SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Earliest Event Reported: February 23, 1997
Jefferson-Pilot Corporation
(Exact name of registrant as specified in its charter)
North Carolina 1-5955 56-0896180
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
100 North Greene Street, Greensboro, North Carolina 27401
(Address of principal executive offices) (Zip Code)
(910) 691-3691
(Registrant's telephone number, including area code)
Item 5. Other Events
Jefferson-Pilot Corporation ("JP Corp") has signed a definitive
agreement to acquire all outstanding shares of Chubb Life
Insurance Company of America ("Chubb Life"), a New Hampshire
corporation, from The Chubb Corporation ( Seller ).
Chubb Life's life insurance operations, principally universal
life, variable universal life and term insurance, are conducted
nationwide through Chubb Life and its life insurance
subsidiaries, Chubb Colonial Life Insurance Company, a New Jersey
corporation, and Chubb Sovereign Life Insurance Company, a New
Hampshire corporation. Chubb Life's other subsidiaries include
Chubb Securities Corporation, a full service NASD registered
broker dealer.
The Stock Purchase Agreement dated as of February 23, 1997
provides for a purchase price of $875 million, subject to certain
potential adjustments, which are not expected to be material.
Seller has committed to, among other things, maintain a minimum
adjusted statutory capital and surplus of Chubb Life's life
insurance operations. Closing will occur as soon as regulatory
approvals are obtained and is expected to occur in the second
quarter.
A dividend of up to $100 million may be paid by Chubb Life to
Seller prior to closing. A portion or all of the funds would be
provided through dividends from Chubb Life's insurance
subsidiaries. Any such dividend from Chubb Life, if all
necessary approvals are obtained from state insurance regulators,
would reduce the purchase price by the amount of such dividend.
JP Corp expects to finance the purchase primarily through
internally available resources, with approximately 75-80% from
liquidation of invested assets, a securities issuance similar to
JP Corp's outstanding 7.25% Automatic Common Exchange Securities
Due January 21, 2000 (as to which the underlying securities may
include NationsBank Corporation and/or other common stocks), and
proceeds from the recently issued 8.14% Capital Securities,
Series A. The balance is expected to be funded from a
combination of borrowings and a further issue of Capital
Securities. In excess of $200 million of the after tax proceeds
will come from the sale of securities which are currently held by
Jefferson-Pilot Life Insurance Company, which is applying for
approval from the North Carolina Department of Insurance to pay
an extraordinary dividend to JP Corp.
The parties to the Stock Purchase Agreement have committed to
negotiate in good faith to develop and enter into a mutually
beneficial marketing arrangement that would make available to JP
Corp affiliates the property and casualty agency distribution and
certain bank distribution channels of Seller. These channels
have historically generated approximately 20% of Chubb Life s
total production, with the remainder generated principally by
independent agents.
Synergies available from the acquisition are expected to result,
when fully realized over the next two or three years, in annual
expense reductions throughout the combined organization of $40
million (pre-tax). Although the acquisition is not expected to
have any significant effect on 1997 results, JP Corp anticipates
that the transaction will be accretive to earnings per share by
at least 8% when full synergies from both expense reductions and
revenue improvements are achieved.
It is anticipated that a major base of operations for Chubb Life
will be retained in Concord, New Hampshire.
The forward looking statements contained herein, including those
related to JP Corp's expectation, are subject to all risks and
uncertainties set forth near the end of JP Corp's Management
Discussion and Analysis in its Form 10-Q for the third quarter
1996, including those related to changes in interest rates,
competitive factors and litigation, and to the risks (1) that the
business and/or operations of Chubb Life and its subsidiaries
will deteriorate in the interim before closing, and (2) that JP
Corp might fail to successfully complete synergistic strategies
for cost reduction and for growth in sales of products of Chubb
Life and existing insurance subsidiaries through all existing and
acquired distribution channels.
Item 7. Financial Statements and Exhibits
Exhibit 1. A copy of JP Corp's February 24, 1997 press release.
Exhibit 2. Stock Purchase Agreement dated as of February 23,
1997 between Jefferson-Pilot Corporation and The Chubb
Corporation. (Confidential treatment requested with respect to
certain portions thereof.) Exhibits and Schedules set forth in
the Agreement have been omitted and will be provided
supplementally to the Securities and Exchange Commission upon
request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
JEFFERSON-PILOT CORPORATION
By:_________________________
(name) Robert A. Reed
(title) Vice President
Dated: March 5, 1997
Index to Exhibits
Exhibit No. Description Page
1 Press release 5
2 Stock Purchase Agreement* 7
*Portions of this exhibit have been omitted pursuant to a request
for confidential treatment filed with the Securities and Exchange
Commission.
EXHIBIT 1
JEFFERSON-PILOT TO ACQUIRE LIFE INSURANCE
OPERATIONS OF THE CHUBB CORPORATION
FOR IMMEDIATE RELEASE
(Greensboro, North Carolina, February 24, 1997) Jefferson-Pilot
Corporation announced today that is has signed a definitive
agreement to acquire the life insurance operations of The Chubb
Corporation. The agreement calls for a purchase price of $875
million, with a closing expected as soon as regulatory approvals
are obtained. Jefferson-Pilot expects to finance the purchase
primarily through internally available resources.
Chubb Life Insurance Company of America and its subsidiaries
offer a broad range of individual life insurance products and are
leading providers of variable universal life products. The Chubb
Life Companies distribute their products through an independent
network that includes more than 1,300 general agents and 9,000
agents.
In addition, Chubb Securities, a full service NASD registered
broker dealer, offers securities support and services to equity-
oriented insurance professionals and financial planners. Chubb
Securities has approximately 1,200 registered representatives,
all of which are agents or general agents of the Chubb Life
Companies. The Chubb Life Companies have total assets of nearly
$5 billion. Following the acquisition, the combined companies
will have more than 25,000 sales representatives, almost two
million customers, and more than $160 billion of life insurance
in force.
Jefferson-Pilot's President and Chief Executive Officer, David A.
Stonecipher, stated that this acquisition is the next step in
Jefferson-Pilot's continuing efforts toward market leadership.
"Our Vision Statement states that we will grow faster than our
competitors and strive to be one of the largest providers in each
of our target product and geographic segments," Stonecipher said.
"With the purchase of Chubb Life, our combined companies will
rank in the top 15 of life insurance companies nationwide based
on total life premium income. Annual life sales will be
approximately $200 million, ranking us in the top ten life
insurance companies in the United States for life sales. Within
the universal life product category, which has been our main life
thrust, recent LIMRA statistics would place us among the top
three companies in the U.S. Chubb Life's variable life product
offerings and distribution system will substantially broaden our
ability to market products throughout the nation. We look
forward to welcoming them to the Jefferson-Pilot family."
Jefferson-Pilot Corporation, a holding company, is one of the
nation's largest shareholder-owned life insurance organizations.
Jefferson-Pilot's present life insurance and annuity companies,
principally Jefferson-Pilot Life and Alexander Hamilton Life,
together offer full lines of individual and group life and health
insurance and annuity products. Jefferson-Pilot Communications
Company owns and operates three network affiliated television
stations, 17 radio stations and a sports production company.
EXHIBIT 2
CONFORMED COPY
(With Certain Provisions Redacted)
STOCK PURCHASE AGREEMENT
dated as of
February 23, 1997
between
JEFFERSON-PILOT CORPORATION
and
THE CHUBB CORPORATION
relating to the purchase and sale
of
100% of the Common Stock
of
Chubb Life Insurance Company of America
[CONFIDENTIAL TREATMENT REQUESTED] INDICATES WHERE PORTIONS OF
THE STOCK PURCHASE AGREEMENT HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT BY THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC"). SUCH PORTIONS HAVE BEEN FILED SEPARATELY
WITH THE SEC. APPROXIMATELY FIVE PAGES IN THE AGGREGATE HAVE
BEEN OMITTED PURSUANT TO THE REQUEST.
TABLE OF CONTENTS
PAGE
ARTICLE 1
Definitions
Section 1.01. Definitions. . . . . . . . . . . . . . . . 1
ARTICLE 2
Purchase and Sale
Section 2.01. Purchase and Sale . . . . . . . . . . . . . 7
Section 2.02. Closing . . . . . . . . . . . . . . . . . . 7
ARTICLE 3
Representations and Warranties of Seller
Section 3.01. Corporate Existence and Power . . . . . . . 8
Section 3.02. Corporate Authorization . . . . . . . . . . 9
Section 3.03. Governmental Authorization. . . . . . . . . 10
Section 3.04. Non-Contravention . . . . . . . . . . . . . 10
Section 3.05. Capitalization. . . . . . . . . . . . . . . 10
Section 3.06. Ownership of Shares . . . . . . . . . . . . 11
Section 3.07. Subsidiaries. . . . . . . . . . . . . . . . 11
Section 3.08. Financial Statements. . . . . . . . . . . . 11
Section 3.09. Absence of Certain Changes. . . . . . . . . 12
Section 3.10. No Undisclosed Material Liabilities . . . . 15
Section 3.11. Material Contracts. . . . . . . . . . . . . 15
Section 3.12. Litigation. . . . . . . . . . . . . . . . . 16
Section 3.13. Compliance with Laws and Court Orders . . . 16
Section 3.14. Finders Fees. . . . . . . . . . . . . . . . 17
Section 3.15. Insurance Filings . . . . . . . . . . . . . 17
Section 3.16. Insurance Business. . . . . . . . . . . . . 19
Section 3.17. ERISA Representations . . . . . . . . . . . 20
Section 3.18. Property. . . . . . . . . . . . . . . . . . 21
Section 3.19. Environmental Matters . . . . . . . . . . . 21
Section 3.20. Guaranty Fund Assessments . . . . . . . . . 22
Section 3.21. Actuarial Analysis. . . . . . . . . . . . . 22
Section 3.22. Investments; Defaults . . . . . . . . . . . 22
Section 3.23. Separate Accounts . . . . . . . . . . . . . 23
Section 3.24. Funds . . . . . . . . . . . . . . . . . . . 23
Section 3.25. Employees and Compensation. . . . . . . . . 23
Section 3.26. Producers for the Company and the Insurance
Subsidiaries. . . . . . . . . . . . . . . . 24
Section 3.27. Insurance . . . . . . . . . . . . . . . . . 25
Section 3.28. Full Disclosure . . . . . . . . . . . . . . 25
Section 3.29. Company Trademarks; Software. . . . . . . . 25
ARTICLE 4
Representations and Warranties of Buyer
Section 4.01. Corporate Existence and Power . . . . . . . 26
Section 4.02. Corporate Authorization . . . . . . . . . . 26
Section 4.03. Governmental Authorization. . . . . . . . . 26
Section 4.04. Non-Contravention . . . . . . . . . . . . . 26
Section 4.05. Purchase for Investment . . . . . . . . . . 27
Section 4.06. Litigation. . . . . . . . . . . . . . . . . 27
Section 4.07. Finders Fees. . . . . . . . . . . . . . . . 27
Section 4.08. Financing . . . . . . . . . . . . . . . . . 27
ARTICLE 5
Covenants of Seller
Section 5.01. Conduct of the Company. . . . . . . . . . . 27
Section 5.02. Access to Information . . . . . . . . . . . 28
Section 5.03. Notices of Certain Events . . . . . . . . . 28
Section 5.04. Other Offers. . . . . . . . . . . . . . . . 29
Section 5.05. Non-Solicitation. . . . . . . . . . . . . . 29
Section 5.06. Computer Services and Software. . . . . . . 29
Section 5.07. Minimum Statutory Net Worth . . . . . . . . 30
Section 5.08. Special Dividend. . . . . . . . . . . . . . 30
Section 5.09. Noncompetition Agreement. . . . . . . . . . 31
Section 5.10. Other Agreements. . . . . . . . . . . . . . 32
Section 5.11. Cross-Defaults. . . . . . . . . . . . . . . 32
Section 5.12. Portfolio Management. . . . . . . . . . . . 32
ARTICLE 6
Covenants of Buyer
Section 6.01. Confidentiality . . . . . . . . . . . . . . 32
Section 6.02. Access. . . . . . . . . . . . . . . . . . . 33
Section 6.03. Compliance with Section 15 of the 1940 Act. 33
ARTICLE 7
Covenants of Buyer and Seller
Section 7.01. Reasonable Efforts. . . . . . . . . . . . . 34
Section 7.02. Further Assurances. . . . . . . . . . . . . 34
Section 7.03. Public Announcements. . . . . . . . . . . . 34
Section 7.04. Intercompany Accounts . . . . . . . . . . . 34
Section 7.05. Service Marks, Trademarks and Trade Names . 35
Section 7.06. Purchase of Mainframe Computer. . . . . . . 35
Section 7.07. Reports . . . . . . . . . . . . . . . . . . 36
Section 7.08. Joint Marketing Arrangements. . . . . . . . 36
Section 7.09. Post-Closing Review of Minimum Statutory
Equity Amount . . . . . . . . . . . . . . . 36
Section 7.10. Certain Transition Arrangements . . . . . . 38
ARTICLE 8
Tax Matters
Section 8.01. Definitions . . . . . . . . . . . . . . . . 38
Section 8.02. Tax Representations . . . . . . . . . . . . 40
Section 8.03. Tax Covenants . . . . . . . . . . . . . . . 41
Section 8.04. Termination of Existing Tax Sharing
Agreements. . . . . . . . . . . . . . . . . 44
Section 8.05. Tax Sharing . . . . . . . . . . . . . . . . 44
Section 8.06. Cooperation on Tax Matters. . . . . . . . . 44
Section 8.07. Indemnification by Seller . . . . . . . . . 45
Section 8.08. Survival. . . . . . . . . . . . . . . . . . 47
ARTICLE 9
Employees and Employee Benefits
Section 9.01. Pension Plans . . . . . . . . . . . . . . . 47
Section 9.02. Individual Account Plans. . . . . . . . . . 47
Section 9.03. Other Employee Plans and Benefit
Arrangements. . . . . . . . . . . . . . . . 48
Section 9.04. Plans Following the Closing . . . . . . . . 49
Section 9.05. Third Party Beneficiaries . . . . . . . . . 50
ARTICLE 10
Conditions to Closing
Section 10.01.Conditions to Obligations of Buyer and
Seller. . . . . . . . . . . . . . . . . . . 50
Section 10.02.Conditions to Obligation of Buyer . . . . . 51
Section 10.03.Conditions to Obligation of Seller. . . . . 52
ARTICLE 11
Survival; Indemnification
Section 11.01.Survival. . . . . . . . . . . . . . . . . . 52
Section 11.02.Indemnification . . . . . . . . . . . . . . 53
Section 11.03.Procedures; Exclusivity . . . . . . . . . . 55
Section 11.04.[Confidential Treatment Requested]
Section 11.05.[Confidential Treatment Requested]
Section 11.06.Limitation of Indemnification . . . . . . . 58
ARTICLE 12
Termination
Section 12.01.Grounds for Termination . . . . . . . . . . 59
Section 12.02.Effect of Termination . . . . . . . . . . . 60
ARTICLE 13
Miscellaneous
Section 13.01.Notices . . . . . . . . . . . . . . . . . . 60
Section 13.02.Amendments and Waivers. . . . . . . . . . . 61
Section 13.03.Expenses. . . . . . . . . . . . . . . . . . 61
Section 13.04.Successors and Assigns. . . . . . . . . . . 61
Section 13.05.Governing Law . . . . . . . . . . . . . . . 62
Section 13.06.Jurisdiction. . . . . . . . . . . . . . . . 62
Section 13.07.WAIVER OF JURY TRIAL. . . . . . . . . . . . 62
Section 13.08.Counterparts; Third Party Beneficiaries . . 62
Section 13.09.Entire Agreement. . . . . . . . . . . . . . 62
EXHIBITS AND SCHEDULES
Exhibit I Form of Opinion of Robert Rusis, Esq., General
Counsel for Seller
Exhibit II Form of Opinion of Shanley & Fisher, P.C., New
Jersey Counsel for Seller
Exhibit III Form of Opinion of Davis Polk & Wardwell, Special
Counsel for Seller
Exhibit IV Form of Opinion of King & Spalding, Special
Counsel for Buyer
Schedule 3.01(a) Corporate Existence and Power
Schedule 3.01(b) Certificates of Authority
Schedule 3.01(c) Pending Licenses
Schedule 3.03 Governmental Authorizations of Seller
Schedule 3.04 Non-Contravention
Schedule 3.07 Subsidiaries
Schedule 3.09 Certain Changes
Schedule 3.11 Material Contracts
Schedule 3.12 Litigation
Schedule 3.13 Violations
Schedule 3.15(a) Holding Company Reports
Schedule 3.15(b) Statutory Insurance Statements
Schedule 3.15(b)(iii) Fines and Penalties
Schedule 3.15(d) Reports of Examination
Schedule 3.16 Insurance Business
Schedule 3.17 Employee Plans and Benefit Arrangements
Schedule 3.19 Environmental Matters
Schedule 3.22 Investments; Defaults
Schedule 3.23 Separate Accounts
Schedule 3.24 Funds
Schedule 4.03 Governmental Authorizations of Buyer
Schedule 5.06(a) Computer Services Agreement
Schedule 5.06(b) Form of List of Software Contracts
Schedule 5.09 Noncompetition
Schedule 7.04 Intercompany Accounts
Schedule 7.05 Certain Company Trademarks
Schedule 8.02 Tax Representations
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of February 23, 1997 between Jefferson-
Pilot Corporation, a North Carolina corporation ("Buyer"), and
The Chubb Corporation, a New Jersey corporation ("Seller").
W I T N E S S E T H :
WHEREAS, Seller is the record and beneficial owner of the
Shares and desires to sell the Shares to Buyer, and Buyer desires
to purchase the Shares from Seller, upon the terms and subject to
the conditions hereinafter set forth;
The parties hereto agree as follows:
ARTICLE I
Definitions
Section 0.01: Definitions. (a) The following terms, as
used herein, have the following meanings:
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with, such Person; provided that neither the
Company nor any Subsidiary shall be considered an Affiliate of
Seller.
"Balance Sheet" means the unaudited consolidated balance
sheet of the Company and its Subsidiaries as of September 30,
1996 prepared in conformity with generally accepted accounting
principles applied on a consistent basis.
"Balance Sheet Date" means September 30, 1996.
"Benefit Arrangement" means any written employment,
severance or similar contract, arrangement or policy, or any
written plan or arrangement providing for severance benefits,
insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options,
equity-based pay, stock appreciation rights or other forms of
incentive compensation or post-retirement insurance, compensation
or benefits that (i) is not an Employee Plan, (ii) is entered
into or maintained, as the case may be, by Seller or any of its
ERISA Affiliates and (iii) covers any employee or former employee
of the Company or any Subsidiary.
"Capital Accumulation Plan" means the Capital Accumulation
Plan of The Chubb Corporation, Chubb & Son Inc. and Participating
Affiliates
"CASC" means Chubb America Service Corporation, a New
Hampshire corporation.
"Chubb Colonial" means Chubb Colonial Life Insurance
Company, a New Jersey corporation.
"Chubb Life America" is a service mark for the Company,
Chubb Colonial and Chubb Sovereign.
"The Chubb Life Companies" is a service mark for the
Company, Chubb Colonial and Chubb Securities Corporation.
"Chubb Securities Material Adverse Effect" means an event,
occurrence or condition which would prevent Chubb Securities
Corporation, a wholly-owned subsidiary of the Company, from
operating its business in the ordinary course.
"Chubb Sovereign" means Chubb Sovereign Life Insurance
Company, a New Hampshire corporation.
"CIAC" means Chubb Investment Advisory Corporation, a
Tennessee corporation.
"Closing Date" means the date of the Closing.
"Company" means Chubb Life Insurance Company of America, a
New Hampshire corporation.
"Defined Contribution Excess Plan" means the Defined
Contribution Excess Benefit Plan of The Chubb Corporation,
Federal Insurance Company, Vigilant Insurance Company and Chubb
Life Insurance Company of America.
"Employee Plan" means any "employee benefit plan", as
defined in Section 3(3) of ERISA, that (i) is subject to any
provision of ERISA, (ii) is maintained, administered or
contributed to by Seller or any of its ERISA Affiliates and (iii)
covers any employee or former employee of the Company or any
Subsidiary.
"Environmental Laws" shall mean all federal, state, local
and foreign laws, statutes, ordinances, rules, regulations,
principles of common law, orders, decrees, judgments and
injunctions relating to pollution, the environment, natural
resources, nuclear power production or Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statue thereto, and the rules
and regulations promulgated thereunder.
"ERISA Affiliate" of any entity means any other entity
which, together with such entity, would be treated as a single
employer under Section 414 of the Code.
"Excess Pension Plan" means the Pension Excess Benefit Plan
of The Chubb Corporation, Chubb & Son Inc. and Participating
Affiliates.
"Hazardous Substances" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste,
nuclear substance or waste, radioactive substance or waste,
petroleum and petroleum-derived substance or waste, with respect
to any of such items to the extent regulated under, or defined
by, any Environmental Laws.
"HSR Act" means the Hart-Scott Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
"Individual Account Plans" means the Capital Accumulation
Plan and The Chubb Corporation Employee Stock Ownership Plan.
"Insurance Subsidiaries" means Chubb Colonial and Chubb
Sovereign.
"Investment Company" has the meaning assigned to it in the
Investment Company Act of 1940, as amended.
"Investment Contracts" means each contract or agreement, as
in effect on the date hereof, relating to the rendering by CIAC
of investment advisory or management services, including without
limitation all sub-advisory services.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or
other adverse claim of any kind in respect of such property or
asset other than (i) Liens arising by operation of law and in the
ordinary course of business, such as mechanics , carriers or
materialmen s liens (none of which would materially impair or
interfere with the use or operation of such property or asset);
(ii) Liens for Taxes which are either not delinquent or are being
contested in good faith; and (iii) Liens which secure
indebtedness for borrowed money reflected on the Balance Sheet.
For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any property or asset which it has acquired
or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
"Material Adverse Effect" means a material adverse effect
on the condition (financial or otherwise), business, assets or
results of operations of the Company and the Subsidiaries, taken
as whole.
"Multiemployer Plan" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
"NASD" means the National Association of Securities Dealers.
"NOLHGA" means National Organization of Life and Health
Guaranty Associations.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PLI" means Personal Lines Insurance Brokerage, Inc., a
wholly-owned subsidiary of Seller.
"Pension Plan" means the Pension Plan of The Chubb
Corporation, Chubb & Son Inc. and Participating Affiliates 1985.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Reference Rate" means a rate per annum equal to
[Confidential Treatment Requested].
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leeching or migration into the indoor or outdoor environment or
into or out of any property, including the movement of Hazardous
Substances through or in the air, soil, surface water, ground
water or property.
"Required Jurisdictions" means the jurisdictions set forth
on Schedule 3.03 hereto.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means all of the issued and outstanding shares of
the capital stock of the Company.
"Subsidiary" means each Insurance Subsidiary, CIAC, and each
of the other Subsidiaries listed on Schedule 3.07 hereto.
"Title IV Plan" means an Employee Plan, other than a
Multiemployer Plan, subject to Title IV of ERISA.
"Transferred Employee" means each individual who, as of the
Closing Date, is employed (including persons absent from active
service by reason of illness, short-term disability or leave of
absence, whether paid or unpaid) by the Company or any
Subsidiary; provided, that an individual who is employed as of
the Closing Date by the Company or any Subsidiary, but on such
date is absent from active service by reason of short-term
disability and subsequently begins to receive long-term
disability benefits under the Seller s long-term disability plan
shall not be considered a Transferred Employee for the period
commencing on the date such individual begins to receive long-
term disability benefits under Seller s long-term disability
plan.
(b) Each of the following terms is defined in the Section
set forth opposite such term:
Term Section
Accounting Referee 8.01
Acquisition Proposal 5.04
Applicable Tax Rate 8.01
Arbiter 7.09(e)
Basket 8.01
Buyer Recitals
Buyer Plan 9.02
Claim Indemnified Parties 11.02(a)
Chubb Trademarks 7.05
Claims 11.05(a)
[Confidential Treatment Requested]
Closing 2.02
Closing Date Statutory Statements 7.09(a)
Code 8.01
Company Securities 3.05(b)
Company Trademarks 3.29(a)
Computer Services Agreement 5.06(a)
Conversion Date 5.06(a)
Damages 11.02(a)
Direct Rollover 9.02
Disputed Amounts 7.09(e)
Dispute Notice 7.09(e)
Dispute Notice Date 7.09(e)
Employees 8.03(d)
Federal Tax 8.01
Final Arbiter 7.09(e)
Funds 3.24
[Confidential Treatment Requested]
Holding Company Reports 3.15(a)
Indemnifiable Tax 8.01
Indemnified Party 11.03(a)
Indemnifying Party 11.03(a)
[Confidential Treatment Requested]
Loss 8.07(a)
M&R Analysis 3.21
Minimum Statutory Equity Amount 5.07
1940 Act 3.23
Post-Closing Tax Period 8.01
[Confidential Treatment Requested]
Pre-Closing Tax Period 8.01
Price Allocation Schedule 8.03(f)
Producer Plans 3.26(a)
Producers 3.26(a)
Purchase Price 2.01
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
Returns 8.02(a)
[Confidential Treatment Requested]
[Confidential Treatment Requested]
[Confidential Treatment Requested]
Section 338(h)(10) Election 8.03(f)
Seller Recitals
Seller Group 8.01
Seller Stock Option 8.03(d)
Separate Accounts 3.23
Software 3.29(b)
Statutory Insurance Statements 3.15(b)
Statutory Financial Statements 3.15(c)
Straddle Period 8.01
Subsidiary Securities 3.07(b)
Tax 8.01
Tax Asset 8.01
Tax Sharing Agreement 8.01
Taxing Authority 8.01
Temporary Difference 8.07(b)
Trademark License Agreement 7.05
Transition Period 5.06
ARTICLE 2
Purchase and Sale
Section 2.01. Purchase and Sale. Upon the terms and subject
to the conditions of this Agreement, Seller agrees to sell to
Buyer and Buyer agrees to purchase from Seller, the Shares at the
Closing. The purchase price for the Shares (the "Purchase
Price") is $875,000,000 in cash, less any amounts paid by the
Company to Seller in accordance with Section 5.08. If the
Closing shall not have occurred on or before June 30, 1997,
interest shall accrue on the Purchase Price at the Reference Rate
from and including July 1, 1997 to, but excluding, the Closing
Date. Such interest shall be calculated daily on the basis of a
year of 365 days and the actual number of days elapsed. The
Purchase Price, together with any accrued interest thereon, shall
be paid as provided in Section 2.02.
Section 2.02. Closing. The closing (the "Closing") of the
purchase and sale of the Shares hereunder shall take place at the
offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York on the last business day of the month in which the
conditions set forth in Article 10 are satisfied, or at such
other time or place as Buyer and Seller may agree. At the
Closing:
(a) Buyer shall deliver to Seller:
(i) the Purchase Price, together with any accrued interest
thereon, in immediately available funds by wire transfer to an
account of Seller with a bank in New York City designated by
Seller, by notice to Buyer, not later than two business days
prior to the Closing Date (or if not so designated, then by
certified or official bank check payable in immediately available
funds to the order of Seller in such amount); and
(ii) the opinion, certificates and other documents set forth
in Section 10.03 of this Agreement.
(b) Seller shall deliver to Buyer:
(i) certificates for the Shares duly endorsed or accompanied
by stock powers duly endorsed in blank, with any required
transfer stamps affixed thereto;
(ii) true copies of the articles of incorporation and by-
laws of each of Seller, the Company and the Subsidiaries;
(iii) the complete stock books, stock ledgers, minute books
and corporate seals of the Company and the Subsidiaries and the
stock certificates evidencing ownership of the Subsidiaries;
(iv) the opinions, certificates and other documents set
forth in Section 10.02 of this Agreement; and
(v) resignations of such directors and officers (from their
offices as such) of the Company and the Subsidiaries as Buyer may
request.
ARTICLE 3
Representations and Warranties of Seller
Seller represents and warrants to Buyer as of the date
hereof that:
Section 3.01. Corporate Existence and Power. (a) Each of
Seller and the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as now conducted. Except as disclosed
on Schedule 3.01(a), the Company is duly qualified to do business
as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect. Seller
has heretofore made available to Buyer true and complete copies
of the certificate of incorporation and bylaws of Seller and the
Company as currently in effect. The minutes of the Board of
Directors , any investment committees and stockholders meetings
and the stock books of the Company and the Subsidiaries, all of
which have been previously made available to Buyer, are the
complete and correct records of such Board of Directors ,
investment committee s and stockholders meetings and stock
issuances from, in the case of such minutes, December 31, 1993
through and including the date hereof and reflect all
transactions through and including the date hereof required to be
contained in such records, and all such meetings were duly
called.
(b) Attached hereto as Schedule 3.01(b) a complete and
accurate list of all jurisdictions where the Company and each of
the Insurance Subsidiaries has written or is qualified to write
insurance; a list of all licenses and permits held by the Company
and each of the Insurance Subsidiaries issued by any insurance
authority of any such jurisdiction; and a description of the
classes and lines of businesses the Company and each of the
Insurance Subsidiaries is authorized to write in each
jurisdiction. The Company s and each of the Insurance
Subsidiaries authority to write the classes and lines of
insurance business reflected on said schedule is not restricted
in any material respect, and neither the Company nor any of the
Insurance Subsidiaries is a party to any agreement with any state
insurance regulatory official limiting the Company s or such
Insurance Subsidiary s ability to make full use of the licenses
or permits which have been issued to it or requiring the Company
and the Insurance Subsidiaries to comply with regulatory
standards, procedures or requirements different from those
applicable to companies with licenses or permits identical to
those issued to the Company or such Insurance Subsidiary. The
licenses and permits listed on Schedule 3.01(b) constitute all
licenses and permits material to the conduct of their business,
as it is now conducted and will be conducted prior to the
Closing. Excluding the Company s license in Taiwan, all such
licenses and permits are in full force and effect, and there are
no reasonable grounds to believe that any such license or permit
will not, in the ordinary course, be renewed upon its expiration.
(c) Attached hereto as Schedule 3.01(c) is a complete and
accurate list of all jurisdictions in which the Company or any
Insurance Subsidiary currently has applications for licenses,
permits or certificates of authority pending. Schedule 3.01(c)
also sets forth the current status of all such applications.
Section 3.02. Corporate Authorization. The execution,
delivery and performance by Seller of this Agreement are within
Seller s corporate powers and have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement
constitutes a valid and binding agreement of Seller enforceable
in accordance with its terms, except as (i) the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors rights
generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability.
Section 3.03. Governmental Authorization. The execution,
delivery and performance by Seller of this Agreement require no
action by or in respect of, or filing with, any governmental
body, agency, or official other than (ii) compliance with any
applicable requirements of the HSR Act, (iii) the approvals or
non-disapprovals of the Required Jurisdictions, and (ii) any such
action or filing as to which the failure to make or obtain would
not reasonably be expected to have a Material Adverse Effect or a
Chubb Securities Material Adverse Effect.
Section 3.04. Non-Contravention. The execution, delivery and
performance by Seller of this Agreement do not and will not (i)
violate the certificate of incorporation or bylaws of Seller or
the Company or any Subsidiary, (ii) assuming compliance with the
matters referred to in Section 3.03, violate any applicable law,
rule, regulation, judgment, injunction, order or decree or alter
or, except as set forth on Schedule 3.04, impair any license,
franchise, permit or other similar authorization held by Seller
or the Company or any Subsidiary, (iii) except as disclosed on
Schedule 3.04, require any consent or other action by any Person
under, constitute a default under, or give rise to any right of
termination, cancellation or acceleration of any right or
obligation of Seller or the Company or any Subsidiary or to a
loss of any benefit to which the Company or any Subsidiary is
entitled under, any agreement or other instrument binding upon
Seller or the Company or any Subsidiary or their properties or
assets or (iv) result in the creation or imposition of any Lien
on any asset of the Company or any Subsidiary, except, in the
case of clauses (iii) and (iv), to the extent that any such
violation, failure to obtain any such consent or other action,
default, right, loss or Lien would not reasonably be expected to
have a Material Adverse Effect.
Section 3.05. Capitalization. (a) The authorized capital
stock of the Company consists of 600,000 shares of common stock,
par value $5.00 per share. As of the date hereof, there are
600,000 shares outstanding.
(b) The Shares have been duly authorized and validly issued
and are fully paid and non-assessable. Except as set forth in
this Section 3.05, there are no outstanding (i) shares of capital
stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company or (iii) options or
other rights to acquire from the Company, or other obligation of
the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses (i), (ii)
and (iii) being referred to collectively as the "Company
Securities ). There are no outstanding obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities.
Section 3.06. Ownership of Shares. Seller is the record and
beneficial owner of the Shares, free and clear of any Lien and
any other limitation or restriction (including any restriction on
the right to vote, sell or otherwise dispose of the Shares), and
will transfer and deliver to Buyer at the Closing valid title to
the Shares free and clear of any Lien and any such limitation or
restriction.
Section 3.07. Subsidiaries. (a) Each Subsidiary is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, has
all corporate power and authority to own, lease and operate its
properties and to carry on its business as now conducted. Each
Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where
such qualification is necessary, except for those jurisdictions
where failure to be so qualified would not reasonably be expected
to have a Material Adverse Effect. All Subsidiaries and their
respective jurisdictions of incorporation are identified on
Schedule 3.07. No later than 10 days after the date hereof,
Seller shall deliver to Buyer an amendment to Schedule 3.07 which
shall set forth the authorized and outstanding shares of capital
stock of each Subsidiary.
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each Subsidiary, is owned
by the Company, directly or indirectly, free and clear of any
Lien and free of any other limitation or restriction (including
any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other voting securities or ownership
interests). There are no outstanding (i) securities of the
Company or any Subsidiary convertible into or exchangeable for
shares of capital stock or other voting securities or ownership
interests in any Subsidiary or (ii) options or other rights to
acquire from the Company or any Subsidiary, or other obligation
of the Company or any Subsidiary to issue, any capital stock or
other voting securities or ownership interests in, or any
securities convertible into or exchangeable for any capital stock
or other voting securities or ownership interests in, any
Subsidiary (the items in clauses (i) and (ii) being referred to
collectively as the "Subsidiary Securities"). There are no
outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
Section 3.08. Financial Statements. The audited
consolidated balance sheets of the Company and its Subsidiaries
as of December 31, 1994 and December 31, 1995 and the related
consolidated statements of income and cash flows for each of the
years ended December 31, 1994 and December 31, 1995 and the
Balance Sheet and the related unaudited consolidated statements
of income and cash flows in the nine months ended September 30,
1996 present fairly, in all material respects, the consolidated
financial position of the Company or any Subsidiary as of the
dates thereof and their consolidated results of operations and
changes in the consolidated financial position for the periods
then ended in conformity with generally accepted accounting
principles applied on a consistent basis, except as set forth in
the notes, exhibits or schedules thereto (subject, in the case of
any unaudited statements, to normal year-end adjustments).
Promptly after they become available, but in no event later than
May 15, 1997, Seller will deliver to Buyer audited consolidated
balance sheets of the Company and its Subsidiaries at December
31, 1996 and consolidated statements of income, cash flows and
changes in stockholder s equity for the year then ended, and the
notes thereto, and will deliver as soon as they are available
interim financial statements of the Company and its Subsidiaries
as of the end of each subsequent quarter and for the quarter and
year then ended, in each case prepared in accordance with
generally accepted accounting principles applied on a consistent
basis.
Section 3.09. Absence of Certain Changes. Since the
Balance Sheet Date, except (i) as disclosed on Schedule 3.09 and
(ii) for the transactions contemplated hereby, the business of
the Company and each Subsidiary has been conducted in the
ordinary course consistent with past practices and there has not
been:
(i) any event, occurrence, development or state of
circumstances or facts which has had a Material Adverse Effect or
a Chubb Securities Material Adverse Effect, other than those
resulting from changes in general conditions (including laws and
regulations) applicable to the industry, or general economic
conditions;
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of the Company, or any repurchase, redemption or
other acquisition by the Company or any Subsidiary of any
outstanding shares of capital stock or other securities of, or
other material ownership interests in, the Company or any
Subsidiary, or the issuance by the Company or any Subsidiary of
any capital stock or the issuance or grant by the Company or any
Subsidiary of any option, warrant, call, commitment,
subscription, right to purchase or contract of any character
relating to its authorized or issued capital stock or any
securities convertible into, relating to or based on its capital stock;
(iii) any amendment of the articles of incorporation or
by-laws or similar governing instruments or outstanding security
of the Company or any Subsidiary;
(iv) any incurrence, assumption or guarantee by the Company
or any Subsidiary of any indebtedness for borrowed money in
excess of $100,000;
(v) any creation or assumption by the Company or any
Subsidiary of any Lien on any asset other than in the ordinary
course of business;
(vi) any making of any loan, advance or capital
contributions to or investment of any nature in any Person other
than loans, advances or capital contributions to or investments
in wholly-owned Subsidiaries and portfolio transactions made, in
each case, in the ordinary course of business;
(vii) any reported damage, destruction or other casualty
loss affecting the business or assets of the Company or any
Subsidiary which after giving effect to any applicable insurance
payment has had a Material Adverse Effect;
(viii) any transaction or commitment made, or any contract
or agreement entered into, by the Company or any Subsidiary
relating to its material assets or business (including the
acquisition or disposition of any assets) or any relinquishment
by the Company or any Subsidiary of any contract or other right,
in either case, involving more than $1,000,000 over its
noncancellable term, other than transactions and commitments
contemplated by this Agreement;
(ix) any change in any method of accounting or accounting
practice by the Company or any Subsidiary, except for any such
change after the date hereof required by law or by reason of a
concurrent change in generally accepted accounting principles, or
any change in any actuarial or reserving standard or any change
in depreciation or amortization policies or rates adopted by it;
(x) any (A) employment, deferred compensation, severance,
retirement or other similar agreement entered into with any
director or officer of the Company or any Subsidiary (or any
amendment to any such existing agreement), (B) grant of any
severance or termination pay to any director or officer of the
Company or any Subsidiary, or (C) change in compensation or other
benefits payable to any director or officer of the Company or any
Subsidiary pursuant to any severance or retirement plans or
policies thereof, except for enhanced vesting, if any, relating
to awards outstanding under Seller s Long-Term Stock Incentive
Plans and under the Pension Plan and Individual Account Plans;
provided that no such enhanced vesting shall result in any
liability or obligation to the Company, any Subsidiary or Buyer;
(xi) any labor dispute, other than routine individual
grievances, or, to the knowledge of Seller, any activity or
proceeding by a labor union or representative thereof to organize
any employees of the Company or any Subsidiary, or any lockouts,
strikes, slowdowns, work stoppages or, to the knowledge of
Seller, any threats thereof by or with respect to any employees
of the Company or any Subsidiary;
(xii) except as referenced in subsection (x) of this
Section 3.09 and except for customary wage or salary increases
for employees and customary compensation increases for agents,
any increase in the compensation payable or to become payable to
any employee or agent or any increase in any bonus, insurance,
severance, pension or other Benefit Arrangement or Employee Plan
for such employees or agents or any employment, consulting,
severance or other similar contract entered into, except for (a)
at will employment arrangements and (b) contracts with agents, in
each case entered into in the ordinary course of business
consistent with past practice;
(xiii) any change in its underwriting standards, retention
limits or administrative practices with respect to additions to
(new business) or deletions from (policy terminations) any policy
master files;
(xiv) any change in interest rates credited on life
insurance or annuity policies, except for such changes that the
Company deems reasonably necessary consistent with past practice
to respond to competitive factors;
(xv) any change in systems of internal accounting controls
that could reasonably be expected to increase the risk of a
Material Adverse Effect;
(xvi) any amendment to any form of the contracts with
Producers or Producer Plans referred to in Section 3.26(a);
(xvii) any transaction or commitment made to acquire or
dispose of any real property; or
(xviii) any agreement, understanding or commitment to take
any action described in this Section 3.09.
Section 3.01. No Undisclosed Material Liabilities. There
are no liabilities of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than:
(a) liabilities provided for on the consolidated balance
sheet of the Company and its Subsidiaries dated December 31,
1995, or disclosed in the notes thereto;
(b) liabilities incurred in the ordinary course of business
since December 31, 1995 that have not had and are not reasonably
expected to have a Material Adverse Effect; and
(c) liabilities or other obligations disclosed in, or
related to, contracts or other matters disclosed in this
Agreement or any Schedule to this Agreement.
Section 3.11. Material Contracts. (a) Except as disclosed
on Schedule 3.11, and except, in the case of Section 3.11(a)(i),
(ii) and (vii), for any agreements that are terminable on not
more than 60 days notice and without the payment of any penalty
by, or any other material consequence to, the Company or any
Subsidiary, neither the Company nor any Subsidiary, to the best
of their knowledge, is a party to or bound by:
(i) any lease not made in the ordinary course of business
which involves payments of more than $150,000 per year or extends
beyond December 31, 1999;
(ii) any agreement for the purchase of materials, supplies,
goods, services, equipment or other assets not made in the
ordinary course of business which individually does not exceed
$250,000;
(iii) any agreement relating to indebtedness for borrowed
money or the deferred purchase price of property (in either case,
whether incurred, assumed, guaranteed or secured by any asset),
except any such agreement entered into in the ordinary course of
business with an aggregate outstanding principal amount not
exceeding $25,000;
(iv) any material partnership, joint venture or other
similar agreement or arrangement;
(v) any material agency, dealer, sales representative,
marketing or other similar agreement not made in the ordinary
course of business;
(vi) any material agreement or arrangement with Seller or
any of its Affiliates; or
(vii) any other agreement not made in the ordinary course
of business that is material to the Company and the Subsidiaries
taken as a whole.
(b) Except for agreements which are disclosed as terminable
on Schedule 3.11, each agreement disclosed in any Schedule to
this Agreement to which the Company or any Subsidiary is a party
is a valid and binding agreement of the Company or a Subsidiary,
as the case may be, and is in full force and effect, and neither
the Company nor any Subsidiary is, nor to the knowledge of Seller
is any other party thereto, in default or breach in any material
respect under the terms of any such agreement, except for such
defaults or breaches which would not reasonably be expected to
have a Material Adverse Effect or a Chubb Securities Material
Adverse Effect.
Section 3.12. Litigation. Except as set forth on Schedule
3.12, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of Seller threatened against
or affecting, Seller, the Company or any Subsidiary before any
court or arbitrator or any governmental or regulatory body,
agency or official which would reasonably be expected to result
in costs or losses in excess of $100,000 in any single instance
against or on behalf of the Company or any Subsidiary, or any
officer, employee or director thereof in such individual s
capacity as officer, employee or director of the Company or any
Subsidiary or involving any of their properties or businesses,
whether at law or in equity. [Confidential Treatment Requested]
Further, except as set forth on Schedule 3.12, there are no
outstanding judgments, orders, decrees, stipulations or awards
(whether rendered by a court, administrative agency, or by
arbitration, pursuant to a grievance or other procedures) against
or relating to the Company or any Subsidiary which contain any
remaining restrictions or obligations to perform. There is no
pending or, to the best knowledge of the Seller, the Company and
the Subsidiaries, any threatened action, proceeding or
investigation with respect to the Company, any Subsidiary or any
other Person which questions the validity of this Agreement or
the transactions contemplated hereby, could prevent or materially
adversely affect any action taken to be taken pursuant hereto or
which could reasonably be expected to result in any revocation,
suspension or limitation of any regulatory authority of the
Company or any Subsidiary.
Section 3.13. Compliance with Laws and Court Orders.
Except as disclosed on Schedule 3.13 and 3.15(b)(iii), since
December 31, 1993, the Company and each Subsidiary has complied
in all material respects with its obligation to make all required
filings or reports with governmental or regulatory bodies and has
complied in all material respects with all laws, rules,
regulations, licensing requirements and orders applicable to the
Company or such Subsidiary or the operation of their respective
businesses, and there has been no written assertion received, and
no elected officer has received any oral notice, from any party
responsible for the administration or enforcement thereof that
the Company or any Subsidiary has violated any such laws, rules,
regulations, requirements or orders. All filings and reports to
governmental or regulatory authorities have been true, complete
and accurate in all material respects. This Section does not
cover any environmental matters, for which Section 3.19 is solely
applicable.
Section 3.14. Finders Fees. Except for Goldman, Sachs &
Co., whose fees will be paid by Seller, there is no investment
banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Seller or the
Company or any Subsidiary who might be entitled to any finder s
fee or commission in connection with the transactions
contemplated by this Agreement.
Section 3.15. Insurance Filings. (a) Holding Company
Reports. Schedule 3.15(a) contains a true and complete list of
all annual holding company reports ("Holding Company Reports")
which the Company and each Insurance Subsidiary has filed with or
submitted to the insurance regulatory authorities of New Jersey,
New Hampshire and California (and certain other jurisdictions)
since December 31, 1993.
(b) Statutory Insurance Statements. Schedule 3.15(b)
contains a true and complete list of all annual and quarterly
statements ("Statutory Insurance Statements") which the Company
and each Insurance Subsidiary has filed (or caused to be filed)
with or submitted to the insurance regulatory authorities of New
Jersey, New Hampshire and California and in each other
jurisdiction in which such company is an admitted insurer since
December 31, 1993. Except as indicated therein or in the reports
of examination referred to Section 3.15(d), (i) no material
deficiencies have been asserted to the Company or any such
Insurance Subsidiary by any such regulatory authority with
respect to such filings or submissions; (ii) neither the Company
nor any such Insurance Subsidiary has submitted any response with
respect to material comments from such insurance regulatory
authorities concerning such filings, submissions or reports of
examination; (iii) since December 31, 1993 and except as
disclosed on Schedule 3.15(b)(iii), no fine or penalty in excess
of $500 has been imposed on the Company or any Insurance
Subsidiary by any such insurance regulatory authority; and (iv)
no deposits have been made by the Company or any Insurance
Subsidiary with any such insurance regulatory authority which
were not shown in the most recent annual Statutory Insurance
Statement of the Company and each of the Insurance Subsidiaries.
The Company has delivered to Buyer true and complete copies of
the Statutory Insurance Statements.
(c) Statutory Financial Statements. The statutory financial
statements ("Statutory Financial Statements") of the Company and
of each Insurance Subsidiary which are included in the Statutory
Insurance Statements present fairly, in all material respects,
the statutory financial condition of the Company and of each
Insurance Subsidiary as of the dates thereof and the statutory
results of its operations and other data contained therein for
each of the years then ended in conformity with required or
permitted statutory insurance accounting requirements and
practices which have been applied on a consistent basis, except
as set forth in the notes, exhibits or schedules thereto.
Seller shall deliver to Buyer as soon as they are filed such
interim or annual Statutory Financial Statements that may be
required to be filed with any state departments of insurance on
behalf of the Company or any Insurance Subsidiary, and such
Statutory Financial Statements to be delivered hereafter will
present fairly, in all material respects, the statutory financial
condition of the Company and each Insurance Subsidiary as of such
date and the statutory results of operations of the Company and
each Insurance Subsidiary for the period then ended, in
accordance with required or permitted statutory insurance
accounting requirements and practices which have been applied on
a consistent basis, except as set forth in the notes, exhibits or
schedules thereto.
(d) Reports of Examination. Schedule 3.15(d) contains a
true and complete list of the Reports of Examination as to
Condition for the Company and each Insurance Subsidiary,
constituting the most recent National Association of Insurance
Commissioners Zone Examination for the Company and any such
Insurance Subsidiary under applicable insurance laws, true and
complete copies of which have been delivered to Buyer.
(e) Reserves, etc. The amounts shown in the Statutory
Insurance Statements as reserves and liabilities for past and
future insurance policy benefits, losses, claims and expenses
under insurance policies as of the end of each such year were
computed in accordance with commonly accepted actuarial standards
consistently applied, were fairly stated in accordance with sound
actuarial principles, were based on actuarial assumptions which
were in accordance with those called for in policy provisions and
met the requirements of the insurance laws of New Jersey, New
Hampshire, New York and California, as applicable, and such
amounts shown on the Statutory Insurance Statements filed after
the date hereof and on or prior to the Closing Date will be so
computed and based and will meet all such requirements. No other
state has objected to such Statutory Insurance Statements as
filed.
Section 3.16. Insurance Business. (a) Reinsurance. All
material contracts, arrangements, treaties and agreements to
which the Company or any Insurance Subsidiary is a party with
respect to reinsurance applicable to insurance in force
(including grace periods and other extensions) on the date of
this Agreement, a list of which is included on Schedule 3.16, and
all such material contracts, arrangements, treaties and
agreements under which the Company or any such Insurance
Subsidiary has any obligation to cede insurance, are valid,
binding and in full force and effect in accordance with their
terms. To the best knowledge of Seller, the Company is generally
in good standing under its reinsurance agreements with respect to
the reporting of business to be ceded and the timely payment of
premiums. Neither the Company nor any Insurance Subsidiary is,
and, to the best knowledge of Seller, no other party thereto is,
in material default of any provision thereof and, except as set
forth on Schedule 3.16, no such material agreement contains any
provision providing that the other party thereto may terminate
the same by reason of the transactions contemplated by this
Agreement or any other provision which would be altered or
otherwise become applicable by reason of such transactions.
Except as provided for in the Statutory Financial Statements
as of and for the year ended December 31, 1995, or as set forth
on Schedule 3.16, all reinsurance represented by reinsurance
treaties to which the Company or any Insurance Subsidiary is a
party represents an admitted asset or reduction of loss reserves
of the Company or the Insurance Subsidiary in the respective
Statutory Financial Statements and their carrying values have
been described in conformity with statutory accounting principles
in accordance with values described by the National Association
of Insurance Commissioners, when appropriate, consistent with the
prior reporting practices of the Company and the Insurance
Subsidiaries. Except as set forth on Schedule 3.16, (i) no
consent from any assuming reinsurer under any of such reinsurance
treaties is required in order for Seller to validly and
effectively sell the Shares to Buyer as provided hereunder, and
(ii) the termination of any reinsurance treaty between or among
the Company and any Insurance Subsidiary will not result in
adverse tax consequences to the Company or any Insurance
Subsidiary.
(b) Insurance Policy Forms and Rates. Except as set forth
on Schedule 3.16, each insurance policy or certificate form, as
well as any related application form, written advertising
material and rate or rule currently marketed by the Company and
each Insurance Subsidiary, the use or issuance of which requires
filing or approval, has been appropriately filed, and if required,
approved by the insurance regulatory authorities of New Jersey and
New Hampshire (and any other state in which such policies and forms
are required to be filed). To the knowledge of the Company, all such
policies and certificates, forms, applications, advertising materials
and rates or rules are in compliance in all material respects with all
applicable laws and regulations.
(c) No Policy Dividends. Except as set forth on Schedule
3.16, no provision in any policy in force gives policyholders the
right to receive dividends or distributions on their policies
(other than accruals of interest on cash values or as claim
benefits) or otherwise share in the benefits, revenue or profits
of the Company or any Insurance Subsidiary, provided that the
practice in certain instances of making premium refunds based
upon group policyholder loss experience shall not violate the
representation contained in this sentence. Except as set forth
on Schedule 3.16, and except as paid in the ordinary course of
business, none of the Insurance Subsidiaries or the Company is
liable to pay commissions upon the renewal of any insurance
policy nor is it a party to any agreement providing for the
collection of insurance premiums payable to the Company or any
such Insurance Subsidiary by any other person.
(d) Threats of Cancellation. Except as set forth on
Schedule 3.16, since December 31, 1995, no policyholder or
related group of policyholders or persons or entities producing
insurance business which accounted for five percent or more of
the gross income of the Company and the Insurance Subsidiaries
for the year ended December 31, 1995 has or have, at its or their
initiative, terminated or threatened to terminate in writing its
or their relationship with the Company or any such Insurance
Subsidiary.
(e) Underwriting Standards. Each of the Company and the
Insurance Subsidiaries have complied in all material respects
with its respective underwriting standards and, with respect to
insurance contracts reinsured in whole or in part, such insurance
contracts conform in all material respects to the standards
agreed to with the reinsurer in the related reinsurance,
coinsurance or other similar contracts.
Section 3.17. ERISA Representations. (a) Schedule 3.17
identifies each Employee Plan. Seller has furnished or made
available to Buyer copies of the Employee Plans and all
amendments thereto together with (i) the most recent annual
report prepared in connection with any Employee Plan (Form 5500
including, if applicable, Schedule B thereto) and (ii) the most
recent actuarial valuation report prepared in connection with any
Employee Plan.
(b) Neither the Seller nor any ERISA Affiliate of Seller
has incurred, or reasonably expects to incur prior to the Closing
Date, any liability under Title IV of ERISA arising in connection
with the complete or partial termination of, or complete or
partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA that could become a liability of the Buyer
or any of its ERISA Affiliates after the Closing Date.
(c) Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service. Each
Employee Plan which is not a Multiemployer Plan has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes,
orders, rules and regulations, including but not limited to ERISA
and the Code. No Employee Plan is a Multiemployer Plan.
(d) Schedule 3.17 identifies each Benefit Arrangement.
Seller has furnished or made available to Buyer copies or
descriptions of each Benefit Arrangement. Each Benefit
Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all
applicable statutes, orders, rules and regulations.
Section 3.18. Property. (a) All of the real property
owned by the Company and its Subsidiaries is shown on its Balance
Sheet, except with respect to any acquisitions or dispositions of
property since the Balance Sheet Date that are disclosed on
Schedule 3.09, and each of the Company and its Subsidiaries has
good and marketable title to all such real property, and to such
personal property (other than leased property referred to in
Section 3.18(b)) as is necessary to conduct its business as
presently conducted, free and clear of any Lien, covenant or
other restriction which would materially and adversely affect the
Company s or any of its Subsidiaries ability to conduct their
respective business as such business is currently conducted.
(b) Each of the Company and its Subsidiaries has the right
to use and possess all property currently leased to it, with such
rights being evidenced by valid and enforceable leases.
(c) Except for the equipment described in Section 7.06 and
the computer software referred to in Section 5.06(b), all of the
personal property necessary for the Company and each of the
Subsidiaries to conduct its business as presently conducted is
under the possession or control of the Company or such
Subsidiary.
Section 3.19. Environmental Matters. Except as set forth
on Schedule 3.19:
(a) The Company and the Subsidiaries are in compliance in
all material respects with all Environmental Laws.
(b) With respect to any properties owned, leased or
operated by the Company or any Subsidiary, to the knowledge of
the Seller, the Company and the Subsidiaries there has been no
Release or threatened Release of Hazardous Substances in
violation of Environmental Laws that would reasonably be expected
to result in a Material Adverse Effect.
(c) Neither the Company nor any Subsidiary has received any
claim, notice or advice from a Person (i) asserting that the
Company or the Subsidiaries are or may be liable for (A) personal
injury, (B) property damage or (C) cleaning up Hazardous
Substances on, under, in or migrating from such properties, in
each case arising under Environmental Laws or (ii) that (A)
Hazardous Substances are or may be migrating onto or under such
properties or (B) such properties are or may be subject to any
environmental investigation or evaluation by any Person.
Section 3.20. Guaranty Fund Assessments. Each of the Company
and the Insurance Subsidiaries has fully reserved in its
respective Statutory Financial Statements as of and for the nine
months ended September 30, 1996 for any present or future
guaranty fund assessments, up to the amount reserved for in
accordance with the calculations of NOLHGA, relating to any
rehabilitation, conservatorship or insolvency known to exist as
of the date hereof, as reported by the most recent NOHLGA survey
dated April 1, 1996.
Section 3.21. Actuarial Analysis. Seller has delivered to
Buyer a true and complete copy of the Actuarial Evaluation Report
of Milliman & Robertson, Inc. as of September 30, 1996, the Roll
Forward Analysis as of February 10, 1997, and any other
information prepared by Milliman & Robertson and generally made
available to prospective purchasers of the Company (the "M&R
Analysis"). The information furnished to Milliman & Robertson,
Inc. in connection with the preparation of the M&R Analysis was
accurate in all material respects; provided that no
representation or warranty is made with respect to projections of
future economic events, future expenses, new business production
levels or future management actions. The assumptions utilized in
making such projections were arrived at in good faith and Seller
believes that they were reasonable when made.
Section 3.22. Investments; Defaults. Seller has previously
delivered to Buyer a complete list of all investments owned,
directly or indirectly, by the Company and the Subsidiaries as of
December 31, 1996. Schedule 3.22 also contains a list of all
bankruptcies, restructured assets, nonperforming assets,
foreclosures and defaults known to the Seller, the Company or any
of the Subsidiaries with respect to the investments as of
December 31, 1996. Except as set forth on Schedule 3.22, no
liability will inure to the Company or any Subsidiary under any
ISDA Master Swap Agreement to which the Company or any Subsidiary
is a party as a result of the transactions contemplated by this
Agreement.
Section 3.23. Separate Accounts. Each separate account
maintained by the Company or an Insurance Subsidiary is listed on
Schedule 3.23 (collectively, the "Separate Accounts"). Each
Separate Account is duly and validly established and maintained
under the laws of its state of formation and is either excluded
from the definition of an investment company pursuant to Section
3(c)(11) of the Investment Company Act of 1940, as amended (the
"1940 Act") or is duly registered as an investment company under
the 1940 Act. Each such Separate Account, if registered, is
operated in compliance in all material respects with the 1940
Act, has filed all reports and amendments of its registration
statement required to be filed, has filed all annual reports on
Form N-SAR with the SEC, has filed all notices, including Form
24f-2, and paid all fees in connection with shares or units sold,
and has been granted all exemptive relief necessary for its
operations as presently conducted. The insurance contracts under
which the Separate Account assets are held are duly and validly
issued and are either exempt from registration under the
Securities Act pursuant to Section 3(a)(2) of the Securities Act
or were sold pursuant to an effective registration statement
under the Securities Act, and any such registration statement is
currently in effect to the extent necessary to allow the
appropriate Company or Insurance Subsidiary to receive
contributions under such policies.
Section 3.24. Funds. Each of the mutual funds presently
sponsored or intended to be sponsored by the Company or an
Insurance Subsidiary is listed on Schedule 3.24 (the "Funds").
Except as listed on Schedule 3.24, (i) each Fund is or will be
duly registered with the SEC as an open-end management investment
company under the 1940 Act, (ii) each Fund is or will be in
material compliance with the 1940 Act and the SEC regulations
promulgated thereunder, including the requirements to file semi-
annual or annual reports on N-SAR with the SEC, (iii) all shares
of the Funds are or will be duly registered under the Securities
Act and any applicable state securities law, and (iv) each of the
Funds is or will be duly incorporated and in good standing under
the laws of the state of its incorporation or is or will be a
validly existing business trust under the laws of the
jurisdiction in which it was formed.
Section 3.25. Employees and Compensation. (a) Each of the
Company and the Subsidiaries has complied in all material
respects with all applicable rules, laws and regulations
concerning wages, bonuses, discrimination in employment,
disabilities, family and medical leave, immigration, wrongful
termination, worker s compensation for injury or sickness,
collective bargaining, OSHA and other employment matters and
made, in a timely manner, true, complete and accurate filings (in
all material respects) required in connection therewith by any
federal, state or local governmental unit or agency. Except for
items 9, 12 and 13 of Schedule 3.09, there are no employment
contracts with any employee of the Company or any Subsidiary and
the employment of each employee of the Company and the
Subsidiaries is terminable at will by the Company and the
Subsidiaries without restriction, penalty or payment of any kind,
other than payments with respect to liabilities reflected on the
financial statements of the Company and the Subsidiaries as of
and for the year ended December 31, 1995 and for services
actually performed, non-material payments for accrued benefits
and the severance plan referred to on Schedule 3.17 or as may be
provided for under federal, state or local laws, rules or
regulations.
(b) The employees of the Company and the Subsidiaries are
not represented by a labor organization, none of the Company or
the Subsidiaries is a signatory to a collective bargaining
agreement with any labor organization, no union claims to
represent any such employees and, to the best knowledge of
Seller, no union organizing effort is or within the last three
years has been underway involving employees of the Company or any
Subsidiary.
Section 3.26. Producers for the Company and the Insurance
Subsidiaries. (a) Seller has provided to Buyer true, accurate
and complete copies of the forms of all agreements, including all
amendments or modifications thereof since December 31, 1993, with
agents, brokers or others that have the authority to generate
business for the Company or any of the Insurance Subsidiaries,
including the authority to bind the Company or a Subsidiary to a
contract for insurance (the "Producers"). Items 28-32, 34, 37-42
and 49 of Schedule 3.11 constitute a list of all other plans,
programs and practices, whether written or oral, maintained or
contributed to by the Company or any Insurance Subsidiary in
effect as of the date hereof which presently provide or are
reasonably likely to provide in the future benefits or
compensation in excess of [Confidential Treatment Requested]
individually to or on behalf of Producers or former Producers of
the Company or any Insurance Subsidiary (excluding any
promotional contests for Producers as to which the aggregate
amounts payable thereunder do not exceed [Confidential Treatment
Requested]) ("Producer Plans"), copies of which have previously
been furnished to Buyer. Except as set forth in the forms and in
the items referred to in the preceding sentence, each such
Producer Plan may be terminated within 90 days of the giving of
notice without any liability whatsoever to any person whomsoever
except payment to or on behalf of any Producers or former
Producers (other than commissions accrued prior to such
termination and vested renewals) of an amount less than or equal
to [Confidential Treatment Requested] or, in the aggregate for
all such Producers or former Producers, of an amount less than or
equal to [Confidential Treatment Requested].
(b) To the best knowledge of Seller, the Company and the
Subsidiaries there is no, and since the Balance Sheet Date there
has not been any, condition or state of fact (excluding the
transactions contemplated by this Agreement and external
political and economic conditions) which is reasonably likely to
affect the Company s and the Subsidiaries relations with the
Producers in a manner which would have a Material Adverse Effect,
and no Producer or group of Producers, the loss of whom would
have a Material Adverse Effect, has notified the Company or any
Subsidiary since the Balance Sheet Date of his or their intent to
(i) terminate his or their relationship with the Company or any
Subsidiary or (ii) make any demand for material payments or
modifications of his or their arrangements with the Company or
any Insurance Subsidiary.
Section 3.27. Insurance. The Company and the Subsidiaries
have been and are insured by licensed insurers with respect to
their properties and the conduct of their business in such
amounts and against such risks as are reasonable in relation to
their business, and the Company will use commercially reasonable
efforts to maintain such insurance in force at least through the
Closing Date.
Section 3.28. Full Disclosure. There is no fact or
condition known to senior management of Seller, the Company or
any Subsidiary which has not been disclosed to Buyer in writing
which has had a Material Adverse Effect or to the knowledge of
senior management of Seller, the Company or any Subsidiary could
reasonably be expected to have a Material Adverse Effect.
Section 3.29. Company Trademarks; Software. (a) Schedule
7.05 sets forth a complete and accurate list of all material
trademarks, trade names and applications therefor, other than the
Chubb Trademarks (as defined in Section 7.05), owned by the
Company or any Subsidiary (collectively, the "Company
Trademarks"). The Company Trademarks are free of any Liens and
are all those which are necessary to the conduct of the business
of the Company as now conducted other than the Chubb Trademarks.
None of the Company Trademarks are licensed to the Company by a
third party. The Company Trademarks and the Chubb Trademarks are
not the subject of any pending or, to the knowledge of Seller,
threatened litigation. The consummation of the transactions
contemplated by this Agreement will not result in the loss or
impairment of any of the Company Trademarks or result in any
requirement of new or additional royalties, licensing fees,
relicensing fees or other expenses. Neither the Seller, the
Company nor any Subsidiary knows of any use by others of the
Company Trademarks.
(b) The Company and its Subsidiaries have valid and
enforceable rights to use all the computer software necessary for
the operation of their business as currently conducted (the
"Software"). The transfer of ownership of the Company and the
Subsidiaries contemplated by this Agreement will not limit or
impair the rights of the Company and its Subsidiaries to use
material Software owned or directly licensed by the Company and
its Subsidiaries.
ARTICLE 4
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as of the date
hereof that:
Section 4.01. Corporate Existence and Power. Buyer is a
corporation duly incorporated, validly existing and in good
standing under the laws of North Carolina and has all corporate
powers and all material governmental licenses, authorizations,
permits, consents and approvals required to carry on its business
as now conducted, except for those licenses, authorizations,
permits, consents and approvals the absence of which would not,
individually or in the aggregate, have an adverse effect on
Buyer s ability to consummate the transactions contemplated
hereby.
Section 4.02. Corporate Authorization. The execution,
delivery and performance by Buyer of this Agreement are within
the corporate powers of Buyer and, except for any required
approval by Buyer s stockholders, have been duly authorized by
all necessary corporate action on the part of Buyer. This
Agreement constitutes a valid and binding agreement of Buyer
enforceable in accordance with its terms, except as (i) the
enforceability hereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of
general applicability.
Section 4.03. Governmental Authorization. The execution,
delivery and performance by Buyer of this Agreement require no
action by or in respect of, or filing with, any governmental
body, agency or official other than (i) compliance with any
applicable requirements of the HSR Act, (ii) the approvals or
non-disapprovals set forth on Schedule 4.03, and (iii) any such
action or filing as to which the failure to make or obtain would
not, individually or in the aggregate, have an adverse effect on
Buyer s ability to consummate the transactions contemplated
hereby.
Section 4.04. Non-Contravention. The execution, delivery
and performance by Buyer of this Agreement do not and will not
(i) violate the certificate of incorporation or bylaws of Buyer,
(ii) assuming compliance with the matters referred to in Section
4.03, violate any applicable law, rule, regulation, judgment,
injunction, order or decree or any license, franchise, permit or
other similar authorization held by Buyer or (iii) require any
consent or other action by any Person under, constitute a default
under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Buyer under, any
agreement or other instrument binding upon Buyer or its
properties or assets, except, in the case of clauses (ii) and
(iii), to the extent that any such violation, failure to obtain
any such consent or other action, default, right or loss would
not reasonably be expected to have an adverse effect on Buyer s
ability to consummate the transactions contemplated hereby.
Section 4.05. Purchase for Investment. Buyer is purchasing
the Shares for investment for its own account and not with a view
to, or for sale in connection with, any distribution thereof.
Buyer (either alone or together with its advisors) has sufficient
knowledge and experience in financial and business matters so as
to be capable of evaluating the merits and risks of its
investments in the Shares and is capable of bearing the economic
risks of such investment.
Section 4.06. Litigation. There is no action, suit,
investigation or proceeding pending against, or to the knowledge
of Buyer threatened against or affecting, Buyer before any court
or arbitrator or any governmental body, agency or official which
in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement.
Section 4.07. Finders' Fees. Except for Morgan Stanley &
Co. Incorporated whose fees will be paid by Buyer, there is no
investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf of Buyer who
might be entitled to any fee or commission from Seller or any of
its Affiliates upon consummation of the transactions contemplated
by this Agreement.
Section 4.08. Financing. Buyer has, or will have prior to
the Closing, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to make
payment of the Purchase Price and any other amounts to be paid by
it hereunder.
ARTICLE 5
Covenants of Seller
Seller agrees that:
Section 5.01. Conduct of the Company. From the date hereof
until the Closing Date, except for the transactions contemplated
hereby, Seller shall cause the Company and each of its
Subsidiaries to conduct their business in the ordinary course and
to use commercially reasonable efforts to preserve intact their
business organizations and relationships with third parties and
to keep available the services of its present officers and
employees. Without limiting the generality of the foregoing,
from the date hereof until the Closing Date, Seller will not
permit the Company or any Subsidiary to adopt or propose any
change to its certificate of incorporation or bylaws. Except as
otherwise agreed to by Buyer, Seller will not, and will not
permit the Company or any Subsidiary to, take any action the
effect of which would prevent any representation and warranty of
Seller hereunder from being accurate in any material respect at
the Closing Date.
Section 5.02. Access to Information. From the date hereof
until the Closing Date, Seller will (i) give, and will cause the
Company and each Subsidiary to give, Buyer, its counsel,
financial advisors, auditors and other authorized representatives
access during normal working hours to the offices, properties,
books and records of the Company and each Subsidiary, (ii)
furnish, and will cause the Company and each Subsidiary to
furnish, to Buyer, its counsel, financial advisors, auditors and
other authorized representatives such available financial and
operating data and other information relating to the Company or
any Subsidiary as such Persons may reasonably request and (iii)
instruct the employees, counsel and financial advisors of Seller,
Company and the Subsidiaries to cooperate with Buyer in its
investigation of the Company or any Subsidiary. Notwithstanding
the foregoing, Buyer shall not have access to personnel records
of the Company or any Subsidiary relating to: individual
performance or evaluation records, medical histories or other
information, in each such case which in Seller s good faith
opinion is sensitive or the disclosure of which could subject
Seller to risk of liability.
Section 5.03. Notices of Certain Events. Seller shall
promptly notify Buyer of:
(i) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
governmental or regulatory agency or authority in connection with
the transactions contemplated by this Agreement;
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge, threatened against,
relating to or involving or otherwise affecting Seller, the
Company or any Subsidiary that, if pending on the date of this
Agreement would have been required to have been disclosed
pursuant to Section 3.12 or that relate to the consummation of
the transactions contemplated by this Agreement; and
(iv) notices of investigations, proceedings or regulatory
actions instituted or to be instituted against the Company or any
Subsidiary by governmental or regulatory agencies or authorities.
Section 5.04. Other Offers. From the date hereof until the
termination of this Agreement or the Closing Date, whichever
first occurs, Seller will not, will cause the Company and the
Subsidiaries not to, and will use its best efforts to cause the
officers, directors, employees or other agents of the Seller, the
Company and the Subsidiaries not to, directly or indirectly, (i)
take any action to solicit or initiate any offer or indication of
interest from any person with respect to any Acquisition Proposal
(as hereinafter defined) or (ii) engage in negotiations with or
disclose any nonpublic information relating to the Company or the
Subsidiaries or afford access to the properties, books or records
of the Company or the Subsidiaries to any person that may be
considering making, or has made, an offer with respect to an
Acquisition Proposal. For purposes hereof, "Acquisition Proposal"
means any proposal for a merger or other business combination involving
the Company or the Subsidiaries or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company
or any Subsidiary, other than the transactions contemplated by this
Agreement. Seller will, and will cause the Company to, terminate
any existing discussions or negotiations with any person (other than
Buyer) relating to any Acquisition Proposal.
SECTION 5.05. Non-Solicitation. Until [Confidential
Treatment Requested], Seller agrees that, without the prior
written consent of Buyer, neither Seller nor any of its
Affiliates will hire, or solicit to hire, any Producers (only
with respect to the Scheduled Products), officers, directors or
other employees of the Company or any Subsidiary; provided that
Seller shall not be prohibited from hiring or soliciting to hire
(i) individuals whose employment is terminated by the Company or
any Subsidiary after the Closing Date and (ii) any clerical or
other individuals who are not officers and who respond to any
general solicitation.
SECTION 5.06. Computer Services and Software. (a) On or
before the Closing Date, Seller, for itself and on behalf of its
Affiliates, shall enter into a computer services agreement with
the Company (the "Computer Services Agreement") for the services
and on the terms set forth on Schedule 5.06(a). The Computer
Services Agreement shall have a term of 12 months from the
Closing Date (subject to earlier termination at the sole option
of Buyer upon 90 days prior written notice, with the termination
date of the Computer Services Agreement being deemed the "Conversion Date").
(b) During the period beginning on the Closing Date and
ending on the Conversion Date (the "Transition Period"), Seller
shall make available for use by the Company and its Subsidiaries
any Software not owned or directly licensed by the Company and
its Subsidiaries (other than the Software licensed pursuant to
the contract (x) with SunGard Corporation listed on Schedule 3.11
and (y) referred to in Item 35 of Schedule 3.04). Seller shall
(i)(A) obtain the necessary consents to make such Software
available in accordance with the preceding sentence and (B)
assign the licenses for such Software, or otherwise obtain the
benefit of use of such Software, for the Company and its
Subsidiaries following the Conversion Date (or, in each case,
provide alternative software which will permit the Company and
its Subsidiaries to continue to operate their business as
currently conducted), and (ii) pay any costs, fees and expenses
incurred in connection therewith; provided, however, that any on-
going, periodic, or usage fees or royalties payable in connection
with the use of such Software by the Company or its Subsidiaries
shall be paid by the Company or its Subsidiaries. In the event
that any Software licensed by the Company would terminate as a
result of the transactions contemplated by this Agreement, Seller
shall cause the Company to obtain any consents necessary to make
such Software available for use by the Company and its
Subsidiaries during the Transition Period or otherwise provide
alternative Software which will permit the Company and its
Subsidiaries to continue to operate their business as currently
conducted.
(c) Seller shall deliver to Buyer, no later than sixty days
following the date hereof, a complete and accurate list, in the
form of Schedule 5.06(b), of all Software, which list shall
indicate whether such Software is owned or licensed directly by
the Company or its Subsidiaries, together with copies of all
contracts relating thereto.
SECTION 5.07. Minimum Statutory Net Worth. Seller shall
cause the sum of the amount of the aggregate capital and surplus
of the Company and the aggregate asset valuation reserves and
interest maintenance reserves of the Company and the Insurance
Subsidiaries at the Closing Date to be not less than the sum of
[Confidential Treatment Requested], minus the amount of any
special dividend paid to Seller as contemplated by Section 5.08
(the "Minimum Statutory Equity Amount").
SECTION 5.08. Special Dividend. Seller shall use
commercially reasonable efforts to cause the Company to declare
and pay the maximum approved special dividend to Seller, in an
amount not exceeding $100,000,000, immediately prior to Closing.
Seller and Buyer shall cooperate (i) to seek any regulatory
approval which may be required for the payment of any such
dividend (including the payment of any dividend from the
Insurance Subsidiaries), and (ii) to identify mutually agreed
upon U.S. government obligations which the Company or its
Subsidiaries shall sell in order to facilitate the payment of the
special dividend described in this Section 5.08. The Purchase
Price (calculated prior to the accrual of any interest thereon)
shall be reduced by the amount of any dividend paid to Seller
pursuant to this Section 5.08.
SECTION 5.09. Noncompetition Agreement. [Confidential
Treatment Requested]
SECTION 5.10. Other Agreements. Except as otherwise
provided in this Agreement, Seller hereby agrees to assume and be
responsible for any obligation or liability relating to, arising
under, or based upon (a) any contract or agreement that Schedule
3.11 to this Agreement indicates may be terminated (or amended to
exclude the Company and the Subsidiaries) by Seller or its
Affiliates which is in fact terminated or so amended and (b) the
agreements identified in Item 19 of Schedule 3.11 to this
Agreement.
SECTION 5.11. Cross-Defaults. Seller shall cause any
contract or other arrangement of the Company or any of its
Subsidiaries which is subject to a cross-default arising from any
performance obligation of Seller or any of its Affiliates (not
including the Company or any of the Subsidiaries) to be
terminated or amended to remove any such cross-default provision
prior to the Closing Date, and Seller shall protect the Company
and each Subsidiary from any cost or charge to the Company or any
Subsidiary resulting from such termination or amendment.
SECTION 5.12. Portfolio Management. Seller agrees that
with respect to the investment portfolios of the Company and each
Subsidiary it will cause the Company and each Subsidiary to
[Confidential Treatment Requested], it being understood that the
responsibility for management of the investment portfolios shall
reside with the Company and each Subsidiary.
ARTICLE 6
Covenants of Buyer
Buyer agrees that:
SECTION 6.01. Confidentiality. Prior to the Closing Date
and after any termination of this Agreement, Buyer and its
Affiliates will hold, and will use their best efforts to cause
their respective officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential
documents and information concerning the Company or any Affiliate
or Subsidiary furnished to Buyer or its Affiliates in connection
with the transactions contemplated by this Agreement, except to
the extent that such information can be shown to have been (i)
previously known on a nonconfidential basis by Buyer, provided
that such information is not known by Buyer to be subject to
another confidentiality agreement with or other obligation of
secrecy to the Seller or the Company or any Subsidiary or any
other party, or (ii) becomes generally available to the public
other than as a result of a disclosure by Buyer or its directors,
officers, employees, agents or advisors, or (iii) becomes
available to Buyer on a non-confidential basis from a source
other than the Seller or the Company or any Subsidiary or their
advisors, provided that such source is not known by Buyer to be
bound by a confidentiality agreement with or other obligation of
secrecy to the Seller or the Company or any Subsidiary or any
other party. Buyer shall be responsible for any breach of this
Section 6.01 by any Persons to whom Buyer discloses any of the
confidential information which is subject to this Section. If
this Agreement is terminated, Buyer and its Affiliates will, and
will use their best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors
and agents to, destroy or deliver to Seller, upon request, all
documents and other materials, and all copies thereof, obtained
by Buyer or its Affiliates or on their behalf from Seller or the
Company or any Subsidiary in connection with this Agreement that
are subject to such confidence.
SECTION 6.02. Access. Buyer will cause the Company and
each Subsidiary, on and after the Closing Date, to afford
promptly to Seller and its agents reasonable access to their
properties, books, records, employees and auditors to the extent
necessary to permit Seller to determine any matter relating to
its rights and obligations hereunder or to any period ending on
or before the Closing Date. To the extent necessary or helpful
in connection with any tax or other matters relating to any
period ending on or before the Closing Date, Buyer will furnish
to Seller or permit the Seller and its agents to inspect and copy
all books and records of the Company and its Subsidiaries which
relate to any period prior to the Closing Date. Seller will
hold, and will use its best efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors
and agents to hold, in confidence, unless compelled to disclose
by an order of a court of final jurisdiction, all confidential
documents and information concerning the Company or any
Subsidiary provided to it pursuant to this Section.
SECTION 6.03. Compliance with Section 15 of the 1940 Act.
Buyer acknowledges that the Seller has entered into this
Agreement in reliance upon the benefits and protections provided
by Section 15(f) of the 1940 Act. Buyer agrees that Buyer
(including its Affiliates) (i) shall not take any action that
would have the effect of causing Section 15(f) of the 1940 Act
not to be met in respect of this Agreement and the transactions
contemplated hereby, and (ii) shall not fail to take any action
if the failure to take such action would have the effect of
causing Section 15(f) of the 1940 Act not to be met in respect of
this Agreement and the transactions contemplated hereby.
ARTICLE 7
Covenants of Buyer and Seller
Buyer and Seller agree that:
SECTION 7.01. Reasonable Efforts. Subject to the terms and
conditions of this Agreement, Buyer and Seller will use
commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary
or desirable under applicable laws and regulations to consummate
the transactions contemplated by this Agreement including,
without limitation, (i) the obtaining of the approval or non-
disapproval of the Insurance Departments of the Required
Jurisdictions and those set forth on Schedule 4.03, (ii) the
obtaining of the consents required under Items 1, 2 and 3 of
Schedule 3.04 and, in connection therewith, consents to the
election of designees of Buyer as directors of the Funds or, with
respect to Item 1 of such Schedule, new Investment Contracts
substantially in the form of CIAC s existing Investment
Contracts, with each Investment Company to which CIAC currently
provides investment advisory or management services and (iii) the
compliance with the filing and waiting period requirements of the
HSR Act.
SECTION 7.02. Further Assurances. Seller and Buyer agree,
and Seller, prior to the Closing, and Buyer, after the Closing,
agree to cause the Company and each Subsidiary, to execute and
deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement.
SECTION 7.03. Public Announcements. The parties agree to
consult with each other before issuing any press release or
making any public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required
by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or
make any such public statement prior to such consultation.
SECTION 7.04. Intercompany Accounts. All intercompany
accounts between the Seller or its Affiliates, on the one hand,
and the Company or any Subsidiary, on the other hand, as of the
Closing shall be settled in accordance with their terms or in the
ordinary course consistent with past practice, as the case may
be, in the categories listed on Schedule 7.04 (which represent
estimates of any amounts outstanding as of December 31, 1996).
From the date hereof through the Closing Date, any changes in
such accounts shall only be made in the ordinary course of
business consistent with past practice.
SECTION 7.05. Service Marks, Trademarks and Trade Names.
On or prior to the Closing Date, Seller shall cause the Company
to take such action as is necessary to cause all rights,
including ownership and registration of any trademark, trade
name, service mark, logo design or other identifying mark or
symbol utilizing the stylized letter "C" or the name "Chubb"
(collectively the "Chubb Trademarks") to be conveyed and assigned
to Seller, and Seller shall take such action as is necessary to
ensure that the ownership of and rights relating to the
trademarks listed on Schedule 7.05 shall remain with the Company
and that such trademarks shall be available for use by Buyer, the
Company and its Subsidiaries following the Closing Date. On or
prior to the Closing Date, Seller shall execute a royalty-free
license (the "Trademark License Agreement") with the Company to
permit the Company and the Subsidiaries to continue to use any of
the Chubb Trademarks currently in use in the conduct of their
businesses, including but not limited to, the use of any contract
materials, signs or policy forms which contain any Chubb
Trademarks, for a period of up to one year following the Closing
Date. As promptly as practicable following the Closing Date,
Buyer shall cause the Company and the Subsidiaries to take such
action as is necessary, including seeking all requisite
regulatory and shareholder approvals, to change, by deleting the
name "Chubb" or the stylized letter "C" therefrom, the product
names, marketing materials, policy forms and materials that
utilize such name or stylized letter, and to cause the name
"Chubb" to be deleted from its name, from the name of each
Subsidiary and from the name Chubb America Fund, Inc. and Chubb
Investment Funds, Inc.
SECTION 7.06. Purchase of Mainframe Computer. On the
Closing Date, Buyer shall purchase from Seller or its Affiliate,
the mainframe computer and all peripheral equipment (including
without limitation tape and disk storage units and all
communications hardware) that is currently being utilized in
connection with the business of the Company and the Subsidiaries
located in Branchburg, New Jersey, which serves as the sole
mainframe computer supporting the Company s insurance operations,
at a purchase price in an amount equal to the average between its
depreciated book value and its fair market value at the Closing
Date. The fair market value as of the Closing Date of the
computer and related equipment hereunder shall be agreed upon by
Buyer and Seller as of a date not later than the fifth business
day preceding the Closing Date. If Buyer and Seller do not reach
such agreement, then Buyer and Seller shall jointly select a
third party expert to promptly make such fair market value
determination, which will be binding upon the parties. The
purchase price of the computer and the related equipment shall be
paid on the Closing Date by wire transfer of immediately
available funds to an account designated in writing by Seller or
its Affiliate. Promptly after the Conversion Date, Buyer shall
provide for the removal of the mainframe computer from the
Branchburg location.
SECTION 7.07. Reports. The Company shall from time to time
furnish to Buyer, promptly following the receipt by senior
management of the Company or any Subsidiaries (i) copies of all
monthly management reports prepared for senior management of the
Company or any subsidiary, (ii) copies of all monthly financial
statements and reports, and (iii) a copy of any report filed with
any insurance regulatory authority, which in each such case,
shall be prepared in a manner consistent with past practice.
SECTION 7.08. Joint Marketing Arrangements. Seller and
Buyer each agree that it will negotiate in good faith to develop
and enter into a mutually beneficial marketing arrangement that
will make available to Buyer, the Company and the Insurance
Subsidiaries after the Closing Date, the property and casualty
agency distribution and bank distribution channels of Seller,
including without limitation the continued marketing of life
insurance products through the general agencies recruited by
Seller prior to the date hereof.
SECTION 7.09. Post-Closing Review of Minimum Statutory
Equity Amount. (a) As soon as practicable, but in any event
within 90 calendar days following the Closing Date, the Company
shall prepare and deliver to Seller and Buyer the statements of
assets, liabilities, surplus and other funds and summary of
operations and cash flows of the Company and each of the
Insurance Subsidiaries as of, and for the period beginning
January 1, 1997 and ending on, the Closing Date (or the most
recent end of a month if the Closing Date is not the last
business day of a month) (the "Closing Date Statutory
Statements"), which shall be prepared in conformity with
statutory insurance accounting requirements and practices,
consistently applied. The Closing Date Statutory Statements shall
present fairly, in all material respects, in accordance with
statutory accounting principles and practices consistently
applied the financial position of the Company and the Insurance
Subsidiaries as of the Closing Date, and the results of their
operations for the period specified and ending on the Closing
Date (or the most recent end of a month if the Closing Date is
not the last business day of a month).
(b) Subsequent to the delivery of the Closing Date
Statutory Statements, Buyer shall give Seller and its
accountants, actuaries, counsel and other representatives
reasonable access to the books and records of the Company and the
Insurance Subsidiaries in order to make such investigations as
Seller shall desire in conjunction with the evaluation by it of
the Closing Date Statutory Statements. During such period, Buyer
shall permit Seller and its representatives to consult with the
respective employees, auditors, actuaries, attorneys and agents
of the Company and the Insurance Subsidiaries.
(c) The Closing Date Statutory Statements shall be deemed
final upon the earliest to occur of the date on which Seller and
Buyer jointly agree that the Closing Date Statutory Statements
are final, the 31st day following the delivery of the Closing
Date Statutory Statements, if neither Seller nor Buyer has
notified the other of a dispute in amounts shown on the Closing
Date Statutory Statements, and the date on which all disputes
relating to such statements and calculations between Buyer and
Seller are resolved in accordance with Section 7.09(e).
(d) On the fifth business day following the date on which
the Closing Date Statutory Statements are deemed final, if the
sum of the aggregate amount of the capital and surplus of the
Company plus the aggregate asset valuation reserves and interest
maintenance reserves of the Company and the Insurance
Subsidiaries, each as set forth in the Closing Date Statutory
Statements, is less than the Minimum Statutory Equity Amount,
Seller shall pay to the Company, by wire transfer, the amount of
such difference, together with interest on any such amount at the
Reference Rate (based upon a 365-day year) from the Closing Date
to (but not including) the date of such payment.
(e) In the event that the Seller and Buyer do not agree to
the determination of the calculation set forth in Section 7.09(d)
(the "Disputed Amounts"), the disputing Party shall provide
notice of such disagreement to the other Party hereto (the
"Dispute Notice", and the date of its delivery, the "Dispute
Notice Date"). The chief financial officer of Buyer and the
chief financial officer of Seller shall meet (by conference
telephone call or in person at a mutually agreeable site) within
one week after notice of a disagreement is given as provided
above. The chief financial officers shall attempt to make a final
determination of the Disputed Amounts, and if the chief financial
officers reach agreement, any payments shall be made within five
days in accordance with such agreement. If the chief financial
officers do not reach agreement within a reasonable time, either
or both of such chief financial officers shall give notice of an
impasse, in which case the chief executive officer of Buyer and
the chief executive officer of Seller shall meet (by conference
telephone call or in person at a mutually agreeable site) within
one week after notice of an impasse is given by the chief
financial officers. If the chief executive officers have hereto
not reached agreement as to the Disputed Amounts within a
reasonable time, either chief executive officer may give notice
of an impasse, and such determination shall be promptly submitted
to a nationally recognized independent public accounting firm or
a nationally recognized actuarial firm (an "Arbiter") jointly
selected by Seller and Buyer. If Seller or Buyer do not agree
upon the joint selection of an Arbiter within five (5) business
days following the notice of such impasse by the chief executive
officers, either Seller or Buyer may designate a proposed
qualified Arbiter to the other by written notice. Within five (5)
business days such other Party shall either agree to the proposed
qualified Arbiter or propose a different Arbiter (failure to
propose a different Arbiter within such five business day period
shall be deemed such Party s agreement to the other Party s
proposed Arbiter), and in the case in which such Party has
proposed a different Arbiter the two Arbiters so proposed shall
within five (5) business days thereafter select an Arbiter to
make a final determination of the Disputed Amounts. The Arbiter
so selected by either Seller and Buyer jointly or by the Arbiters
(the "Final Arbiter") shall make its determination of the
Disputed Amounts solely in accordance with the terms of this
Agreement. The Parties shall cooperate fully in assisting the
Final Arbiter in calculating the Disputed Amounts and shall take
such actions as necessary to expedite and to cause the Final
Arbiter to expedite such calculation. Each of Seller and Buyer
shall pay one-half of the total fees and expenses of the Final Arbiter.
SECTION 7.10. Certain Transition Arrangements. Buyer and
Seller will cooperate to facilitate the transition to Buyer of
the asset management services and mortgage servicing currently
provided to the Company and its Subsidiaries by Affiliates of
Seller.
ARTICLE 8
Tax Matters
SECTION 8.01. Definitions. The following terms, as used
herein, have the following meanings:
" Accounting Referee" means a nationally recognized
accounting firm with no material relationship with Buyer, Seller
or their Affiliates, mutually acceptable to both Buyer and Seller
and chosen within five days of the date on which the need to
choose the Accounting Referee arises.
"Applicable Tax Rate" means (i) the maximum combined
effective federal and state corporate tax rate in effect at the
time such adjustment is made by a Taxing Authority, or (ii) in
the case of a credit 100%.
"Basket" means the amount at any time equal to [Confidential
Treatment Requested].
"Code" means the United States Internal Revenue Code of
1986, as amended.
" Federal Tax" means any income Tax imposed under the Code.
"Indemnifiable Tax" means (i) any Tax related to a Pre-
Closing Tax Period and (ii) any liability for the payment of any
amount of the type described in the immediately preceding clause
(i) as a result of the Company being a member of the Seller
Group.
"Post-Closing Tax Period" means any Tax period commencing
after the close of business on the Closing Date or the post-
Closing portion of a Straddle Period.
"Pre-Closing Tax Period" means any Tax period ending on or
before the Closing Date or the pre-Closing portion of a Straddle
Period.
"Seller Group" means, with respect to federal income Taxes,
the affiliated group of corporations (as defined in Section
1504(a) of the Code) of which Seller is a member and, with
respect to state income or franchise Taxes, the consolidated,
combined or unitary group of which Seller or any of its
Affiliates is a member.
"Straddle Period "means any taxable period that includes the
Closing Date, but which does not terminate on such date.
"Tax" means (i) any tax imposed under Subtitle A of the Code
and any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding on amounts
paid to or by the Company or any Subsidiary, payroll, employment,
excise, severance, stamp, capital stock, occupation, property,
environmental or windfall profit tax, premium, custom, duty or
other tax, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest, penalty
(including any payment made to any Taxing Authority in connection
with the failure to properly report any payment or distribution
of income to any recipient), addition to tax or additional amount
imposed by any governmental authority (a "Taxing Authority")
responsible for the imposition of any such tax (domestic or
foreign), (ii) liability of the Company or its Subsidiary for the
payment of any amounts of the type described in (i) as a result
of being a member of an affiliated, consolidated, combined or
unitary group with any other corporation at any time on or prior
to the Closing Date, (iii) any payment paid to any Taxing
Authority to secure any closing agreement, or similar agreement,
related to any violations of Sections 72, 817, 7702 or 7702A and
(iv) liability of the Company or any Subsidiary for the payment
of any amounts as a result of being a party to any Tax Sharing
Agreement or with respect to the payment of any amounts of the
type described in (i) or (ii) as a result of any express or
implied obligation to indemnify any other Person.
"Tax Asset" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction
or any other credit or tax attribute which could reduce Taxes
(including, without limitation, deductions and credits related to
alternative minimum Taxes).
"Tax Sharing Agreements" means all existing Tax sharing
agreements or arrangements (whether or not written) binding the
Company or its Subsidiary (including without limitation the Tax
Sharing Agreement between and among the Seller and the Company
effective May 1, 1992 (the "Tax Sharing Agreement") and any
agreements or arrangements which afford any other person the
benefit of any Tax Asset of the Company or its Subsidiary, afford
the Company or its Subsidiary the benefit of any Tax Asset of any
other person or require or permit the transfer or assignment of
income, revenues, receipts, or gains).
SECTION 8.02. Tax Representations. (a) Seller represents
and warrants to Buyer as of the date hereof and as of the Closing
Date that, except as set forth in the Balance Sheet (including
the notes thereto) or on Annex 3.09 (ix) or Schedule 8.02, (i)
all Tax returns, statements, reports and forms (collectively, the
"Returns") required to be filed with any Taxing Authority on or
before the Closing Date with respect to any Pre-Closing Tax
Period by, or with respect to, the Company or any Subsidiary have
been or will be timely filed in accordance with all applicable
laws; (ii) with respect to the Company and the Subsidiaries, all
such Returns for Pre-Closing Periods are or will be true and
complete in all material respects, (iii) the Company and the
Subsidiaries have timely paid all Taxes shown as due and payable
on the Returns that have been filed; (iv) the Company and the
Subsidiaries have made or will on or before the Closing Date make
provision for all Taxes payable by the Company and the
Subsidiaries for any Pre-Closing Tax Period for which no Return
has yet been filed; (v) the charges, accruals and reserves for
Taxes with respect to the Company and the Subsidiaries reflected
on the Balance Sheet are adequate to cover the Tax liabilities
accruing through the date thereof; and (vi) there is no action,
suit, proceeding, investigation, audit or claim now proposed or
pending against or with respect to the Company or any Subsidiary
in respect of any Tax.
(b) The Company and the Subsidiaries are not in violation
of any material applicable tax information reporting and tax
withholding obligations (or with notice or lapse of time, or
both, would be in violation). Except as disclosed on Schedule
8.02, the Company and the Subsidiaries have timely withheld from,
and paid over to the appropriate Taxing Authorities, and have
properly reported all salaries, wages, and other compensation.
Each life insurance and annuity product issued, sold or
administered by, or on behalf of, the Company and the
Subsidiaries has been, and is, in compliance in all material
respects with Sections 72, 817, 7702 and/or 7702A of the Code.
SECTION 8.03. Tax Covenants. (a) Buyer covenants that,
other than in the ordinary course of business, it will not cause
or permit the Company, any Subsidiary or any Affiliate of Buyer
(i) to take any action on the Closing Date, including but not
limited to the distribution of any dividend or the effectuation
of any redemption that could give rise to any Tax liability of
the Seller Group or any loss of the Seller or the Seller Group
under this Agreement or (ii) without the prior written consent of
the Seller, which shall not be unreasonably withheld, to make or
change any Tax election (other than the Section 338 (h)(10)
Election), amend any Return or take any Tax position on any
Return, take any action, omit to take any action or enter into
any transaction that results in any increased Tax liability or
reduction of any Tax Asset of Seller in respect of any
Pre-Closing Tax Period. Buyer agrees that Seller is to have no
liability for any Tax resulting from any action, referred to in
the preceding sentence, of the Company, Buyer or any Affiliate of
Buyer on the Closing Date, and agrees to indemnify and hold
harmless Seller and its Affiliates against any such Tax. Each of
Seller and Buyer agrees to give prompt notice to the other party
of the assertion of any claim, or the commencement of any action
or proceeding, in respect of which indemnity may be sought under
this Section 8.03(a). Buyer may participate in and assume the
defense of any such suit, action or proceeding at its own
expense. If Buyer assumes such defense, Seller shall have the
right (but not the duty) to participate in the defense thereof
and to employ counsel, at its own expense, separate from the
counsel employed by Buyer. Whether or not Seller chooses to
defend or prosecute any claim, the parties hereto shall cooperate
in the defense or prosecution thereof.
(b) Buyer agrees to cause the Company and the Subsidiaries
to elect, where permitted by law, to carry forward any net
operating loss, net capital loss, charitable contribution or
other item arising after the Closing Date that would, absent such
election, be carried back to a Pre-Closing Tax Period of the
Company or the Subsidiaries in which the Company or the
Subsidiaries filed a consolidated, combined or unitary Return
with Seller or an Affiliate of Seller.
(c) The Buyer will cause the Company and any Subsidiary to
timely file any separate Returns required to be filed by the
Company or any such Subsidiary after the Closing Date.
(d) Buyer shall claim a compensation deduction with respect
to the exercise by employees and retired or former employees of
the Company or any of its Subsidiaries ("Employees") of options
to purchase shares of common stock of Seller which were granted
to Employees pursuant to an employee benefit arrangement
maintained by Seller (a "Seller Stock Option"). Seller will
notify Buyer of the amount of such compensation deductions.
Buyer covenants that it will remit to Seller within fifteen days
after the filing of its Federal Tax Return for each taxable year
the amount of any deduction multiplied by the maximum federal
corporate tax rate applicable to the tax year in which the
deduction is claimed; provided that if any such deduction is
disallowed by any Taxing Authority, Seller shall make appropriate
adjustments to Buyer. Simultaneously with the reporting of
income in connection with the exercise of the Seller Stock
Options, Seller shall pay to Buyer an amount equal to the sum of
(i) all Taxes required to be withheld in respect of such income
and (ii) the employer portion of all FICA Taxes in respect of
such income.
(e) All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any
penalties and interest) incurred in connection with this
Agreement (including any New York State Transfer Tax, New York
City Transfer Tax and any similar tax imposed in other states or
subdivisions) shall be borne and paid by Buyer, and Buyer will,
at its own expense, file all necessary Returns and other
documentation with respect to all such Taxes and fees, and, if
required by applicable law, Seller will, and will cause its
Affiliates to, join in the execution of any such Returns and
other documentation.
(f) Seller shall, upon the request of Buyer, make a timely,
effective and irrevocable joint election under Section 338(g) and
Section 338(h)(10) of the Code and any comparable elections under
state and local tax law (together, the "Section 338(h)(10)
Election") with respect to the Company and each Subsidiary.
Except as otherwise provided in this Section 8.03(f), Buyer, on
the one side, and Seller, on the other side, shall bear their
respective administrative, legal, accounting, and similar
expenses resulting from the making of the Section 338(h)(10)
Election. Seller and Buyer agree to cooperate fully with respect
to the making of the Section 338(h)(10) Election. Such
cooperation shall include, but not be limited to, the following:
(i) the treatment of the transaction as an assumption
reinsurance transaction;
(ii) the determination of the fair market value of the
assets of the Company and each Subsidiary, and the calculation of
the adjusted gross-up basis, within the meaning of Treasury
Regulation Section 1.338(b)-1;
(iii) the allocation of the deemed purchase price among the
acquired assets in accordance with all applicable rules and
regulations under Section 338 of the Code; and
(iv) the preparation and timely filing of all Tax Returns,
including all forms or schedules necessary or appropriate to the
Section 338(h)(10) Election.
No later than December 31, 1997, Buyer shall prepare and
deliver to Seller a schedule (the "Price Allocation Schedule")
allocating the modified ADSP (as such term is defined in Treasury
Regulations Section 1.338(h)(10)-1) among the assets of the
Company and the Subsidiaries in accordance with the Treasury
regulations promulgated under Section 338(h)(10). Any objections
by Seller to the Price Allocation Schedule prepared by Buyer
shall be raised within 60 business days after the receipt by
Buyer of the Price Allocation Schedule. If Buyer and Seller are
unable to resolve any differences within 60 business days
thereafter, such dispute shall be resolved by the Accounting
Referee, and, if necessary, a revised Price Allocation Schedule
consistent with the determination made by the Accounting Referee
shall be prepared by Buyer as soon as possible thereafter. In
all events, the Price Allocation Schedule shall be finally
prepared and agreed upon prior to August 15, 1998. Buyer and
Seller shall each pay one-half of the costs, fees and expenses of
the Accounting Referee. The Price Allocation Schedule shall be
binding on the parties hereto, and Seller and Buyer agree to act
in accordance with such Schedule in the preparation, filing and
audit of any Tax return.
[Confidential Treatment Requested]
SECTION 8.04. Termination of Existing Tax Sharing
Agreements. Any and all existing Tax Sharing Agreements between
the Company or any Subsidiary and any member of the Seller Group
shall be terminated as of the Closing Date. After such date
neither the Company, any Subsidiary, Seller nor any Affiliate of
Seller shall have any further rights or liabilities thereunder,
and this Agreement shall be the sole Tax sharing agreement
relating to the Company or any Subsidiary for all Pre-Closing Tax
Periods.
SECTION 8.05. Tax Sharing. Immediately preceding the
Closing, the Company shall pay Seller, based on Seller s good
faith estimate, an amount equal to the Federal Taxes of the
Company and the Subsidiaries with respect to all Pre-Closing Tax
Periods for which no Federal Tax Return has yet been filed,
exclusive of any Taxes resulting from the Section 338(h)(10)
Election. Promptly after the filing of Federal Tax Returns for
the Pre-Closing Tax Periods, the Company and Seller shall settle
any difference between the provision for Federal Taxes calculated
in accordance with the Tax Sharing Agreement, exclusive of any
Federal Taxes resulting from the Section 338(h)(10) Election, and
the payments made pursuant to this Section 8.05.
SECTION 8.06. Cooperation on Tax Matters. (a) Seller will
cause the Company and each Subsidiary to retain all books,
records or other information that reflect, as of the last date on
which such information is available (but not prior to December
31, 1996), (i) the original tax cost, (ii) the adjusted tax basis
of all assets (including but not limited to all investment
assets, all depreciable real or personal property, and all
amortizable and non-amortizable intangible assets), and a
schedule of all depreciation or amortization claimed on such
assets. Buyer and Seller agree to furnish or cause to be
furnished to each other, upon request, as promptly as
practicable, such information (including access to books and
records) and assistance relating to the Company as is reasonably
necessary for the filing of any return, for the preparation for
any audit, and for the prosecution or defense of any claim, suit
or proceeding relating to any proposed adjustment. Buyer and
Seller agree to retain or cause to be retained all books and
records pertinent to the Company and the Subsidiaries until the
applicable period for assessment under applicable law (giving
effect to any and all extensions or waivers) has expired, and to
abide by or cause the abidance with all record retention
agreements entered into with any Taxing Authority. The Company
agrees to give Seller reasonable notice prior to transferring,
discarding or destroying any such books and records relating to
Tax matters and, if Seller so requests, the Company shall allow
Seller to take possession of such books and records. Buyer and
Seller shall cooperate with each other in the conduct of any
audit or other proceedings involving the Company for any Tax
purposes and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the
intent of this subsection.
(b) Buyer and Seller further agree, upon request, to
provide the other party with all information that either party
may be required to report pursuant to Section 6043 of the Code
and all Treasury Department Regulations promulgated thereunder.
SECTION 8.07. Indemnification by Seller. (a) Seller hereby
indemnifies Buyer against and agrees to hold it harmless from any
(i) Indemnifiable Tax of the Company or any Subsidiary, and (ii)
liabilities, costs, expenses (including, without limitation,
reasonable expenses of investigation and attorneys fees and
expenses), arising out of or incident to the imposition,
assessment or assertion of any Indemnifiable Tax, including those
incurred in the contest in good faith in appropriate proceedings
relating to the imposition, assessment or assertion of any
Indemnifiable Tax, in each case incurred or suffered by Buyer,
any of its Affiliates or, effective upon the Closing, the
Company, or any Subsidiary (the sum of (i) and (ii) being
referred to as a "Loss"); provided, however, that Seller shall
have no liability for the payment of any loss attributable to or
resulting from any action described in Section 8.03(a) hereof;
and provided, further, that Seller shall have no obligation to
make any payment to Buyer pursuant to this Section 8.07 until the
amount of all claims arising pursuant hereto in the aggregate
(minus any Temporary Difference attributable thereto multiplied
by the Applicable Tax Rate, each as defined in Section 8.07(b)
hereof) exceeds the Basket, in which case Buyer shall be entitled
to indemnity calculated in accordance with Section 8.07(b) for
the full amount of all claims in excess of the Basket.
(b) If Seller s indemnification obligation under Section
8.07(a) arises in respect of an adjustment which makes allowable
to Buyer, any of its Affiliates, the Company or any Subsidiary,
for any Post-Closing Tax Period, any deduction, amortization,
exclusion from income, credit or other allowance (a "Temporary
Difference") which would not, but for such adjustment, be
allowable, then any payment by Seller to Buyer under Section
8.07(a) shall be an amount equal to (x) the amount otherwise due
but for this subsection (b), minus (y) the present value of the
Temporary Difference (determined as if the Buyer and its
Affiliates have sufficient taxable income or other tax attributes
to permit the utilization of the Temporary Difference at the
earliest time permissible under applicable law) discounted at a
rate of 10%, multiplied by the Applicable Tax Rate plus (z) the
present value of the Temporary Difference, if any, allowable to
Seller as a consequence of the adjustment giving rise to such
payment, discounted at a rate of 10%, multiplied by the
Applicable Tax Rate.
(c) If as a result of an adjustment Seller makes a payment
to any Taxing Authority in respect of an Indemnifiable Tax of the
Company with respect to any Pre-Closing Tax Period, then Buyer
shall promptly pay to Seller an amount equal to such payment made
by Seller, provided, however, that any such payment by Buyer
shall not exceed an amount equal to (x) the positive balance, if
any, in the Basket plus (y) the present value of the Temporary
Difference, if any, allowable to Buyer, any of its Affiliates or,
effective upon the Closing, the Company or any Subsidiary as a
consequence of the adjustment giving rise to such payment,
discounted at a rate of 10%, multiplied by the Applicable Tax
Rate minus (z) the present value of the Temporary Difference, if
any, allowable to Seller as a consequence of the adjustment
giving rise to such payment, discounted at a rate of 10%,
multiplied by the Applicable Tax Rate.
(d) The Basket shall be reduced by (i) the amount of any
claim of Buyer under Section 8.07(a) hereof that is not paid in
whole or part by Seller solely by reason of there being a
positive balance in the Basket, minus any Temporary Difference
attributable thereto multiplied by the Applicable Tax Rate, and
(ii) the amount of any payment of Buyer to Seller under Section
8.07(c) hereof, minus any Temporary Difference attributable
thereto multiplied by the Applicable Tax Rate.
(e) If any claim or demand for Indemnifiable Taxes is
asserted in writing against Buyer, any of its Affiliates or,
effective upon the Closing, the Company or any Subsidiary, Buyer
shall notify Seller of such claim or demand within 20 days of
receipt thereof, or such earlier time that would allow Seller to
timely respond to such claim or demand, and shall give Seller
such information with respect thereto as Seller may reasonably
request. Seller may discharge, at any time, its indemnification
obligation under this Section 8.07 by paying to Buyer the amount
of the applicable Loss, calculated on the date of such payment.
Seller may, at its own expense, participate in and, upon notice
to Buyer, assume the defense of any such claim, suit, action,
litigation or proceeding (including any Tax audit). If Seller
assumes such defense, Buyer shall have the right (but not the
duty) to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed
by Seller. Whether or not Seller chooses to defend or prosecute
any claim, all of the parties hereto shall cooperate in the
defense or prosecution thereof.
(f) Any payment by Seller pursuant to this Section 8.07
shall be made not later than 30 days after receipt by Seller of
written notice from Buyer stating that any Loss has been paid by
Buyer, any of its Affiliates or, effective upon the Closing, the
Company or any Subsidiary and the amount thereof and of the
indemnity payment requested.
(g) Seller shall not be liable under this Section 8.07 for
(i) any Indemnifiable Tax the payment of which was made without
Seller s prior written consent or (ii) any settlements effected
without the consent of Seller, or resulting from any claim, suit,
action, litigation or proceeding in which Seller was not
permitted an opportunity to participate.
SECTION 8.08. Survival. Notwithstanding anything in this
Agreement to the contrary, the provisions of this Article 8 shall
survive for the full period of all statutes of limitations
(giving effect to any waiver, mitigation or extension thereof).
ARTICLE 9
Employees and Employee Benefits
SECTION 9.01. Pension Plans. Seller and its Affiliates
shall retain all liabilities and obligations in respect of
benefits accrued by Transferred Employees under the Pension Plan
and the Excess Pension Plan. Benefit accruals in respect of
Transferred Employees under the Pension Plan shall cease as of
the Closing Date and Transferred Employees participating therein
shall be considered to have terminated employment for purposes of
such Plan. No Pension Plan assets shall be transferred to Buyer
or any of its Affiliates or to any plan of Buyer or its
Affiliates.
SECTION 9.02. Individual Account Plans. (a) The Seller
shall retain all liabilities and obligations in respect to
benefits accrued by Transferred Employees under the Individual
Account Plans and the Defined Contribution Excess Plan. On the
Closing Date, the Seller shall take such action as may be
necessary, if any, to permit each Transferred Employee to
exercise his rights under the Individual Account Plans to effect
an immediate distribution of such Transferred Employee s vested
account balances under the Individual Account Plans or to effect
a tax-free rollover of the taxable portion of the account
balances into an eligible retirement plan (within the meaning of
Section 401(a)(31) of the Code, a "Direct Rollover") maintained
by the Buyer or a Subsidiary of the Buyer (the "Buyer Plan") or
to an individual retirement account. The Seller and the Buyer
shall work together in order to facilitate any such distribution
or rollover and to effect a Direct Rollover for those
participants who elect to roll over their account balances
directly into the Buyer Plan; provided that, except as provided
in Section 9.02(c) below, nothing contained herein shall obligate
the Buyer Plan to accept a Direct Rollover in a form other than
cash.
(b) On the Closing Date, or as soon as practicable
thereafter, the Buyer shall establish or designate the Buyer Plan
in order to accommodate the Direct Rollovers described above and
shall take all action necessary, if any, to qualify the Buyer
Plan under the applicable provisions of the Code and shall make
any and all filings and submissions to the appropriate
governmental authorities required to be made by it in connection
with any Direct Rollover.
(c) On the Closing Date, for each Transferred Employee who
has an outstanding loan under the Capital Accumulation Plan and
who elects a Direct Rollover to the Buyer Plan, the Direct
Rollover shall include the note related to such outstanding loan
provided that Buyer with respect to the Buyer Plan and Seller
with respect to the Capital Accumulation Plan conclude that such
Direct Rollover complies with the applicable rules under Section
401 of the Code and such note is enforceable under applicable law
by the trustees of Buyer Plan. In the event either Buyer or
Seller is unable to so conclude, Buyer and Seller agree to take
such steps as may be necessary to amend the eligibility rules and
permit such Transferred Employee to secure a loan under the Buyer
Plan (to the extent of the loan permitted under the loan rules of
the Buyer Plan) in order to make a further rollover to the Buyer
Plan of the amount of the distribution from the Capital
Accumulation Plan represented by such Transferred Employee s
loan balance under the Capital Accumulation Plan.
SECTION 9.03. Other Employee Plans and Benefit
Arrangements.
(a) Buyer shall be liable for, and, where appropriate,
shall cause the Company to perform:
(i) all obligations to any Transferred Employee under
Seller's short-term disability and wage continuation programs;
(ii) all obligations to any Transferred Employee in respect
of the continuation of coverage rules under Section 601 through
608 of ERISA and Section 4980B of the Code;
(iii) all obligations relating to any Transferred Employee
in connection with applicable Worker s Compensation laws,
including any such obligations relating to events that occur
prior to the Closing Date;
(iv) all obligations relating to severance benefits with
respect to any Transferred Employee whose employment by the
Company or a Subsidiary terminates on or after the Closing Date
with such severance benefits for any Transferred Employee whose
employment terminates in the six month period beginning on the
Closing Date being at least equal to the benefit such Transferred
Employee would have received under the Company's severance policy
in effect on the Closing Date;
(v) all obligations relating to bonus and profit sharing to
which each Transferred Employee is entitled for the period from
January 1, 1997 through the Closing Date and vacation and
personal holidays (including personal time off (PTO) days) to
which each Transferred Employee is entitled as of the Closing
Date; and
(vi) subject to Buyer s annual discretionary review, a
payroll deduction function to continue and facilitate the
purchase of insurance and the payment of premiums for such
coverages for personal insurance products made available through
Affiliates of the Seller to employees of the Company and its
Subsidiaries as described in Benefit Arrangement Item 22 on
Schedule 3.17.
(b) Seller shall retain all obligations and liabilities
under the Employee Plans and Benefit Arrangements in respect of
any employee or former employee or any independent contractor
(including any beneficiary or dependent thereof) who is not a
Transferred Employee (other than Items 23 and 24 on Schedule
3.17, which shall be the liability of the Company).
(c) With respect to Transferred Employees, Seller shall
have no obligation or liability relating to or arising under the
Employee Plans or Benefit Arrangements except as otherwise
provided in Sections 9.01 or 9.02 and except for any liability
arising under the Employee Plans or Benefit Arrangements which
are attributable to events occurring on or prior to the Closing
Date, which Seller hereby assumes, provided, however, that with
respect to any Transferred Employee who, on the Closing Date, is
absent by reason of short-term disability or wage continuation,
Buyer shall assume and be liable for any payment attributable to
the period beginning on the Closing Date.
SECTION 9.04. Plans Following the ClosingBuyer will, or
will cause the Company to, give Transferred Employees full credit
for purposes of eligibility and vesting under any plans or
arrangements maintained by Buyer or the Company for such
Transferred Employees' service recognized for such purposes under
the Employee Plans and Benefit Arrangements. Buyer shall cause
all health and welfare plans in which Transferred Employees
become participants on or after the Closing Date to waive any and
all pre-existing condition exclusions and waiting period
requirements to the extent necessary to provide a Transferred
Employee with the same status as such Transferred Employee had
under the Employee Plans as of the date of this Agreement, and to
recognize, to the extent such participation commences other than
at the beginning of a plan year, expenses previously incurred for
purpose of applicable deductible and co-payment rules to the
extent such expenses would have been recognized under the
applicable Seller plan as in effect immediately prior to the
Closing Date.
SECTION 9.05. Third Party BeneficiariesNo provision of this
Article 9 shall create any third party beneficiary rights in any
employee or former employee of the Company or any Subsidiary
(including any beneficiary or dependent thereof) in respect of
continued employment or resumed employment, and no provision of
this Article 9 shall create any rights in any such persons in
respect of any benefits that may be provided, directly or
indirectly, under any employee benefit plan or arrangement.
Except as otherwise provided in this Article 9, Buyer makes no
representations, warranties or covenants with respect to any
compensation or benefits to be offered or provided to Transferred
Employees or former employees of the Company or any Subsidiary
after the Closing Date.
ARTICLE 10
Conditions to Closing
SECTION 10.01. Conditions to Obligations of Buyer and
Seller. The obligations of Buyer and Seller to consummate the
Closing are subject to the satisfaction of the following
conditions:
(i) Any applicable waiting period under the HSR Act
relating to the transactions contemplated hereby shall have
expired or been terminated.
(ii) No provision of any applicable law or regulation and
no judgment, injunction, order or decree shall prohibit the
consummation of the Closing. There shall not be pending or
threatened any claim, suit, action or proceeding by any
governmental agency before any court or governmental agency,
seeking to prohibit or restrain the transactions contemplated by
this Agreement or seeking material damages in connection
therewith.
(iii) This Agreement and the consummation of the
transactions contemplated hereby shall have been approved by the
Insurance Departments of the Required Jurisdictions and the
jurisdictions set forth on Schedule 4.03 or shall not have been
disapproved by such Departments and the period of time during
which such Departments and jurisdictions may, under applicable
law, disapprove this Agreement and the consummation of such
transactions shall have lapsed, and the parties shall have
received reasonably satisfactory evidence of such approvals or
non-disapprovals.
SECTION 10.02. Conditions to Obligation of Buyer. The
obligation of Buyer to consummate the Closing is subject to the
satisfaction of the following further conditions:
(i) (A) Seller shall have performed in all material
respects all of its obligations hereunder required to be
performed by it on or prior to the Closing Date and (B) the
representations and warranties of Seller contained in this
Agreement and in any certificate or other writing delivered by
Seller pursuant hereto shall be true in all material respects at
and as of the Closing Date, as if made at and as of such date,
except for those representations and warranties made as of a
specified date, and (C) Buyer shall have received a certificate
signed by an executive officer of Seller to the foregoing effect.
(ii) Buyer shall have received an opinion of Robert Rusis,
Esq., General Counsel of Seller, and an opinion of Davis Polk &
Wardwell, counsel to Seller, dated the Closing Date in the forms
attached as Exhibits I and III hereto. In rendering such
opinions, such counsel may rely: (x) upon certificates of public
officers, (y) as to matters governed by the laws of jurisdictions
other than New York and the corporate laws of Delaware or the
federal laws of the United States of America, upon the opinions
of Shanley & Fisher, P.C. (as to the laws of New Jersey),
Frederick Condon, General Counsel to the Company (as to the laws
of New Hampshire), and any other counsel reasonably satisfactory
to Buyer and (z) as to matters of fact, upon certificates of
officers of Seller, the Company or any Subsidiary, copies of
which opinions and certificates shall be contemporaneously
delivered to Buyer.
(iii) The Company shall have obtained the consents required
under Item 1 of Schedule 3.04 or new Investment Contracts,
substantially in the form of CIAC's existing Investment
Contracts, with each Investment Company to which CIAC currently
provides investment advisory or management services.
(iv) Buyer shall have received all documents it may
reasonably request relating to the existence of Seller, the
Company and Subsidiary and the authority of Seller for this
Agreement, all in form and substance reasonably satisfactory to
Buyer.
SECTION 10.03. Conditions to Obligation of Seller. The
obligation of Seller to consummate the Closing is subject to the
satisfaction of the following further conditions:
(i) (A) Buyer shall have performed in all material respects
all of its obligations hereunder required to be performed by it
at or prior to the Closing Date and (B) the representations and
warranties of Buyer contained in this Agreement and in any
certificate or other writing delivered by Buyer pursuant hereto
shall be true at and as of the Closing Date, as if made at and as
of such date, except for those representations and warranties
made as of an earlier date, and (C) Seller shall have received a
certificate signed by an executive officer of Buyer to the
foregoing effect.
(ii) Seller shall have received an opinion of King &
Spalding, counsel to Buyer, dated the Closing Date in the form
attached as Exhibit IV hereto. In rendering such opinion, such
counsel may rely upon certificates of public officers, as to
matters governed by the laws of jurisdictions other than New York
or the federal laws of the United States of America, upon
opinions of counsel reasonably satisfactory to Seller and, as to
matters of fact, upon certificates of officers of Buyer, copies
of which opinions and certificates shall be contemporaneously
delivered to Seller.
(iii) Seller shall have received all documents it may
reasonably request relating to the existence of Buyer and the
authority of Buyer for this Agreement, all in form and substance
reasonably satisfactory to Seller.
ARTICLE 11
Survival; Indemnification
SECTION 11.01. Survival. The representations and
warranties of the parties hereto contained in this Agreement or
in any certificate or other writing delivered pursuant hereto or
in connection herewith shall survive the Closing until
[Confidential Treatment Requested] after the Closing Date;
provided that (i) the representations and warranties contained in
[Confidential Treatment Requested] and the covenants and
agreements contained in [Confidential Treatment Requested], (ii)
the covenants and agreements set forth in [Confidential Treatment
Requested] and (iii) the covenants, agreements, representations
and warranties contained in [Confidential Treatment Requested].
No covenant, agreement, representation or warranty contained in
this Agreement shall survive after the time at which it would
otherwise terminate pursuant to the preceding sentence unless
written notice of the inaccuracy or breach thereof shall have
been given to the party against whom such indemnity may be sought
prior to such time.
SECTION 11.02. Indemnification. (a) Seller hereby
indemnifies Buyer and, effective at the Closing, without
duplication, the Company or any Subsidiary and their officers,
directors, employees, agents, successors and assigns (the "Claim
Indemnified Parties") against and agrees to hold them harmless
from any and all damage, loss, liability and expense (including
without limitation reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any
claim, action, suit or proceeding) ("Damages") relating to or
arising out of:
(i) any inaccuracy in or breach of any representation or
warranty made by Seller pursuant to this Agreement (other than
pursuant to Section 3.19 or Article 8); provided that (x) Seller
shall not be liable under this Section 11.02(a)(i) unless the
aggregate amount of Damages with respect to all matters referred
to in this Section 11.02(a)(i) exceeds [Confidential Treatment
Requested] and then only to the amount of such excess, provided
that this limitation shall not apply to the breach of any
representation or warranty contained in Sections 3.02, 3.05, 3.06
and 3.07(b), and (y) Seller s maximum liability under this
Section 11.02(a)(i) shall not exceed an amount equal to the
Purchase Price;
(ii) Seller s breach of or failure to perform any of its
covenants or agreements contained in or made pursuant to this
Agreement (other than Article 8);
(iii) [Confidential Treatment Requested]
(iv) any obligation or liability of the Company or any
Subsidiary that is payable after December 31, 1996 under any
acquisition, disposition or joint venture agreement involving a
significant amount of assets owned or previously owned by the
Company or any Subsidiary, to the extent such obligation or
liability is not fully reflected in the Statutory Financial
Statements of the Company and the Insurance Subsidiaries as of
and for the year ended December 31, 1996; and
(v) any cause of action, claim, suit or proceeding relating
to or arising out of the Company s or any Subsidiary s violation
of, or liability under, any Environmental Laws which arises out
of facts or circumstances occurring prior to the Closing Date;
provided that (x) Seller shall not be liable under this Section
11.02(a)(v) unless the aggregate amount of Damages with respect
to all matters referred to in this Section 11.02(a)(v) exceeds
[Confidential Treatment Requested] and then only to the amount of
such excess, and (y) Seller s maximum liability under this
Section 11.02(a)(v) shall not exceed [Confidential Treatment
Requested].
(b) Buyer hereby indemnifies Seller and its officers,
directors, employees, agents, successors and assigns against and
agrees to hold them harmless from any and all Damages relating to
or arising out of (i) any inaccuracy or breach of any
representation or warranty made by Buyer pursuant to this
Agreement (other than pursuant to Article 8); provided that Buyer
shall not be liable under this Section 11.02(b) unless the
aggregate amount of Damages with respect to all matters referred
to in this Section 11.02(b)exceeds an amount equal to
[Confidential Treatment Requested] and then only to the extent of
such excess, (ii) Buyer s breach of or failure to perform any of
its covenants and agreements pursuant to this Agreement (other
than Article 8) and (iii) any Damages resulting from the use,
after the Closing Date, of any policy forms and materials or
marketing materials containing the Chubb Trademarks or the
"Chubb" name or the use of the Chubb Trademarks.
SECTION 11.03. Procedures; Exclusivity. (a) The party
seeking indemnification under Section 11.02 (the "Indemnified
Party") agrees to give prompt written notice to the party against
whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which indemnity may be sought under
such Section. The Indemnifying Party may, and at its election
shall, participate in and control the defense of any such suit,
action or proceeding at its own expense. Except as otherwise
provided in this Article 11, the Indemnifying Party shall not be
liable under Section 11.02 for any settlement effected without
its consent of any claim, litigation or proceeding in respect of
which indemnity may be sought hereunder.
(b) The Indemnified Party shall have the right to employ
separate counsel in any action or claim and to participate in the
defense thereof at the expense of the Indemnifying Party (i) if
the retention of such counsel has been specifically authorized by
the Indemnifying Party, or (ii) if the counsel is retained
because the Indemnifying Party does not notify the Indemnified
Party within twenty (20) days after receipt of a claim notice
that it elects to undertake the defense thereof. The Indemnified
Person shall have the right to employ counsel at the Indemnified
Party s own expense and participate in such action or claim,
including settlement or trial.
(c) Except as otherwise provided in Section 11.05, the
Indemnifying Party shall obtain the prior written approval of the
Indemnified Party before entering into any settlement,
adjustment, or compromise of such claim or ceasing to defend
against such claim that provides for any relief (i) other than
the payment of monetary damages by the Indemnifying Party or (ii)
which might adversely affect the Indemnified Party or its
business or operations, and the determination of whether and
under what conditions such approval may be given shall be in the
sole discretion of the Indemnified Party.
(d) If the Indemnifying Party does not assume control over
the defense of such claim as provided in Section 11.03(a) within
30 days of receipt of notice thereof, the Indemnified Party shall
have the right to defend the claim in such manner as it may deem
appropriate at the cost and expense of the Indemnifying Party,
including the right to settle, adjust or compromise such claim.
(e) Except as otherwise specifically set forth in this
Agreement, Buyer and its Affiliates (including, effective at the
Closing without duplication, the Company or any Subsidiary)
hereby waive all rights for contribution or other rights of
recovery with respect to Damages arising under or relating to
Environmental Laws that Buyer or any of the Affiliates may have
by statute or otherwise against Seller or any of its Affiliates.
(f) After the Closing, Section 11.02 will provide the
exclusive remedy for any breach of representation or warranty
(other than those contained in Article 8) or other claim arising
under this Agreement.
SECTION 11.04. [Confidential Treatment Requested]
SECTION 11.05. [Confidential Treatment Requested].
SECTION 11.06. Limitation of Indemnification.
Notwithstanding the foregoing provisions of this Article 11, an
Indemnifying Party s obligation to indemnify an Indemnified Party
shall be subject to the following limitations:
(i) No indemnification shall be required to be made by
Buyer or Seller with respect to any claim for indemnity which
when aggregated with any similar claims is less than
[Confidential Treatment Requested].
(ii) The Damages required to be paid by the Indemnifying
Party pursuant to this Article 11 shall be reduced to the extent
of any amounts actually received by the Indemnified Party after
the Closing Date pursuant to the terms of any insurance policies
covering such Damages.
(iii) Each of the parties agrees that to the extent the
other party indemnifies it from any claim for Damages, the
Indemnified Party shall assign its rights to such claim to the
Indemnifying Party to the extent of any amounts actually received
by the Indemnified Party from the Indemnifying Party.
ARTICLE 12
Termination
SECTION 12.01. Grounds for TerminationThis Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyer;
(ii) by either Seller or Buyer if the Closing shall not
have been consummated on or before September 30, 1997;
(iii) by either Seller or Buyer if there shall be any law
or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if
consummation of the transactions contemplated hereby would
violate any nonappealable final order, decree or judgment of any
court or governmental body having competent jurisdiction;
(iv) by Seller if events occur which render impossible
compliance with one or more conditions set forth in Section 10.01
and Section 10.03 hereof and such conditions are not waived by
Seller; provided that such events did result from any action or
omission by Seller, the Company or the Subsidiaries which were
within the control of such entity and which such entity was not
expressly permitted to take or omit by the terms of this
Agreement; or
(v) by Buyer if events occur which render impossible
compliance with one or more conditions set forth in Section 10.01
and 10.02 hereof, and such conditions are not waived by Buyer;
provided that such events did not result from any action or
omission by Buyer which was within its control and which Buyer
was not expressly permitted to take or omit by the terms of this
Agreement;
The party desiring to terminate this Agreement shall give
notice of such termination to the other party.
SECTION 12.02 Effect of Termination. If this Agreement is
terminated as permitted by Section 12.01, termination shall be
without liability of either party (or any stockholder, director,
officer, employee, agent, consultant or representative of such
party) to the other party to this Agreement; provided that if
such termination shall result from the willful failure of either
party to fulfill a condition to the performance of the
obligations of the other party or to perform a covenant of this
Agreement or from a willful breach by either party to this
Agreement, such party shall be fully liable for any and all
Damages incurred or suffered by the other party as a result of
such failure or breach. The provisions of Sections 6.01, 6.02
and 13.03 shall survive any termination hereof pursuant to
Section 12.01.
ARTICLE 13
Miscellaneous
SECTION 13.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,
if to Buyer, to:
Jefferson-Pilot Corporation
100 N. Greene Street
Greensboro, NC 27401
Attention: General Counsel
Fax: 910-691-3639
with a copy to:
King & Spalding
120 West 45th Street
New York, NY 10036
Attention: E. William Bates, II
Fax: 212-556-2222
if to Seller, to:
The Chubb Corporation
15 Mountain View Road
Warren, New Jersey 07061-1625
Attention: General Counsel
Fax: (908) 903-3607
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Dennis S. Hersch, Esq.
Fax: (212) 450-4800
All such notices, requests and other communications shall be
deemed received on the date of receipt by the recipient thereof
if received prior to 5 p.m. in the place of receipt and such day
is a business day in the place of receipt. Otherwise, any such
notice, request or communication shall be deemed not to have been
received until the next succeeding business day in the place of
receipt.
SECTION 13.02. Amendments and Waivers. (a) Any provision
of this Agreement may be amended or waived prior to the Closing
Date if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this
Agreement, or in the case of a waiver, by the party against whom
the waiver is to be effective.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 13.03. Expenses. All costs and expenses incurred
in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
cost and expense and neither the Company nor any Subsidiary shall
be responsible for or pay any such cost or expense.
SECTION 13.04. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
No party shall assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the prior
written consent of each other party hereto. Notwithstanding the
foregoing, Buyer may assign all or any portion of its rights,
interest or obligations hereunder to any Affiliate of Buyer
without the prior written consent of Seller, provided that such
assignment shall not release Buyer from or in any manner limit
Buyer s obligations hereunder.
SECTION 13.05. Governing Law. This Agreement shall be
governed by and construed in accordance with the law of the State
of New York, without regard to the conflicts of law rules of such
state.
SECTION 13.06. Jurisdiction. Except as otherwise expressly
provided in this Agreement, any suit, action or proceeding
seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the
transactions contemplated hereby may be brought in the United
States District Court for the Southern District of New York or
any other New York State court sitting in New York City, and each
of the parties hereby consents to the jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been
brought in an inconvenient form. Process in any such suit,
action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 13.01
shall be deemed effective service of process on such party.
SECTION 13.07. WAIVER F JURY TRIAL. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 13.08. Counterparts; Third Party Beneficiaries.
This Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. No
provision of this Agreement is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
SECTION 13.09. Entire Agreement. This Agreement and the
Confidentiality Agreement between Buyer and Seller dated October
16, 1996 constitute the entire agreement between the parties with
respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this
Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has
been made or relied upon by either party hereto. Neither this
Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies
hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
JEFFERSON-PILOT CORPORATION
By: David A. Stonecipher
Title: President and Chief
Executive Officer
THE CHUBB CORPORATION
By: Dean R. O'Hare
Title: Chairman and Chief
Executive Officer
March 5, 1997
VIA EDGAR
Securities and Exchange Commission
ATTENTION: Filing Desk, Stop 1-4
450 Fifth Street N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
SUBJECT: Jefferson-Pilot Corporation
File No. 1-5955
Enclosed herewith is a Current Report on Form 8-K for Jefferson-
Pilot Corporation, the date of the earliest event reported being
February 23, 1997.
Please confirm receipt of this filing by notifying the CompuServe
mailbox maintained by Jefferson-Pilot.
Very truly yours,
/s/ Robert A. Reed
Robert A. Reed
Vice President, Secretary
and Associate General Counsel
Jefferson-Pilot Corporation