Exhibit 99(a)
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ASSET PURCHASE AGREEMENT
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DATED AS OF DECEMBER 4, 2001
BETWEEN
FOLKSAM INTERNATIONAL INSURANCE COMPANY, LTD. (PUBL)
FOLKSAM MUTUAL GENERAL INSURANCE COMPANY
AND
FUND AMERICAN REINSURANCE COMPANY, LTD.
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 6
SECTION 1.01. CERTAIN DEFINED TERMS 6
ARTICLE II PURCHASE AND SALE OF THE ASSUMED BUSINESS 11
SECTION 2.01. PURCHASE OF THE ASSUMED BUSINESS 11
SECTION 2.02. PURCHASE PRICE 12
SECTION 2.03. CLOSING 13
SECTION 2.04. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS 14
RELATED TO WHITE MOUNTAINS SHARES
SECTION 2.05. POST CLOSING ADJUSTMENTS 16
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 17
SECTION 3.01. INCORPORATION AND AUTHORITY OF THE COMPANY 17
SECTION 3.02. NECESSARY PROPERTY HELD BY SUBSIDIARIES OR AFFILIATES 18
SECTION 3.03. NO CONFLICT 18
SECTION 3.04. CONSENTS AND APPROVALS 19
SECTION 3.05. FINANCIAL INFORMATION 19
SECTION 3.06. ABSENCE OF UNDISCLOSED LIABILITIES 19
SECTION 3.07. CERTAIN EVENTS 20
SECTION 3.08. INSURANCE RESERVES AND REPORTS 21
SECTION 3.09. JUDGMENTS, DECREES AND ORDERS 21
SECTION 3.10. LITIGATION 21
SECTION 3.11. COMPLIANCE WITH LAWS 21
SECTION 3.12. LICENSES AND PERMITS 21
SECTION 3.13. PROPERTY 22
SECTION 3.14. ASSUMED AND CEDED REINSURANCE AGREEMENTS 22
SECTION 3.15. OTHER CONTRACTS 23
SECTION 3.16. EMPLOYEE BENEFIT MATTERS 24
SECTION 3.17. TAXES 24
SECTION 3.18. AGENTS 25
SECTION 3.19. BROKERS 25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 26
SECTION 4.01. INCORPORATION AND AUTHORITY OF THE PURCHASER 26
SECTION 4.02. NO CONFLICT 26
SECTION 4.03. ABSENCE OF LITIGATION 26
SECTION 4.04. CONSENTS AND APPROVALS 26
SECTION 4.05. FINANCIAL ABILITY 27
SECTION 4.06. BROKERS 27
SECTION 4.07 MANAGMENT COMPANY 27
ARTICLE V ADDITIONAL AGREEMENTS 27
SECTION 5.01. PRE-CLOSING AGREEMENTS 27
SECTION 5.02. CONDUCT OF BUSINESS PRIOR TO THE CLOSING 27
SECTION 5.03. ACCESS TO INFORMATION 30
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SECTION 5.04. REGULATORY AND OTHER CONSENTS AND AUTHORIZATIONS; 30
THIRD PARTY CONSENTS
SECTION 5.05. NO SOLICITATION OF EMPLOYEES 31
SECTION 5.06. USE OF NAME 31
SECTION 5.07. NO SOLICITATION OF OFFERS, ETC. 31
SECTION 5.08. FEES AND EXPENSES 33
SECTION 5.09. INVESTMENT PORTFOLIO 33
SECTION 5.10. NOTICE OF CERTAIN MATTERS 33
SECTION 5.11. INTERIM FINANCIAL STATEMENTS 34
SECTION 5.12. AFFILIATE AGREEMENTS; INTERCOMPANY ACCOUNTS 34
SECTION 5.13. RENEWAL RIGHTS 34
SECTION 5.14. CERTAIN SOFTWARE LICENSES 35
SECTION 5.15 REINSURANCE PURCHASES 35
ARTICLE VI EMPLOYEE MATTERS 35
SECTION 6.01. COMPANY 35
SECTION 6.02 PURCHASER 36
SECTION 6.03. THE COMPANY'S CONTINUATION OF EMPLOYMENT AND PAYROLL; 36
SECTION 6.04 OBLIGATIONS OF THE COMPANY UNTIL CLOSING DATE 37
ARTICLE VII TAX MATTERS 37
SECTION 7.01. INDEMNITY 37
SECTION 7.02. CONTESTS 37
SECTION 7.03. COOPERATION AND EXCHANGE OF INFORMATION 39
SECTION 7.04. CONVEYANCE TAXES 39
SECTION 7.05. MISCELLANEOUS 39
ARTICLE VIII CONDITIONS TO CLOSING 40
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THE COMPANY 40
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE PURCHASER 41
ARTICLE IX INDEMNIFICATION 43
SECTION 9.01. SURVIVAL 43
SECTION 9.02. INDEMNIFICATION BY THE PURCHASER 43
SECTION 9.03. INDEMNIFICATION BY THE COMPANY AND THE GUARANTOR 45
ARTICLE X TERMINATION, AMENDMENT AND WAIVER 47
SECTION 10.01. TERMINATION 47
SECTION 10.02. EFFECT OF TERMINATION 47
SECTION 10.03. WAIVER 47
ARTICLE XI GENERAL PROVISIONS 48
SECTION 11.01. NOTICES 48
SECTION 11.02. PUBLIC ANNOUNCEMENT 49
SECTION 11.03. HEADINGS 49
SECTION 11.04. SEVERABILITY 49
SECTION 11.05. ENTIRE AGREEMENT 49
SECTION 11.06. ASSIGNMENT 49
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SECTION 11.07. NO THIRD-PARTY BENEFICIARIES 49
SECTION 11.08. AMENDMENT; WAIVER 49
SECTION 11.09. GOVERNING LAW 50
SECTION 11.10. COUNTERPARTS 50
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EXHIBITS
A Administrative Services Agreement
B Transfer and Assumption Agreement
C Form of Closing Balance Sheet
D Disclosure Schedule
E Form of Promissory Note
F Certain Employees
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This ASSET PURCHASE AGREEMENT is made and effective, as of November 30,
2001, by and between Folksam International Insurance Company Ltd. (publ), Reg.
No 502006-1650 a stock insurance (SW: Forsakringsaktiebolag) company organized
under the laws of the Sweden (the "COMPANY"); Folksam Mutual General Insurance
Company, Reg. No 502006-1619 (the"Guarantor") and Fund American Reinsurance
Company, Ltd., a stock insurance company organized under the laws of Bermuda (
the "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Company and the Guarantor desire to sell certain assets and
contract rights of the reinsurance operations of the Company to the Purchaser
and to consummate the transactions contemplated herein and the Purchaser wishes
to purchase certain assets and reinsurance operations of the Company, to have
its subsidiary Fund American Management Company to assist the Company in the
run-off part of the remaining operations which are not so purchased and to
consummate the transactions contemplated herein, on the terms and subject to the
conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants hereinafter set forth, the Purchaser and the Company hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
" ADMINISTRATIVE SERVICES AGREEMENT" means the agreement attached as
EXHIBIT A
"ACCOUNTANTS OPINION" has the meaning specified in Section 2.02(a)(ii).
"ACQUISITION AGREEMENT" has the meaning specified in Section 5.07(b).
"ACQUISITION PROPOSAL" has the meaning specified in Section 5.07(a).
"AFFILIATE" with respect to any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person.
"AFFILIATE AGREEMENTS" has the meaning specified in Section 5.12(b).
"ANNUAL STATUTORY STATEMENTS" means (a) in the case of the Company, the
Annual Statement of the Company, as filed with insurance regulatory officials in
Sweden and such statements as are filed by the Company in any country where the
Company does business, for the years ended December 31, 2000, 1999 and 1998, in
each case including all exhibits, interrogatories, notes and schedules thereto
and any auditor's report, actuarial opinion, affirmation or certification
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filed in connection therewith and (b) in the case of Purchaser, the Annual
Statement as filed with insurance regulatory officials in Bermuda, for the year
ended December 31, 2000, including all exhibits, interrogatories, notes and
schedules thereto and any auditor's report, actuarial opinion, affirmation or
certification filed in connection therewith.
"APPLICABLE INSURANCE DEPARTMENTS" has the meaning specified in Section
5.04(a).
"APPOINTED EXPERTS" means (i) Tillinghast, as regards the Reserves, and,
(ii) Deloitte and Touche, as regards all remaining aspects.
"ASSUMED BUSINESS" means the business of the Company to be assumed by the
Purchaser pursuant to the Transfer and Assumption Agreement.
"BEST OF THE COMPANY'S KNOWLEDGE" means the knowledge of the Company or its
representatives after (except for Section 3.18) due and reasonable enquiries.
"BEGINNING RESERVES" means the Reserves set forth on the Closing Balance
Sheet.
"BUSINESS" means the business of the Company as it is currently conducted
by the Company as of the date hereof and, when applicable, as of the Closing
Date.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to be closed in Bermuda and Stockholm Sweden.
"CLOSING" has the meaning specified in Section 2.03(a).
"CLOSING DATE" has the meaning specified in Section 2.03(a).
"CLOSING DATE BALANCE SHEET" and "CLOSING BALANCE SHEET" shall have the
meanings specified in Section 2.02.
"COMMERCIALLY REASONABLE EFFORTS" of any Person means efforts of that
Person that a reasonable Person would exert for its own account under similar
circumstances but without the expenditure of funds except the payment of the
fees and expenses of any applicable attorneys, consultants or other advisors
retained by it and applicable filing fees.
"COMPANY'S ACCOUNTANTS" has the meaning specified in Section 2.02(a)(i).
"COMPANY'S STOCKHOLDER APPROVAL" has the meaning specified in Section 3.01
"CONTINUING EMPLOYEES" has the meaning specified in Section 6.02.
"CONTRACT" means all written mortgages, indentures, debentures, notes,
loans, bonds, agreements, contracts, leases, subleases, licenses, franchises,
obligations, instruments or other legally binding commitments, arrangements or
undertakings of any kind (excluding Reinsurance Agreements and insurance
policies) to which the Company is a party or by which the Company or any of its
Properties may be bound or affected.
"CREDIT FOR REINSURANCE FACILITY(IES)" means any and all reinsurance
trusts, letters of credit, funds withheld, deposits and other similar agreements
or mechanisms which have been
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established by, on behalf of, or for the benefit of, the Company which
collateralizes reinsurance ceded pursuant to any Reinsurance Agreement or
retrocession arrangement.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule, dated as of the date
hereof, delivered to the Purchaser by the Company, attached hereto as EXHIBIT D.
"EMPLOYEES" shall mean employees or former employees of the Company.
"ENCUMBRANCES" means any lien, pledge, mortgage, security interest,
assessment, claim, lease, charge, option, right of first refusal, imperfection
of title, easement, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation of any kind
whatsoever.
"ENDING RESERVES" means the Reserves for Treaty Liabilities as of the
Valuation Date. The calculation of the Ending Reserves shall be (x) made in
accordance with internationally accepted actuarial practices and methodologies
and (y) consistent with the Purchaser's audited financial statements for the
fiscal year that includes the Valuation Date.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"EXCLUDED CLAIMS" has the meaning specified in Section 9.03(b).
"EXCLUDED LIABILITIES" has the meaning specified in Section 2.01.
"GAAP" has the meaning specified in Section 2.01(a).
"GOVERNMENTAL AUTHORITY" means any government, political subdivision,
legislature, court, agency, department, bureau, commission or other governmental
or regulatory authority, body or instrumentality, including any insurance or
securities regulatory authority.
"INDEMNIFIED PARTY" has the meanings specified in Sections 9.02(a) and
9.03(a), as applicable.
"INVESTMENT PORTFOLIO" means a list provided by the Company to the
Purchaser setting forth all investments, including, without limitation, bills,
notes and bonds owned by the Company which are expected to be transferred to the
Purchaser as of a particular date, the issuer of the investments, the amount
owned and the market value of the investments as of such date; PROVIDED, that
such list shall not include publicly-traded equity securities, privately held
equity securities, the Company's high yield securities or securities which are
illiquid.
"LIABILITY OR LIABILITIES" means, with respect to any Person, any
liability, obligation or commitment of such Person of any kind, character or
description, whether known or unknown, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable or
otherwise and whether or not the same is required to be accrued on the financial
statements of such Person.
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"MATERIAL ADVERSE EFFECT" means:
(a) With respect to the Company, any change in, or effect on, the Company or the
Business which is, or which is reasonably likely to be, materially adverse to
the Business taken as a whole, operations, assets, Liabilities, results of
operations or condition (financial or otherwise) of the Company to the extent
related to the Assumed Business, or which will, or is reasonably likely to,
prevent the transactions contemplated by this Agreement.
(b) With respect to the Purchaser, any change in, or effect on, the Purchaser
which is reasonably likely to be materially adverse to the Purchaser's business,
operations, assets, Liabilities, results of operations or condition (financial
or otherwise) on a consolidated basis, or which will, or is reasonably likely
to, prevent the transactions contemplated by this Agreement.
"OBJECTION NOTICE" means a written notice to Purchaser that the Company
disputes any component or the reports issued in accordance with Section 2.05(b)
and specifying in reasonable detail the Company's reasons for such dispute.
"OBJECTION PERIOD" means the period of sixty (60) days following the
Company's receipt of the latest reports referred to in Section 2.05(b).
"PAID LOSSES" means losses and loss adjustment expenses (allocated and
unallocated) actually paid by the Purchaser on or after the Closing Date to (and
including) the relevant Valuation Date, less (x) any amounts actually received
as of the Valuation Date in respect of such losses and loss adjustment expenses
pursuant to insurance, reinsurance, retrocession or similar contracts, treaties,
agreements or arrangements and (y) salvage and subrogation actually received as
of the Valuation Date in respect of such losses and loss adjustment expenses.
"PERMITS" has the meaning specified in Section 3.12.
"PERSON" means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, Governmental Authority or other entity.
"PLAN" and "PLANS" mean all retirement, pension, savings, profit-sharing,
bonus, incentive compensation, deferred compensation, stock option or stock
compensation, welfare benefit, severance or termination, change in control,
stay-bonus, retention, or similar "pay-to-stay" arrangements, retiree medical,
dental or life insurance, supplemental retirement, employment or consulting
agreements and similar or other plans, agreements, policies, programs, contracts
and arrangements (including automobile rental or usage arrangements) sponsored,
maintained, executed or contributed to by the Company covering Employees.
"PROPERTY" and "PROPERTIES" mean real, personal or mixed property, tangible
or intangible.
"PURCHASED ASSETS" has the meaning specified in Section 2.01(a).
"PURCHASER'S ACCOUNTANTS" has the meaning specified in Section 2.02(a)(ii).
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"QUARTERLY STATEMENTS" means (a) in the case of the Company, the
Quarterly Statement of the condition and affairs of the Company, for the
quarterly periods ended March 31, June 30 and September 30,2001
"REINSURANCE AGREEMENTS" has the meaning specified in Section 3.14(a).
"RESERVES" means all unearned premium reserves and all reserves for
incurred losses including, without limitation, case reserves, reserves for
incurred but not reported losses and reserves for loss adjustment expenses, both
allocated and unallocated, and also any adjustments to such items on account of
reinsurance receivables, salvage and subrogation, reinsurance retrospective
premiums and reinsurance profit commissions.
"RETAINED NAMES AND MARKS" has the meaning specified in Section 5.06.
"SECURITIES ACT" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
"SEK" means Swedish Kronor.
"SETTLEMENT DATE" means (a) if the Company does not give an Objection
Notice within the Objection Period, the second Business Day following the end of
the Objection Period, and (b) if Company gives an Objection Notice within the
Objection Period, the second Business Day following the determinations and
confirmations by the Appointed Experts pursuant to Section 2.05(b).
"SOFTWARE LICENSES" has the meaning specified in Section 5.14.
"SUBSIDIARY" means any and all other corporations, limited liability
companies, partnerships, joint ventures, associations and other entities of
which the Company, directly or indirectly (through one or more Subsidiaries or
otherwise), owns or controls more than 50% of the voting securities or other
voting interests.
"SUPERIOR PROPOSAL" has the meaning specified in Section 5.07(b).
"TAX" or "TAXES" means (i) all taxes, fees, duties and other assessments
imposed by any state, local or foreign government or political subdivision or
taxing authority thereof or therein, including, without limitation, any income,
estimated, premium, profits, windfall profits, environmental, alternative,
minimum, license, import, transfer, registration, stamp, franchise, sales, use,
value added, gross receipts, excise, utility, property (real or personal),
severance, ad valorem, net proceeds, deed, lease, service, capital, customs,
occupation, payroll, wage, workman's compensation, employment, withholding and
social security taxes, including all interest, penalties and additions to taxes
imposed by any taxing authority with respect thereto, whether disputed or not
and (ii) any liability of the Company for amounts described in clause (i) as a
result of being a member of any affiliated, consolidated, combined or unitary
group on or prior to the Closing Date.
"TAX RETURN" means any return, report or statement (including any
information returns) required to be filed for purposes of a particular Tax.
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"TERMINATION FEE" has the meaning specified in Section 5.08(b).
"THIRD PARTY" has the meaning specified in Section 5.08(b).
"TRANSFER AND ASSUMPTION AGREEMENT" has the meaning specified in Section
2.01(c).
"TREATY LIABILITIES" has the meaning specified in Section 2.01(b).
"VALUATION DATE" means the first anniversary of the Closing Date and each
anniversary thereafter.
"WTM" has the meaning specified in Section 2.03(c).
ARTICLE II
PURCHASE AND SALE OF THE ASSUMED BUSINESS
SECTION 2.01. PURCHASE OF THE ASSUMED BUSINESS.
(a) On the Closing Date and subject to the terms and conditions stated in this
Agreement, the Company shall sell to Purchaser, and Purchaser shall purchase
from the Company, as provided in Section 2.03 (b), all of the Company's right,
title and interest in and to the following assets related to the Assumed
Business (the "PURCHASED ASSETS"):
(i) Bonds at market value;
(ii) Cash and Accrued Investment Income;
(iii) Debtors arising out of reinsurance operations;
(iv) Reinsurers' share of technical provisions - unearned premiums;
(v) Reinsurers' share of technical provisions - claims outstanding
(vi) Deposits with ceding undertakings
(vii) Contingent Commissions Recoverables; and
(viii) Deferred Acquisition Costs - external costs only (determined in
accordance with Swedish Generally Accepted Accounting Principles,
"GAAP")
(b) In consideration of the sale, transfer, conveyance and assignment of the
Purchased Assets and in reliance on the representations and warranties made
herein by the Company, the Purchaser agrees to assume the Treaty Liabilities (as
defined in the Transfer and Assumption Agreement) as reflected on the Closing
Date Balance Sheet.
(c) The transfer of the Purchased Assets and assumption of the Treaty
Liabilities shall be further evidenced by the execution on the Closing Date by
the Company and Purchaser of a portfolio transfer and assumption reinsurance
agreement in the form annexed hereto as Exhibit B (together with all other
assignments, bills of sale, assignment and assumption agreements and other title
transfer documentation necessary to effectuate the transfer of the Purchased
Assets and assumption of the Treaty Liabilities, collectively the "TRANSFER AND
ASSUMPTION AGREEMENT"). In case of any discrepancies between this Agreement and
the Transfer and Assumption Agreement, the provisions of this Agreement shall
prevail.
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(d) Notwithstanding the foregoing, the Purchaser shall not assume, and shall not
at any time hereafter (including on or after the Closing Date) become obligated
to pay, perform, satisfy or discharge, any Liabilities of the Company (whether
or not asserted prior to the Closing Date), of any of its Affiliates,
Subsidiaries, Plans or any shareholder of the Company, other than the Treaty
Liabilities (such Liabilities not being assumed being hereinafter referred to as
the "EXCLUDED LIABILITIES") and Liabilities for Continuing Employees transferred
to the Purchaser by operation of law. The assumption by the Purchaser of the
Treaty Liabilities shall in no way expand the rights or remedies of third
parties against Purchaser as compared to the rights and remedies which such
parties would have had against the Company had the transactions contemplated by
this Agreement not been consummated.
(e) Subject to Section 9.03, the payment, discharge and performance of the
Excluded Liabilities shall be the sole responsibility of the Company and the
Purchaser shall have no responsibility therefor whatsoever.
(f) On the Closing Date the Company shall deliver and convey title to Purchaser
to the inventory listed in Exhibit 3.02 to the Disclosure Schedule, without any
further consideration.
SECTION 2.02. PURCHASE PRICE.
(a) The Purchaser shall purchase the Assumed Business by purchasing from the
Company, Purchased Assets in an amount necessary to produce a Closing Date
Balance Sheet of Purchaser with a "Net Asset Value" of not less than (but not
greater than unless otherwise agreed) SEK 700 million; such amount being
necessary to support the Purchaser's ongoing business plan for the Purchased
Assets and the Assumed Business. The Purchaser shall pay the Company 90% of the
first SEK 350 million and 100% of the amount in excess of SEK 350 million
("Purchase Price"). "Net Asset Value" shall mean the fair market value of the
Purchased Assets, as preliminarily agreed by the parties, less the Treaty
Liabilities or any other Liabilities, as preliminarily agreed by the parties
(including Purchaser's actuary), all of which shall be provided for in a Closing
Date Balance Sheet. The Closing Date Balance Sheet shall be updated to reflect
the Treaty Liabilities and other Liabilities reflected thereon from the Closing
Date to December 31, 2001 and subject to audit as provided for below.
(i) Promptly following the Closing, the Company shall cause an audit of the
Closing Date Balance Sheet, updated as of December 31, 2001, to be
conducted by KPMG, Sweden, the Company's independent public accountants
("COMPANY'S ACCOUNTANTS"), in accordance with generally accepted auditing
standards in accordance with GAAP.
(ii) During the period of the audit (which shall include an evaluation of
the Reserves by representatives of the Purchaser and the Company) of the
Closing Date Balance Sheet, updated as of December 31, 2001, Company's
Accountants shall keep the Purchaser and an independent public accounting
firm designated by the Purchaser ("PURCHASER'S ACCOUNTANTS"), fully
informed as to the progress of the audit. Upon conclusion of the audit,
Company's Accountants shall prepare and submit to the Purchaser and
Purchaser's Accountants (A) a balance sheet of the Assumed Business at the
Closing Date in the form of EXHIBIT C hereto (the "CLOSING BALANCE SHEET")
prepared in accordance with (GAAP), (B) an unqualified opinion of the
Company's Accountants (the "ACCOUNTANTS OPINION") stating that the Closing
Date Balance Sheet
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(x) has been prepared in accordance with GAAP and (y) presents fairly, in
all material respects, the financial position of the Assumed Business and
Treaty Liabilities at the Closing Date.
(b) Promptly following the delivery of the Accountants Opinion pursuant to
Section 2.02(a) (ii), Company shall make available to the Purchaser and
Purchaser's Accountants for review such information regarding the accounts and
records of the Company from Company's Accountants' work papers as the Purchaser
and Purchaser's Accountants may reasonably request. The Company shall provide
the Purchaser and Purchaser's Accountants with full access to any accounting
records pertaining to the Assumed Business for the purpose of such review. In
the event that within thirty (30) days after the receipt by Purchaser's
Accountants of such materials, Company's Accountants and Purchaser's Accountants
are unable to agree on the manner in which any item or items should be treated
in the Closing Date Balance Sheet, including the establishment of Reserves, as
preliminarily agreed, then a separate written report of such item or items shall
be made by each such accounting firm in concise form and both reports shall be
submitted promptly to the Company and the Purchaser for consideration and
settlement. The Company and the Purchaser shall then in good faith endeavor to
resolve such treatment and agree upon the computation of the item as soon as
possible. If the Company and the Purchaser are unable to agree thereon within
twenty (20) Business Days after receipt of such reports, then such item or items
shall be referred promptly to Deloitte and Touche for resolution within twenty
(20) Business Days from the date of such referral.
The Company shall pay the fees and expenses of Company's Accountants and
the Purchaser shall pay the fees and expenses of Purchaser's Accountants in
connection with any auditing and accounting services performed pursuant to this
Section 2.02). The fees and expenses of Deloitte and Touche whose findings shall
not be subject to arbitration, if retained pursuant to this Section 2.02(b),
shall be borne equally by the Company and the Purchaser. Provided however,
nothing in this Agreement, including the audit or the appointment of Deloitte
and Touche shall in any manner alter the agreements referenced in Section 2.05
or the indemnifications provided for in Article IX and it is expressly
understood that the Closing Balance sheet shall be subject to the indemnities
and guaranties provided for herein.
(c) The cash portion of the Net Asset Value as provided in Section 2.03(c),
shall be adjusted, if necessary, by the parties to reflect the results of the
audit referenced in this Section 2.02 and shall include a provision for interest
at an annual rate of 4% from the Closing date until paid. Provided, however,
changes in the market value of the investment Purchased Assets (as opposed to
default risk), both positive and negative, shall be for the account of the
Purchaser and shall not be subject to adjustment unless the market value, as
audited as of the Closing Date, is adjusted in accordance with this Section
2.02. Investment income on the Purchased Assets shall be for the sole benefit of
the Purchaser.
SECTION 2.03. CLOSING.
(a) Subject to the terms and conditions of this Agreement, the sale and purchase
of the Assumed Business contemplated hereby shall take place at a closing (the
"CLOSING") at 10:00 a.m., local time, on the fifth Business Day after the
satisfaction or waiver of all of the conditions to closing set forth in Article
VIII, at the offices of the Purchaser in Bermuda, or at such other time or on
such other date or at such other place as the Company and the Purchaser may
mutually agree upon in writing (the date on which the Closing takes place being
the "CLOSING DATE").
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(b) At the Closing, each of the Company and Purchaser shall deliver or cause to
be delivered to the other a duly executed Transfer and Assumption Agreement, and
the Company shall pursuant thereto sell, transfer and assign to the Purchaser
the Purchased Assets in the respective amounts included in the calculation of
the Closing Date Balance Sheet as provided in Section 2.02, and the Purchaser
shall pursuant thereto assume from the Company the Treaty Liabilities calculated
as of the Closing Date.
(c) At the Closing, the Purchaser shall deliver and pay the Purchase Price as
follows: (i) 90% of the first SEK 350 million of Purchase Price shall be paid in
White Mountains Insurance Group, Ltd. ("WTM") common stock (the "Shares") at a
value per Share equal to the greater of: (A) US $340.00 per share or (B) the
average closing price of the Shares on the New York Stock Exchange in the period
of twenty (20) Business Days prior to the Closing (ii) the balance of the
Purchase Price shall be paid (x) in a five year promissory note in the principal
amount of SEK 35 million bearing interest at an annual rate of 4 (four) percent
and substantially in a form attached hereto as Exhibit E (the "Note") and (y) in
cash by wire transfer (to an account designated by the Company in writing at
least three (3) Business Days prior to Closing), bank check, certified check or
any other instrument agreed to by the Purchaser and the Company in advance. In
addition, the Company and the Purchaser shall deliver to each other the
opinions, certificates and other documents described in Article VIII hereof.
SECTION 2.04. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS RELATED TO
WHITE MOUNTAINS SHARES
(A) THE SHARES. The Shares will be when issued duly authorized,
validly issued, fully paid and non-assessable and not subject to or issued
in violation of any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right.
(B) Except pursuant to this Agreement, there are no restrictions upon,
or contracts to which WTM is a party or otherwise bound with respect to,
the voting or transfer of any of the Shares.
(C) PRIVATE OFFERING. None of WTM, Fund American Reinsurance Company,
Ltd ("Fund American"), their affiliates or their respective representatives
has issued, sold or offered any security of WTM to any person under
circumstances that would cause the issuance and sale of the Shares, as
contemplated by this Agreement, to be subject to the registration
requirements of the Securities Act. None of WTM, its affiliates or their
respective representatives will offer the Shares or any part thereof or any
similar securities for issuance or sale to, or solicit any offer to acquire
any of the same from, anyone so as to make the issuance and sale of the
Shares subject to the registration requirements of Section 5 of the
Securities Act. Assuming the representations of the Company contained in
Section 3.01 are true and correct, the issuance, sale and delivery of the
Shares hereunder are exempt from the registration and prospectus delivery
requirements of the Securities Act.
(D) The Company represents and warrants to Purchaser that:
(a) PRIVATE PLACEMENT. The Company understands that the issuance
of the Shares by WTM and sale of the Shares by Purchaser pursuant to
this Agreement are intended to be exempt from registration under the
Securities Act pursuant to Section 4(2) thereof.
14
(b) The Company (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 investment in the Shares and is capable of bearing the economic
risks of such investment.
(c) The Company is acquiring the Shares to be acquired
hereunder for its own account, for investment and not with a view
to the public resale or distribution thereof in violation of any
securities law.
(d) The Company understands that the Shares will be issued and
sold in a transaction exempt from the registration or qualification
requirements of the Securities Act and applicable state securities
laws, and that such securities must be held indefinitely unless a
subsequent disposition thereof is (i) registered or qualified under
the Securities Act and such laws or is exempt from such
registration or qualification and (ii) otherwise is made in
accordance with Section 2.04 (D)(h).
(e) The Company (i) has been furnished with or has had full
access to all of the information that it considers necessary or
appropriate to make an informed investment decision with respect to
the Shares that it has requested from Purchaser, (ii) has had an
opportunity to discuss with management of Purchaser the intended
business and financial affairs of WTM and to obtain information (to
the extent Purchaser possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify any
information furnished to it or to which it had access, (iii) can
bear the economic risk of (A) an investment in the Shares
indefinitely and (B) a total loss in respect of such investment and
(iv) has such knowledge and experience in business and financial
matters so as to enable it to understand and evaluate the risks of
and form an investment decision with respect to its investment in
the Shares and to protect its own interest in connection with such
investment.
(f) FINANCING. The Company has funds available sufficient to
consummate the transactions contemplated hereby.
(g) LEGENDS. So long as applicable, each certificate
representing any portion of the Shares shall be stamped or
otherwise imprinted with a legend in the following form (in
addition to any legend required under applicable state securities
laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OTHER
THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
If outside counsel for the holder of Shares reasonably determines
that the transfer of such Shares is no longer restricted by the
Securities Act and outside counsel for WTM reasonably concurs in
such determination, then Purchaser shall cause WTM to remove such
legend upon request from a holder of such Shares and facilitate a
sale in the public market.
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(h) RESTRICTIONS ON TRANSFER. The Company shall not sell,
assign, transfer, pledge, hypothecate, deposit in a voting trust or
otherwise dispose of any portion of the Shares, other than (i) in
compliance with Rule 144 under the Securities Act or any successor
rule or regulation or (ii) in a transaction exempt from the
registration requirements of the Securities Act.
(i) RIGHT OF FIRST REFUSAL. In the event the Company proposes
to sell the Shares to any third party, the Company shall notify the
Purchaser of the terms and conditions of such proposed sale. The
Purchaser shall have the option, but not the obligation, to
purchase the Shares on the same terms and conditions as offered to
the third party. Purchaser shall have 5 (five) Business Days from
the notice of the proposed sale to elect to exercise its option to
purchase the Shares.
SECTION 2.05. POST CLOSING ADJUSTMENTS.
(a) TREATY LIABILITIES, LIABILITIES AND PURCHASED ASSET DEFICIENCY
Notwithstanding the audit of the Closing Date Balance Sheet, the Company and the
Guarantor shall indemnify the Purchaser, as provided for herein and in Section
9.03, on a dollar for dollar basis, for any and all loss (on an incurred basis
as opposed to a paid basis) to the Purchaser resulting from the assumption of
the Assumed Business (without diminution due to investment income earned on the
Purchased Assets) including without limitation the related reinsurance Treaty
Liabilities, Liabilities (whether assumed on or after the Closing Date as
provided in the Transfer and Assumption Agreement) and the Purchased Assets. As
soon as practicable (but not later than ninety (90) days) after each Valuation
Date, the Purchaser shall deliver to the Company each of the following:
(i) A report shall be prepared by the Purchaser which summarizes
the activity in all Liabilities, Treaty Liabilities and Purchased
Assets for the period beginning on the Closing Date (or first
preceding Valuation Date, as the case may be) and ending on the
most recent Valuation Date. Such activity will include, but not
be limited to, paid losses, changes in reserves, earnings of
prior unearned premiums and related losses (paid and incurred)
and commissions, premium adjustments relating to the Assumed
Business, debts arising out of reinsurance operations not
collected in accordance with contract terms for any reason,
investment income and investment principal not collected on
scheduled payment dates. The intent being to measure the net
income or loss emanating from the run-off of the Treaty
Liabilities and Purchased Assets, which is the financial
responsibility of the Company and for which the Purchaser is
indemnified by the Company and the Guarantor. All assumptions and
measurement techniques to be applied in this annual remeasurement
process will be designed to result in accomplishing the mutual
business objective of the Company and Purchaser, that being the
orderly run-off of the Assumed Business without consideration to
investment income earned on Purchased Assets which is exclusively
for the account of Purchaser.
(ii) The report will be accompanied by a letter prepared by the
Purchaser's Accountants which attests to the fairness of the
information presented in the report. Further, the report will be
accompanied by a letter prepared by the Purchaser's actuary
attesting to the fairness of the reserves and related activity
included in the report.
If the activity in the Liabilities and Purchased Assets as
reflected in
16
the report results in a net loss and, therefore, adverse
development or additional Liabilities have been incurred, the
Company will undertake to transfer cash and investment assets
with a market value equal to such loss to the Purchaser within 10
(ten) Business Days of such report being accepted by the Company
or determined under Section (b) below. Interest will accrue at an
annual rate equal to the 90 (ninety) day Libor rate from the
Valuation Date to the date such loss is funded.
(iii) the only exceptions to the annual remeasurement process
described above will be that the Company will reimburse the
Purchaser within 7 (seven) Business Days of being notified by the
Purchaser through the delivery of confirming documentation that a
receivable balance billed to a debtor arising out of reinsurance
operations (treaty balance receivable or reinsurance recoverable
on a paid loss balance) has remained unsettled for a period of
more than 120 days from the date such balance should have been
settled under the applicable contract terms; or, the interest or
maturity principal balance for a fixed income instrument included
in the Purchased Assets was not received in accordance with the
terms of the underlying security (i.e. default).
(b) DISPUTES
(i) If at any time within the Objection Period Company gives an
Objection Notice, Appointed Experts shall be engaged to
separately determine the report and valuation provided for above
within forty-five (45) days of the date the Company gives such
notice. The Appointed Experts' determinations and confirmations
shall be final and binding and not subject to arbitration only
for the current period being evaluated and shall NOT prejudice
future evaluations and the guarantees and indemnities provided
for herein for all parties. Fees and expenses of the Appointed
Experts shall be paid equally by Purchaser and Company.
(ii) Purchaser and the Company agree to cooperate with and use
all Commercially Reasonable Efforts to assist the Appointed
Experts, including by furnishing all information reasonably
requested by them, in performing the services specified hereby,
and to negotiate in good faith to resolve the disputes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and Guarantor, jointly and severally, hereby represent and
warrant to the Purchaser as at the date hereof as follows:
SECTION 3.01. INCORPORATION AND AUTHORITY OF THE COMPANY. The Company is a
company duly organized, validly existing under the laws of Sweden, and has all
necessary corporate power and authority to own, lease and operate its respective
Properties, to conduct its respective business as now being conducted and to
enter into this Agreement, the Transfer and Assumption Agreement and each other
agreement and instrument required to be executed and delivered by it pursuant
hereto, and, subject to the approval of this Agreement and the transactions
contemplated hereby by Guarantor (the "COMPANY'S STOCKHOLDER APPROVAL") to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement, the Transfer and Assumption
Agreement and each other agreement and instrument required to be executed and
17
delivered by it pursuant hereto, and the consummation by it of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
requisite corporate action, subject to the Company's Stockholder Approval. This
Agreement has been, and at the Closing Date the Transfer and Assumption
Agreement and the other agreements and instruments required pursuant hereto and
to which the Company is a party will have been, duly and validly executed and
delivered by the Company, and (assuming due authorization, execution and
delivery by the Purchaser of this Agreement and by the Purchaser and each other
party (other than the Company) to any other document delivered hereunder), this
Agreement, the Transfer and Assumption Agreement and such other documents at the
Closing will constitute a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
Nothing in this paragraph 3.01 shall require the Guarantor to provide additional
capital support to the Company.
SECTION 3.02. NECESSARY PROPERTY HELD BY SUBSIDIARIES OR AFFILIATES. Except as
set forth in Section 3.02 of the Disclosure Schedule, there are no other assets
or Properties owned by, or in the possession of, the Company or any Subsidiary
(or any other Affiliate of the Company) which are material to and required in
the conduct of the Assumed Business.
SECTION 3.03. NO CONFLICT.
(a) Except as set forth in Section 3.03 of the Disclosure Schedule, the Company
is not in violation or default in any material respect (and is not in default in
any respect regarding any indebtedness, loan or credit agreement) under any
indenture, agreement or instrument involving or relating to the Assumed Business
to which it is a party or by which it or any of its assets or properties
relating to the Assumed Business may be bound.
The Company is not in default under any order, writ, injunction, judgment
or decree of any Governmental Authority or arbitrator(s) relating to the Assumed
Business.
(b) Assuming all consents, approvals, authorizations, orders and other actions
described in Section 3.04 have been obtained and/or taken, and all filings and
notifications described in Section 3.04 have been made, except as may result
from any facts or circumstances relating solely to the Purchaser or its
Affiliates, the execution, delivery and performance of this Agreement and of the
Transfer and Assumption Agreement by the Company, the transfer of the Assumed
Business pursuant to this Agreement and the Transfer and Assumption Agreement
and the consummation by the Company of the transactions contemplated hereby and
thereby do not and will not (a) violate or conflict with the charter documents
of the Company, (b) conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to the
Company or the Assumed Business, or (c) result in any breach of, or constitute a
default (or event which with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on any of the assets or properties of the Company relating to the
Assumed Business pursuant to any Contract, Permit or other instrument relating
to such assets or properties to which the Company is a party or by which any of
such assets or properties is bound or affected, except for such conflicts,
violations, breaches or defaults which, individually or in the aggregate, do not
have, and are not reasonably likely to have, a Material Adverse Effect.
18
SECTION 3.04. CONSENTS AND APPROVALS. The execution and delivery by the Company
of this Agreement, the Transfer and Assumption Agreement and each other
agreement and instrument required to be executed and delivered by the Company in
connection herewith, the transfer and sale of the Assumed Business pursuant to
this Agreement and the Transfer and Assumption Agreement, and the consummation
of the transactions contemplated hereby and thereby do not, and the Company's
performance of this Agreement, the Transfer and Assumption Agreement and each
other agreement and instrument required to be executed and delivered by the
Company in connection herewith will not, require any consent, approval,
authorization, order or other action by, or filing with or notification to, any
Governmental Authority, except the approval of the Singapore insurance
regulatory authorities.
SECTION 3.05. FINANCIAL INFORMATION.
The Company has heretofore delivered to the Purchaser true and complete copies
of the Company's Annual Statutory Statements and the Quarterly Statements. Each
of the Annual Statutory Statements (which have been audited) and Quarterly
Statements was prepared in accordance with the books and records of the Company
and in accordance with GAAP and on a basis consistent with previous statements,
and presents fairly, in all material respects the assets, Liabilities, capital
and surplus of the Company at the respective dates thereof and the results of
operations and cash flows of the Company for the respective periods then ended.
Each of the Company's Annual Statutory Statements and Quarterly Statements (i)
complies in all material respects with Swedish law and regulations (ii) was
complete and correct in all material respects when filed, (iii) was filed with
or submitted to the appropriate authority in a timely manner on forms prescribed
or permitted . Except as set forth in Section 3.05 of the Disclosure Schedule,
no material deficiency has been asserted with respect to any of the Company's
Annual Statutory Statements or Quarterly Statements by any Governmental
Authority. The Purchaser confirms the receipt (but only the receipt) of such
statements.
The Guarantor represents and guarantees that the transfer of SEK 2 billion of
subordinated loan in the Guarantor's balance sheet to guarantee capital has been
accomplished and that such equity is free and available to satisfy all
policyholders' and creditors' claims, including the Guarantor's guarantee to the
Purchaser.
SECTION 3.06. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in Section
3.06 of the Disclosure Schedule, there are no debts, Liabilities, obligations or
commitments of the Company involving or relating to the Assumed Business of any
kind whatsoever, whether accrued, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, contingent, absolute, known or
unknown, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a debt, Liability, obligation or commitment other than:
(a) as, and to the extent, reflected or reserved against in the
September 30, 2001 Balance Sheet.
(b) as, and to the extent, specifically disclosed in any of the
subsections of this Article III or the Disclosure Schedule;
19
(c) Liabilities incurred since the date of the September 30, 2001
Balance Sheet in the ordinary course of business and consistent with past
practice, which, individually and in the aggregate, would not have a
Material Adverse Effect.
SECTION 3.07. CERTAIN EVENTS.
(a) Except as set forth in Section 3.07 of the Disclosure Schedule, since
September 30, 2001 there has been no change in the business, operations, assets,
Properties, condition (financial or otherwise) or results of operations of the
Company involving or relating to the Assumed Business which, individually or in
the aggregate, has had or is reasonably likely to have a Material Adverse
Effect.
(b) Except as set forth in Section 3.07 of the Disclosure Schedule since
September 30, 2001 the business of the Company involving or relating to the
Assumed Business has been conducted only in the ordinary course of business
consistent with past practice and there has not been, except as contemplated
hereby:
(i) any material change in the underwriting, reinsurance,
accounting, establishment of reserves, investment or claims
adjustment policies and practices of the Company involving or
relating to the Assumed Business, including, without limitation,
any change which has had the effect of materially accelerating
the recording and billing of premiums or accounts receivable or
retarding the payment of expenses or establishing Reserves in
connection with the Assumed Business, or has had the effect of
materially altering, modifying or changing the historic
operating, financial or accounting practices or policies of the
Company involving or relating to the Assumed Business;
(ii) any severance or termination agreement or arrangement
entered into, or amended, between the Company and a director,
officer or other employee or consultant for a material
engagement of the Company;
(iii) any indebtedness incurred by the Company for borrowed money
involving or relating to the Assumed Business;
(iv) the creation of any Encumbrance on all or any portion of any
material assets, Properties or rights of the Company involving or
relating to the Assumed Business;
(v) any amendment, modification, alteration, failure to renew or
termination of any Contract or Reinsurance Agreement involving or
relating to the Assumed Business which, individually or in the
aggregate with such other amendments, modifications, alterations,
failure to renew or terminations, has had or could reasonably be
expected to have a Material Adverse Effect;
(vi) any waiver of any rights of material value or any
cancellation or forgiveness of any claims, debts or accounts
receivable owing to the Company and relating to the Assumed
Business other than in the ordinary course of business and
consistent with past practice;
20
(vii) any transaction or commitment made, or any contract or
agreement entered into, between the Company on the one hand, and
any of its Affiliates on the other hand and involving or relating
to the Assumed Business;
(viii) any entry into any joint venture, partnership or similar
arrangement with any Person involving or relating to the Assumed
Business;
(ix) any authorization, approval, agreement or commitment to do
any of the foregoing; or
(x) any other event or occurrence which has had or is reasonably
likely to have a Material Adverse Effect on the Assumed Business.
SECTION 3.08. INSURANCE RESERVES AND REPORTS.
(a) Since September 30, 2001 the Company has not adjusted its Reserves except in
the ordinary course of business consistent with past practice.
(b) The Company has delivered or made available to the Purchaser true and
complete copies of all actuarial reports, actuarial certificates and loss and
loss adjustment expense reserve reports prepared by the Company or the Company's
Accountants or actuaries and any other report prepared by any third party
actuarial consultant on behalf of or made available to the Company or any of its
Affiliates, in each case relating to the Reserves of the Company for any period
ended on or after December 31, 1999 (to the extent such documents exist).
SECTION 3.09. JUDGMENTS, DECREES AND ORDERS. Except as set forth in Section 3.09
of the Disclosure Schedule, neither the Company nor any of its directors,
officers or employees (in their capacity as such) is a party to or subject to
any judgment, decree, order, writ, award, or injunction of any Governmental
Authority or arbitrator which, individually or in the aggregate with all such
other judgments, decrees, orders, writs, awards and injunctions, has had or is
reasonably likely to have a Material Adverse Effect on the Assumed Business.
There is no default in any material respect on the part of the Company with
respect to any judgment, order, writ, arbitration award, injunction, decree or
award of any Governmental Authority or arbitrator to which it is subject.
SECTION 3.10. LITIGATION. Except as set forth in Section 3.10 of the Disclosure
Schedule, there are no claims, actions, suits, investigations, arbitrations or
legal, administrative or other proceedings pending and, to the knowledge of the
Company, none are threatened, against or affecting the Company relating to the
Assumed Business at law or in equity, or before or by any Governmental Authority
or arbitrator.
SECTION 3.11. COMPLIANCE WITH LAWS. The Company is in compliance with (a) the
terms of its certificate or articles of incorporation, its by-laws and any other
charter or organization documents, (b) all laws, statutes, ordinances, rules,
regulations or other legal requirements, whether local or foreign, applicable to
the Company and by which any of the Assumed Business may be bound, (c) all
applicable licenses, authorizations, orders, writs, judgements, injunctions,
awards and decrees of any court, or other Governmental Authority, or any
arbitrator involving or relating to the Assumed Business and (d) its Permits,
except, in the case of clauses (b), (c) and (d), where the failure to comply
would not, individually or in the aggregate, have a Material Adverse Effect on
the Assumed Business.
21
SECTION 3.12. LICENSES AND PERMITS. Except as set forth in Section 3.12 of the
Disclosure Schedule, the Company has all governmental licenses, permits and
authorizations (other than those relating to the writing of insurance which are
covered by the next sentence) necessary to carry on the Assumed Business now
being conducted by the Company (collectively, the "PERMITS"), all of which are
valid and in full force and effect, except for such Permits the absence of
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Assumed Business. Section 3.12 of the Disclosure Schedule lists
all jurisdictions in which the Company is licensed, authorized or permitted to
write insurance or reinsurance. The Company has been duly authorized by the
relevant insurance regulatory authorities to write the lines of insurance or
reinsurance that it is currently writing in the respective jurisdictions in
which it does business. Except as set forth in Section 3.12 of the Disclosure
Schedule, the Company does not conduct any business or underwrite reinsurance in
any foreign jurisdiction which requires any license or approval for the Company
to conduct the Assumed Business as currently conducted.
SECTION 3.13. PROPERTY. Except as set forth in Section 3.13 of the Disclosure
Schedule, the Company has good and marketable title to all its Property material
and necessary for the conduct of the Assumed Business free and clear of all
Encumbrances except (i) liens for Taxes and assessments not yet payable; (ii)
liens and imperfections of title which do not, either individually or in the
aggregate, materially detract from the value of, or interfere with the present
use of, the Properties subject thereto or affected thereby; and (iii) pledges of
collateral securing Credit for Reinsurance Facility(ties), where such collateral
will be released as of the Closing.
SECTION 3.14. ASSUMED AND CEDED REINSURANCE AGREEMENTS.
(a) As used in this Agreement, the term "REINSURANCE AGREEMENTS" shall mean all
assumed and ceded reinsurance and retrocession agreements, contracts, treaties,
obligations, instruments or other reinsurance or retrocession commitments,
arrangements or undertakings of any kind to which the Company is a party or by
which the Company or any of its respective Properties may be bound or affected.
(b) All of the Reinsurance Agreements and Credit for Reinsurance Facilities are
valid, binding and enforceable against the Company and, to the knowledge of the
Company, against the other parties thereto in accordance with their terms and
are in full force and effect. Except as set forth in Section 3.14(b) of the
Disclosure Schedule, the Company is not, and to the knowledge of the Company, no
other party thereto is, in or claimed to be in material breach or material
default under any such Reinsurance Agreement or Credit for Reinsurance Facility,
and, to the knowledge of the Company, no event has occurred which (after notice
or lapse of time or both) would become a material breach or material default
under, or would permit modification, cancellation, acceleration or termination
of, any such Reinsurance Agreement or Credit for Reinsurance Facility or result
in the creation of any material Encumbrance upon, or result in any Person
obtaining any right to acquire, any Properties, assets or rights of the Company.
Except as set forth in Section 3.14(b) of the Disclosure Schedule, there are, to
the knowledge of the Company, no unresolved disputes under any such Reinsurance
Agreement or Credit for Reinsurance Facility.
22
(c) Except as set forth in Section 3.14(c) of the Disclosure Schedule, the
monies or debts due to the Company as reflected on the September 30 Balance
Sheet are, and all such receivables to be included in the Closing Date Balance
Sheet and Closing Balance Sheet will be, (i) legal, valid and binding
obligations of the respective debtors enforceable in accordance with their
respective terms, (ii) not subject to any valid set-off or counterclaim, (iii),
collectible in the ordinary course of business consistent with past practice in
the aggregate recorded amounts thereof, net of any applicable Reserve reflected
in the September 30, 2001 Balance Sheet or in the Closing Date Balance Sheet and
Closing Balance Sheet, as the case may be, (iv) not the subject of any claims,
actions, suits, arbitrations or other proceedings brought by or on behalf of the
Company or by the account debtor, and (v) not subject to any pledge as
collateral by the Company.
SECTION 3.15. OTHER CONTRACTS.
(a) Set forth in Section 3.15 of the Disclosure Schedule is a complete and
accurate list of (x) each Contract which is material to the Assumed Business and
(y) without regard to materiality, each of the following Contracts involving or
relating to the Assumed Business (access to correct and complete copies or, if
none exist, written descriptions, of all Contracts called for by clauses (x) and
(y) having been provided to the Purchaser):
(i) All Contracts involving or relating to the Assumed Business
out of the ordinary course of business representing, individually
or in the aggregate, non-terminable future Liabilities in excess
of $100,000;
(ii) All Contracts with any Person containing any provision or
covenant limiting the ability of the Company to engage in the
Assumed Business in any geographical area or to compete with any
Person;
(iii) All reinsurance pools relating to the Assumed Business
pursuant to which the Company has assumed reinsurance risks
currently in force and all assigned pools relating to the Assumed
Business in which the Company is participating;
(iv) Each Contract (other than Contracts cancelable at will or
with thirty (30) days' notice, in each case without penalty)
involving or related to the Assumed Business which obligates the
Company to provide services to a third party; and
(v) Any power of attorney relating to the Assumed Business which
is currently effective and outstanding, other than powers of
attorney which are required by law or which have been granted
pursuant to requirements of applicable state insurance or
securities rules and regulations.
(b) All of the Contracts referred to in clause (a) above are, to the knowledge
of the Company, valid, binding and enforceable against the parties thereto in
accordance with their terms and are in full force and effect, subject to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Company is not, and to the best of the knowledge of the Company, no other
party thereto is, in or claimed to be in material breach or material
23
default under any Contract referred to in clause (a) above, and no event has
occurred which (after notice or lapse of time or both) would become a material
breach or material default under or would permit modification, cancellation,
acceleration or termination of, any Contract referred to in clause (a) above or
result in the creation of any material Encumbrance upon, or any Person obtaining
any right to acquire, any Properties, assets or rights of the Company involving
or relating to the Assumed Business. There are no unresolved disputes under any
Contract referred to in clause (a) above. Except as set forth in Section 3.15(b)
of the Disclosure Schedule, no material Contract contains any provision
providing that any other party thereto may terminate or cancel the same by
reason of the transactions contemplated by this Agreement.
SECTION 3.16. EMPLOYEE BENEFIT MATTERS.
(a) Set forth in Section 3.16 of the Disclosure Schedule is a complete and
correct list of all Plans. The Purchaser will have no Liability under any Plan
(other than Liabilities vis-a-vis Continuing Employees attributable only to the
period after the Closing Date and only under any Plan that is transferred to the
Purchaser by operation of law).
(b) Except pursuant to Plans or agreements set forth in Section 3.16 of the
Disclosure Schedule, which sets forth a true and complete description of all
terms and benefits relating to the Employees, no benefit under any plan or
agreement between the Company or any Employee has been agreed or will be
triggered or become accelerated, vested or payable by reason of this Agreement
or any transaction contemplated hereby or shall give the Employee any right
against the Purchaser.
SECTION 3.17. TAXES. Except as set forth in Section 3.17 of the Disclosure
Schedule:
(a) All Tax Returns required to be filed in respect of the Company or with
respect to the Assumed Business that are due, taking into account timely
extensions of the filing period, on or prior to the Closing Date have been duly
and timely filed (or will have been duly and timely filed by the Closing Date)
in accordance with all applicable laws and each such Tax Return is correct,
accurate and complete in all material respects. With respect to the Assumed
Business, the Company has (or will have by the Closing Date) paid, or has (or
will have by the Closing Date) made a specific provision for Taxes (as opposed
to any reserve for deferred Taxes to reflect timing differences between book and
Tax income) on its books for the payment of, all Taxes, whether or not yet due
and payable and whether or not disputed, in respect of the periods covered by
Tax Returns which are due on or before the Closing Date, and has (or will have
by the Closing Date) accrued or otherwise adequately reserved on its books for
the payment of all Taxes for periods beginning before and ending after the
Closing Date for which Tax Returns have not yet been filed.
(b) The Company has made all withholdings of Taxes with respect to the Assumed
Business required to be made under all applicable local and foreign Tax laws and
regulations on or before the Closing Date in connection with payments made to
any employee, former employee, creditor, shareholder, affiliate, customer or
supplier, and to the extent required to be paid, such withholdings have been
paid to the respective governmental agencies.
(c) There have been made available to the Purchaser true and complete copies of
all material Tax Returns with respect to the Assumed Business, as may be
relevant to the Assumed Business since the incorporation of the Company.
24
(d) No deficiencies, adjustments, or changes in assessments for any Taxes have
been proposed, asserted or assessed with respect to the Assumed Business. All
Liabilities in respect of income Taxes with respect to the Assumed Business have
been finally determined for all taxable years prior to and including the years
set forth in Section 3.17(d) of the Disclosure Schedule. There is no action,
suit, proceeding, audit, investigation or claim pending or, to the best
knowledge of the Company, threatened, in respect of any Taxes with respect to
the Assumed Business, including as a transferee of the assets of, or successor
to, any entity. All deficiencies proposed as a result of any audits have been
paid or finally settled and no deficiencies have been proposed in the course of
any pending audit.
(e) There are no material Encumbrances for Taxes upon the assets of the Company
except Encumbrances for Taxes not yet due and payable.
(f) Section 3.17(f) of the Disclosure Schedule contains a list of all
territories and jurisdictions (foreign or domestic) to which any tax is properly
payable with respect to the Assumed Business. No claim has ever been made by any
taxing authority in a jurisdiction in which the Company does not file tax
returns that it is or may be subject to Tax in that jurisdiction with respect to
the Assumed Business.
SECTION 3.18. AGENTS.
(a) To the best of Company's knowledge, all Persons through whom the Company has
placed or sold reinsurance and insurance are duly licensed (to the extent such
licensing is required) to sell or place reinsurance and insurance in the
jurisdictions where they do so on behalf of the Company. Set forth in Section
3.18 of the Disclosure Schedule is a complete and accurate list of each agency,
brokerage, consultation or representation Contract with any agent, managing
general agent, reinsurance intermediary, claims adjuster or administrator or
broker of the Company who (i) generated more than 10% of the aggregate net
written premium of the Company during the years ended December 31, 1999 or
December 31, 2000 or for the nine months ended September 30, 2001; or (ii) to
whom any underwriting or claims settlement authority has been delegated by the
Company. Except as set forth in Section 3.18 of the Disclosure Schedule, the
Company is not a party to any fronting or similar agreement to assume or cede
reinsurance or insurance for any other Person.
SECTION 3.19. BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.01. INCORPORATION AND AUTHORITY OF THE PURCHASER. The Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
laws of Bermuda and has all
25
necessary corporate power and authority to enter into this Agreement, to own,
lease and operate its respective properties, to conduct its respective business
as now being conducted, and on the Closing Date enter into the Transfer and
Assumption Agreement and each other agreement and instrument required to be
executed and delivered by it pursuant hereto, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by the Purchaser of this
Agreement, Transfer and Assumption Agreement and each other agreement and
instrument required to be executed and delivered by it pursuant hereto and the
consummation by it of the transactions contemplated hereby and thereby, have
been, or will be prior to the Closing Date, duly and validly authorized by all
requisite corporate action, and no other corporate proceedings on the part of
the Purchaser necessary to authorize the foregoing.
SECTION 4.02. NO CONFLICT. Assuming all consents, approvals, authorizations,
orders and other actions described in Section 4.04 have been obtained and/or
taken, all filings and other notifications described in Section 4.04 have been
made, except as may result from any facts or circumstances relating solely to
the Company, the execution, delivery and performance of this Agreement and the
Transfer and Assumption Agreement and the transfer of the Assumed Business
pursuant to this Agreement and the Transfer and Assumption Agreement and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby do not and will not (a) violate or conflict with the respective
Certificates of Incorporation or By-laws (or other similar applicable documents)
of the Purchaser (b) conflict with or violate any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award applicable to the
Purchaser, or (c) result in any breach of, or constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any Encumbrance on
any of the assets or properties of Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument relating to such assets or properties to which Purchaser is a
party or by which any of such assets or properties is bound or affected, which
conflict, violation, breach or default in the case of clauses (b) and (c) would
have, or is reasonably likely to have, a Material Adverse Effect with respect to
the Purchaser.
SECTION 4.03. ABSENCE OF LITIGATION. No claim, action, proceeding or
investigation is pending against Purchaser or any of its Affiliates which seeks
to materially delay or prevent the consummation of the transactions contemplated
hereby or which would be reasonably likely to adversely affect or restrict their
ability to consummate the transactions contemplated hereby.
SECTION 4.04. CONSENTS AND APPROVALS. The execution and delivery of this
Agreement, the Transfer and Assumption Agreement and the purchase of the Assumed
Business pursuant to this Agreement and the consummation by the Purchaser of the
transactions contemplated hereby and thereby do not and will not, require any
consent, approval, authorization, order or other action by, or filing with or
notification to, any Governmental Authority, except for the approval of the
Bermuda authorities and the registration of a branch in Sweden
SECTION 4.05. FINANCIAL ABILITY. The Purchaser has the financial resources to
perform its obligations under this Agreement and the Transfer and Assumption
Agreement.
SECTION 4.06. BROKERS. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Purchaser.
26
SECTION 4.07. MANAGEMENT COMPANY. On the Closing Date the company that has
executed the Administrative Services Agreement will be a corporation duly
incorporated, validly existing and in good standing and shall have all necessary
corporate power and authority to enter into the Administrative Services
Agreement and have all necessary corporate and other powers to perform its
obligations thereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
The Company hereby covenants and agree as follows:
SECTION 5.01. PRE-CLOSING AGREEMENTS.
(a) Provided that the Purchaser has received its license to conduct business in
Bermuda (as contemplated by this Agreement) by December 17th, 2001, the Company
will "Front" the Assumed Business underwritten in Singapore until such time as
the Purchaser receives its license in Singapore at which time Purchaser shall
succeed to all rights and obligations, subject to the indemnities provided for
in this Agreement, of the Assumed Business as provided for in the Transfer and
Assumption Agreement and the Company shall thereafter have no right, title or
interest in such Assumed Business or any responsibility in relation thereto
other than as indemnified hereunder. The term "Front" means the Assumed Business
underwritten by the Company with an Effective Date of January 1, 2002
underwritten in the Company's name and 100% reinsured by the Purchaser. No fee
will be charged to Purchaser for the Front facility.
SECTION 5.02. CONDUCT OF BUSINESS PRIOR TO THE CLOSING.
(a) Between the date hereof and the Closing Date, the Company shall conduct the
Assumed Business in the ordinary course and consistent with its prior practice
except as described in Section 5.02(a) of the Disclosure Schedule or except as
otherwise specifically provided in this Agreement.
(b) Except as otherwise specifically provided in this Agreement, prior to the
Closing and without making any commitment on Purchaser's behalf, the Company
will with respect to the Assumed Business and Purchased Assets (i) use all
commercially reasonable efforts to preserve substantially intact its business
organization, goodwill, Permits and insurance licenses, (ii) comply in all
respects with all laws, statutes, ordinances, rules and regulations applicable
to the Company, (iii) use all commercially reasonable efforts to preserve the
current relationships of the Company with its brokers, reinsurance
intermediaries, ceding companies, reinsurers, agents, managing general agents,
suppliers and other persons with which the Company has significant business
relationships, and (iv) perform its obligations under all Reinsurance
Agreements, Contracts and commitments to which it is a party or by or to which
it is bound or subject, except, in each case, as would not, individually or in
the aggregate, have a Material Adverse Effect.
27
(c) Prior to the Closing Date, the Company will maintain its books and records
in the usual, regular and ordinary manner consistent with past practices; and
use commercially reasonable efforts to continue in full force and effect all
policies of insurance (other than Reinsurance Agreements) maintained in the
ordinary course of business or comparable substitute policies and will promptly
notify the Purchaser of any cancellation or non-renewal of such insurance.
(d) The Company will not amend, commute, terminate or waive any of its rights
under any Reinsurance Agreement pursuant to which the Company has ceded or
transferred any portion of its obligations or Liabilities.
(e) The Company will commence preparation of and, consistent with past practice
and on a timely basis, if required prior to the Closing Date, file with or
submit to any regulatory authority with which the Company is required to make
such filings or submissions, and, if filed prior to the Closing Date, deliver to
the Purchaser true and complete copies of, any quarterly statement for each
quarter of 2001 ended prior to the Closing Date, and the annual statutory
statement for 2001, together with all related notes, exhibits and schedules
thereto. All such quarterly and annual statements filed with or submitted to any
regulatory authority (i) shall be prepared from the books of account and other
financial records of the Company, (ii) on forms prescribed or permitted thereby,
(iii) shall be prepared on a basis consistent with the past practices of the
Company (except as set forth in the notes, exhibits or schedules thereto), and
shall comply on their respective dates of filing or submission with the laws of
all jurisdictions, (iv) shall present fairly the assets, Liabilities, capital
and surplus or equity, results of operations and cash flows of the Company as of
the dates thereof or for the periods covered thereby (in the case of quarterly
statements, subject to normal estimation of accruals and reserves and normal
year-end audit adjustments).
(f) Prior to the Closing, the Company will not amend its Charter or By-laws or
any of its corporate documents, merge or consolidate or sell all or
substantially all of its assets or obligate itself to do so, with or into or to
any other entity, without the prior written consent of the Purchaser.
(g) Except as otherwise specifically permitted by this Agreement or as set forth
in the Disclosure Schedule, without the prior written consent of the Purchaser,
the Company will not, prior to the Closing:
(i) change in any material respect its accounting methods,
principles or practices involving or relating to the Assumed
Business except as by law or change in any material respect its
underwriting, reinsurance, establishment of reserves, investment
or claims adjustment policies or practices involving or relating
to the Assumed Business;
(ii) create, incur, assume, maintain or permit to exist any
Encumbrances on any Property of the Assumed Business;
(iii) pay or discharge any material claim, Liability or
Encumbrance involving or relating to the Assumed Business
(whether absolute, accrued, contingent or otherwise), or waive
any right involving or relating to the Assumed Business, other
than in the ordinary course of business consistent with past
practice or pursuant to binding contractual obligations of the
Company in existence on the date hereof;
28
(iv) become a party to any agreement (other than Reinsurance
Agreements in the ordinary course of business consistent with
past practice) which, if it existed on the date hereof, would be
required to be listed in the Disclosure Schedule, or, other than
in the ordinary course of business and consistent with past
practice, amend or terminate any existing Reinsurance Agreement
or, other than in the ordinary course of business and consistent
with past practice, amend or terminate any other Contract
involving or relating to the Assumed Business;
(v) dispose of or acquire any assets of the Assumed Business
other than in the ordinary course of business for fair value and
consistent with past practice;
(vi) with respect to the Investment Portfolio, upon the sale or
maturity of any fixed income securities, the Company shall not
reinvest the proceeds of such fixed income securities except in
United States Treasuries or mutually agreed liquid fixed income
investments;
(vii) abandon, modify, waive, terminate or otherwise change any
of the insurance licenses described in Section 3.12 of the
Disclosure Schedule or Permits of the Company involving or
relating to the Assumed Business, except as may be required by
law or by any applicable insurance or other regulatory authority;
(viii) enter into any commutation of any retrocession agreements;
(ix) enter into any transaction, commitment, contract or
agreement involving or relating to the Assumed Business between
the Company on the one hand and any of its Affiliates on the
other hand;
(x) enter into any joint venture, partnership, managing general
agency or similar arrangement with any Person involving or
relating to the Assumed Business;
(xi) settle or compromise any material claims against the Company
involving or relating to the Assumed Business (other than the
payment of claims on Reinsurance Agreements in the ordinary
course of business consistent with past practice);
(xii) take any action or course of action inconsistent with its
compliance with the covenants and agreements contained in this
Agreement; or
(xiii) take or agree to commit to take any action that would make
any representation or warranty of the Company contained herein
inaccurate in any material respect at the Closing or omit to take
any action necessary to prevent any such representation or
warranty from being inaccurate in any material respect at such
time.
SECTION 5.03. ACCESS TO INFORMATION. From the date hereof until the Closing,
upon reasonable notice, the Company shall cause its respective officers,
directors, employees, auditors and agents to, (i) afford the officers, employees
and authorized agents and representatives of the Purchaser reasonable access,
during normal business hours and upon reasonable advance notice, to the offices,
properties, books and records of the Company and to its respective officers,
employees,
29
agents, accountants and actuaries and (ii) furnish to the officers,
employees and authorized agents and representatives of the Purchaser such
additional financial and operating data and other information regarding the
assets, properties, goodwill and Assumed Business of the Company as are
available to the Company or as may be prepared or compiled by the Company
without undue burden or expense as the Purchaser may from time to time
reasonably request. No investigation or access to information pursuant to this
Section 5.03 shall affect any representation or warranty made by the Company to
the Purchaser hereunder or otherwise affect the rights and remedies available to
the Purchaser hereunder.
SECTION 5.04. REGULATORY AND OTHER CONSENTS AND AUTHORIZATIONS; THIRD PARTY
CONSENTS.
(a) Each party hereto will use all commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental Authorities
including, without limitation, the insurance regulatory authorities of Sweden,
Singapore and Bermuda that may be or become necessary (including all
informational and notice filings) for its execution, delivery and performance of
this Agreement, the Transfer and Assumption Agreement and the transfer of the
Assumed Business (such Governmental Authorities, the "APPLICABLE INSURANCE
DEPARTMENTS"), and will cooperate fully with the other parties in promptly
seeking to obtain all such authorizations, consents, orders and approvals. The
Company agrees to promptly make all initial filings with the Applicable
Insurance Departments upon the execution of this Agreement and to supply
promptly any additional information and documentary material that may be
requested by any Applicable Insurance Department in connection therewith. The
Company agrees to provide a draft of any filings to the Purchaser for its review
and to consult with the Purchaser relating to any issues arising as a result of
the Purchaser's review, prior to the submission of such filings by the Company
to the Applicable Insurance Departments; provided that such consultation does
not delay the timely filing of such filings or any amendments or supplements
thereto and it being agreed that the final determination as to the content of
such filings or any amendments or supplements thereto shall remain with the
Company. The Company agrees to provide the Purchaser with a copy of such filings
and each amendment or supplement thereto in final form upon the submission
thereof to the Applicable Insurance Departments. The Company and the Purchaser
each agree to make all other appropriate filings with the Applicable Insurance
Departments and such other filings as may be required under the insurance laws
of any other jurisdiction in which the Company does business. The parties hereto
will not knowingly take any action that will have the effect of materially
delaying, impairing or impeding the receipt of any required approvals.
(b) From the date hereof to the Closing Date the Company will use its
commercially reasonable efforts to obtain the written consents, in form and
substance reasonably satisfactory to the Purchaser, of (i) the other party to
all contracts and other agreements to be transferred pursuant to the Transfer
and Assumption Agreement which by their terms or otherwise require the consent
of such party to the assignment thereof to Purchaser (including all retrocession
arrangements), consenting to such assignment, and (ii) any other party to, or
beneficiary of, or obligee with respect to, any Credit for Reinsurance Facility
to be transferred, amended or replaced pursuant to the Transfer and Assumption
Agreement, to the assignment of such Credit for Reinsurance Facility (including
the transfer to Purchaser of any assets of the Company which are subject to
Encumbrances in connection with such Credit for Reinsurance Facilities),
consenting to such transfer, amendment or replacement, and that the Company
will, at the Closing Date, deliver to the Purchaser such consents as have then
been received by the Company. The Company further agrees that, at all times
after the Closing Date, at the reasonable request of the Purchaser, the Company
30
will use all commercially reasonable efforts to cooperate fully with the
Purchaser in order to obtain any such consents not previously obtained by the
Company.
SECTION 5.05. NO SOLICITATION OF EMPLOYEES. For a period of three years
following the Closing and other than through ordinary help-wanted advertising,
(a) the Company and the Guarantor shall not, directly or indirectly, actively
solicit or induce any employee of the Purchaser or any of its subsidiaries
(including any Employee employed by the Purchaser following the Closing) to
leave such employment and become an employee of the Company or the Guarantor or
any of their Affiliates and (b) the Purchaser shall not, directly or indirectly,
actively solicit or induce any employee of the Company to leave such employment
and become an employee of the Purchaser or any of its Affiliates; PROVIDED,
HOWEVER, that nothing in this Section 5.05 shall prohibit the Company or the
Guarantor or any of their Affiliates or the Purchaser or any of its Affiliates
from employing any person who contacts them on his or her own initiative and
without any direct or indirect solicitation (it being understood that ordinary
help wanted advertising shall not be considered solicitation) by the Company or
the Guarantor or any of their Affiliates or the Purchaser or any of its
Affiliates, as the case may be.
SECTION 5.06. USE OF NAME. Anything herein to the contrary notwithstanding, the
Purchaser shall not acquire any interest in the name "Folksam International" or
any logo, trademark or trade name including such name (collectively, the
"RETAINED NAMES AND MARKS").
SECTION 5.07. NO SOLICITATION OF OFFERS, ETC.
(a) The Company shall not, nor shall it permit any of its Affiliates to, nor
shall it authorize or permit any of its or their officers or employees or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or by them to, directly or indirectly, (i)
solicit, initiate or knowingly encourage (including by way of furnishing
information), or take any other action designed to facilitate, the making of any
offer or proposal which constitutes or reasonably may be expected to lead to any
Acquisition Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding any Acquisition Proposal; PROVIDED, HOWEVER, that if,
at any time the Board of Directors of the Guarantor determines in good faith,
based on the advice of counsel, that it is necessary to do so in order to comply
with its fiduciary duties to it's stockholders under applicable law, the Company
may, in response to a Superior Proposal (as defined in Section 5.07(b)) which
was not solicited by it or which did not otherwise result from a breach of this
Section 5.07(a), and subject to providing prior written notice of its decision
to take such action to the Purchaser and compliance with Section 5.07(b), (x)
furnish information with respect to the Company and its subsidiaries to any
person making a Superior Proposal pursuant to a customary confidentiality
agreement and (y) participate in discussions and/or negotiations regarding such
Superior Proposal. For purposes of this Agreement, "ACQUISITION PROPOSAL" means
any proposal or offer from any person relating to any direct or indirect
acquisition or purchase of a business that constitutes 50% or more of the
consolidated net revenues, net income or assets of the Company, or 50% or more
of any class of equity securities of the Company, or any merger, consolidation,
share exchange or other business combination, reorganization, recapitalization,
liquidation, dissolution or similar transaction involving the Company, other
than (i) the transactions contemplated by this Agreement and (ii) transactions
that would not prevent the consummation of the transactions contemplated by this
Agreement.
31
(b) Except as expressly permitted by this Section 5.07, neither the Board of
Directors of the Guarantor nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to the
Purchaser, the approval or recommendation by such Board of Directors or such
committee of this Agreement and the transactions contemplated hereby, (ii)
approve or recommend, or propose publicly to approve or recommend, any
Acquisition Proposal, or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, an "ACQUISITION AGREEMENT") relating to any Acquisition Proposal.
Notwithstanding the foregoing, in the event of any Superior Proposal which was
not solicited by the Company and which did not otherwise result from a breach of
this Section 5.07, the Board of Directors of the Company may terminate this
Agreement and, concurrently with or after such termination, if it so chooses,
cause the Company to enter into any Acquisition Agreement with respect to any
Superior Proposal, and withdraw its approval and recommendation of the
transactions contemplated hereby and approve and recommend to its stockholders a
Superior Proposal, but only at a time that is after the second Business Day
following the Purchaser's receipt of written notice advising the Purchaser that
the Board of Directors of the Company is prepared to accept a Superior Proposal
and specifying the material terms and conditions of such Superior Proposal. For
purposes of this Agreement, a "SUPERIOR PROPOSAL" means any bona fide
Acquisition Proposal made by a financially responsible third party which the
Board of Directors of the Company determines in its good faith judgment (based
on the written advice of a financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders than this
Agreement and the transactions contemplated hereby.
SECTION 5.08. FEES AND EXPENSES.
(a) Subject to the provisions of Section 5.08(b) and except as otherwise
provided in this Agreement, all costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with the negotiation of this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, whether or not the Closing shall have occurred.
(b) In the event that (i) the Company's Stockholder Approval is not obtained as
a result of direct solicitation of the Company's stockholders by a third party
(the "THIRD PARTY") and thereafter this Agreement is terminated by either (i)
the Purchaser or (ii) the Company pursuant to this Agreement, then the Company
shall promptly, but in no event later than two (2) days after the date of such
termination, pay the Purchaser a fee equal to $1 million (the "TERMINATION
FEE"), payable by wire transfer of same day funds.
SECTION 5.09. INVESTMENT PORTFOLIO. Prior to the Closing Date, the Company shall
update the Investment Portfolio as of the end of each month and shall deliver
the updated Investment Portfolio to the Purchaser within fifteen (15) Business
Days of the end of such month.
SECTION 5.10. NOTICE OF CERTAIN MATTERS.
(a) Prior to the Closing Date, the Company shall give prompt notice in writing
to the Purchaser of: (i) any information that indicates that any representation
or warranty of the Company contained herein was not true and correct in any
material respect as of the date hereof or will not be
32
true and correct in any material respect as of the Closing Date, (ii) the
occurrence of any event which will result, or has a reasonable prospect of
resulting, in the failure to satisfy a condition specified herein, (iii) any
notice or other written, or, to the knowledge of any senior officer of the
Company, oral communication from any third party alleging that the consent of
such third party is or may be required in connection with the transactions
contemplated by this Agreement, (iv) any notice of, or other communication
relating to, any default or event which, with notice or lapse of time or both,
would become a default under any Reinsurance Agreement or material Contract, and
(v) any fact, condition or change that, individually or in the aggregate, has
resulted or is reasonably likely to result in a Material Adverse Effect with
respect to the Assumed Business.
(b) Prior to the Closing Date, the Purchaser covenants and agrees to give prompt
notice in writing to the Company of: (i) any information that indicates that any
representation or warranty of the Purchaser contained herein was not true and
correct as of the date hereof or will not be true and correct as of the Closing
Date, (ii) the occurrence of any event which will result, or has a reasonable
prospect of resulting, in the failure to satisfy a condition specified herein,
(iii) any notice or other written or, to the knowledge of any senior officer of
the Purchaser, oral communication from any third party alleging that the consent
of such third party is or may be required in connection with the transactions
contemplated by this Agreement and (iv) any fact, condition or change that,
individually or in the aggregate, has resulted or is reasonably likely to result
in a Material Adverse Effect with respect to the Purchaser.
(c) The giving of any such notice under this Section 5.10 or the providing of
the financial statements contemplated by Section 5.11 shall in no way change or
modify the Company's or the Purchaser's representations and warranties or the
conditions to either party's obligations contained herein or otherwise affect
the remedies available to the Purchaser or the Company hereunder.
SECTION 5.11. INTERIM FINANCIAL STATEMENTS.
(a) The Company shall, as soon as available, but no later than sixty (60) days
after the end of the relevant month or quarter, as the case may be, deliver
promptly to the Purchaser any and all quarterly financial statements for the
Company, unaudited, prepared for the management of the Company after the date of
this Agreement and prior to the Closing Date. In addition, the Company will
deliver to the Purchaser copies of the Company's audited 2001 Annual Statutory
Statement as soon as it has been delivered by the Company's Accountants.
SECTION 5.12. AFFILIATE AGREEMENTS; INTERCOMPANY ACCOUNTS.
(a) The Company shall cause all intercompany accounts receivable or payable
(whether or not currently due or payable) between (i) the Company involving or
relating to Assumed Business, on the one hand, and (ii) the Company or any of
its Affiliates (other than the Company) involving or relating to Assumed
Business, or any of the officers or directors of any of the Guarantor and its
Affiliates (other than the Company) involving or relating to Assumed Business,
on the other hand, to be settled in full (without any premium or penalty) at or
prior to the Closing.
(b) Section 5.12(b) of the Disclosure Schedule sets forth all agreements between
(i) the Company involving or relating to the Assumed Business, on the one hand,
and (ii) any of its Affiliates (other than the Company) or any of their
Affiliates, on the other hand (collectively, "AFFILIATE AGREEMENTS"). Except as
provided for herein, all Affiliate Agreements shall be
33
terminated and discharged without any further liability or obligation thereunder
effective at the Closing, upon terms and pursuant to instruments reasonably
satisfactory to the Purchaser, unless otherwise noted on Section 5.12(b) of the
Disclosure Schedule.
(c) Prior to the Closing Date, and except as provided for herein, any Property
or assets owned by, or in the possession of the Company or its Affiliates
(including any rights or benefits under insurance policies with respect to such
Property or assets) which are used principally, or are necessary, in connection
with the Assumed Business and related Liabilities shall be transferred to the
Purchaser (including personal property such as desks, filing cabinets, computers
and peripherals without further cost, liability or obligation to the Company or
the Purchaser).
SECTION 5.13. RENEWAL RIGHTS. From and after the Closing, the Company shall
refer all communications received from cedents or broker producers with respect
to the Assumed Business (including, without limitation, the modification,
renewal or replacement of any Reinsurance Agreement forming part of the Assumed
Business) to Purchaser on an exclusive basis, and shall use commercially
reasonable efforts to promote Purchaser for such business to the broker
producers and ceding companies of such business. Following the Closing, the
Company agrees to direct to at the contract's next anniversary date (in the case
of continuous contracts) or at its renewal date (in the case of all other
contracts), or in each case any earlier date agreed to by the parties, such of
that business which meets Purchaser's underwriting guidelines, subject, where
applicable, to the ceding company's agreement on each contract. For two (2)
years from the Closing Date, the Company and the Guarantor or any of their
respective Affiliates agrees for itself (including, without limitation, the
Company) now or hereinafter in existence not to compete with Purchaser, to
acquire or reinsure, in whole or in part, any of the business included in the
Assumed Business. As used herein, the term "business" shall mean the coverage
provided under the treaties included in the Assumed Business.
SECTION 5.14. CERTAIN SOFTWARE LICENSES. On the Closing Date, the Company shall
transfer and assign all the Software Licenses (as defined below) to Purchaser.
The Company shall take all action necessary (including, without limitation,
making any required payments) to assure that any and all software licenses
relating to the Assumed Business (the "SOFTWARE LICENSES") are in full force and
effect and usable by the Purchaser on and after the Closing Date. Anything in
this Agreement to the contrary notwithstanding, the Company hereby agrees to
indemnify the Purchaser against and hold the Purchaser harmless, dollar for
dollar, from and shall pay any and all claims, losses, damages, expenses,
obligations and Liabilities (including costs of investigation, reasonable
attorney's fees and expenses and other costs of defense) arising out of or
otherwise in respect of any suit or claim of violation or infringement of the
Software Licenses or the software subject thereto brought against Purchaser.
SECTION 5.15 REINSURANCE PURCHASES
The Purchaser shall for a period of 5 (five) years from the date hereof continue
to be the exclusive representative of the Company and the Guarantor and all of
its Affiliates and shall advise and consult in the purchase of and
administration of any and all reinsurance on behalf of the Company or the
Guarantor and all of its Affiliates, the expense of which shall be borne by the
Company or the Guarantor. The Company and the Guarantor shall reimburse the
Purchaser for its time and out of pocket expenses related to such service.
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SECTION 5.16 PROFIT COMMISSION
In consideration of the agreements provided for herein, the Company shall be
entitled to a "Profit Commission" on the Singapore and Stockholm business
renewed by the Purchaser with an effective date during calendar years 2002,
2003, and 2004 (the three calendar years renewals shall be collectively defined
as the "Renewed Business"). The term "Profit Commission" shall mean a payment
equal to 25% of the profits generated on the Renewed Business (for the three
calendar years taken as a whole) to the extent that the Renewed Business
generates a "combined ratio" of less than 90 % (thus 25 % of the amount below a
90 % combined ratio). The combined ratio shall be the ratio of all losses
(including paid losses, case Reserves and Reserves for IBNR), allocated and
unallocated loss adjustment expenses, internal underwriting expenses,
commissions, brokerage and retrocessional costs over the premiums earned on the
Renewed Business. The Purchaser shall provide a final detailed calculation of
the combined ratio for the Renewed Business as of December 31, 2005. The Profit
Commission, if any, shall become due for payment and be paid in full on June 1,
2006. The Company shall have the right to audit Purchaser's calculation of the
final Profit Commission as calculated as of December 31, 2005.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. COMPANY:
Except as specifically provided in Section 6.03, the Company shall be and remain
solely responsible for the payment of any and all Liabilities which have arisen
or may arise in connection with
(i) any Plan, including, but not limited to, Liabilities arising
from income or excise tax assessments, participant benefit
claims, fiduciary conduct, or under any Swedish or foreign
statute or regulation (other than Liabilities for Continuing
Employees, attributable to the service after the Closing Date
under any Plan transferred to the Purchaser by operation of law),
(ii) the employment, compensation or benefits of any employee or
former employee of the Company or any affiliate, including but
not limited to the Employees, or the termination thereof,
including, without limitation, any Liability arising out of or
relating to any act or omission by the Company or any Affiliate
(other than those which may arise with respect to Continuing
Employees and which are attributable to the period after the
Closing Date);
(iii) any violation of or non-compliance by the Company or any
Affiliate with any applicable law respecting employment,
compensation or benefits of the Employees, union consultations
(other than those which may arise with respect to Continuing
Employees and which are attributable to the period after the
Closing Date); and
(iv) severance pay, change in control, or stay-bonus, retention
or similar "pay-to-stay" arrangements (whether or not triggered
by virtue of the transactions contemplated by this Agreement),
accrued vacation pay, sick pay, health and medical claims and
requests for reimbursements, and similar and other benefits,
compensation, pension, benefits (including any Plan), damages and
any other claims whatsoever, relating to any period of employment
with the Company or any Affiliate on or prior to the Closing
Date.
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(v) Any un- or underfunded pension liability attributable to
employment with the Company or any affiliate on or prior to the
Closing Date.
Except as specifically provided in Section 6.03, the Purchaser shall neither
adopt, become a sponsoring employer of, and the Purchaser shall have no
obligations, responsibility or Liabilities under, the Plans (including, but not
limited to, any funding or payment obligation), or to the Employees with respect
to any matters (other than those which may arise with respect to Continuing
Employees and are attributable to the period after the Closing Date), including
but not limited to the Plans.
SECTION 6.02 PURCHASER.
The Purchaser shall offer employment to certain Employees set out in EXHIBIT F
to effective as of the Closing Date (such Employees, provided they accept
employment with the Purchaser, the "CONTINUING EMPLOYEES"), on such terms and
conditions as are mutually acceptable to the Purchaser and such Employees
effective as of the Closing Date and, in so far as Swedish Employees are
concerned, subject to section 6b of the Swedish Employment Protection Act. The
Purchaser shall, in so far as Anders Henriksson and Lena Kjellenberg Heynes are
concerned, offer employment on the same terms (retirement benefits included) as
they had with the Company. The Company shall use commercially reasonable efforts
to assist the Purchaser in hiring the Continuing Employees, and shall not offer
other employment (or arrange to have another Person offer employment) to any
such Continuing Employee without the prior written consent of the Purchaser
within five years from Closing Date. The parties are however aware of the fact
that the Employees are entitled to refuse to be transferred to the Purchaser. In
such a case, the Company remains the employer for any refusing Employee and the
Company shall remain solely responsible for such refusing employees.
Nothing herein express or implied shall be construed to prevent the Purchaser,
at any time after the Closing Date, from terminating or modifying to any extent
or in any respect at any time or from time to time (i) the Purchaser's
employment relationship with any employee, including any Continuing Employee,
(ii) the terms and conditions of the employment of any employee, including the
Continuing Employees, including but not limited to wages and/or salaries, hours
and employee benefits, or (iii) any of the Purchaser's Plans, programs,
arrangements or agreements.
SECTION 6.03. THE COMPANY'S CONTINUATION OF EMPLOYMENT AND PAYROLL;
From and after the Closing Date and for a period of one-hundred twenty (120)
calendar days thereafter (the "120 DAY PERIOD"), the Company agrees to retain
the payroll function of the Company for all Continuing Employees. During the 120
Day Period, the Company agrees that the Continuing Employees shall render their
services exclusively for and at the direction of the Purchaser. The Purchaser
shall reimburse the Company for all salaries, benefits and other direct
compensation related costs associated with the Company's undertakings under this
Section 6.03 which are incurred during the 120 Day Period.
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SECTION 6.04 OBLIGATIONS OF THE COMPANY UNTIL CLOSING DATE;
The Company undertakes to Purchaser that until the Closing Date, the Company;
(i) shall not dismiss any of the Continuing Employees, except
with the written consent of Purchaser,
(ii) shall not vary the employment terms of any of the Continuing
Employees, except with the written consent of Purchaser or as
stipulated in any applicable central collective bargaining
agreement or as may follow by operation of law, and
SECTION 6.05 OTHER EMPLOYEES.
The parties expressly agree that the Purchaser is obliged only to take over the
Continuing Employees . The Company shall indemnify Purchaser against any
liabilities, costs, claims and demands resulting from or made by any other
person than the Continuing Employees who by law or contract has a right to
employment or re-employment with the Purchaser on or after the Closing Date as a
result of the transfer of the Assumed Business under this Agreement.
ARTICLE VII
TAX MATTERS
SECTION 7.01. INDEMNITY.
The Company and the Guarantor agree to indemnify and hold harmless the Purchaser
against (i) all Taxes of the Company, or any subsidiary or Affiliate of the
Company and (ii) all Taxes imposed with respect to the Assumed Business for any
pre-closing period . The Purchaser shall be responsible for, and shall indemnify
and hold harmless the Company and the Guarantor against all Taxes in respect of
the Assumed Business for which the Purchaser is not eligible for indemnification
pursuant to the first sentence hereof. Nothing in this Section 7.01 shall be
interpreted as requiring the Purchaser to make payments of any Taxes to any
taxing authority before the Closing Date.
SECTION 7.02. CONTESTS.
(a) After the Closing, the Purchaser shall reasonably promptly after becoming
aware notify the Company in writing of the commencement of any Tax audit or
administrative or judicial proceeding and shall also separately notify the
Company in writing of any demand or claim on the Purchaser which, if determined
adversely to the taxpayer or after the lapse of time would be grounds for
indemnification by the Company under this Article VII. Such notice shall contain
factual information (to the extent known to the Purchaser) describing the
asserted Tax liability in reasonable detail and shall include copies of any
notice or other document received from any taxing authority in respect of any
such asserted Tax liability.
(b) The Company, promptly after receiving notice, may elect to direct, through
counsel of its own choosing and at its own expense, any audit, claim for refund
and administrative or judicial proceeding involving any asserted liability with
respect to which indemnity may be sought against the Company under this Article
VII (any such audit, claim for refund or proceeding relating to an
37
asserted Tax liability are referred to herein collectively as a "CONTEST"). If
the Company elects to direct the Contest of an asserted Tax liability, the
Purchaser shall cooperate in all reasonable respects, at the Company's expense,
in each phase of such Contest. If the Company does not either reasonably
promptly give notice to direct the Contest or commence the direction of the
Contest or if it contests its obligation to indemnify under Section 7.02, the
Purchaser may pay, compromise or contest, at its own expense, such asserted
liability without waiving any of its rights to indemnification hereunder.
However, in such case, the Purchaser may not settle or compromise any asserted
liability over the objection of the Company; provided, however, that the
Company's consent to settlement or compromise shall not be unreasonably withheld
or delayed. In any event, each of the Purchaser and the Company may participate,
at their own expense, in the Contest. If the Company chooses to direct the
Contest, the Purchaser shall promptly empower (by power of attorney and such
other documentation as may be appropriate) such representatives of the Company
as the Company may designate to represent the Purchaser or its successor in the
Contest insofar as the Contest involves an asserted Tax liability for which the
Company would be liable under this Article VII, PROVIDED that the Company shall
not, without the Purchaser's consent, which shall not be unreasonably withheld
or delayed, (x) agree to any settlement with respect to any Tax if such
settlement would likely materially adversely affect the future Tax liability of
the Purchaser for any periods ending after the Closing Date other than through
the use of losses or credits arising in periods or portions thereof ending on or
prior to the Closing Date or (y) agree to any settlement of such claim or cease
to defend against such claim if, pursuant to or as a result of such settlement
or cessation, injunctive or other equitable relief would be imposed against the
Purchaser. If, with respect to any proposed settlement referred to in clause (x)
of the previous sentence, the Company proposes in good faith to settle a claim,
suit, action or proceeding with respect to any Tax, which settlement offer is
accepted by the relevant taxing authority, the Purchaser may elect to continue
to contest such claim, suit, action or proceeding; provided that notwithstanding
how such matter is ultimately settled or decided, the liability of the Company
with respect to such claim, suit, action or proceeding shall be no greater than
the amount which would have been payable if the Purchaser had consented to the
settlement proposed by the Company.
(c) The Purchaser shall have the sole obligation and right to direct, at its own
expense, a Contest regarding any Tax Return for any taxable period commencing
after the Closing Date in the case of a Tax Return which is filed on a combined,
consolidated, unitary or similar basis with the Purchaser; PROVIDED, HOWEVER,
that the Purchaser shall advise and consult with the Company regarding the
status of any such Contest that involves an asserted Tax liability for which the
Company would be liable under this Article VII and provided, further, that,
Purchaser shall not, without the prior written consent of the Company (which
shall not be unreasonably withheld or delayed) settle any such contest.
SECTION 7.03. COOPERATION AND EXCHANGE OF INFORMATION.
The Company and the Purchaser will provide each other with such cooperation and
information as either of them reasonably may request of the other in filing any
Tax Return, amended return or claim for refund, determining a liability for
Taxes or a right to a refund of Taxes or participating in or conducting any
audit or other proceeding in respect of Taxes. Such cooperation and information
shall include providing copies of relevant Tax Returns or portions thereof,
together with accompanying schedules and related work papers and documents
relating to rulings or other determinations by taxing authorities, but in no
event shall either party be required to disclose to the other party any
information relating to its operations other than the Company. The Company and
the Purchaser shall make their employees available on a mutually convenient
basis to provide
38
explanations of any documents or information provided hereunder. The Company and
the Purchaser will retain all Tax Returns, schedules and work papers and all
material records or other documents relating to Tax matters of the Company and
the Assumed Business for its taxable period first ending after the Closing Date
and for all prior taxable periods until the later of: (i) the expiration of the
statute of limitations of the taxable periods to which such returns and other
documents relate, without regard to extensions except to the extent notified by
the other party in writing of such extensions for the respective Tax periods; or
(ii) six years following the due date (without extension) for such returns.
After such time, before either the Company or the Purchaser shall dispose of any
of such books and records, at least ninety calendar days prior written notice to
such effect shall be given to the other party, and such other party shall be
given an opportunity, at its cost and expense, to remove and retain all or any
part of such books and records as such party may select; provided, however, that
in no event shall either party be required to disclose to the other party any
information relating to its operations other than the Assumed Business. Any
information obtained under this Section 7.03 shall be kept confidential, except
as may be otherwise necessary in connection with the filing of returns or claims
for refund or in conducting an audit or other proceeding.
SECTION 7.04. CONVEYANCE TAXES.
The Company agrees to assume liability for and to hold the Purchaser harmless
against any sales, use, transfer, stamp, stock transfer, real property transfer
or gains, and value added taxes, any transfer, registration, recording or other
fees, and any similar Taxes incurred as a result of the transactions
contemplated hereby, and shall file such applications and documents as shall
permit any such Tax to be assessed and paid on or prior to the Closing Date in
accordance with any available pre-sale filing procedure.
SECTION 7.05. MISCELLANEOUS.
(a) The Company and the Purchaser agree to treat all payments made by either to
or for the benefit of the other under this Article VII and under other indemnity
provisions of this Agreement, as adjustments to the purchase price for Tax
purposes and that such agreed treatment shall govern for Tax purposes hereof.
(b) Regardless of whether a Contest is commenced, if the Company becomes aware
of the commencement of any Tax audit or administrative or judicial proceeding
which could result in any liability for which the Company has agreed to
indemnify the Purchaser or the Company pursuant to the provisions of Section
7.01, the Company shall reasonably promptly so inform the Purchaser in writing
(if it has not previously done so).
(c) All indemnities under this Article VII shall be paid dollar-for-dollar, in
accordance with their terms.
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ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THE COMPANY . The obligation of the
Company to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of the Purchaser contained in this Agreement shall be true and
correct in all respects as of the Closing (except where the failure to be so
true and correct would not have a Material Adverse Effect with respect to the
Purchaser), with the same force and effect as if made as of the Closing, other
than such representations and warranties as are made as of another date, which
shall be true and correct as of such date; PROVIDED, HOWEVER, that if any such
portion of any representation or warranty is already qualified by materiality,
for purposes of determining whether this Section 8.01(a) has been satisfied with
respect to such portion of such representation or warranty, such portion of such
representation or warranty as so qualified must be true and correct in all
respects, and all the covenants contained in this Agreement to be complied with
by the Purchaser on or before the Closing shall have been complied with (except
where the failure to so comply would not have a Material Adverse Effect with
respect to the Purchaser), and the Company shall have received a certificate of
the Purchaser to such effect signed by a duly authorized officer thereof;
(b) NO ORDER. No governmental authority or other agency or commission of
competent jurisdiction to which the Company is subject shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary or permanent) which is
in effect and has the effect of making the transactions contemplated by this
Agreement illegal or otherwise restraining or prohibiting consummation of such
transactions or which would have a Material Adverse Effect with respect to the
Purchaser; PROVIDED, HOWEVER, that the parties hereto shall use their
commercially reasonable efforts to have any such order or injunction vacated;
(c) GOVERNMENTAL FILINGS AND CONSENTS. All authorizations, consents, orders and
approvals of Governmental Authorities to the transactions contemplated by this
Agreement and the Transfer and Assumption Agreement shall have been obtained and
be in effect on the Closing Date, except to the extent that the failure to
obtain any such consent would not have the effect of making the transactions
contemplated by this Agreement and the Transfer and Assumption Agreement illegal
or otherwise restrain or prohibit consummation of such transactions or result in
a material liability to the Company;
(d) THE PURCHASER'S LICENSE.The Company shall have received a copy of the
Purchaser's license to transact reinsurance in Bermuda.
(e) BOARD OF DIRECTORS/SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the affirmative vote of the
stockholders and Board of Directors of the Company by the requisite vote in
accordance with applicable law;
(f) INCUMBENCY CERTIFICATE. The Company shall have received a certificate of the
Secretary or an Assistant Secretary of the Purchaser certifying the names and
signatures of the
40
officers of the Purchaser authorized to sign this Agreement
and any other document required to be delivered hereunder;
(g) PROCEEDINGS. All proceedings, corporate or otherwise, taken by the Purchaser
in connection with the transactions contemplated hereby and all instruments and
documents incident thereto shall be reasonably satisfactory in form and
substance to the Company and its counsel.
(h) CLOSING DATE BALANCE SHEET. A Closing Date Balance Sheet shall have been
approved by the Company and the Purchaser.
(i) ADMINISTRATIVE SERVICES AGREEMENT. The Purchaser or a duly established
wholly owned subsidiary thereof shall have executed and delivered the
Administrative Services Agreement.
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or written waiver, at or prior to the Closing, of
each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties of the Company contained in this Agreement shall be true and correct
in all respects as of the Closing Date (except where the failure to be so true
and correct would have a Material Adverse Effect with respect to the Company in
which case the Purchaser shall have no obligation to close) with the same force
and effect as if made as of the Closing Date. Any events that may have occurred
during the period between the date hereof and the Closing Date shall not be
regarded as a breach of warranty or misrepresentation if notified pursuant to
Section 5.10 on or prior to the Closing Date, however without limiting the right
for Purchaser to be indemnified for any loss or cost arising out of such events
pursuant to the provisions hereof, other than such representations and
warranties as are made as of another date, which shall be true and correct as of
such date; provided, however, that if any portion of any representation or
warranty is already qualified by materiality, for purposes of determining
whether this Section 8.02(a) has been satisfied with respect to such portion of
such representation or warranty, such portion of such representation or warranty
as so qualified must be true and correct in all respects, and all the covenants
contained in this Agreement to be complied with by the Company on or before the
Closing shall have been complied with (except where the failure to so comply
would not have a Material Adverse Effect with respect to the Company), and the
Purchaser shall have received a certificate of the Company to such effect signed
by a duly authorized officer thereof;
(b) NO ORDER OR SUIT. No Governmental Authority or other agency or commission
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and has the effect of making the transactions
contemplated by this Agreement illegal or otherwise restraining or prohibiting
consummation of such transactions or which would have a Material Adverse Effect;
PROVIDED, HOWEVER, that the parties hereto shall use their commercially
reasonable efforts to have any such order or injunction vacated;
(c) GOVERNMENTAL FILINGS AND CONSENTS. All authorizations, consents, orders and
approvals of Governmental Authorities to the transactions contemplated by this
Agreement and the Transfer and Assumption Agreement shall have been obtained in
a manner satisfactory to Purchaser, including with out limitation, the license
to conduct reinsurance business by the Bermuda Governmental Authorities which
shall be in effect on the Closing Date.
41
(d) THIRD PARTY CONSENTS. The Purchaser shall have received the third party
consents, approvals, authorizations or actions to the transactions contemplated
by this Agreement and the Transfer and Assumption Agreement and the
Administrative Services Agreement, if any, in form and substance reasonably
satisfactory to the Purchaser from the parties listed in Section 3.15 of the
Disclosure Schedule.
(e) Intentionally blank.
(f) BOARD OF DIRECTORS' AND SHAREHOLDER APPROVAL. This Agreement and the
transactions contemplated hereby shall have been approved by the Boards of
Directors of the Company and the Guarantor and the affirmative vote of the
stockholders of the Company by the requisite vote in accordance with applicable
law.
(g) NO MATERIAL ADVERSE EFFECT. Since the date of this Agreement, no event or
events shall have occurred which, individually or in the aggregate, have, or are
reasonably likely to have, a Material Adverse Effect.
(h) INCUMBENCY CERTIFICATE. The Purchaser shall have received a certificate of
the Secretary of each of the Company certifying the names and signatures of the
officers of each of the Company authorized to sign this Agreement and any other
document required to be delivered hereunder;
(i) SOFTWARE LICENSES. The Company shall have fulfilled its obligations under
Section 5.14 respecting the Software Licenses;
(j) TRANSFER AND ASSUMPTION, ADMINISTRATIVE SERVICES AGREEMENT. The Company
shall have executed and delivered the Transfer and Assumption and Administrative
Services Agreements;
(j) PROCEEDINGS. All proceedings, corporate or otherwise, taken by the Company
in connection with the transactions contemplated hereby and all instruments and
documents incidental thereto shall be reasonably satisfactory in form and
substance to the Purchaser and its counsel.
(k) BOARD OF DIRECTORS' APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the Board of Directors of the
Purchaser .
(l) CLOSING DATE BALANCE SHEET. A Closing Date Balance Sheet shall have been
approved by the Company and the Purchaser.
(m) EMPLOYEES' ACCEPTANCE TO TRANSFER. The Purchaser shall have received
reasonable evidence that all employees, who in the Purchaser's discretion
(acting reasonably) are deemed to be material to and required for the conduct of
the Assumed Business have accepted to transfer to the Purchaser.
(n) CATASTROPHE RETROCESSIONAL AGREEMENT. The Company shall have secured on
behalf of the Purchaser a quote on a catastrophe retrocessional agreement
effective January 1, 2002. It being understood that such coverage will be bound
on mutually acceptable terms and conditions (including an acceptable credit or
agency rating of the retrocessionnaire).
(o) LEASE AND SERVICE AGREEMENT. The Purchaser and the Guarantor shall have
entered into a lease and service agreement in relation to the premises and
services as presently used by the
42
Company in Stockholm and on terms specified in the Disclosure Schedule, which
may superseede the servising provisions in the first sentence of Section 6.03,
if applicable, and the Purchaser shall have received the approval of the
landlord for the transfer of the lease in Singapore. Until such consent has been
received, the Company shall sublet the Singapore premises to the Purchaser at
cost.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. SURVIVAL. The representations and warranties and covenants of the
parties hereto contained herein shall survive the Closing indefinitely
regardless of any investigation made by or on behalf of the Company or the
Purchaser.
SECTION 9.02. INDEMNIFICATION BY THE PURCHASER.
(a) Purchaser shall, subject to the other terms and conditions of this
Agreement, indemnify the Company and its Affiliates, and their respective
officers, directors, employees, agents, heirs, successors and assigns (as used
in this Section 9.02, each an "INDEMNIFIED PARTY") against and hold them
harmless from, and shall pay, all Liabilities of and costs and damages
(including any costs of investigation, reasonable attorneys' fees and expenses
and other costs of defense) arising out of or related to (i) the breach of any
representation, warranty, covenant or agreement of the Purchaser herein, and
(ii) any and all debts, Liabilities, obligations and commitments for renewals of
business issued by Purchaser with an effective date on or after the Closing
Date. Anything in Section 9.01 to the contrary notwithstanding, no claim may be
asserted nor may any action be commenced against the Purchaser under this
Section 9.02 for breach of any representation, warranty, covenant or agreement
contained herein, unless written notice of such claim or action is received by
the Purchaser describing in reasonable detail the facts and circumstances known
to the Company with respect to the subject matter of such claim or action on or
prior to the date on which the representation, warranty, covenant or agreement
on which such claim or action is based ceases to survive as set forth in Section
9.01; and any claim made by the Company under this Article IX within the
aforesaid time periods shall be considered timely made even if such claim is not
resolved until after the expiration of the aforesaid periods.
(b) Payments by the Purchaser pursuant to Section 9.02(a) shall be limited to
the amount of any Liability or damage that remains after deducting therefrom any
insurance proceeds and any indemnity, contribution or other similar payment
recoverable by the Indemnified Party from any third party with respect thereto
and shall be determined on an after-tax basis.
(c) An Indemnified Party shall give the Purchaser reasonably prompt written
notice of any claim, assertion, event or proceeding by or in respect of a third
party of which such Indemnified Party has knowledge concerning any Liability or
damage as to which such Indemnified Party may request indemnification hereunder.
Failure to give such notice shall not waive any right to indemnification on the
part of the Indemnified Party or Parties who fail to give such notice, except
only to the extent of any damage or loss actually suffered by the Purchaser by
reason of the delay in receiving such notice. The Purchaser shall have the right
to direct, through counsel of its own choosing, provided such counsel is
reasonably satisfactory to the Indemnified Party, the defense or settlement of
any such claim or proceeding at its own expense, provided that the
43
Purchaser vigorously and diligently pursues such defense in good faith and keeps
the Indemnified Party and its attorneys reasonably informed as to the progress
of the defense and any proposed settlement. If the Purchaser elects to assume
the defense of any such claim or proceeding, the Indemnified Party may
participate in such defense, but in such case the expenses of the Indemnified
Party shall be paid by the Indemnified Party. The Indemnified Party shall
provide the Purchaser with access to such Indemnified Party's records and
personnel relating to any such claim, assertion, event or proceeding during
normal business hours and shall otherwise cooperate with the Purchaser in the
defense or settlement thereof, and the Purchaser shall reimburse the Indemnified
Party for all the reasonable out-of-pocket expenses of such Indemnified Party in
connection therewith. If the Purchaser elects to direct the defense of any such
claim or proceeding, the Indemnified Party shall not pay, or permit to be paid,
any part of any claim or demand arising from such asserted liability, (i) unless
the Purchaser consents in writing to such payment which consent shall not be
unreasonably withheld, or (ii) unless the Purchaser, subject to the last
sentence of this Section 9.02(c), withdraws from the defense of such asserted
liability, or (iii) unless a final judgment from which no appeal may be taken by
or on behalf of the Purchaser is entered against the Indemnified Party for such
liability, or (iv) unless there is a material risk if such asserted liability is
not paid that an injunction or other equitable relief will be granted which will
materially adversely affect the business of the Company or there is a material
risk of the seizure of any material assets of the Company or a material risk
that a lien or liens will be imposed on any such material assets. The Purchaser
shall have the right, in its discretion exercised in good faith and with the
advice of counsel, to settle any such claim with the prior written consent of
the Indemnified Party, which consent shall not be unreasonably withheld;
provided that the Indemnified Party may withhold its consent to any settlement
if, in its reasonable judgment, such settlement would materially adversely
affect the conduct of the business of the Company or does not include a general
release to all Indemnified Parties. If the Purchaser shall fail to defend, or
if, after commencing or undertaking any such defense, the Purchaser fails to
diligently prosecute and defend or withdraws from such defense, the Indemnified
Party shall have the right to undertake the defense or settlement thereof, at
the Purchaser's expense. If the Indemnified Party assumes the defense of any
such claim or proceeding pursuant to this Section 9.02(c) and proposes to settle
such claim or proceeding prior to a final judgment thereon or to forego any
appeal with respect thereto, then the Indemnified Party shall give the Purchaser
prompt written notice thereof and the Purchaser shall have the right to
participate in the settlement or assume or reassume the defense of such claim or
proceeding subject to the conditions set forth above; PROVIDED, HOWEVER, if the
Purchaser does not assume or reassume the defense within ten (10) Business Days
or any earlier time that such offer to settle expires and post a letter of
credit reasonably satisfactory to the Company in the amount of the proposed
settlement, then the Indemnified Party can settle such claim in good faith
without the consent of the Purchaser.
(d) Except as set forth in this Agreement, the Transfer and Assumption Agreement
or any other agreement delivered pursuant to the provisions hereof, the
Purchaser is not making any representation, warranty, covenant or agreement with
respect to the matters contained herein or therein. Anything herein to the
contrary notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein or therein shall give rise to any right on the part
of the Indemnified Party, after the consummation of the transfer of the Assumed
Business contemplated by this Agreement, to rescind this Agreement, the Transfer
and Assumption Agreement or any of the transactions contemplated hereby.
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SECTION 9.03. INDEMNIFICATION BY THE COMPANY AND THE GUARANTOR.
(a) The Company and the Guarantor, jointly and severally, agree to indemnify the
Purchaser and its Affiliates and their respective officers, directors,
employees, agents, successors and assigns (as used in this Section 9.03, each an
"INDEMNIFIED PARTY") against and hold them harmless, dollar for dollar unless
otherwise indicated, from, and shall pay, all Liabilities of and costs and
damages (including any costs of investigation, reasonable attorneys' fees and
expenses and other costs of defense) arising out of or related to (i) the breach
of any representation, warranty, covenant or agreement of the Company or the
Guarantor (provided however that a breach by the Guarantor of the Guarantor's
representations and warranties shall be remedied solely by the Guarantor)
herein, provided the aggregate of all such claims exceeds US 50,000 in which
case the excess thereof shall be indemnified and paid in full (ii) Excluded
Liabilities of any kind whatsoever whether or not described in this Agreement or
in the Disclosure Schedule, (iii) any amounts which are due or become due before
or after the Closing or any breach of any agreement or covenant under the
Administrative Services Agreement (iv) any additional Liability in the Reserves,
Liabilities, Treaty Liabilities or reduction in the value or collectability, for
any reason, of the Purchased Assets or assets transferred, accrued or due post
Closing (other than reductions in the market value in investment assets due to
market conditions but including defaults as to principal and interest) related
to the Assumed Business, (v) any fines or penalties imposed by a Governmental
Authority arising out of this Agreement or (vi) any other indemnities expressly
provided for herein.
Prior to the execution of this Agreement, the Purchaser has conducted a due
diligence and thereby examined certain information provided by the Company. The
Company has made all Commercially reasonable efforts to provide the information
requested by the Purchaser. The facts or circumstances that the Purchaser may
have become aware of shall not preclude the Purchaser from making any claim
against the Company or the Guarantor under the representations, warranties,
covenants, other agreements or indemnities provided herein.
(b) The Company and the Guarantor expressly agree jointly and severally to
indemnify the Indemnified Parties against and hold the Indemnified Parties
harmless, dollar for dollar, from and shall pay any and all claims, losses,
damages, expenses, obligations and Liabilities (including costs of
investigation, reasonable attorney's fees and expenses and other costs of
defense) arising out of or relating to (i) any suit or claim of violation
brought against any of the Indemnified Parties for any actions taken or inaction
by the Company on prior to or after the Closing Date with respect to any
Employees (including the Continuing Employees), (ii) any failure of the Company
to discharge its obligations under Article VI, (iii) the termination of, or
cessation of participation of any Employee or the Company (as a participating
employer) in the Plans (including, but not limited to income or excise tax
assessments) Liabilities relating to participant benefit claims or fiduciary
conduct, or Liabilities otherwise arising under any law or regulation, (iv) any
severance, change in control, "pay-to-stay" or similar or other payments or
benefits under the Plans which are triggered by or will be established or become
accelerated, vested or payable by reason of this Agreement or any transaction
contemplated under this Agreement, and (v) any Liabilities or obligations with
respect to, or in any manner arising out of, the Plans.
(c) An Indemnified Party shall give the Company (which for purposes of this
paragraph includes Guarantor) reasonably prompt written notice of any claim,
assertion, event or proceeding by or in respect of a third party of which such
Indemnified Party has knowledge concerning any liability or damage as to which
such Indemnified Party may request indemnification hereunder. Failure to give
such notice shall not waive any right to indemnification on the part of the
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Indemnified Party or Parties who fail to give such notice, except only to the
extent of any damage or loss actually suffered by the Company by reason of the
delay in receiving such notice. The Company shall have the right to direct,
through counsel of its own choosing, provided such counsel is reasonably
satisfactory to the Indemnified Party, the defense or settlement of any claim
under 9.03(a) (ii) or proceeding at its own expense, provided that the Company
vigorously and diligently pursues such defense in good faith and keeps the
Indemnified Party and its attorneys reasonably informed as to the progress of
the defense and any proposed settlement. If the Company elects to assume the
defense of any such claim or proceeding, the Indemnified Party may participate
in such defense, but in such case the expenses of the Indemnified Party shall be
paid by the Indemnified Party. The Indemnified Party shall provide the Company
with access to such Indemnified Party's records and personnel relating to any
such claim, assertion, event or proceeding during normal business hours and
shall otherwise cooperate with the Company in the defense or settlement thereof,
and the Company shall reimburse the Indemnified Party for all the reasonable
out-of-pocket expenses of such Indemnified Party in connection therewith. If the
Company elects to direct the defense of any such claim or proceeding, the
Indemnified Party shall not pay, or permit to be paid, any part of any claim or
demand arising from such asserted liability (i) unless the Company consents in
writing to such payment, which consent will not be unreasonably withheld, or
(ii) unless the Company, subject to the last sentence of this Section 9.03(c),
withdraws from the defense of such asserted liability, or (iii) unless a final
judgment from which no appeal may be taken by or on behalf of the Company is
entered against the Indemnified Party for such liability or (iv) unless there is
a material risk if such asserted liability is not paid that an injunction or
other equitable relief will be granted which will materially adversely affect
the business of the Purchaser or there is a material risk of the seizure of any
material assets of the Purchaser or a material risk that a lien or liens will be
imposed on any such material assets. The Company shall have the right, in its
discretion exercised in good faith and with the advice of counsel, to settle any
such claim with the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld; provided that the Indemnified Party
may withhold its consent to any settlement if, in its reasonable judgment, such
settlement would materially adversely affect the conduct of the business of the
Purchaser or does not include a general release to all Indemnified Parties. If
the Company shall fail to defend, or if after commencing or undertaking any such
defense, the Company fails to diligently prosecute and defend or withdraws from
such defense, the Indemnified Party shall have the right to undertake the
defense or settlement thereof, at the Company's expense. If the Indemnified
Party assumes the defense of any such claim or proceeding pursuant to this
Section 9.03(c) and proposes to settle such claim or proceeding prior to a final
judgment thereon or to forego any appeal with respect thereto, then the
Indemnified Party shall give the Company prompt written notice thereof and the
Company shall have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding subject to the conditions set
forth above; PROVIDED, HOWEVER, if the Company does not assume or reassume the
defense within ten (10) Business Days or any earlier time that such offer to
settle expires and post a letter of credit from a bank reasonably satisfactory
to the Purchaser in the amount of the proposed settlement, then the Indemnified
Party can settle such claim in good faith without the consent of the Company.
(d) Except as set forth in this Agreement, the Transfer and Assumption
Agreement, the Administrative Services Agreement, the certificates delivered
pursuant to Article VIII or any agreement delivered pursuant to the provisions
hereof, the Company or Guarantor is not making any representation, warranty,
covenant or agreement with respect to the matters contained herein.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual written consent of the Company and the Purchaser;
(b) by written notice by either the Company or the Purchaser if the Closing
shall not have occurred prior to March 31, 2002; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 10.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur prior to such date;
(c) by the Purchaser or the Company, if either shall have breached or failed in
any material respect to perform or comply with any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure is, in the reasonable judgement of the Company or Purchaser
incapable of being cured by the Company or Purchaser within fifteen (15)
Business Days;
(d) by the Purchaser or the Company, if the stockholders of the Company or Board
of Directors of the Company have voted against approval of this Agreement; or
(e) by the Purchaser if its Board of Director fails to approve this agreement by
December 31, 2001.
SECTION 10.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 10.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto, except
nothing herein shall relieve any party from liability for any breach hereof
prior to termination.
SECTION 10.03. WAIVER. At any time prior to the Closing, either party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(c) waive compliance with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed by the parties to be bound thereby.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of (i) the date delivered if delivered personally against written
receipt or (ii) five (5) days after mailing if mailed by registered or certified
mail (postage prepaid, return receipt requested) or (iii) the date telecopied to
47
the parties (if the appropriate answer back or telephonic confirmation) shall
have been received; PROVIDED THAT notices after the giving of which there is a
designated period within which to perform an act and notices of changes of
address shall be effective only upon receipt. All such notices and
communications shall be delivered to the following addresses or numbers (or at
such other address or number for a party as shall be specified by like notice):
(a) if to the Company:
Folksam International Insurance Company Ltd. (publ)
Folksam Building
Bohusgatan
Stockholm, Sweden S-106 60
Attention: Tore Andersson
Telecopier: +46 8 772 6275
(c) if to Guarantor:
Folksam omsesidig sakforsakring
106 60 Stockholm
Attention: Tore Andersson
Telephone: +46 8 772 60 10
Telecopier: +46 8 772 6275
(b) if to the Purchaser:
Fund American Reinsurance Company, Ltd.
Victoria Hall
11 Victoria Street
HM HX Bermuda
Attention: Thomas Kemp
Telephone No: 441-297-9726
Telecopier: 441-297-9780
with a copy under separate cover to:
Folksamerica Reinsurance Company
One Liberty Plaza
New York, NY 10006
Attention: Donald A. Emeigh, Jr.
Telecopier: (212) 732-5614
SECTION 11.02. PUBLIC ANNOUNCEMENT. No party to this Agreement shall make any
public announcements in respect of this Agreement or the transactions
contemplated herein or otherwise communicate with any news media without prior
notification to the other parties, and the parties, subject to the requirements
of applicable law, shall cooperate as to the timing and content of any such
announcement. The parties agree that, except as required by applicable law, in
the event this Agreement is terminated in accordance with Article X hereof, each
party will keep confidential the reasons for such termination and any public
announcement issued by any party following any such termination shall be limited
to a statement that the parties were unable to agree on the principal terms of
the transaction.
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SECTION 11.03. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.04. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
SECTION 11.05. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Disclosure Schedule) constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, except as otherwise expressly provided
herein.
SECTION 11.06. ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise; PROVIDED, HOWEVER, that this Agreement, the Transfer and
Assumption Agreement, and the Administrative Services Agreement may be assigned,
in whole or in part, by the Purchaser to any of its Affiliates with the consent
of the Company, which consent shall not be unreasonably withheld .
SECTION 11.07. NO THIRD-PARTY BENEFICIARIES. Except for the provisions of this
Agreement relating to Indemnified Parties, this Agreement is for the sole
benefit of and is binding upon the parties hereto and their permitted successors
and assigns and nothing herein, express or implied, is intended to or shall
confer upon any other person or entity any legal or equitable right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 11.08. AMENDMENT; WAIVER. This Agreement may not be amended or modified
except by an instrument in writing signed by the Company and the Purchaser.
Waiver of any term or condition of this Agreement shall only be effective if in
writing and shall not be construed as a waiver of any subsequent breach or
waiver of the same term or condition, or a waiver of any other term or condition
of this Agreement. Any failure or delay on the part of any party in exercising
any power or right hereunder shall not operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power preclude any other or
further exercise thereof or the exercise of any other right or power hereunder.
SECTION 11.09. GOVERNING LAW/ARBITRATION. This Agreement shall be governed by,
and construed in accordance with, the laws of Sweden, other than any conflict of
law rules which might result in the application of the laws of any other
jurisdiction.
(1) Any dispute, controversy or claim arising out of or in connection
with this Agreement, or the breach, termination or invalidity thereof,
shall be settled by arbitration in accordance with the Rules of the
Arbitration Institute of the Stockholm Chamber of Commerce.
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(2) The place of arbitration shall be Stockholm, Sweden.
(3) The language to be used in the arbitral proceedings shall be
English.
(4) The arbitral proceedings under this Agreement shall be joined with
any arbitral proceedings between the parties in relation to any of the
other agreements, entered into between the parties this day, i.e. the
Transfer and Assumption Agreement, the Note, and the Administrative
Services Agreement.
(5) The parties undertake and agree that all arbitral proceedings
conducted by reference to this Article will be kept strictly
confidential, and all information disclosed in the course of such
arbitral proceedings will be used solely for the purpose of these
proceedings.
SECTION 11.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the Company and the Purchaser have caused this Agreement to
be executed as of the date first written above by their respective duly
authorized officers.
FOLKSAM INTERNATIONAL INSURANCE COMPANY LTD. (PUBL)
By
-------------------------------------
Name:
Title:
FOLKSAM MUTUAL GENERAL INSURANCE COMPANY
By
-------------------------------------
Name:
Title:
FUND AMERICAN REINSURANCE COMPANY, LTD.
By
-------------------------------------
Name:
Title:
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