MANAGEMENT STOCK PURCHASE AGREEMENT
MANAGEMENT STOCK PURCHASE AGREEMENT (the "Agreement") dated
as of July 28, 1993, among THE CONTINENTAL CORPORATION, a New York
corporation ("Continental"), UNDERWRITERS RE HOLDINGS CORP., a
Delaware corporation ("Underwriters Re"), UNDERWRITERS RE
CORPORATION, a Delaware corporation ("Underwriters Re Corporation")
and each of the individuals listed on the signature pages hereof (the
"Management Stockholders").
W I T N E S S E T H:
WHEREAS, Underwriters Re is the owner of all of the issued
and outstanding capital stock of Underwriters Re Corporation; and
Underwriters Re Corporation is the owner of all of the issued and
outstanding capital stock of Underwriters Reinsurance Company, a New
Hampshire insurance company ("Underwriters Reinsurance");
WHEREAS, Continental, Underwriters Re and Underwriters Re
Corporation have entered into a Stock Purchase Agreement, dated as of
July 28, 1993, with Alleghany Corporation, a Delaware corporation
("Alleghany"), providing for the purchase by Alleghany of a portion
of the issued and outstanding capital stock of New Holding
Corporation, a Delaware Corporation ("NHC") to be formed to hold all
of the issued and outstanding capital stock of Underwriters
Reinsurance (the "Alleghany Stock Purchase Agreement"); and
WHEREAS, Continental and Underwriters Re Corporation
desire to purchase from the Management Stockholders and the
Management Stockholders desire to sell to Continental and
Underwriters Re Corporation the shares of common stock, par value
$.01 per share (the "Common Stock"), of Underwriters Re described in
Section 1 below;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, agreements and provisions contained herein, the
parties hereto agree as follows:
1. EXERCISE OF OPTIONS, PURCHASE OF SHARES AND CLOSING.
1.1. Outstanding Options. Underwriters Re shall cause all
stock options held by the Management Stockholders granted under the
Underwriters Re 1987 Stock Option Plan (the "Option Plan") that are
not currently exercisable to become exercisable not later than two
business days before the Closing Date. Each of the Management
Stockholders shall 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 business days before the Closing Date
in accordance with the terms of any applicable Nonstatutory Stock
Option Agreement entered into between Underwriters Re and a
Management Stockholder (the "Option Agreements"). Notwithstanding
anything contained in this Agreement or the Option Agreements to the
contrary, each Management Shareholder shall be entitled (i) to pay
the exercise price for stock options using Common Stock owned prior
to such exercise and (ii) to satisfy any applicable tax withholding
requirements using Common Stock owned prior to such exercise or
issuable upon the exercise of such stock options, in each case using
$23.50 per share as the fair market value of such Common Stock.
1.2. Purchase of Shares. Subject to the terms and
conditions set forth in this Agreement, at the Closing (as defined
below), each Management Stockholder agrees to sell, convey, assign,
transfer and deliver the remainder of (i) the shares of Common Stock
owned on the date hereof and the shares of Common Stock acquired in
conjunction with the exercise of stock options as contemplated in
Section 1.1 less (ii) any shares of Common Stock used to exercise any
stock options or pay such Management Stockholder's withholding
obligations in accordance with Section 1.1 (such net amount of Common
Stock hereinafter referred to as the "Shares") to Continental or a
subsidiary of Continental designated by Continental (the "Continental
Purchaser") and Underwriters Re Corporation (hereafter collectively
referred to as the "Companies"), and the Continental Purchaser and
Underwriters Re Corporation shall acquire the Shares from the
Management Stockholder in the manner described below.
1.3. Consideration. At the Closing, as consideration
for the sale of Shares, (i) the Continental Purchaser will deliver to
each Management Stockholder cash in an aggregate amount equal to the
product of $23.50 and the number of Shares that such Management
Stockholder has identified as to be purchased for cash and (ii)
Underwriters Re Corporation shall deliver to the Management
Stockholder that number of shares of the capital stock of NHC owned
by it which represents the same proportionate ownership interest in
NHC as the number of Shares less the number of Shares sold to the
Continental Purchaser pursuant to clause (i) represented in
Underwriters Re immediately prior to the Closing Date. The Shares
held by the Management Stockholders listed on Schedule 1.3 which are
to purchased for cash shall be those identified on such schedule. The
Shares held by the Management Stockholders not listed on Schedule 1.3
which are to purchased for cash shall be identified to Continental in
writing not later than two business days prior to the Closing Date.
Any property delivered to a Management Stockholder pursuant to this
Sec- tion 1.3 shall be free and clear of all liens, security
interests, pledges, agreements, claims, charges, options or
encumbrances of any nature whatsoever (collectively "Liens").
1.4. Closing. The purchase and sale of the Shares
pursuant to this Agreement (the "Closing") shall take place after
satisfaction or waiver of the conditions precedent set forth herein
at the place specified for, and on the same date as (but prior to),
the closing under Alleghany Stock Purchase Agreement (the "Closing
Date"), or on such other date as the parties hereto agree in
writing. At the Closing, (i) each Management Stockholder shall
deliver to the Continental Purchaser and Underwriters Re Corporation
a certificate or certificates representing the Shares owned by such
Management Stockholder, duly endorsed in blank or with appropriate
stock powers attached, free and clear of all Liens and (ii) the
Continental Purchaser and Underwriters Re Corporation shall deliver
to each Management Stockholder the consideration payable to such
Management Stockholder in accordance with Section 1.3.
2. REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT
STOCKHOLDERS.
Each of the Management Stockholders, severally but not
jointly, represents and warrants to the Companies as follows:
2.1. Title to Shares. Each Management Stockholder owns
beneficially and of record, free and clear of all Liens, or owns of
record and has full power and authority to convey free and clear of
all Liens, in each case except for Liens set forth in Schedule 2.1,
all of such Management Stockholder's Shares. Upon delivery of the
Consideration as herein provided, such Management Stockholder will
convey good title thereto, free and clear of all Liens.
2.2. Authority. This Agreement constitutes a legal, valid
and binding obligation of each Management Stockholder, enforceable
against such Management Stockholder in accordance with its terms,
subject to bankruptcy, insolvency, moratorium and other laws of
general applicability relating to or affecting creditors' rights and
to general equity principles.
3. REPRESENTATIONS AND WARRANTIES OF UNDERWRITERS RE
CORPORATION.
Underwriters Re Corporation represents and warrants to each
Management Stockholder as follows:
3.1. Organization and Standing. Underwriters Re
Corporation 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.
3.2. Authority. The execution, delivery and performance
of this Agreement have been duly and validly authorized by all
necessary corporate action on the part of Underwriters Re
Corporation. This Agreement constitutes a legal, valid and binding
obligation of Underwriters Re Corporation, enforceable against
Underwriters Re Corporation 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.
3.3. Other Representations and Warranties. The
representations and warranties of Underwriters Re Corporation in
Section 2.3 (Consents and Approvals) and the third sentence of
Section 2.4 (Authority) of the Alleghany Stock Purchase Agreement are
hereby incorporated by reference, and Underwriters Re Corporation
represents and warrants the same to each of the Management
Stockholders (subject to the exceptions and qualifications set forth
therein, mutatis mutandis), as if set out herein at length save that
identical terms defined both therein and herein shall be deemed to
have the respective meanings ascribed thereto in this Agreement and
all uses therein of the word "hereby" shall refer to this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF CONTINENTAL.
Continental represents and warrants to each Management
Stockholder 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 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 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.
4.3. Other Representations and Warranties. The
representations and warranties of Continental in Section 3.1
(Consents and Approvals) and the third sentence of Section 4.2
(Authority) of the Alleghany Stock Purchase Agreement are hereby
incorporated by reference, and Continental represents and warrants
the same to each of the Management Stockholders (subject to the
exceptions and qualifications set forth therein, mutatis mutandis),
as if set out herein at length save that identical terms defined both
therein and herein shall be deemed to have the respective meanings
ascribed thereto in this Agreement and all uses therein of the word
"hereby" shall refer to this Agreement.
5. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
Underwriters Re represents and warrants to each Management
Stockholder as follows:
5.1. Organization and Standing. Underwriters Re 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.
5.2. Authority. The execution, delivery and performance
of this Agreement have been duly and validly authorized by all
necessary corporate action on the part of Underwriters Re. This
Agreement constitutes a legal, valid and binding obligation of
Underwriters Re, enforceable against Underwriters Re 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.
6. CONDITIONS TO OBLIGATIONS OF THE COMPANIES AND
UNDERWRITERS RE.
The obligations of the Companies and Underwriters Re under
this Agreement are subject to the satisfaction, on or before the
Closing Date and separately as to each Management Stockholder, of
each of the following conditions:
6.1. Compliance with Agreement. Each Management
Stockholder shall have performed and complied in all material
respects with all the obligations required by this Agreement to be
performed or complied with by such Management Stockholder on or
before the Closing Date.
6.2. Representations and Warranties. The representations
and warranties made by each Management Stockholder in Section 2 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.
6.3. Approvals. All Alleghany Approvals and all Sellers
Approvals (as such terms are defined in the Alleghany Stock Purchase
Agreement) shall have been obtained and be in full force and effect
on the Closing Date. Without limiting the generality of the
foregoing, Continental 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 Continental,
Underwriters Re or Underwriters Re Corporation or any of its direct
or indirect subsidiaries any conditions which materially adversely
impair the ability of such entities to conduct their business in
substantially the same manner as such business is presently being
conducted.
6.4. Absence of Certain Litigation. On the Clos- ing 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 Continental to dispose of or discontinue a significant por-
tion of the business conducted by the Underwriter Re, Underwriters Re
Corporation or any of the subsidiaries of Underwriters Re Corporation
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.
6.5. Transfer Taxes. Each of the Management Stockholders
shall have paid, or caused to be paid, all stock transfer taxes
required to be paid in connection with the sale and delivery to the
Companies of the Shares owned by such Management Stockholder, 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 by such Management Stockholder.
6.6. Other Conditions. All conditions to the obligations
of the parties to the Alleghany Stock Purchase Agreement (other than
the conditions set forth in Sections 7.8 and 9.7 thereof) shall have
been satisfied or waived.
7. CONDITIONS TO OBLIGATIONS OF THE MANAGEMENT
STOCKHOLDERS.
The obligations of each Management Stockholder 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. The Companies shall have
performed and complied in all material respects with all the
obligations required by this Agreement to be performed or complied
with by them on or before the Closing Date.
7.2. Representations and Warranties. The representations
and warranties made by Underwriters Re Corporation in Section 3 of
this Agreement, by Continental in Section 4 of this Agreement and by
Underwriters Re in Section 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.
7.3. Approvals. All Alleghany Approvals and all Sellers
Approvals (as such terms are defined in the Alleghany Stock Purchase
Agreement) shall have been obtained and be in full force and effect
on the Closing Date.
7.4. Other Conditions. All conditions to the obligations
of the parties to the Alleghany Stock Purchase Agreement (other than
the conditions set forth in Sections 7.8 and 9.7 thereof) shall have
been satisfied or waived.
8. COVENANTS.
8.1. Covenants Pending the Closing. From and after the
date hereof and until the Closing Date, each of the Companies and
each of the Management Stockholders agrees to use 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.
8.2. Further Assurances. Each Management Stockholder
agrees from time to time at and subsequent to the Closing Date, at
the request of either of the Companies and without further
consideration, to execute and deliver such other instruments of
conveyance, assignment and transfer and take such other actions as
either of the Companies may reasonably request in order more
effectively to convey, assign, transfer to and vest in the Companies,
the Shares.
9. TERMINATION, AMENDMENT, WAIVERS.
9.1. Termination. At any time prior to the Closing
Date, this Agreement may be terminated as to any of the Management
Stockholders:
(i) by mutual written consent of the affected
parties hereto;
(ii) by either of the Companies at any time after
December 31, 1993, if any of the conditions set forth
in Section 6 hereof with respect to such Management
Stockholder have not been met and have not been waived
in writing by both of the Companies; or
(iii) by such Management Stockholder at any time
after December 31, 1993, if any of the conditions set
forth in Section 7 hereof have not been met and have
not been waived in writing by such Management Stock-
holder.
In the event of any termination pursuant to this Section 8.1 this
Agreement shall thereupon become void and of no further force or
effect and there shall be no liability or obligation on the part of
any party hereto or their respective agents in respect hereof or of
any representation, warranty, covenant or agreement contained herein
except to the extent that such termination results from the willful
breach by a party hereto of any of its representations, warranties,
covenants or agreements set forth in this Agreement, in which case
the aggrieved party may recover its out-of-pocket expenses (including
reasonable fees, but excluding lost profit and consequential damages)
reasonably and actually incurred by such party by virtue of such
breach.
9.2. Unwinding. Notwithstanding anything to the contrary
contained herein, if the closing under the Alleghany Stock Purchase
Agreement shall not occur pursuant to the terms thereof by December
31, 1993, this Agreement shall thereupon terminate and have no
further force or effect. The respective obligations of the
Companies, Underwriters Re and the Management Stockholders hereunder
shall thereupon cease and there shall be no liability or obligation
on the part of any of the Companies, Underwriters Re or the
Management Stockholders in respect of any covenant, condition or
agreement contained herein, and the Companies, Underwriters Re and
the Management Stockholders shall be placed in the same position with
respect to each other as they would have been but for their execution
of the Alleghany Stock Purchase Agreement and this Agreement.
9.3. 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.
9.4. 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.
10. MISCELLANEOUS PROVISIONS.
10.1. Survival of Representations, Etc. The
representations and warranties, covenants and obligations of the
Management Stockholders, Continental, Underwriters Re Corporation and
Underwriters Re contained herein shall not survive the Closing Date,
except that the representations and warranties contained in Section
2.1 (Title to Shares) and 2.2 (Organization and Standing) and the
covenants contained in Section 7.2 (Further Assurances) shall survive
the Closing Date, without regard to any investigation made by the
parties hereto.
10.2. Counterparts and Supplements. This Agreement may be
executed in one or more counterparts, all of which shall constitute
one and the same instrument. On or before August 12, 1993, 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 may become a party hereto, and a
Stockholder hereunder, by executing a counterpart hereof with
attached supplemented Schedules providing all of the information
called for by this Agreement in respect of such additional
Stockholders. The Agreement, as so supplemented, shall constitute
the Agreement for all purposes hereof.
10.3. 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).
10.4. Notices. All notices or other communications
require 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 personal delivery, by facsimile transmission, or by
registered, certified or express mail, postage prepaid, addressed as
follows:
If to Continental to:
Thomas A. Eff, Esq.
Vice President and
Associate General Counsel
The Continental Corporation
180 Maiden Lane
New York, New York 10038
Telecopy: (212) 440-7982 and
with a copy to:
Deborah F. Stiles, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
If to either of the Companies:
to the Secretary of each of the Companies at
their principal business offices
with a copy to each of:
Thomas A. Eff, Esq.
Vice President and
Associate General Counsel
The Continental Corporation
180 Maiden Lane
New York, New York 10038
Telecopy: (212) 440-7982 and
Deborah F. Stiles, Esq.
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
If to any Management Stockholder:
to the address of such Management Stockholder
listed on the records of Underwriters Re
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 pro- vided herein for giving notice.
10.5. 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.
10.6. 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.
10.7. 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 the Companies
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 subsidiaries (provided that the Companies 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 the
Management Stockholders).
10.8. 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
action, which shall be governed by the laws of the state or other
jurisdiction of incorporation the relevant corporation, 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.
10.9. Counterparts. This Agreement may be execu- ted 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.
10.10. 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.
THE CONTINENTAL CORPORATION
By /s/ Wayne H. Fisher
Attest:
By /s/ Deborah B. Lacivita
Secretary
UNDERWRITERS RE HOLDING
CORPORATION
By /s/ Steven H. Newman
Attest:
By /s/ Pamela Falzone
Secretary
UNDERWRITERS RE CORPORATION
By /s/ Steven H. Newman
Attest:
By /s/ Pamela Falzone
Secretary
MANAGEMENT STOCKHOLDERS
/s/ Dennis E. Arnold
/s/ Peter A. Bengelsdorf
/s/ Mark A. Bennett
/s/ Theodore A. Blundell
/s/ Denise A. Coleman
/s/ Pamela Falzone
/s/ Todd J. Hess
/s/ F. Paul Japp
/s/ Russell T. John
/s/ Stephen C. Kolakowski
/s/ Michael J. Kruse
/s/ Judy Mann
/s/ Nancy Moore
/s/ Steven H. Newman
/s/ M. Bernard Puckett
/s/ James P. Rapp
/s/ Edwin Seaman