STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement") dated as
of July 28, 1993, among ALLEGHANY CORPORATION, a Delaware
corporation ("Alleghany"), THE CONTINENTAL CORPORATION, a New
York corporation ("Continental"), GOLDMAN, SACHS & CO. and
certain funds which Goldman, Sachs & Co. either control or of
which they are general partner (together, the "GS Investors")
(Continental and the GS Investors together referred to as the
"URHC Stockholders"), UNDERWRITERS RE HOLDINGS CORP., a
Delaware corporation ("URHC"), and UNDERWRITERS RE
CORPORATION, a Delaware corporation ("URC").
W I T N E S S E T H:
WHEREAS, the URHC Stockholders hold approximately
90 percent of the issued and outstanding capital stock of
URHC; URHC is the owner of all of the issued and outstanding
capital stock of URC; URC is the owner of all of the issued
and outstanding capital stock of Underwriters Reinsurance
Company, a New Hampshire insurance company ("Underwriters
Reinsurance"), and URC Risk Managers, Inc., a Delaware
corporation ("Risk Managers"); and Underwriters Reinsurance
is the owner of all of the issued and outstanding capital
stock of Commercial Underwriters Insurance Company, a
California insurance company ("Commercial Underwriters");
WHEREAS, prior to the Closing Date (as defined
below), a new wholly owned subsidiary ("NHC") of URC will be
organized in the State of Delaware and, as of the Closing
Date, NHC will hold all of the issued and outstanding capital
stock of Underwriters Reinsurance and Risk Managers (NHC,
Underwriters Reinsurance, Risk Managers and Commercial
Underwriters are together referred to as the "Companies");
WHEREAS, contemporaneous with the execution hereof,
Continental has entered into a Management Stock Purchase
Agreement with the management stockholders of URHC in the
form annexed hereto as Exhibit A (the "Management Stock
Purchase Agreement"), pursuant to which such management
stockholders will acquire prior to the Closing Date (as
defined below) at least 633,758 shares of capital stock of
NHC, which number of shares will constitute about 7 percent
of the outstanding shares of capital stock of NHC, in
exchange for the shares of capital stock of URHC currently
owned by them and to be owned by them upon exercise of all
outstanding stock options;
WHEREAS, Alleghany desires to purchase and URC
desires to sell all of the issued and outstanding capital
stock of NHC to be held by URC after the closing under the
Management Stock Purchase Agreement (the "Shares"), which
will be 8,648,372 shares of capital stock of NHC, which
number of shares will constitute about 93 percent of the
outstanding capital stock of NHC, subject to adjustment to
decrease such number of shares by up to 22,162 in respect of
shares of NHC to be sold to any one or more of Stephen C.
Kolakowski, Mark A. Bennett, Theodore A. Blundell, Denise A.
Coleman, Pamela Falzone, Todd J. Hess, Michael J. Kruse, Judy
Mann and Nancy Moore, such number being the number set forth
on Schedule 5, as supplemented, to the Stock Purchase Related
Agreement, which Schedule shall be supplemented not later
than August 12, 1993; and
WHEREAS, contemporaneous with the execution hereof,
Alleghany has entered into a Stock Purchase Related Agreement
with the management stockholders of URHC in the form annexed
hereto as Exhibit B (the "Stock Purchase Related Agreement");
NOW, THEREFORE, in consideration of the premises
and the mutual covenants, agreements and provisions contained
herein, the parties hereto agree as follows:
1. PURCHASE OF SHARES AND CLOSING.
1.1. Purchase of Shares. Subject to the terms and
conditions set forth in this Agreement, at the Closing (as
defined below), URC agrees to sell, convey, assign, transfer
and deliver the Shares to Alleghany, or a subsidiary of
Alleghany designated by Alleghany pursuant to Section 13.6
hereof, and Alleghany, or such subsidiary, shall acquire the
Shares from URC.
1.2. Consideration. At the Closing (as defined
below), Alleghany shall pay by wire transfer to URC an amount
in immediately available funds equal to Two Hundred Million,
Seven Hundred Fifteen Thousand, Nine Hundred Thirty-Five
Dollars ($200,715,935), subject to adjustment as hereinafter
provided (the "Cash Consideration"). The Cash Consideration
shall be increased by an amount equal to the product of (x)
$23.50, and (y) the difference between (a) 22,162 shares and
(b) that number of shares of common stock of NHC, not
exceeding 22,162 shares, which are sold to any one or more of
Stephen C. Kolakowski, Mark A. Bennett, Theodore A. Blundell,
Denise A. Coleman, Pamela Falzone, Todd J. Hess, Michael J.
Kruse, Judy Mann and Nancy Moore, such number being the
number set forth on Schedule 5, as supplemented, to the
Stock Purchase Related Agreement, which Schedule shall be
supplemented not later than August 12, 1993.
1.3. Closing. The purchase and sale of the Shares
pursuant to this Agreement (the "Closing") shall take place
at such time of day and place agreed to by the parties as
soon as reasonably practicable but not on the first or second
business day of a week and no later than five (5) business
days after satisfaction or waiver of the conditions precedent
set forth herein (the "Closing Date"), or on such other date
as the parties hereto agree in writing. At the Closing, (i)
URC shall deliver to Alleghany a certificate or certificates
representing the Shares, duly endorsed in blank or with
appropriate stock powers attached, free and clear of all
liens, security interests, pledges, agreements, claims,
charges, options or encumbrances of any nature whatsoever
(collectively, "Liens"), and (ii) Alleghany shall make
payment to URC of the Cash Consideration by wire transfer to
such account or accounts as designated to Alleghany by URC in
the manner specified herein for delivery of notices not less
than two (2) business days prior to the Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF URHC AND URC.
Each of URHC and URC, jointly and severally,
represents and warrants to Alleghany as follows:
2.1. Title to Shares. As of the date of the
organization of NHC and the issuance of shares of its capital
stock to URC as provided herein (the "Organization Date"),
URC will own beneficially and of record all of the issued and
outstanding shares of capital stock of NHC, free and clear of
all Liens except for this Agreement, the Management Stock
Purchase Agreement, the Shareholders Agreement dated as of
December 29, 1987, and amended as of July 6, 1988, May 29,
1991 and May 1, 1993, among URHC and the shareholders listed
therein (the "Shareholders Agreement"), and the Credit
Agreement dated as of November 16, 1992, among URC, the
lenders named therein and First National Bank of Chicago, as
agent (the "Credit Agreement"). As of the Closing Date, URC
will own, beneficially and of record all of the Shares, free
and clear of all Liens (subject to the granting of the
Sellers Approvals, as defined below). Upon delivery of the
Cash Consideration as herein provided, URC will convey good
title to the Shares, free and clear of all Liens.
2.2. Organization and Standing. Each of URHC and
URC is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation,
and has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
2.3. Consents and Approvals. The execution and
delivery by each of URHC and URC of this Agreement, the
performance by each of URHC and URC of its obligations
hereunder, and the consummation by each of URHC and URC of
the transactions contemplated hereby do not require either
URHC or URC to obtain any consent, approval, authorization or
action of, or make any filing with or give any notice to, any
third party, or any public, governmental or judicial
authority except (a) as set forth on Schedule 2.3 hereto; (b)
such filings made with governmental agencies such as the
Securities and Exchange Commission which are (i) part of the
regular disclosure obligations of URHC and URC and (ii)
available as public documents; or (c) such consents,
approvals, authorizations, actions, filings or notices of
which the failure to obtain, make or give would not have a
material adverse effect on the business, financial condition
or results of operations of the Companies taken as a whole or
interfere in any material way with the ability of either URHC
or URC to consummate the transactions contemplated hereby.
The consents, approvals, authorizations, actions, filings and
notices set forth on Schedules 2.3, 3.1 and 8.4 hereto are
together referred to as the "Sellers Approvals."
2.4. Authority. 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
each of URHC and URC. This Agreement constitutes a legal,
valid and binding obligation of each of URHC and URC,
enforceable against it in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. Neither
the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will
(i) conflict with or result in a breach or violation of any
of the terms, conditions or provisions of the charter or by-
laws of URHC or URC; (ii) subject to the granting of the
Sellers Approvals, conflict with or result in a breach or
violation of, or default or loss of a material benefit under,
or permit the acceleration of any obligation under any
provision of any agreement, indenture, mortgage, lien, lease
or other instrument or restriction of any kind to which
either URHC or URC is a party or by which any of its assets
or properties is otherwise bound, which conflict, breach,
violation, default, loss or acceleration, individually or in
the aggregate, would interfere in any material way with the
ability of either URHC or URC to consummate the transactions
contemplated by this Agreement; or (iii) subject to the
granting of the Sellers Approvals, require URHC or URC to
obtain any consent, approval, authorization or action of, or
make any filing with or give any notice to, any third party,
or any public, governmental or judicial authority, or violate
any order, writ, injunction, decree, statute, rule or
regulation applicable to either URHC or URC or any of its
assets or properties, the failure to make, obtain or give or
the effect of which violation, individually or in the
aggregate, would interfere in any material way with the
ability of either URHC or URC to consummate the transactions
contemplated by this Agreement.
2.5. Organization and Standing of NHC. As of the
Organization Date and the Closing Date, NHC will be a
corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, and
will have all requisite corporate power and authority to own
its properties and to carry on its business as being
conducted at such dates; and NHC will be duly qualified and
licensed to do business and will be in good standing in each
jurisdiction where the nature of the property owned or
business conducted requires such qualification or licensing.
Schedule 2.5 hereto will set forth a true and complete list
as of the Closing Date of NHC and all of the entities in
which NHC will have directly or indirectly at least a fifty
percent equity interest (the "Subsidiaries"), their
jurisdictions of incorporation and the jurisdictions in which
they are qualified to do business as a foreign corporation.
2.6. Charter and By-Laws. The forms of charter
and by-laws that will be used for the organization of NHC are
set forth on Schedule 2.6(a) hereto. Schedule 2.6(b) hereto
is a true and complete list of the officers and directors of
NHC who will be in office at the Organization Date and the
Closing Date, which Schedule may be updated as of such dates
subject to Section 8.15 hereof.
2.7. Capital Stock. As of the Organization Date
and the Closing Date, the authorized capital stock of NHC
will consist of Ten Million (10,000,000) shares of common
stock, par value $0.01 per share ("Common Stock"), 9,282,130
shares of which will be issued and outstanding, and all of
the issued and outstanding shares of Common Stock of NHC will
be duly authorized, validly issued, fully paid and
nonassessable. As of the Organization Date, all of the
issued and outstanding shares of Common Stock of NHC will be
owned by URC free and clear of all Liens except for this
Agreement, the Management Stock Purchase Agreement, the
Shareholders Agreement and the Credit Agreement. As of the
Closing Date, all of the Shares will be owned by URC free and
clear of all Liens (subject to the granting of the Sellers
Approvals), and all of the remaining issued and outstanding
shares of Common Stock of NHC will be owned only by the
Management Stockholders as provided in the Management Stock
Purchase Agreement. All of the issued and outstanding shares
of the capital stock of Underwriters Reinsurance and Risk
Managers are held by URC as of the date hereof, and will be
held by NHC as of the Closing Date, and all of the issued and
outstanding shares of the capital stock of Commercial
Underwriters are held by Underwriters Reinsurance and, except
as set forth on Schedule 2.7 hereto, to the knowledge of URHC
or URC such shares are so held free and clear of all Liens
(subject to the granting of the Sellers Approvals). No
shares of capital stock of any of the Companies are held in
treasury. To the knowledge of URHC or URC, all of the issued
and outstanding shares of capital stock of the Subsidiaries
have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth on Schedule 2.7
hereto, to the knowledge of URHC or URC none of the Companies
is bound by, has granted, issued or made or agreed to grant,
issue or make any warrants, options, subscription rights or
any other commitments of any character relating to the issued
or unissued shares of capital stock of any of the Companies,
nor is there any agreement providing for the amendment of the
charters of any of the Companies so as to increase the amount
of authorized capital stock of such corporation. Except as
set forth on Schedule 2.7 hereto, to the knowledge of URHC or
URC none of the Companies is a party to any voting trust or
other agreement or understanding with respect to the voting
of the capital stock of any of the Companies.
2.8. Rights, Assets and Liabilities. Immediately
prior to the Closing, URHC and URC shall transfer to the
Companies such rights, assets and liabilities possessed by
URHC and URC as are necessary so that the Companies shall own
at the Closing all of the rights, assets and liabilities
owned by URHC, URC and the Companies immediately prior to
such transfer, provided that the rights, assets and
liabilities listed on Schedule 10.2(b)(i) hereto shall not be
so transferred and the rights, assets and liabilities so
transferred shall include without limitation those set forth
on Schedule 10.2(b)(ii) hereto. Such transfers shall cause
no diminution or impairment whatsoever of any such rights,
assets or liabilities.
2.9. Registration Statement. On or prior to the
Closing Date, application will be made to the Securities and
Exchange Commission for the withdrawal of the Registration
Statement on Form S-1, as amended by Amendment No. 1 to Form
S-1, filed with the Securities and Exchange Commission on
June 15, 1993 by URHC under the Securities Act of 1933 (the
"Registration Statement").
3. REPRESENTATIONS AND WARRANTIES OF THE URHC
STOCKHOLDERS.
Each URHC Stockholder, severally and not jointly,
represents and warrants to Alleghany as follows:
3.1. Consents and Approvals. The execution and
delivery by such URHC Stockholder of this Agreement, the
performance by such URHC Stockholder of its obligations
hereunder, and the consummation by such URHC Stockholder of
the transactions contemplated hereby do not require such URHC
Stockholder to obtain any consent, approval, authorization or
action of, or make any filing with or give any notice to, any
third party, or any public, governmental or judicial
authority except (a) as set forth on Schedule 3.1 hereto; (b)
such filings made with governmental agencies such as the
Securities and Exchange Commission which are (i) part of the
regular disclosure obligations of such URHC Stockholder and
(ii) available as public documents; or (c) such consents,
approvals, authorizations, actions, filings or notices of
which the failure to obtain, make or give would not have a
material adverse effect on the business, financial condition
or results of operations of the Companies taken as a whole or
interfere in any material way with the ability of such URHC
Stockholder to consummate the transactions contemplated
hereby.
3.2. Transactions with URHC Stockholders.
Schedule 3.2 hereto is a true and correct list of
transactions, contracts and other obligations since December
31, 1991 between any of the Companies and (i) Continental or
any entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, Continental, or (ii) any of the GS
Investors or any of the entities in which The Goldman Group,
L.P. directly or indirectly owns an equity interest of 50
percent or more (the "Goldman Subsidiaries"), (except in each
case for broker, dealer or investment transactions occurring
in the ordinary course of business with Goldman, Sachs & Co.
or Continental Asset Management Corp. ("Ordinary Course
Broker, Dealer or Investment Transactions"), market making
activities by Goldman, Sachs & Co. with respect to the 15%
Senior Notes Due 1997 of URC (the "Notes") and sales by
Goldman, Sachs & Co. of the Notes to URC (together, the "Note
Transactions")), including all such transactions involving,
in each case, $60,000 or more. As of the Closing Date, none
of the Companies shall have any obligations involving $60,000
or more to such URHC Stockholder or such entity, except
(x) for Ordinary Course Broker, Dealer or Investment
Transactions, (y) as reflected on Schedule 3.2 hereto or
(z) pursuant to this Agreement, the Tax Sharing Agreement,
the Loan Agreement or the Stock Purchase Related Agreement.
3.3. Brokers. Except as set forth on Schedule 3.3
hereto, no agent, broker, investment banker, person or firm
acting on behalf of such URHC Stockholder or under authority
of such URHC Stockholder is or will be entitled to any
broker's, finder's or investment banker's fee or any other
commission or similar fee directly or indirectly from
Alleghany or any of the Companies in connection with the
negotiation of any of the transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF CONTINENTAL.
Continental represents and warrants to Alleghany as
follows:
4.1. Organization and Standing. Continental is a
corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, and
has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder.
4.2. Authority. 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
Continental. This Agreement constitutes a legal, valid and
binding obligation of Continental, enforceable against
Continental in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles. Neither
the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will
(i) conflict with or result in a breach or violation of any
of the terms, conditions or provisions of the charter or by-
laws of Continental; (ii) subject to the granting of the
Sellers Approvals, conflict with or result in a breach or
violation of, or default or loss of a material benefit under,
or permit the acceleration of any obligation under any
provision of any agreement, indenture, mortgage, lien, lease
or other instrument or restriction of any kind to which
Continental is a party or by which any of its assets or
properties is otherwise bound, which conflict, breach,
violation, default, loss or acceleration, individually or in
the aggregate, would interfere in any material way with the
ability of Continental to consummate the transactions
contemplated by this Agreement; or (iii) subject to the
granting of the Sellers Approvals, require Continental to
obtain any consent, approval, authorization or action of, or
make any filing with or give any notice to, any third party,
or any public, governmental or judicial authority, or violate
any order, writ, injunction, decree, statute, rule or
regulation applicable to Continental or any of its assets or
properties, the failure to make, obtain or give or the effect
of which violation, individually or in the aggregate, would
interfere in any material way with the ability of Continental
to consummate the transactions contemplated by this
Agreement.
4.3. Reinsurance Agreements with Continental.
Each of (i) the Aggregate Excess of Loss Reinsurance
Agreement dated as of January 1, 1988 between Continental
Reinsurance Corporation International Limited and
Underwriters Reinsurance, reinsuring losses attributable to
pre-1987 business of Underwriters Reinsurance subject to an
absolute limit of liability of $168,600,000, (ii) the
Aggregate Excess of Loss Reinsurance Agreement dated as of
January 1, 1988 between Continental Reinsurance Corporation
International Limited and Underwriters Reinsurance,
reinsuring losses attributable to pre-1987 business of
Underwriters Reinsurance subject to an absolute limit of
liability of $31,400,000 (the agreements referred to in (i)
and (ii), hereinafter the "Continental Reinsurance
Agreements"), (iii) the Reinsurance Guaranty dated as of
January 1, 1988 between Continental and Underwriters
Reinsurance, and (iv) the Trust Agreement dated as of
January 1, 1988 among Continental Reinsurance Corporation
International Limited, as Grantor, Underwriters Reinsurance,
as Beneficiary, and Morgan Guaranty Trust Company of New York
as Trustee, as amended by the First Amendment to Trust
Agreement dated September 6, 1991, is in full force and
effect and constitutes a legal, valid and binding obligation
of Continental or its affiliates, as the case may be,
enforceable against each of them in accordance with its
terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating
to or affecting creditors' rights and to general equity
principles. Continental Reinsurance Corporation
International Limited has, as of the date hereof, provided
for letters of credit totalling approximately $92 million,
and a trust fund with Chemical Bank (formerly known as
Manufacturers Hanover Trust Company), with a fair market
value of not less than $108 million as of June 30, 1993,
under the Continental Reinsurance Agreements and the Trust
Agreement. None of Continental or its affiliates, as the
case may be, and to Continental's knowledge no other party,
is in material breach or violation of, or default under, any
of the Continental Reinsurance Agreements, the Reinsurance
Guaranty or the Trust Agreement, and no event has occurred
which, solely with the giving of notice or the passage of
time or both, would constitute a material breach, violation
or default by any of Continental or its affiliates, as the
case may be, or to Continental's knowledge any other party
thereto, of any of the foregoing agreements.
5. REPRESENTATIONS AND WARRANTIES OF THE GS INVESTORS.
Each GS Investor, severally and not jointly,
represents and warrants to Alleghany as follows:
5.1. Organization and Standing. Such GS Investor
is duly organized and validly existing under the laws of its
state of organization, and has all requisite partnership
power and authority to enter into this Agreement and to
perform its obligations hereunder.
5.2. Authority. 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 partnership action on the part of
such GS Investor. This Agreement constitutes a legal, valid
and binding obligation of such GS Investor, enforceable
against such GS Investor in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
Neither the execution nor the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby,
will (i) conflict with or result in a breach or violation of
any of the terms, conditions or provisions of the partnership
agreements of such GS Investor; (ii) subject to the granting
of the Sellers Approvals, conflict with or result in a breach
or violation of, or default or loss of a material benefit
under, or permit the acceleration of any obligation under any
provision of any agreement, indenture, mortgage, lien, lease
or other instrument or restriction of any kind to which such
GS Investor is a party or by which any of its assets or
properties is otherwise bound, which conflict, breach,
violation, default, loss or acceleration, individually or in
the aggregate, would interfere in any material way with the
ability of such GS Investor to consummate the transactions
contemplated by this Agreement; or (iii) subject to the
granting of the Sellers Approvals, require such GS Investor
to obtain any consent, approval, authorization or action of,
or make any filing with or give any notice to, any third
party, or any public, governmental or judicial authority, or
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to such GS Investor or any of its
assets or properties, the failure to make, obtain or give or
the effect of which violation, individually or in the
aggregate, would interfere in any material way with the
ability of such GS Investor to consummate the transactions
contemplated by this Agreement.
6. REPRESENTATIONS AND WARRANTIES OF ALLEGHANY.
Alleghany represents and warrants to each of URHC,
URC and the URHC Stockholders as follows:
6.1. Organization and Standing. Alleghany is a
corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation,
and has all requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder.
6.2. Certificate of Incorporation and By-Laws.
The copies of the Restated Certificate of Incorporation and
By-Laws of Alleghany which have heretofore been delivered to
each of the URHC Stockholders are true, accurate and complete
and reflect all amendments or changes in effect.
6.3. Authority. 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
Alleghany and this Agreement constitutes a legal, valid and
binding obligation of Alleghany enforceable against Alleghany
in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles. Neither the
execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will
(i) conflict with or result in a breach or violation of any
of the terms, conditions or provisions of the Certificate of
Incorporation or By-Laws of Alleghany; or (ii) subject to the
granting of the qualifications, approvals and consents of
third parties and regulatory authorities set forth on
Schedule 6.3 hereto (the "Alleghany Approvals"), conflict
with or result in a breach or violation of, or default or
loss of a material benefit under, or permit the acceleration
of any obligation under any provision of any agreement,
indenture, mortgage, lien, lease or other instrument or
restriction of any kind to which Alleghany is a party or by
which its assets or properties is otherwise bound, which
conflict, breach, violation, default, loss or acceleration,
individually or in the aggregate, would interfere in any
material way with the ability of Alleghany to consummate the
transactions contemplated by this Agreement; or (iii) subject
to the granting of the Alleghany Approvals, require Alleghany
to obtain any consent, approval, authorization or action of,
or make any filing with or give any notice to, any third
party, or any public, governmental or judicial authority or
violate any order, writ, injunction, decree, statutes, rule
or regulation applicable to Alleghany or its assets or
properties, the failure to make, obtain or give or the effect
of which violation, individually or in the aggregate, would
interfere in any material way with the ability of Alleghany
to consummate the transactions contemplated by this
Agreement.
6.4. Brokers. No agent, broker, investment
banker, person or firm acting on behalf of Alleghany or under
authority of Alleghany is or will be entitled to any
broker's, finder's or investment banker's fee or any other
commission or similar fee directly or indirectly from any of
the URHC Stockholders in connection with the negotiation of
any of the transactions contemplated hereby.
7. CONDITIONS TO OBLIGATIONS OF ALLEGHANY.
The obligations of Alleghany under this Agreement
are subject to the satisfaction, on or before the Closing
Date, of each of the following conditions:
7.1. Compliance with Agreement. Each of URHC, URC
and the URHC Stockholders shall have performed and complied
in all material respects with all the obligations required by
this Agreement to be performed or complied with by each of
them on or before the Closing Date, and Alleghany shall have
received from each of URHC, URC and the URHC Stockholders at
the Closing a certificate, dated the Closing Date, to that
effect. Attached to such certificate shall be a certified
copy of the resolutions of the Board of Directors of
Continental, URHC and URC or a certified copy of the written
consent of the GS Investors, as the case may be, in each case
authorizing this Agreement and the transactions contemplated
hereby.
7.2. Representations and Warranties. The repre-
sentations and warranties made by each of URHC, URC and the
URHC Stockholders in Sections 2, 3, 4 and 5 of this Agreement
shall be true and correct in all material respects as of the
Closing Date as though such representations and warranties
were made at and as of such time (except for any
representation and warranty made or given as of a specified
date, which shall have been true and correct in all material
respects as of such specified date, and except for any
changes permitted by the terms hereof or consented to by
Alleghany). Alleghany shall have received from each of URHC,
URC and the URHC Stockholders at the Closing a certificate,
dated the Closing Date, to that effect, which certificate
shall specify in reasonable detail any matters to be excepted
in accordance with this Section 7.2. Delivery of such
certificate shall constitute a representation and warranty by
each of URHC, URC and the URHC Stockholders as to the matters
stated therein, but this shall not alter the provision for
survival of representations and warranties set forth in
Section 12.1 hereof.
7.3. Opinion of Counsel for URHC, URC and the URHC
Stockholders. Alleghany shall have received an opinion from
each of (a) Debevoise & Plimpton, special counsel for
Continental, (b) the Senior Vice President, General Counsel
and Secretary of Continental, (c) Sullivan & Cromwell,
counsel for the GS Investors, (d) the General Counsel or an
Associate General Counsel or Assistant General Counsel of
Goldman, Sachs & Co., (e) Arnold & Porter, counsel for URHC
and URC, (f) Buchalter, Nemer, Fields & Younger, special
California counsel for URHC and URC, and (g) Roussos, Hage &
Hodes, special New Hampshire counsel for URHC and URC, in
each case dated the Closing Date and substantially to the
effect set forth in Exhibits C, D, E, F, G, H and I hereto,
respectively.
7.4. Approvals. All Alleghany Approvals and all
Sellers Approvals shall have been obtained and be in full
force and effect on the Closing Date. Without limiting the
generality of the foregoing, Alleghany shall have received
the requisite approvals of the consummation of the purchase
and sale of the Shares, and the transactions contemplated
hereby, from the relevant state insurance regulatory
authorities, and such approvals shall be in full force and
effect, and no such approvals shall impose upon Alleghany or
any of the Companies any conditions which materially
adversely impair the ability of any of the Companies to
conduct their business in substantially the same manner as
such business is presently being conducted.
7.5. Absence of Certain Litigation. On the
Closing Date (i) there shall be no injunction, restraining
order or order of any nature issued by any court of competent
jurisdiction which directs that this Agreement or any
material transaction contemplated hereby shall not be
consummated as herein provided or compels or would compel
Alleghany to dispose of or discontinue a significant portion
of the business conducted by Alleghany and its subsidiaries
or of the business conducted by the Companies as a result of
the consummation of the transactions contemplated hereby; and
(ii) there shall be no suit, action or other proceeding by
the United States (or any agency thereof) or by any state (or
any agency thereof) pending before any court or governmental
agency, or threatened to be filed or initiated, wherein such
complainant seeks the restraint or prohibition of the
consummation of any material transaction contemplated hereby
or asserts the illegality of any material transaction
contemplated hereby.
7.6. Transfer Taxes. Each of URHC and URC shall
have paid, or caused to be paid, all stock transfer and other
transfer taxes required to be paid in connection with the
sale and delivery to Alleghany of the Shares, and shall have
caused all appropriate stock transfer tax stamps to be
affixed to the certificate or certificates representing the
Shares so sold and delivered. Each URHC Stockholder shall
have paid, or caused to be paid, all stock transfer and other
transfer taxes required to be paid by it in connection with
the transactions contemplated by this Agreement.
7.7. Shareholders Agreement. The Shareholders
Agreement shall have been terminated in accordance with its
terms, with no further force and effect upon the management
stockholders who are parties to the Management Stock Purchase
Agreement.
7.8. Arrangements with Management Stockholders.
The closing under the Management Stock Purchase Agreement and
the closing under the Stock Purchase Related Agreement shall
have occurred, and there shall have been no modification of
the Management Stock Purchase Agreement other than pursuant
to Section 10.2 thereof without the consent of Alleghany, and
there shall be no modification of the Stock Purchase Related
Agreement other than pursuant to Section 33 thereof without
the consent of Continental; provided, however, that the
failure of the persons listed in Section 1.2 hereof to
purchase not more than one-half of the shares of Common Stock
of NHC that they were obligated to purchase in the aggregate
pursuant to the Management Stock Purchase Agreement shall not
be deemed to be a failure of the foregoing condition.
7.9. Tax Sharing Agreement. On or prior to the
Closing Date, Continental, URHC, URC, NHC, Risk Managers,
Underwriters Reinsurance and Commercial Underwriters shall
have entered into a Tax Sharing Agreement, substantially in
the form annexed hereto as Exhibit J (the "Tax Sharing
Agreement"). The Tax Sharing Agreement shall be in full
force and effect on the Closing Date and there shall have
been no modification of the Tax Sharing Agreement without the
consent of Alleghany.
7.10. Loan Agreement. On or prior to the Closing
Date, Continental or an affiliate of Continental and NHC
shall have entered into a Loan Agreement, substantially in
the form annexed hereto as Exhibit K (the "Loan Agreement").
7.11. California Tax Election. On or prior to the
Closing Date, Alleghany and URC shall have executed and
delivered to URC six copies of IRS Form 8023 (marked to
indicate that it applies for California tax purposes only)
for filing with the Franchise Tax Board of California
pursuant to the California Bank and Corporation Tax Law
Sections 24451 and 23051.5(g) to treat the sale of the stock
of NHC as a sale of NHC's assets, as described in Section
338(h)(10) of the Code, for California tax purposes only.
8. ADDITIONAL CONDITIONS TO OBLIGATIONS OF ALLEGHANY.
In addition, the obligations of Alleghany under
this Agreement are subject to the condition that all of the
following representations and warranties of NHC (which shall
have been given by NHC on the Closing Date) (a) which speak
as of the date hereof shall be true and correct in all
material respects as of the date hereof as if the defined
term "Companies" includes URHC and URC and does not include
NHC, and (b) which speak as of the Organization Date or the
Closing Date shall be true and correct in all material
respects as of the Organization Date or the Closing Date, as
the case may be (except in each case for any representation
and warranty which speaks as of any other date, which shall
be true and correct in all material respects as of such date,
and except for any changes permitted by the terms hereof or
consented to by Alleghany), and Alleghany shall have received
from the President and Chief Financial Officer of NHC a
certificate, on behalf of NHC, dated the Closing Date, to the
foregoing effect:
8.1. Organization and Standing of the Companies.
As of the date hereof (or as of the Organization Date with
respect to NHC) and as of the Closing Date, each of the
Companies is a corporation duly organized, validly existing
and in good standing under the laws of its state of
incorporation, and has all requisite corporate power and
authority to own its properties and to carry on its business
as now being conducted; and each of the Companies is duly
qualified and licensed to do business and is in good standing
in each jurisdiction where the nature of the property owned
or business conducted requires such qualification or
licensing, except for such failures to be so qualified,
licensed or in good standing as would not have a material
adverse effect on the business, financial condition or
results of operations of the Companies taken as a whole. As
of the date hereof (or as of the Organization Date with
respect to NHC) and as of the Closing Date, Schedule 8.1
hereto sets forth a true and complete list of the Companies
and all of the entities in which any of the Companies has
directly or indirectly at least a fifty percent equity
interest (the "Subsidiaries"), their jurisdictions of
incorporation and the jurisdictions in which they are
qualified to do business as a foreign corporation.
8.2. Charter and By-Laws. As of the date hereof
(or as of the Organization Date with respect to NHC) and as
of the Closing Date, the copies of the charter and by-laws of
each of the Companies which have heretofore been delivered to
Alleghany or Alleghany's counsel are true, accurate and
complete and reflect all amendments or changes in effect. As
of the date hereof (or as of the Organization Date with
respect to NHC) and as of the Closing Date, Schedule 8.2
hereto is a true and complete list of the officers and
directors of each of the Companies, which Schedule may be
updated as of the Closing Date subject to Section 8.15
hereof.
8.3. Capital Stock. As of the Organization Date
and the Closing Date, the authorized capital stock of NHC
will consist of Ten Million (10,000,000) shares of Common
Stock, 9,282,130 shares of which will be issued and
outstanding, and all of the issued and outstanding shares of
Common Stock of NHC will be duly authorized, validly issued,
fully paid and nonassessable. As of the Organization Date,
all of the issued and outstanding shares of Common Stock of
NHC will be owned by URC free and clear of all Liens except
for this Agreement, the Management Stock Purchase Agreement,
the Shareholders Agreement and the Credit Agreement. As of
the Closing Date, all of the Shares will be owned by URC free
and clear of all Liens (subject to the granting of the
Sellers Approvals). All of the issued and outstanding shares
of the capital stock of Underwriters Reinsurance and Risk
Managers are held by URC as of the date hereof, and will be
held by NHC as of the Closing Date, and all of the issued and
outstanding shares of the capital stock of Commercial
Underwriters are held by Underwriters Reinsurance, in each
case, except as set forth on Schedule 2.7 hereto, free and
clear of all Liens (subject to the granting of the Sellers
Approvals). No shares of capital stock of any of the
Companies are held in treasury. All of the issued and
outstanding shares of capital stock of the Subsidiaries have
been duly authorized and validly issued and are fully paid
and nonassessable. Except as set forth on Schedule 2.7
hereto, none of the Companies is bound by, has granted,
issued or made or agreed to grant, issue or make any
warrants, options, subscription rights or any other commit-
ments of any character relating to the issued or unissued
shares of capital stock of any of the Companies, nor is there
any agreement providing for the amendment of the charters of
any of the Companies so as to increase the amount of
authorized capital stock of such corporation. Except as set
forth on Schedule 2.7 hereto, none of the Companies is a
party to any voting trust or other agreement or understanding
with respect to the voting of the capital stock of any of the
Companies.
8.4. Authority. Neither the execution nor the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (i) conflict with or
result in a breach or violation of any of the terms,
conditions or provisions of the charters or by-laws of the
Companies; (ii) subject to the granting of the Sellers
Approvals, conflict with or result in a breach or violation
of, or default or loss of a material benefit under, or permit
the acceleration of any obligation under any provision of any
agreement, indenture, mortgage, lien, lease or other instru-
ment or restriction of any kind to which any of the Companies
is a party or by which any of their respective assets or
properties is otherwise bound, which conflict, breach,
violation, default, loss or acceleration, individually or in
the aggregate, would have a material adverse effect upon the
business, financial condition or results of operations of the
Companies taken as a whole or interfere in any material way
with the ability of any of URHC, URC or Continental to
consummate the transactions contemplated by this Agreement;
or (iii) subject to the granting of the Sellers Approvals,
require any of the Companies to obtain any consent, approval,
authorization or action of, or make any filing with or give
any notice to, any third party, or any public, governmental
or judicial authority (such consents, approvals,
authorizations, actions, filings and notices required on the
part of the Companies are set forth on Schedule 8.4 hereto),
or violate any order, writ, injunction, decree, statute, rule
or regulation applicable to any of URHC, URC or the Companies
or any of their assets or properties, the failure to make,
obtain or give or the effect of which violation, individually
or in the aggregate, would have a material adverse effect on
the business, financial condition or results of operations of
the Companies taken as a whole or interfere in any material
way with the ability of any of URHC, URC or Continental to
consummate the transactions contemplated by this Agreement.
8.5. Compliance. Except as set forth on Schedule
8.5 hereto, (a) none of the Companies is in violation of any
applicable order, judgment, injunction, award or decree, the
violation of which would have a material adverse effect upon
the business, financial condition or results of operations of
the Companies taken as a whole, and (b) none of the Companies
has received written notice that any such violation is being
alleged. Except as set forth on Schedule 8.5 hereto, none of
the Companies is in violation of any federal, state and local
laws, regulations, ordinances and governmental requirements
applicable to the operation of its business, the violation of
which would have a material adverse effect upon the business,
financial condition or results of operations of the Companies
taken as a whole, and none of the Companies has received
written notice that any such violation is being alleged.
Schedule 8.5 hereto is a true and complete list of the
jurisdictions in which each of the Companies is licensed and
authorized to engage in insurance and reinsurance or other
business and the lines of insurance or types of business it
is licensed to write or engage in in each such jurisdiction,
which Schedule may be updated as of the Closing Date provided
that the number of jurisdictions listed for each of the
Companies in the updated Schedule is not materially fewer
than listed in the Schedule as of the date hereof. Except as
set forth on Schedule 8.5 hereto, all such licenses are valid
and in full force and effect, except for such failures to be
valid or in full force and effect which would not have a
material adverse effect on the business, financial condition
or results of operations of the Companies taken as a whole.
Each of the Companies conducts no insurance or reinsurance or
other business in any other jurisdiction nor writes any line
of insurance or engages in any type of business other than
those for which it is currently licensed in any jurisdiction,
except where the failure to be so licensed would not have a
material adverse effect on the business, financial condition
or results of operations of the Companies taken as a whole.
Schedule 8.5 hereto is a true and complete list of all the
jurisdictions in which each of the Companies, within the last
five years, had its license or other qualification to conduct
an insurance business revoked, restricted or suspended
(voluntarily or involuntarily) or, to the knowledge of NHC
received any threat of action to revoke, restrict or suspend
such license or qualification. Also set forth on Schedule
8.5 are the jurisdictions in which each of the Companies
within the last five years has been involved in a proceeding
to revoke, restrict or suspend its license or other
qualification, or in which there is any proceeding pending to
revoke, restrict or suspend such license or qualification. A
copy of the report relating to the last completed insurance
regulatory examination and audit of Underwriters Reinsurance
and Commercial Underwriters, if any, has heretofore been
delivered to Alleghany or Alleghany's counsel. Except for
generally applicable legal requirements and as set forth on
Schedules 2.3, 3.1, 8.4 and 8.5 hereto, there are no agree-
ments or understandings between any of the URHC Stockholders
or any of the Companies and any regulatory authority
concerning the payment of dividends by the Companies or the
maintenance of any reserves.
8.6. Financial Statements.
(a) GAAP Financial Statements.
(i) The audited consolidated balance sheet of
URHC and its subsidiaries as of December 31, 1992 and 1991
and the related audited consolidated statements of income,
stockholders' equity and cash flows for each of the years
then ended (the "Annual Financial Statements"), which
heretofore have been delivered to Alleghany or Alleghany's
counsel, present fairly the consolidated financial position
and results of the operations of URHC and its subsidiaries
as of the dates and for the periods indicated therein in
accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods
indicated, except as may otherwise be specifically indicated
in such financial statements.
(ii) The unaudited consolidated balance sheet of
URHC and its subsidiaries as of March 31, 1993 and the
related unaudited consolidated statements of income,
stockholders' equity and cash flows for the respective three
months then ended (the "March Financial Statements"), which
heretofore have been delivered to Alleghany or Alleghany's
counsel, present fairly (subject to normal, recurring year-
end adjustments) the consolidated financial position and
results of operations of URHC and its subsidiaries as of the
dates and for the periods indicated therein in accordance
with generally accepted accounting principles applied on a
basis consistent with the Annual Financial Statements
(except as may otherwise be specifically indicated in the
notes thereto, and except that footnote presentation is as
permitted by Form 10-Q of the Securities and Exchange
Commission).
(iii) The unaudited consolidated balance sheet of
URHC and its subsidiaries as of June 30, 1993 and the
related consolidated unaudited statements of income,
stockholders' equity and cash flows for the respective six
months then ended, which will be prepared and delivered to
Alleghany or Alleghany's counsel prior to the Closing Date,
will present fairly (subject to normal, recurring year-end
adjustments) the financial position and results of
operations of URHC and its subsidiaries as of the dates and
for the periods indicated therein in accordance with
generally accepted accounting principles applied on a basis
consistent with the Annual Financial Statements (except as
may otherwise be specifically indicated in the notes
thereto, and except that footnote presentation is as
permitted by Form 10-Q of the Securities and Exchange
Commission).
(b) Statutory Financial Statements.
(i) All Annual Convention Statements required to
be filed since December 31, 1987 and the Quarterly
Convention Statements required to be filed during the period
January 1, 1993 to the date hereof with any insurance
regulatory agencies by Underwriters Reinsurance and
Commercial Underwriters have been duly filed. Such Annual
Convention Statements for the fiscal years ended December
31, 1992 and 1991 and such Quarterly Convention Statements
for the period ending March 31, 1993 (including the
financial statements on a statutory basis and the
accompanying exhibits and schedules), which have heretofore
been delivered to Alleghany or Alleghany's counsel, were
prepared in accordance with accounting practices prescribed
or permitted for insurance companies by state regulatory
authorities, applied on a consistent basis throughout such
period except as otherwise stated therein, and present
fairly, in accordance with such practices, the statutory
financial position as at the date of, and the result of its
operations for the period covered by, such Annual or
Quarterly Convention Statements. Other than as may be
reflected in the Quarterly Convention Statements for the
three months ending March 31, 1993, there has not been any
material adverse change in the statutory condition of
Underwriters Reinsurance and Commercial Underwriters taken
as a whole since the date of the Annual Convention
Statements for the fiscal year ended December 31, 1992.
(ii) As soon as reasonably practicable after they
become available, URC shall have caused Underwriters
Reinsurance to furnish to Alleghany the Quarterly Convention
Statements of Underwriters Reinsurance and Commercial
Underwriters for all interim quarterly periods subsequent to
March 31, 1993 and prior to the Closing Date. The Quarterly
Convention Statements referred to above required to be filed
with any insurance regulatory agencies shall have been duly
filed. Such Quarterly Convention Statements (including the
financial statements on a statutory basis and the
accompanying exhibits and schedules) will have been prepared
in accordance with accounting practices prescribed or
permitted for insurance companies by state regulatory
authorities, applied on a consistent basis throughout such
period except as otherwise stated therein, and will have
presented fairly in accordance with such practices the
statutory financial position of Underwriters Reinsurance and
Commercial Underwriters as at the date of, and the result of
its operations for the period covered by, such Quarterly
Convention Statements.
8.7. Investments and Other Assets.
(a) Schedule 8.7 hereto is a true and complete
list of all investments in (and the custodial location of)
bonds, stocks and other securities ("Investments") owned by
any of the Companies, other than shares of capital stock of
any of the Companies held by any of the other Companies, as
of the last day of the month immediately preceding the month
hereof, all of which Investments comply in all material
respects with applicable insurance laws and regulations,
which Schedule may be updated as of the Closing Date to
reflect transactions consistent with the Investment
Objectives set forth on Schedule 8.7 hereto. All
Investments of each of Underwriters Reinsurance and
Commercial Underwriters are admitted assets under applicable
insurance laws and regulations and statutory accounting
practices, except to the extent that failure to be admitted
assets would not have a material adverse effect on the
business, financial condition or results of operations of
Underwriters Reinsurance and Commercial Underwriters taken
as a whole. Except as disclosed on Schedule 8.7 hereto,
each of the Companies has good and marketable title to all
its Investments listed on Schedule 8.7 hereto or acquired in
the ordinary course of business since the last day of the
month immediately preceding the month hereof other than with
respect to those Investments which have been disposed of in
the ordinary course of business since such date, free and
clear of all Liens except for Liens for taxes not yet due
and payable or which are being contested in good faith by
appropriate proceedings and for which reserves have been
provided in accordance with generally accepted accounting
principles.
(b) None of the Companies has received written
notice that any of the Investments listed on Schedule 8.7
hereto or acquired in the ordinary course of business since
the last day of the month immediately preceding the month
hereof is currently in default in the payment of principal
or interest.
(c) Except as set forth on Schedule 8.7 hereto,
since March 31, 1993, except as required by agreements in
effect on March 31, 1993 and other than workouts, extensions
or enforcement of security interests on Investments owned on
March 31, 1993, none of the Companies has (i) purchased or
otherwise invested in or committed to purchase or otherwise
invest in any interest in real property (including without
limitation any extension of credit secured by a mortgage or
deed of trust on real property, but excluding instruments of
a type commonly known as mortgage-backed securities), (ii)
purchased or otherwise invested in or committed to purchase
or otherwise invest in bonds, notes, debentures or other
evidence of indebtedness rated lower than "Aa" by Moody's
Investors Service Inc. or "AA" by Standard & Poor's
Corporation at the time of purchase or the equivalent
commercial paper ratings by such rating agencies, (iii)
entered into any agreement or commitment with respect to the
purchase or other acquisition, sale or other disposition or
allocation of any Investment with any Affiliate (as defined
in Section 8.18 hereof) or (iv) entered into any agreement
or commitment with respect to any foreign investments. None
of the Companies owns any real property which is material to
the business of any of the Companies.
(d) Schedule 8.7 hereto sets forth a true and
complete list of all of the assets of the Companies that are
material to the business of the Companies taken as a whole
other than the Investments, the shares of capital stock of
any of the Companies held by any of the other Companies and
rights of the Companies under the contracts set forth on
Schedule 8.9 hereto. All such assets, and all of the rights
of the Companies under the contracts set forth on Schedule
8.9 hereto, are owned free and clear of all Liens except
those Liens that do not materially adversely affect the
value of the assets or rights of the Companies taken as a
whole. All reinsurance letters of credit and trust funds
listed on Schedule F-Part 2A-Section 1 of the Annual
Convention Statements for the fiscal year ended December 31,
1992 of each of Underwriters Reinsurance and Commercial
Underwriters are in full force and effect and comply with
requirements set by state insurance regulatory authorities
to obtain reinsurance credit therefor, except for such
failures to be in full force and effect or to comply which
would not have a material adverse effect on the business,
financial condition or results of operations of Underwriters
Reinsurance and Commercial Underwriters taken as a whole.
8.8. Intangible Property. The Companies own,
have registered or have valid rights to use such trademarks,
service marks, trade names and copyrights as are material to
the business of the Companies taken as a whole. None of the
Companies has received written notice that any of them is
infringing any such trademarks, service marks, trade names,
copyright or any application pending therefor. Each of the
Companies has valid rights, title to or interest in the
trade secrets and other proprietary rights that are material
to the businesses of the Companies taken as a whole.
8.9. Contracts and Commitments. Except as set
forth on Schedule 8.9 hereto, none of the Companies is a
party to any written or oral:
(a) contracts or commitments (including, without
limitation, reinsurance and retrocession agreements and
treaties with any person and agreements with, and
undertakings or commitments to, any governmental or
regulatory authority) materially affecting the business of
the Companies taken as a whole;
(b) retrocession agreements for business ceded by
any of the Companies that do not qualify as risk transfer in
the Annual Financial Statements or the statutory financial
statements set forth in the Annual Convention Statements;
i.e., surplus relief contracts or treaties, or assumption
reinsurance agreements which provide for the transfer and
novation of contracts of insurance;
(c) contracts or agreements containing covenants
limiting the freedom of any of the Companies in any material
respect to engage in any line of business in any geographic
area or to compete with any person;
(d) employment contracts, including without
limitation contracts to employ executive officers and other
contracts with officers or directors of any of the
Companies, which cannot be terminated by any of the
Companies upon notice of sixty days or less without penalty
or premium and involve annual salary in excess of $50,000
individually; or
(e) leases which are material to the Companies
taken as a whole.
None of the Companies is (and to the knowledge of
NHC no other party is) in breach or violation of, or default
under, any of such contracts, commitments or agreements and
no event has occurred which, with the giving of notice or
the passage of time or both, would constitute a breach,
violation or default by any of the Companies (or to the
knowledge of NHC of any other party thereto) of any of such
contracts, commitments or agreements, except for such
breaches, violations, defaults and events which would not
have a material adverse effect on the business, financial
condition or results of operations of the Companies taken as
a whole.
8.10. Accounting Practices. Except as set forth
on Schedule 8.10 hereto and except for changes disclosed in
Quarterly Convention Statements or the March Financial
Statements, since December 31, 1992, none of the Companies
has made any change in its accounting policies or any
material change in accounting methods or practices,
including, without limitation, the establishment of reserves
for unearned premiums, losses (including incurred but not
reported losses) and loss adjustment expenses, or made any
change in depreciation or amortization policies or rates
adopted by it, except as required by law, generally accepted
accounting principles or statutory accounting practices
prescribed or permitted by state regulatory authorities.
8.11. Litigation. As of the date hereof, except
as set forth on Schedule 8.11 hereto, there are no actions,
suits, proceedings, claims, investigations or examinations
pending or to the knowledge of NHC threatened against any of
the Companies or any of their respective businesses,
properties, assets, or securities, at law or in equity,
before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, having jurisdiction
or before any private arbitration panel (the "Actions")
which, if adversely determined, would result in a judgment
of more than $500,000 or which would have a material adverse
effect on the business, financial condition or results of
operations of the Companies taken as a whole. As of the
Closing Date, except as set forth on Schedule 8.11 hereto,
there are no Actions which in the reasonable judgment of
outside counsel for Alleghany (which shall be in writing and
delivered to the parties hereto) are likely to be adversely
determined and, if adversely determined, would result in a
judgment of more than Five Million Dollars ($5,000,000)
liability to the Company or which would have a material
adverse effect on the business, financial condition or
results of operations of the Companies taken as a whole.
8.12. Tax Matters.
(a) Except as disclosed on Schedule 8.12(a)
hereto, the Companies have duly and timely filed (either
separately or on a consolidated or combined basis) with the
appropriate government agencies, all material returns,
declarations, reports, information returns, statements or
extensions relating to Taxes (as hereinafter defined),
including any schedule or attachment thereto or any
amendment thereof (the "Tax Returns"), and the Tax Returns
are true, correct and complete in all material respects.
The term "Taxes", as used in this Agreement, shall mean any
federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental,
customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, real property transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest, penalty or
addition thereto.
(b) Except as disclosed on Schedule 8.12(b)
hereto, all material Taxes of the Companies for all periods
ending on the Closing Date have been (i) properly and fully
paid to the extent due and payable, and (ii) withheld and
paid over or deposited in the case of any Taxes required to
be withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, stockholder,
claimant, creditor or other party. Except as disclosed on
Schedule 8.12(b) hereto, there are no Liens on any of the
assets of the Companies that arose in connection with any
failure (or alleged failure) to pay any Taxes except for
Liens which would not have a material adverse effect on the
business, financial condition or results of operations of
the Companies taken as a whole. Except as disclosed on
Schedule 8.12(b) hereto, none of the Companies has requested
any extension of time within which to pay any material Taxes
or file any material Tax Returns except to the extent that
such Taxes will have been paid or such Tax Returns will have
been filed by the Closing Date. Except as disclosed on
Schedule 8.12(b) hereto, there is no agreement, waiver or
consent providing for an extension of time with respect to
the assessment of any material Tax deficiency against the
Companies. Except as disclosed on Schedule 8.12(b) hereto,
there is no action, suit, proceeding, investigation, audit
or claim now pending against, or with respect to any of the
Companies with regard to any Taxes, nor is any claim for
additional Taxes or assessment of Taxes threatened or
asserted in writing by any tax authority, except, in each
case, for such actions, suits, proceedings, investigations,
audits or claims that could not result in payment of an
amount of Taxes that would have a material adverse effect on
the business, financial condition or results of operations
of the Companies taken as a whole. All applicable
limitation periods for the assessment of any Taxes against
the Companies or against any corporation or other entity
included in a federal, state or local consolidated or
combined income tax return filed by or otherwise including
any of the Companies for all taxable periods ending on or
before December 31, 1986, have closed or expired.
(c) The federal and state income and premium Tax
Returns of, or which include, the Companies have not been
examined by the Internal Revenue Service or other taxing au-
thority having the responsibility for auditing such Tax
Returns for all periods beginning after the Companies'
taxable year ending December 31, 1987. Alleghany has been
provided with true and complete copies of all federal, state
and local income tax returns constituting part of the Tax
Returns which relate to the conduct of the businesses of the
Companies, as well as any correspondence and agreements with
the Internal Revenue Service or such other similar taxing
authority having the responsibility for auditing any such
income tax returns for the jurisdictions in which such
returns are filed for all periods for which assessments are
not barred by operation of the relevant statute of
limitations. The representations and warranties contained
in this paragraph (c) and all but the second sentence of
paragraph (b) of this Section 8.12 shall not apply with
respect to the federal income Taxes and the federal income
Tax Returns of any consolidated group of which any of the
Companies was a member prior to December 31, 1987.
(d) Except as set forth on Schedule 8.12(d)
hereto, (i) each of the Companies has disclosed on its
federal income Tax Returns all positions required to be
disclosed by it under Section 6662 of the Internal Revenue
Code of 1986, as amended (the "Code"), except for such
positions that, if successfully challenged by the Internal
Revenue Service, could not result in payment of an amount of
Taxes that would have a material adverse effect on the
business, financial condition or results of operations of
the Companies taken as a whole; and (ii) none of the
Companies has any liability for the Taxes of any other
person (other than another of the Companies) under Section
1.1502-6 of the Treasury Regulations, any similar provision
of state, local or foreign law.
8.13. Employee Benefit Plans. (a) Schedule 8.13
hereto sets forth a true and complete list of all employee
benefit plans, agreements, arrangements, funds, and programs
(including, without limitation, all "employee benefit plans"
within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA")) (i) which are sponsored, maintained or
contributed to by any of the Companies for the benefit of
current or former employees or directors of any of the
Companies or (ii) with respect to which any of the Companies
has any liability, whether direct or indirect, actual or
contingent (individually, a "Benefit Plan" and collectively,
the "Benefit Plans"). Except as set forth on Schedule 8.13
hereto, no other employee benefit plan, agreement,
arrangement, fund or program sponsored or maintained by any
entity currently or formerly affiliated under Section 414 of
the Code or Section 4001 of ERISA with any of the Companies
provides benefits to current or former employees or
directors of any of the Companies.
(b) With respect to each Benefit Plan, the
Companies have delivered to Alleghany copies of (i) all
Benefit Plan documents, including summary plan descriptions
and material employee communications; (ii) the two most
recent annual reports (Form 5500 series, including all
schedules and attachments); (iii) the two most recent annual
and periodic accountings of plan assets, if applicable; (iv)
the two most recent actuarial valuations, if applicable; and
(v) the most recent determination letter received from the
Internal Revenue Service.
(c) With respect to each Benefit Plan, (i) such
Benefit Plan has been administered in compliance in all
material respects with its terms and all applicable laws;
(ii) no material actions, suits or claims are pending or
threatened in respect thereof; (iii) if such Benefit Plan is
intended to qualify under Section 401(a) or 403(a) of the
Code, (A) such Benefit Plan so qualifies, (B) such Benefit
Plan has received from the Internal Revenue Service a
favorable determination letter covering the Benefit Plan as
originally adopted, and as amended by certain amendments
thereto; and (C) such Benefit Plan's qualified status is
protected with respect to subsequent amendments thereto that
are not covered by the determination letter because such
amendments may be (and will be) corrected or augmented, as
necessary, within the remedial amendment period under
Section 401(b) of the Code, which period extends beyond the
Closing Date; (iv) no fiduciary breaches or prohibited
transactions have occurred which would subject the Companies
to material liability under Title I of ERISA or Section 4975
of the Code; (v) all contributions thereto have been timely
made or reflected on the consolidated financial statements
of the Companies; (vi) all unpaid liabilities with respect
thereto have been fully reflected on the consolidated
financial statements of Underwriters Re and its
subsidiaries; and (vii) the assets of such Benefit Plan, if
a "pension plan" within the meaning of Section 3(2) of
ERISA, are not currently invested in any insurance or
annuity contract issued by an insurance company that is not
rated "A++(Superior)" in claims paying ability by A.M. Best
Company, Inc.
(d) Each Benefit Plan which is subject to Section
302 of ERISA or Section 412 of the Code (i) has no
"accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not
waived; (ii) uses a funding method permissible under ERISA
and the actuarial assumptions used in connection therewith
are permissible and reasonable, both individually and in the
aggregate; and (iii) as of the last day of the most recent
plan year ended prior to the date hereof, based on such
assumptions, had assets the fair market value of which were
at least equal to the present value of all benefit
liabilities within the meaning of Section 4001(a)(16) of
ERISA.
(e) With respect to each Benefit Plan which is an
"employee welfare benefit plan" (as defined in Section 3(1)
of ERISA): (i) the trust relating thereto, if any, satisfies
the requirements of Section 501(c)(9) of the Code; (ii) such
Benefit Plan has been administered in compliance in all
material respects with all requirements imposed under
Section 4980B of the Code and Sections 601-608 of ERISA; and
(iii) except as set forth on Schedule 8.13 hereto, no such
Benefit Plan provides health or death benefits to any
individual beyond his retirement or other termination of
employment (other than statutorily mandated continuation
coverage or conversion rights to individual coverage).
(f) No Benefit Plan is a "multiemployer plan" as
defined in Section 3(37) or 4001 of ERISA or a "multiple
employer plan" within the meaning of Section 413(c) of the
Code or Section 4064 of ERISA and none of the Companies has
any liability or obligation, whether actual or contingent,
with respect to such a multiemployer plan or a multiple
employer plan.
(g) Other than as permitted under the Management
Stock Purchase Agreement and other than the acceleration of
the vesting and the payment of the stock appreciation rights
granted under the Five Year Stock Equivalent Plan of UHRC,
the consummation of the transactions contemplated herein
shall not entitle any current or former employee of any of
the Companies to severance pay, or accelerate the time of
payment or vesting, or increase the amount of any
compensation due to any such employee or former employee.
No payment under any Benefit Plan would fail to be
deductible because of Section 280G of the Code.
8.14. Agencies, Powers of Attorney, etc.
(i) Schedule 8.14 hereto is a true and complete
list as of a current date of the names and addresses of each
agency of any of the Companies that has any authority to
bind any of them to issue an insurance policy, with a
general description of the type of agency or binding
authority granted, which Schedule may be updated as of the
Closing Date provided that any changes in the updated
Schedule will not have a material adverse effect on the
ability of Commercial Underwriters to conduct its business
as now being conducted.
(ii) The Companies have made available to
Alleghany copies of all forms of agreements or other
instruments granting any powers of attorney, agency or
binding authority, including all current form agency
contracts, of each of the Companies.
8.15. Employees. Schedule 8.15 hereto is a true
and complete list of all employees of each of the Companies
whose annual salary exceeds $50,000, the current salary of
each such employee (which information may be updated as of
the Closing Date subject to the other provisions of this
Section 8.15), the salaries, incentive awards, bonuses and
other compensation paid to each such employee for the year
ended December 31, 1992 (shown separately), and whether any
such employee has a written employment agreement with any of
the Companies. All such employment agreements will continue
in full force and effect after the Closing, except for the
modifications set forth on Schedule 10.1(b)(i) hereto,
without triggering any severance payments or other
penalties. The employees of the Companies listed on
Schedule 8.15(a) hereto are actively employed by the
Companies and have not given notice of termination or
resignation. Except as set forth on Schedule 8.15 hereto
(which information may be updated as of the Closing Date
subject to the other provisions of this Section 8.15), since
December 31, 1992, none of the Companies has terminated or
experienced the resignation of any employee whose annual
salary exceeded $50,000. There are no collective bargaining
agreements relating to any employees of any of the
Companies. Within the last two years none of the Companies
has experienced any material work stoppage or union
recognition efforts, or has been the subject of any
collective bargaining or a party to any collective
bargaining agreement.
8.16. Insurance. Schedule 8.16 hereto sets forth
a true and complete list of all policies of insurance
(excluding retrocession agreements and similar agreements)
maintained by each of the Companies with respect to their
respective properties and the conduct of their respective
businesses, showing the subject matter, the beneficiary and
the amount of coverage for each policy, which Schedule may
be updated as of the Closing Date provided that coverage and
premiums continue to be substantially similar to those
reflected in the Schedule as of the date hereof. Other than
life insurance policies, the insurance coverage provided by
such policies of insurance in force is reasonably adequate
for the conduct of the business conducted by each of the
Companies in accordance with sound business practices.
8.17. Brokers. Except as set forth on Schedule
8.17 hereto, no agent, broker, investment banker, person or
firm acting on behalf of any of the Companies or under
authority of any of them is or will be entitled to any
broker's, finder's or investment banker's fee or any other
commission or similar fee directly or indirectly from any of
the parties hereto in connection with the negotiation of any
of the transactions contemplated hereby.
8.18. Transactions with Affiliates. Schedule
8.18 hereto is a true and correct list of transactions,
contracts and other obligations (other than payments of
salary, bonus, employee benefits and other employee-related
expense reimbursements paid to employees of any of the
Companies) since December 31, 1991 between any one of the
Companies and (i) any stockholders, directors, officers,
employees or agents of any of the Companies; (ii) any person
that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, any of the persons listed in clause (i)
hereof (except, with respect to the GS Investors, this
clause (ii) shall apply only to the Goldman Subsidiaries);
or (iii) any member of the immediate family (as defined in
Rule 16a-1(e) of the Securities and Exchange Commission) of
any of the persons listed in clause (i) hereof (the persons
referred to in clauses (ii) and (iii) hereof are together
referred to as the "Affiliates"), (except in each case for
Ordinary Course Broker, Dealer or Investment Transactions
and the Note Transactions), including all such transactions
involving, in each case, $60,000 or more. As of the Closing
Date, none of the Companies shall have any obligations
involving $60,000 or more to URHC, URC, any of the
stockholders, directors, officers, employees or agents of
either URHC or URC, or any of their respective Affiliates,
except (x) for Ordinary Course Broker, Dealer or Investment
Transactions, (y) as reflected on Schedule 8.18 hereto or
(z) pursuant to this Agreement, the Tax Sharing Agreement,
the Loan Agreement or the Stock Purchase Related Agreement.
8.19. Regulatory Filings. Except with respect to
Taxes and Benefit Plans, which are subject to the provisions
of Sections 8.12 and 8.13, respectively, each of the
Companies has filed all reports, statements, documents,
registrations, filings or submissions required to be filed
by it with any governmental or regulatory agency, except
where failure to so file would not have a material adverse
effect on the business, financial condition or results of
operations of the Companies taken as a whole, and except (i)
those with respect to which the imposition, levy or
collection of all fines, penalties, assessments, taxes,
forfeitures, money judgments or sanctions of any type are
barred by statute of limitations, and (ii) as otherwise
agreed to in writing by the applicable governmental or
regulatory agency. Except as indicated on Schedule 8.19
hereto, (x) all such registrations, filings and submissions
were in compliance with applicable law when filed, and (y)
no deficiencies have been asserted by any such governmental
or regulatory agency with respect to such registrations,
filings or submissions that have not been satisfied, except
for such failure to comply and deficiencies which would not
have a material adverse effect on the business, financial
condition or results of operations of the Companies taken as
a whole.
8.20. Registration Statement. A copy of the
Registration Statement has been furnished to Alleghany. As
of its filing date, the Registration Statement did not
contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, not misleading, except that no
representation or warranty is made with respect to the
matters set forth on Schedule 8.20 hereto to the extent such
matters were not described in the Registration Statement, or
with respect to the accounting treatment for funded covers
as reflected in the Registration Statement to the extent
that such treatment is inconsistent with the accounting
treatment therefor referred to in Note 1 to the Annual
Financial Statements and reflected in the Annual Financial
Statements.
8.21. Reserves. Except for any action taken
pursuant to Section 10.1(j) hereof, the insurance reserving
practices and policies of any of the Companies have not
changed in any material respect since December 31, 1992, and
the results of the application of such practices and
policies are reflected in the Convention Statements, it
being understood that for this purpose any change in
reserves resulting from the change in accounting policy
described in Note 1 to the Annual Financial Statements shall
not be deemed a change in reserving practices or policies.
All information in the possession of any of the Companies
and requested by Alleghany with reasonable specificity that
is material to an evaluation of the adequacy of the loss
reserves (including, without limitation, incurred but not
reported reserves), loss adjustment expense reserves and
unearned premium reserves of the Companies as of December
31, 1992 has been made available to Alleghany.
8.22. Absence of Bank or Savings and Loan Status.
None of the Companies (a) is an "insured bank" or is
eligible for federal deposit insurance within the meaning of
the Federal Deposit Insurance Act, as amended; (b) is a
"savings association" for purposes of the Regulations for
Savings and Loan Holding Companies, 12 CFR Section 583-584 and
the Regulations for the Acquisition of Control of Savings
Associations, 12 CFR Section 574; (c) accepts deposits within the
meaning of 12 U.S.C. Section 378; (d) is a "bank" or a "bank
holding company"; (e) owns or "controls" 5 percent or more
of the voting securities of a "bank" or "bank holding
company," as such terms are defined in the Bank Holding
Company Act of 1956, as amended, and the regulations
promulgated thereunder; (f) is regulated as a bank under the
laws or regulations of its jurisdiction of incorporation;
(g) is a "savings and loan holding company"; (h) "controls"
any "savings association," as such terms are defined in 12
CFR Section 574 and 583; (i) has acquired by purchase or
otherwise, or retains, more than 5 percent of the voting
stock or shares of a "savings association" or "savings and
loan holding company," as such terms are defined in 12 CFR
Section 583; or (j) is regulated as a savings and loan institution
under the laws or regulations of its jurisdiction of
incorporation.
8.23. No Material Adverse Change. Since December
31, 1992, there has not been any material adverse change in
the business, financial condition or results of operations
of the Companies taken as a whole as reflected in the Annual
Financial Statements as of December 31, 1992, whether or not
arising from transactions in the ordinary course of
business.
8.24. No Dividends. Except as set forth in the
Registration Statement or on Schedule 8.24 hereto, and
except as permitted by Section 10.1(b)(iv) hereof, since
December 31, 1992, there has not been any declaration,
setting aside or payment of any dividend or other
distribution in respect of the capital stock of any of the
Companies or any direct or indirect redemption, purchase or
other acquisition by any of the Companies of any such stock;
or except as required pursuant to Section 10.2(b) hereof,
since December 31, 1992, there has not been any sale,
assignment, transfer or other disposition of any Investment
other than in the ordinary course of business and consistent
with the Investment Objectives set forth on Schedule 8.7
hereto, or any amendment, termination or waiver of any right
of substantial value belonging to or held by any of the
Companies.
9. CONDITIONS TO OBLIGATIONS OF URHC, URC AND THE URHC
STOCKHOLDERS.
The obligations of URHC, URC and the URHC
Stockholders under this Agreement are subject to the
satisfaction, on or before the Closing Date, of each of the
following conditions:
9.1. Compliance with Agreement. Alleghany shall
have performed and complied in all material respects with
all the obligations required by this Agreement to be
performed or complied with by it on or before the Closing
Date, and each of URHC, URC and the URHC Stockholders shall
have received from Alleghany at the Closing a certificate,
dated the Closing Date, to that effect. Attached to such
certificate shall be a certified copy of the resolutions of
the Board of Directors of Alleghany authorizing this
Agreement and the transactions contemplated hereby.
9.2. Representations and Warranties. The repre-
sentations and warranties made by Alleghany in Section 6 of
this Agreement shall be true and correct in all material
respects as of the Closing Date as though such
representations and warranties were made at and as of such
time (except for any representation and warranty made or
given as of a specified date, which shall have been true and
correct in all material respects as of such specified date,
and except for any changes permitted by the terms hereof or
consented to by each of URHC, URC and the URHC
Stockholders). Each of the URHC Stockholders shall have
received from Alleghany at the Closing a certificate, dated
the Closing Date, to that effect, which certificate shall
specify in reasonable detail any matters to be excepted in
accordance with this Section 9.2. Delivery of such
certificate shall constitute a representation and warranty
by Alleghany as to the matters stated therein, but this
shall not alter the provision for survival of
representations and warranties set forth in Section 12.1
hereof.
9.3. Opinion of Counsel for Alleghany. Each of
URHC, URC and the URHC Stockholders shall have received an
opinion from Messrs. Donovan Leisure Newton & Irvine,
counsel for Alleghany, dated the Closing Date substantially
to the effect set forth in Exhibit L hereto.
9.4. Approvals. All Alleghany Approvals and
Sellers Approvals shall have been obtained and be in full
force and effect on the Closing Date.
9.5. Absence of Certain Litigation. On the
Closing Date (i) there shall be no injunction, restraining
order or order of any nature issued by any court of
competent jurisdiction which directs that this Agreement or
any material transaction contemplated hereby shall not be
consummated as herein provided or compels or would compel
Alleghany to dispose of or discontinue a significant portion
of the business conducted by Alleghany and its subsidiaries
or of the business conducted by the Companies as a result of
the consummation of the transactions contemplated hereby;
and (ii) there shall be no suit, action or other proceeding
by the United States (or any agency thereof) or by any state
(or any agency thereof) pending before any court or
governmental agency, or threatened to be filed or initiated,
wherein such complainant seeks the restraint or prohibition
of the consummation of any material transaction contemplated
hereby or asserts the illegality of any material transaction
contemplated hereby.
9.6. Transfer Taxes. Alleghany shall have filed,
independently or jointly with each of URHC, URC and the URHC
Stockholder, as the law requires, all real property and
other transfer tax filings required to be filed by or with
the cooperation of Alleghany in connection with the sale and
delivery to Alleghany of the Shares.
9.7. Arrangements with Management Stockholders.
The closing under the Management Stock Purchase Agreement
and the closing under the Stock Purchase Related Agreement
shall have occurred, and there shall have been no
modification of the Management Stock Purchase Agreement
other than pursuant to Section 10.2 thereof without the
consent of Alleghany, and there shall be no modification of
the Stock Purchase Related Agreement other than pursuant to
Section 33 thereof without the consent of Continental;
provided, however, that the failure of the persons listed in
Section 1.2 hereof to purchase not more than one-half of the
shares of Common Stock of NHC that they were obligated to
purchase in the aggregate pursuant to the Management Stock
Purchase Agreement shall not be deemed to be a failure of
the foregoing condition.
9.8. Tax Sharing Agreement. On or prior to the
Closing Date, Continental, URHC, URC, NHC, Risk Managers,
Underwriters Reinsurance and Commercial Underwriters shall
have entered into the Tax Sharing Agreement. The Tax
Sharing Agreement shall be in full force and effect on the
Closing Date and there shall have been no modification of
the Tax Sharing Agreement without the consent of Alleghany.
9.9. California Tax Election. On or prior to the
Closing Date, Alleghany and URC shall have executed and
delivered to URC six copies of IRS Form 8023 (marked to
indicate that it applies for California tax purposes only)
for filing with the Franchise Tax Board of California
pursuant to the California Bank and Corporation Tax Law
Sections 24451 and 23051.5(g) to treat the sale of the stock
of NHC as a sale of NHC's assets, as described in Section
338(h)(10) of the Code, for California tax purposes only.
10. COVENANTS.
10.1. Covenants Pending the Closing. From and
after the date hereof and until the Closing Date each of the
parties hereto agrees that, for purposes of this Section
10.1 the defined term "Companies" includes URHC and URC
until but only until the actions to be taken pursuant to
Section 10.2(b) have been taken, and each of URHC and URC
agrees that:
(a) Access to Properties, Books and Records.
Each of URHC and URC shall use its reasonable efforts to
cause to be afforded upon reasonable notice to the officers,
attorneys, accountants and other authorized representatives
of Alleghany, free and full access during normal business
hours to the Companies and to the employees, properties,
books and records of each of the foregoing in order to
afford Alleghany the opportunity to make such investigations
of the affairs of the Companies as they deem desirable.
Each of URHC and URC shall use reasonable efforts to cause
the Companies to furnish to Alleghany such information
relating to their respective businesses and affairs (and
which is reasonably available to the Companies) as Alleghany
shall from time to time reasonably request. Alleghany will
treat all information obtained as a result of its
investigation as confidential in accordance with the
provisions of the letter agreement dated June 4, 1993
between URHC and Alleghany. The parties agree that such
letter agreement shall remain in full force and effect in
accordance with its terms until the Closing, and that
nothing contained herein shall limit Alleghany's covenants
and agreements therein. In the event that the Closing shall
not take place for any reason, Alleghany shall return or
destroy all materials furnished and shall destroy all copies
of such materials made by Alleghany, and agrees not to
disclose to any third party any information contained
therein or derived therefrom and not to use such information
to the competitive disadvantage of URHC and its
subsidiaries.
(b) Carry On in Regular Course. Each of URHC
and URC shall use its reasonable efforts to cause each of
the Companies to carry on its business in the ordinary
course in substantially the same manner as heretofore
conducted, and consistent with the representations and
warranties set forth in Section 8 hereof. Each of URHC and
URC shall use its reasonable efforts to cause each of the
Companies not to, without the prior written consent of
Alleghany, (i) enter into any written employment agreements
or any other employment agreements which cannot be
terminated by any of the Companies upon notice of sixty days
or less without penalty or premium, or grant any bonuses to
any of its employees or alter or increase the present
compensation of its employees other than in the ordinary
course of business consistent with past practice or in any
way amend the current terms of the employee benefit plans
applicable to its employees, except in each case (A) as
required by law; (B) as provided on Schedule 10.1(b)(i)
hereto; (C) as permitted under the Management Stock Purchase
Agreement; (D) not later than two (2) business days before
the Closing Date, the vesting of the stock appreciation
rights under the Five Year Stock Equivalent Plan of UHRC may
be accelerated and a liability for payment thereof may be
accrued, pursuant to Section 10.2(f) hereof; (E) prior to
December 1993, URHC may make employer matching contributions
under the Incentive Savings Plan and the Supplemental
Incentive Savings Plan for the 1993 plan year in an
aggregate amount not to exceed $550,000, and URHC may accrue
liabilities on its financial statements relating to the
profit-sharing component of the Incentive Savings Plan and
the Supplemental Incentive Savings Plan for the 1993 plan
year in an aggregate amount of between $802,000 and
$1,337,000; (F) prior to December 1993, URHC may determine
and pay bonus awards under the Annual Management Incentive
Plan to certain employees for 1993 based upon the applicable
individual performance ratings for 1992; (G) prior to
December 1993, URHC may terminate the Defined Benefit
Retirement Plan and provide for the allocation and
distribution of the vested benefits thereunder, and may
amend the Supplemental Retirement Plan to provide for new
payment options; and (H) URHC may make the payments to
Steven H. Newman, Peter A. Bengelsdorf and Russell T. John
required pursuant to letter agreements dated July 28, 1993
between URHC and each of such persons pursuant to Section
10.2(h) hereof; (ii) incur or contract for any capital
expenditures in excess of $400,000 in the aggregate; (iii)
except for actions pursuant to Section 10.1(j) hereof, make
any material change in accounting methods or practices
(including without limitation any change with respect to
establishment of reserves for unearned premiums, losses
(including without limitation incurred but not reported
losses) and loss adjustment expenses, or any change in
depreciation or amortization policies or rates adopted by
it), except as required by law, generally accepted
accounting principles or statutory accounting practices
prescribed or permitted for insurance companies by state
regulatory authorities; (iv) declare, set aside or pay any
dividend or other distribution in respect of the capital
stock of any of the Companies except as set forth on
Schedule 10.1(b)(iv) hereto, or directly or indirectly
redeem, purchase or otherwise acquire any of such stock
except as permitted by this Agreement and the Management
Stock Purchase Agreement; provided, however, that, except as
may be required by the Shareholders Agreement with respect
to a maximum of 22,162 shares of common stock of URHC owned
by the persons in Section 1.2 hereof, URHC shall not
declare, set aside or pay any dividend or other distribution
in respect of its capital stock, and shall not directly or
indirectly redeem, purchase or otherwise acquire any of its
capital stock; or (v) do any other act which would render
NHC unable to provide the certificate required by Section 8
hereof, or cause any representation or warranty of URHC, URC
or any URHC Stockholder in this Agreement to be or become
untrue in any material respect as of the date made or given
or to be made or to be given.
(c) Preservation of Organization. Each of URHC
and URC shall use its reasonable efforts to cause each of
the Companies to maintain its corporate existence and powers
and its qualifications as a foreign corporation in any
jurisdiction where it is so qualified and to maintain its
books, accounts and records on a basis consistent with that
of its prior periods and in a manner which permits
presentation of information in accordance with generally
accepted accounting principles. Each of URHC and URC shall
use its reasonable efforts to cause each of the Companies to
(i) preserve intact its business organization, (ii) keep
available to Alleghany its present key officers and
employees, (iii) maintain all of its properties (except for
obsolete property) in customary repair, order and condition,
(iv) take all steps reasonably necessary to maintain its
intangible assets, and (v) preserve for Alleghany its
relationships with its clients, suppliers and others having
business relations with it.
(d) No Mergers, Consolidations, Sale of Stock,
Etc. URHC and URC will not and will not cause any of the
Companies to, directly or indirectly, solicit any inquiries
or proposals or enter into or continue any discussions,
negotiations or agreements relating to the sale or exchange
of any Shares, the merger of any of the Companies with, or,
except as permitted by this Agreement, the direct or
indirect disposition of a significant amount of any of the
Companies' assets or business to, any person other than
Alleghany or provide any assistance or any information to or
otherwise cooperate with any person in connection with any
such inquiry, proposal or transaction. In the event that
URHC, URC or any URHC Stockholder receives a solicited or
unsolicited offer for such a transaction or obtains
information that such an offer is likely to be made, it will
provide or will cause to be provided to Alleghany notice
thereof as soon as practical after receipt thereof,
including the identity of the prospective purchaser or
soliciting party.
(e) Reinsurance Agreements. URHC and URC shall
use its reasonable efforts to cause the Companies not to,
without the prior written approval of Alleghany, and except
pursuant to commitments existing on the date hereof, (i)
enter into or commit to enter into any commutation, loss
portfolio transfer or other similar transaction, agreement
or arrangement or series of related transactions, agreements
or arrangements involving any assumed or ceded reinsurance
of any of the Companies that involves payments to or from
any of the Companies in an amount in excess of $2.5 million
or (ii) enter into or commit to enter into any reinsurance
or retrocession contract, treaty or other arrangement or
series of contracts, treaties or other arrangements that
create any liability in excess of $2.5 million.
(f) Consent of Alleghany. Consents which may be
given or withheld by Alleghany regarding the conduct of the
business of the Companies prior to the Closing shall not
constitute an undertaking, commitment or representation by
Alleghany nor give rise to any obligation or liability of
Alleghany with respect to the subject matter of such
consent; provided, however, that nothing shall relieve
Alleghany of any obligation to act reasonably in connection
with withholding its consent.
(g) Filings and Approvals. URHC, URC, the URHC
Stockholders and Alleghany shall duly make all regulatory
filings required to be made by each in respect of this
Agreement or the transactions contemplated hereby.
Alleghany shall use its reasonable efforts to obtain, and
each of URHC, URC, the URHC Stockholders and the Companies
shall use its reasonable efforts to assist Alleghany in
obtaining, all Alleghany Approvals.
(h) Reasonable Efforts. Each of the parties
hereto agrees to use its reasonable efforts to take such
reasonable action as may be necessary or appropriate in
order to effectuate the transactions contemplated hereby as
promptly as reasonably practicable. Subject to the
satisfaction or waiver of the conditions precedent set forth
herein, each of the parties hereto agrees to use its
reasonable efforts to effectuate the Closing not later than
one (1) day after the sale of shares of common stock of URHC
by the GS Investors to Continental.
(i) Publicity. Except as required by law, the
parties agree to notify each other prior to issuing any
press release or making any public statement regarding the
transactions contemplated hereby, and will attempt to obtain
the reasonable approval of the other parties prior to making
such release or statement, and the parties hereto shall
issue a mutually acceptable press release as soon as
practicable after the execution of this Agreement and after
the Closing Date.
(j) Reserves. Alleghany may cause NHC to make
such additional provisions to reserves immediately prior to
the Closing as Alleghany and the President and Chief
Executive Officer of NHC may by mutual agreement determine;
provided, however, that any such additional provisions to
reserves shall not be made until the satisfaction or waiver
of the conditions precedent set forth herein and, provided
further, that the making of any such additional provisions
to reserves shall not be deemed to be a material adverse
change in the business, financial condition or results of
operations of the Companies taken as a whole as reflected in
the Annual Financial Statements as at December 31, 1992.
10.2. Covenants on or Prior to the Closing Date.
(a) Organization and Capitalization of NHC.
Prior to the Closing Date, URHC and URC shall cause NHC to
be organized by filing the form of charter for NHC set forth
on Schedule 2.6(a) hereto with the Secretary of State of the
State of Delaware, and shall cause NHC to issue to URC
9,282,130 shares of Common Stock of NHC, all in a manner
consistent with the representations and warranties in this
Agreement.
(b) Rights, Assets and Liabilities. Immediately
prior to the Closing, URHC and URC shall transfer to the
Companies such rights, assets and liabilities possessed by
URHC and URC as are necessary so that the Companies shall
own at the Closing all of the rights, assets and liabilities
owned by URHC, URC and the Companies immediately prior to
such transfer, provided that the rights, assets and
liabilities listed on Schedule 10.2(b)(i) hereto shall not
be so transferred and the rights, assets and liabilities so
transferred shall include without limitation those set forth
on Schedule 10.2(b)(ii) hereto. Such transfers shall cause
no diminution or impairment whatsoever of any such rights,
assets or liabilities.
(c) FIRPTA. On or prior to the Closing Date,
each of URHC, URC and the URHC Stockholders shall provide
Alleghany with a certificate of its non-foreign status that
meets the requirements of Section 1.1445-2(b)(2)(i) of the
Treasury Regulations.
(d) Credit Agreement. Alleghany agrees that it
will enter into appropriate arrangements with URC and the
lenders under the Credit Agreement (which may include
refinancing provided directly by Alleghany) to release URC
from all obligations under the Credit Agreement on or prior
to the Closing Date. Each of Continental, URHC and URC
agrees to cooperate with Alleghany to take such reasonable
action as may be necessary or appropriate on or prior to the
Closing Date in order to replace the Credit Agreement with
substantially comparable arrangements.
(e) Certain Expenses. Alleghany agrees that the
Companies shall be liable for the reasonable expenses
incurred by URHC, URC or any of the Companies in connection
with the Registration Statement as set forth on Schedule
10.2(e) hereto, and the reasonable out-of-pocket expenses,
including fees and disbursements of counsel, incurred by
Goldman, Sachs & Co. as financial advisor to URHC and URC,
not in excess of Two Million Dollars ($2,000,000) in the
aggregate. Payment of such reasonable expenses identified
on Schedule 10.2(e) hereto and such reasonable out-of-pocket
expenses incurred by Goldman, Sachs & Co. shall be against
documentation thereof which is reasonably acceptable to
Alleghany.
(f) SARs. URHC shall (i) terminate the Five Year
Stock Equivalent Plan of URHC (the "SAR Plan") not later
than two (2) business days before the Closing Date (the "SAR
Termination Date"), (ii) cause all rights of all
participants which are then outstanding under the SAR Plan
(the "SAR Rights") to become fully vested and
nonforfeitable, (iii) cause the amount payable to each
participant in the SAR Plan with respect to the SAR Rights
held by such participant to become fixed, due and payable as
of the SAR Termination Date (the "Fixed SAR Amount"),
(iv) deem all such SAR Rights to be exercised as of the SAR
Termination Date, and (v) cancel the SAR Rights of each
participant under the SAR Plan as of the SAR Termination
Date (subject only to the requirement that such participant
receive payment of the applicable Fixed SAR Amount as soon
as practicable after such SAR Termination Date).
(g) Stock Options. URHC shall cause all stock
options held by the Management Stockholders (as defined in
the Management Stock Purchase Agreement) granted under the
Underwriters Re 1987 Stock Option Plan (the "Option Plan")
that are not currently exercisable to become exercisable not
later than two (2) business days before the Closing Date and
shall cause each of the Management Stockholders to exercise
any and all of the stock options granted to such Management
Stockholder under the Option Plan that are then outstanding
not later than two (2) business days before the Closing Date
in accordance with the terms of any applicable Nonstatutory
Stock Option Agreement entered into between URHC and a
Management Stockholder.
(h) On or before the Closing Date, Continental
shall contribute to URHC an amount in cash equal to the
aggregate amount payable by URHC pursuant to letter
agreements dated July 28, 1993 between URHC and each of
Steven H. Newman, Peter A. Bengelsdorf and Russell T. John.
10.3. Additional Covenants.
(a) Further Assurances. Each of URHC, URC and
the URHC Stockholders agrees, severally and not jointly,
that it will from time to time at and subsequent to the
Closing Date, at the request of Alleghany and without
further consideration, execute and deliver such other
instruments of conveyance, assignment and transfer and take
such other actions as Alleghany may reasonably request in
order more effectively to convey, assign, transfer to and
vest in Alleghany, or any of Alleghany's wholly owned
subsidiaries designated hereunder, (i) the Shares and the
right to operate the businesses of the Companies, and
(ii) all of the rights, assets and liabilities of URHC and
URC which are to be transferred to the Companies as provided
in this Agreement.
(b) Non-Solicitation. Each of Continental, URHC
and URC agrees that, for a period of three years after the
Closing Date, it will not participate or engage, directly or
indirectly, in the solicitation for employment with an
employer other than the Companies of any of the current
employees of URHC, URC or any of the Companies and, except
as set forth on Schedule 10.3(b) hereto, Goldman, Sachs &
Co. agrees that, for a period of three years after the
Closing Date, neither the Principal Investment Area nor the
Investment Banking Division of Goldman, Sachs & Co. will
participate or engage, directly or indirectly, in the
solicitation for employment with an employer other than the
Companies of any of the employees of URHC, URC or any of the
Companies listed on Schedule 8.15 hereto; provided, however,
that such solicitation may be made by those entities that
are subject to the foregoing prohibitions with respect to
employees covered by the foregoing prohibitions who (i) are
terminated by any of the Companies but not earlier than
fifteen (15) months after such termination, or (ii) resign
from such employ but not earlier than two years after such
resignation.
(c) California Tax Election. URC and Alleghany
agree to (i) cooperate in the preparation of revisions to
Form 8023 (as described in Sections 7.11 and 9.9) to make
any necessary corrections, amendments or supplements thereto
which are mutually acceptable to URC and Alleghany and
(ii) file jointly such Form with the Franchise Tax Board of
California on or before the fifteenth day of the ninth month
beginning after the Closing Date.
(d) Change of Name. Each of URHC and URC agrees
to change its name immediately after the Closing Date to a
name that does not use the word "Underwriters," and agrees
not to use the word "Underwriters" in its name thereafter.
11. TERMINATION, AMENDMENT, WAIVERS.
11.1. Termination. At any time prior to the
Closing Date, this Agreement may be terminated:
(i) by mutual written consent of the parties
hereto;
(ii) by Alleghany at any time after December 31,
1993, if any of the conditions set forth in Articles 7
and 8 hereof have not been met and have not been waived
in writing by Alleghany; or
(iii) by URHC, URC or any of the URHC
Stockholders at any time after December 31, 1993, if
any of the conditions set forth in Article 9 hereof
have not been met and have not been waived in writing
by each of URHC, URC or the URHC Stockholders.
In the event of any termination pursuant to this Section
11.1, this Agreement shall thereupon become void and of no
further force or effect (other than the obligations of
Alleghany pursuant to Section 10.1(a) hereof, the agreement
of Continental pursuant to Section 13.2 hereof, and the
obligations of all parties hereto pursuant to Sections 12.2
and 12.3 hereof, which shall in each case continue in full
force and effect) and there shall be no liability for breach
of any representation, warranty, covenant or agreement
contained herein or for indemnification under
Sections 12.2(a), 12.2(b), 12.2(c), 12.2(d) or 12.3 hereof
on account of any breach of any representation, warranty,
covenant or agreement contained herein, on the part of any
party hereto or their respective officers, directors or
partners in respect thereof, except for any breach of the
agreement of Continental set forth in Section 13.2 hereof
and except for a willful breach by such party hereto of any
of its representations, warranties, covenants or agreements
set forth in this Agreement which results in such
termination.
11.2. Amendment. This Agreement may be amended,
modified, superseded or supplemented only by an instrument
in writing executed and delivered on behalf of each of the
parties hereto.
11.3. Waivers. The representations, warranties,
covenants or conditions of this Agreement may be waived only
by a written instrument executed by the party so waiving.
The failure of any party at any time or times to require
performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce
the same. No waiver by any party of any condition, or
breach of any term, covenant, agreement, representation or
warranty contained in this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of
any other condition or of the breach of any other term,
covenant, agreement, representation or warranty contained in
this Agreement.
12. INDEMNIFICATION.
12.1. Survival of Representations, Etc. The
representations and warranties, covenants and obligations of
each of URHC, URC, the URHC Stockholders and Alleghany
contained herein shall not survive the Closing Date, except
that the representations and warranties contained in Section
2.1 (Title to Shares), Section 2.7 (Capital Stock), Section
2.8 (Rights, Assets and Liabilities), Section 3.2
(Transactions with URHC Stockholders) and Section 4.3
(Reinsurance Agreements with Continental), the covenants
contained in Section 10.3 and the agreement of Continental
contained in Section 13.2, shall survive the Closing Date,
without regard to any investigation made by the parties
hereto (provided that Section 10.3(b) shall survive only for
a period of four years after the Closing Date).
Notwithstanding the foregoing, the provisions of this
Section 12 shall survive the Closing.
12.2. Indemnification. (a) Each URHC
Stockholder shall, severally and not jointly, indemnify
Alleghany and each of the Companies and their affiliates for
any damage, claim, liability or expense, including without
limitation, interest, penalties and reasonable attorneys'
fees, but excluding lost profit and consequential damages
(collectively "Damages"), arising out of (i) in the event of
a Closing, the breach of any representation, warranty or
covenant of such URHC Stockholder contained in this
Agreement which survives the Closing, and (ii) in the event
that a Closing does not take place, the willful breach of
any representation, warranty, covenant or agreement of such
URHC Stockholder contained in this Agreement.
(b) Continental shall indemnify Alleghany and
each of the Companies and their affiliates for any Damages
arising out of (i) in the event of a Closing, the breach of
any representation, warranty or covenant of URHC or URC
contained in this Agreement which survives the Closing, and
(ii) in the event that a Closing does not take place, the
willful breach of any representation, warranty, covenant or
agreement of URHC or URC contained in this Agreement.
(c) Each of URHC and URC shall indemnify
Alleghany and each of the Companies and their affiliates for
any Damages arising out of (i) in the event of a Closing,
the breach of any representation, warranty or covenant of
URHC or URC contained in this Agreement which survives the
Closing, and (ii) in the event that a Closing does not take
place, the willful breach of any representation, warranty,
covenant or agreement of URHC or URC contained in this
Agreement.
(d) Alleghany shall indemnify each of URHC, URC
and the URHC Stockholders for any Damages arising out of the
willful breach of any representation, warranty, covenant or
agreement of Alleghany contained in this Agreement in the
event that a Closing does not take place.
(e) Other than with respect to such tax matters
as are provided for in the Tax Sharing Agreement,
Continental shall indemnify Alleghany and each of the
Companies for any Damages or diminution or impairment of any
rights or assets of URHC, URC or the Companies, or any
benefits possessed by URHC, URC or the Companies,
immediately prior to the transfer, arising out of
(i) Alleghany's purchase of the Shares that Alleghany or any
of the Companies would not have incurred or suffered if
Alleghany had acquired about 93 percent of the outstanding
capital stock of URHC at the Closing (which percentage
includes the stock of URHC to have been acquired from the
management stockholders), and no changes had occurred in the
ownership of URHC capital stock prior to the Closing, and
(ii) the Companies having been majority-owned subsidiaries
of Continental prior to the Closing, including without
limitation liabilities of Continental and its affiliates
arising under Section 414 of the Code or Section 4001 of
ERISA.
12.3. Indemnification Procedures.
(a) Any party hereto entitled to indemnification
pursuant to Section 12.2 (the "Indemnitee") shall promptly
notify the party or parties responsible for such
indemnification (the "Indemnitor") if the Indemnitee becomes
aware of any Damages with respect to which indemnity may be
asserted; and the failure to give such notice promptly shall
not relieve the Indemnitor of its obligations hereunder
except to the extent the Indemnitor is prejudiced thereby.
Promptly after (x) the receipt by an Indemnitee of notice
under Section 12.2 of any third party claim or (y) the
commencement of any action or proceeding, the Indemnitee
will, if a claim with respect thereto is to be made against
the Indemnitor, give the Indemnitor written notice in
reasonable detail of such claim or the commencement of such
action or proceeding and shall permit the Indemnitor to
assume the defense of any such claim or any litigation
resulting from such claim. Failure by the Indemnitor to
notify the Indemnitee of its election to defend any such
action within a reasonable time, but in no event more than
thirty days after notice thereof shall have been given to
the Indemnitor, shall be deemed a waiver by the Indemnitor
of its right to defend such action.
(b) If the Indemnitor assumes the defense of any
such claim or litigation resulting therefrom, the
obligations of the Indemnitor as to such claim shall be
limited to taking all steps necessary in the defense or
settlement of such claim or litigation resulting therefrom
and to holding Indemnitee harmless from and against any and
all losses, damages and liabilities caused by, arising out
of or relating to any settlement approved by the Indemnitor
or any judgment in connection with such claim or litigation
resulting therefrom. The Indemnitee may participate, at its
expense, in the defense of such claim or litigation provided
that the Indemnitor shall direct and control the defense of
such claim or litigation. The Indemnitor shall not, in the
defense of such claim or any litigation resulting therefrom,
consent to entry of any judgment or enter into any
settlement other than a judgment or settlement involving
only the payment of money, except with the written consent
of Indemnitee, which consent shall not be unreasonably
withheld.
(c) If the Indemnitor shall not assume the
defense of any such claim or litigation resulting therefrom,
the Indemnitee may defend against such claim or litigation
in such manner as it may deem appropriate. The Indemnitee
shall not enter into any settlement of such claim or
litigation without the written consent of the Indemnitor,
which consent shall not be unreasonably withheld. The
Indemnitor shall promptly reimburse the Indemnitee for the
amount of all reasonable expenses, legal or otherwise,
incurred by the Indemnitee in connection with the defense
against or settlement of such claims or litigation. If no
settlement of such claim or litigation is made, the
Indemnitor shall promptly reimburse the Indemnitee for the
amount of any judgment rendered with respect to such claim
or in such litigation and of all reasonable expenses, legal
or otherwise, incurred by the Indemnitee in the defense of
such claim or litigation.
(d) No indemnification amount shall be payable by
any Indemnitor to an Indemnitee pursuant to Section 12 until
such time that the aggregate Damages subject to
indemnification hereunder by such Indemnitor exceeds
$500,000, but then in an amount of the aggregate Damages
including such $500,000; provided, however, that the
foregoing threshold amount shall not apply in respect of
Damages arising out of the breach of Sections 2.8 and
10.3(a) hereof or amounts claimed under Section 12.2(e)
hereof, and such Damages shall not be considered in
determining whether the foregoing threshold amount has been
met. For purposes of the immediately preceding sentence
(but not for purposes of any other provision of Section 12),
the GS Investors shall be considered one Indemnitor or one
Indemnitee, as applicable, and Continental, URHC and URC
shall be considered one Indemnitor or one Indemnitee, as
applicable. No indemnification amount shall be payable by
(i) any of the GS Investors pursuant to Section 12 in an
amount in excess of the amount received for the URHC Shares
currently held by the GS Investors; or (ii) all of URHC, URC
and Continental pursuant to Section 12 in an amount in
excess of the Cash Consideration; provided, however, that
there shall be no limit on any indemnification amount
payable by Continental pursuant to Section 12.2(e)(ii). No
indemnification amount shall be payable to all of URHC, URC
and the URHC Stockholders pursuant to Section 12 in an
amount in excess of the Cash Consideration.
13. MISCELLANEOUS PROVISIONS.
13.1. No Implied Representations, Etc. None of
URHC, URC or any URHC Stockholder has made or shall be
deemed to have made any representation, warranty, covenant
or agreement with respect to the Companies or the
transactions contemplated hereby or otherwise in connection
herewith (including, without limitation, any warranty of
merchantability or fitness for a particular purpose) except
as expressly set forth herein, and no such representation,
warranty, covenant or agreement shall be implied in any
provision of this Agreement or otherwise. No
representation, warranty, covenant or agreement has been
made or shall be deemed to be made by URHC, URC or any URHC
Stockholder or implied with respect to any oral or written
statement made, document delivered or instrument executed by
any of them, any of the Companies or any other person except
for such representations, warranties, covenants and
agreements made by it and expressly set forth as such in
this Agreement. Without limiting the generality of the
foregoing, none of URHC, URC or any URHC Stockholder makes
any representation or warranty as to whether the statements
set forth in Section 8 hereof are or will be true or whether
the conditions set forth in Sections 7 and 8 hereof, or any
of them, are or will be satisfied. Nothing in this Section
13.1 shall relieve any of URHC, URC or any URHC Stockholder
from any liability it would otherwise have under the federal
securities laws for, or in respect of, any untrue statement
of a material fact, or failure to state a material fact
necessary to make the statements made, in the light of the
circumstances under which they were made, not misleading in
connection with the transactions contemplated by this
Agreement.
13.2. Expenses. Whether or not the Closing takes
place and regardless of whether this Agreement is
terminated, each party hereto shall pay all of the costs and
expenses incurred by it in connection with this Agreement or
in consummating the transactions contemplated hereby
(including, without limitation, disbursements and expenses
of its attorneys, accountants and advisors); provided,
however, that Continental agrees to pay all reasonable
out-of-pocket expenses incurred by each of Alleghany and the
Companies on or prior to the Closing Date relating to the
purchase of the Shares that would not have been incurred if
Alleghany had acquired about 93 percent of the outstanding
capital stock of URHC at the Closing (which percentage
includes the stock of URHC to have been acquired from the
management stockholders), and no changes had occurred in the
ownership of URHC capital stock prior to the Closing, as
reasonably determined by Alleghany. Schedule 13.2 sets
forth firms engaged by Alleghany that Alleghany believes
have provided services for which payment by Continental will
be required pursuant to this Section 13.2. Payment of such
reasonable expenses shall be against documentation thereof
which is reasonably acceptable to Continental.
13.3. Notices. All notices or other
communications required or permitted under this Agreement
shall be in writing and shall be given (and shall be deemed
to have been duly given upon receipt) by delivery
personally, by facsimile transmission, or by registered,
certified or express mail, postage prepaid, addressed as
follows:
If to Alleghany, to
Theodore E. Somerville, Esq.
Vice President and General Counsel
Alleghany Corporation
Park Avenue Plaza
New York, New York 10055
Facsimile: (212) 759-8149
with a copy to
Robert M. Hart, Esq.
Donovan Leisure Newton & Irvine
30 Rockefeller Plaza
New York, New York 10112
Facsimile: (212) 632-3315
If to Continental, to
William F. Gleason, Esq.
Senior Vice President, General Counsel
and Secretary
The Continental Corporation
180 Maiden Lane
New York, New York 10038
Facsimile: (212) 440-7982
with a copy to
Deborah F. Stiles, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Facsimile: (212) 909-6836
If to the GS Investors, to
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: General Counsel
Facsimile: (212) 902-3876
with a copy to
Frank H. Golay, Jr., Esq.
Sullivan & Cromwell
444 South Flower Street
Los Angeles, California 90071
Facsimile: (213) 683-0457
If to URHC or URC, to
Mr. Steven H. Newman
Underwriters Re Holdings Corp.
22801 Ventura Boulevard
Woodland Hills, California 91364
Facsimile: (818) 225-8915
with copies to Continental,
the GS Investors, Debevoise &
Plimpton and Sullivan & Cromwell
at the addresses set forth above,
and to
John A. Willett, Esq.
Arnold & Porter
399 Park Avenue
New York, New York 10022
Facsimile: (212) 715-1399
Any party may change the person and addresses to which
notices or other communications are to be sent to it by
giving written notice of any such change in the manner
provided herein for giving notice.
13.4. Entire Agreement. Except as otherwise
provided herein, this Agreement, together with the exhibits
and schedules hereto, sets forth the entire agreement and
understanding of the parties hereto in respect of the
transactions contemplated hereby, and supersedes all prior
agreements, arrangements and understandings relating to the
subject matter hereof.
13.5. No Third Party Beneficiaries. Nothing in
this Agreement is intended or shall be construed to give any
person, other than the parties hereto, any legal or
equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
13.6. No Assignment. This Agreement shall inure
to the benefit of, and be binding upon, the respective
successors and assigns of the parties hereto; provided,
however, that no assignment of any rights or delegation of
any obligations provided for herein shall be made by any
party hereto without the express prior written consent of
the other party, except that Alleghany shall be permitted,
without such consent, to assign any of its rights hereunder
(but not to delegate any of its obligations hereunder) to
any of its wholly owned domestic subsidiaries (provided that
Alleghany may not, following such assignment to such a
subsidiary, transfer or dispose of such subsidiary, or any
equity interest therein, to any third party without the
express prior written consent of each of URHC, URC and the
URHC Stockholders).
13.7. Goldman, Sachs & Co. Advisory Fee.
Immediately prior to the Closing, NHC or Underwriters
Reinsurance shall pay to Goldman, Sachs & Co. an advisory
fee in an amount equal to 1.25 percent of the Cash
Consideration, in respect of the transactions contemplated
by this Agreement.
13.8. Liability Only for Willful Breach. In the
event that a Closing does not take place, there shall be no
liability hereunder for breach of any representation,
warranty, covenant or agreement contained herein, on the
part of any party hereto or their respective officers,
directors or partners in respect thereof, except for any
breach of the agreement of Continental set forth in Section
13.2 hereof and except for a willful breach by such party
hereto of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
13.9. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of
the State of New York applicable to agreements made and to
be performed entirely within such State, except (a) matters
related to the validity of corporate or partnership action,
which shall be governed by the laws of the state or other
jurisdiction of organization of the relevant corporation or
partnership and (b) matters related to compliance of the
transactions contemplated hereby with applicable insurance
regulatory statutes, which shall be governed by the laws of
the state or other jurisdiction the insurance regulatory
statutes of which apply.
13.10. Counterparts. This Agreement may be
executed in any number of separate counterparts, each of
which shall be deemed to be an original, but which together
shall constitute one and the same instrument.
13.11. Headings. The section headings contained
in this Agreement are inserted for convenience of reference
only and shall not affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, each party hereto has caused
this Agreement to be duly executed on the date first above
written.
ALLEGHANY CORPORATION
By /s/David B. Cuming
Attest:
By /s/John E. Conway
Secretary
THE CONTINENTAL CORPORATION
By /s/Wayne Fisher
Attest:
By /s/Deborah B. LaCivita
Asst. Secretary
STONE STREET FUND 1986
BY: Stone Street Advisors Corp.,
General Partner
By /s/Richard A. Friedman
Vice President
Attest:
By /s/Carla Skodinski
STONE STREET FUND 1987
BY: Stone Street Capital Corp.,
General Partner
By /s/Richard A. Friedman
Vice President
Attest:
By /s/Carla Skodinski
BROAD STREET INVESTMENT FUND I, L.P.
BY: Goldman, Sachs & Co.,
General Partner
By /s/Richard A. Friedman
Partner
Attest:
By /s/Carla Skodinski
BRIDGE STREET FUND 1986
BY: Stone Street Advisors Corp.,
Managing General Partner
By /s/Richard A. Friedman
Vice President
Attest:
By /s/Carla Skodinski
BRIDGE STREET FUND 1987
BY: Stone Street Capital Corp.,
Managing General Partner
By /s/Richard A. Friedman
Vice President
Attest:
By /s/Carla Skodinski
GOLDMAN, SACHS & CO.
By /s/Richard A. Friedman
General Partner
Attest:
By /s/Carla Skodinski
UNDERWRITERS RE HOLDINGS CORP.
By /s/Peter A. Bergelsdorf
Attest:
By /s/Pamela Falzone
Secretary
UNDERWRITERS RE CORPORATION
By /s/Peter A. Bengelsdorf
Attest:
By /s/Pamela Falzone
Secretary
LISTS OF EXHIBITS
Exhibit Description
A Management Stock Purchase Agreement
B Stock Purchase Related Agreement
C Debevoise & Plimpton Opinion
D Continental Opinion
E Sullivan & Cromwell Opinion
F Goldman, Sachs & Co. Opinion
G Arnold & Porter Opinion
H Buchalter, Nemer, Fields & Younger Opinion
I Roussos, Hage & Hodes Opinion
J Tax Sharing Agreement
K Loan Agreement
L Donovan Leisure Newton & Irvine Opinion
LIST OF SCHEDULES
Schedule Description
2.3 URHC and URC Consents and Approvals
2.5 NHC Subsidiaries
2.6(a) Form of Charter and By-laws of NHC
2.6(b) Officers and Directors of NHC
2.7 Capital Stock
3.1 URHC Stockholder Consents and Approvals
3.2 Transactions with URHC Stockholders
3.3 URHC Stockholder Brokers
6.3 Alleghany Approvals
8.1 The Companies
8.2 Officers and Directors of the Companies
8.4 Companies Consents and Approvals
8.5 Compliance and Licenses
8.7 Investments and Other Assets
8.9 Material Contracts
8.10 Accounting Practices
8.11 Litigation
8.12(a) Tax Filings
8.12(b) Payment of Taxes
8.12(d) Undisclosed Tax Positions
8.13 Employee Benefit Plans
8.14 Agencies
8.15 Employees
8.15(a) Active Employees
8.16 Insurance Policies
8.17 Companies Brokers
8.18 Transactions with Affiliates
8.19 Regulatory Filings
8.20 Changes to the Registration Statement
8.24 Dividends
10.1(b)(i) Permitted Modifications to Employment Agreements
10.1(b)(iv) Dividends between the Date of the Agreement and
Closing
10.2(b)(i) Rights, Assets and Liabilities Not to be Held by
the Companies on the Closing Date
10.2(b)(ii) Certain of the Rights, Assets and Liabilities to
be Held by the Companies on the Closing Date
10.2(e) Registration Statement Expenses and Goldman,
Sachs Co. Expenses
10.3(b) Non-Solicitation
13.2 Alleghany Firms