|
Exhibit 2.1
Execution Version
AGREEMENT AND PLAN OF MERGER
among
BRISTOL WEST HOLDINGS, INC.,
FARMERS GROUP, INC.
and
BWH ACQUISITION COMPANY
Dated as of March 1, 2007
TABLE OF
CONTENTS
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Merger
|
|
1
|
|
|
|
Closing
|
|
2
|
|
|
|
Effective Time
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Certificate of Incorporation
|
|
2
|
|
|
|
The Bylaws
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors
|
|
3
|
|
|
|
Officers
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on Capital Stock
|
|
3
|
|
|
|
Exchange of Certificates
|
|
4
|
|
|
|
Treatment of Stock Plans; Warrants
|
|
6
|
|
|
|
Adjustments to Prevent Dilution
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Representations and Warranties of the
Company
|
|
7
|
|
|
|
Representations and Warranties of Parent and
Merger Sub
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Operations
|
|
28
|
|
|
|
Acquisition Proposals
|
|
31
|
|
|
|
Notice of Certain Events
|
|
35
|
i
|
|
|
Proxy Statement
|
|
36
|
|
|
|
Stockholders Meeting
|
|
36
|
|
|
|
Filings; Other Actions; Notification
|
|
37
|
|
|
|
Access and Reports
|
|
40
|
|
|
|
Stock Exchange De-listing
|
|
40
|
|
|
|
Publicity
|
|
40
|
|
|
|
Employee Benefits
|
|
41
|
|
|
|
Expenses
|
|
41
|
|
|
|
Indemnification; Directors’ and
Officers’ Insurance
|
|
42
|
|
|
|
Takeover Statutes
|
|
43
|
|
|
|
Parent Vote
|
|
43
|
|
|
|
Stockholder Litigation
|
|
44
|
|
|
|
Director Resignations
|
|
44
|
|
|
|
Rule 16b-3
|
|
44
|
|
|
|
Company Statutory Statements
|
|
44
|
|
|
|
FIRPTA
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conditions to Each Party’s Obligation to
Effect the Merger
|
|
45
|
|
|
|
Conditions to Obligations of Parent and Merger
Sub
|
|
45
|
|
|
|
Conditions to Obligation of the
Company
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by Mutual Consent
|
|
47
|
|
|
|
Termination by Either Parent or the
Company
|
|
47
|
|
|
|
Termination by the Company
|
|
47
|
|
|
|
Termination by Parent
|
|
48
|
|
|
|
Effect of Termination and Abandonment
|
|
48
|
|
|
|
Fees and Expenses Following
Termination
|
|
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Survival
|
|
50
|
|
|
|
Modification or Amendment
|
|
50
|
|
|
|
Waiver of Conditions
|
|
51
|
|
|
|
Counterparts
|
|
51
|
|
|
|
GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL;
SPECIFIC PERFORMANCE
|
|
51
|
|
|
|
Notices
|
|
52
|
|
|
|
Entire Agreement
|
|
53
|
ii
|
|
|
No Third Party Beneficiaries
|
|
53
|
|
|
|
Obligations of Parent and of the
Company
|
|
54
|
|
|
|
Transfer Taxes
|
|
54
|
|
|
|
Definitions
|
|
54
|
|
|
|
Severability
|
|
54
|
|
|
|
Interpretation; Construction
|
|
54
|
|
|
|
Assignment
|
|
55
|
|
|
|
|
|
|
|
|
|
A-1
|
|
|
|
|
|
|
|
|
|
|
iii
AGREEMENT AND PLAN OF
MERGER
AGREEMENT
AND PLAN OF MERGER (hereinafter called this " Agreement
"), dated as of March 1, 2007, among Bristol West Holdings, Inc., a
Delaware corporation (the " Company "), Farmers Group, Inc.,
a Nevada corporation (" Parent "), and BWH Acquisition
Company, a Delaware corporation and a wholly owned subsidiary of
Parent (" Merger Sub "). The Company and Merger Sub
are sometimes hereinafter collectively referred to as the "
Constituent Corporations ".
RECITALS
WHEREAS,
the parties to this Agreement desire to effect the acquisition of
the Company by Parent through a merger of the Company and Merger
Sub;
WHEREAS,
in furtherance of the foregoing and in accordance with the Delaware
General Corporation Law (the " DGCL "), the respective
boards of directors of each of Parent, Merger Sub and the Company
have unanimously approved this Agreement, the merger of Merger Sub
with and into the Company with the Company as the Surviving
Corporation (the " Merger ") and the transactions
contemplated hereby upon the terms and subject to the conditions
set forth in this Agreement and have adopted and declared advisable
this Agreement;
WHEREAS,
concurrently with the execution and delivery of this Agreement,
Parent is entering into a Voting Agreement with certain significant
stockholders of the Company (the " Voting Agreement ")
pursuant to which each of those stockholders have agreed, subject
to the terms thereof, to vote all shares of the Company owned by
them in accordance with the terms of the Voting Agreement; and
WHEREAS,
the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection
with this Agreement and also to prescribe certain conditions to the
Merger.
NOW,
THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I.
The Merger; Closing; Effective Time
1.1.
The Merger . Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the
DGCL, Merger Sub shall be merged with and into the Company at the
Effective Time. Following the Effective Time, the separate
corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation in the Merger (the "
Surviving Corporation ") and shall succeed to and assume all
the rights and obligations of Merger Sub in accordance with Section
259 of the DGCL. At the election of Parent, any direct or
indirect subsidiary of Parent may be substituted for Merger Sub as
a constituent corporation in the Merger.
1
1.2.
Closing . Unless otherwise mutually agreed in writing
between the Company and Parent, the closing for the Merger (the "
Closing ") shall take place at the offices of Simpson
Thacher and Bartlett LLP, 425 Lexington Avenue, New York, New York,
at 9:00 a.m. (Eastern Time) on the second business day (the "
Closing Date ") following the day on which the last to be
satisfied or waived of the conditions set forth in Article
VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver
of those conditions) shall be satisfied or waived in accordance
with this Agreement. For purposes of this Agreement, the term
" business day " shall mean any day ending at 11:59 p.m.
(Eastern Time) other than a Saturday or Sunday or a day on which
banks are required or authorized to close in the City of New
York.
1.3.
Effective Time . Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties
shall file with the Secretary of State of the State of Delaware a
certificate of merger (the " Certificate of Merger ")
executed and acknowledged by the parties in accordance with the
relevant provisions of the DGCL and, as soon as practicable on or
after the Closing Date, shall make all other filings or recordings
required under the DGCL. The Merger shall become effective upon the
filing of the Certificate of Merger with the Secretary of State of
the State of Delaware, or at such later time as Parent and the
Company shall agree and shall specify in the Certificate of Merger
(the time the Merger becomes effective being the " Effective
Time ").
ARTICLE II.
Certificate of Incorporation and
Bylaws of the Surviving Corporation
2.1.
The Certificate of Incorporation . The certificate of
incorporation of the Company shall be amended as of the Effective
Time as a result of the Merger so as to read in its entirety as set
forth in Exhibit A hereto and as so amended, shall be the
certificate of incorporation of the Surviving Corporation (the "
Charter "), until duly amended as provided therein or by
applicable Laws.
2.2.
The Bylaws . The parties hereto shall take all actions
necessary so that the bylaws of Merger Sub in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving
Corporation (the " Bylaws "), until thereafter amended as
provided therein or by applicable Laws, except that references to
Merger Sub’s name shall be replaced with references to the
Company.
2
ARTICLE III.
Officers and Directors
of the Surviving Corporation
3.1.
Directors . The parties hereto shall take all actions
necessary so that the board of directors of Merger Sub at the
Effective Time shall, from and after the Effective Time, be elected
or otherwise validly appointed as the directors of the Surviving
Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation
or removal in accordance with the Charter and the Bylaws.
3.2.
Officers . The officers of the Company at the
Effective Time (other than those officers who Merger Sub determines
shall not remain as officers of the Surviving Corporation) shall,
from and after the Effective Time, be the officers of the Surviving
Corporation until their successors shall have been duly elected or
appointed and qualified or until their earlier death, resignation
or removal in accordance with the Charter and the Bylaws.
ARTICLE IV.
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1.
Effect on Capital Stock . At the Effective Time, as a
result of the Merger and without any action on the part of Parent,
Merger Sub or the Company or the holder of any capital stock of the
Company:
(a)
Merger Consideration . Each share of the common stock,
$0.01 par value, of the Company (a " Share " or,
collectively, the " Shares ") issued and outstanding
immediately prior to the Effective Time (other than Shares owned by
Parent, Merger Sub or any other direct or indirect wholly owned
subsidiary of Parent and Shares owned by the Company (as treasury
stock or otherwise) or any direct or indirect wholly owned
subsidiary of the Company, and in each case not held on behalf of
third parties (each, an " Excluded Share " and collectively,
the " Excluded Shares ")) shall be converted into the right
to receive $22.50 per Share in cash, less any required withholding
Taxes as described in Section 4.2(f) and without interest
(the " Per Share Merger Consideration "). At the
Effective Time, all of the Shares shall cease to be outstanding,
shall be cancelled and shall cease to exist, and in the case of
book-entry shares (" Book-Entry Shares "), the names of the
former registered holders shall be removed from the registry of
holders of such shares and each certificate (a " Certificate
") formerly representing any of the Shares (other than Excluded
Shares) shall thereafter represent only the right to receive the
Per Share Merger Consideration, without interest.
(b)
Cancellation of Excluded Shares . Each Excluded Share
(other than any Excluded Shares held by any of the Company’s
wholly-owned Subsidiaries) referred to in Section 4.1(a)
shall, by virtue of the Merger and without any action on the part
of the holder thereof, cease to be outstanding, shall be cancelled
without payment of any consideration therefor and shall cease to
exist.
3
(c)
Merger Sub . At the Effective Time, each share of
common stock, without par value, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, $0.01 par value, of the
Surviving Corporation.
4.2.
Exchange of Certificates.
(a)
Paying Agent . At the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a paying agent
selected by Parent with the Company’s prior approval (such
approval not to be unreasonably withheld or delayed) (the "
Paying Agent "), for the benefit of the holders of Shares, a
cash amount in immediately available funds necessary for the Paying
Agent to make payments under Section 4.1(a) (such cash being
hereinafter referred to as the " Exchange Fund "). The
Company will enter into a paying agent agreement on customary
terms, which terms shall be in form and substance reasonably
acceptable to Parent prior to the Effective Time. The Paying
Agent shall invest the Exchange Fund as directed by Parent;
provided that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper
obligations rated A-1 or P-1 or better by Moody’s Investors
Service, Inc. or Standard & Poor’s Corporation,
respectively. Any interest and other income resulting from
such investment shall become a part of the Exchange Fund, and any
amounts in excess of the amounts payable under Section
4.1(a) shall be promptly returned to the Surviving
Corporation. To the extent that there are losses with respect
to any such investments, or the Exchange Fund diminishes for any
reason below the level required to make prompt cash payment under
Section 4.1(a) , Parent shall, or shall cause the Surviving
Corporation to promptly replace or restore the cash in the Exchange
Fund so as to ensure that the Exchange Fund is at all times
maintained at a level sufficient to make such payments under
Section 4.1(a) .
(b)
Exchange Procedures . Promptly after the Effective
Time (and in any event within two business days), the Surviving
Corporation shall instruct the Paying Agent to mail to each holder
of record of Shares (other than holders of Excluded Shares)
(i) a letter of transmittal in customary form specifying that
delivery shall be effected, and risk of loss and title to the
Certificates and Book-Entry Shares shall pass, only upon delivery
of the Certificates (or affidavits of loss in lieu thereof as
provided in Section 4.2(e) ) or Book-Entry Shares, as the
case may be, to the Paying Agent, such letter of transmittal to be
in such form and have such other provisions as Parent and the
Company may reasonably agree, and (ii) instructions for use in
effecting the surrender of the Certificates (or affidavits of loss
in lieu thereof as provided in Section 4.2(e) ) and
Book-Entry Shares in exchange for the Per Share Merger
Consideration. Upon surrender of a Certificate (or affidavit
of loss in lieu thereof as provided in Section 4.2(e) ) or
Book-Entry Share to the Paying Agent in accordance with the terms
of such letter of transmittal, duly executed, and such other
documents as may be reasonably requested by the Paying Agent the
holder of such Certificate or Book-Entry Share shall be entitled to
receive in exchange therefor a cash amount in immediately available
funds (after giving effect to any required Tax withholdings as
provided in Section 4.2(f) ) equal to (A) the number of
Shares represented by such Certificate (or affidavit of loss in
lieu thereof as provided in Section 4.2(e) ) or Book-Entry
Share multiplied by (B) the Per Share Merger Consideration,
and the Certificate or Book-Entry Share so surrendered shall
forthwith be cancelled. No interest will be paid or accrued
on any amount payable upon due surrender of the Certificates or
Book-Entry Shares, as the case may be.
4
In the event of a transfer of ownership of Shares
that is not registered in the transfer records of the Company, a
check for any cash to be exchanged upon due surrender of the
Certificate or Book-Entry Share may be issued to such transferee if
the Certificate or Book-Entry Share formerly representing such
Shares is presented to the Paying Agent, accompanied by all
documents reasonably required to evidence and effect such transfer
and to evidence that any applicable stock transfer taxes have been
paid or are not applicable.
(c)
Transfers . From and after the Effective Time, there
shall be no transfers on the stock transfer books of the Company of
the Shares that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, any Certificate or
Book-Entry Shares are presented to the Surviving Corporation,
Parent or the Paying Agent for transfer, it shall be cancelled and
exchanged for the cash amount in immediately available funds to
which the holder thereof is entitled pursuant to this Article
IV .
(d)
Termination of Exchange Fund . Any portion of the
Exchange Fund (including the proceeds of any investments thereof)
that remains unclaimed by the stockholders of the Company for
180 days after the Effective Time shall be delivered to the
Surviving Corporation. Any holder of Shares (other than
Excluded Shares) who has not theretofore complied with this
Article IV shall thereafter look only to the Surviving
Corporation for payment of the Per Share Merger Consideration
(after giving effect to any required Tax withholdings as provided
in Section 4.2(f) ) upon due surrender of its
Certificates (or affidavits of loss in lieu thereof as provided in
Section 4.2(e) ) or Book-Entry Shares, without any interest
thereon. Notwithstanding the foregoing, none of the Surviving
Corporation, Parent, the Paying Agent or any other Person shall be
liable to any former holder of Shares for any amount properly
delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws. For the purposes of this
Agreement, the term " Person " shall mean any individual,
corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate,
trust, association, organization, Governmental Entity or other
entity of any kind or nature.
(e)
Lost, Stolen or Destroyed Certificates . In the event
any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such Person of a bond in customary amount
and upon such terms as may be required by Parent as indemnity
against any claim that may be made against it or the Surviving
Corporation with respect to such Certificate, the Paying Agent will
issue a check in the amount (after giving effect to any required
Tax withholdings as provided in Section 4.2(f) ) equal to
the number of Shares represented by such lost, stolen or destroyed
Certificate multiplied by the Per Share Merger Consideration.
(f)
Withholding Rights . Each of Parent, Merger Sub, the
Surviving Corporation and the Paying Agent shall be entitled to
deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as
it is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended
(the " Code ") and the regulations promulgated and rulings
issued thereunder, or any other applicable state, local or foreign
Tax Law.
5
To the extent that amounts are so withheld, such
withheld amounts (i) shall be remitted by Parent, Merger Sub,
the Surviving Corporation or the Paying Agent, as applicable, to
the applicable Governmental Entity, and (ii) shall be treated
for all purposes of this Agreement as having been paid to the
holder of Shares in respect of which such deduction and withholding
was made by the Paying Agent, Surviving Corporation, Merger Sub or
Parent, as the case may be.
4.3.
Treatment of Stock Plans; Warrants.
(a)
Options . At the Effective Time, each outstanding
option to purchase Shares granted under the Stock Plans or
otherwise, vested or unvested (a " Company Option "), shall
as of the Effective Time become fully vested and converted into the
right to receive, as soon as reasonably practicable after the
Effective Time (but in any event no later than three business days
after the Effective Time), an amount in cash equal to the product
of (i) the total number of Shares subject to the Company
Option immediately prior to the Effective Time multiplied by
(ii) the excess, if any, of the Per Share Merger Consideration
over the exercise price per Share under such Company Option,
less applicable Taxes required to be withheld with respect to such
payment. If the applicable exercise price of any Company
Option equals or exceeds the Per Share Merger Consideration, such
Company Option shall be cancelled without payment of additional
consideration, and all rights with respect to such Company Option
except as provided in the immediately preceding sentence shall
terminate as of the Effective Time. The holders of Company
Options will have no further rights in respect of any Company
Options from and after the Effective Time. Notwithstanding
the foregoing, each outstanding warrant to purchase Shares listed
on Section 4.3(a) of the Company Disclosure Letter shall be
cancelled immediately prior to the Effective Time and shall have no
right to receive the Per Share Merger Consideration.
(b)
Restricted Stock . At the Effective Time, each
outstanding Share of restricted stock granted under the Stock
Plans, vested or unvested (each a " Restricted Share "),
shall as of the Effective Time become fully vested and free of any
forfeiture restriction and converted into the right to receive, as
soon as reasonably practicable after the Effective Time (but in any
event no later than three business days after the Effective Time),
an amount in cash equal to the Per Share Merger Consideration, plus
any declared and unpaid dividends, less applicable Taxes required
to be withheld with respect to such payment. The holders of
Restricted Shares will have no further rights in respect of any
Restricted Shares from and after the Effective Time.
(c)
Phantom Stock. At the Effective Time, each Share
contained in each non employee director’s deferred
compensation account (each a " Phantom Share ") under the
Company’s Non-Employee Directors’ Deferred Compensation
and Stock Award Plan (the " Non Employee Directors’
Plan ") shall as of the Effective Time entitle the beneficiary
thereto to receive, as soon as reasonably practicable after
the Effective Time (but in any event no later than three business
days after the Effective Time), an amount in cash equal to the
product of (i) the total number of Phantom Shares and (ii) the Per
Share Merger Consideration. The holders of Phantom Shares
will have no further rights in respect of any Phantom Shares from
and after the Effective Time.
6
(d)
Corporate Actions . At or prior to the Effective Time, the
Company, the board of directors of the Company and the compensation
committee of the board of directors of the Company, as applicable,
shall adopt resolutions, and take all other actions they reasonably
believe to be necessary, to implement the provisions of
Sections 4.3(a), (b) and (c), without paying or incurring any
debts or obligations (other than the fees and expenses of counsel)
on behalf of the Company or the Surviving
Corporation.
4.4.
Adjustments to Prevent Dilution . In the event that
the Company changes the number of Shares or securities convertible
or exchangeable into or exercisable for Shares issued and
outstanding prior to the Effective Time as a result of a
reclassification, stock split (including a reverse stock split),
stock dividend or distribution, recapitalization, merger, issuer
tender or exchange offer, or other similar transaction, the Per
Share Merger Consideration shall be equitably adjusted;
provided that nothing herein shall be construed to permit
the Company to take any action with respect to its securities that
is prohibited by the terms of this Agreement.
ARTICLE V.
Representations and Warranties
5.1.
Representations and Warranties of the Company . Except
as set forth in the Company Reports filed with the SEC on or after
January 1, 2004 and prior to the date of this Agreement (excluding,
in each case, any disclosures set forth in any risk factor section,
in any section relating to forward looking statements (including
future operating results) and any other disclosures included
therein to the extent that they are generic, cautionary, predictive
or forward-looking in nature) or in the corresponding sections or
subsections of the disclosure letter delivered to Parent by the
Company concurrently with entering into this Agreement (the "
Company Disclosure Letter ") (it being agreed that written
disclosure of any item in any section or subsection of the Company
Disclosure Letter shall be deemed disclosure with respect to any
other section or subsection to which the relevance of such item is
reasonably apparent on the face of such disclosure that such
disclosure is applicable to such other section or subsection), the
Company hereby represents and warrants to Parent and Merger Sub
that:
(a)
Organization, Good Standing and Qualification . Each
of the Company and its Subsidiaries is a legal entity duly
organized, validly existing and in good standing under the Laws of
its respective jurisdiction of organization. Each of the Company
and its Subsidiaries has all requisite corporate or similar power
and authority to own, lease and operate its properties and assets
and to carry on its business as presently conducted. Each of
the Company and its Subsidiaries is qualified to do business and is
in good standing as a foreign corporation or similar entity in each
jurisdiction where the ownership, leasing or operation of its
assets or properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in
good standing would not, individually or in the aggregate, have or
reasonably be expected to have a Company Material Adverse
Effect. The Company has made available to Parent and Merger
Sub a complete and correct copy of the certificate of incorporation
and bylaws or comparable governing documents of the Company and
each of its Subsidiaries, each as in effect on the date of this
Agreement.
7
As used in this Agreement, the term (i) "
Subsidiary " means, with respect to any Person, any other
Person of which at least a majority of the securities or ownership
interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions is directly or indirectly owned or controlled by
such Person and/or by one or more of its Subsidiaries, (ii) "
Significant Subsidiary " is as defined in Rule 1.02(w)
of Regulation S-X promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the " Exchange Act ") and
(iii) " Company Material Adverse Effect " means a
material adverse effect on the financial condition, business,
assets, liabilities, properties or results of operations of the
Company and its Subsidiaries taken as a whole or that would prevent
or materially impair or materially delay the ability of the Company
to perform its obligations under this Agreement or to consummate
the transactions contemplated hereby; provided that none of
the following shall constitute or be taken into account in
determining whether there has been or is a Company Material Adverse
Effect:
|
|
(A) changes
in the economy or financial markets generally in the United States
or other countries in which the Company or any of its Subsidiaries
conduct operations or that are the result of acts of war or
terrorism, except to the extent such changes have a
disproportionate impact on the Company and its Subsidiaries, taken
as a whole, relative to other industry participants;
|
|
|
|
|
|
(B) any
loss or threatened loss of business from any agents, brokers or
customers of the Company or any of its Subsidiaries directly caused
by the announcement or the pendency of the transactions
contemplated by this Agreement;
|
|
|
|
|
|
(C) changes
in any Law or GAAP or interpretation thereof after the date
hereof;
|
|
|
|
|
|
(D) any
failure by the Company to meet any estimates of revenues or
earnings for any period ending on or after the date of this
Agreement; provided that the exception in this clause (D)
shall not prevent or otherwise affect a determination that any
change, effect, circumstance or development underlying such failure
has resulted in, or contributed to, a Company Material Adverse
Effect;
|
|
|
|
|
|
(E) a
decline in the price or trading volume of the Company common stock
on the New York Stock Exchange (the " NYSE ");
provided that the exception in this clause (E) shall not
prevent or otherwise affect a determination that any change,
effect, circumstance or development underlying such decline has
resulted in, or contributed to, a Company Material Adverse Effect;
and
|
|
|
|
|
|
(F) any
occurrence or condition affecting the property and casualty
insurance or reinsurance industry generally (including without
limitation any change or proposed change in insurance laws or
regulations in any jurisdiction), except to the extent such
occurrences or conditions have a disproportionate impact on the
Company and its Subsidiaries, taken as a whole, relative to other
industry participants.
|
8
(b)
Capital Structure . The authorized capital stock of
the Company consists of 200,000,000 Shares, of which 29,479,864
Shares were outstanding as of the close of business on March 1,
2007, and 15,000,000 shares of preferred stock, none of which were
outstanding as of the date hereof. Except as set forth in
Schedule 5.1(b) of the Company Disclosure Letter, no Shares are
held in the treasury of the Company or by any of its
Subsidiaries. All of the outstanding Shares have been duly
authorized and are validly issued, fully paid and
nonassessable. Except as set forth in Schedule 5.1(b)
of the Company Disclosure Letter and other than the Shares reserved
for issuance as of March 1, 2007, under the 1998 Stock Option Plan
for Management and Key Employees and the 2004 Stock Incentive Plan
and the outstanding non-employee options and warrants
(collectively, the " Stock Plans "), the Company has no
Shares reserved for issuance. Schedule 5.1(b) of the
Company Disclosure Letter contains a correct and complete list of
options, restricted stock, performance stock units and restricted
stock units, if any, outstanding as of the date hereof under the
Stock Plans, including the holder, date of grant, term, number of
Shares and, where applicable, exercise price. Except as set
forth in Schedule 5.1(b) of the Company Disclosure Letter or
as set forth above, there are no preemptive or other outstanding
rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that
obligate the Company or any of its Subsidiaries to issue or sell
any shares of capital stock or other equity securities of the
Company or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any equity securities
of the Company or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or
outstanding. Upon any issuance of any Shares in accordance
with the terms of the Stock Plans, such Shares will be duly
authorized, validly issued, fully paid and nonassessable and free
and clear of any Liens. The Company does not have outstanding
any bonds, debentures, notes or other obligations for borrowed
money the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter. For purposes
of this Agreement, a wholly owned Subsidiary of the Company shall
include any Subsidiary of the Company of which all of the shares of
capital stock of such Subsidiary other than director qualifying
shares are owned by the Company (or a wholly owned Subsidiary of
the Company).
With
respect to the Company Options, there has been no grant of any
Company Option since the date of the Company’s initial public
offering of its common stock, $0.01 par value (the " IPO ")
other than 25,166 Company Options granted to employees at fair
market value as of the applicable grant date.
(c)
Subsidiaries . Schedule 5.1(c) of the Company
Disclosure Letter sets forth a complete and correct list of all of
the Company’s Subsidiaries. Except as set forth in
Schedule 5.1 (c) of the Company Disclosure Letter, each of the
outstanding shares of capital stock or other equity securities of
each of the Company’s Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and owned by the
Company or by a direct or indirect wholly owned Subsidiary of the
Company, free and clear of any lien, charge, pledge, security
interest, claim or other encumbrance (each, a " Lien "),
other than Liens that would not, individually or in the aggregate,
have or reasonably be expected to have a Company Material Adverse
Effect.
9
|
|
(d)
Corporate Authority; Approval and Fairness .
|
|
|
|
|
|
(i) The
Company has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute and
deliver this Agreement and, subject only to adoption of this
Agreement by the holders of a majority of the outstanding Shares
entitled to vote on such matter (the " Requisite Company
Vote "), to perform its obligations under this Agreement and to
consummate the Merger. This Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar Laws of
general applicability relating to or affecting creditors’
rights and to general equity principles (the " Bankruptcy and
Equity Exception ").
|
|
|
|
|
|
(ii) The
board of directors of the Company has (A) unanimously
determined that the Merger is in the best interests of the Company
and its stockholders, adopted and declared advisable this Agreement
and the Merger and the other transactions contemplated hereby and
resolved to recommend adoption of this Agreement to the holders of
Shares (the " Company Recommendation "), (B) directed
that this Agreement be submitted to the holders of Shares for their
adoption and (C) received the opinion of its financial
advisor, JPMorgan Chase Securities Inc. (" JPMorgan "), to
the effect that the consideration to be received by the holders of
the Shares in the Merger is fair from a financial point of view, as
of the date of such opinion, to such holders. The Company has
furnished Merger Sub a correct and complete copy of such
opinion. The Company has obtained the authorization of
JPMorgan to include a copy of its opinion in the Proxy
Statement.
|
|
|
|
|
|
(iii) The
Requisite Company Vote is the only vote of the holders of any class
or series of the capital stock of the Company or of any of the
Company’s Subsidiaries necessary to adopt this Agreement, the
Merger and the other transactions contemplated hereby. There
are no voting trusts, proxies or similar agreements, arrangements
or commitments to which the Company or any of its Subsidiaries is a
party or of which the Company has Knowledge with respect to the
voting of any shares of capital stock of the Company or any of its
Subsidiaries, other than the Voting Agreement.
|
|
|
|
|
|
(e)
Governmental Filings; No Violations .
|
|
|
|
|
|
(i) Other
than the approvals, notices, under the insurance Laws of the
jurisdictions in which the Company and its Subsidiaries are
organized or transact the business of insurance or the filings
and/or notices (A) pursuant to Section 1.3 , (B) under
the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended
(the " HSR Act "), and any other applicable merger control
laws, (C) under the Exchange Act, (D) under the rules of the NYSE
(the " Company Approvals ") and (E) the filing and
recordation of the appropriate merger documents with the Secretary
of State of the State of Delaware as required by the DGCL (the "
Merger Certificate ") and appropriate documents with the
relevant authorities of other states in which the Company and its
Subsidiaries are
|
10
|
|
qualified to do business, no notices, reports,
submissions or other filings are required to be made by the Company
with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any
federal, state, local or foreign governmental or regulatory
authority, agency, commission, body, court or other legislative,
executive or judicial governmental entity (each a " Governmental
Entity "), in connection with the execution, delivery and
performance of this Agreement by the Company and the consummation
of the Merger and the other transactions contemplated hereby,
except those that the failure to make or obtain would not,
individually or in the aggregate, have or reasonably be expected to
have a Company Material Adverse Effect.
|
|
|
|
|
|
(ii) The
execution, delivery and performance of this Agreement by the
Company do not, and the consummation of the Merger and the other
transactions contemplated hereby will not, constitute or result in
(A) a breach or violation of, or a default under, the
certificate of incorporation or bylaws of the Company or the
comparable governing instruments of any of its Significant
Subsidiaries, (B) with or without notice, lapse of time or
both, a breach or violation of, a termination (or right of
termination) or a default under, the creation or acceleration of
any obligations or the creation of a Lien on any of the assets of
the Company or any of its Significant Subsidiaries pursuant to any
material agreement, lease, license, contract, note, mortgage,
indenture, arrangement or other obligation (each, a "
Contract ") binding upon the Company or any of its
Subsidiaries or (C) assuming compliance with the matters referred
to in Section 5.1(e)(i) , a violation of any Law to
which the Company or any of its Subsidiaries is subject, except, in
the case of clause (B) or (C) above, for any such breach,
violation, termination, default, creation, acceleration or change
set forth on Schedule 5.1(e)(ii) of the Company Disclosure
Letter or that would not, individually or in the aggregate, have or
reasonably be expected to have a Company Material Adverse
Effect.
|
|
|
|
|
|
(f)
Company Reports; Financial Statements .
|
|
|
|
|
|
(i) The
Company has filed or furnished, as applicable, on a timely basis
all forms, statements, certifications, reports and documents
required to be filed or furnished by it with the Securities
Exchange Commission (the " SEC ") under the Exchange Act or
the Securities Act of 1933, as amended (the " Securities
Act ") since January 1, 2004 (the " Applicable Date
") (the forms, statements, certifications, reports and documents
filed or furnished since the Applicable Date and those filed or
furnished subsequent to the date hereof, including any amendments
thereto, the " Company Reports "). Each of the Company
Reports, at the time of its filing or being furnished complied or,
if not yet filed or furnished, will comply in all material respects
with the applicable requirements of the Securities Act and the
Exchange Act, and any rules and regulations promulgated thereunder
applicable to the Company Reports and complied or will comply, as
applicable, in all material respects with the then-applicable
accounting standards. As of their respective dates (or, if
amended prior to the date hereof, as of the date of such
amendment), the Company Reports did not, and any Company Reports
filed or furnished with the SEC subsequent to the date hereof will
not, contain any untrue statement of a
|
11
|
|
material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were
made, not misleading. The Company Reports filed or furnished
on or prior to the date of this Agreement included, and if filed or
furnished after the date of this Agreement, will include all
certificates required to be included therein pursuant to Sections
302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, and the
rules and regulations promulgated thereunder (" SOX "), and
the internal control report and attestation of the Company’s
outside auditors to the extent required by Section 404 of
SOX. As of the date of this Agreement, there are no
outstanding or unresolved comments in the comment letters received
from the SEC staff with respect to the Company Reports. To
the Knowledge of the Company, as of the date of this Agreement none
of the Company Reports is the subject of an ongoing SEC
review.
|
|
|
|
|
|
(ii) The
Company is in compliance in all material respects with the
applicable listing and corporate governance rules and regulations
of the NYSE.
|
|
|
|
|
|
(iii) Each
of the consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and
schedules) fairly presents in all material respects, or, in the
case of Company Reports filed after the date hereof, will fairly
present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as of its
date and each of the consolidated statements of operations,
stockholders’ equity and cash flows included in or
incorporated by reference into the Company Reports (including any
related notes and schedules) fairly presents in all material
respects, or in the case of Company Reports filed after the date
hereof, will fairly present in all material respects the
consolidated results of operations, retained earnings and changes
in financial position, as the case may be, of the Company and its
consolidated Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to the absence of
notes and normal year-end audit adjustments), in each case in
accordance with U.S. generally accepted accounting principles ("
GAAP ") consistently applied during the periods involved,
except as may be noted therein or elsewhere in the Company
Reports.
|
|
|
|
|
|
(iv) The
Company maintains disclosure controls and procedures (as defined by
Rule 13a 15(e) or 15d-15(e) under the Exchange Act) as required by
Rule 13a 15(a) or 15d 15(a) under the Exchange Act. The
Company designed such disclosure controls and procedures to ensure
that material information relating to the Company, including its
consolidated Subsidiaries, that is required to be disclosed in the
reports that the Company files or submits under the Exchange Act is
recorded, processed, summarized and reported within applicable time
periods, and that such information is accumulated and communicated
to the Company’s management to allow timely decisions
regarding required disclosures, particularly during the period in
which the Company is preparing such reports under the Exchange
Act. Any controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving
the desired control objectives, as the Company’s are designed
to do. Based on its most recent evaluation of the
effectiveness of the design and operation of its disclosure
controls and
|
12
|
|
procedures performed as required by Rule
13a-15(b) or 15d-15(b) under the Exchange Act, and subject to the
foregoing, the Company concluded that the design and operation of
its disclosure controls and procedures provided reasonable
assurance that the disclosure controls and procedures were
effective to accomplish their objectives. The management of
the Company has disclosed in accordance with the Company’s
applicable policies and procedures, based on its most recent
evaluation of its internal controls over financial reporting (as
defined by Rule 13a 15(f) or 15d-15(f) under the Exchange Act)
performed as required by Rule 13a 15 and 15d-15 under the Exchange
Act, to the Company’s outside auditors and the audit
committee of the board of directors of the Company (A) all
significant deficiencies and material weaknesses (each as defined
by applicable rules under the Exchange Act) in the design or
operation of its internal controls over financial reporting which
are reasonably likely to adversely affect in any material respect
the Company’s ability to record, process, summarize and
report financial information and (B) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company’s internal controls over
financial reporting. Since January 1, 2004, the Company has
disclosed any material weakness (as defined by applicable rules
under the Exchange Act) in its internal control over financial
reporting and its conclusions regarding the effectiveness of its
disclosure controls and procedures to the extent and in the manner
required to be disclosed in the reports that the Company files or
submits under the Exchange Act.
|
|
|
|
|
|
(v) The
Company has delivered to the Parent the following statutory
statements, in each case together with the exhibits, schedules and
notes thereto and any affirmations and certifications filed, or to
be filed, therewith (collectively, the " Company Statutory
Statements "): the annual statement of the Company and each of
its insurance Subsidiaries as of December 31, 2005, as filed with
the insurance Governmental or Entity of such company’s
jurisdiction of domicile, including the statutory basis financial
statements of the Company and each of its insurance Subsidiaries as
audited by Deloitte & Touche LLP as of December 31, 2005.
The Company Statutory Statements present fairly, in all material
respects, the statutory financial condition and results of
operations of the Company and were prepared, in all material
respects, in conformity with statutory accounting principles
prescribed or permitted by the applicable insurance Governmental
Entity as in effect as of the date thereof (" SAP ") applied
on a consistent basis during the period presented and with prior
periods, except as expressly set forth within the subject Company
Statutory Statements. No notice to the Company or any of its
insurance Subsidiaries of deficiencies has been asserted by any
Governmental Entity with respect to the Company Statutory
Statements, and the Company Statutory Statements comply in all
material respects with all applicable Law.
|
|
|
|
|
|
(vi) The
Company and each of its insurance Subsidiaries has filed or
submitted all statutory statements required to be filed with or
submitted to the insurance Government Entities in its state of
domicile and of any state where it is licensed or from which it has
received a License, and no deficiency has been asserted with
respect to such statutory statements by the applicable insurance
Governmental Entity which has not been cured, waived or otherwise
resolved to the satisfaction of such insurance Governmental Entity
except as set forth in Schedule 5.1(h)(i) of the Company
Disclosure Letter or for those deficiencies which would not,
individually or in the aggregate, have or be reasonably likely to
have a Company Material Adverse Effect.
|
(g)
Absence of Certain Changes . Except as set forth in
Schedule 5.1(g) of the Company Disclosure Letter, since
December 31, 2005, the Company and its Subsidiaries have conducted
their respective businesses only in, and have not engaged in any
material transaction other than according to, the ordinary and
usual course of such businesses consistent with past practices and
except as disclosed in the Company’s filings with the SEC and
other public disclosure documents (the " Public Documents
"), there has not been:
|
|
(i) any
change in the financial condition, business or results of their
operations that, individually or in the aggregate, has had, or
would reasonably be expected to have, a Company Material Adverse
Effect;
|
|
|
|
|
|
(ii) any
material change in any method of accounting or accounting practice
by the Company or any of its Subsidiaries, except as may be
appropriate to conform to changes in statutory or regulatory
accounting rules or GAAP or regulatory requirements with respect
thereto;
|
|
|
|
|
|
(iii) any
redemption, repurchase or other acquisition of any shares of
capital stock of the Company or of any of its
Subsidiaries;
|
|
|
|
|
|
(iv) any
granting by the Company or any of its Subsidiaries to any of their
directors, officers or employees of any increase in compensation,
except for (A) increases in the ordinary course of business or
increases required under any Benefit Plan, (B) any granting to any
director or officer of the Company or its Subsidiaries of the right
to receive any severance or termination pay not provided for under
any Benefit Plan, (C) any entry by the Company or any of its
Subsidiaries into any employment, consulting, severance agreement
or arrangement with any director or officer of the Company or its
Subsidiaries or any material amendment of any Benefit Plan (other
than as required by Applicable Law); or
|
|
|
|
|
|
(v) any
material Tax election made or revoked by the Company or any of its
Subsidiaries or any settlement or compromise of any material Tax
liability made by the Company or any of its
Subsidiaries.
|
|
|
|
|
|
(h)
Litigation and Liabilities .
|
|
|
|
|
|
(i) As
of the date of this Agreement, except as set forth in Schedule
5.1(h)(i) of the Company Disclosure Letter, there are no
material civil, criminal, administrative or regulatory actions,
suits, demand letters, claims, hearings, notices of violation,
arbitrations, investigations, orders to show cause, market conduct
examinations, notices of non-compliance or other proceedings
pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries. Neither the Company nor
any of its Subsidiaries is a party to or subject to the provisions
of any judgment, order, writ, injunction, decree or award of any
Governmental Entity which, individually or in the aggregate, has
had or would reasonably be expected to have a Company Material
Adverse Effect.
|
14
|
|
(ii) Neither
the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether known or unknown, accrued,
absolute, contingent or otherwise) required by GAAP to be set forth
on a consolidated balance sheet of the Company and its Subsidiaries
or in the notes thereto, other than liabilities and obligations (A)
set forth in the Company’s consolidated balance sheet or the
notes thereto as of December 31, 2006 included in the Company
Reports, (B) incurred in the ordinary course of business consistent
with past practice since December 31, 2006, (C) incurred in
connection with the Merger or any other transaction or agreement
contemplated by this Agreement, or (D) that would not,
individually, or in the aggregate, have a Company Material Adverse
Effect.
|
The
term " Knowledge " when used in this Agreement with respect
to the Company shall mean the actual knowledge of those persons set
forth on Schedule 5.1(h) of the Company Disclosure
Letter.
|
|
(i)
Employee Benefits .
|
|
|
|
|
|
(i) All
material employee benefit plans covering current or former
employees of the Company and its Subsidiaries (the "
Employees ") or pursuant to which the Company or any
of its Subsidiaries has any material liability, contingent or
otherwise, including, but not limited to, "employee benefit plans"
within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (" ERISA "), and
deferred compensation, severance, stock option, stock purchase,
stock appreciation rights, stock based, incentive, bonus
employment, consulting, retention, change in control, fringe
benefit and other benefit plans, programs, policies, agreements or
arrangements (the " Benefit Plans ") are listed on
Schedule 5.1(i)(i) of the Company Disclosure
Letter. True and complete copies of all Benefit Plans listed
on Schedule 5.1(i)(i) of the Company Disclosure Letter
have been made available to Parent.
|
|
|
|
|
|
(ii) Except
for such matters that would not, individually or in the aggregate,
have a Company Material Adverse Effect:
|
|
|
|
|
|
(A) All
Benefit Plans, other than "multiemployer plans" within the meaning
of Section 3(37) of ERISA (each, a " Multiemployer Plan
"), (collectively, " U.S. Benefit Plans "), are in
compliance in all material respects with their terms and the
applicable provisions of ERISA, the Code and other applicable Laws,
and if intended to be qualified within the meaning of Section 401
of the Code, has received a favorable determination letter as to
its qualification and to the Knowledge of the Company nothing has
occurred that could reasonably be expected to adversely affect such
qualification. The Company does not have any Benefit Plans
which are not subject to United States law.
|
15
|
|
(B) Neither
the Company nor any of its Subsidiaries has engaged in a
transaction with respect to any U.S. Benefit Plan that, assuming
the taxable period of such transaction expired as of the date
hereof, could reasonably be expected to subject the Company or any
Subsidiary to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA.
|
|
|
|
|
|
(C)
Neither the Company nor any of its Subsidiaries has or is
reasonably expected to incur any liability under Subtitle C or
D of Title IV of ERISA with respect to any "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the
single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or
Section 414 of the Code (an " ERISA Affiliate
").
|
|
|
|
|
|
(D) The
Company and its ERISA Affiliates do not have any unsatisfied
withdrawal liability with respect to a Multiemployer Plan under
Subtitle E of Title IV of ERISA nor do they reasonably
expect to incur any such liability.
|
|
|
|
|
|
(E) As
of the date hereof, there is no pending or, to the Knowledge of the
Company, threatened litigation relating to the Benefit Plans, other
than routine claims for benefits.
|
|
|
|
|
|
(F) Except
as set forth in Schedule 5.1(i)(ii)(F) of the Company
Disclosure Letter, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (either alone or in combination with another event) (i)
result in any payment becoming due, or increase the amount of any
compensation or benefits due, to any current or former employee of
the Company or its Subsidiaries or with respect to any Benefit
Plan; (ii) increase any benefits otherwise payable under any
Benefit Plan; (iii) result in the acceleration of the time of
payment or vesting of any such compensation or benefits; or (iv)
limit or restrict the right of the Company to merge, amend or
terminate any of the Benefit Plans.
|
(j)
Compliance with Laws; Licenses . The businesses of
each of the Company and its Subsidiaries have not been since the
Applicable Date, and are not being, conducted in violation of any
federal, state, local or foreign law, statute or ordinance, common
law, or any rule, regulation, standard, judgment, order, writ,
injunction, directive, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity
(collectively, " Laws "), except for violations that would
not, individually or in the aggregate, have or reasonably be
expected to have a Company Material Adverse Effect. Except
with respect to regulatory matters covered by
Section 6.6 or except as set forth in Schedule
5.1(h)(i) of the Company Disclosure Letter, no investigation or
review by any Governmental Entity with respect to the Company or
any of its Subsidiaries, including without limitation financial and
market conduct examinations, is pending as of the date of this
Agreement or, to the Knowledge of the Company, threatened as of the
date of this Agreement except for those the outcome of which would
not, individually or in the aggregate, have or reasonably be
expected to have a Company Material Adverse Effect. The
Company and its Subsidiaries each has obtained and is in compliance
with all permits,
16
certifications, approvals, registrations,
consents, authorizations, franchises, variances, exemptions and
orders issued or granted by a Governmental Entity ("
Licenses ") necessary to conduct its business as presently
conducted, except those the absence of which would not,
individually or in the aggregate, have or reasonably be expected to
have a Company Material Adverse Effect.
(k)
Takeover Statutes . No "fair price," "moratorium,"
"control share acquisition" or other similar Delaware anti-takeover
statute or regulation (each, a " Takeover Statute ") or any
anti-takeover provision in the Company’s certificate of
incorporation or bylaws is applicable to the Merger or the other
transactions contemplated by this Agreement. The adoption of
this Agreement and the Merger by the Company’s board of
directors represents all the actions necessary to render
inapplicable to this Agreement, the Voting Agreement, the Merger
and the other transactions contemplated by this Agreement or the
Voting Agreement, the restrictions on "business combinations" set
forth in Section 203 of the DGCL to the extent, if any, such
restrictions would otherwise be applicable to this Agreement, the
Merger or the other transactions contemplated by this
Agreement. The Company does not have a poison pill or rights
agreement in place.
(l)
Environmental Matters .
|
|
(i) Except
in each case for such matters that would not, individually or in
the aggregate, have or reasonably be expected to have a Company
Material Adverse Effect: (A) the Company and its Subsidiaries
have complied at all times with all applicable Environmental Laws;
(B) the Company and its Subsidiaries possess all permits,
licenses, registrations, identification numbers, authorizations and
approvals required under applicable Environmental Laws for the
operation of the business as presently conducted; (C) there
are no Environmental Claims pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries;
(D) there are no agreements, writs, injunctions, decrees,
orders or judgments outstanding, or any actions, suits or
proceedings pending or, to the Knowledge of the Company,
threatened, concerning noncompliance by the Company or any of its
Subsidiaries with any Environmental Law or imposing any liability
or obligation under any Environmental Law on the Company or any of
its Subsidiaries; and (E) to the Knowledge of the Company, there
have been no Releases of any Hazardous Substances that could be
reasonably likely to form the basis of any Environmental Claim
against the Company of any of its Subsidiaries.
|
|
|
|
|
|
(ii) Notwithstanding
any other representation or warranty in Article V of this
Agreement, the representations and warranties contained in this
Section 5.1(l) constitute the sole representations and
warranties of the Company relating to any environmental, health or
safety matters, including without limitation, any matters arising
under Environmental Law.
|
As
used herein, the term " Environmental Claim " means, in
respect of any Person, (i) any and all administrative, regulatory
or judicial actions, suits, orders, decrees, demands, directives,
claims, liens, proceedings or written notices or noncompliance or
violation by any Governmental Entity, alleging potential presence
or Release of, or exposure to, any Hazardous Substances at any
location, whether or not owned, operated, leased or managed by such
Person, or (ii) any and all indemnification, cost recovery,
compensation or injunctive relief resulting from the presence or
Release of, or exposure to, any Hazardous Substances.
17
As
used herein, the term " Environmental Law " means, as
currently in effect, any applicable law (including international
conventions, protocols and treaties), regulation, code, license,
permit, binding agreement, order, judgment, decree or injunction
from any Governmental Entity (A) concerning the protection,
investigation or restoration of the environment, (including air,
water, soil and natural resources), (B) the use, storage, handling,
release or disposal of Hazardous Substances, or (C)
pollution.
As
used herein, the term " Hazardous Substance " means any
substance presently listed, defined, designated or classified as
hazardous, toxic or radioactive under any applicable Environmental
Law including petroleum and any derivative or by-products
thereof.
As
used herein, the term " Release " means any actual or
threatened release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment.
(m)
Taxes .
|
|
(i) The
Company and each of its Subsidiaries: (A) have prepared in
good faith and duly and timely filed (taking into account any
extension of time within which to file) all Tax Returns required to
be filed by, or on behalf of, any of them except where such failure
to prepare or file Tax Returns would not, individually or in the
aggregate, have or would reasonably be expected to have a Company
Material Adverse Effect; (B) all such Tax Returns were true,
correct and complete in all material respects as of the date of
such filing; and (C) have timely paid all Taxes that are due
(whether or not shown to be due on any Tax Return) and withheld all
amounts that the Company or any of its Subsidiaries are obligated
to withhold from amounts owing or paid to any employee, creditor,
shareholder or third party, other than Taxes that are not yet due
and payable, or that are contested in good faith, for which
adequate reserves or accruals have been made in accordance with
GAAP in the financial statements included in the Company Reports
except where such failure to so pay or remit would not,
individually or in the aggregate, have or would reasonably be
expected to have a Company Material Adverse Effect. All
material liabilities for Taxes that arose after the end of the last
period reflected in the financial statements included in the
Company Reports arose in the ordinary course of
business.
|
|
|
|
|
|
(ii) As
of the date hereof, there are no pending or, to the Knowledge of
the Company, threatened in writing, any audits, examinations,
investigations, claims, proposed adjustment or assessments for
deficiencies or other proceedings in respect of Taxes or Tax
matters involving the Company or any of its Subsidiaries, which
would, individually or in the aggregate, have or would reasonably
be expected to have a Company Material Adverse Effect.
|
18
|
|
(iii) Neither
the Company or any of its Subsidiaries: (A) is or has ever
been a member of a group of corporations with which it has filed
(or been required to file) consolidated, combined or unitary Tax
Returns, other than a group of which only the Company and its
Subsidiaries are or were members or (B) is a party to or bound by
any Tax sharing, Tax allocation, Tax indemnity or similar
agreements other than agreements exclusively between or among the
Company and its Subsidiaries.
|
|
|
|
|
|
(iv) There
are no Liens with respect to Taxes upon any of the assets or
property of the Company or its Subsidiaries, other than liens for
Taxes not yet due and payable.
|
|
|
|
|
|
(v) Each
of the Company’s Subsidiaries that is a statutory insurance
company is taxable as a domestic "insurance company other than a
life insurance company" within the meaning of Section 831 of the
Code, and all insurance and reinsurance policies and contracts
entered into by such Subsidiaries are insurance contracts for
federal income tax purposes except as would not, individually or in
the aggregate, have or would reasonably be expected to have a
Company Material Adverse Effect. With respect to reinsurance
contracts to which the Company or any of the Subsidiaries is a
party, no facts, circumstances or basis exists under which the IRS
could make any material reallocation, recharacterization or other
adjustment under Section 845 of the Code except as would not,
individually or in the aggregate, have or would reasonably be
expected to have a Company Material Adverse Effect.
|
|
|
|
|
|
(vi) The
Company and each of its Subsidiaries is and has at all times been
in compliance with the provisions of Sections 6011, 6111 and 6112
of the Code relating to tax shelter disclosure, registration, and
list maintenance, and with the Treasury Regulations promulgated
thereunder.
|
|
|
|
|
|
(vii) The
Federal, state and local income and franchise Tax Returns of the
Company and its Subsidiaries through the Tax year ended December
31, 2001 have been examined and closed or are returns with respect
to which the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, has
expired.
|
|
|
|
|
|
(viii) During
the last five years, neither the Company nor any of its
Subsidiaries was a distributing corporation or a controlled
corporation in a transaction intended to be governed by Section 355
of the Code.
|
As
used in this Agreement, (A) the term " Tax "
(including, with correlative meaning, the term " Taxes ")
includes all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital
stock, severances, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value
added, occupancy, alternative or add-on minimum, transfer, premium
and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect of such
penalties and additions, and (B) the term " Tax Return
" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates, amended returns,
claims for refund and information returns) required to be supplied
to a Tax authority or maintained relating to Taxes.
19
(n)
Labor Matters . Neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by any collective
bargaining agreement with a labor union or labor organization, nor
is the Company or any of its Subsidiaries the subject of any
material proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice or seeking to
compel it to bargain with any labor union or labor organization nor
is there pending or, to the Knowledge of the Company, threatened,
nor has there been since the Applicable Date, any labor strike,
dispute, walk-out, work stoppage, slow-down or lockout involving
the Company or any of its Subsidiaries.
(o)
Intellectual Property .
|
|
(i) Except
as would not, individually or in the aggregate, have or reasonably
be expected to have a Company Material Adverse Effect, (A) the
Company and its Subsidiaries own, or are licensed or otherwise
possess sufficient rights to use such rights as it has in and
to all Intellectual Property currently used in connection with the
business of the Company or any Subsidiary or owned or held for use
by the Company or any Subsidiary (the " Company Intellectual
Property "), (B) the use of the Company Intellectual Property
by the Company and its Subsidiaries does not constitute an
infringement or misappropriation of any valid third party
Intellectual Property right in existence as of the date of this
Agreement, (C) no written claim has been asserted, or to the
Knowledge of the Company threatened, against the Company or its
Subsidiaries concerning the ownership, validity, registerability,
enforceability, infringement, use or licensed right to use any
Intellectual Property, and (D) except as set forth in Schedule
5.1(e)(ii) of the Company Disclosure Letter, all of such rights
shall survive unchanged the consummation of the transactions
contemplated by this Agreement. To the Knowledge of the
Company, no person is violating any Intellectual Property owned by
the Company except as would not, individually or in the aggregate,
have or reasonably be expected to have a Company Material Adverse
Effect.
|
|
|
|
|
|
(ii) For
purposes of this Agreement, the following term has the following
meaning:
|
"
Intellectual Property " means all: (A) trademarks,
service marks, brand names, Internet domain names, logos, symbols,
trade dress, trade names, and other indicia of origin, all
applications and registrations for the foregoing, and all goodwill
associated therewith and symbolized thereby, including all renewals
of same; (B) inventions and discoveries, and all patents,
registrations, invention disclosures and applications therefor,
including divisions, continuations, continuations-in-part and
renewal applications, and including renewals, extensions,
reexaminations and reissues; (C) confidential information,
trade secrets and know-how, including processes, schematics,
business methods, drawings, prototypes, models, designs, customer
lists and supplier lists; (D) published and unpublished works
of authorship (including, computer software, programs, databases
and other compilations of information), copyrights therein and
thereto, and registrations and applications therefor, and all
renewals, extensions, restorations and reversions thereof; and
(E) all other intellectual property or proprietary
rights.
20
(p)
Insurance . All material fire and casualty, general
liability, business interruption, product liability, sprinkler and
water damage and directors’ and officers’ liability
insurance policies maintained by the Company or any of its
Subsidiaries (collectively, the " Insurance Policies ") are
in full force and effect and all premiums due with respect to all
Insurance Policies have been paid.
(q)
Brokers and Finders . Neither the Company nor any of
its officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finders fees in connection with the Merger or the
other transactions contemplated in this Agreement except that the
Company has employed JPMorgan as its financial advisor. The
Company has furnished to Parent and Merger Sub a correct and
complete copy of all agreements between the Company and JPMorgan
under which JPMorgan would be entitled to any payment relating to
the Merger or such other transaction.
(r)
Insurance Matters .
|
|
(i) (A) Except
as set forth on Schedule 5.1(r)(i) of the Company Disclosure
Letter, since January 1, 2005 salaried employees of the Company and
its Subsidiaries, and, to the Knowledge of the Company, each other
person, performing the duties of insurance producer, reinsurance
intermediary, agency, agent, managing general agent, wholesaler,
broker, solicitor, adjuster or customer representative for the
Company and its Subsidiaries (collectively, " Company
Producers "), at the time such Company Producer wrote, sold, or
produced business, or performed such other act for or on behalf of
the Company or any of its Subsidiaries that may require a License,
was duly licensed and appointed as required by applicable Law, in
the particular jurisdiction in which such Company Producer wrote,
sold, produced, solicited, or serviced such business, except as
would not, individually or in the aggregate, have or reasonably be
expected to have a Company Material Adverse Effect. Except as
set forth in Schedule 5.1(r)(i) of the Company Disclosure
Letter, or as would not, individually or in the aggregate, have or
reasonably be expected to have a Company Material Adverse Effect,
each of the agency agreements and appointments between the Company
Producers, including as subagents under the Company’s
affiliated insurance agency, and the Company and any of its
Subsidiaries, is valid, binding and in full force and effect in
accordance with its terms.
|
|
|
|
|
|
(B) Except
as set forth in Schedule 5.1(r)(i) of the Company Disclosure
Letter, to the Knowledge of the Company, as of the date of this
Agreement, no Company Producer has been since January 1, 2005, or
is currently, in material violation (or with or without notice or
lapse of time or both, would be in material violation) of any term
or provision of any applicable Law applicable to the writing, sale
or production of insurance or other business for the Company or any
of its Subsidiaries, except as would not, individually or in the
aggregate, have or reasonably be expected to have a Company
Material Adverse Effect.
|
21
|
|
(C) Except
as set forth on Schedule 5.1(r)(i) of the Company Disclosure
Letter, as of the date of this Agreement, no Company Producer has
indicated to the Company or any of its Subsidiaries that any
Company Producer will be unable or unwilling to continue its
relationship as a Company Producer with the Company or any of its
Subsidiaries within twelve (12) months after the Closing, except as
would not, individually or in the aggregate, have or reasonably be
expected to have a Company Material Adverse Effect.
|
|
|
|
|
|
(D) The
Company has made available to the Parent copies of the written
procedures of the Company and its Subsidiaries designed to provide
assurance that Company Producers comply with all applicable
Law.
|
|
|
|
|
|
(ii)
Managing General Agency Agreements . As of the date of
this Agreement, the Company and its Subsidiaries do not have any
managing general agency contracts or similar arrangements under
which an independent party has authority to perform underwriting
analysis and issue insurance or reinsurance policies on behalf of
the Company or any of its Subsidiaries or otherwise to bind the
Company or any of its Subsidiaries without prior approval by the
Company or any of its Subsidiaries.
|
|
|
|
|
|
(iii)
Insurance Contracts . Except as set forth on
Schedule 5.1(r)(i) of the Company Disclosure Letter, or as
would not individually or in the aggregate, have or reasonably be
expected to have a Company Material Adverse Effect:
|
|
|
|
|
|
(A) To
the extent required by Law, all policies, binders, slips,
certificates and other agreements or contracts of insurance or
reinsurance (" Insurance Contracts ") that are issued by the
Company or any of its Subsidiaries are in all material respects, on
forms approved by applicable insurance Governmental Entities or
which have been filed and not objected to by such authorities
within the period provided for objection.
|
|
|
|
|
|
(B) Any
rates of the Company and its Subsidiaries which are required to be
filed with or approved by any Governmental Entity have been so
filed or approved.
|
|
|
|
|
|
(C) Any
Insurance Contract form which is required to be filed with or
approved by any Governmental Entity has been so filed or
approved.
|
|
|
|
|
|
(D) There
are no in-force Insurance Contracts of the Company or any of its
Subsidiaries under which the holders or owners of such Insurance
Contracts have any rights with respect to dividends, surplus,
profit participation, voting, or any other rights to share in the
benefits, revenue or profits of the Company or any of its
Subsidiaries.
|
|
|
|
|
|
(iv)
Regulatory Filings . S
|
|
