with, or is indebted to, any parent, affiliate, officer or director
of (or to any person related to or owned or controlled by any
parent, affiliate, officer or director of) XxXxx or any Subsidiary
of XxXxx in any amount whatsoever other than in respect of salaries
(and other compensation and benefits disclosed in Schedule 3.13) of
any officer or director of XxXxx or any Subsidiary of XxXxx.
Except as listed and described in the Schedule 3.15, none of such
parents, affiliates, officers or directors is indebted to XxXxx or
any Subsidiary of XxXxx.
Section 2.16 CAPITAL EXPENDITURES. Except as disclosed
in Schedule 3.16, neither XxXxx nor any Subsidiary of XxXxx has an
outstanding commitment for capital expenditures (including but not
limited to expenditures for data processing hardware, software and
systems) in excess of $50,000 other than for ordinary repairs and
maintenance.
Section 2.17 BANKS. Schedule 3.17 contains a true and
complete list of all banks or other financial institutions in which
either XxXxx or any Subsidiary of XxXxx has an account, line of
credit or safe deposit box, showing a description of each such
account and line of credit.
Section 2.18 AGENTS AND BROKERS. Schedule 3.18
contains a true and complete list of the names and addresses of
each person ("agents and brokers" herein) who has any authority to
bind (i) XxXxx or any Subsidiary of XxXxx or (ii) the Pool or any
Pool Participant (in its capacity as a Pool Participant) or (iii)
any insurance company in its capacity as an issuer of policies of
insurance or reinsurance on behalf of the Pool, in each case with
a description of the type of agency or binding authority granted,
and the geographical or other limits of each such authority or
agency. Sun has delivered or made available to Orion true and
complete copies of all agreements or other instruments granting any
powers of attorney, agency agreements and broker agreements,
including all current form contracts, of each of XxXxx and each
Subsidiary of XxXxx. To Sun's Knowledge, except as set forth in
- 18 -
Schedule 3.18, and except where prohibited by law each such
contract with each such agent or broker is terminable by XxXxx or
such Subsidiary, without payment of any compensation or indemnity,
on ninety (90) days' (or less) notice. To Sun's Knowledge, (i)
each agent and broker has been and continues to be properly
licensed to represent XxXxx or such Subsidiary, as the case may be
to the extent required by law; (ii) except as set forth on Schedule
3.18, since December 31, 1994 neither XxXxx nor any Subsidiary of
XxXxx has terminated or experienced the resignation of any agent or
broker and (iii) XxXxx and each of its Subsidiaries has
satisfactory relations with its agents and brokers.
Section 2.19 APPROVED FORMS OF POLICIES. Each form of
insurance policy, policy endorsement or amendment, reinsurance
contract, annuity contract, application form, sales material and
service contract, and the rates, rating plans and premiums
therefor, now in use by XxXxx or any Subsidiary of XxXxx, or by or
on behalf of the Pool, in any jurisdiction has, where required,
been approved by the appropriate insurance regulatory authorities
of such jurisdiction except where the failure to be so approved is
not reasonably likely to have a Material Adverse Effect.
Section 2.20 INSURANCE. Schedule 3.20 contains a true
and complete list of all policies of insurance issued to XxXxx or
to any Subsidiary of XxXxx or naming any of them as insureds or
covering any of their businesses, assets or liabilities, showing
policy limits, type of coverage, annual premium, premium payment
dates, expiration dates, cash surrender value, and the amount of
loans, if any, secured. No policy listed has been cancelled and
each policy listed will continue in effect after the Closing Date
on the terms indicated in Schedule 3.20 unless cancelled by the
insured after the Closing Date.
Section 2.21 ABSENCE OF MATERIAL CHANGES AND ADVERSE
FACTORS. Since December 31, 1994, and except for the transactions
provided for herein, there has not been, in respect of XxXxx or any
Subsidiary of XxXxx:
(a) any loss or destruction of, or damage (whether or
not covered by insurance) to, any of its assets or properties which
materially affects or impairs its ability to conduct its business
as now conducted or proposed to be conducted such that a Material
Adverse Effect is reasonably likely to result therefrom;
(b) any other event or condition of any character
reasonably likely to have a Material Adverse Effect;
- 19 -
(c) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of
XxXxx or any Subsidiary of XxXxx or any direct or indirect
redemption, purchase or other acquisition by XxXxx or any
Subsidiary of XxXxx of any such stock; or
(d) any indebtedness or other liability or obligation
(whether absolute, accrued, contingent or otherwise) incurred or
other transaction (except that reflected in this Agreement)
incurred by it other than in the ordinary course of business.
Section 2.22 ENVIRONMENTAL MATTERS. To Sun's Knowledge,
XxXxx and each of XxXxx'x Subsidiaries is in compliance with all
applicable environmental laws governing its business for which
failure to comply is likely to have a Material Adverse Effect, and
neither XxXxx nor any of its Subsidiaries is liable for any
material penalties, fines or forfeitures for failure to comply with
any of the foregoing in the manner set forth above. All licenses,
permits, registrations or approvals required for the business of
XxXxx and each of XxXxx'x Subsidiaries under any environmental law
have, to Sun's Knowledge, been secured and XxXxx and each of its
Subsidiaries is in substantial compliance therewith, except such
licenses, permits, registrations or approvals the failure to
secure, or to comply with which, is not likely to have a Material
Adverse Effect. To Sun's Knowledge, there are no environmental
claims pending or threatened, which (a) question the validity, term
or entitlement of XxXxx or any of XxXxx'x Subsidiaries for any
permit, license, order or registration required for the operation
of any facility which XxXxx or any of XxXxx'x Subsidiaries
currently operates and (b) wherein an unfavorable decision, ruling
or finding would be reasonably likely to have a Material Adverse
Effect. To Sun's Knowledge, there are no facts, circumstances,
conditions or occurrences on any real property owned or leased by
XxXxx or any of XxXxx'x Subsidiaries, or on any property adjacent
to such real property that could reasonably be expected (i) to form
the basis of an environmental claim against XxXxx or any of its
Subsidiaries or any real property owned or leased by XxXxx or any
of its Subsidiaries or (ii) to cause such real property to be
subject to any restrictions on the ownership, occupancy, use or
transferability of such real property under any environmental law,
except in each such case, such environmental claims or restrictions
that individually or in the aggregate are not reasonably likely to
have a Material Adverse Effect. To Sun's Knowledge hazardous toxic
materials have not at any time been (i) generated, used, treated or
stored on, or transported to or from, any real property owned or
- 20 -
leased by XxXxx or any of XxXxx'x Subsidiaries except in compliance
with applicable environmental laws or (ii) released on any such
real property, in each case where such occurrence or event is
reasonably likely to have a Material Adverse Effect.
Section 2.23 FINDERS AND BROKERS. All negotiations on
behalf of Sun relative to this Agreement and the transactions
contemplated hereby have been carried on directly by Sun without
the intervention of any broker, finder, investment banker or other
third party representing Sun. Neither Sun nor any Subsidiary nor
any officer or director of Sun or any of its Subsidiaries has
engaged or authorized any broker, finder, investment banker or
other third party to act on behalf of Sun, directly or indirectly,
as a broker, finder, investment banker or in any other like
capacity in connection with this Agreement or the transactions
contemplated hereby, or has consented to or acquiesced in anyone so
acting. Sun knows of no claim by any person against Sun or any of
its Subsidiaries or Orion for compensation for so acting or of any
basis for such a claim and Sun shall hold Orion totally harmless
against any costs or expenses to Orion arising out of any such
claim.
Section 2.24 DISCLOSURE. No representation or warranty
of Sun contained herein or in any Schedule hereto contains or will
on the Closing Date contain any untrue statement of a material fact
or omits or will on the Closing Date omit to state any material
fact necessary to make the statements herein or therein not false
or misleading.
Section 3.25 CANADIAN BANK ACT. To Sun's Knowledge, the
principal activity in Canada of XxXxx and each of its Subsidiaries
does not consist of (i) providing any services that a bank is
permitted by the Bank Act (Canada) to provide in Canada, (ii)
providing fiduciary services, (iii) performing the functions of an
investment dealer, stock broker, investment counsellor or portfolio
manager, (iv) the business of insurance, including the function of
an insurance agent or broker or (v) any combination of such
activities, all as defined by the provisions of the Bank Act
(Canada).
- 21 -
IV.
REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF ORION
--------------------------------
Orion represents, warrants and agrees as follows:
Section 3.1 ORGANIZATION AND STANDING. Orion is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Orion has all requisite
corporate power and authority to own its properties and to carry on
its business as now being conducted.
Section 3.2 CERTIFICATE OF INCORPORATION AND BY-LAWS.
The copies of the Certificate of Incorporation and By-Laws of Orion
which have heretofore been delivered to Sun are true, accurate and
complete and reflect all amendments or changes in effect as of the
date hereof.
Section 3.3 AUTHORITY. Orion has full corporate power
and authority to enter into this Agreement and (subject to any
requisite approvals of insurance and other regulatory authorities,
all of which are set forth on Schedule 4.3 hereto) to carry out the
transactions contemplated hereby. The execution and performance of
this Agreement have been duly and validly authorized by all
necessary corporate action on the part of Orion and this Agreement
constitutes a valid and binding obligation of Orion enforceable in
accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally, and except that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the equitable discretion of the court
before which any proceeding therefor may be brought. Neither the
execution nor the delivery of this Agreement, nor the consummation
of the transactions herein contemplated, nor compliance with nor
fulfillment of the terms and provisions hereof, will (i) conflict
with or result in a breach or violation of any of the terms,
conditions or provisions of the Certificate of Incorporation or By-
Laws of Orion. Except as set forth in Schedule 4.3 hereto, no
consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of Orion
or any Subsidiary of Orion is required in connection with the
execution, delivery and performance by Orion of this Agreement or
the purchase of the Common Stock as provided herein.
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Section 3.4 FINDERS AND BROKERS. All negotiations on
behalf of Orion relative to this Agreement and the transactions
contemplated hereby have been carried on directly by Orion without
the intervention of any broker, finder, investment banker or other
third party representing Orion. Neither Orion nor any Subsidiary
nor any officer or director of Orion or any of its Subsidiaries,
has engaged or authorized any broker, finder, investment banker or
other third party to act on Orion's behalf, directly or indirectly,
as a broker, finder, investment banker or in any other like
capacity in connection with this Agreement or the transactions
contemplated hereby, or has consented to or acquiesced in anyone so
acting. Orion knows of no claim by any person against Orion or any
of its Subsidiaries for compensation for so acting or of any basis
for such a claim and Orion shall hold Sun totally harmless against
any costs or expenses to Sun arising out of any such claim.
Section 3.5 INVESTOR STATUS. Orion is an "Accredited
Investor" within the meaning of SEC Rule 501(a).
Section 3.6 BANK OR BANKING INSTITUTION. Neither Orion
nor any affiliate (as defined) of Orion is a "foreign bank" or
"foreign banking institution" as such terms may be defined under
the Bank Act (Canada).
V.
COVENANTS OF ORION AND SUN
Section 4.1 ACCESS TO PROPERTIES, BOOKS AND RECORDS.
Prior to the Closing Date, Sun shall afford or cause XxXxx to
afford to the officers, attorneys, accountants and other authorized
representatives of Orion, reasonable access to XxXxx and to each
Subsidiary of XxXxx and to the officers, properties, books and
records (electronic and other) of all of the foregoing during
regular business hours and upon prior notice to Sun in order to
afford Orion the opportunity to make such investigations of the
affairs of XxXxx and its Subsidiaries as they may reasonably deem
necessary. Sun shall also furnish, or cause XxXxx and its
Subsidiaries to furnish, to Orion such information relating to
their respective businesses and affairs as Orion shall from time to
time reasonably request. All information made available to Orion
and its representatives pursuant to this Section 5.1 shall be
subject to the terms of the confidentiality letter agreement dated
January 9, 1995 between Sun and Orion (which is incorporated herein
by reference thereto).
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Section 4.2 CONDUCT OF BUSINESS.
(a) Except as otherwise permitted by this Agreement, or
as set forth on Schedule 5.2 hereto, or with the prior written
consent of Orion, prior to the Closing Date Sun shall not cause,
suffer or permit XxXxx or any of its Subsidiaries, either on its
own behalf or on behalf of or for the account of the Pool to:
(i) create, issue or sell any of its own stocks,
bonds, or other of its corporate securities, or grant or
otherwise issue any options, warrants or other purchase rights
with respect thereto, or enter into any contract or commitment
to do any of the foregoing;
(ii) create, incur, assume, guarantee or otherwise
become liable with respect to any obligations or liabilities,
fixed or contingent, in excess of $50,000 in the aggregate;
(iii) declare or make any payment or distribution to
its stockholders or purchase or redeem any shares of its
capital stock or the capital stock of XxXxx or any Subsidiary
of XxXxx;
(iv) sell or transfer any properties or assets
(including cash held in bank accounts or otherwise) or cancel,
release or assign any indebtedness owed to it or any claims
held by it, other than in the ordinary course of business;
(v) mortgage, pledge or subject to lien, or any
other encumbrance, any assets, tangible or intangible except
for liens (i) with respect to deposits with State insurance
departments and (ii) letters of credit, trust funds and funds
withheld arrangements, in each case relating to credit for
reinsurance provided that such liens shall have been in the
ordinary course of business;
(vi) sell, assign, transfer or otherwise dispose of
any tangible assets or cancel any debt or claim, except in
each case in the ordinary course of business;
(vii) sell, assign or transfer any intangible right
or asset;
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