AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK AGREEMENT dated as of March 31, 1999 by and
between Zenith Insurance Company, a California corporation ("Seller"), and
Nationwide Mutual Insurance Company, an Ohio mutual insurance company ("Buyer").
WHEREAS, Seller and Buyer are parties to a Stock Purchase Agreement dated
as of February 22, 1999 (the "Agreement"); and
WHEREAS, Buyer and Seller desire to amend the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual terms,
conditions and other agreements set forth herein, intending to be legally bound,
the parties hereby agree as follows:
1. Section 2.2 of the Agreement is hereby amended by:
(a) substituting the amount "Two Hundred Seventy Five Million Six
Hundred Thirty Nine Thousand One Hundred and Sixty Dollars ($275,639,160)"
for the amount "Two Hundred Seventy-Two Million Dollars ($272,000,000)" in
the first line thereof; and
(b) substituting the following sentence for the second sentence
thereof:
"The Purchase Price shall be subject to adjustment after
Closing pursuant to Sections 2.4 and 2.6 hereof."
2. Section 2.3 of the Agreement is hereby amended by and restated in its
entirety to read as follows:
"The consummation of the purchase and sale of the
Shares ("Closing") shall be effective at 11:59 p.m.,
California time, on the last day of the calendar month in
which all conditions to the respective obligations of the
parties set forth in Sections 7 and 8 hereof (other than
those that are intended to be satisfied only at the Closing)
have been satisfied (such effective date and time being
referred to herein as the "Closing Date"). The physical
transfer of funds and delivery of the Shares shall occur at
11:00 a.m., New York time, on the Closing Date at the
offices of
LeBoeuf, Lamb, Greene & MacRae, L.L.P., 125 West 55th Street, New
York, New York, or at such other time, date and place as shall be
mutually agreed upon by the parties. Each party hereto agrees to use
commercially reasonable efforts promptly to satisfy the conditions to
Closing to be satisfied by it in order to expedite the Closing."
3. Section 2.4 of the Agreement is amended by substituting the phrase:
"an unaudited statutory balance sheet of CalFarm as of the Closing Date (the
"Closing Date Balance Sheet")" for the words "an unaudited statutory balance
sheet of CalFarm as of the end of the calendar month immediately preceding the
Closing Date (the "Closing Balance Sheet")" in the third line thereof.
4. Section 2.5 of the Agreement is hereby amended by:
(a) substituting the words "Within the earlier of 15 days after
receipt of the 1998 Pro Forma Balance Sheet or 9:00 am (New York
Time) on March 31, 1999" for the words "within 15 days after
receipt of the 1998 Pro Forma Balance Sheet and
(b) amending the last sentence thereof in its entirety to read as
follows:
If Buyer does not notify Seller as to any disputed items within
the earlier 15 days after receipt of the 1998 Pro Forma Balance
Sheet or 9:00 am (New York Time) on March 31, 1999, the 1998 Pro
Forma Balance Sheet provided by Seller shall be deemed acceptable
to Buyer."
5. Section 2.6 of the Agreement is hereby amended and restated in its
entirety to read as follows:
"On March 3, 1999, Seller provided Buyer with a copy of an
appraisal report prepared by Giannelli, Jarrette & Filipiak on the
real property located at 1601 Exposition Boulevard, Sacramento, CA
95815 (the "Sacramento Property") which set forth an estimated current
market valuation for the Sacramento Property equal to $24,155,000 (the
"Appraised Value"). On March 16, 1999, Buyer delivered notice to
Seller of its objection to and dispute of the Appraised Value (the
"Objection Notice"). Buyer shall deliver to Seller, within 30
Business Days after the delivery of the Objection Notice, at its own
cost and expense, an appraisal report by an MAI certified appraiser of
Buyer's choice familiar with the Sacramento commercial real estate
market, of the estimated current market value for the Sacramento
Property
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(the "Buyer Appraised Value"). If Buyer and Seller are unable to
reach agreement as to the amount of the purchase price adjustment, if
any, due under this Section 2.6 within 15 Business Days after receipt
by Seller of the report containing the Buyer Appraised Value, Buyer
and Seller shall select another MAI certified appraiser familiar with
the Sacramento commercial real estate market with no material
relationship with Buyer, Seller or any of their respective affiliates
to render a third appraisal report of the estimated current market
value for the Sacramento Property (the "Final Appraised Value"). Upon
determination of the Final Appraised Value and within two Business
Days after delivery to Buyer and Seller of a copy of the third
appraisal report, (i) Buyer shall pay Seller, in immediately available
funds, a sum equal to the amount, if any, by which the Final Appraised
Value exceeds $20,000,000 and (ii) Seller shall pay Buyer, in
immediately available funds, a sum equal to the amount, if any, by
which the Final Appraised Value is less than $20,000,000; provided
that in no event shall Seller be required to pay Buyer an amount in
excess of $3,639,160."
6. All other terms and conditions of the Agreement are hereby ratified
and confirmed by the parties hereto and shall remain in full force and effect.
7. All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided such terms in the Agreement.
8. This Amendment shall bee governed by and construed and enforced in
accordance with the laws of the State of California, without giving effect to
principles of conflicts of laws.
9. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
ZENITH INSURANCE COMPANY
By: /s/ John J. Tickner
-------------------
Name: John J. Tickner
Title: Senior Vice President
NATIONWIDE MUTUAL INSURANCE COMPANY
By: /s/ Robert A. Oakley
--------------------
Name: Robert A. Oakley
Title: Executive Vice President -
Chief Financial Officer
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