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Exhibit
10.44
ASSET PURCHASE
AGREEMENT
FOR THE ACQUISITION
OF
CERTAIN ASSETS
OF
Gallagher Re,
Inc.
by
Aon Re,
Inc.
DATED AS OF
FEBRUARY 22,
2008
ASSET PURCHASE
AGREEMENT
THIS ASSET PURCHASE
AGREEMENT (this “Agreement”), is made and entered
into as of the 22th day of February, 2008 (the “Closing
Date”), by and between Gallagher Re, Inc., a Delaware
corporation (the “Company”) and Aon Re, Inc., an
Illinois corporation (the “Buyer”).
W I T
N E S S E T H
:
WHEREAS , the Company
owns certain client accounts and other assets related to its
reinsurance brokerage business; and
WHEREAS , the Company
desires to sell to Buyer and Buyer desires to purchase from the
Company such accounts and certain other assets on the terms and
conditions set forth in this Agreement;
NOW, THEREFORE , in
consideration of the mutual representations, warranties, covenants
and agreements herein contained, and upon and subject to the terms
and the conditions hereinafter set forth, the parties do hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF
ASSETS; ASSUMPTION OF LIABILITIES
1.01 Transfer of the
Assets. Upon the terms and subject to the conditions of this
Agreement, at the Closing (as defined herein), the Company shall
sell, convey, assign, and transfer to the Buyer, and the Buyer
shall purchase, accept and take from the Company, the following
assets, properties and rights (the
(“Assets”):
(a) the treaty reinsurance
and certain facultative reinsurance brokerage client accounts and
reinsurance treaties set forth in Schedule 1.01(a)(i) (the
“Treaties”) and the “pipeline accounts” set
forth in Schedule 1.01(a)(ii) (the
“Prospects”));
(b) the accounts receivable
and accounts payable, and cash in all custodial, trust and
fiduciary accounts and brokerage payables and brokerage receivables
with respect to the Treaties. Schedule 1.01(b)(i) sets forth the
accounts receivable and accounts payable, and cash in all
custodial, trust and fiduciary accounts and Schedule 1.01(b)(ii)
sets forth brokerage payables and receivables as of
December 31, 2007. The Company agrees to deliver to Buyer the
information set forth on Schedules 1.01(b)(i) and 1.01(b)(ii)
updated as of the Closing Date within 30 days following the Closing
Date;
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(c) all of the rights and
benefits in and to all contracts set forth on Schedule
1.01(c);
(d) the Company’s
rights to receive revenue, fees, income or payments and any other
entitlements and rights of every kind and nature whatsoever to
receive money or payments with respect to Treaties, Prospects and
contracts set out in Schedule 1.01(c);
(e) originals or copies of
all of the business records that arise from or which are used in
connection with the Assets referred to in Schedules 1.01(a) through
1.01(f), including customer lists, accounting records (including
ancillary records, paid invoices and work papers related thereto),
correspondence, computer and billing tapes, files, research data,
and other records, and business records required for Buyer to
perform its run-off service obligations pursuant to
Section 1.03(c); and
(f) all claims of the Company
against third parties relating to the Assets, whether choate or
inchoate, known or unknown, contingent or noncontingent.
1.02 Excluded Assets.
Notwithstanding anything herein to the contrary, the Assets shall
not include the following assets, properties and/or rights (the
“Excluded Assets”), which shall remain the property of
the Company after the Closing Date:
(a) all personnel records and
other records pertaining to the Assets or the Transferring
Employees that the Company is required by law to retain in its
possession;
(b) all claims for the refund
of taxes and other governmental charges of whatever nature arising
from periods prior to the Closing Date; and
(c) any assets, properties or
rights of the Company not described in
Section 1.01.
1.03 Assumed
Liabilities. Unless otherwise provided herein, the Buyer hereby
assumes only the following liabilities of the Seller (the
“Assumed Liabilities”):
(a) except as otherwise
provided in this Agreement (including Section 1.02 and 1.04),
Buyer hereby agrees that on or after the Closing Date it will
assume and undertake to pay, satisfy and discharge when due the
(i) liabilities, obligations and commitments of the Company
arising out of any contract which is part of the Assets, including
the accounts payable set forth in Schedule 1.01(b) and
(ii) any premiums, commissions and fees arising out of
transactions occurring after the Closing Date, but only with
respect to the clients, accounts and contracts set forth on
Schedule 1.01(a)(i);
(b) the liabilities and
obligations relating to employees and employee benefits but only to
the extent set forth in Section 5.03; and
(c) run-off services for
current and prior years with respect of clients that have an
in-force treaty among the Treaties for the same class of business
as the in-force treaty. For purposes of this sub-section (c),
“class(es) of business” are: (a) property&
casualty treaty; (b) accident & health treaty; and
(c) property facultative. Further, “clients”, for
property facultative, refers to “Insured Name” as used
in Schedule 1.01(a)(i).
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1.04 Excluded
Liabilities . Except as set forth in Section 1.03 or as
otherwise expressly provided in this Agreement, the Buyer shall not
assume any obligation or liability of the Company including, but
not limited to the following:
(a) liability for taxes or
other governmental charges, fees or assessments of the Company or
related to the Assets for the period ending on or before the
Closing Date;
(b) the Company’s
obligation, if any, to pay any tax or other governmental charges,
fees or assessments with respect to the sale of the
Assets;
(c) any suits, employee
claims, including claims by Transferring Employees, causes of
action or other claims or losses, however or whenever asserted,
that relate to or are in any way connected with or arise from
events occurring before the Closing Date;
(d) any suits, causes of
action or obligations, or other claims or losses, however and
whenever asserted, relating to performance under a contract that is
a part of the Assets that relate to or are in any way connected
with or arise from events occurring before the Closing
Date;
(e) the Company’s
liabilities for failure to comply with any applicable law prior to
the Closing Date;
(f) any liability for errors
or omissions brought by third parties allegedly committed in
connection with the Assets by employees (including Transferring
Employees), agents, consultants or representatives of Company
arising from acts or omissions at any time prior to the Closing
Date;
(g) any premiums, commissions
and fees arising out of transactions occurring after the Closing
Date not related to the clients, accounts and contracts set forth
on Schedule 1.01(a)(i); and
(h) any liability arising out
of, or in connection with, any Excluded Asset.
ARTICLE II
PURCHASE PRICE;
CLOSING
2.01 Purchase Price.
The aggregate purchase price for the Assets (the “Initial
Purchase Price”) shall be (a) Twelve Million Dollars
($12,000,000) which shall be paid by the Buyer in cash to the
Company at the Closing, plus (b) the “Contingent
Purchase Price”.
2.02 Contingent Purchase
Price. Buyer shall pay the Company a Contingent Purchase Price
computed in accordance with and subject to each of the conditions
of Exhibit A of this Agreement, which is hereby incorporated by
reference in, and made a part of this Agreement.
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2.03 Allocation . The
Buyer and the Company agree to file their federal and state income
tax returns on the basis of the allocation to be agreed by the
parties within 90 days following the Closing Date and that neither
shall thereafter take a tax return position inconsistent with such
allocation unless such inconsistent position shall arise out of or
through an audit or other inquiry or examination by the Internal
Revenue Service or other taxing authority.
2.04 Manner of Effecting
Sale . The sale, conveyance, transfer, assignment and delivery
of the Assets by the Company to the Buyer shall be effected by such
bills of sale, endorsements, assignments, transfers and other
instruments of transfer in such form as the Buyer shall reasonably
request.
2.05 Closing . The
Closing shall take place on the Closing Date.
2.05 Method of Payment
. All monetary payments from one party to another under this
Agreement shall be made by wire transfer of immediately available
federal funds to an account designated in writing by the party
receiving such payment.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents
and warrants to the Buyer as follows:
3.01 Organization and
Authorization.
(a) The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware and has all requisite power
and authority, corporate or otherwise, to carry on and conduct its
business as it is now being conducted and to own or lease its
properties and assets. The Company is duly qualified and in good
standing in every state of the United States in which the conduct
of its business or the ownership of the Assets requires it to be so
qualified.
(b) The Company has the
right, power and capacity to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the
Company, and the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly and
validly executed and delivered by the Company and constitutes the
Company’s legal, valid and binding obligation, enforceable in
accordance with their terms.
3.02 No Conflict . The
execution and delivery of this Agreement by the Company, the
consummation of the transactions contemplated hereby, and the
performance of the covenants and agreements of the Company will
not, with or without the giving of notice or the lapse of time, or
both, (a) violate or conflict with any of the provisions of
any charter document or bylaw of the Company; (b) violate,
conflict with or result in a material breach or material default
under or cause termination of any material term or condition of any
contract set forth in Schedule 1.01(c) ; (c) violate any
provision of material law, statute, regulation, court order or
ruling of any governmental authority, to which the Company is a
party or by which it or its properties may be bound; or
(d) result
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in the creation or imposition of any
lien, claim, charge, restriction, security interest or encumbrance
of any kind whatsoever upon any Asset.
3.03 Required Consents and
Approvals. No material consent or approval is required by
virtue of the execution hereof by the Company or the consummation
of any of the transactions contemplated herein by the Company to
avoid the violation or breach of, or the default under, or the
creation of a lien on the Assets pursuant to the terms of, any
regulation, order, decree or award of any court or governmental
agency or any lease, agreement, contract, mortgage, note, license,
or any other instrument to which the Company is a party or to which
it or any Asset is subject.
3.04 No Violation of
Law. The Company is not, has not been in material violation of
any applicable local, state or federal law, ordinance, regulation,
order, injunction or decree, of any governmental body, agency or
authority or court binding on it, or that would have an adverse
effect on any Asset.
3.05 Certain Schedules
True and Correct. The amount of accounts receivable and
accounts payable and the amount of cash in custodial, trust or
fiduciary accounts set forth in Schedule 1.01(b) on the Closing
Date and as updated as provided in Section 1.01(b) are, and
shall be, true and correct, and shall in the aggregate net to
$0.
3.06 Litigation.
Schedule 3.06 (a) sets forth all litigation, claims, suits,
actions, investigations, or proceedings or arbitrations, pending,
or to the knowledge of the Company, threatened, before any court,
commission, arbitration tribunal, or judicial, governmental or
administrative department, body, agency, administrator or official,
against the Company relating to or involving any of the
Assets.
3.07
Employees.
(a) Schedule 3.07 sets forth
the names of those employees of the Company to whom Buyer intends
to offer employment effective as of the Closing. To the knowledge
of the Company, no such employee has notified the Company of such
employee’s intention to terminate his or her employment
relationship with the Company as a result of the transactions
contemplated herein or otherwise. All such employees who accept
Buyer’s offer of employment shall be considered
“Transferring Employees”.
(b) To the knowledge of the
Company, each Transferring Employees who is a foreign national is
authorized to be present and employed in the United
States.
3.08 Title to Assets.
The Company (i) has good and valid title to all of the Assets;
(ii) owns the Assets free and clear of all liens, mortgages,
pledges, reservation, restriction, security interest, title
retention or other security arrangement, default of title,
infringement or any adverse right or charge (collectively,
“Liens”); and (iii) will, upon the Closing, convey
good and valid title to the Assets to the Buyer free and clear of
any and all Liens.
3.09 Contracts.
(a) Each contract set forth in Schedule 1.01(c) is in full
force and effect and a copy has been made available to
Buyer.
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(b) To the knowledge of the
Company, with respect to the Company’s performance of its
obligations under the contracts set forth in Schedule 1.01(c), no
event of default or non-compliance, or event which with the passage
of time, giving notice or both, would constitute such an event or
default of non-compliance, has occurred or is continuing under any
such contract which would have an adverse effect on any Asset. To
the knowledge of the Company, with respect to the performance by
any other party of its obligations under such contracts, no event
of default or non-compliance, or event which with the passage of
time, giving of notice or both, would constitute such an event of
default or non-compliance, has occurred or is continuing under any
such contract.
3.10 Accuracy of
Records. Information in the Records is complete and accurate.
“Records” as used in this Section shall mean the
Company’s books and records relating to the Assets and the
business related thereto (including the books and records related
to the run-off Buyer is obligated to service pursuant to
Section 1.03(c), and all such books and records in relation to
clients, underwriters third party administrators, service
providers, and all related financial accounting records.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE BUYER
The Buyer hereby represents
and warrants to the Company as follows:
4.01 Organization. The
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of Illinois and has all requisite corporate
power and authority to effect the transactions contemplated
hereunder.
4.02 Authorization.
The Buyer has the right, power and capacity to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of the
Buyer. This Agreement has been duly and validly executed and
delivered by the Buyer and constitutes the Buyer’s legal,
valid and binding obligation, enforceable in accordance with their
terms.
4.03 No Conflict. The
execution and delivery of this Agreement by the Buyer, the
consummation of the transactions contemplated herein and therein by
the Buyer, and the performance of the covenants and agreements of
the Buyer will not, with or without the giving of notice or the
lapse of time, or both, (a) violate or conflict with any of
the provisions of any charter document or bylaw of the Buyer;
(b) violate, conflict with or result in material breach or
default under or cause termination of any term or condition of any
mortgage, indenture, contract, license, permit, instrument, trust
document, or other agreement, document or instrument to which the
Buyer is a party or by which the Buyer or any of its properties may
be bound; or (c) violate any provision of any material law,
statute, rule, regulation, court order, judgment or decree, or
ruling of any governmental authority, to which the Buyer is a party
or by which the Buyer or its properties may be bound.
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ARTICLE V
COVENANTS OF THE
PARTIES
The Company and the Buyer,
respectively, hereby covenant to and agree with one another as
follows:
5.01 Approvals of Third
Parties; Satisfaction of Conditions to Closing. If any consent
or approval is not obtained prior to or on the Closing Date, and
such consent or approval relates to the transfer or assignment to
the Buyer of a contract or other agreement that constitutes an
Asset, the Company shall hold such contract in trust for the use
and benefit of the Buyer, and shall take such other action as may
be reasonably requested by the Buyer in order to place the Buyer in
the same position as if such consents or approvals had been
obtained.
5.02 Publicity.
Company and Buyer agree that no public release or announcement
concerning the transactions contemplated hereby shall be issued by
either party without the prior written consent of the other party
(which consent shall not be unreasonably withheld). The provisions
of Confidentiality Agreement dated November 21, 2007 and
between Arthur J. Gallagher & Co. and Aon Corporation (the
“CA”) shall remain in full force and effect.
5.03 Employee
Matters.
(a) Except as otherwise
specifically set forth herein, neither Buyer nor any of its
affiliates shall adopt, assume or otherwise become responsible for,
either primarily or as a successor employer, any assets,
liabilities or obligations of any Company employee benefit or
pension plans, arrangements, commitments or policies currently
provided by the Company in connection with any Transferring
Employee.
(b) The Company hereby
consents to the hiring by the Buyer of the Transferring Employees
and waives, with respect to the employment by Buyer of such
employees, any claims or rights the Company may have against Buyer
or any such employee under any non-competition or employment
agreement but only to the extent those agreements would preclude
such employment by Buyer or limit the ability of such employee to
perform brokerage services on Buyer’s behalf or use
confidential information of the Company in connection with the
performing services in respect of the Assets.
(c) The Company or one of its
affiliates shall retain responsibility under the Company welfare
benefit plans in which the Transferring Employees participate with
respect to all amounts that are payable by reason of, or in
connection with, any and all welfare benefit claims made by the
Transferring Employees and their eligible dependents but only to
the extent the claims were incurred on or prior to the Closing
Date. If the Transferring Employee elects to participate in a
welfare benefit plan offered by Buyer or its affiliates, Buyer and
its affiliates shall be responsible for all other welfare benefit
claims made by the Transferring Employees and their eligible
dependents to the extent such claims are incurred after the Closing
and covered under terms of Buyer’s welfare benefit
plans.
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(d) To the extent that
service is relevant for purposes of eligibility and vesting (and,
in order to calculate the amount of any vacation where applicable,
severance and similar benefits, and defined contribution benefits,
but not for purposes of benefit accruals or vesting under any
defined benefit program ) under any of Buyer and its affiliates
programs offered for the benefit of the Transferring Employees,
following the Closing such plans, programs or arrangements shall
credit such Transferring Employees for service earned on and prior
to the Closing Date with the Seller, any of its affiliates or any
of their respective predecessors in addition to the service earned
with Buyer or any of Buyer’s affiliates after the Closing
Date. In no event shall Transferring Employees participate in any
defined benefit pension plan sponsored by the Buyer and its
affiliates.
(e) Following the Closing
Date, Buyer shall, or shall cause its affiliates to, waive
limitations on eligibility, enrollment and benefits relating to any
preexisting medical conditions of the Transferring Employees and
their eligible dependents to the extent such pre-existing medical
conditions were covered under a plan of the Company.
(f) Following the Closing
Date. Buyer shall, or shall cause an affiliate to, offer
continuation health care coverage to all Transferring Employees and
their qualified beneficiaries, regardless of when a
“qualifying event” occurs, in accordance with the
continuation health care coverage requirements of
Section 4980B of the Code and Title 1, Subtitle B, Part 6 of
ERISA (“COBRA”) with respect to claims incurred at any
time on or after the Closing Date.
(g) Buyer shall not be
responsible for any liabilities or obligations under the Worker
Adjustment and Retraining Notification Act and similar state and
local rules, statutes and ordinances resulting from any actions
taken by Seller or its affiliates on or before the Closing Date
pursuant to this Agreement.
(h) Buyer shall assume as
part of this transaction all liability for unpaid vacation pay
accrued between January 1, 2008 and the Closing Date for
Transferring Employees prior to the Closing Date. Company shall
have no further liability for vacation pay for Transferring
Employees.
5.04
Non-competition.
The Company shall comply with
the following covenants:
(a) For a period of five
(5) years following the Closing, the Company shall not, and
shall cause its affiliates not to solicit any Transferring
Employees to leave the employ of Buyer or its affiliates or violate
the terms of their contracts, or any employment arrangements, with
Buyer or its affiliates, provided, however, that the Company or any
of its affiliates may solicit any such employees who are
involuntarily discharged by Buyer or its affiliates.
(b) For a period of five
(5) years following the Closing (the “Restricted
Period”), the Company and its affiliates shall continue to
have the right to engage only in the following (“Acceptable
Activities”):
(i) continue to engage in the
traditional treaty reinsurance brokerage business for current
clients operating out of Global Risks unit in the United
Kingdom;
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(ii) place reinsurance
arising directly out of its United States advisory practice engaged
in consultative services to small and mid-size insurance companies,
MGAs/MGUs and program managers;
(iii) place reinsurance in
connection with its retail and wholesale property and casualty
insurance brokerage operations services for pools, captives,
MGAs/MGUs and program managers, and other alternative risk
mechanisms;
(iv) place reinsurance in
connection with its current and future operations outside of the
United States and the United Kingdom;
(v) place facultative
reinsurance; and
(vi) place reinsurance which
is a part of any acquisition; provided however, the Company shall
not make such an acquisition if the acquired company’s annual
revenues derived from traditional treaty reinsurance brokerage is
more than $10,000,000 and a majority of the acquired
company’s annual revenues is derived from traditional
reinsurance brokerage; provided further, that the acquired company
shall only engage in Acceptable Activities.
Provided, however , in
no event will the Company engage in the following (the
“Prohibited Activities”):
(vii) use the name Gallagher
Re (or any variant thereof involving the use of the name Gallagher
and implying the conduct of reinsurance brokerage business) for any
purpose whatsoever during the Restricted Period, including for the
avoidance of doubt with respect to the Acceptable
Activities;
(viii) solicit or accept
business of the Treaties; and
(ix) for a period of two
(2) years following the Closing Date, solicit or accept United
States or United Kingdom domiciled traditional treaty ceded
reinsurance brokerage business in excess of $10,000,000 in ceded
premium per treaty.
(c) Dispute Resolution
. Prior to the Buyer commencing legal action to enforce its rights
under this Section 5.04, the Company and the Buyer shall
negotiate in good faith to resolve any dispute with J. Patrick
Gallagher and Paul Davies representing the Company and the Buyer,
respectively, in such negotiations. In the event either
Mr. Gallagher or Mr. Davies is no longer employed by the
Company or the Buyer, respectively, the Company or the Buyer, as
the case may be, shall appoint a successor who is a senior officer
of their respective parent companies.
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(d) Specific Relief.
The Company agrees that Buyer’s remedy at law for any breach
of
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