STOCK PURCHASE AGREEMENT
Exhibit 10.13
This Stock Purchase Agreement (the “Agreement”) is made as of this __ day of
____________, 2010, by and between LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts stock
insurance company (the “Seller”), LIBERTY INSURANCE HOLDINGS, INC., a Delaware corporation
(the “Contributor”) and LIBERTY MUTUAL AGENCY CORPORATION, a Delaware corporation (the
“Buyer”).
WHEREAS the Seller owns 920 of the 1,000 issued and outstanding shares of the common stock
(the “Common Stock”) of Ohio Casualty Corporation, an Ohio corporation (the
“Company”);
WHEREAS Peerless Insurance Company, a New Hampshire insurance company and direct, wholly-owned
subsidiary of the Buyer, owns the remaining 80 shares of Common Stock;
WHEREAS the Seller wishes, in connection with the initial public offering of the Buyer’s Class
A common stock, par value $0.01 per share (“Class A Shares”) pursuant to Registration
Statement No. 333-166671 (the “IPO”), to transfer to Buyer, and the Buyer wishes to
acquire, all 920 shares of Common Stock owned by the Seller (the “Shares”) on the terms and
conditions set forth in this Agreement (the “Transfer”);
WHEREAS the Transfer will be accomplished through a combination of (i) a sale of shares of the
Common Stock from the Seller to the Buyer for the fair and reasonable per share price of not less
than the June 30, 2010 statutory book value of $2,417,692.48 per share and (ii) a contribution of
shares of the Common Stock from the Seller to the Contributor and then from the Contributor to the
Buyer, each on the terms and conditions set forth in this Agreement; and
WHEREAS, unless otherwise noted, capitalized terms shall have the meanings set forth or
referenced in Appendix 1 to this Agreement.
NOW, THEREFORE, for good and valuable consideration, the legal sufficiency and receipt of which is
hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1. CONTRIBUTION, PURCHASE AND SALE OF SHARES. At the consummation of the transactions
referred to in this Agreement (the “Closing”), upon the terms and subject to the conditions
set forth in this Agreement:
1.1 The Seller shall sell, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase from the Seller, the Sale Shares (“Share Sale”).
1.2 The Seller and the Contributor shall execute the contribution agreement by and between the
Seller and the Contributor in the form attached as Exhibit A hereto, pursuant to which the
Seller shall contribute, assign, transfer and deliver to the Contributor, and the Contributor
shall accept from Seller, the Contributed Shares (“Contribution No. 1”).
1.3 Immediately following Contribution No. 1, the Contributor and the Buyer shall execute the
contribution agreement by and between the Contributor and the Buyer in the form attached as
Exhibit B hereto, pursuant to which the Contributor shall contribute, assign, transfer and
deliver to the Buyer, and the Buyer shall accept from the Contributor, the Contributed Shares
(“Contribution No. 2”).
1.4 The purchase price to be paid by the Buyer to the Seller for the Sale Shares shall be
equal to the sum of (a) the IPO Proceeds and (b) the Debt Increase Amount (together, the
“Consideration”). No consideration will be paid to any party in connection with the
contribution of the Contributed Shares from (i) the Seller to the Contributor or (ii) the
Contributor to the Buyer.
1.5 At the Closing, the Buyer shall deliver to the Seller a duly executed promissory note in
the form attached as Exhibit C hereto with a principal amount equal to the Consideration.
1.6. The Closing shall occur as soon as practicable, but in any event not later than
twenty-four (24) hours, following the authorization of the Offering Price by either the Board of
Directors of the Buyer or a duly appointed pricing committee thereof.
1.7 Following the consummation of Contribution No. 1, Contribution No. 2 and the Share Sale,
Buyer will have legal and marketable title to the Shares.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents and warrants to,
and agrees with, the Contributor and the Buyer as follows:
2.1 Corporate Existence, Power and Qualification of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under the laws of the State of
Ohio and has full power and authority to own, lease and operate its properties and to carry on its
business as presently conducted.
2.2 Corporate Existence, Power and Qualification of the Seller. The Seller is a stock
insurance company duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts.
2.3 Capital Stock of the Company. The Seller owns 920 of the issued and outstanding
shares of Common Stock free and clear of any and all mortgages, pledges, liens, encumbrances,
restrictions (including restrictions on the transfer thereof), and other interests of third parties
or other claims.
2.5 Title to Shares. Immediately prior to the Closing, the Seller owned the Shares
and at the Closing the Seller will convey or cause to be conveyed to the Buyer good and marketable
title to the Shares to be acquired by or contributed to the Buyer free and clear of any and all
mortgages, pledges, liens, encumbrances, restrictions (including restrictions on the transfer
thereof), and other interests of third parties or other claims.
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2.6 Power and Authority Regarding Sale and Contributions of Shares.
(a) The Seller has full power and authority to execute and deliver this Agreement and to
perform all of its obligations contained herein (including the assignment, transfer and conveyance
to (i) the Buyer of the Sale Shares and (ii) the Contributor of the Contributed Shares, as
contemplated hereby).
(b) The execution and delivery by the Seller of this Agreement and the consummation of the
transactions contemplated on the part of the Seller hereby have been duly authorized and no other
proceedings on the part of the Seller are necessary to authorize the execution and delivery of this
Agreement by the Seller or the consummation of the transactions contemplated on its part hereby.
(c) The execution, delivery and performance of this Agreement by the Seller and the
consummation of the transactions contemplated hereby will not violate or be prevented by, with or
without the giving of notice or the lapse of time, or both, or result in the creation of any lien,
claim, charge or encumbrance upon any of the assets, properties or business of the Company pursuant
to any charter or by-law provisions of the Seller or the Company.
(d) The execution, delivery and performance of this Agreement by the Seller and the
consummation of the transactions contemplated hereby will not violate or be prevented by, with or
without the giving of notice or the lapse of time, or both, any partnership agreement, indenture,
mortgage, deed of trust, lease, contract, instrument, agreement, order, judgment, decree, law,
statute, ordinance or regulation or any other restriction of any kind or character applicable to
the Seller or the Company, except, as to the Seller, as would not have a material adverse effect on
the ability of the Seller to consummate the transactions contemplated hereby, and except, as to the
Company, as would not have a material adverse effect on the Company.
(e) The execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with, or require any consent or approval under,
or constitute a default under, or result in the termination under, or result in the breach under,
or constitute an assignment for which consent is required by any other party under, or result in
the acceleration of the performance of the obligations of the Company under, or result in the
creation of any claim, lien, charge or encumbrance upon any of the properties, assets or business
of the Company pursuant to, (i) its charter or by-laws or (ii) any indenture, mortgage, deed of
trust, lease, contract, instrument, agreement, judgment or decree to which the Company is a party
or by which the Company or any of their respective assets or properties is bound, except as would
not have a material adverse effect on the Company.
2.7 Valid and Binding Obligation. This Agreement constitutes the valid and legally
binding obligation of the Seller enforceable against the Seller in accordance with its terms,
subject to the usual exceptions as to bankruptcy and the availability of equitable remedies.
3. REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTOR. The Contributor represents and
warrants to, and agrees with the Buyer and Seller, as follows:
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3.1 Corporate Existence, Power and Qualification of the Contributor. The Contributor
is a corporation duly organized, validly existing and in good standing under the laws of Delaware,
with full power and authority to engage in the business in which it is engaged, and is duly
authorized and lawfully entitled to carry on its business where now carried on.
3.2 Power and Authority Regarding Receipt and Contribution of Shares. The Contributor
has full power and authority to execute and deliver this Agreement and to perform all of its
obligations contained herein (including the assignment, transfer and conveyance to the Seller of
the Contributed Shares as contemplated hereby). The execution and delivery by the Contributor of
this Agreement and the consummation of the transactions contemplated on the part of the Contributor
hereby have been duly authorized and no other proceedings on the part of the Contributor are
necessary to authorize the execution and delivery of this Agreement by the Contributor or the
consummation of the transactions contemplated on its part hereby. The execution, delivery and
performance of this Agreement by the Contributor and the consummation of the transactions
contemplated hereby will not violate or be prevented by, conflict with or require any approval or
consent under, with or without the giving of notice or the lapse of time, or both, the charter or
by-laws of the Contributor or any partnership agreement, indenture, mortgage, deed of trust, lease,
contract or other instrument or agreement, order, judgment, decree, law, statute, ordinance or
regulation or any other restriction of any kind or character applicable to the Contributor, except
as would not have a material adverse effect on the ability of the Contributor to consummate the
transactions contemplated hereby.
3.3 Valid and Binding Obligation. This Agreement constitutes the valid and legally
binding obligation of the Contributor enforceable against the Contributor in accordance with its
terms, subject to the usual exceptions as to bankruptcy and the availability of equitable remedies.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to, and
agrees with the Seller and Contributor, as follows:
4.1 Corporate Existence, Power and Qualification of The Buyer. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws of Delaware, with
full power and authority to engage in the business in which it is engaged, and is duly authorized
and lawfully entitled to carry on its business where now carried on.
4.2 Power and Authority Regarding Purchase of Shares. The Buyer has full power and
authority to execute and deliver this Agreement and to perform all of its obligations contained
herein. The execution and delivery by the Buyer of this Agreement and the consummation of the
transactions contemplated on the part of the Buyer hereby have been duly authorized and no other
proceedings on the part of the Buyer are necessary to authorize the execution and delivery of this
Agreement by the Buyer or the consummation of the transactions contemplated on its part hereby.
The execution, delivery and performance of this Agreement by the Buyer and the consummation of the
transactions contemplated hereby will not violate or be prevented by, conflict with or require any
approval or consent under, with or without the giving of notice or the lapse of time, or both, the
charter or by-laws of the Buyer or any partnership agreement, indenture, mortgage, deed of trust,
lease, contract or other instrument or agreement, order, judgment, decree, law, statute, ordinance
or regulation or any other restriction of any kind
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or character applicable to the Buyer, except as would not have a material adverse effect on the
ability of the Buyer to consummate the transactions contemplated hereby.
4.3 Valid and Binding Obligation. This Agreement constitutes the valid and legally
binding obligation of the Buyer enforceable against the Buyer in accordance with its terms, subject
to the usual exceptions as to bankruptcy and the availability of equitable remedies.
5. ENTIRE AGREEMENT. This Agreement, including any appendices or exhibits, contains
the entire understanding of the parties hereto with respect to the subject matter contained herein.
The section and paragraph headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
6. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, without regard to its conflict of laws principles.
7. SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the respective successors of the parties hereto; provided, however,
that this Agreement may not be assigned by any party without the prior written consent of the other
party hereto. If this Agreement is assigned with such consent, the terms and conditions hereof
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
assigns.
8. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which
shall be deemed an original but all of which counterparts collectively shall constitute one
instrument representing the Agreement between the Seller, the Contributor and the Buyer.
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IN WITNESS WHEREOF, the undersigned parties have duly executed and delivered this Stock
Purchase Agreement the date first above written.
| LIBERTY MUTUAL INSURANCE COMPANY |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| LIBERTY INSURANCE HOLDINGS, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| LIBERTY MUTUAL AGENCY CORPORATION |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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APPENDIX
1
DEFINITIONS
In addition to the terms defined elsewhere in this Agreement, the following terms shall have
the following meanings:
“Agreement” shall have the meaning set forth in the introductory paragraph.
“Buyer” shall have the meaning set forth in the preamble.
“Class A Shares” shall have the meaning set forth in the preamble.
“Closing” shall have the meaning set forth in Section 1.
“Common Stock” shall have the meaning set forth in the preamble.
“Consideration” shall have the meaning set forth in Section 1.4.
“Contributed Shares” shall mean a number of shares equal to the difference between 920 and
the Sale Shares.
“Contribution No. 1” shall have the meaning set forth Section 1.2.
“Contribution No. 2” shall have the meaning set forth Section 1.3.
“Contributor” shall have the meaning set forth in the preamble.
“Debt Increase Amount” shall mean an amount equal to $310,757,890.
“IPO” shall have the meaning set forth in the preamble.
“IPO Share Number” shall mean the aggregate number of Class A Shares offered in the IPO
(excluding any Class A Shares offered pursuant to any over-allotment option).
“IPO Proceeds” shall mean an amount equal the product of (i) the IPO Share Number
multiplied by (ii) the Offering Price multiplied by (iii) 95.75%, rounded to the nearest whole
cent.
“Offering Price” shall mean the per share price of the Class A Shares to be issued in
connection with the IPO, authorized by either the Board of Directors of the Buyer or a duly
appointed pricing committee thereof.
“Sale Shares” shall mean a number of shares of Common Stock equal to the quotient of (i)
the Consideration divided by (ii) $2,417,692.48 per share, the per share statutory book value of
the Common Stock as of June 30, 2010, rounded down to the nearest whole share.
“Share Sale” shall have the meaning set forth in Section 1.1.
“Seller” shall have the meaning set forth in the preamble.
“Shares” shall have the meaning set forth in the preamble.
“Transfer” shall have the meaning set forth in the preamble.
* * *
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EXHIBIT A
CONTRIBUTION AGREEMENT
This Contribution Agreement (this “Agreement”), by and between Liberty Mutual
Insurance Company, a Massachusetts stock insurance company (“LMIC”) and Liberty Insurance
Holdings, Inc., a Delaware corporation (“LIHI “), is dated and effective as of ____ day of
____, 2010.
RECITALS
WHEREAS, LMIC owns of record and beneficially 920 shares of the issued and outstanding common
stock, par value $0.125 per share (the “Common Stock”), of Ohio Casualty Corporation, an
Ohio corporation (“OCAS”);
WHEREAS, LMIC and LIHI desire that OCAS become a wholly owned subsidiary of Liberty Mutual
Agency Corporation, a Delaware corporation and a direct, wholly owned subsidiary of LIHI and an
indirect, wholly owned subsidiary of LMIC (“LMAC”);
WHEREAS, LMIC intends to contribute ____ shares of Common Stock (the “Contributed
Shares”) to LMAC via an initial contribution of the Contributed Shares to LIHI, which will
subsequently contribute the Contributed Shares to LMAC;
WHEREAS, subject to the terms and conditions set forth herein, LMIC desires to contribute to
LIHI, and LIHI desires to receive from LMIC, the Contributed Shares; and
WHEREAS, LMIC and LIHI intend for the contribution of the Contributed Shares from LMIC to LIHI
pursuant to this Agreement to qualify as a transfer within the meaning of Section 351(a) of the
Internal Revenue Code of 1986, as amended.
NOW THEREFORE BE IT RESOLVED, that, in consideration of the foregoing, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Contribution of the Contributed Shares. LMIC hereby contributes to LIHI, and LIHI
hereby accepts from LMIC, the Contributed Shares.
2. Title to Common Stock. LMIC is the record and beneficial owner of, and has, and
will convey to LIHI legal and marketable title to, the Contributed Shares.
3. Expenses. All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such costs or expenses.
4. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without regard to principles of conflicts of
laws.
5. Entire Agreement. This Agreement contains the entire agreement and understanding
of the parties hereto with respect to the subject matter contained herein and, except as otherwise
set forth herein, all prior agreements or understandings whether written or
oral of the parties hereto with respect to such subject matter are revoked and of no further
force and effect.
6. Headings. The headings used in this Agreement are inserted for convenience of
reference only and are not to be used in construing or interpreting any of the provisions of this
Agreement.
7. Counterparts. This Agreement may be executed in any number of counterparts, which
may be by facsimile, all of which counterparts taken together shall constitute one and the same
agreement.
8. Invalidity or Unenforceability. If any provision of this Agreement or the
application thereof to any circumstance shall, for any reason and to any extent, be invalid or
unenforceable under applicable law or governing contractual provisions of either party, the
remainder of this Agreement shall not be affected thereby and the application of such provision to
other circumstances shall not be affected thereby, but rather shall be enforced to the fullest
extent permitted by applicable law.
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IN WITNESS WHEREOF, a duly authorized representative of each of LMIC and LIHI has duly
executed this Agreement on behalf of such party.
| LIBERTY MUTUAL INSURANCE COMPANY |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| LIBERTY INSURANCE HOLDINGS, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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EXHIBIT B
CONTRIBUTION AGREEMENT
This Contribution Agreement (this “Agreement”), by and between Liberty Insurance
Holdings, Inc., a Delaware corporation (“LIHI”), and Liberty Mutual Agency Corporation, a
Delaware corporation (“LMAC”) is dated and effective as of ____ day of ____, 2010.
RECITALS
WHEREAS, immediately prior to Contribution No. 1 (as defined below) Liberty Mutual Insurance
Company, a Massachusetts stock insurance company (“LMIC”) owned of record and beneficially 920 of
the issued and outstanding common stock, par value $0.125 per share (the “Common Stock”),
of Ohio Casualty Corporation, an Ohio corporation (“OCAS”);
WHEREAS, LMIC and LIHI desire that OCAS become a wholly owned subsidiary of LMAC;
WHEREAS, LMIC intends to contribute [•] shares of Common Stock (the “Contributed
Shares”) to LIHI (“Contribution No. 1”);
WHEREAS, subject to the terms and conditions set forth herein, LIHI desires to contribute to
LMAC, and LMAC desires to receive from LIHI, the Contributed Shares immediately following
Contribution No. 1; and
WHEREAS, LIHI and LMAC intend for the contribution of the Contributed Shares from LIHI to LMAC
pursuant to this Agreement to qualify as a transfer within the meaning of Section 351(a) of the
Internal Revenue Code of 1986, as amended.
NOW THEREFORE BE IT RESOLVED, that, in consideration of the foregoing, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Contribution of the Contributed Shares. LIHI hereby contributes to LMAC, and LMAC
hereby accepts from LIHI, the Contributed Shares.
2. Title to Common Stock. Immediately following Contribution No. 1, LIHI will be the
record and beneficial owner of, and has, and will convey to LMAC legal and marketable title to, the
Contributed Shares.
3. Expenses. All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such costs or expenses.
4. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without regard to principles of conflicts of
laws.
5. Entire Agreement. This Agreement contains the entire agreement and understanding
of the parties hereto with respect to the subject matter contained herein and,
except as otherwise set forth herein, all prior agreements or understandings whether written
or oral of the parties hereto with respect to such subject matter are revoked and of no further
force and effect.
6. Headings. The headings used in this Agreement are inserted for convenience of
reference only and are not to be used in construing or interpreting any of the provisions of this
Agreement.
7. Counterparts. This Agreement may be executed in any number of counterparts, which
may be by facsimile, all of which counterparts taken together shall constitute one and the same
agreement.
8. Invalidity or Unenforceability. If any provision of this Agreement or the
application thereof to any circumstance shall, for any reason and to any extent, be invalid or
unenforceable under applicable law or governing contractual provisions of either party, the
remainder of this Agreement shall not be affected thereby and the application of such provision to
other circumstances shall not be affected thereby, but rather shall be enforced to the fullest
extent permitted by applicable law.
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IN WITNESS WHEREOF, a duly authorized representative of each of LIHI and LMAC has duly
executed this Agreement on behalf of such party.
| LIBERTY INSURANCE HOLDINGS, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| LIBERTY MUTUAL AGENCY CORPORATION |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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Exhibit C
See
Exhibit 10.8 to Liberty Mutual Agency Corporation’s Registration
Statement No. 333-166671
