SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 1999
LaSalle Re Holdings Limited
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(Exact name of registrant as specified in its charter)
Bermuda 1-12823 Not Applicable
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
Continental Building, 25 Church Street
Hamilton HM12, Bermuda Not Applicable
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 441-292-3339
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
LaSalle Re Holdings Limited ("LaSalle"), a Bermuda company, and
LaSalle Re Limited, its majority-owned subsidiary ("LaSalle Re"), entered into
a definitive Agreement, Scheme of Arrangement, Plan of Merger and Plan of
Reorganization, dated as of December 19, 1999 (the "Business Combination
Agreement") with Trenwick Group Inc. ("Trenwick"), Trenwick Group (Delaware)
Inc. and Gowin Holdings International Limited, pursuant to which the
stockholders of Trenwick, the common shareholders of LaSalle and the minority
shareholders of LaSalle Re will each exchange their shares on a one-for-one
basis for shares in a newly formed Bermuda company (the "Business
Combination"). See the full text of the Business Combination Agreement which
is filed herewith as Exhibit 2.1 and which is incorporated by reference herein.
In connection with the Business Combination Agreement, Trenwick and
LaSalle have granted to each other options to purchase up to 19.9% of their
outstanding shares pursuant to Stock Option Agreements, each dated as of
December 19, 1999. See the full text of the Stock Option Agreements which
are filed herewith as Exhibits 99.1 and 99.2 and which are incorporated by
reference herein.
Certain shareholders of LaSalle and LaSalle Re have agreed to vote
their shareholdings in favor of the Business Combination pursuant to a
Shareholders Agreement, dated as of December 19, 1999. See the full text of
the Shareholders Agreement which is filed herewith as Exhibit 99.3 and which
is incorporated by reference herein.
On December 19, 1999, Trenwick and LaSalle issued a joint press
release announcing the Business Combination, which is filed herewith as
Exhibit 99.4 and which is incorporated by reference herein.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2.1 Agreement, Scheme of Arrangement, Plan of Merger and Plan of
Reorganization, dated as of December 19, 1999, by and among
LaSalle Re Holdings Limited, LaSalle Re Limited, Trenwick
Group Inc., Trenwick Group (Delaware) Inc. and Gowin Holdings
International Limited.
99.1 Stock Option Agreement, dated as of December 19,
1999, between Trenwick Group Inc. and LaSalle Re
Holdings Limited (option granted to LaSalle Re
Holdings Limited).
99.2 Stock Option Agreement, dated as of December 19,
1999, between Trenwick Group Inc. and LaSalle Re
Holdings Limited (option granted to Trenwick Group
Inc.).
99.3 Shareholders Agreement, dated as of December 19,
1999, by and among Trenwick Group Inc., Combined
Insurance Company of America, Virginia Surety
Company, Inc., Aon Risk Consultants (Bermuda) Ltd.,
Continental Casualty Company and CNA (Bermuda)
Services Limited.
99.4 Press release of Trenwick Group Inc. and LaSalle
Re Holdings Limited issued December 19, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Dated: December 22, 1999 LASALLE RE HOLDINGS LIMITED
By: /s/ Guy D. Hengesbaugh
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Guy D. Hengesbaugh
President and
Chief Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description of Document
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2.1 Agreement, Scheme of Arrangement, Plan of Merger and
Plan of Reorganization, dated as of December 19, 1999,
by and among LaSalle Re Holdings Limited, LaSalle Re
Limited, Trenwick Group Inc., Trenwick Group
(Delaware) Inc. and Gowin Holdings International Limited.
99.1 Stock Option Agreement, dated as of December 19, 1999,
between Trenwick Group Inc. and LaSalle Re Holdings
Limited (option granted to LaSalle Re Holdings Limited).
99.2 Stock Option Agreement, dated as of December 19, 1999,
between Trenwick Group Inc. and LaSalle Re Holdings
Limited (option granted to Trenwick Group Inc.).
99.3 Shareholders Agreement, dated as of December 19, 1999, by
and among Trenwick Group Inc., Combined Insurance Company
of America, Virginia Surety Company, Inc., Aon Risk
Consultants (Bermuda) Ltd., Continental Casualty Company
and CNA (Bermuda) Services Limited.
99.4 Press release of Trenwick Group Inc. and LaSalle Re Holdings
Limited issued December 19, 1999.
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AGREEMENT,
SCHEME OF ARRANGEMENT,
PLAN OF MERGER
AND
PLAN OF REORGANIZATION
BY AND AMONG
LASALLE RE HOLDINGS LIMITED,
LASALLE RE LIMITED,
TRENWICK GROUP INC.,
TRENWICK GROUP (DELAWARE) INC.,
AND
GOWIN HOLDINGS INTERNATIONAL LIMITED
DATED AS OF DECEMBER 19, 1999
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TABLE OF CONTENTS
ARTICLE 1 CERTAIN DEFINITIONS.......................................2
Section 1.1. Certain Definitions.......................................2
ARTICLE 2 THE PLANS.................................................6
Section 2.1. The Plans.................................................6
Section 2.2. Application to the Court; Shareholder Meetings;
Effective Time of the Plans; Closing......................7
Section 2.3. Effects of the Plans......................................8
Section 2.4. Governing Documents.......................................9
Section 2.5. Board of Directors of New Holdings.......................10
Section 2.6. Terms of the Scheme of Arrangement: Exchange of
Securities...............................................10
Section 2.7. Terms of the Plan of Merger and the Plan of Reorganization:
Conversion and Issuance of Securities....................11
Section 2.8. Terms of the Scheme of Arrangement: Surrender
and Payment..............................................12
Section 2.9. Terms of the Plan of Merger and the Plan of
Reorganization: Surrender and Payment....................14
Section 2.10. Voting...................................................15
Section 2.11. Lost Certificates........................................15
Section 2.12. No Fractional Shares.....................................15
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TRENWICK...............16
Section 3.1. Corporation; Organization................................16
Section 3.2. Authority; Approval and Fairness.........................17
Section 3.3. Capital Structure........................................17
Section 3.4. SEC Reports; Financial Statements........................19
Section 3.5. Absence of Certain Changes or Events.....................20
Section 3.6. Certain Fees.............................................20
Section 3.7. No Defaults..............................................20
Section 3.8. Consents.................................................21
Section 3.9. Compliance with Applicable Law...........................21
Section 3.10. Information Supplied.....................................22
Section 3.11. Material Contracts.......................................22
Section 3.12. Taxes....................................................23
Section 3.13. Litigation...............................................24
Section 3.14. Title to Properties; Leases..............................24
Section 3.15. Employees................................................25
Section 3.16. Benefit Plans............................................25
Section 3.17. Intellectual Property....................................31
Section 3.18. Takeover Statutes........................................32
Section 3.19. Opinion of Financial Advisor.............................32
Section 3.20. Rights Agreement.........................................32
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Section 3.21. Insurance Matters........................................32
Section 3.22. Liabilities and Reserves.................................33
Section 3.23. Investment Company.......................................33
Section 3.24. Finite Risk Reinsurance..................................34
Section 3.25. Reinsurance Contracts, Coverholders and MGAs.............34
Section 3.26. Derivatives. ...........................................35
Section 3.27. Related Party Transactions. ............................35
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF LASALLE
HOLDINGS.................................................35
Section 4.1. Corporation; Organization................................35
Section 4.2. Authority; Approval and Fairness.........................36
Section 4.3. Capital Structure........................................37
Section 4.4. SEC Reports; Financial Statements........................38
Section 4.5. Absence of Certain Changes or Events.....................39
Section 4.6. Certain Fees.............................................40
Section 4.7. No Defaults..............................................40
Section 4.8. Consents.................................................40
Section 4.9. Compliance with Applicable Law...........................41
Section 4.10. Information Supplied.....................................41
Section 4.11. Material Contracts.......................................41
Section 4.12. Taxes....................................................42
Section 4.13. Litigation...............................................43
Section 4.14. Title to Properties; Leases..............................44
Section 4.15. Approval of Scheme of Arrangement........................44
Section 4.16. Employees................................................44
Section 4.17. Intellectual Property....................................45
Section 4.18. Takeover Statutes........................................46
Section 4.19. Opinions of Financial Advisors...........................46
Section 4.20. Insurance Matters........................................46
Section 4.21. Liabilities and Reserves.................................47
Section 4.22. Investment Company.......................................47
Section 4.23. Reinsurance Contracts, Coverholders and MGAs.............47
Section 4.24. Derivatives..............................................48
Section 4.25. Related Party Transactions. .............................48
Section 4.26. Finite Risk Reinsurance..................................48
ARTICLE 5 COVENANTS................................................49
Section 5.1. Conduct of Business of Trenwick..........................49
Section 5.2. Conduct of Business of LaSalle Holdings..................52
Section 5.3. No Solicitation..........................................55
Section 5.4. Access to Information; Confidentiality...................59
Section 5.5. Form S-4; Regulatory Matters.............................59
Section 5.6. Public Announcements.....................................60
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Section 5.7. Supplemental Information.................................60
Section 5.8. Shareholders' Meetings...................................60
Section 5.9. Trenwick Options, LaSalle Holdings Options,
LaSalle Re Options and Trenwick Warrants.................61
Section 5.10. Takeover Laws............................................63
Section 5.11. Affiliates...............................................63
Section 5.12. Stock Exchange Listing...................................63
Section 5.13. Indemnification and Insurance............................64
Section 5.14. Commercially Reasonable Efforts..........................65
Section 5.15. Post-Closing Matters.....................................65
Section 5.16. Employee Benefit Plans; Existing Agreements..............65
Section 5.17. Letters from Accountants.................................66
Section 5.18. Litigation. ............................................67
Section 5.19. Advice of Changes. .....................................67
Section 5.20. Trenwick Rights Agreement. .............................67
Section 5.21. New Holdings Rights Agreement. .........................67
Section 5.22. Organization of Trenwick Subsidiaries. .................67
Section 5.23. Assumption of Non-Voting Share Conversion Obligation.....68
Section 5.24. Assumption of Series B Preferred Share Conversion
Obligation. ............................................68
Section 5.25. Tax-Free Reorganization. ...............................68
ARTICLE 6 CONDITIONS TO THE PLANS..................................68
Section 6.1. Conditions to Each Party's Obligation to Effect the
Plans....................................................68
Section 6.2. Additional Conditions to Trenwick's Obligation to Effect
the Plans................................................70
Section 6.3. Additional Conditions to LaSalle Holdings'
Obligation to Effect the Plans...........................71
ARTICLE 7 TERMINATION AND ABANDONMENT..............................73
Section 7.1. Termination by Trenwick or LaSalle Holdings..............73
Section 7.2. Termination by Trenwick..................................74
Section 7.3. Termination by LaSalle Holdings..........................74
Section 7.4. Procedure and Effect of Termination......................75
ARTICLE 8 MISCELLANEOUS PROVISIONS.................................76
Covenants and Agreements.................................76
Section 8.2. Amendment and Modification...............................76
Section 8.3. Waiver of Compliance; Consents...........................76
Section 8.4. Severability and Validity................................77
Section 8.5. Expenses and Obligations.................................77
Section 8.6. Parties in Interest......................................77
Section 8.7. Notices..................................................77
Section 8.8. Governing Law............................................79
Section 8.9. Counterparts.............................................79
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Section 8.10. Headings................................................79
Section 8.11. Entire Agreement; Assignment............................79
Section 8.12. Interpretation..........................................80
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SCHEDULES AND EXHIBITS
Schedule I Minority Shareholders
Exhibit A-1 LaSalle Stock Option Agreement
Exhibit A-2 Trenwick Stock Option Agreement
Exhibit B-1 Memorandum of Association of New Holdings
Exhibit B-2 Bye-Laws of New Holdings
Exhibit C New Holdings Directors
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AGREEMENT, SCHEME OF ARRANGEMENT, PLAN OF MERGER
AND PLAN OF REORGANIZATION
This Agreement, Scheme of Arrangement, Plan of Merger and Plan of
Reorganization (this "Agreement") is made as of the 19th day of December,
1999, by and among LaSalle Re Holdings Limited, a company organized under
the laws of Bermuda ("LaSalle Holdings"), LaSalle Re Limited, a company
organized under the laws of Bermuda and a majority-owned Subsidiary (as
defined herein) of LaSalle Holdings ("LaSalle Re"), Trenwick Group Inc., a
Delaware corporation ("Trenwick"), Trenwick Group (Delaware) Inc., a
Delaware corporation and Gowin Holdings International Limited, a company
organized under the laws of Bermuda ("New Holdings").
WHEREAS, the issued share capital of LaSalle Re consists of voting
common shares, par value $1.00 per share ("Voting Shares"), all of which
are beneficially owned by LaSalle Holdings, and non-voting common shares,
par value $1.00 per share (the "Non-Voting Shares"), all of which are
beneficially owned by LaSalle Holdings and the shareholders of LaSalle Re
listed on Schedule I hereto (the "Minority Shareholders"). LaSalle Holdings
owns 15,603,570 Voting Shares and Non-Voting Shares in the aggregate. The
Minority Shareholders own 4,725,546 Non-Voting Shares in the aggregate (the
"Minority Shares").
WHEREAS, the respective Boards of Directors of LaSalle Holdings,
LaSalle Re, Trenwick and New Holdings (a) deem it advisable and in the best
interests of their respective companies and shareholders to enter into this
Agreement whereby (i) each of LaSalle Holdings and LaSalle Re become
wholly-owned Subsidiaries of New Holdings pursuant to the Scheme of
Arrangement between LaSalle Holdings and its shareholders and LaSalle Re
and the holders of its Non-Voting Shares (the "Scheme of Arrangement") and
(ii) the assets of Trenwick are transferred to New Holdings pursuant to a
plan of merger and restructuring described in Section 2.1(b) (the "Plan of
Merger") and a plan of reorganization described in Section 2.1(c) (the
"Plan of Reorganization"), and together with the Scheme of Arrangement and
the Plan of Merger, the "Plans") as provided for herein and (b) have
adopted resolutions approving this Agreement, the Plans and the
transactions contemplated hereby;
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of LaSalle
Holdings and Trenwick to enter into this Agreement, LaSalle Holdings and
Trenwick have entered into (i) a Stock Option Agreement dated as of the
date of this Agreement and attached hereto as Exhibit A-1 (the "LaSalle
Stock Option Agreement"), pursuant to which Trenwick has granted LaSalle
Holdings an option to purchase a number of shares equal to 19.9% of the
currently outstanding Common Stock, par value $0.10 per share, of Trenwick
("Trenwick Shares", which shall refer to all such outstanding shares) and
(ii) a Stock Option Agreement dated as of the date of this Agreement and
attached hereto as Exhibit A-2 (the "Trenwick Stock Option Agreement" and
together with the LaSalle Stock Option Agreement, the "Stock Option
Agreements"), pursuant to which LaSalle Holdings has granted Trenwick an
option to purchase a number of shares equal to 19.9% of the currently
outstanding Common Shares, par value $1.00 per share, of LaSalle Holdings
("LaSalle Holdings Shares", which shall refer to all such outstanding
shares);
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WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Trenwick
to enter into this Agreement, Trenwick and the Minority Shareholders have
entered into a Shareholders Agreement pertaining to the voting of shares
held of record and beneficially in favor of the transactions contemplated
hereby; and
WHEREAS, the parties hereto intend that each of the Plans shall
qualify as tax-free under the United States Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Section 1.1. Certain Definitions. Certain capitalized terms used in
this Agreement shall have the meaning set forth below:
(a) An "Affiliate" of, or a Person "affiliated" with, a specified
Person means any Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control
with, the Person specified.
(b) "Average Closing Price" means an amount equal to the average
per share closing price of a Trenwick Share as reported on the NYSE for the
ten (10) NYSE trading days immediately preceding the three (3) NYSE trading
days prior to the Effective Date (as defined below).
(c) "Business Day" means any day other than a Saturday, a Sunday
or a day on which commercial banks in Bermuda or in the State of
Connecticut in the United States of America are authorized or required by
law to be closed.
(d) "Confidentiality Letters" means the letter agreements between
LaSalle Holdings and Trenwick, dated as of August 30, 1999 and November 19,
1999.
(e) "Control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used
with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by
agreement or otherwise.
(f) "Dollars" or "$" means the lawful currency of the United
States of America.
(g) "Effective Time" means the later of the Scheme Effective Time
and the Reorganization Effective Time.
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(h) "Employee Benefit Plan" means
(i) any "employee welfare benefit plan" or
"employee pension benefit plan" (as those terms
are defined in sections 3(1) and 3(2) of ERISA,
respectively), other than a "multiemployer plan"
(as defined in Section 3(37) of ERISA);
(ii) any retirement or deferred compensation
plan, incentive compensation plan, stock plan,
unemployment compensation plan, vacation pay,
severance pay, bonus or benefit arrangement,
insurance or hospitalization program or any
other fringe benefit arrangements for any
current or former employee, director, consultant
or agent, whether pursuant to contract,
arrangement, custom or informal understanding,
which does not constitute an employee benefit
plan (as defined in Section 3(3) of ERISA); or
(iii) any employment agreement or consulting
agreement.
(i) "ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended.
(j) "Exchange Act" means the United States Securities Exchange Act
of 1934, as amended.
(k) "GAAP" means generally accepted accounting principles as in
effect in the United States of America (as such principles may change from
time to time).
(l) "Governmental Authority" means any governmental,
quasi-governmental, judicial or regulatory agency or entity or subdivision
thereof with jurisdiction over Trenwick, LaSalle Holdings, LaSalle Re, New
Holdings or any of their respective Subsidiaries or any of the transactions
contemplated by this Agreement (including, without limitation, the
Corporation of Lloyd's ("Lloyd's")).
(m) "Knowledge" (i) an individual will be considered to have
"Knowledge" of a fact or matter if the individual is actually aware of the
fact or matter; (ii) an entity will be considered to have "Knowledge" of a
fact or matter if any individual who is serving, or who has at any time
served, as a senior executive of such entity has, or at any time had,
Knowledge of the fact or matter; and Trenwick and LaSalle Holdings will be
considered to have "Knowledge" of a fact or matter if Trenwick or its
Subsidiaries or LaSalle Holdings or its Subsidiaries, as the case may be,
has Knowledge of the fact or matter.
(n) "LaSalle Disclosure Letter" means the letter, dated as of the
date hereof, from LaSalle Holdings to Trenwick regarding certain matters
related to this Agreement.
(o) "LaSalle Fair Market Value" means the product of (i) the
average of the closing sale price as reported on the NYSE Composite Tape
for the Voting Shares for the thirty (30) trading days
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immediately preceding the Effective Date multiplied by (ii) the aggregate
number of issued and outstanding Voting Shares and Non-Voting Shares on the
Effective Date.
(p) "Lien" means any mortgage, lien, security interest, pledge,
lease or other charge or encumbrance of any kind, including, without
limitation, the lien or retained security title of a purchase money
creditor or conditional vendor, and any easement, right of way or other
encumbrance on title to real property, and any agreement to give any of the
foregoing.
(q) "Material Adverse Change" or "Material Adverse Effect" means,
with respect to any Person, any change, effect, event, condition or
development, occurrence or state of facts that is materially adverse to the
business, assets, results of operations, properties, financial or operating
condition of such party and its Subsidiaries, taken as a whole or the
ability to perform obligations under this Agreement; provided, however,
that any change, effect, event, condition or development, occurrence or
state of facts resulting from or arising in connection with (i) this
Agreement, the Scheme of Arrangement, the Plan of Merger or the
transactions contemplated hereby or the public announcement thereof, (ii)
changes generally affecting the insurance, reinsurance or financial
services industry (including, without limitation, the impact of any natural
catastrophes causing a Net Loss from a single loss occurrence and not in
the aggregate to such Persons of $100,000,000 or less, (iii) changes in the
value of portfolio investments resulting from changes in prevailing
interest rates, (iv) changes in economic or market conditions generally,
(v) changes in laws, regulations, accounting principles, or regulations or
policies of general applicability or (vi) changes resulting from actions or
omissions of a party hereto taken with the prior written consent of the
other parties in contemplation of the Scheme of Arrangement and Plan of
Merger and associated transactions contemplated by this Agreement shall not
constitute a Material Adverse Effect for purposes of this Agreement.
(r) "Net Loss" means, with respect to any Person, the estimated
amount of all losses and loss adjustment expenses incurred or to be
incurred by such Person and its Subsidiaries in connection with the
occurrence of a single natural catastrophe occurring between the date
hereof and the Effective Time, net of all applicable reinsurance
recoverables, determined in accordance with GAAP and generally accepted
actuarial standards of practice as applied in the insurance industry, each
as in effect on the date of determination of such Net Loss. Net Loss shall
be determined as soon as reasonably practicable following the occurrence of
a natural catastrophe by the Settlement Auditor. In the event that there is
more than one Person serving as the Settlement Auditor, Net Loss shall be
determined by taking the average of the Net Loss determinations established
by each Settlement Auditor.
(s) "NYSE" means The New York Stock Exchange, Inc.
(t) "Permitted Liens" means, with respect to Trenwick or LaSalle
Holdings (as the case may be), (i) Liens for Taxes or other assessments or
charges of Governmental Authorities that are not yet delinquent or that are
being contested in good faith by appropriate proceedings, in each case,
with respect to which adequate reserves or other appropriate provisions are
being maintained to the extent required by GAAP; (ii) statutory Liens of
landlords and mortgagees of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other Liens imposed by law and created in the
ordinary
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course of business for amounts not yet more than thirty (30) days overdue
or which are being contested in good faith by appropriate proceedings, in
each case, with respect to which adequate reserves or other appropriate
provisions are being maintained to the extent required by GAAP; (iii)
leases or subleases, easements, rights-of-way, covenants, consents and
Liens which do not interfere materially with the ordinary conduct of the
business of Trenwick or LaSalle Holdings (as the case may be) and their
respective Subsidiaries, taken as a whole, or detract materially from the
value of the property to which they attach or materially impair the use
thereof to such party and its Subsidiaries; and (iv) Liens granted by
Trenwick or LaSalle Holdings (as the case may be) or any of their
respective Subsidiaries to lenders pursuant to credit agreements in
existence on the date hereof.
(u) "Person" means any individual, company, corporation, estate,
limited liability company, partnership, joint venture, association, joint
stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof or other entity.
(v) "SEC" means the United States Securities and Exchange
Commission.
(w) "Securities Act" means the United States Securities Act of
1933, as amended.
(x) "Settlement Auditor" means either Ernst & Young LLP or Paragon
Risk Management Services, Inc., as shall be mutually agreed by LaSalle
Holdings and Trenwick. In the event LaSalle Holdings and Trenwick are
unable to agree upon a Settlement Auditor within 30 calendar days following
the completion of a natural catastrophe, both Ernst & Young LLP and Paragon
Risk Management Services, Inc. shall serve as the Settlement Auditor.
(y) "Subsidiary" means, with respect to a specified Person, each
company, partnership or other entity in which the specified Person owns or
controls, directly or indirectly through one or more intermediaries, fifty
percent (50%) or more of the shares or other interests having general
voting power in the election of directors or Persons performing similar
functions or rights to fifty percent (50%) or more of any distributions.
(z) "Tax" or "Taxes" means any Bermuda or United States federal,
state, local, foreign or other income, share capital, employees' income
withholding, foreign Person withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer or other
tax, including any interest, penalties or other additions to tax in respect
to the foregoing, whether disputed or not.
(aa) "Trenwick Delaware" means Trenwick Group (Delaware) Inc., a
newly-formed holding company organized under the laws of the State of
Delaware, all of whose outstanding shares of capital stock are owned
initially by Trenwick, with Certificate of Incorporation, By-laws and
capital structure identical in all material respects to those of Trenwick.
(bb) "Trenwick Delaware Shares" means the shares of common stock,
par value $.10 per share, of Trenwick Delaware outstanding from time to
time.
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(cc) "Trenwick Disclosure Letter" means the letter, dated as of
the date hereof, from Trenwick to LaSalle Holdings regarding certain
matters related to this Agreement.
(dd) "Trenwick Fair Market Value" means the product of (i) the
average of the closing sale price as reported on the NYSE Composite Tape
for the Trenwick Shares for the thirty (30) trading days immediately
preceding the Effective Date multiplied by (ii) the number of issued and
outstanding Trenwick Shares on the Effective Date.
(ee) "Trenwick Holdings Limited" means a wholly-owned subsidiary
of Trenwick organized under the laws of the United Kingdom.
(ff) "Trenwick LLC" means a Delaware limited liability company
with a single membership interest outstanding and held by Trenwick
Delaware.
(gg) "Trenwick Services Limited" means a wholly-owned subsidiary of
Trenwick organized under the laws of Bermuda.
(hh) "Trenwick Subsidiary" means a wholly-owned subsidiary of
Trenwick Delaware organized under the laws of the State of Delaware.
ARTICLE 2
THE PLANS
Section 2.1. The Plans.
(a) The Scheme of Arrangement. On the Effective Date at the Scheme
Effective Time (as defined herein), and upon the terms and subject to the
conditions hereof and subject to the Supreme Court of the Islands of
Bermuda (the "Court") exercising its discretion and sanctioning the Scheme
of Arrangement pursuant to Section 99(2) of The Companies Act, 1981 of
Bermuda, as amended (the "Companies Act"), and making such facilitating
orders as are appropriate pursuant to Section 101 of the Companies Act, all
of the issued and outstanding LaSalle Holdings Shares and all of the issued
and outstanding Minority Shares shall be transferred to New Holdings, and
holders of LaSalle Holdings Shares and Minority Shares shall become holders
of common shares of New Holdings ("New Holdings Shares") in accordance with
the terms of this Agreement.
(b) The Plan of Merger. On the Effective Date, immediately prior
to (but subject to the consummation of) the Plan of Reorganization
described in Section 2.1(c), and upon the terms and subject to the
conditions of this Agreement:
(i) At the Merger Effective Time (as defined herein),
Trenwick shall merge with and into Trenwick LLC, pursuant
to Section 264 of the General Corporation Law of the
State of Delaware, as amended (the "GCL"), with Trenwick
LLC as the surviving
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entity, whereupon the shareholders of Trenwick shall
receive a number of Trenwick Delaware Shares equal to the
number of Trenwick Shares owned by them in a transaction
intended to qualify as a tax-free reorganization under
Section 368(a) of the Code. At the Merger Effective Time,
the one share of common stock of Trenwick Delaware owned
by Trenwick shall be cancelled;
(ii) Trenwick LLC shall distribute to Trenwick Delaware
all of the issued and outstanding shares of Trenwick
Holdings Limited and Trenwick Services Limited;
(iii) Trenwick Delaware shall assume all undertakings and
obligations of Trenwick under this Agreement and, upon
such assumption for the purposes of Section 2.1(c) and
the Plan of Reorganization and transactions contemplated
thereby, all references to Trenwick, Trenwick Shares,
Trenwick Options and any other similar reference,
respectively, under this Agreement shall refer to
Trenwick Delaware, Trenwick Delaware Shares, options to
acquire Trenwick Delaware Shares and to such similar
reference, respectively; and
(iv) Trenwick Delaware shall contribute to Trenwick
Subsidiary its entire interest in Trenwick LLC.
(c) The Plan of Reorganization. On the Effective Date, upon the
terms and subject to the conditions hereof and immediately after and
conditioned upon the transactions set forth in Section 2.1(b), New Holdings
shall acquire all of the assets of and shall assume all of the liabilities
of Trenwick, pursuant to Section 271 of the GCL, in exchange for New
Holdings Shares which shall be distributed to the holders of Trenwick
Shares (the time of such distribution being the "Reorganization Effective
Time") in complete liquidation of Trenwick, in a transaction intended to
qualify as a tax-free reorganization under Section 368(a) of the Code.
Section 2.2. Application to the Court; Shareholder Meetings;
Effective Time of the Plans; Closing.
(a) As soon as practicable after the date hereof, LaSalle Holdings
and LaSalle Re, acting through their respective Boards of Directors, in
accordance with applicable law shall:
(i) cause an application to be made to the Court,
pursuant to Section 99(1) of the Companies Act,
requesting the Court to summon such class meetings of
members of LaSalle Holdings and LaSalle Re as the Court
may direct;
(ii) give notice of, convene and hold such class meetings
for the purpose of obtaining such approvals of the Scheme
of Arrangement as may be required under Section 99(2) of
the Companies Act; and
(iii) subject to such approvals being obtained, cause a
petition to be presented to the Court seeking the
sanctioning of the Scheme of Arrangement pursuant to
Section 99
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of the Companies Act and file such other documents as are
required to be duly filed with the Court to effect the
Scheme of Arrangement.
(b) As soon as practicable after the date hereof, Trenwick, acting
through its Board of Directors, in accordance with applicable law shall
duly call, give notice of, convene and hold an annual or special meeting of
its stockholders for the purpose of obtaining their approval of this
Agreement, the Plan of Merger and the Plan of Reorganization.
(c) Upon receipt of orders from the Court sanctioning the Scheme
of Arrangement, upon approval by the stockholders of Trenwick of this
Agreement, the Plan of Merger and the Plan of Reorganization and upon the
terms and subject to the satisfaction or waiver, if permissible, of the
conditions hereof, (i) the order sanctioning the Scheme of Arrangement
shall be duly filed with the Registrar of Companies of Bermuda (the
"Registrar") and (ii) a certificate of merger with respect to this
Agreement and the Plan of Merger (the "Certificate of Merger") shall be
duly filed with the Secretary of State of Delaware (the "Secretary of
State"). The Scheme of Arrangement shall become effective upon the filing
of the order of the Court with respect to the Scheme of Arrangement with
the Registrar (the time of such filing being the "Scheme Effective Time"
and the date of such filing being the "Effective Date"). The Plan of Merger
shall become effective upon the filing of the Certificate of Merger with
the Secretary of State (the "Merger Effective Time") on the Effective Date,
with the Reorganization Effective Time being immediately after the Merger
Effective Time. Immediately prior to such filings, a closing (the
"Closing") shall be held at such time as the last condition set forth
hereunder shall be fulfilled or waived, at the New York office of Mayer,
Brown & Platt, 1675 Broadway, New York, New York 10019-5820, at 9:00 a.m.
or such other place and/or time as the parties shall agree, for the purpose
of confirming the satisfaction or waiver of the conditions set forth in
Article 5. The date upon which the Closing shall occur is referred to
herein as the "Closing Date."
Section 2.3. Effects of the Plans.
(a) Effect of the Scheme of Arrangement. As of the Scheme
Effective Time, LaSalle Holdings shall be a wholly-owned Subsidiary of New
Holdings and LaSalle Re shall be, directly and indirectly through LaSalle
Holdings, a wholly-owned Subsidiary of New Holdings, and holders of LaSalle
Holdings Shares and Minority Shares shall only have the right to receive
the LaSalle Consideration as set forth in Section 2.6(c).
(b) Effect of the Plan of Merger and the Plan of Reorganization.
As of the Reorganization Effective Time, Trenwick shall have transferred
all of its assets to New Holdings and New Holdings shall have assumed all
the liabilities of Trenwick and the holders of Trenwick Shares shall only
have the right to receive the Trenwick Consideration as set forth in
Section 2.7(b).
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Section 2.4. Governing Documents.
(a) New Holdings.
(i) At or prior to the Closing, the memorandum of
association of New Holdings shall be in the form set
forth in Exhibit B(i) attached hereto.
(ii) At or prior to the Closing, the bye-laws of New
Holdings shall be in the form set forth in Exhibit B(ii)
attached hereto.
(b) LaSalle Holdings.
(i) The memorandum of association of LaSalle Holdings in
effect at the Scheme Effective Time shall continue to be
the memorandum of association of LaSalle Holdings until
thereafter amended or restated as provided therein and by
law.
(ii) The bye-laws of LaSalle Holdings in effect at the
Scheme Effective Time, shall continue to be the bye-laws
of LaSalle Holdings until thereafter amended or restated
as provided therein and by law.
(c) LaSalle Re.
(i) The memorandum of association of LaSalle Re in effect
at the Scheme Effective Time shall continue to be the
memorandum of association of LaSalle Re until thereafter
amended or restated as provided therein and by law.
(ii) The bye-laws of LaSalle Re in effect at the Scheme
Effective Time shall continue to be the bye-laws of
LaSalle Re until thereafter amended or restated as
provided therein and by law.
(d) Trenwick Delaware
(i) The certificate of incorporation of Trenwick Delaware
in effect at the Merger Effective Time shall continue to
be the certificate of incorporation of Trenwick Delaware
until thereafter amended or restated as provided therein
and by law.
(ii) The by-laws of Trenwick Delaware in effect at the
Merger Effective Time shall continue to be the by-laws of
Trenwick Delaware until thereafter amended or restated as
provided therein and by law.
(e) Trenwick LLC
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(i) The certificate of formation of Trenwick LLC in
effect at the Merger Effective Time shall continue to be
the certificate of formation of the surviving entity
until thereafter amended or restated as provided therein
and by law.
(ii) The limited liability company agreement of Trenwick
Delaware in effect at the Merger Effective Time shall
continue to be the limited liability company agreement of
the surviving entity until thereafter amended or restated
as provided therein and by law.
Section 2.5. Board of Directors of New Holdings. The parties
hereto shall procure that at or prior to the Closing, the directors of New
Holdings shall be the individuals designated in Exhibit C attached hereto,
which such directors shall constitute the entire Board of Directors of New
Holdings at such time, each of such directors to hold office in accordance
with the applicable provisions of the bye-laws of New Holdings and until
their successors shall be elected or appointed and shall duly qualify.
Section 2.6. Terms of the Scheme of Arrangement: Exchange of
Securities. At the Scheme Effective Time, by virtue of the Scheme of
Arrangement and without any action on the part of LaSalle Holdings, LaSalle
Re or the holder of any of the following securities:
(a) Subject to Section 2.12, each LaSalle Holdings Share and each
Minority Share that is issued and outstanding immediately prior to the
Scheme Effective Time (other than LaSalle Holdings Shares and Minority
Shares to be cancelled in accordance with Section 2.6(c)) shall be
transferred to New Holdings and there shall be allotted and issued to the
holder thereof such number of fully paid and nonassessable New Holdings
Shares as is equal to the LaSalle Exchange Ratio, as defined below (the
"LaSalle Consideration"). The "LaSalle Exchange Ratio" means the product of
(i) 1.0 multiplied by (ii) the quotient of (A) the LaSalle Fair Market
Value minus 50% of the amount by which any Net Loss experienced by LaSalle
Holdings exceeds $40,000,000 and is less than or equal to $60,000,000 and
minus 100% of the amount by which any Net Loss experienced by LaSalle
Holdings exceeds $60,000,000 and is less than or equal to $100,000,000,
divided by (B) the LaSalle Fair Market Value. New Holdings shall issue the
New Holdings Shares to be received as LaSalle Consideration and register
the Persons to whom New Holdings Shares are issued on New Holdings'
register of members. The Non-Voting Shares held by LaSalle Holdings shall
not be affected by the Scheme of Arrangement.
(b) Each LaSalle Holdings Option (as defined herein) and each
LaSalle Re Option (as defined herein) outstanding as of the Scheme
Effective Time shall be treated in accordance with the provisions of
Section 5.9.
(c) Each LaSalle Holdings Share that is issued and outstanding
immediately prior to the Effective Time that is owned by LaSalle Holdings,
LaSalle Re, Trenwick, New Holdings or any Subsidiary of either of the
foregoing shall be automatically cancelled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or deliverable
in exchange therefor.
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(d) Each Series A Preferred Share of LaSalle Holdings or LaSalle
Re that is issued and outstanding immediately prior to the Effective Time
shall remain unchanged as a Series A Preferred Share of LaSalle Holdings or
LaSalle Re, as the case may be.
(e) If the requisite approval of the holders of Non-Voting Shares
is not received, the Scheme of Arrangement shall relate only to LaSalle
Holdings Shares and shall not affect the NonVoting Shares.
Section 2.7. Terms of the Plan of Merger and the Plan of
Reorganization: Conversion and Issuance of Securities.
(a) At the Merger Effective Time, by virtue of the Plan of Merger
and without any action on the part of any of the entities described in
Section 2.1(b) or the holder of any of the following securities:
(i) Each Trenwick Share that is issued and outstanding
immediately prior to the Merger Effective Time (other
than Trenwick Shares to be cancelled in accordance with
Section 2.7(d)) shall be cancelled and extinguished and
converted into the right to receive one fully paid and
nonassessable Trenwick Delaware Share. If prior to the
Merger Effective Time either Trenwick, LaSalle Holdings
or LaSalle Re should split or combine the Trenwick
Shares, the LaSalle Re Shares or the Minority Shares, as
applicable, pay a stock dividend or otherwise change the
Trenwick Shares, the LaSalle Re Shares or the Minority
Shares, as applicable, into any other securities, or make
any other dividend or distribution on the Trenwick
Shares, the LaSalle Re Shares or the Minority Shares, as
applicable, then the Trenwick Exchange Ratio will be
appropriately adjusted to reflect such split,
combination, dividend or other distribution or changes.
Trenwick Delaware shall issue the Trenwick Delaware
Shares to be received as Trenwick Delaware Consideration
and register the Persons to whom such Trenwick Delaware
Shares are issued in Trenwick Delaware's register of
stockholders.
(ii) Each Trenwick Option (as defined herein) outstanding
as of the Merger Effective Time shall be treated in
accordance with the provisions of Section 5.9.
(iii) Each Trenwick Share that is issued and outstanding
immediately prior to the Merger Effective Time that is
owned by LaSalle Holdings, LaSalle Re, Trenwick, New
Holdings or any Subsidiary of any of the foregoing
(together, in each case, with the associated Right (as
defined in Section 3.3(a)) shall be automatically
cancelled and retired and shall cease to exist, and no
cash or other consideration shall be delivered or
deliverable in exchange therefor.
(b) Subject to Section 2.12, at the Reorganization Effective Time,
by virtue of the Plan of Reorganization and without any action on the part
of any of the entities described in Section 2.1(c) or the holder of any of
the following securities, there shall be allotted and issued to each holder
of
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Trenwick Delaware Shares a number of fully paid and nonassessable New
Holdings Shares as is equal to the Trenwick Exchange Ratio, as defined
below (the "Trenwick Consideration"). The "Trenwick Exchange Ratio" means
the product of (i) 1.0 multiplied by (ii) the quotient of (A) the Trenwick
Fair Market Value minus 50% of the amount by which any Net Loss experienced
by Trenwick exceeds $40,000,000 and is less than or equal to $60,000,000
and minus 100% of the amount by which any Net Loss experienced by Trenwick
exceeds $60,000,000 and is less than or equal to $100,000,000, divided by
(B) the Trenwick Fair Market Value. New Holdings shall issue the New
Holdings Shares to be received as Trenwick Consideration and register the
Persons to whom such New Holdings Shares are issued in New Holdings'
register of members.
Section 2.8. Terms of the Scheme of Arrangement: Surrender and
Payment.
(a) Promptly after the Scheme Effective Time, New Holdings shall
(i) appoint an agent (the "LaSalle Exchange Agent") for the purpose of
exchanging certificates representing LaSalle Holdings Shares and Minority
Shares for New Holdings Shares pursuant to Section 2.6(a), (ii) deposit
with the LaSalle Exchange Agent certificates representing the aggregate
LaSalle Consideration to be paid in respect of the LaSalle Holdings Shares
and the Minority Shares (together with any dividends or distributions with
respect thereto) and (iii) send, or cause the LaSalle Exchange Agent to
send, to each holder of LaSalle Holdings Shares and each holder of Minority
Shares at the Scheme Effective Time a letter of transmittal for use in such
exchange (which shall specify that the delivery shall be effected, and risk
of loss and title shall pass, only upon proper delivery of the certificates
representing LaSalle Holdings Shares or Minority Shares (as applicable) to
the LaSalle Exchange Agent).
(b) Each holder of LaSalle Holdings Shares or Minority Shares that
have been transferred to New Holdings pursuant to the Scheme of
Arrangement, upon surrender to the LaSalle Exchange Agent of a certificate
or certificates representing such shares, together with a properly
completed letter of transmittal covering such shares, shall be entitled to
receive the LaSalle Consideration payable in respect of such shares. Until
so surrendered, each such certificate shall, after the Scheme Effective
Time, represent for all purposes only the right to receive such LaSalle
Consideration.
(c) If any portion of the LaSalle Consideration is to be paid to a
Person other than the registered holder of the LaSalle Holdings Shares or
Minority Shares (as applicable) represented by the certificate or
certificates surrendered in exchange therefor, it shall be a condition to
such payment that the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay to the LaSalle Exchange Agent any
transfer or other Taxes required as a result of such payment to a Person
other than the registered holder of such shares or establish to the
satisfaction of the LaSalle Exchange Agent that such Tax has been paid or
is not payable.
(d) After the Scheme Effective Time, there shall be no further
registrations of transfers of LaSalle Holdings Shares or Minority Shares
other than the registration of LaSalle Holdings Shares and Minority Shares
in the name of New Holdings pursuant to Section 2.6(a). If, after the
Scheme Effective Time, certificates representing LaSalle Holdings Shares or
Minority Shares are presented to LaSalle Holdings or, subject to the
provisions of Section 2.8(e), the LaSalle Exchange Agent, they
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shall be cancelled and exchanged for the LaSalle Consideration in
accordance with the procedures set forth in this Section 2.8.
(e) Any portion of the LaSalle Consideration (together with any
dividends or distributions with respect to the New Holdings Shares)
deposited with the LaSalle Exchange Agent pursuant to Section 2.8(a) and
any cash payment for a fractional New Holdings Share pursuant to Section
2.12, that remains unclaimed by the holders of LaSalle Holdings Shares or
the holders of Minority Shares twelve months after the Scheme Effective
Time shall be returned to New Holdings or an Affiliate designated by New
Holdings, upon demand, and any such holder who has not exchanged his
LaSalle Holdings Shares or Minority Shares for the LaSalle Consideration in
accordance with this Section 2.8 prior to that time shall thereafter look
only to New Holdings for his claim for New Holdings Shares and any
dividends or distributions with respect to New Holdings Shares.
Notwithstanding the foregoing, New Holdings shall not be liable to any
holder of LaSalle Holdings Shares or any holder of Minority Shares for any
amount paid to a public official pursuant to applicable abandoned property
laws.
(f) No dividends or other distributions with respect to the New
Holdings Shares constituting part of the LaSalle Consideration shall be
paid to the holder of any unsurrendered certificates representing LaSalle
Holdings Shares or Minority Shares until such certificates are surrendered
as provided in this Section 2.8. Upon such surrender, there shall be paid,
without interest, to the Person in whose name the certificates representing
the New Holdings Shares received in exchange for such LaSalle Holdings
Shares or Minority Shares (as applicable) are registered, (i) all dividends
and other distributions in respect of New Holdings Shares that are payable
on a date subsequent to, and the record date for which occurs after, the
Scheme Effective Time and (ii) all dividends or other distributions in
respect of LaSalle Holdings Shares or Minority Shares (as applicable) that
are payable on a date subsequent to, and the record date for which occurs
on or before, the Scheme Effective Time.
(g) At and after the Scheme Effective Time, each holder of a
certificate or certificates that represented issued and outstanding LaSalle
Holdings Shares or Minority Shares immediately prior to the Scheme
Effective Time shall cease to have any rights as a shareholder of LaSalle
Holdings or LaSalle Re (as applicable), except for the right to surrender
its certificate or certificates in exchange for the LaSalle Consideration
as provided in this Section 2.8.
Section 2.9. Terms of the Plan of Merger and the Plan of
Reorganization: Surrender and Payment.
(a) Promptly after the Reorganization Effective Time, New Holdings
shall (i) appoint an agent (the "Trenwick Exchange Agent") for the purpose
of exchanging certificates representing Trenwick Shares for New Holdings
Shares pursuant to Section 2.7, (ii) deposit with the Trenwick Exchange
Agent certificates representing the aggregate Trenwick Consideration to be
paid in exchange for the Trenwick Shares (together with any dividends or
distributions with respect thereto) and (iii) send, or cause the Trenwick
Exchange Agent to send, to each holder of Trenwick Shares at the
Reorganization Effective Time a letter of transmittal for use in such
exchange (which shall specify that
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the delivery shall be effected, and risk of loss and title shall pass, only
upon proper delivery of the certificates representing Trenwick Shares to
the Trenwick Exchange Agent).
(b) Each holder of Trenwick Shares that have been converted into a
right to receive the Trenwick Consideration pursuant to the Plan of Merger
and the Plan of Reorganization, upon surrender to the Trenwick Exchange
Agent of a certificate or certificates representing such Trenwick Shares,
together with a properly completed letter of transmittal covering such
Trenwick Shares, shall be entitled to receive the Trenwick Consideration
payable in respect of such Trenwick Shares. Until so surrendered, each such
certificate shall, after the Reorganization Effective Time, represent for
all purposes only the right to receive such Trenwick Consideration.
(c) If any portion of the Trenwick Consideration is to be paid to
a Person other than the registered holder of the Trenwick Shares
represented by the certificate or certificates surrendered in exchange
therefor, it shall be a condition to such payment that the certificate or
certificates so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the Person requesting such payment shall
pay to the Trenwick Exchange Agent any transfer or other Taxes required as
a result of such payment to a Person other than the registered holder of
such Trenwick Shares or establish to the satisfaction of the Trenwick
Exchange Agent that such Tax has been paid or is not payable.
(d) After the Reorganization Effective Time, there shall be no
further registrations of transfers of Trenwick Shares. If, after the
Reorganization Effective Time, certificates representing Trenwick Shares
are presented to Trenwick or, subject to the provisions of Section 2.9(e),
the Trenwick Exchange Agent, they shall be cancelled and exchanged for the
Trenwick Consideration in accordance with the procedures set forth in this
Section 2.9.
(e) Any portion of the Trenwick Consideration (together with any
dividends or distributions with respect to the New Holdings Shares)
deposited with the Trenwick Exchange Agent pursuant to Section 2.9(a), and
any cash payment for a fractional New Holdings Share pursuant to Section
2.12, that remains unclaimed by the holders of Trenwick Shares twelve
months after the Reorganization Effective Time shall be returned to New
Holdings or an Affiliate designated by New Holdings, upon demand, and any
such holder who has not exchanged his Trenwick Shares for the Trenwick
Consideration in accordance with this Section 2.9 prior to that time shall
thereafter look only to New Holdings for his claim for New Holdings Shares,
any cash in lieu of fractional New Holdings Shares and any dividends or
distributions with respect to New Holdings Shares. Notwithstanding the
foregoing, New Holdings shall not be liable to any holder of Trenwick
Shares for any amount paid to a public official pursuant to applicable
abandoned property laws.
(f) No dividends or other distributions with respect to the New
Holdings Shares constituting part of the Trenwick Consideration shall be
paid to the holder of any unsurrendered certificates representing Trenwick
Shares until such certificates are surrendered as provided in this Section
2.9. Upon such surrender, there shall be paid, without interest, to the
Person in whose name the certificates representing the New Holdings Shares
into which such Trenwick Shares were converted are registered, (i) all
dividends and other distributions in respect of New Holdings Shares
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that are payable on a date subsequent to, and the record date for which
occurs after, the Reorganization Effective Time and (ii) all dividends or
other distributions in respect of Trenwick Shares that are payable on a
date subsequent to, and the record date for which occurs on or before, the
Merger Effective Time.
(g) At and after the Merger Effective Time, each holder of a
certificate or certificates that represented issued and outstanding
Trenwick Shares immediately prior to the Merger Effective Time shall cease
to have any rights as a stockholder of Trenwick, except for the right to
surrender its certificate or certificates in exchange for the Trenwick
Consideration as provided in this Section 2.9.
Section 2.10. Voting. In determining shareholders of New Holdings
entitled to notice of and to vote at meetings of shareholders of New
Holdings, former shareholders of record of LaSalle Holdings, LaSalle Re and
Trenwick shall not be deemed shareholders of record until the register of
members of New Holdings is amended to reflect the allotment and issue of
the New Holdings Shares to such former shareholders.
Section 2.11. Lost Certificates. If any certificate representing
Trenwick Shares, LaSalle Holdings Shares or Non-Voting Shares shall have
been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such certificate to be lost, stolen or
destroyed and, if required by New Holdings, the posting by such Person of a
bond in such reasonable amount as the New Holdings may direct as indemnity
against any claim that may be made against it with respect to such
certificate, the Trenwick Exchange Agent or LaSalle Exchange Agent, as the
case may be, will deliver in exchange for such lost, stolen or destroyed
certificate the Trenwick Consideration or LaSalle Consideration, as the
case may be, with respect to the Trenwick Shares, LaSalle Holdings Shares
or Non-Voting Shares formerly represented thereby, without any interest
thereon.
Section 2.12. No Fractional Shares. No certificates or scrip
representing fractional New Holdings Shares shall be issued upon the
conversion of Trenwick Shares, LaSalle Holding Shares, or Non-Voting
Shares, but in lieu thereof each holder otherwise entitled to a fractional
New Holdings Share (after taking into account all Trenwick Shares, LaSalle
Holdings Shares or Non-Voting Shares, as applicable, owned by such holder)
shall be entitled to receive, from the Trenwick Exchange Agent or the
LaSalle Exchange Agent, as applicable, in accordance with the provisions of
this Section 2.12, a cash payment in lieu of such fractional New Holdings
Share representing the value of such fraction, which for this purpose shall
be calculated by (i) multiplying such fraction by the product of the
Average Closing Price and the Trenwick Exchange Ratio in the case of
Trenwick Shares and (ii) multiplying such fraction by the product of the
Average Closing Price and the LaSalle Exchange Ratio in the case of LaSalle
Holdings Shares and Non-Voting Shares. As soon as practicable after the
determination of the amount of cash, if any, to be paid to holders of
Trenwick Shares, LaSalle Holdings Shares, or Non-Voting Shares, as
applicable, in lieu of any fractional New Holdings Share, the Trenwick
Exchange Agent or the LaSalle Exchange Agent, as applicable, shall promptly
pay without interest to all holders of Trenwick Shares, LaSalle Holdings
Shares, or Non-Voting Shares, as applicable, entitled thereto all such
amounts. Holders of interests representing fractional New Holdings Shares
shall not be entitled to vote such interests or to any other rights as a
shareholder of New Holdings.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TRENWICK
Trenwick hereby represents and warrants to LaSalle Holdings that:
Section 3.1. Corporation; Organization.
(a) Except as set forth in Section 3.1(a) of the Trenwick
Disclosure Letter, each of Trenwick and its Subsidiaries is a company duly
incorporated, validly existing and in good standing (with respect to
jurisdictions that recognize such concept) under the laws of the
jurisdiction of its incorporation. Each of Trenwick and its Subsidiaries
(i) is qualified, licensed or domesticated as a foreign corporation in all
jurisdictions where such qualification, license or domestication is
required to own and operate its properties and conduct its business in the
manner and at the places presently conducted; (ii) holds all franchises,
grants, licenses, certificates, permits, consents and orders, all of which
are valid and in full force and effect, from all applicable regulatory
authorities necessary to own and operate its properties and to conduct its
business in the manner and at the places presently conducted; and (iii) has
full power and authority (corporate and other) to own, lease and operate
its respective properties and assets and to carry on its business as
presently conducted and as proposed to be conducted, except where the
failure to be so qualified, licensed or domesticated or to hold such
franchises, grants, licenses, certificates, permits, consents and orders or
to have such power and authority would not, when taken together with all
other such failures, reasonably be expected to have a Material Adverse
Effect on Trenwick. Trenwick has furnished to LaSalle Holdings complete and
correct copies of its certificate of incorporation and by-laws as in effect
on the date hereof. Such certificate of incorporation and by-laws are in
full force and effect and no other constitutional documents are applicable
to or binding upon Trenwick.
(b) Trenwick conducts its insurance and reinsurance operations
through the Subsidiaries set forth in Section 3.1(b) of the Trenwick
Disclosure Letter (collectively, the "Trenwick Insurance Subsidiaries").
Each of the Trenwick Insurance Subsidiaries is (i) duly licensed or
authorized as an insurance company or (as applicable) a reinsurer in its
jurisdiction of incorporation or duly licensed to operate in the insurance
or reinsurance business (as applicable) in its jurisdiction of
incorporation, (ii) duly licensed or authorized as an insurance company and
(as applicable) a reinsurer in each other jurisdiction where it is required
to be so licensed or authorized or duly licensed to operate in the
insurance or reinsurance business (as applicable) in each other
jurisdiction where it is required to be so licensed and (iii) duly
authorized in its jurisdiction of incorporation and each other applicable
jurisdiction to write each line of business currently written by such
Trenwick Insurance Subsidiaries, except, in any such case, where the
failure to be so licensed or authorized is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Trenwick.
Except as set forth in Section 3.1(b) of the Trenwick Disclosure Letter,
Trenwick has made all required filings under applicable insurance holding
company statutes except where the failure to file is not reasonably
expected to have a Material Adverse Effect on Trenwick.
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Section 3.2. Authority; Approval and Fairness.
(a) Trenwick has all requisite corporate power and authority to
execute and deliver this Agreement and, subject to the due approval and
adoption of this Agreement by its stockholders, to perform its obligations
hereunder and consummate the transactions contemplated hereby. Trenwick has
all requisite corporate power and authority to enter into the Stock Option
Agreements and to consummate the transactions contemplated thereby. The
execution and delivery of this Agreement by Trenwick, the performance by
Trenwick of its obligations hereunder and the consummation by Trenwick of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Trenwick, subject only to
compliance with the provisions of Sections 264 and 271 of the GCL. No other
corporate proceedings on the part of Trenwick are necessary for the
execution and delivery of this Agreement by Trenwick and, subject to
compliance with the provisions of Sections 264 and 271 of the GCL, the
performance by Trenwick of its obligations hereunder and the consummation
by Trenwick of the transactions contemplated hereby. This Agreement and the
Stock Option Agreements have been duly executed and delivered by Trenwick
and (assuming the due authorization, execution and delivery of this
Agreement and the Stock Option Agreements by LaSalle Holdings, LaSalle Re),
subject to the provisions of Section 264 and 271 of the GCL, constitute
legal, valid and binding obligations of Trenwick, enforceable against
Trenwick in accordance its terms, subject with respect to enforceability to
the effect of bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or similar laws now or hereafter affecting the
enforcement of creditors' rights generally and to the availability of
equitable remedies.
(b) The Board of Directors of Trenwick (the "Trenwick Board") (i)
has unanimously (by all directors present at a meeting duly called and
held) declared that it considers this Agreement, the Plan of Merger and the
other transactions contemplated hereby to be advisable and in the best
interests of Trenwick and its stockholders, and (ii) has authorized and
approved in all respects this Agreement, the Plans and the other
transactions contemplated hereby.
Section 3.3. Capital Structure.
(a) As of the date hereof, the authorized capital stock of
Trenwick consists of 30,000,000 shares of common stock with a par value of
$0.10 per share and 2,000,000 shares of preferred stock with a par value of
$0.10 per share. As of December 15, 1999, (i) 17,397,809 shares of common
stock were issued and outstanding, (ii) no shares of common stock were held
as treasury shares or by Subsidiaries of Trenwick, (iv) 200,000 shares of
Series B Junior Participating Preferred Stock were reserved for issuance
upon exercise of the rights (the "Rights") distributed to the holders of
shares of common stock pursuant to the Rights Agreement dated as of
September 24, 1997 (the "Rights Agreement"), between Trenwick and First
Chicago Trust Company of New York, as Rights Agent, and (v) no shares of
preferred stock were issued or outstanding. Section 3.3(a) of the Trenwick
Disclosure Letter sets forth each plan, arrangement or agreement pursuant
to which options or stock appreciation rights with respect to Trenwick
Shares may be granted or under which such options or stock appreciation
rights have been granted and are outstanding (the "Trenwick Option Plans")
and in the aggregate the maximum number of options and stock appreciation
rights outstanding as of the date
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hereof and the class and number of Trenwick Shares reserved for issue
pursuant to the Trenwick Option Plans (such options and rights being herein
collectively referred to as the "Trenwick Options"), together with a
listing of the aggregate number of such Trenwick Options which shall vest
at the Merger Effective Time as a result of the Plan of Merger. Each of the
outstanding shares of capital stock of each Subsidiary of Trenwick, other
than the 110,000 redeemable preferred capital securities (liquidation
amount $1,000 per security) issued by Trenwick Capital Trust I, a Delaware
statutory business trust ("Trenwick Capital"), and other than as set forth
in Section 3.3(a) of the Trenwick Disclosure Letter, is directly or
indirectly owned by Trenwick, free and clear of all Liens.
(b) Except as described in Section 3.3(b) of the Trenwick
Disclosure Letter, no bonds, debentures, notes or other indebtedness having
the right to vote (or convertible into or exercisable for securities having
the right to vote) on any matters on which stockholders may vote ("Voting
Debt") of Trenwick or any of its Subsidiaries are issued or outstanding.
(c) Except as described in Sections 3.3(a), (b) or (c) of the
Trenwick Disclosure Letter, there are no options, warrants, calls, rights,
commitments or agreements of any character to which Trenwick or any of its
Subsidiaries is a party or by which any of them is bound obligating
Trenwick or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or any
Voting Debt of Trenwick or any of its Subsidiaries or obligating Trenwick
or any of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Except as set forth in this
Agreement or in Section 3.3(c) of the Trenwick Disclosure Letter, there are
no outstanding contractual obligations of Trenwick or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Trenwick or any of its Subsidiaries.
(d) Except as described in Section 3.3(d) of the Trenwick
Disclosure Letter or as specifically described in this Agreement and except
for quarterly dividends in an amount not in excess of $0.26 per share,
since September 30, 1999, Trenwick has not (i) made or agreed to make any
share split or share dividend, or issued or permitted or agreed to permit
to be issued any shares, or securities exercisable for or convertible into
shares, of capital stock of Trenwick other than pursuant to and as required
by the terms of any Trenwick Option; (ii) repurchased, redeemed or
otherwise acquired any shares of capital stock of Trenwick; or (iii)
declared, set aside, made or paid to the stockholders of Trenwick dividends
or other distributions on the outstanding shares of capital stock of
Trenwick.
Section 3.4. SEC Reports; Financial Statements.
(a) Trenwick has delivered or made available to LaSalle Holdings a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement or information statement (including exhibits)
filed by Trenwick or Chartwell Re Corporation ("Chartwell") with the SEC in
respect of their respective fiscal years ending December 31, 1997 and 1998
and their respective quarters ending after December 31, 1998 under the
Securities Act and the Exchange Act and will deliver to LaSalle Holdings
promptly upon the filing thereof with the SEC all such reports,
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schedules, registration statements and proxy statements (including
exhibits) as may be filed after the date hereof and prior to the Effective
Time (as such documents have since the time of their filing been amended,
including without limitation, amendments reflected in the Joint Proxy
Statement/Prospectus dated September 7, 1999 or may after their filing, if
after the date hereof, be amended, the "Trenwick SEC Reports"), which are
or will be all the documents that Trenwick was or will be required to file
with the SEC. Except as disclosed in Section 3.4(a) of the Trenwick
Disclosure Letter, as of their respective dates, the Trenwick SEC Reports
complied or will comply in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to the Trenwick SEC
Reports, and none of the Trenwick SEC Reports contained or will contain any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made or will be made, not misleading.
(b) As of their respective dates, the financial statements of
Trenwick included or to be included in the Trenwick SEC Reports (the
"Trenwick Financial Statements") complied or will comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, and
presented or will present fairly in all material respects the consolidated
financial position of Trenwick and its Subsidiaries and the consolidated
results of operations, changes in stockholders' equity and cash flows of
Trenwick and its Subsidiaries as of the dates and for the periods
indicated, in accordance with GAAP applied on a consistent basis, subject
in the case of interim financial statements to normal year-end adjustments
and except for the absence of certain footnote information in the unaudited
statements.
(c) Except as set forth in, or arising out of facts or
circumstances disclosed in, filings by Trenwick with the SEC prior to the
date hereof, Trenwick and its Subsidiaries have no liabilities, debts,
claims or obligations of any nature on the date hereof, whether accrued,
absolute, direct or indirect, contingent or otherwise, whether due or to
become due, that would be required to be included on a balance sheet
prepared in accordance with GAAP ("Trenwick Liabilities"), and there is no
existing condition or set of circumstances which would reasonably be
expected to result in a Trenwick Liability, except for (i) Trenwick
Liabilities incurred in the ordinary and usual course of business and
consistent with past practice since September 30, 1999, (ii) Trenwick
Liabilities incurred in connection with or as a result of the transactions
contemplated by this Agreement and (iii) Trenwick Liabilities that would
not reasonably be expected to have a Material Adverse Effect on Trenwick.
Section 3.5. Absence of Certain Changes or Events. Except in
connection with this Agreement, the Plans, the Stock Option Agreements and
the transactions contemplated hereby and thereby or except as described in
Section 3.5 of the Trenwick Disclosure Letter, as disclosed in the Trenwick
SEC Reports filed and publicly available prior to the date of this
Agreement (the "Filed Trenwick SEC Reports") since the date of the most
recent audited financial statements included in the Filed Trenwick SEC
Reports, Trenwick and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice, and there has not occurred
(i) any event or change having individually or in the aggregate a Material
Adverse Effect on Trenwick, (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property)
with respect to any of Trenwick's outstanding capital stock, other than
regular quarterly cash dividends of
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not more than $0.26 per share on the Trenwick Shares and dividends paid by
wholly owned subsidiaries, (iii) (A) any granting by Trenwick or any of its
Subsidiaries to any current or former director or officer of Trenwick or
its Subsidiaries of any increase in compensation, bonus or other benefits,
except for normal increases in the ordinary course of business, (B) any
granting by Trenwick or any of its Subsidiaries to any such current or
former director or officer of any increase in severance or termination pay
or (C) any entry by Trenwick or any of its Subsidiaries into, or any
amendments of, any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such current
or former director or officer, (iv) any tax election that individually or
in the aggregate would have a Material Adverse Effect on Trenwick or any of
its tax attributes or any settlement or compromise of any material income
tax liability, or (v) any change in accounting methods, principles or
practices by Trenwick or any of its Subsidiaries materially affecting their
assets, liabilities or business, except insofar as may have been required
or permitted by a change in applicable accounting principles (including
statutory accounting practices ("SAP")).
Section 3.6. Certain Fees. No finder, broker, agent, financial
advisor or other intermediary other than DLJ has acted on behalf of
Trenwick in connection with this Agreement or the transactions contemplated
hereby, or is entitled to any payment in connection herewith. Trenwick has
provided to LaSalle Holdings copies of Trenwick's engagement letter with
DLJ in connection with this Agreement and the transactions contemplated
hereby.
Section 3.7. No Defaults. Neither Trenwick nor any of its
Subsidiaries is in default or violation (and no event has occurred which
with notice or lapse of time or both would constitute a default or
violation) of its certificate of incorporation or by-laws or other
governing document, or any material agreement, mortgage, indenture,
debenture, trust, lease, license or other instrument or obligation to or by
which it or any of its properties is subject or bound (the "Trenwick
Instruments"), except for such defaults or violations as would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Trenwick. Except as set forth in Section 3.7 of
the Trenwick Disclosure Letter, the execution, delivery and performance of
this Agreement and the taking of any other action contemplated by this
Agreement will not (i) result in any violation of or be in conflict with or
constitute a breach or default (with or without notice or lapse of time or
both) under (a) the certificate of incorporation or by-laws of Trenwick or
its Subsidiaries or (b) any of the other Trenwick Instruments, except for
any such violation of, conflict with, breach of or default under which
would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Trenwick, (ii) result in or constitute an
event entitling any party to a Trenwick Instrument to effect an
acceleration of the maturity of any indebtedness of Trenwick or any of its
Subsidiaries or an increase in the rate of interest presently in effect
with respect to such indebtedness, except for any such accelerations or
increases which would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on Trenwick or (iii) result in
the creation of any Lien upon any of the properties or assets of Trenwick,
except for Permitted Liens and any Liens which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Trenwick.
Section 3.8. Consents.
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(a) Except as set forth in Section 3.8 of the Trenwick Disclosure
Letter and except for compliance with the provisions of Sections 264 and
271 of the GCL and the approval of Lloyd's, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or filing with, any Governmental Authority ("Consent") is required on the
part of Trenwick or any of its Subsidiaries in connection with the
execution, delivery and performance by Trenwick of this Agreement and the
consummation by Trenwick of the transactions contemplated hereby, except
those required by (i) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) United States federal and state securities or "Blue Sky" laws
and (iii) where failure to obtain such Consent would not be reasonably
expected to have a Material Adverse Effect on Trenwick.
(b) Other than the affirmative vote of the holders of more than
50% of the issued and outstanding Trenwick Shares (with each share having
one vote per share) required to approve and adopt this Agreement, the Plan
of Merger and the Plan of Reorganization, there is no other vote, consent
or approval of the holders of any class of shares of Trenwick necessary to
approve and adopt this Agreement, the Plan of Merger, the Plan of
Reorganization and the transactions contemplated hereby.
Section 3.9. Compliance with Applicable Law. Each of Trenwick and
its Subsidiaries is in compliance with all licenses, permits and other
authorizations, domestic or foreign, necessary to conduct its respective
business, except where failure to have or comply with such licenses,
permits and authorizations would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Trenwick.
Neither Trenwick nor any of its Subsidiaries is in default or violation
(and no event has occurred which with notice or the lapse of time or both
would constitute a default or violation) of any judgment, decree, order,
law, statute, rule or regulation of any Governmental Authority, except for
such defaults or violations as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Trenwick.
Subject to obtaining the Consents referred to in Section 3.8, the
execution, delivery and performance of this Agreement by Trenwick and the
consummation by Trenwick of the transactions contemplated hereby prior to
the date or dates as of which the representations and warranties herein are
made or deemed made, will not result in any default or violation of any
judgment, decree, order, law, statute, rule or regulation of any
Governmental Authority applicable to Trenwick or its Subsidiaries, except
for such defaults or violations as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
Trenwick.
Section 3.10. Information Supplied. None of the information
supplied or to be supplied by Trenwick for inclusion or incorporation by
reference in the Registration Statement on Form S-4 (the "Form S-4") to be
filed with the SEC by New Holdings relating to the New Holdings Shares
comprising LaSalle Consideration and Trenwick Consideration will, at the
time the Form S-4 is filed with the SEC, at any time it is amended or
supplemented or at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such
statements were made, not misleading. The letters to shareholders, notices
of meetings, proxy statements and forms of proxies to be distributed to
shareholders of LaSalle Holdings
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and stockholders of Trenwick, respectively, in connection with the Plans
and the transactions contemplated hereby, except information supplied by
LaSalle Holdings in writing for inclusion in the Joint Proxy Statement (as
defined herein), will not, as of the date the Joint Proxy Statement is
first mailed to such shareholders and on the date of the meetings of
Trenwick's stockholders or LaSalle Holdings' shareholders, as the case may
be, and the date of any postponement or adjournment thereof, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The information and documents referred to in the previous two
sentences are herein referred to as the "Joint Proxy Statement." All
documents that Trenwick is responsible for filing with any Governmental
Authority in connection with the transactions contemplated hereby will
comply as to form in all material respects with the provisions of any
applicable law.
Section 3.11. Material Contracts. Except as set forth in
Section 3.11 of the Trenwick Disclosure Letter:
(a) All of the contracts of Trenwick and its Subsidiaries that are
required to be described in the Trenwick SEC Reports or to be filed as
exhibits thereto (including, without limitation, contracts of Chartwell)
are described in the Trenwick SEC Reports or filed as exhibits thereto and
are in full force and effect.
(b) Neither Trenwick nor any of its Subsidiaries is a party to any
agreement containing any provision or covenant limiting in any material
respect the ability of Trenwick or any of its Subsidiaries (or New Holdings
or any of its Subsidiaries subsequent to the Effective Time) to (i) sell
any products or services of or to any other Person, (ii) engage in any line
of business in any geographical area or (iii) compete with or to obtain
products or services from any Person or limiting the ability of any Person
to provide products or services to Trenwick or any of its Subsidiaries.
(c) Neither Trenwick nor any of its Subsidiaries is a party to or
bound by any contract, agreement or arrangement which would cause the
rights or obligations of any party thereto to change in the event of the
Plans, except for any such contract, agreement or arrangement which would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Trenwick.
Section 3.12. Taxes. Except as provided in Section 3.12 of the
Trenwick Disclosure Letter:
(a) Trenwick and its Subsidiaries have filed or caused to be filed
with the appropriate United States federal, state, local, foreign and other
Governmental Authorities, all Tax returns, information returns and reports
required to be filed on or prior to the date hereof (taking into account
all valid extensions). All such Tax returns, information returns and
reports are complete and accurate in all material respects.
(b) Trenwick and its Subsidiaries have paid in full or made
adequate provision (in accordance with GAAP) for the payment of all Taxes
shown to be due on the Tax returns referred to
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in Section 3.12(a). All material written assessments of Taxes due and
payable by or on behalf of Trenwick or any of its Subsidiaries have either
been paid or provided for (in accordance with GAAP) or are being contested
in good faith by appropriate proceedings.
(c) There are no material Tax claims pending against Trenwick or
any of its Subsidiaries and Trenwick does not know of any threatened claim
for Tax deficiencies or any basis for such claims, no material issues have
been raised in any examination by any taxing authority with respect to
Trenwick or any of its Subsidiaries which, by application of similar
principles, reasonably could be expected to result in a proposed deficiency
for any other period not so examined, and there are not now in force any
waivers or agreements by Trenwick or any of its Subsidiaries for the
extension of time for the assessment of any material Tax, nor has any such
waiver or agreement been requested by any taxing authority. Neither
Trenwick nor any of its Subsidiaries has any liability for any material
United States federal, state, local, foreign or other Taxes of any
corporation or entity other than Trenwick and its Subsidiaries.
(d) There are no Liens on any of the assets of Trenwick or any of
its Subsidiaries that arose in connection with any failure (or alleged
failure) to pay any Taxes (other than Taxes that are not due as of the date
hereof).
(e) Trenwick and its Subsidiaries have withheld and paid all
United States federal, state, local, foreign and other Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party.
(f) To Trenwick's knowledge, Section 3.12(f) of the Trenwick
Disclosure Letter discloses, with respect to the year ended December 31,
1998 and for the period commencing January 1, 1999 and ending on the date
of the Trenwick Disclosure Letter, (i) each insurance or reinsurance
transaction by Trenwick or any of its Subsidiaries directly with
stockholders of Trenwick and (ii) each insurance or reinsurance transaction
by Trenwick or any of its Subsidiaries directly or indirectly with Persons
related to stockholders of Trenwick and not disclosed in clause (i) above,
which would cause Trenwick or any of its Subsidiaries to have any "related
person insurance income" within the meaning of Section 953(c)(2) of the
Code.
(g) To Trenwick's knowledge, Trenwick and its Subsidiaries did not
have for the year ended December 31, 1998, and Trenwick does not expect
Trenwick or any of its Subsidiaries to have for the period ending at the
Merger Effective Time (treating such period as if it were a taxable year),
"related person insurance income" within the meaning of Section 953(c)(2)
of the Code in excess of the exceptions provided in Sections 953(c)(3)(A)
and (B) of the Code.
(h) To Trenwick's knowledge, except as disclosed in Section
3.12(h) of the Trenwick Disclosure Letter, neither Trenwick nor any of its
Subsidiaries is, nor has Trenwick or any of its Subsidiaries ever been, a
"controlled foreign corporation" within the meaning of Section 957(a) or
957(b) of the Code.
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(i) A representation with respect to Taxes contained in this
Section 3.12 shall be deemed to be accurate unless an inaccuracy contained
therein would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Trenwick.
Section 3.13. Litigation. Except as disclosed in the Trenwick SEC
Reports filed prior to the date hereof or in Section 3.13 of the Trenwick
Disclosure Letter, there are no actions, suits, claims, proceedings or
investigations pending against or, to the knowledge of Trenwick, threatened
against or affecting, Trenwick or any of its Subsidiaries or any of their
respective properties or any syndicates managed by a Lloyd's or other
managing agency which is a Subsidiary of Trenwick ("Trenwick Managing
Agency") before any Governmental Authority or otherwise which (a) would be
expected to have, individually or in the aggregate, a Material Adverse
Effect on Trenwick, (b) in any manner challenges or seeks to prevent,
enjoin, alter or delay the transactions contemplated hereby or (c) alleges
criminal action or inaction. As of the date hereof, neither Trenwick nor
its Subsidiaries or any of their respective properties is subject to any
order, writ, judgment, injunction, decree, determination or award having,
or which would reasonably be expected to have, a Material Adverse Effect on
Trenwick or which would prevent or delay the consummation of the
transactions contemplated hereby. Except as disclosed in the Trenwick SEC
Reports filed prior to the date hereof, there are no pending or, to the
knowledge of Trenwick, threatened claims for indemnification by Trenwick or
any of its Subsidiaries in favor of directors, officers, employees and
agents of Trenwick or any of its Subsidiaries.
Section 3.14. Title to Properties; Leases. Except as set forth in
Section 3.14(a) of the Trenwick Disclosure Letter, each of Trenwick and its
Subsidiaries has good and marketable title to, and is the lawful owner of,
or has the right to use pursuant to a license or otherwise, all of the
tangible and intangible assets, properties and rights used in its
businesses and all tangible and intangible assets, properties and rights
reflected on the balance sheet of Trenwick dated September 30, 1999 or
acquired since September 30, 1999, free and clear of all Liens (other than
Permitted Liens) and material defects. Trenwick and its Subsidiaries own no
real property. Section 3.14(b) of the Trenwick Disclosure Letter sets forth
all material real property and personal property leases of Trenwick and its
Subsidiaries. All such leases are valid, binding and enforceable against
Trenwick or its Subsidiaries (and, to the knowledge of Trenwick and its
Subsidiaries, each other party thereto) in accordance with their respective
terms, and there does not exist, under any lease of real property or
personal property, any material defect or any event which, with notice or
lapse of time or both, would constitute a material default by the Trenwick
or its Subsidiaries, as the case may be, or, to the knowledge of Trenwick
and its Subsidiaries, by any other party thereto.
Section 3.15. Employees.
(a) Section 3.15(a) of the Trenwick Disclosure Letter lists all
employment contracts and similar arrangements between Trenwick or any of
its Subsidiaries and their respective executive officers and all plans and
arrangements pursuant to which Trenwick or any of its Subsidiaries is
obligated to make any payment or confer any material benefit upon any
officer, director, employee or agent of Trenwick or any of its Subsidiaries
as a result of or in connection with any of the transactions contemplated
by this Agreement or any transaction or transactions resulting in a change
of control of
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Trenwick or any of its Subsidiaries (including as a result of a termination
of employment in connection with any of such events). Except as described
in Section 3.15(a) of the Trenwick Disclosure Letter and except as would
not reasonably be expected to have a Material Adverse Effect on Trenwick,
(a) Trenwick and its Subsidiaries have complied with all laws relating to
the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity and collective bargaining and (b) no labor dispute
with employees of Trenwick or any of its Subsidiaries exists or, to the
knowledge of Trenwick, is threatened. The severance costs associated with
the acquisition of Chartwell and related workforce reductions have been
identified and are as set forth in Section 3.15(a) of the Trenwick
Disclosure Letter.
(b) Except as set forth in Section 3.15(b) of the Trenwick
Disclosure Letter, neither Trenwick nor any of its Subsidiaries is a party
to any collective bargaining or other labor union contract applicable to
Persons employed by Trenwick or any of its Subsidiaries, no collective
bargaining agreement is being negotiated by Trenwick or any of its
Subsidiaries and Trenwick has no knowledge of any activities or proceedings
of any labor union to organize any of their respective employees. There is
no labor dispute, strike or work stoppage against Trenwick or any of its
Subsidiaries pending or, to Trenwick's knowledge, threatened which may
interfere with the respective business activities of Trenwick or any of its
Subsidiaries, except where such dispute, strike or work stoppage would not
reasonably be expected to have a Material Adverse Effect on Trenwick.
(c) Trenwick has made all necessary notifications to and received
all necessary consents from Lloyd's and the Financial Services Authority
with respect to the employment of personnel requiring such notification or
consents.
Section 3.16. Benefit Plans.
(a) (i) Each Employee Benefit Plan maintained or contributed to,
or required to be maintained or contributed to, by Trenwick or any of its
Subsidiaries for the benefit of any present or former U.S. officer,
employee or director of Trenwick or any of its Subsidiaries (all the
foregoing collectively referred to hereinafter as "Trenwick Benefit Plans")
has been administered substantially in accordance with its terms and any
related trust agreement or insurance contract has been administered
substantially in accordance with its terms. Trenwick, its Subsidiaries and
all the Trenwick Benefit Plans, and any related trust agreements or
insurance contracts, are in substantial compliance with the applicable
provisions of ERISA, the Code, all other applicable laws and all applicable
collective bargaining agreements.
(ii) None of Trenwick or any other person or entity that
together with Trenwick is treated as a single employer
under Section 414 of the Code (each a "Trenwick Commonly
Controlled Entity") has incurred any material liability
under Title IV of ERISA (other than for the payment of
benefits or the timely payment of Pension Benefit
Guaranty Corporation insurance premiums, in either case
in the ordinary course) or under Section 412(f) or 412(n)
of the Code, and no condition exists which could
reasonably be expected to present a risk of Trenwick or
any Commonly Controlled Entity incurring such a material
liability.
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(iii) Neither Trenwick nor any Trenwick Commonly
Controlled Entity is obligated to contribute to any
"multiemployer plan" (as defined in Section 3(37) or
Section 4001(a)(3) of ERISA) or has any material
liability, including current or potential withdrawal
liability (within the meaning of Section 4201 of ERISA)
with respect to any multiemployer plan.
(iv) Except as contemplated by Section 2.4 or as
disclosed in the Filed Trenwick SEC Documents or in
Section 3.16(a)(iv) of the Trenwick Disclosure Schedule,
since the date of the most recent audited financial
statements included in the Filed Trenwick SEC Documents,
there has not been any adoption or amendment by Trenwick
or any of its Subsidiaries of any collective bargaining
agreement or any Trenwick Benefit Plan. Except as
disclosed in the Filed Trenwick SEC Documents or in
Section 3.16(a)(iv) of the Trenwick Disclosure Schedule,
there exist no employment, consulting, change in control,
severance, termination or indemnification agreements,
arrangements or understandings between Trenwick or any
Subsidiary and any current or former employee, officer or
director of Trenwick or any Subsidiary or any Trenwick
Benefit Plan.
(v) All material contributions and other payments
required to be made by Trenwick and its subsidiaries to
any Trenwick Benefit Plan prior to the date hereof have
been made and all accruals required to be made under any
Trenwick Benefit Plan have been made. There is no claim,
dispute, grievance, charge, complaint, restraining or
injunctive order, litigation or proceeding pending, or,
to the knowledge of Trenwick, threatened or anticipated
(other than routine claims for benefits) against or
relating to any Trenwick Benefit Plan or against the
assets of any Trenwick Benefit Plan which could
reasonably be expected to result in the imposition of any
material liability of Trenwick. Neither Trenwick nor any
of its Subsidiaries has communicated generally to
employees or specifically to any employee regarding any
future increase of benefit levels (or future creations of
new benefits) with respect to any Trenwick Benefit Plans.
(vi) Each Trenwick Benefit Plan can be terminated or
otherwise discontinued without any liability to Trenwick
or any subsidiary that would reasonably be expected to
have a Material Adverse Effect. With respect to each
Trenwick Benefit Plan subject to Title IV of ERISA and
with respect to each plan of a Trenwick Commonly
Controlled Entity subject to Title IV of ERISA (each a
"Trenwick Defined Benefit Plan") Trenwick Defined Benefit
Plan (i) no termination of any Trenwick Defined Benefit
Plan has occurred pursuant to which all liabilities have
not been satisfied in full, and no event has occurred and
no condition exists that could reasonably be expected to
result in Trenwick or any Trenwick Commonly Controlled
Entity incurring liability under Title IV of ERISA or
could constitute grounds for terminating any Trenwick
Defined Benefit Plan; (ii) each Trenwick Defined Benefit
Plan which is subject to Part 3 of Subtitle B of Title I
of ERISA or Section 412 of the Code, has been maintained
in compliance with the minimum funding standards of ERISA
and the Code
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and no such Trenwick Defined Benefit Plan has incurred
any "accumulated funding deficiency," as defined in
Section 412 of the Code and Section 302 of ERISA, whether
or not waived; (iii) neither Trenwick nor any Trenwick
Commonly Controlled Entity has sought or received a
waiver of its funding requirements with respect to any
Trenwick Defined Benefit Plan and all material
contributions payable with respect to each Defined
Benefit Plan have been timely made; (iv) no reportable
event, within the meaning of Section 4043 of ERISA, and
no event described in Section 4062 or 4063 of ERISA, has
occurred with respect to any Trenwick Defined Benefit
Plan; (v) the aggregate accumulated benefit obligations
of each Trenwick Defined Benefit Plan subject to Title IV
of ERISA (as of the date of the most recent actuarial
valuation prepared for such Trenwick Defined Benefit
Plan) do not exceed the fair market value of the assets
of such Trenwick Defined Benefit Plan (as of the date of
such valuation); and (vi) no amendment has been made to
any Trenwick Defined Benefit Plan that has required or
would require the provision of security under ERISA
Section 307 or Code Section 401(a)(29).
(vii) The execution, delivery and performance of this
Agreement and the transactions contemplated hereby will
not in and of themselves result in the imposition of any
federal excise tax with respect to any Trenwick Benefit
Plan.
(viii) Neither Trenwick nor any subsidiary maintains or
contributes (or has maintained or contributed to) any
Trenwick Benefit Plan which provides, or has a liability
to provide, life insurance, medical, severance, or other
employee welfare benefits to any employee upon his
retirement or termination of employment, except as may be
required by Section 4980B of the Code.
(ix) Neither Trenwick nor any of its subsidiaries
maintains or contributes to a trust, organization or
association described in any of the Sections 501(c)(9),
501(c)(17) or 501(c)(2) of the Code.
(x) Favorable determination letters have been received
from the Internal Revenue Service with respect to each
Trenwick Benefit Plan which is intended to comply with
the provisions of Section 401(a) of the Code, and each
such Trenwick Benefit Plan complies in form and in
operation in all material respects with the requirements
of a "qualified plan" under Section 401(a) of the Code.
(xi) Neither Trenwick nor any of its Subsidiaries, nor
any of their respective directors, officers, employees
or, to the knowledge of Trenwick any other "fiduciary,"
as such term is defined in Section 3(21) of ERISA, has
any liability for failure to comply with ERISA or the
Code for any action or failure to act in connection with
the administration or investment of the Trenwick Benefit
Plans.
(xii) There has been no act or acts which would result in
a disallowance of a deduction or the imposition of a tax
pursuant to Section 4980B, or with regard to plan
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years beginning before December 31, 1988, Section 162(i)
of the Code as in effect immediately prior to the
enactment of the Technical and Miscellaneous Revenue Act
of 1988, or any regulations promulgated thereunder,
whether final, temporary or proposed. No event has
occurred with respect to which Trenwick or any of its
subsidiaries could be liable for a tax imposed by Chapter
43 of Subtitle A of the Code, or for a civil penalty or
other liability under Section 502(c) or Section 501(l) of
ERISA. Each Trenwick Benefit Plan that is a "group health
plan" as defined in Section 607 of ERISA complies in all
material respects and has been operated in substantial
compliance in all respects with Part 7 of Title I,
Subtitle B of ERISA and Subtitle K of the Code.
(xiii) With respect to each of the Trenwick Benefit
Plans, Trenwick has delivered to LaSalle Holdings true
and complete copies of: (a) the plan documents, including
any related trust agreements, insurance contracts or
other funding arrangements, or a written summary of the
terms and conditions of the plan if there is no written
plan document; (b) the most recent determination letter
received from the Internal Revenue Service; (c) the most
recent IRS Form 5500; (d) the most recent actuarial
valuation; (e) the most recent financial statement; (f)
all material correspondence with the Internal Revenue
Service, the Department of Labor and the Pension Benefit
Guaranty Corporation with respect to the past three plan
years other than IRS Form 5500 filings and PBGC premium
payments; and (g) the most recent summary plan
description.
(xiv) None of the payments contemplated by any Trenwick
Employee Benefit Plans would, in the aggregate,
constitute excess parachute payments (as defined in
Section 280G of the Code (without regard to subsection
(b)(4) thereof)).
(xv) Except as disclosed in the Section 3.16(a)(xv) of
the Trenwick Disclosure Letter, the consummation of the
Plan of Merger (or the approval thereof by the parties'
respective shareholders) and the other transactions
contemplated by this Agreement, will not (x) entitle any
employees or directors of Trenwick or of any Trenwick
Commonly Controlled Entity, directly or indirectly to
severance pay; (y) accelerate the time of payment or
vesting or trigger any payment of compensation or
benefits under, or increase the amount payable or trigger
any other material obligation pursuant to, any of the
Trenwick Benefit Plans; or (z) result in any breach or
violation of, or default under any of the Trenwick
Benefit Plans.
(b) Except as would not have a Material Adverse Effect on
Trenwick, except as set forth in Section 3.16(b) of the Trenwick Disclosure
Letter and so far as Pierre D. Croizat, Russell J. English, Andrew Okell
and Joanne Merrick, who are senior management of Trenwick's international
operations, are aware:
(i) There is no existing or threatened or pending
industrial or trade dispute involving Trenwick
International Limited ("Trenwick International") and any
of the employees of Trenwick International and there are
no facts known or which would on
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reasonable inquiry be known to Trenwick International
which might indicate that there may be any such dispute
(excluding the Merger and the transactions contemplated
by this Agreement). There are no agreements or
arrangements (whether oral or in writing or existing by
reason of custom and practice and whether or not legally
binding) between Trenwick International and any trade
union or other employees' representatives or organization
concerning or affecting the employees of Trenwick
International and there are no trade unions or other
employees' representatives whom Trenwick International
recognizes to any extent for collective bargaining
purposes nor, so far as Trenwick International is aware,
has Trenwick International done any act which might be
construed as recognition.
(ii) Trenwick International has given no notice of any
redundancies to the U.K. Secretary of State nor started
consultations with any independent trade union or
employees' representatives within the preceding period of
one year in relation to any employees of Trenwick
International. No circumstances have arisen under which
Trenwick International is likely to be required to pay
damages for wrongful dismissal or breach of contract, to
make any contractual or statutory redundancy payment or
make or pay any compensation in respect of unfair
dismissal, to make any other payment under any employment
protection legislation or to reinstate or re-engage any
former employee. No circumstances have arisen under which
Trenwick International is likely to be required to pay
damages or compensation, or suffer any penalty or be
required to take corrective action or be subject to any
form of discipline under the Employment Rights Act 1996,
the Trade Union and Labor Relations (Consolidation) Act
1992, the Transfer of Undertakings (Protection of
Employment) Regulations 1981, the Sex Discrimination Act
1975, the Equal Pay Act 1970, the Treaty of Rome or any
Directive or recommendation made pursuant to it, the Race
Relations Act 1976 or the Disability Discrimination Act
1995. So far as Trenwick International is aware, there
are no current, pending or threatened claims of any type
against Trenwick International by any existing or former
employees or directors of Trenwick International or by
any existing or former consultants to Trenwick
International.
(iii) There are no existing service or other agreements
or contracts between Trenwick International and any of
its directors or executives or employees which cannot be
lawfully terminated by six calendar months' notice or
less without giving rise to any claim for damages or
compensation other than a statutory redundancy payment or
a claim for unfair dismissal depending on the
circumstances of the termination. Trenwick International
has complied with all its material obligations under all
legislation, regulations and other requirements having
the force of law (including, without limitation, orders
and awards) in connection with its employees, directors
and consultants.
(iv) Trenwick International is not involved in
negotiations (whether with employees or any trade union
or other employees' representatives) to vary the terms
and conditions of employment or engagement of any of its
employees, directors or
29
<PAGE>
consultants and has not made any representations,
promises, offers or proposals to any of its employees,
directors or consultants or to any trade union or other
employees' representatives concerning or affecting the
terms and conditions of employment or engagement of any
of its employees, directors or consultants.
(v) Trenwick International has discharged its obligations
in full in relation to salary, wages, fees, commission,
bonuses, overtime pay, holiday pay, sick pay and all
other benefits and emoluments relating to its employees,
consultants and directors in respect of all prior
periods.
(vi) There are no pension, share option, share incentive,
life assurance, disability or similar schemes,
arrangements or obligations for any employees or
directors of Trenwick International, and Trenwick
International has no obligations (whether legally binding
or established by custom) to pay any pension or make any
other payment after retirement or death or otherwise to
provide "relevant benefits" within the meaning of Section
612 of the U.K. Income and Corporation Taxes Act 1988 or
to make any payment for the purpose of providing such
"relevant benefits" to or in respect of any person who is
now or has been an officer or employee of Trenwick
International and is not a party to any scheme or
arrangement having as its purpose or one of its purposes
the making of such payments or the provision of such
benefits.
(vii) All Employee Benefit Plans comply with and have at
all times complied with the provisions of the relevant
legislation and the requirements of the Pension Schemes
Office and the Contributions Agency affecting schemes
approved under Chapter I of Part XIV of the U.K. Income
and Corporation Taxes Act 1988. Trenwick International
and the trustees of such schemes have duly complied with
their respective obligations under the trust deeds and
the rules thereof and under the aforementioned
legislation and requirements. All amounts due to the
trustees thereof or to any insurance company in
connection therewith have been paid.
(viii) Neither Trenwick International nor the trustees of
any pension scheme is engaged in any litigation or
arbitration proceedings in respect of any Employee
Benefit Plan or any benefit provided thereunder in
relation to the employees or former employees of Trenwick
International and there are no current submissions or
referrals to the Pensions Ombudsman or to the
Occupational Pensions Advisory Service in respect of
Trenwick International or any pension scheme.
(ix) No Employee Benefit Plan in which employees or
former employees of Trenwick International participate or
have participated has been or is in the process of being
(or is proposed to be) wound up (in whole or in part) or
closed to new entrants (in whole or in part).
Section 3.17. Intellectual Property. Trenwick and its Subsidiaries
own or possess, or have all necessary rights and licenses in, all patents,
patent rights, licenses, inventions (whether or not
30
<PAGE>
patentable or reduced to practice), copyrights (whether registered or
unregistered), know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), registered and unregistered trademarks, service marks and
trade names and other intellectual property rights (collectively,
"Intellectual Property") necessary to conduct their business as conducted
and proposed to be conducted except to the extent that the failure of
Trenwick or its Subsidiaries to own or have such rights and licenses in
such Intellectual Property would not reasonably be expected to have a
Material Adverse Effect on Trenwick. Neither Trenwick nor any of its
Subsidiaries have received any unresolved notice of, or is aware of any
fact or circumstance that would give any Person a right to assert,
infringement or misappropriation of, or conflict with, asserted rights of
others or invalidity or unenforceability of any Intellectual Property owned
by Trenwick or any of its Subsidiaries with respect to any of the foregoing
which, singly or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Trenwick. To the knowledge of Trenwick, the use
of such Intellectual Property to conduct the business and operations of
Trenwick and its Subsidiaries as conducted or proposed to be conducted does
not infringe on the rights of any person in any case where such
infringement would reasonably be expected to have a Material Adverse Effect
on Trenwick. To the knowledge of Trenwick, no person is challenging,
infringing on or otherwise violating any right of Trenwick or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Trenwick or any of its Subsidiaries. Except as set forth in
Section 3.17 of the Trenwick Disclosure Letter, neither the execution of
this Agreement or the Stock Option Agreements nor the consummation of the
transactions contemplated hereby or thereby will result in a loss or
limitation in the rights and licenses of Trenwick to use or enjoy the
benefit of any Intellectual Property employed by Trenwick or any of its
Subsidiaries in connection with its business as conducted or proposed to be
conducted where such loss or limitation, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on Trenwick.
Following the Effective Date, Trenwick's Intellectual Property may be used
by New Holdings or any of its Subsidiaries, except to the extent that
failure to be so able to use Trenwick's Intellectual Property would not
have a Material Adverse Effect on New Holdings or any of its Subsidiaries.
Section 3.18. Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation enacted under any Delaware law is applicable to the Plans, the
Stock Option Agreements or the other transactions contemplated hereby or
thereby. Trenwick has taken all corporate action necessary to render the
provisions of Section 203 of the GCL inapplicable to the Plans, the Stock
Option Agreements and the other transactions contemplated hereby and
thereby.
Section 3.19. Opinion of Financial Advisor. Trenwick has received
the written opinion of Donaldson, Lufkin & Jenrette ("DLJ"), dated December
16, 1999, to the effect that, as of such date, the Trenwick Exchange Ratio
is fair to Trenwick from a financial point of view, a copy of which written
opinion will be delivered to LaSalle Holdings.
Section 3.20. Rights Agreement.
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(a) Trenwick and its Board of Directors have taken all necessary
actions, including the amendment to the Rights Agreement, so that the
execution and delivery of this Agreement, the LaSalle Stock Option
Agreement or the consummation of the transactions contemplated hereby and
thereby will not (i) cause any of the Rights to become exercisable, (ii)
cause LaSalle Holdings or New Holdings to be an Acquiring Person (as
defined in the Rights Agreement) or (iii) trigger other provisions of the
Rights Agreement, including giving rise to a Distribution Date (as defined
in the Rights Agreement), and the Expiration Date (as defined in the Rights
Agreement) of the Rights shall occur immediately prior to the Effective
Time. Such amendment shall be in full force and effect from and after the
date hereof.
(b) Trenwick has taken all necessary action with respect to all of
the outstanding Rights so that, as of immediately prior to the Effective
Time, (i) none of Trenwick, New Holdings, LaSalle Holdings, LaSalle Re and
Acquisition will have any obligations under the Rights or the Rights
Agreement and (ii) the holders of the Rights will have no rights under the
Rights or the Rights Agreement.
Section 3.21. Insurance Matters.
(a) All insurance, reinsurance and coinsurance treaties or
agreements, including retrocessional agreements, to which Trenwick or any
Trenwick Insurance Subsidiary or any syndicate managed by any Trenwick
Managing Agency is a party or under which Trenwick or any Trenwick
Insurance Subsidiary or any syndicate managed by any Trenwick Managing
Agency, has any existing rights, obligations or liabilities are in full
force and effect, except for such treaties or agreements the failure to be
in full force and effect of which are not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Trenwick.
(b) Prior to the date hereof, Trenwick has delivered or made
available to LaSalle Holdings a true and complete copy of the most recent
actuarial reports prepared by actuaries, independent or otherwise, with
respect to Trenwick or any Trenwick Insurance Subsidiary since December 31,
1998 and all attachments, addenda, supplements and modifications thereto
(the "Trenwick Actuarial Analyses"). The information and data furnished by
Trenwick or any Trenwick Insurance Subsidiary to its independent actuaries
in connection with the preparation of Trenwick Actuarial Analyses were
accurate in all material respects.
(c) Except as disclosed in Section 3.21 of the Trenwick Disclosure
Letter:
(i) All in-force primary insurance policies issued by
Trenwick or any of its Insurance Subsidiaries are, to the
extent required under applicable insurance laws, rules or
regulations, on forms and at rates approved by the
insurance regulatory authority of the jurisdiction where
issued or have been filed with and not objected to by
such authority within the period provided for objection,
except as would not individually or in the aggregate have
a Material Adverse Effect on Trenwick.
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(ii) To the knowledge of Trenwick, except as would not
individually or in the aggregate have a Material Adverse
Effect on Trenwick, each insurance agent or solicitor,
including, without limitation, salaried employees of
Trenwick or any Insurance Subsidiary appointed as an
insurance agent or solicitor, at the time which agent or
solicitor wrote, sold, solicited or produced business for
such insurer since January 1, 1996, was duly licensed as
an insurance agent (for the type of business written,
sold, solicited or produced by such insurance agent or
solicitor in the particular jurisdiction in which such
agent or solicitor wrote, sold, solicited or produced
such business).
Section 3.22. Liabilities and Reserves. Except for instances where
the failure of the following statements to be true would not reasonably be
expected to have a Material Adverse Effect on Trenwick, (a) the reserves
carried on the financial statements of each Trenwick Insurance Subsidiary
for future insurance policy benefits, losses, claims and similar purposes
were, as of the respective dates of such financial statements, in
compliance with the requirements for reserves established by the insurance
departments of the jurisdiction of such Trenwick Insurance Subsidiary or
(as the case may be) by Lloyd's, were determined in accordance with
generally accepted actuarial standards and principles consistently applied
and were fairly stated in accordance with sound actuarial and statutory
accounting principles (it being understood that no representation or
warranty is made in this Agreement to the effect that such reserves will
prove to be adequate to cover the actual amount of liabilities that are
eventually paid after the date hereof); and (b) the admitted assets of each
Trenwick Insurance Subsidiary as determined under applicable laws or under
Lloyd's regulations are in an amount at least equal to the minimum amounts
required by applicable laws or regulations.
Section 3.23. Investment Company. Neither Trenwick nor any of its
Subsidiaries conducts activities of, or is otherwise deemed under
applicable law to control, an "investment adviser" as such term is defined
in Section 2(a)(20) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), whether or not registered under the Investment
Advisers Act of 1940, as amended (the "Investment Advisers Act"). Neither
Trenwick nor any of its Subsidiaries is an "investment company" as defined
under the Investment Company Act and neither Trenwick nor any of its
Subsidiaries sponsors any Person that is such an investment company.
Section 3.24. Finite Risk Reinsurance. Except as set forth in
Section 3.24 of the Trenwick Disclosure Letter, none of Trenwick's
Insurance Subsidiaries has ceded business pursuant to a reinsurance
agreement that does not meet the conditions for reinsurance accounting as
provided by the Statement of Financial Accounting Standards No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and Long-Term
Contracts."
Section 3.25. Reinsurance Contracts, Coverholders and MGAs.
(a) Section 3.25 of the Trenwick Disclosure Letter contains a true
and complete list of all managing general agents ("MGAs") and coverholders
with whom each Subsidiary of Trenwick does business that have been
appointed within the twelve (12) months preceding the date of this
Agreement and all in force contracts, treaties or arrangements regarding
the credit of reinsurance, coinsurance,
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<PAGE>
excess insurance (collectively, the "Reinsurance Contracts") which generate
premium income in excess of $1,000,000. Except as would not, individually
or in the aggregate, have a Material Adverse Effect on Trenwick: (i) each
of the foregoing Reinsurance Contracts is valid and binding in accordance
with its terms, and is in full force and effect and (ii) neither the
Subsidiaries of Trenwick nor, to the knowledge of Trenwick, or other party
thereto, is in default in any material respect with respect to any such
Reinsurance Contract, nor to the knowledge of Trenwick does any condition
exist that with notice or lapse of time or both would constitute such a
material default thereunder. Except as set forth in Section 3.25 of the
Trenwick Disclosure Letter, none of the contracts, treaties or arrangements
which generate premium income in excess of $1,000,000 involving the MGAs or
coverholders with whom each Subsidiary of Trenwick does business contain
"change of control" provisions and no such Reinsurance Contract contains
any provision providing that any such other party thereto may terminate,
cancel or commute the same by reason of the transactions contemplated by
this Agreement or any other provision which would be altered or otherwise
become applicable by reason of such transactions, and no party has given
notice of termination, cancellation or commutation of any such Reinsurance
Contract or that it intends to terminate, cancel or commute any such
Reinsurance Contract as a result of the transactions contemplated hereby.
(b) Except as set forth in Section 3.25 of the Trenwick Disclosure
Letter, Trenwick America Reinsurance Company ("TARCO") is entitled under
applicable insurance laws, rules and regulations to take credit in its
statutory financial statements in accordance with Chapter 22 of the NAIC
Accounting Practices and Procedures Manual for Property and Casualty
Insurance Companies as in effect on the date hereof, with respect to those
Reinsurance Contracts to which it is a party and all such amounts are
properly reflected in the statutory financial statements of TARCO. Except
as set forth in Section 3.25 of the Trenwick Disclosure Letter, Trenwick
International is entitled under applicable insurance laws, rules and
regulations to take credit in its statutory financial statements in
accordance with Lloyd's regulations as in effect on the date hereof, with
respect to those Reinsurance Contracts to which it is a party and all such
amounts are properly reflected in the statutory financial statements of
Trenwick International. Each of Trenwick, TARCO and Trenwick International
has no knowledge of any disputes as to reinsurance or retrocessional
coverage under, or any terms of provisions of, any such Reinsurance
Contract except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on Trenwick. To the
knowledge of Trenwick and TARCO and Trenwick International, the financial
condition of any other party to any such Reinsurance Contract is not
impaired to the extent that a default thereunder could reasonably be
expected to occur.
Section 3.26. Derivatives. As of the date hereof, other than as
set forth in Section 3.26 of the Trenwick Disclosure Letter, neither
Trenwick nor any of its Subsidiaries is a party to any futures or option
contracts, swaps, hedges or similar instruments which, individually or in
the aggregate, could have a Material Adverse Effect on Trenwick.
Section 3.27. Related Party Transactions. Except as set forth in
Section 3.27 of the Trenwick Disclosure Letter, since September 30, 1999,
there have been no transactions, agreements, arrangements or understandings
between Trenwick and its Subsidiaries, on the one hand, and Trenwick
affiliates (other than wholly-owned Subsidiaries of Trenwick) or other
Person, on the other
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<PAGE>
hand, in existence as of the date hereof that are or would be required to
be disclosed in the Trenwick SEC Reports in accordance with Item 404 of
Regulation S-K under the Securities Act.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF LASALLE HOLDINGS
LaSalle Holdings hereby represents and warrants to Trenwick and
the Minority Shareholders that:
Section 4.1. Corporation; Organization.
(a) Except as set forth in Section 4.1(a) of the LaSalle
Disclosure Letter, each of LaSalle Holdings and its Subsidiaries is a
company duly organized, validly existing and in good standing (with respect
to jurisdictions that recognize such concept) under the laws of the
jurisdiction of its organization. Each of LaSalle Holdings and its
Subsidiaries (i) is qualified, licensed or domesticated as a foreign
company in all jurisdictions where such qualification, license or
domestication is required to own and operate its properties and conduct its
business in the manner and at the places presently conducted; (ii) holds
all franchises, grants, licenses, certificates, permits, consents and
orders, all of which are valid and in full force and effect, from all
applicable Bermuda and foreign regulatory authorities necessary to own and
operate its properties and to conduct its business in the manner and at the
places presently conducted; and (iii) has full power and authority
(corporate and other) to own, lease and operate its respective properties
and assets and to carry on its business as presently conducted and as
proposed to be conducted, except where the failure to be so qualified,
licensed or domesticated or to hold such franchises, grants, licenses,
certificates, permits, consents and orders or to have such power and
authority would not, when taken together with all other such failures,
reasonably be expected to have a Material Adverse Effect on LaSalle
Holdings. LaSalle Holdings has furnished to Trenwick complete and correct
copies of its memorandum of association and bye-laws as in effect on the
date hereof. Such memorandum of association and bye-laws are in full force
and effect and no other constitutional documents are applicable to or
binding upon LaSalle Holdings.
(b) LaSalle Holdings conducts its reinsurance operations through
the Subsidiaries set forth in Section 4.1(b) of the LaSalle Disclosure
Letter (collectively, the "LaSalle Reinsurance Subsidiaries"). Each of the
LaSalle Reinsurance Subsidiaries is (i) duly licensed or authorized as a
reinsurer in its jurisdiction of organization or duly licensed to operate
in the reinsurance business (as applicable) in its jurisdiction of
organization, (ii) duly licensed or authorized as a reinsurer in each other
jurisdiction where it is required to be so licensed or authorized or duly
licensed to operate in the reinsurance business in each other jurisdiction
where it is required to be so licensed and (iii) duly authorized in its
jurisdiction of organization and each other applicable jurisdiction to
write each line of business currently written by such LaSalle Reinsurance
Subsidiaries, except, in any such case, where the failure to be so licensed
or authorized is not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on LaSalle Holdings. Except as set
forth in Section 4.1(b) of the LaSalle Disclosure Letter, LaSalle Holdings
has made all required filings under applicable
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insurance holding company statutes except where the failure to file is not
reasonably expected to have a Material Adverse Effect on LaSalle Holdings.
Section 4.2. Authority; Approval and Fairness.
(a) LaSalle Holdings has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to the due
approval and adoption of this Agreement by its shareholders, to perform its
obligations hereunder and consummate the transactions contemplated hereby.
LaSalle Holdings has all requisite corporate power and authority to enter
into the Stock Option Agreements and to consummate the transactions
contemplated thereby. The execution and delivery of this Agreement by
LaSalle Holdings, the performance by LaSalle Holdings of its obligations
hereunder and the consummation by LaSalle Holdings of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of LaSalle Holdings, subject only to compliance with the
provisions of Section 99 of the Companies Act. No other corporate
proceedings on the part of LaSalle Holdings are necessary for the execution
and delivery of this Agreement by LaSalle Holdings and, subject to
compliance with the provisions of Section 99 of the Companies Act, the
performance by LaSalle Holdings of its obligations hereunder and the
consummation by LaSalle Holdings of the transactions contemplated hereby.
This Agreement and the Stock Option Agreements have been duly executed and
delivered by LaSalle Holdings and, assuming the due authorization,
execution and delivery hereof and thereof by Trenwick, New Holdings and
Acquisition, and subject to the provisions of Section 99 of the Companies
Act constitutes the legal, valid and binding obligations of LaSalle
Holdings, enforceable against LaSalle Holdings in accordance its terms,
subject with respect to enforceability to the effect of bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium or similar
laws now or hereafter affecting the enforcement of creditors' rights
generally and to the availability of equitable remedies.
(b) The Board of Directors of LaSalle Holdings (the "LaSalle
Board") (i) has unanimously (by all directors present at a meeting duly
called and held) declared that it considers this Agreement, the Scheme of
Arrangement and the other transactions contemplated hereby to be advisable
and in the best interests of LaSalle Holdings and its shareholders and (ii)
has authorized and approved in all respects this Agreement, the Plans and
the other transactions contemplated hereby.
Section 4.3. Capital Structure.
(a) As of the date hereof, the authorized share capital of LaSalle
Holdings is $100,000,000 comprised of 100,000,000 shares with a par value
of $1.00 per share. As of December 15, 1999, (i) 15,603,570 LaSalle
Holdings Shares were issued and outstanding, (ii) no LaSalle Holdings
Shares were held as treasury shares or by Subsidiaries of LaSalle Holdings
and (ii) 3,000,000 Series A Preferred Shares were issued and outstanding.
In addition, there are 4,000,000 Series B Preferred Shares of LaSalle
Holdings reserved for issuance pursuant to the CatEPut, which shares are
convertible into LaSalle Holdings Shares. Section 4.3(a) of the LaSalle
Disclosure Letter sets forth each plan, arrangement or agreement pursuant
to which options or stock appreciation rights with respect to LaSalle
Holdings Shares or shares of LaSalle Re may be granted or under which such
options or stock appreciation rights have been granted and are outstanding
(the "LaSalle Option
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Plans") and in the aggregate the maximum number of options and stock
appreciation rights outstanding as of the date hereof and the class and
number of LaSalle Holdings Shares or shares of LaSalle Re reserved for
issuance pursuant to the plan, arrangement or agreement (such options and
rights being herein collectively referred to as the "LaSalle Holdings
Options" and the "LaSalle Re Options," as the case may be), together with a
listing of the aggregate number of such LaSalle Holdings Options and
LaSalle Re Options which shall vest at the Scheme Effective Time as a
result of the Scheme of Arrangement. Except as set forth in Section 4.3(a)
of the LaSalle Disclosure Letter, each of the outstanding shares of each
Subsidiary of LaSalle Holdings, other than the Non-Voting Shares owned by
the Minority Shareholders, is directly or indirectly owned by LaSalle
Holdings, free and clear of all Liens.
(b) Except as described in Section 4.3(b) of the LaSalle
Disclosure Letter, as of the date hereof, no Voting Debt of LaSalle
Holdings or any of its Subsidiaries is issued or outstanding.
(c) Except as described in Section 4.3(a), (b) or (c) of the
LaSalle Disclosure Letter, as of the date hereof, there are no options,
warrants, calls, rights, commitments or agreements of any character to
which LaSalle Holdings or any of its Subsidiaries is a party or by which
any of them is bound obligating LaSalle Holdings or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares or any Voting Debt or obligating LaSalle Holdings or any
of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. Except as set forth in this
Agreement or in Section 4.3(c) of the LaSalle Disclosure Letter, as of the
date hereof, there are no outstanding contractual obligations of LaSalle
Holdings or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of LaSalle Holdings or any of its Subsidiaries.
(d) Except as described in Section 4.3(d) of the LaSalle
Disclosure Letter or as specifically described in this Agreement and except
for quarterly dividends in an amount not in excess of $0.375 per LaSalle
Holdings Share and $1.0938 per Series A Preferred Share, since June 30,
1999, LaSalle Holdings has not (i) made or agreed to make any share split
or share dividend, or issued or permitted or agreed to permit to be issued
any shares, or securities exercisable for or convertible into shares, of
LaSalle Holdings other than pursuant to and as required by the terms of any
LaSalle Holdings Option; (ii) repurchased, redeemed or otherwise acquired
any shares of LaSalle Holdings; or (iii) declared, set aside, made or paid
to the shareholders of LaSalle Holdings dividends or other distributions on
the outstanding shares of LaSalle Holdings.
(e) Except as described in Section 4.3(e) of the LaSalle
Disclosure Letter or as specifically described in this Agreement and except
for quarterly dividends in an amount not in excess of $0.375 per Minority
Share, since June 30, 1999, LaSalle Re has not (i) made or agreed to make
any share split or share dividend, or issued or permitted or agreed to
permit to be issued any shares, or securities exercisable for or
convertible into shares, of LaSalle Re other than pursuant to and as
required by the terms of any LaSalle Re Option; (ii) repurchased, redeemed
or otherwise acquired any shares of LaSalle Re; or (iii) declared, set
aside, made or paid to the shareholders of LaSalle Re (other than LaSalle
Holdings) dividends or other distributions on the outstanding shares of
LaSalle Re.
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Section 4.4. SEC Reports; Financial Statements. Except as set forth
in Section 4.4 of the LaSalle Disclosure Letter,
(a) LaSalle Holdings has delivered or made available to Trenwick a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement or information statement (including exhibits)
filed by LaSalle Holdings with the SEC in respect of its fiscal years
ending September 30, 1997 and 1998 and its quarters ending after September
30, 1998 under the Securities Act and the Exchange Act and will deliver to
Trenwick promptly upon the filing thereof with the SEC all such reports,
schedules, registration statements and proxy statements (including
exhibits) as may be filed after the date hereof and prior to the Effective
Time (as such documents have since the time of their filing been amended or
may after their filing, if after the date hereof, be amended, the "LaSalle
SEC Reports"), which are or will be all the documents that LaSalle Holdings
was or will be required to file with the SEC. Except as disclosed in
Section 4.4(a) of the LaSalle Disclosure Letter, as of their respective
dates, the LaSalle SEC Reports complied or will comply in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to the LaSalle SEC Reports, and none of the LaSalle SEC Reports
contained or will contain any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made or will be made, not misleading.
(b) As of their respective dates, the financial statements of
LaSalle Holdings included or to be included in the LaSalle SEC Reports (the
"LaSalle Financial Statements") complied or will comply as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and present
or will present fairly in all material respects the consolidated financial
position of LaSalle Holdings and its Subsidiaries and the consolidated
results of operations, changes in shareholders' equity and cash flows of
LaSalle Holdings and its Subsidiaries as of the dates and for the periods
indicated, in accordance with GAAP applied on a consistent basis, subject
in the case of interim financial statements to normal year-end adjustments
and except for the absence of certain footnote information in the unaudited
statements.
(c) Except as set forth in, or arising out of facts or
circumstances disclosed in, filings by LaSalle Holdings with the SEC prior
to the date hereof, LaSalle Holdings and its Subsidiaries have no
liabilities, debts, claims or obligations of any nature on the date hereof,
whether accrued, absolute, direct or indirect, contingent or otherwise,
whether due or to become due, that would be required to be included on a
balance sheet prepared in accordance with GAAP ("LaSalle Liabilities"), and
there is no existing condition or set of circumstances which would
reasonably be expected to result in a LaSalle Liability, except for (i)
LaSalle Liabilities incurred in the ordinary and usual course of business
and consistent with past practice since June 30, 1998, (ii) LaSalle
Liabilities incurred in connection with or as a result of the transactions
contemplated by this Agreement and (iii) LaSalle Liabilities that would not
reasonably be expected to have a Material Adverse Effect on LaSalle
Holdings.
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Section 4.5. Absence of Certain Changes or Events. Except in
connection with this Agreement, the Plans, the Stock Option Agreements and
the transactions contemplated hereby and thereby, as disclosed in the
LaSalle SEC Reports filed and publicly available prior to the date of this
Agreement (the "Filed LaSalle SEC Reports") since the date of the most
recent audited financial statements included in the Filed LaSalle SEC
Reports, LaSalle Holdings and its Subsidiaries have conducted their
business in the ordinary course consistent with past practice, and there
has not occurred (i) any event or change having individually or in the
aggregate a Material Adverse Effect on LaSalle Holdings, (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of LaSalle
Holdings's outstanding capital stock, other than regular quarterly
dividends in an amount payable in cash not in excess of $1.0938 per Series
A Preferred Share and quarterly dividends in an amount payable in cash not
in excess of $0.375 per LaSalle Holdings Share, Voting Share and Non-Voting
Share and dividends paid by wholly owned Subsidiaries, (iii) (A) any
granting by LaSalle Holdings or any of its Subsidiaries to any current or
former director or officer of LaSalle Holdings or its Subsidiaries of any
increase in compensation, bonus or other benefits, except for normal
increases in the ordinary course of business, (B) any granting by LaSalle
Holdings or any of its Subsidiaries to any such current or former director
or officer of any increase in severance or termination pay or (C) any entry
by LaSalle Holdings or any of its Subsidiaries into, or any amendments of,
any employment, deferred compensation, consulting, severance, termination
or indemnification agreement with any such current or former director or
officer, (iv) any tax election that individually or in the aggregate would
have a Material Adverse Effect on LaSalle Holdings or any of its tax
attributes or any settlement or compromise of any material income tax
liability, or (v) any change in accounting methods, principles or practices
by LaSalle Holdings or any of its Subsidiaries materially affecting their
assets, liabilities or business, except insofar as may have been required
or permitted by a change in applicable accounting principles (including
SAP).
Section 4.6. Certain Fees. No finder, broker, agent, financial
advisor or other intermediary, other than Lazard Freres & Co. LLC, Salomon
Smith Barney Inc. and Aon Capital Markets, Inc., have acted on behalf of
LaSalle Holdings in connection with this Agreement or the transactions
contemplated hereby or is entitled to any payment in connection herewith.
LaSalle Holdings has provided to Trenwick copies of LaSalle Holdings'
engagement letter with Lazard Freres & Co. LLC, Salomon Smith Barney Inc. and
Aon Capital Markets, Inc. in connection with this Agreement and the
transactions contemplated hereby.
Section 4.7. No Defaults. Neither LaSalle Holdings nor any of its
Subsidiaries is in default or violation (and no event has occurred which
with notice or lapse of time or both would constitute a default or
violation) of its memorandum of association or bye-laws or other governing
document or any material agreement, mortgage, indenture, debenture, trust,
lease, license or other instrument or obligation to or by which it or any
of its properties is subject or bound (the "LaSalle Instruments"), except
for such defaults or violations as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
LaSalle Holdings. Except as set forth in Section 4.7 of the LaSalle
Disclosure Letter, the execution, delivery and performance of this
Agreement and the taking of any other action contemplated by this Agreement
will not (i) result in any violation of or be in conflict with or
constitute a breach or default (with or without notice or lapse of time or
both) under
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(a) the memorandum of association or bye-laws of LaSalle Holdings or its
Subsidiaries or (b) any of the other LaSalle Instruments, except for any
such violation of, conflict with, breach of or default under which would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on LaSalle Holdings, (ii) result in or constitute
an event entitling any party to a LaSalle Holdings Instrument to effect an
acceleration of the maturity of any indebtedness of LaSalle Holdings or any
of its Subsidiaries or an increase in the rate of interest presently in
effect with respect to such indebtedness, except for any such accelerations
or increases which would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on LaSalle Holdings or (iii)
result in the creation of any Lien upon any of the properties or assets of
LaSalle Holdings, except for Permitted Liens and any Liens which would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on LaSalle Holdings.
Section 4.8. Consents. Except as set forth in Section 4.8 of the
LaSalle Disclosure Letter and except for compliance with the provisions of
Section 99 of the Companies Act, the approval of Lloyd's, the consent of
the Court to the Plans and the filing of the order or orders of the Court
pursuant to Section 2.2 of this Agreement, no Consent is required on the
part of LaSalle Holdings or any of its Subsidiaries in connection with the
execution, delivery and performance by LaSalle Holdings of this Agreement
and the consummation by LaSalle Holdings of the transactions contemplated
hereby, except those required by (i) compliance with any applicable
requirements of the HSR Act, (ii) United States federal and state
securities or "Blue Sky" laws and (iii) where failure to obtain such
Consent would not reasonably be expected to have a Material Adverse Effect
on LaSalle Holdings.
Section 4.9. Compliance with Applicable Law. Each of LaSalle
Holdings and its Subsidiaries is in compliance with all licenses, permits
and other authorizations, domestic or foreign, necessary to conduct its
respective business, except where failure to have or comply with such
licenses, permits and authorizations would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
LaSalle Holdings. Neither LaSalle Holdings nor any of its Subsidiaries is
in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any
judgment, decree, order, law, statute, rule or regulation of any
Governmental Authority, except for such defaults or violations as would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on LaSalle Holdings. Subject to obtaining the
Consents referred to in Section 4.8, the execution, delivery and
performance of this Agreement by LaSalle Holdings and the consummation by
LaSalle Holdings of the transactions contemplated hereby prior to the date
or dates as of which the representations and warranties herein are made or
deemed made, will not result in any default or violation of any judgment,
decree, order, law, statute, rule or regulation of any Governmental
Authority applicable to LaSalle Holdings or its Subsidiaries, except for
such defaults or violations as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on LaSalle
Holdings.
Section 4.10. Information Supplied. None of the information
supplied or to be supplied by LaSalle Holdings for inclusion or
incorporation by reference in the Form S-4 to be filed with the SEC by New
Holdings relating to the New Holdings Shares comprising LaSalle
Consideration and Trenwick Consideration will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at the
time it becomes effective under the Securities Act, contain any untrue
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statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which such statements were made, not misleading.
The letters to shareholders, notices of meetings, proxy statements and
forms of proxies to be distributed to shareholders of LaSalle Holdings and
stockholders of Trenwick, respectively, in connection with the Plans and
the transactions contemplated hereby, except information supplied by
Trenwick in writing for inclusion in the Joint Proxy Statement, will not,
as of the date the Joint Proxy Statement is first mailed to such
shareholders and on the date of the meetings of LaSalle Holdings'
shareholders or Trenwick's stockholders, as the case may be, and the date
of any postponement or adjournment thereof, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. All documents
that LaSalle Holdings is responsible for filing with any Governmental
Authority in connection with the transactions contemplated hereby will
comply as to form in all material respects with the provisions of any
applicable law.
Section 4.11. Material Contracts. Except as set forth in Section 4.11
of the LaSalle Disclosure Letter:
(a) All of the contracts of LaSalle Holdings and its Subsidiaries
that are required to be described in the LaSalle SEC Reports or to be filed
as exhibits thereto are described in the LaSalle SEC Reports or filed as
exhibits thereto and are in full force and effect.
(b) Neither LaSalle Holdings nor any of its Subsidiaries is, as of
the date hereof, party to any agreement containing any provision or
covenant limiting in any material respect the ability of LaSalle Holdings
or any of its Subsidiaries (or New Holdings or any of its Subsidiaries
subsequent to the Effective Time) to (i) sell any products or services of
or to any other Person, (ii) engage in any line of business in any
geographical area or (iii) compete with or to obtain products or services
from any Person or limiting the ability of any Person to provide products
or services to LaSalle Holdings or any of its Subsidiaries.
(c) Neither LaSalle Holdings nor any of its Subsidiaries is a
party to or bound by any contract, agreement or arrangement which would
cause the rights or obligations of any party thereto to change in the event
of the Plans, except for any such contract, agreement or arrangement which
would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on LaSalle Holdings.
Section 4.12. Taxes. Except as provided in Section 4.12 of the
LaSalle Disclosure Letter:
(a) To LaSalle Holdings' knowledge, neither LaSalle Holdings nor
any of its Subsidiaries has, nor has it had, any income which is, or has
been, subject to the United States federal income tax as income which is
effectively connected with the conduct of a trade or business within the
United States, within the meaning of Section 882(a)(1) of the Code. LaSalle
Holdings and its Subsidiaries have filed or caused to be filed with the
appropriate United States federal, state, local, foreign and other
Governmental Authorities, all Tax returns, information returns and reports
required to be filed
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on or prior to the date hereof (taking into account all valid extensions).
All such Tax returns, information returns and reports are complete and
accurate in all material respects.
(b) LaSalle Holdings and its Subsidiaries have paid in full or
made adequate provision (in accordance with GAAP) for the payment of all
Taxes shown to be due on the Tax returns referred to in Section 4.12(a).
All material written assessments of Taxes due and payable by or on behalf
of LaSalle Holdings or any of its Subsidiaries have either been paid or
provided for (in accordance with GAAP) or are being contested in good faith
by appropriate proceedings.
(c) There are no material Tax claims pending against LaSalle
Holdings or any of its Subsidiaries and LaSalle Holdings does not know of
any threatened claim for Tax deficiencies or any basis for such claims, no
material issues have been raised in any examination by any taxing authority
with respect to LaSalle Holdings or any of its Subsidiaries which, by
application of similar principles, reasonably could be expected to result
in a proposed deficiency for any other period not so examined, and there
are not now in force any waivers or agreements by LaSalle Holdings or any
of its Subsidiaries for the extension of time for the assessment of any
material Tax, nor has any such waiver or agreement been requested by any
taxing authority. Neither LaSalle Holdings nor any of its Subsidiaries has
any liability for any material United States federal, state, local, foreign
or other Taxes of any corporation or entity other than LaSalle Holdings and
its Subsidiaries.
(d) There are no Liens on any of the assets of LaSalle Holdings or
any of its Subsidiaries that arose in connection with any failure (or
alleged failure) to pay any Taxes (other than Taxes that are not due as of
the date hereof).
(e) LaSalle Holdings and its Subsidiaries have withheld and paid
all United States federal, state, local, foreign and other Taxes required
to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third
party.
(f) To LaSalle Holdings' knowledge, Section 4.12(f) of the LaSalle
Disclosure Letter discloses, with respect to the year ended September 30,
1998 and for the period commencing October 1, 1998 and ending on the date
of the LaSalle Disclosure Letter, (i) each insurance or reinsurance
transaction by LaSalle Holdings or any of its Subsidiaries directly with
shareholders of LaSalle Holdings and (ii) each insurance or reinsurance
transaction by LaSalle Holdings or any of its Subsidiaries directly or
indirectly with Persons related to shareholders of LaSalle Holdings and not
disclosed in clause (i) above, which would cause LaSalle Holdings or any of
its Subsidiaries to have any "related person insurance income" within the
meaning of Section 953(c)(2) of the Code.
(g) To LaSalle Holdings' knowledge, LaSalle Holdings and its
Subsidiaries did not have for the year ended September 30, 1998, and
LaSalle Holdings does not expect LaSalle Holdings or any of its
Subsidiaries to have for the period ending at the Scheme Effective Time
(treating such period as if it were a taxable year), "related person
insurance income" within the meaning of Section 953(c)(2) of the Code in
excess of the exceptions provided in Sections 953(c)(3)(A) and (B) of the
Code.
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(h) To LaSalle Holdings' knowledge, neither LaSalle Holdings nor
any of its Subsidiaries is, nor has LaSalle Holdings or any of its
Subsidiaries ever been, a "controlled foreign corporation" within the
meaning of Section 957(a) or 957(b) of the Code.
(i) A representation with respect to Taxes contained in this
Section 4.12 shall be deemed to be accurate unless an inaccuracy contained
therein would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on LaSalle Holdings.
Section 4.13. Litigation. Except as disclosed in the LaSalle SEC
Reports filed prior to the date hereof or in Section 4.13 of the LaSalle
Disclosure Letter, there are no actions, suits, claims, proceedings or
investigations pending against or, to the knowledge of LaSalle Holdings,
threatened against or affecting, LaSalle Holdings or any of its
Subsidiaries or any of their respective properties before any Governmental
Authority or otherwise which (a) would be expected to have, individually or
in the aggregate, a Material Adverse Effect on LaSalle Holdings, (b) in any
manner challenges or seeks to prevent, enjoin, alter or delay the
transactions contemplated hereby or (c) alleges criminal action or
inaction. As of the date hereof, neither LaSalle Holdings nor its
Subsidiaries or any of their respective properties is subject to any order,
writ, judgment, injunction, decree, determination or award having, or which
would reasonably be expected to have, a Material Adverse Effect on LaSalle
Holdings or which would prevent or delay the consummation of the
transactions contemplated hereby. Except as disclosed in the LaSalle SEC
Reports filed prior to the date hereof, there are no pending or, to the
knowledge of LaSalle Holdings, threatened claims for indemnification by
LaSalle Holdings or any of its Subsidiaries in favor of directors,
officers, employees and agents of LaSalle Holdings or any of its
Subsidiaries.
Section 4.14. Title to Properties; Leases. Except as set forth in
Section 4.14(a) of the LaSalle Disclosure Letter, each of LaSalle Holdings
and its Subsidiaries has good and marketable title to, and is the lawful
owner of, or has the right to use pursuant to a license or otherwise, all
of the tangible and intangible assets, properties and rights used in its
businesses and all tangible and intangible assets, properties and rights
reflected on the balance sheet of LaSalle Holdings dated June 30, 1999 or
acquired since June 30, 1999, free and clear of all Liens (other than
Permitted Liens) and material defects. LaSalle Holdings and its
Subsidiaries own no real property. Section 4.14(c) of the LaSalle
Disclosure Letter sets forth all material real property and personal
property leases of LaSalle Holdings and its Subsidiaries. All such leases
are valid, binding and enforceable against LaSalle Holdings or its
Subsidiaries (and, to the knowledge of LaSalle Holdings and its
Subsidiaries, each other party thereto) in accordance with their respective
terms, and there does not exist, under any lease of real property or
personal property, any material defect or any event which, with notice or
lapse of time or both, would constitute a material default by the LaSalle
Holdings or its Subsidiaries, as the case may be, or, to the knowledge of
LaSalle Holdings and its Subsidiaries, by any other party thereto.
Section 4.15. Approval of Scheme of Arrangement. Other than the
affirmative vote of the holders of at least seventy-five percent (75%) of
the issued and outstanding LaSalle Holdings Shares (with each LaSalle
Holding Share having one vote per share) and at least seventy-five percent
(75%) of the issued and outstanding Non-Voting Shares (with each Non-Voting
Share having one vote per
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share) to approve and adopt this Agreement and the Scheme of Arrangement,
there is no other vote, consent or approval of the holders of any class of
shares of LaSalle Holdings or LaSalle Re necessary to approve and adopt
this Agreement, the Scheme of Arrangement and the transactions contemplated
hereby.
Section 4.16. Employees.
(a) Section 4.16(a) of the LaSalle Disclosure Letter lists, as of
the date hereof, all employment contracts and similar arrangements between
LaSalle Holdings or any of its Subsidiaries and their respective executive
officers and all plans and arrangements pursuant to which LaSalle Holdings
or any of its Subsidiaries is obligated to make any payment or confer any
material benefit upon any officer, director, employee or agent of LaSalle
Holdings or any of its Subsidiaries as a result of or in connection with
any of the transactions contemplated by this Agreement or any transaction
or transactions resulting in a change of control of LaSalle Holdings or any
of its Subsidiaries (including as a result of a termination of employment
in connection with any of such events). Except as described in Section
4.16(a) of the LaSalle Disclosure Letter and except as would not reasonably
be expected to have a Material Adverse Effect on LaSalle Holdings, (i)
LaSalle Holdings and its Subsidiaries have complied with all laws relating
to the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity and collective bargaining, (ii) no labor dispute
with employees of LaSalle Holdings or any of its Subsidiaries exists or, to
the knowledge of LaSalle Holdings, is threatened, (iii) each Employee
Benefit Plan maintained by LaSalle Holdings or any of its Subsidiaries
(each a "LaSalle Employee Benefit Plan") conforms to, and its
administration is in conformity with, all applicable laws, no liability has
been or is expected to be incurred by LaSalle Holdings or any of its
Subsidiaries with respect to any LaSalle Employee Benefit Plan, except as
expressly provided by such plan, (iv) no LaSalle Employee Benefit Plan is
subject to ERISA, (v) LaSalle Holdings has made available to Trenwick a
true and correct copy of each of the LaSalle Employee Benefit Plans and all
applicable trust agreements and all contracts relating thereto or to the
funding thereof, (vi) all LaSalle Employee Benefit Plans intended to
satisfy applicable Tax qualification requirements, or other requirements
necessary to secure favorable Tax or other legal treatment, comply in all
material respects with such requirements and (vii) adequate accruals for
all obligations under the LaSalle Employee Benefit Plans are reflected in
the LaSalle Financial Statements. Except as described in Section 4.16(a) of
the LaSalle Disclosure Letter, no agreement, contract or arrangement to
which LaSalle Holdings or any of its Subsidiaries is a party would result
in a payment that would not be deductible as a result of Section 280G of
the Code.
(b) Except as set forth in Section 4.16(b) of the LaSalle
Disclosure Letter, neither LaSalle Holdings nor any of its Subsidiaries is
a party to any collective bargaining or other labor union contract
applicable to Persons employed by LaSalle Holdings or any of its
Subsidiaries, no collective bargaining agreement is being negotiated by
LaSalle Holdings or any of its Subsidiaries and LaSalle Holdings has no
knowledge of any activities or proceedings of any labor union to organize
any of their respective employees. There is no labor dispute, strike or
work stoppage against LaSalle Holdings or any of its Subsidiaries pending
or, to LaSalle Holdings' knowledge, threatened which may interfere with the
respective business activities of LaSalle Holdings or any of its
Subsidiaries, except where
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such dispute, strike or work stoppage would not reasonably be expected to
have a Material Adverse Effect on LaSalle Holdings.
(c) Except as disclosed in the Section 4.16(c) of the LaSalle
Disclosure Letter, the consummation of the Scheme of Arrangement (or the
approval thereof by the parties' respective shareholders) and the other
transactions contemplated by this Agreement, will not (x) entitle any
employees or directors of LaSalle or of any LaSalle Holdings Commonly
Controlled Entity, directly or indirectly to severance pay; (y) accelerate
the time of payment or vesting or trigger any payment of compensation or
benefits under, or increase the amount payable or trigger any other
material obligation pursuant to, any of the LaSalle Benefit Plans; or (z)
result in any breach or violation of, or default under any of the LaSalle
Benefit Plans.
Section 4.17. Intellectual Property. LaSalle Holdings and its
Subsidiaries own or possess, or have all necessary rights and licenses in,
all Intellectual Property necessary to conduct their business as conducted
and proposed to be conducted except to the extent that the failure of
LaSalle Holdings or its Subsidiaries to own or have such rights and
licenses in such Intellectual Property would not reasonably be expected to
have a Material Adverse Effect on LaSalle Holdings. Neither LaSalle
Holdings nor any of its Subsidiaries have received any unresolved notice
of, or is aware of any fact or circumstance that would give any Person a
right to assert, infringement or misappropriation of, or conflict with,
asserted rights of others or invalidity or unenforceability of any
Intellectual Property owned by LaSalle Holdings or any of its Subsidiaries
with respect to any of the foregoing which, singly or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on LaSalle
Holdings. To the knowledge of LaSalle Holdings, the use of such
Intellectual Property to conduct the business and operations of LaSalle
Holdings and its Subsidiaries as conducted or proposed to be conducted does
not infringe on the rights of any person in any case where such
infringement would reasonably be expected to have a Material Adverse Effect
on LaSalle Holdings. To the knowledge of LaSalle Holdings, no person is
challenging, infringing on or otherwise violating any right of LaSalle
Holdings or any of its Subsidiaries with respect to any Intellectual
Property owned by and/or licensed to LaSalle Holdings or any of its
Subsidiaries. Except as set forth in Section 4.17 of the LaSalle Disclosure
Letter, neither the execution of this Agreement or the LaSalle Stock Option
Agreement nor the consummation of the transactions contemplated hereby or
thereby will result in a loss or limitation in the rights and licenses of
LaSalle Holdings to use or enjoy the benefit of any Intellectual Property
employed by LaSalle Holdings or any of its Subsidiaries in connection with
its business as conducted or proposed to be conducted where such loss or
limitation, individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect on LaSalle Holdings. Following the
Effective Date, LaSalle Holdings Intellectual Property may be used by New
Holdings or any of its Subsidiaries, except to the extent that failure to
be so able to use LaSalle's Intellectual Property would not have a Material
Adverse Effect on New Holdings or any of its Subsidiaries.
Section 4.18. Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation enacted under any Bermuda law is applicable to the Plans, the
Stock Option Agreements or the other transactions contemplated hereby or
thereby.
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Section 4.19. Opinions of Financial Advisors. The LaSalle Board
has received the separate opinions of Lazard Freres & Co. LLC and Salomon
Smith Barney Inc., dated December 16, 1999, to the effect that, as of such
date, the LaSalle Exchange Ratio is fair to the holders of LaSalle Holdings
Shares from a financial point of view, copies of the written opinions of
which will be delivered to Trenwick.
Section 4.20. Insurance Matters.
(a) All insurance, reinsurance and coinsurance treaties or
agreements, including retrocessional agreements, to which LaSalle Holdings
or any LaSalle Holdings Reinsurance Subsidiary is a party or under which
LaSalle Holdings or any LaSalle Holdings Reinsurance Subsidiary has any
existing rights, obligations or liabilities are in full force and effect,
except for such treaties or agreements the failure to be in full force and
effect of which are not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on LaSalle Holdings.
(b) Prior to the date hereof, LaSalle Holdings has delivered or
made available to Trenwick a true and complete copy of the most recent
actuarial reports prepared by actuaries, independent or otherwise, with
respect to LaSalle Holdings or any LaSalle Holdings Reinsurance Subsidiary
since September 30, 1998 and all attachments, addenda, supplements and
modifications thereto (the "LaSalle Actuarial Analyses"). The information
and data furnished by LaSalle Holdings or any LaSalle Holdings Reinsurance
Subsidiary to its independent actuaries in connection with the preparation
of the LaSalle Actuarial Analyses were accurate in all material respects.
(c) LaSalle Re does not currently issue and has not issued any
primary insurance policies in the United States.
Section 4.21. Liabilities and Reserves.
Except for instances where the failure of the following statements
to be true would not reasonably be expected to have a Material Adverse
Effect on LaSalle Holdings, (a) the reserves carried on the financial
statements of each LaSalle Holdings Reinsurance Subsidiary for future
insurance policy benefits, losses, claims and similar purposes were, as of
the respective dates of such financial statements, in compliance with the
requirements for reserves established by the insurance departments of the
jurisdiction of such LaSalle Holdings Reinsurance Subsidiary or (as the
case may be) by Lloyd's, were determined in accordance with generally
accepted actuarial standards and principles consistently applied, and were
fairly stated in accordance with sound actuarial and statutory accounting
principles (it being understood that no representation or warranty is made
in this Agreement to the effect that such reserves were in fact adequate to
cover the actual amount of liabilities that are eventually paid after the
date hereof); and (b) the admitted assets of each LaSalle Holdings
Reinsurance Subsidiary as determined under applicable laws or under Lloyd's
regulations are in an amount at least equal to the minimum amounts required
by applicable laws or regulations.
Section 4.22. Investment Company. Neither LaSalle Holdings nor any of
its Subsidiaries onducts activities of, or is otherwise deemed under applicable
law to control, an "investment
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adviser" as such term is defined in Section 2(a)(20) of the Investment
Company Act, whether or not registered under the Investment Advisers Act.
Neither LaSalle Holdings nor any of its Subsidiaries is an "investment
company" as defined under the Investment Company Act and neither LaSalle
Holdings nor any of its Subsidiaries sponsors any Person that is such an
investment company.
Section 4.23. Reinsurance Contracts, Coverholders and MGAs.
(a) Section 4.23 of the LaSalle Disclosure Letter contains a true
and complete list of all MGAs and coverholders with whom each Subsidiary of
LaSalle Holdings does business that have been appointed within the twelve
(12) months preceding the date of this Agreement and all in force
Reinsurance Contracts which generate premium income in excess of $1,000,000
to which each subsidiary of LaSalle Holdings is a party as the cedent
thereunder or by or to which each subsidiary of LaSalle Holdings is bound
or subject as the cedent thereunder, as each such Reinsurance Contract may
have been amended, modified or supplemented. Except as would not,
individually or in the aggregate, have a Material Adverse Effect on LaSalle
Holdings: (i) each of the foregoing Reinsurance Contracts is valid and
binding in accordance with its terms, and is in full force and effect and
(ii) neither the Subsidiaries of LaSalle Holdings nor, to the knowledge of
LaSalle Holdings, or other party thereto, is in default in any material
respect with respect to any such Reinsurance Contract, nor to the knowledge
of LaSalle Holdings does any condition exist that with notice or lapse of
time or both would constitute such a material default thereunder. Except as
set forth in Section 4.23 of the LaSalle Disclosure Letter, none of the
contracts, treaties or arrangements involving the MGAs or coverholders
which generate premium income in excess of $1,000,000 with whom each
Subsidiary of LaSalle Holdings does business contain "change of control"
provisions and no such Reinsurance Contract contains any provision
providing that any such other party thereto may terminate, cancel or
commute the same by reason of the transactions contemplated by this
Agreement or any other provision which would be altered or otherwise become
applicable by reason of such transactions, and no party has given notice of
termination, cancellation or commutation of any such Reinsurance Contract
or that it intends to terminate, cancel or commute any such Reinsurance
Contract as a result of the transactions contemplated hereby.
(b) Except as set forth in Section 4.23 of the LaSalle Disclosure
Letter, LaSalle Re is entitled under applicable insurance laws, rules and
regulations to take credit in its statutory financial statements in
accordance with applicable Bermuda law as in effect on the date hereof,
with respect to the Reinsurance Contracts listed in Section 4.23 of the
LaSalle Disclosure Letter and all such amounts are properly reflected in
the statutory financial statements of LaSalle Re. Each of LaSalle Holdings
and LaSalle Re has no knowledge of any disputes as to reinsurance or
retrocessional coverage under, or any terms of provisions of, any such
Reinsurance Contract. To the knowledge of LaSalle Holdings and LaSalle Re,
the financial condition of any other party to any such Reinsurance Contract
is not impaired to the extent that a default thereunder could reasonably be
expected to occur.
Section 4.24. Derivatives. As of the date hereof, other than as
set forth in Section 4.24 of the LaSalle Disclosure Letter, neither LaSalle
Holdings nor any of its Subsidiaries is a party to any futures or option
contracts, swaps, hedges or similar instruments which, individually or in
the aggregate, could have a Material Adverse Effect on LaSalle Holdings.
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Section 4.25. Related Party Transactions. Except as set forth in
Section 4.25 of the LaSalle Disclosure Letter, since June 30, 1999, there
have been no transactions, agreements, arrangements or understandings
between LaSalle Holdings and its Subsidiaries, on the one hand, and LaSalle
Holdings' affiliates (other than wholly-owned Subsidiaries of LaSalle
Holdings) or other Persons, on the other hand, in existence as of the date
hereof that are or would be required to be disclosed in the LaSalle SEC
Reports in accordance with Item 404 of Regulation S-K under the Securities
Act.
Section 4.26. Finite Risk Reinsurance. Except as set forth in
Section 4.26 of the LaSalle Disclosure Letter, none of LaSalle's
Reinsurance Subsidiaries has ceded business pursuant to a reinsurance
agreement that does not meet the conditions for reinsurance accounting as
provided by the Statement of Financial Accounting Standards No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and Long-Term
Contracts."
ARTICLE 5
COVENANTS
Section 5.1. Conduct of Business of Trenwick. Except as expressly
contemplated by this Agreement, the Stock Option Agreements, as set forth
in Section 5.1 of the Trenwick Disclosure Letter or as consented to in
writing by LaSalle Holdings, during the period from the date of this
Agreement to the Effective Time, Trenwick shall, and shall cause each of
its Subsidiaries to, conduct its operations and (to the extent it is able
to control them) the operations of the syndicates managed by the Trenwick
Managing Agencies only in, and neither Trenwick nor any of its Subsidiaries
shall take any action and shall not take any action in relation to the
syndicates managed by the Trenwick Managing Agencies (to the extent they
are able to control them) except in, the ordinary and usual course of
business and consistent with past practice, and Trenwick and its
Subsidiaries will use all commercially reasonable efforts to preserve
intact their business organization, to keep available the services of their
officers and employees and to maintain advantageous relationships with and
the goodwill of their customers, business partners and others having
business relationships with Trenwick or its Subsidiaries or the syndicates
managed by the Trenwick Managing Agencies, as the case may be. Without
limiting the generality of the foregoing, prior to the Effective Time,
neither Trenwick nor any of its Subsidiaries will, except as expressly
contemplated by this Agreement, without the prior written consent of
LaSalle Holdings:
(a) split, combine or reclassify any shares of its capital stock,
declare, pay or set aside for payment any dividend or other distribution
payable in cash, stock, property or otherwise in respect of its capital
stock or directly or indirectly redeem, purchase or otherwise acquire any
shares of any class of capital stock or other securities, other than
regular quarterly dividends (other than those payable to Trenwick) in an
amount payable in cash not in excess of $0.26 per share; after the date of
this Agreement, LaSalle Holdings and Trenwick will coordinate with each
other regarding the declaration of dividends in respect of the Trenwick
Shares and the record dates and payment dates relating thereto, it being
the intention of the parties that holders of Trenwick Shares will not
receive
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two dividends, or fail to receive one dividend, for any single calendar
quarter with respect to their Trenwick Shares and the New Holdings Shares
any such holder receives in exchange therefor in accordance with the Plans;
(b) authorize for issuance, issue, sell, grant, pledge, dispose of
or encumber, deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issue or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any shares of
any class of capital stock of Trenwick or any Subsidiary or any securities
convertible into or exercisable or exchangeable for shares of any class of
capital stock of Trenwick, except as required by agreements as in effect as
of the date hereof and disclosed in Section 5.1(b) of the Trenwick
Disclosure Letter, or amend any of the terms of any such securities or
agreements outstanding as of the date hereof;
(c) (i) incur or assume any debt, except for borrowings, in each
case, in the ordinary course of business consistent with past practices,
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person, except in the ordinary course of business, (iii) make any
loans or advances to any Person other than loans or advances of
out-of-pocket expenses incurred in connection with the business of Trenwick
or its Subsidiaries, (iv) pledge or otherwise encumber shares of capital
stock of Trenwick or its Subsidiaries or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create any Lien thereupon other
than Permitted Liens;
(d) except as may be required by law or as contemplated by this
Agreement, including Section 5.9, enter into, adopt or amend or terminate
any bonus, profit sharing, compensation, severance, termination, change of
control, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, consulting, fringe benefit,
severance or other Employee Benefit Plan; or enter into or amend any
employment or severance agreement with any director, officer, employee or
agent of Trenwick or any of its Subsidiaries; or increase in any manner the
salary, wages, bonus, commission or other compensation or benefits of any
director, officer, employee or agent of Trenwick or any of its
Subsidiaries, except, (i) in connection with the promotion of any director,
officer, employee or agent of Trenwick or any of its Subsidiaries or (ii)
for increases in the ordinary course of business and consistent with past
practice which in the aggregate do not exceed 10%; or hire employees at the
level of Vice President or above; or pay any benefit not required by any
plan and arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights or
performance units);
(e) acquire (by merger, amalgamation, consolidation or acquisition
of stock or assets or otherwise) any corporation, partnership, joint
venture, association or other business organization or division thereof or
make any material investment either by purchase of stock or securities,
contributions to capital, property transfer or acquisition (including by
lease) of any material amount of properties or assets of any other Person,
except for the purchase of investment stock or securities in the ordinary
course of business;
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(f) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) against Trenwick
or any of its Subsidiaries, its directors, officers, employees or agents,
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of claims for contractual
benefits under any insurance or reinsurance contract under which Trenwick
or any of its Subsidiaries or syndicates managed by any of its Subsidiaries
is the insurer or reinsurer;
(g) amend or propose to amend the certificate of incorporation,
by-laws or any similar document of Trenwick or any of its Subsidiaries;
(h) adopt a plan or resolutions providing for the complete or
partial liquidation, dissolution, amalgamation, consolidation,
restructuring, recapitalization or other reorganization of Trenwick or any
of its Subsidiaries;
(i) except as set forth in Section 5.1(i) of the Trenwick
Disclosure Letter, enter into any new lines of business (other than in or
related to the insurance or reinsurance business) or otherwise make
material changes to the operation of its business or its loss reserve;
(j) except as set forth in Section 5.1(j) of the Trenwick
Disclosure Letter, sell (whether by amalgamation, consolidation or
otherwise), lease, transfer or dispose of any material assets (including
without limitation, rights of renewal) outside the ordinary course of
business consistent with past practice or enter into any material
commitment or transaction outside the ordinary course of business
consistent with past practices;
(k) authorize or make or commit to make any capital expenditures,
except for transactions in the ordinary course of business consistent with
past practice (but in no event in excess of $1,000,000 in the aggregate) or
pursuant to agreements or commitments entered into by Trenwick or any of
its Subsidiaries prior to the date hereof;
(l) make any Tax elections or settle or compromise any material
United States federal, state, local or other foreign income Tax liability,
or waive or extend the statute of limitations in respect of any such Taxes;
(m) except as may be required as a result of a change in law or in
GAAP, change any of the accounting principles or practices used by it;
(n) amend the Rights or the Rights Agreement in any manner
adverse to LaSalle Holdings;
(o) enter into any agreement providing for the acceleration of
payment or performance or other consequence as a result of a change in
control of Trenwick or any of its Subsidiaries;
(p) resolve, commit or agree to take any of the foregoing actions
or any action which would make any representation or warranty in Article 3
materially untrue or incorrect;
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(q) make any material change in its retrocessional agreements or
arrangements, including without limitation converting any of its funds
withheld stop loss reinsurance agreements into another type of reinsurance
agreement or entering into new funds withheld stop loss reinsurance
agreements or arrangements or stop loss reinsurance agreements or
arrangements that attach at an attachment point less than the expected loss
ratio;
(r) make any material change in its reinsurance agreements or
arrangements;
(s) enter into any agreement or arrangement that limits or
otherwise restricts Trenwick or any of its Subsidiaries or any successor
thereto or that could, after the Effective Time, limit or restrict New
Holdings and its Subsidiaries or any successor thereto, from engaging or
competing in any line of business or in any geographic area; or
(t) enter into any new transaction, agreement, arrangement or
understanding with any other Persons that would be required to be disclosed
in the Trenwick SEC Reports in accordance with Item 404 of Schedule S-K
under the Securities Act.
Section 5.2. Conduct of Business of LaSalle Holdings. Except as
expressly contemplated by this Agreement, the Stock Option Agreements or as
set forth in Section 5.2 of the LaSalle Disclosure Letter or as consented
to in writing by Trenwick, during the period from the date of this
Agreement to the Effective Time, LaSalle Holdings shall, and shall cause
each of its Subsidiaries to, conduct its operations only in, and neither
LaSalle Holdings nor any of its Subsidiaries shall take any action except
in, the ordinary and usual course of business and consistent with past
practice, and LaSalle Holdings and its Subsidiaries will use all
commercially reasonable efforts to preserve intact their business
organization, to keep available the services of their officers and
employees and to maintain advantageous relationships with and the goodwill
of their customers, business partners and others having business
relationships with LaSalle Holdings or its Subsidiaries, as the case may
be. Without limiting the generality of the foregoing, prior to the
Effective Time, neither LaSalle Holdings nor any of its Subsidiaries will,
except as expressly contemplated by this Agreement, without the prior
written consent of Trenwick:
(a) split, combine or reclassify any shares, declare, pay or set
aside for payment any dividend or other distribution payable in cash,
shares, property or otherwise in respect of its shares or directly or
indirectly redeem, purchase or otherwise acquire any shares of any class of
capital stock or other securities, other than regular quarterly dividends
(other than those payable to LaSalle Holdings) in an amount payable in cash
not in excess of $1.0938 per Series A Preferred Share and quarterly
dividends in an amount payable in cash not in excess of $0.375 per LaSalle
Holdings Share and Non-Voting Share; after the date of this Agreement,
LaSalle Holdings and Trenwick will coordinate with each other regarding the
declaration of dividends (other than those payable to LaSalle Holdings) in
respect of the Series A Preferred Shares, LaSalle Holdings Shares and
Non-Voting Shares and the record dates and payment dates relating thereto,
it being the intention of the parties that holders of LaSalle Holdings
Shares and Non-Voting Shares will not receive two dividends for any single
calendar quarter with respect to their LaSalle Holdings Shares and
Non-Voting Shares and the New Holdings Shares any such holder receives in
exchange therefor in accordance with the Plans;
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(b) authorize for issuance, issue, sell, grant, pledge, dispose of
or encumber, deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issue or granting of any options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any shares of
any class of LaSalle Holdings or any Subsidiary or any securities
convertible into or exercisable or exchangeable for shares of any class of
LaSalle Holdings, except as required by agreements as in effect as of the
date hereof and disclosed in Section 5.2(b) of the LaSalle Disclosure
Letter, or amend any of the terms of any such securities or agreements
outstanding as of the date hereof;
(c) (i) incur or assume any debt, except for borrowings, in each
case, in the ordinary course of business consistent with past practices,
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other Person, except in the ordinary course of business, (iii) make any
loans or advances to any Person other than loans or advances of
out-of-pocket expenses incurred in connection with the business of LaSalle
Holdings or its Subsidiaries, (iv) pledge or otherwise encumber shares of
LaSalle Holdings or its Subsidiaries or (v) mortgage or pledge any of its
material assets, tangible or intangible, or create any Lien thereupon other
than Permitted Liens;
(d) except as may be required by law or as contemplated by this
Agreement, including Section 5.9, enter into, adopt or amend or terminate
any bonus, profit sharing, compensation, severance, termination, change of
control, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, consulting, fringe benefit,
severance or other Employee Benefit Plan; or enter into or amend any
employment or severance agreement with any director, officer, employee or
agent of LaSalle Holdings or any of its Subsidiaries; or increase in any
manner the salary, wages, bonus, commission or other compensation or
benefits of any director, officer, employee or agent of LaSalle Holdings or
any of its Subsidiaries, except, (i) in connection with the promotion of
any director, officer, employee or agent of LaSalle Holdings or any of its
Subsidiaries or (ii) for increases in the ordinary course of business and
consistent with past practice for employees below the level of Vice
President, in the aggregate case not to exceed 5%; or hire employees at the
level of Vice President or above; or pay any benefit not required by any
plan and arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock options, stock appreciation rights or
performance units);
(e) acquire (by merger, amalgamation, consolidation or acquisition
of stock or assets or otherwise) any corporation, partnership, joint
venture, association or other business organization or division thereof or
make any material investment either by purchase of stock or securities,
contributions to capital, property transfer or acquisition (including by
lease) of any material amount of properties or assets of any other Person,
except for the purchase of investment stock or securities in the ordinary
course of business;
(f) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) against LaSalle
Holdings or any of its Subsidiaries, its directors, officers, employees or
agents, other than the payment, discharge or satisfaction in the ordinary
course of
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business and consistent with past practice of claims for contractual
benefits under any insurance or reinsurance contract under which LaSalle
Holdings or any of its Subsidiaries or any syndicates managed by any of its
Subsidiaries is the insurer or reinsurer;
(g) amend or propose to amend the memorandum of association,
bye-laws or any similar document of LaSalle Holdings or any of its
Subsidiaries;
(h) propose to adopt a plan or resolutions providing for the
complete or partial liquidation, dissolution, amalgamation, consolidation,
restructuring, recapitalization or other reorganization of LaSalle Holdings
or any of its Subsidiaries;
(i) except as set forth in Section 5.2(i) of the LaSalle
Disclosure Letter, enter into any new lines of business (whether or not
part of the insurance or reinsurance business) or change any policy forms,
investment policies or guidelines or otherwise make material changes to the
operation of its business or its loss reserve;
(j) except as set forth in Section 5.2(j) of the LaSalle
Disclosure Letter, sell (whether by amalgamation, consolidation or
otherwise), lease, transfer or dispose of any material assets (including
without limitation, rights of renewal) outside the ordinary course of
business consistent with past practice or enter into any material
commitment or transaction outside the ordinary course of business
consistent with past practices;
(k) authorize or make or commit to make any capital expenditures,
except for transactions in the ordinary course of business consistent with
past practice (but in no event in excess of $350,000 in the aggregate) or
pursuant to agreements or commitments entered into by LaSalle Holdings or
any of its Subsidiaries prior to the date hereof;
(l) make any Tax elections or settle or compromise any material
Bermuda, United States federal, state, local or other foreign income Tax
liability, or waive or extend the statute of limitations in respect of any
such Taxes;
(m) except as may be required as a result of a change in law or in
GAAP, change any of the accounting principles or practices used by it;
(n) enter into any agreement providing for the acceleration of
payment or performance or other consequence as a result of a change in
control of LaSalle Holdings or any of its Subsidiaries;
(o) resolve, commit or agree to take any of the foregoing actions
or any action which would make any representation or warranty in Article 4
materially untrue or incorrect;
(p) make any material change in its retrocessional agreements or
arrangements, including without limitation converting any of its funds
withheld stop loss reinsurance agreements into another type of reinsurance
agreement or entering into new funds withheld stop loss reinsurance
agreements
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or arrangements or stop loss reinsurance agreements or arrangements that
attach at an attachment point less than the expected loss ratio;
(q) make any material change in its reinsurance agreements or
arrangements;
(r) enter into any agreement or arrangement that limits or
otherwise restricts LaSalle Holdings or any of its Subsidiaries or any
successor thereto or that could, after the Effective Time, limit or
restrict New Holdings and its Subsidiaries or any successor thereto, from
engaging or competing in any line of business or in any geographic area; or
(s) enter into any new transaction, agreement, arrangement or
understanding with any other Persons that would be required to be disclosed
in the LaSalle SEC Reports (excluding the amendment to the CatEPut) in
accordance with Item 404 of Schedule S-K under the Securities Act.
Nothing in this Section 5.2 shall preclude LaSalle Holdings or
LaSalle Re from implementing a new pension plan or amending existing
pension plans, to comply with Bermuda law.
Section 5.3. No Solicitation.
(a) No Solicitation by Trenwick.
(i) Trenwick shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any of
its directors, officers or employees or any investment
banker, financial advisor, attorney, accountant or other
representative retained by it or any of its Subsidiaries
to, and it shall use commercially reasonable efforts to
ensure that such Persons do not directly or indirectly,
(x) solicit, initiate or encourage (including by way of
furnishing information), or take any other action
designed to facilitate, any inquiries or the making of
any proposal which constitutes any Trenwick Takeover
Proposal (as defined below) or (y) participate in any
discussions or negotiations regarding any Trenwick
Takeover Proposal; provided, however, that if, at any
time the Board of Directors of Trenwick determines in
good faith, after consultation with outside counsel, that
it is necessary to do so in order to comply with its
fiduciary duties to the stockholders of Trenwick under
applicable law, Trenwick may, in response to a Trenwick
Superior Proposal (as defined in Section 5.3(a)(ii))
which was not solicited by it or which did not otherwise
result from a breach of this Section 5.3(a)(i), and
subject to providing prior written notice of its decision
to take such action to LaSalle Holdings and compliance
with Section 5.3(a)(iii), (x) furnish information with
respect to Trenwick and its Subsidiaries to any Person
making a Trenwick Superior Proposal pursuant to a
customary confidentiality agreement (as determined by
Trenwick after consultation with its outside counsel) and
(y) participate in discussions or negotiations regarding
such Trenwick Superior Proposal. For purposes of this
Agreement, "Trenwick Takeover Proposal" means any
inquiry, proposal or offer from any Person relating to
any direct or indirect acquisition or purchase of a
business that constitutes 15% or more of the net
revenues, net income or
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assets of Trenwick and its Subsidiaries, taken as a
whole, or 15% or more of any class of equity securities
of Trenwick or any of its Subsidiaries, any tender offer
or exchange offer that if consummated would result in any
Person beneficially owning 15% or more of any class of
equity securities of Trenwick or any of its Subsidiaries,
or any merger, consolidation, amalgamation, business
combination, recapitalization, liquidation, dissolution
or similar transaction involving Trenwick or any of its
Subsidiaries, other than the transactions contemplated by
this Agreement or the Stock Option Agreements.
(ii) Except as expressly permitted by this Section
5.3(a), neither the Board of Directors of Trenwick nor
any committee thereof shall (x) withdraw or modify, or
propose publicly to withdraw or modify, in a manner
adverse to LaSalle Holdings, the approval or
recommendation by such Board of Directors or such
committee of this Agreement and the transactions
contemplated hereby, (y) approve or recommend, or propose
publicly to approve or recommend, any Trenwick Takeover
Proposal, or (z) cause Trenwick to enter into any letter
of intent, agreement in principle, acquisition agreement
or other similar agreement (each a "Trenwick Acquisition
Agreement") related to any Trenwick Takeover Proposal.
Notwithstanding the foregoing, the Board of Directors of
Trenwick (x) may withdraw or modify its approval and
recommendation of this Agreement and the transactions
contemplated hereby if the Board of Directors of Trenwick
determines in good faith that it has the fiduciary duty
to do so under applicable law and (y) may terminate this
Agreement and concurrently with or after such
termination, if it so chooses, cause Trenwick to enter
into any Trenwick Acquisition Agreement with respect to
any Trenwick Superior Proposal, but only at a time that
is after the fifth business day following LaSalle
Holdings' receipt of written notice advising LaSalle
Holdings that the Board of Directors of Trenwick is
prepared to accept a Trenwick Superior Proposal,
specifying the material terms and conditions of such
Trenwick Superior Proposal and identifying the person
making such Trenwick Superior Proposal. For purposes of
this Agreement, a "Trenwick Superior Proposal" means any
proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business
combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of
cash and/or securities, more than 50% of the combined
voting power of the Trenwick Shares then outstanding or
all or substantially all the assets of Trenwick and
otherwise on terms which the Board of Directors of
Trenwick determines in its good faith judgment (after
receiving the advice of a financial advisor of nationally
recognized reputation) to be more favorable to Trenwick's
stockholders than this Agreement and the transactions
contemplated hereby and for which financing, to the
extent required, is then committed or which, in the good
faith judgment of the Board of Directors of Trenwick, is
reasonably capable of being obtained by such third party.
(iii) In addition to the obligations of Trenwick set
forth in subparagraphs (a) (i) and (a) (ii) of this
Section 5.3, Trenwick shall immediately advise LaSalle
Holdings orally
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and in writing of any request for information or of any
Trenwick Takeover Proposal, the material terms and
conditions of such request or Trenwick Takeover Proposal
and the identity of the Person making such request or
Trenwick Takeover Proposal. Trenwick will keep LaSalle
Holdings reasonably informed of the status and details
(including amendments or proposed amendments) of any such
request or Trenwick Takeover Proposal.
(iv) Nothing contained in this Section 5.3(a) shall
prohibit Trenwick from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any
disclosure to Trenwick's stockholders if, in the good
faith judgment of the Board of Directors of Trenwick,
after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under
applicable law.
(b) No Solicitation by LaSalle Holdings.
(i) LaSalle Holdings shall not, nor shall it permit any
of its Subsidiaries to, nor shall it authorize or permit
any of its directors, officers or employees or any
investment banker, financial advisor, attorney,
accountant or other representative retained by it or any
of its Subsidiaries to, and it shall use commercially
reasonable efforts to ensure that such Persons do not
directly or indirectly, (x) solicit, initiate or
encourage (including by way of furnishing information),
or take any other action designed to facilitate, any
inquiries or the making of any proposal which constitutes
any LaSalle Holdings Takeover Proposal (as defined below)
or (y) participate in any discussions or negotiations
regarding any LaSalle Holdings Takeover Proposal;
provided, however, that if, at any time the Board of
Directors of LaSalle Holdings determines in good faith,
after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary
duties to shareholders of LaSalle Holdings under
applicable law, LaSalle Holdings may, in response to a
LaSalle Holdings Superior Proposal (as defined in Section
5.3(b)(ii)) which was not solicited by it or which did
not otherwise result from a breach of this Section
5.3(b)(i), and subject to providing prior written notice
of its decision to take such action to Trenwick and
compliance with Section 5.3(b)(iii), (x) furnish
information with respect to LaSalle Holdings and its
Subsidiaries to any Person making a LaSalle Holdings
Superior Proposal pursuant to a customary confidentiality
agreement (as determined by LaSalle Holdings after
consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such
LaSalle Holdings Superior Proposal. For purposes of this
Agreement, "LaSalle Holdings Takeover Proposal" means any
inquiry, proposal or offer from any Person relating to
any direct or indirect acquisition or purchase of a
business that constitutes 15% or more of the net
revenues, net income or assets of LaSalle Holdings and
its Subsidiaries, taken as a whole, or 15% or more of any
class of equity securities of LaSalle Holdings or any of
its Subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of
LaSalle Holdings
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or any of its Subsidiaries, or any merger, consolidation,
amalgamation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving
LaSalle Holdings or any of its Subsidiaries, other than
the transactions contemplated by this Agreement or the
Stock Option Agreements.
(ii) Except as expressly permitted by this Section
5.3(b), neither the Board of Directors of LaSalle
Holdings nor any committee thereof shall (x) withdraw or
modify, or propose publicly to withdraw or modify, in a
manner adverse to Trenwick, the approval or
recommendation by such Board of Directors or such
committee of this Agreement and the transactions
contemplated hereby, (y) approve or recommend, or propose
publicly to approve or recommend, any LaSalle Holdings
Takeover Proposal, or (z) cause LaSalle Holdings to enter
into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each a
"LaSalle Holdings Acquisition Agreement") related to any
LaSalle Holdings Takeover Proposal. Notwithstanding the
foregoing, the Board of Directors of LaSalle Holdings (x)
may withdraw or modify its approval and recommendation of
this Agreement and the transactions contemplated hereby
if the Board of Directors of LaSalle Holdings determines
in good faith that it has the fiduciary duty to do so
under applicable law and (y) may terminate this Agreement
and concurrently with or after such termination, if it so
chooses, cause LaSalle Holdings to enter into any LaSalle
Holdings Acquisition Agreement with respect to any
LaSalle Holdings Superior Proposal, but only at a time
that is after the fifth business day following Trenwick's
receipt of written notice advising Trenwick that the
Board of Directors of LaSalle Holdings is prepared to
accept a LaSalle Holdings Superior Proposal, specifying
the material terms and conditions of such LaSalle
Holdings Superior Proposal and identifying the person
making such LaSalle Holdings Superior Proposal. For
purposes of this Agreement, a "LaSalle Holdings Superior
Proposal" means any proposal made by a third party to
acquire, directly or indirectly, including pursuant to a
tender offer, exchange offer, merger, consolidation,
amalgamation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more
than 50% of the combined voting power of LaSalle Holdings
Shares then outstanding or all or substantially all the
assets of LaSalle Holdings and otherwise on terms which
the Board of Directors of LaSalle Holdings determines in
its good faith judgment (after receiving the advice of a
financial advisor of nationally recognized reputation) to
be more favorable to LaSalle Holdings' stockholders than
this Agreement and the transactions contemplated hereby
and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the
Board of Directors of LaSalle Holdings, is reasonably
capable of being obtained by such third party.
(iii) In addition to the obligations of LaSalle Holdings
set forth in subparagraphs (b)(i) and (b)(ii) of this
Section 5.3, LaSalle Holdings shall immediately advise
Trenwick orally and in writing of any request for
information or of any LaSalle Holdings Takeover Proposal,
the material terms and conditions of such request or
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LaSalle Holdings Takeover Proposal and the identity of
the person making such request or LaSalle Holdings
Takeover Proposal. LaSalle Holdings will keep Trenwick
reasonably informed of the status and details (including
amendments or proposed amendments) of any such request or
LaSalle Holdings Takeover Proposal.
(iv) Nothing contained in this Section 5.3(b) shall
prohibit LaSalle Holdings from taking and disclosing to
its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any
disclosure to LaSalle Holdings' shareholders if, in the
good faith judgment of the Board of Directors of LaSalle
Holdings, after consultation with outside counsel,
failure so to disclose would be inconsistent with its
obligations under applicable law.
Section 5.4. Access to Information; Confidentiality. Between the
date of this Agreement and the Effective Time, each of LaSalle Holdings and
Trenwick shall, and shall cause each of its respective Subsidiaries to,
afford the other party and its officer, employees and authorized
representatives (including, without limitation, attorneys, auditors,
financial advisors and actuaries) of the other reasonable access during
normal business hours during the period prior to the Effective Time to all
its personnel, offices and other facilities and to its books and records
and will permit such party and its authorized representatives to make such
inspections of its financial and operating data and other information with
respect to its business and properties as such party and its authorized
representatives may from time to time reasonably request. No information or
knowledge obtained in any investigation pursuant to this Section 5.4 shall
affect or be deemed to modify any representation or warranty contained in
the Agreement or the conditions to the obligations of the parties to
consummate the Plans. The confidentiality of all such documents and
information furnished in connection with the transactions contemplated by
this Agreement shall be governed by the terms of the Confidentiality
Letter.
Section 5.5. Form S-4; Regulatory Matters. As soon as is
reasonably practicable following the date of this Agreement, LaSalle
Holdings and Trenwick shall prepare and file with the SEC, pursuant to Rule
14a-6(a) under the Exchange Act, the Joint Proxy Statement and a
registration statement of New Holdings on Form S-4 with respect to the
transactions contemplated by this Agreement. LaSalle Holdings and Trenwick
shall cause New Holdings to file the Form S-4 promptly after the conclusion
of the SEC's review of the Joint Proxy Statement. Each of LaSalle Holdings
and Trenwick shall provide reasonable opportunity for the other to review
and comment upon the contents of the Joint Proxy Statement and the Form S-4
and shall not include therein or omit therefrom any information or
supplement to which counsel to the other shall reasonably object or
specifically request (as the case may be). After the date of the mailing of
the Joint Proxy Statement, each of LaSalle Holdings and Trenwick agrees
promptly to notify the other of and to correct or supplement any
information which either of them shall have furnished for inclusion in the
Joint Proxy Statement that shall have become false or misleading in any
material respect. Trenwick and LaSalle Holdings shall use all commercially
reasonable efforts to have the Joint Proxy Statement cleared by the SEC
under the Exchange Act and the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. New Holdings
shall also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or to file a general
consent to service
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of process) required to be taken under any applicable state securities and
"Blue Sky" laws in connection with the issue of New Holdings Shares in
accordance with the Plans and upon the exercise of New Holdings Options (as
defined herein) and each of LaSalle Holdings and Trenwick shall furnish all
information concerning itself and its shareholders as may reasonably be
requested in connection with any such action.
Section 5.6. Public Announcements. LaSalle Holdings and Trenwick
shall not issue any press release or otherwise make any public statements
with respect to the Plans, this Agreement or the transactions contemplated
hereby without first consulting with each other, and providing each other
the opportunity to review, comment upon and concur as to the wording,
timing and media for such press release or statement, except for any press
release or statement as may be required by applicable law, court process or
the obligation pursuant to any listing statement with any national
securities exchange, in which case notice shall be given to the other party
prior to the issuance of such press release or the dissemination of such
written material. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement, the
Plans and the Stock Option Agreements shall be in the form hereto agreed by
the parties.
Section 5.7. Supplemental Information. Prior to the Effective
Time, each party will promptly disclose in writing to the other parties any
matter hereafter arising which, if existing, occurring or known at the date
of this Agreement would have been required to be disclosed to such other
parties. Each party shall promptly advise the other parties of such party's
knowledge of any Material Adverse Effect. Except where prohibited by
applicable statutes and regulations, each party shall promptly provide the
other (or its counsel) with copies of all filings, material notices or
material communications made by such party with any Governmental Authority
(including the SEC or NYSE) in connection with this Agreement or the Stock
Option Agreements, or the transactions contemplated hereby or thereby. No
information provided to a party pursuant to this Section 5.7 shall be
deemed to cure any breach of any representation of or warranty made in this
Agreement unless the party receiving such information specifically agrees
thereto in writing.
Section 5.8. Shareholders' Meetings. LaSalle Holdings and LaSalle
Re shall each request the Court to convene a special meeting of its
respective shareholders (and, if necessary, classes of shareholders), with
the meeting of LaSalle Holdings to occur first, and Trenwick, acting
through its Board of Directors, shall in accordance with the GCL call a
special meeting of its stockholders (and, if necessary, classes of
stockholders), and shall give notice of, convene and hold such special
meetings as soon as practicable, but in no event more than 45 days, after
the Form S-4 is declared effective by the SEC for the purpose of approving
this Agreement and all actions contemplated hereby. In connection with such
meetings, each of LaSalle Holdings, LaSalle Re and Trenwick shall mail the
Joint Proxy Statement to its respective shareholders as promptly as
practicable. The respective Boards of Directors of each of LaSalle
Holdings, LaSalle Re and Trenwick shall submit for approval and adoption by
its respective shareholders the matters to be voted upon at such meetings
and shall, subject to their fiduciary duties after having consulted with
and considered the advice of outside counsel, include in the Joint Proxy
Statement the recommendation of its respective Board of Directors that the
shareholders vote in favor of the approval and adoption of this Agreement
and the Plans and each such party shall (subject to the fiduciary duties of
its Board of Directors) use all commercially
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reasonable efforts to secure such approval and adoption. LaSalle Holdings,
LaSalle Re and Trenwick shall coordinate and cooperate with respect to the
timing of such meetings and shall endeavor to hold such meetings on the
same day.
Section 5.9. Trenwick Options, LaSalle Holdings Options, LaSalle
Re Options and Trenwick Warrants.
(a) Trenwick Options.
(i) At the Effective Time, each outstanding Trenwick
Option shall be replaced by an option (a "New Holdings
Option") to acquire New Holdings Shares, the terms of
which shall be no less favorable than the terms currently
applicable to such Trenwick Option, under a new stock
option plan to be established by New Holdings for such
purposes before the Closing Date (the "New Holdings
Option Plan"), all as provided in Section 5.9(a)(ii).
(ii) The cancellation of Trenwick Options and replacement
with New Holdings Options shall comply in all respects
with, and shall be performed in accordance with, the
methodology prescribed by the provisions of Section
424(a) of the Code and the regulations thereunder and
each New Holdings Option shall provide the option holder
with termination rights that are no less favorable to
such holder than were provided under the Trenwick Option
for which it was replaced as of the Effective Time. The
parties contemplate that, consistent with the methodology
prescribed by Section 424(a) of the Code and the
applicable regulations thereunder (A) the number of New
Holdings Shares subject to such New Holdings Option will
be determined by multiplying the number of Trenwick
Shares subject to Trenwick Options by the Trenwick
Exchange Ratio (rounded to the next higher whole number
with respect to each holder thereof) and (B) the exercise
price under such New Holdings Option will be determined
by dividing the exercise price per share under the
Trenwick Option in effect immediately prior to the Merger
Effective Time by the Trenwick Exchange Ratio and
rounding the exercise price thus determined to the
nearest whole cent (a half-cent shall be rounded to the
next higher whole cent).
(iii) As promptly as practicable after the Effective
Time, New Holdings shall issue to each holder of an
outstanding Trenwick Option a document evidencing the New
Holdings Option having the terms provided for in Sections
5.9(a)(i) and (ii) and effective as of the Effective
Time.
(b) LaSalle Holdings Options.
(i) At the Effective Time, each outstanding LaSalle
Holdings Option shall be replaced by a New Holdings
Option, the terms of which shall be no less favorable
than the terms currently applicable to such LaSalle
Holdings Option, under the New Holdings Option Plan, all
as provided in Section 5.9(b)(ii).
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(ii) The cancellation of LaSalle Holdings Options and
replacement with New Holdings Options shall comply in all
respects with, and shall be performed in accordance with,
the methodology prescribed by the provisions of Section
424(a) of the Code and the regulations thereunder and
each New Holdings Option shall provide the option holder
with termination rights that are no less favorable to
such holder than were provided under the LaSalle Holdings
Option for which it was replaced as of the Effective
Time. The parties contemplate that, consistent with the
methodology prescribed by Section 424(a) of the Code and
the applicable regulations thereunder (A) the number of
New Holdings Shares subject to such New Holdings Option
will be determined by multiplying the number of LaSalle
Holdings Shares subject to LaSalle Holdings Options by
the LaSalle Exchange Ratio (rounded to the next higher
whole number with respect to each holder thereof) and (B)
the exercise price under such New Holdings Option will be
determined by dividing the exercise price per share under
the LaSalle Holdings Option in effect immediately prior
to the Scheme Effective Time by the LaSalle Exchange
Ratio and rounding the exercise price thus determined to
the nearest whole cent (a half-cent shall be rounded to
the next higher whole cent).
(iii) As promptly as practicable after the Effective
Time, New Holdings shall issue to each holder of an
outstanding LaSalle Holdings Option a document evidencing
the New Holdings Option having the terms provided for in
Sections 5.9(b)(i) and (ii) and effective as of the
Effective Time.
(c) LaSalle Re Options.
(i) Pursuant to Section 2(H) of that certain Amended and
Restated Option Agreement dated November 27, 1995 among
LaSalle Holdings, LaSalle Re and each of the
optionholders listed on Schedule I thereto, from and
after the Scheme Effective Time, each holder of an
outstanding option to acquire Non-Voting Shares shall be
entitled, upon payment of the exercise price thereof, to
receive, at such holder's election, either (i) the number
of Non-Voting Shares covered by such option or (ii) the
number of New Holdings Shares that such holder would have
received pursuant to Section 2.6(a) (plus, if applicable,
the amount of cash payable in lieu of a fractional share
that such holder would have received pursuant to Section
2.12) if such holder had exercised such option
immediately prior to the Scheme Effective Time. LaSalle
Re undertakes to use commercially reasonable efforts to
obtain the consent of each of the holders of such options
to the cancellation of such options and replacement
thereof with New Holdings Options, the terms of which
shall be no less favorable than the terms currently
applicable to such options.
(ii) Pursuant to Section 2(F) of that certain Stock
Appreciation Rights Agreement dated as of April 1, 1994
between Victor H. Blake and LaSalle Re, if Victor H.
Blake exercises any of his stock appreciation rights
during the period beginning at the
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Scheme Effective Time and ending on November 22, 2003, he
shall be entitled to receive the number of New Holdings
Shares that he would have received pursuant to Section
2.6(a) (plus, if applicable, the amount of cash payable
in lieu of a fractional share that he would have received
pursuant to Section 2.12) if he had exercised such stock
appreciation rights immediately prior to the Scheme
Effective Time.
(d) Registration of Options. If the New Holdings Options issued
pursuant to Sections 5.9(a), (b) and (c) are not already covered by an
effective registration statement, New Holdings will file a registration
statement as promptly as practicable after the Effective Time, which
registration statement will cover the New Holdings Shares issuable upon
exercise of the New Holdings Options granted in substitution of Trenwick
Options, LaSalle Holdings Options and LaSalle Re Options, and New Holdings
will use all commercially reasonable efforts to cause such registration
statement to become effective under the Securities Act and to maintain such
registration statement in effect until the exercise or termination of all
such New Holdings Options.
(e) Trenwick Warrants. At the Effective Time, each then
outstanding warrant of Trenwick shall be assumed by New Holdings in
accordance with its terms.
Section 5.10. Takeover Laws. The parties shall use all
commercially reasonable efforts to exempt the transactions contemplated by
this Agreement from, and otherwise act to eliminate or minimize the effects
of any applicable takeover or change of control law.
Section 5.11. Affiliates.
(a) At least five days prior to the Closing Date, Trenwick shall
deliver to LaSalle Holdings a letter identifying all persons who are
anticipated to be, at the time of the Trenwick stockholders meeting,
"affiliates" of Trenwick for purposes of Rule 145 under the Securities Act
("Rule 145"). Trenwick shall furnish such information and documents as
LaSalle Holdings may reasonably request for the purpose of reviewing such
letter. Trenwick shall use all commercially reasonable efforts to cause
each Person who is identified as an "affiliate" in such letter to deliver
to LaSalle Holdings, prior to the Closing Date, a written agreement in
connection with restrictions on affiliates under Rule 145, in a form
mutually agreeable to Trenwick and LaSalle Holdings.
(b) At least five days prior to the Closing Date, LaSalle Holdings
shall deliver to Trenwick a letter identifying all Persons who are
anticipated to be, at the time of the LaSalle Holdings shareholders
meeting, "affiliates" of LaSalle Holdings for purposes of Rule 145. LaSalle
Holdings shall furnish such information and documents as Trenwick may
reasonably request for the purpose of reviewing such letter. LaSalle
Holdings shall use all commercially reasonable efforts to cause each Person
who is identified as an "affiliate" in such letter to deliver to Trenwick,
prior to the Closing Date, a written agreement in connection with
restrictions on affiliates under Rule 145, in a form mutually agreeable to
Trenwick and LaSalle Holdings.
Section 5.12. Stock Exchange Listing. Trenwick, LaSalle Holdings and
New Holdings shall use all commercially reasonable efforts to cause the New
Holdings Shares to be issued in accordance
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with the Plans and the New Holdings Shares to be reserved for issue upon
exercise of New Holdings Options to be approved for listing on the NYSE,
subject to official notice of issuance, prior to the Closing Date.
Section 5.13. Indemnification and Insurance.
(a) From and after the Effective Time, New Holdings shall
indemnify, defend and hold harmless each Person who is, or has been at any
time prior to the date hereof or who becomes prior to the Effective Time,
an officer or director of Trenwick and LaSalle Holdings (the "Indemnified
Parties") against all losses, expenses, claims, damages and liabilities
arising out of the transactions contemplated by this Agreement to the
fullest extent permitted or required under applicable law (including,
without limitation, reasonable attorneys' fees). Subject to any limitations
imposed by Bermuda law and public policy, to the extent applicable, New
Holdings agrees that all rights to indemnification existing in favor of
current and former directors and officers of Trenwick, LaSalle Holdings or
any of their respective Subsidiaries as provided in such corporation's
certificate of incorporation or by-laws (or analogous documents) or
existing indemnification agreements, as in effect as of the date hereof,
with respect to matters occurring through the Effective Time, shall survive
the Plans and shall continue in full force and effect, and New Holdings
shall guarantee the obligations of Trenwick and LaSalle Holdings in respect
thereof; provided, however, that this shall not limit the ability of New
Holdings to effect any corporate restructuring of its Subsidiaries.
(b) New Holdings shall cause to be maintained for a period of not
less than six years from the Effective Time the directors' and officers'
insurance and, fiduciary liability insurance indemnification policies
currently maintained by Trenwick and LaSalle Holdings to the extent that
such policies provide coverage for events occurring prior to the Effective
Time (the "D&O Insurance") for any of the Indemnified Parties so long as
the annual premium therefor would not be in excess of two hundred percent
(200%) of the last annual premium paid prior to the date of this Agreement
(two hundred percent (200%) of such premium, the "Maximum Premium");
provided, however, that New Holdings may, in lieu of maintaining such
existing D&O Insurance as provided above, cause no less favorable coverage
to be provided under any policy maintained for the benefit of the directors
and officers of Trenwick, LaSalle Holdings or any of their respective
Subsidiaries, so long as (i) the insurance company providing such coverage
thereof has an A.M. Best Company rating of A or better and (ii) the
material terms thereof are no less advantageous to the Indemnified Parties
than the existing D&O Insurance. If the existing D&O Insurance expires, is
terminated or cancelled or if the premium for such D&O Insurance exceeds
the Maximum Premium during such six-year period, New Holdings will cause to
be obtained, to the extent commercially available, replacement D&O
Insurance as can be obtained for the remainder of such six-year period for
a premium not in excess of the Maximum Premium on terms and conditions no
less advantageous to the Indemnified Parties than the existing D&O
Insurance.
(c) The provisions of Section 5.13 are in addition to, and not in
substitution for any rights that an Indemnified Party may have under the
applicable certificate of incorporation, memorandum of association, or
by-laws, bye-laws or agreements with Trenwick and LaSalle Holdings or any
of their respective Subsidiaries or under applicable law. New Holdings
agrees to pay all costs and expenses
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(including fees and expenses of counsel) that may be incurred by an
Indemnified Party in successfully enforcing the indemnity or other
obligations under this Section 5.13. The provisions of this Section 5.13
shall survive the Closing and are intended for the benefit of, and shall be
enforceable by, each of the Indemnified Parties, their heirs and their
representatives.
Section 5.14. Commercially Reasonable Efforts. Upon the terms and
subject to the conditions and other agreements set forth in this Agreement,
each of the parties hereto will use commercially reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner possible, the transactions contemplated by this
Agreement (including with respect to Trenwick, the reduction of any
taxation of Trenwick arising from the Plan of Reorganization) and shall use
all commercially reasonable efforts to obtain all waivers, permits,
consents and approvals and to effect all registrations, filings and notices
with or to third parties or Governmental Authorities which are necessary or
desirable in connection with the transactions contemplated by this
Agreement. If, at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the
proper officers or directors of each of the parties hereto shall take such
action.
Section 5.15. Post-Closing Matters.
(a) LaSalle Holdings, Trenwick and their respective Affiliates
shall (and, following the Effective Time, New Holdings shall) take no
action with respect to the stock, assets or liabilities of LaSalle Holdings
or Trenwick, including, without limitation, the filing of Tax returns or
reports, that would be inconsistent with the qualification of the Plans as
tax-free under Section 351 of the Code; provided, however, that Trenwick,
LaSalle Holdings and their respective Affiliates may file with the
appropriate Governmental Authorities and execute all documents necessary to
consummate the Plans and other transactions contemplated by this Agreement.
(b) Upon request, New Holdings shall use commercially reasonable
efforts to cooperate with any LaSalle Holdings shareholder or any Trenwick
stockholder in the completion and administration of a gain recognition
agreement under Section 367 of the Code.
Section 5.16. Employee Benefit Plans; Existing Agreements.
(a) For a period of at least one year after the Effective Time,
New Holdings will cause (i) the employees of Trenwick and its Subsidiaries
who are employed immediately after the Effective Time ("Trenwick
Employees") to be provided with employee benefits under Employee Benefit
Plans maintained by New Holdings ("New Holdings Plans") which are no less
favorable in the aggregate than benefits provided to Trenwick Employees
immediately prior to the Effective Time; and (ii) the employees of LaSalle
Holdings and its Subsidiaries who are employed immediately after the
Effective Time ("LaSalle Holdings Employees") to be provided with employee
benefits under the New Holdings Plans which are no less favorable in the
aggregate than benefits provided to LaSalle Holdings Employees immediately
prior to the Effective Time, except for the termination of the LaSalle Re
Holdings Limited Employee Stock Purchase Plan.
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(b) With respect to each New Holdings Plan, for purposes of
determining eligibility to participate, vesting and entitlement to
benefits, including for severance benefits and vacation entitlement (but
not for accrual of pension benefits except to the extent that past service
credit is provided in a similar manner to both Trenwick Employees and
LaSalle Holdings Employees), service with Trenwick and its Subsidiaries by
Trenwick Employees employed immediately after the Merger Effective Time
shall be treated as service with New Holdings and service with LaSalle
Holdings and its Subsidiaries by LaSalle Holdings Employees employed
immediately after the Scheme Effective Time shall be treated as service
with New Holdings; provided, however, that such service shall not be
recognized to the extent that such recognition would result in a
duplication of benefits. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements or
the application of any preexisting condition limitations. Trenwick
Employees and LaSalle Holdings Employees shall be given credit for amounts
paid under a corresponding benefit plan during the same period for purposes
of applying deductibles, copayments and out-of-pocket maximums as though
such amounts had been paid in accordance with the terms and conditions of
the New Holdings Plan.
(c) Except with respect to those plans and arrangements listed in
Section 5.16 of the Trenwick Disclosure Letter or the LaSalle Disclosure
Letter (as applicable), following the Effective Time, New Holdings shall
honor in accordance with their terms (i) all employment, severance and
other compensation agreements and arrangements existing on or prior to the
execution of this Agreement which are between Trenwick and any director,
officer or employee thereof and which have been disclosed in Section 3.16
of the Trenwick Disclosure Letter and previously have been delivered to
LaSalle Holdings and (ii) all employment, severance and other compensation
agreements and arrangements existing on or prior to the execution of this
Agreement which are between LaSalle Holdings and any director, officer or
employee thereof and which have been disclosed in Section 4.16(a) of the
LaSalle Disclosure Letter and previously have been delivered to Trenwick.
(d) It is understood and agreed between the parties that all
provisions contained in this Agreement with respect to employee benefit
plans or employee compensation are included for the sole benefit of the
respective parties hereto and do not and shall not create any right in any
other person, including, but not limited to, any LaSalle Holdings Employee
or any Trenwick Employee, any participant in any benefit or compensation
plan or any beneficiary thereof.
Section 5.17. Letters from Accountants.
(a) LaSalle Holdings shall use all commercially reasonable efforts
to cause to be delivered to Trenwick two letters from Deloitte & Touche
LLP, its independent public accountants, one dated a date within two
business days before the date on which the Form S-4 shall become effective
and one dated a date within two business days before the Effective Date,
each addressed to Trenwick, in form and substance reasonably satisfactory
to Trenwick and comparable in scope and substance to comfort letters
customarily delivered by independent public accountants in connection with
registration statements similar to the Form S-4 and transactions such as
those contemplated by this Agreement.
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(b) Trenwick shall use its best efforts to cause to be delivered
to LaSalle Holdings two letters of PricewaterhouseCoopers LLP, its
independent public accountants, one dated a date within two business days
before the date on which the Form S-4 shall become effective and one dated
a date within two business days before the Effective Date, each addressed
to LaSalle Holdings, in form and substance reasonably satisfactory to
LaSalle Holdings and comparable in scope and substance to comfort letters
customarily delivered by independent public accountants in connection with
registration statements similar to the Form S-4 and transactions such as
those contemplated by this Agreement.
Section 5.18. Litigation. Each of Trenwick and LaSalle Holdings
shall (to the extent their interests do not diverge) cooperate in the
defense of any litigation against Trenwick or LaSalle Holdings, as
applicable, and its directors and officers relating to the transactions
contemplated by this Agreement, the Plans and the Stock Option Agreements.
Section 5.19. Advice of Changes. Each of Trenwick and LaSalle
Holdings agrees that it shall give the other party prompt notice of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming
untrue or inaccurate in any material respect or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement;
provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Section 5.20. Trenwick Rights Agreement. The Board of Directors of
Trenwick shall take all further action (in addition to that referred to in
Section 3.20) reasonably requested in writing by LaSalle Holdings in order
to render the Trenwick Rights inapplicable to transactions contemplated by
this Agreement, the Plans and the Stock Option Agreements to the extent
provided herein and in the Trenwick Rights Plan amendment.
Section 5.21. New Holdings Rights Agreement. The Board of
Directors of New Holdings shall take all action necessary to implement a
shareholders rights plan (the "New Holdings Rights Agreement"),
substantially similar to the Trenwick Rights Agreement and Trenwick Rights,
except as otherwise contemplated by Section 5.21 of the Trenwick Disclosure
Letter or as otherwise agreed by Trenwick and LaSalle Holdings, with such
other changes as are set forth on Section 5.21 of the Trenwick Disclosure
Letter and such changes therein as may be agreed by Trenwick and LaSalle
Holdings, effective as of the Effective Time.
Section 5.22. Organization of Trenwick Subsidiaries. During the
period from the date of this Agreement to the Effective Time, Trenwick
shall organize Trenwick LLC and Trenwick Subsidiary and shall cause each
such Subsidiary to enter into the transactions described in Section 2.1(b)
of this Agreement by executing a joinder hereto, subject to obtaining
stockholder approval pursuant to Section 264 and Section 271 of the GCL.
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Section 5.23. Assumption of Non-Voting Share Conversion
Obligation. In the event that the Scheme of Arrangement is not approved by
the holders of at least seventy-five percent (75%) of the issued and
outstanding Non-Voting Shares, then, prior to the consummation of the
Scheme of Arrangement with respect to the LaSalle Holdings Shares, New
Holdings shall assume by written instrument the obligation to deliver one
New Holdings Share in exchange for each Non-Voting Share surrendered for
exchange pursuant to that certain Conversion Agreement dated as of November
27, 1995 among LaSalle Holdings, LaSalle Re and each of the Persons listed
on Schedule I thereto.
Section 5.24. Assumption of Series B Preferred Share Conversion
Obligation. Prior to the Scheme Effective Time, New Holdings shall assume
by written instrument the obligation to deliver to the holders of any
Series B Preferred Shares, par value $1.00 per share, of LaSalle Holdings
("Series B Preferred Shares"), upon the basis and upon the terms and
conditions specified in the Certificate of Designation, Preferences and
Rights of the Series B Preferred Shares with respect to the conversion of
such Series B Preferred Shares, and in lieu of the LaSalle Holdings Shares
immediately theretofore receivable upon such conversion, such shares of
stock, securities or assets as may be issued or payable with respect to or
in exchange for a number of LaSalle Holdings Shares equal to the number of
LaSalle Holdings Shares immediately theretofore so receivable had the
Scheme of Arrangement not been consummated.
Section 5.25. Tax-Free Reorganization. Trenwick, New Holdings and
LaSalle Holdings shall each use its best efforts to cause the exchange
described in Section 2.1(c) to be treated as a reorganization within the
meaning of Section 368(a) of the Code and to cause the Scheme of
Arrangement to be treated as tax-free under Section 351 of the Code and to
cause the delivery of the certificates of officers and opinions upon which
the opinions of Baker & McKenzie under Section 6.1(h), Section 6.2(g) and
Section 6.3(h) will rely and upon which the opinion of Mayer, Brown & Platt
under Section 6.1(g) will rely.
ARTICLE 6
CONDITIONS TO THE PLANS
Section 6.1. Conditions to Each Party's Obligation to Effect the
Plans. The respective obligations of each party to this Agreement to
consummate the Plans and to effect the actions referred to in Section
2.2(c) shall be subject to the following conditions:
(a) Stockholder Approvals. This Agreement, the Plans and the other
transactions contemplated hereby shall have been approved and adopted by
any requisite vote or consent of (i) the relevant classes of Trenwick's
stockholders as required by the GCL, Trenwick's certificate of
incorporation and by-laws and (if applicable), the NYSE and (ii) the
relevant classes of LaSalle Holdings' shareholders as required by the
Companies Act and (if applicable) the NYSE and LaSalle Holdings' bye-laws,
and orders of the Court sanctioning the Scheme of Arrangement shall have
been obtained.
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(b) Third Party Consents.
(i) Both of Trenwick and LaSalle Holdings shall have
received all consents and approvals required by any
lender or equity provider as further set forth in Section
6.1(b) of the Trenwick Disclosure Letter and the LaSalle
Disclosure Letter, respectively.
(ii) Those regulatory and other approvals required to
consummate the Plans and the other transactions
contemplated hereby, including but not limited to any
applicable Lloyd's approval and those approvals specified
in Section 3.8 of the Trenwick Disclosure Letter and
Section 4.8 of the LaSalle Disclosure Letter, shall have
been obtained (without any terms or conditions to such
approvals which would impose material and adverse
limitations on the ability of New Holdings and its
Subsidiaries to conduct their business after the
Effective Time, which would require changes to the terms
of the Plans which would be material and adverse to New
Holdings, LaSalle Holdings or Trenwick or which would
change the consideration payable to shareholders in
accordance with the Plans) and shall remain in full force
and effect and all statutory waiting periods in respect
thereof shall have expired.
(c) No Injunctions or Restraints. No order, decree or injunction
of any court or agency of competent jurisdiction shall be in effect, and no
law, statute or regulation shall have been enacted or adopted, that
enjoins, prohibits or makes illegal consummation of any of the transactions
contemplated hereby; provided, however, that each of LaSalle Holdings and
Trenwick shall have used all commercially reasonable efforts to prevent any
such rule, regulation, injunction, decree or other order, and to appeal as
promptly as possible any injunction, decree or other order that may be
entered.
(d) Form S-4. The Form S-4 shall have been declared effective by
the SEC and shall not be subject to a stop order or threatened stop order.
(e) HSR Act. Any waiting period (and any extension thereof)
applicable to the Plan of Merger under the HSR Act shall have terminated or
expired.
(f) NYSE Listing. The New Holdings Shares to be issued to holders
of Trenwick Shares, LaSalle Holdings Shares and Minority Shares upon
consummation of the Plans shall have been authorized for trading on the
NYSE, subject to official notice of issuance.
(g) Mayer, Brown & Platt Opinion. New Holdings and LaSalle
Holdings shall have received an opinion of Mayer, Brown & Platt, dated the
Effective Date, on the basis of facts, representations and assumptions set
forth in such opinion that are consistent with the facts existing on the
Effective Date, substantially to the effect that (i) the Scheme of
Arrangement will qualify as an exchange under Section 351(a) of the Code,
(ii) no gain or loss will be recognized by United States transferors of
LaSalle Holdings Shares who, actually or constructively within the meaning
of Section 958 of the Code, own less than 5% of both the total voting power
and the total value of the shares of New Holdings immediately after the
Plans upon the receipt of solely New Holdings Shares pursuant
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to the Scheme of Arrangement, (iii) no gain or loss will be recognized by
United States transferors of LaSalle Holdings Shares who own 5% or more of
the total voting power or the total value of the New Holdings Shares
immediately after the Plans upon the receipt of solely New Holdings Shares
pursuant to the Scheme of Arrangement, provided that such United States
transferors enter into gain recognition agreements meeting the requirements
of United States Treasury Regulation ss.1.367(a)-8, (iv) no gain or loss
will be recognized by United States transferors of Non-Voting Shares who,
actually or constructively within the meaning of Section 958 of the Code,
own less than 5% of both the total voting power and the total value of the
shares of New Holdings immediately after the Plans upon the receipt of
solely New Holdings Shares pursuant to the Scheme of Arrangement, and (v)
no gain or loss will be recognized by United States transferors of
Non-Voting Shares who own 5%, actually or constructively within the meaning
of Section 958 of the Code, or more of the total voting power or the total
value of the New Holdings Shares immediately after the Plans upon the
receipt of solely New Holdings Shares pursuant to the Scheme of
Arrangement, provided that such United States transferors enter into gain
recognition agreements meeting the requirements of United States Treasury
Regulation 1.367(a)-8. In rendering such opinion, counsel may require and
rely upon representations contained in certificates of officers of LaSalle
Holdings, LaSalle Re, Trenwick, New Holdings, foreign counsel and others.
(h) Baker & McKenzie Opinion. New Holdings and Trenwick shall have
received an opinion of Baker & McKenzie, dated the Effective Date, on the
basis of facts, representations and assumptions set forth in such opinion
that are consistent with the facts existing on the Effective Date
substantially to the effect that (i) no gain or loss will be recognized by
United States shareholders of Trenwick upon the receipt of solely New
Holdings Shares pursuant to the Plan of Reorganization (except with respect
to cash received in lieu of a fractional share interest in New Holdings
Shares), and (ii) the Plan of Reorganization will qualify as a tax-free
reorganization within the meaning of Section 368(a). In rendering such
opinion, counsel may require and rely upon representations contained in
certificates of officers of LaSalle Holdings, LaSalle Re, Trenwick and New
Holdings.
Section 6.2. Additional Conditions to Trenwick's Obligation to
Effect the Plans. The obligation of Trenwick to consummate the Plans and to
effect the actions referred to in Section 2.2(c) shall be further subject
to the following conditions unless waived in accordance with Section 8.3:
(a) Performance of Obligations of LaSalle Holdings. LaSalle
Holdings shall have performed in all material respects the obligations and
covenants to be performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and
warranties of LaSalle Holdings contained in this Agreement that are
qualified as to materiality shall be true and correct and the
representations and warranties of LaSalle Holdings contained in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made as of and on the
Closing Date, except for such failure or failures to be true and correct
(or true and correct in all material respects) as would not have or be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on LaSalle Holdings.
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(c) Compliance with Conditions. Trenwick shall receive customary
closing documents in form and substance reasonably satisfactory to it,
including a certificate of an executive officer of LaSalle Holdings
certifying compliance with the conditions set forth in Sections 6.2(a) and
(b).
(d) Comfort Letters. Trenwick shall have received from Deloitte &
Touche LLP the letters described in Section 5.17(a).
(e) Consents and Approvals. Trenwick shall have received evidence,
in form and substance reasonably satisfactory to it, that all consents and
approvals set forth in Section 4.8 of the LaSalle Disclosure Letter have
been obtained.
(f) Fiduciary Duties. The Board of Directors of LaSalle Holdings
shall not have (A) withdrawn or modified or changed in a manner adverse to
Trenwick its approval or recommendation of this Agreement in order to
approve and permit LaSalle Holdings to execute a definitive agreement
relating to a LaSalle Holdings Superior Proposal (as defined in Section
5.3(b)(ii)), and (B) determined in good faith, after consultation with
outside legal counsel to LaSalle Holdings that the failure to take such
action as set forth in the preceding clause (A) is reasonably likely to
result in the breach of the respective Board of Directors' fiduciary duties
under applicable law.
(g) Baker & McKenzie Opinion. New Holdings and Trenwick shall have
received an opinion of Baker & McKenzie, dated the Effective Date, on the
basis of facts, representations and assumptions set forth in such opinion
that are consistent with the facts existing on the Effective Date
substantially to the effect that Trenwick shall treat the Plan of
Reorganization as a taxable disposition of assets directly held by
Trenwick, but that Trenwick shall not be subject to U.S. federal income tax
in excess of $60.0 million with respect to such gain. In rendering such
opinion, counsel may require and rely upon representations contained in
certificates of officers of LaSalle Holdings, LaSalle Re, Trenwick and New
Holdings, including representations regarding the adjusted tax basis of the
assets of Trenwick. In addition, in rendering such opinion, counsel may
require and rely upon opinions prepared by valuation experts, including
opinions regarding the fair market value of the assets of Trenwick, foreign
counsel and others.
(h) No Material Adverse Change. At any time after the date of this
Agreement there shall not have occurred any Material Adverse Change
relating to LaSalle Holdings; provided, that this condition shall no longer
be applicable following the approval of the LaSalle Holdings' shareholders.
Section 6.3. Additional Conditions to LaSalle Holdings' Obligation
to Effect the Plans. The obligation of LaSalle Holdings to consummate the
Plans and to effect the actions referred to in Section 2.2(c) shall be
further subject to the following conditions unless waived in accordance
with Section 8.3:
(a) Performance of Obligations of Trenwick. Trenwick shall have
performed in all material respects the obligations and covenants to be
performed by it at or prior to the Effective Time.
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(b) Representations and Warranties. The representations and
warranties of Trenwick contained in this Agreement that are qualified as to
materiality shall be true and correct and the representations and
warranties of Trenwick contained in this Agreement that are not so
qualified shall be true and correct in all material respects, in each case
as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
Closing Date as though made as of and on the Closing Date, except for such
failure or failures to be true and correct (or true and correct in all
material respects) as would not have or be reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Trenwick.
(c) Compliance with Conditions. LaSalle Holdings shall receive
customary closing documents in form and substance reasonably satisfactory
to it, including a certificate of an executive officer of Trenwick
certifying compliance with the conditions set forth in Sections 6.3(a) and
(b).
(d) Comfort Letters. LaSalle Holdings shall have received from
PricewaterhouseCoopers LLP the letters described in Section 5.17(b).
(e) Consents and Approvals. LaSalle Holdings shall have received
evidence, in form and substance reasonably satisfactory to it, that all
consents and approvals set forth in Section 3.8 of the Trenwick Disclosure
Letter have been obtained.
(f) Rights Agreement. Trenwick shall have taken all necessary
action pursuant to Section 3.20 so that, as of immediately prior to the
Effective Time, (i) none of Trenwick, New Holdings and LaSalle Holdings
will have any obligations under the Rights or the Rights Agreement and (ii)
the holders of the Rights will have no rights under the Rights or the
Rights Agreement.
(g) Fiduciary Duties. The Board of Directors of Trenwick shall not
have (A) withdrawn or modified or changed in a manner adverse to LaSalle
Holdings its approval or recommendation of this Agreement in order to
approve and permit Trenwick to execute a definitive agreement relating to a
Trenwick Superior Proposal (as defined in Section 5.3(a)(ii)), and (B)
determined in good faith, after consultation with outside legal counsel to
Trenwick that the failure to take such action as set forth in the preceding
clause (A) is reasonably likely to result in the breach of the respective
Board of Directors' fiduciary duties under applicable law.
(h) Baker & McKenzie Opinion. In addition to those matters set
forth in Section 6.3(h) of the Trenwick Disclosure Letter, New Holdings and
Trenwick shall have received an opinion of Baker & McKenzie, dated the
Effective Date, on the basis of facts, representations and assumptions set
forth in such opinion that are consistent with the facts existing on the
Effective Date substantially to the effect that Trenwick shall treat the
Plan of Reorganization as a taxable disposition of assets directly held by
Trenwick, but that Trenwick shall not be subject to U.S. federal income tax
in excess of $40.0 million with respect to such gain. In rendering such
opinion, counsel may require and rely upon representations contained in
certificates of officers of LaSalle Holdings, LaSalle Re, Trenwick and New
Holdings, including representations regarding the adjusted tax basis of the
assets of Trenwick. In addition, in rendering such opinion, counsel may
require and rely upon opinions
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prepared by valuation experts, including opinions regarding the fair market
value of the assets of Trenwick, foreign counsel and others.
(i) No Material Adverse Change. At any time after the date of this
Agreement, there shall not have occurred any Material Adverse Change
relating to Trenwick; provided, that this condition shall no longer be
applicable following the approval of the Trenwick stockholders.
ARTICLE 7
TERMINATION AND ABANDONMENT
Section 7.1. Termination by Trenwick or LaSalle Holdings. Anything
herein contained to the contrary notwithstanding, this Agreement may be
terminated and the Plans contemplated hereby may be abandoned at any time
prior to the earlier of the Scheme Effective Time or Merger Effective Time,
whether before or after approval of the Plans by the shareholders of
LaSalle Holdings and LaSalle Re or the stockholders of Trenwick,
respectively:
(a) by the mutual written consent of LaSalle Holdings and Trenwick;
(b) by either LaSalle Holdings or Trenwick by written notice to
the other:
(i) if the Effective Time shall not have occurred on or
before June 30, 2000; provided, however, that the right
to terminate this Agreement under this Section 7.1(b)(i)
shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective
Time to occur on or before such date;
(ii) if a Governmental Authority shall have issued a
final and nonappealable order, decree or ruling or taken
any other action (which order, decree, ruling or other
action the parties hereto shall use their commercially
reasonable efforts to lift), in each case, permanently
restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become
final and nonappealable;
(iii) if the required approval of the classes of
stockholders of Trenwick shall not have been obtained by
reason of the failure to obtain the required vote at a
duly held meeting of such stockholders or at any
adjournment or postponement thereof; provided, that, if
the terminating party is Trenwick, Trenwick shall not be
in material breach of its obligations under Section 5.8;
(iv) if the required approval of the shareholders of
LaSalle Holdings and LaSalle Re shall not have been
obtained by reason of the failure to obtain the required
vote at a duly held meeting of such shareholders or at
any adjournment or postponement
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thereof; provided, that, if the terminating party is
LaSalle Holdings, LaSalle Holdings shall not be in
material breach of its obligations under Section 5.8; or
(v) if any single natural catastrophe shall have occurred
which would result in Net Losses to LaSalle Holdings and
its Subsidiaries or to Trenwick and its Subsidiaries of
$100,000,000 or more.
Section 7.2. Termination by Trenwick.
(a) Trenwick may terminate this Agreement prior to the Effective
Time if LaSalle Holdings (x) breaches or fails in any material respect to
perform or comply with any of its covenants and agreements contained herein
or (y) breaches its representations or warranties and such breach would
have or would be reasonably likely to have a Material Adverse Effect on
LaSalle Holdings and its Subsidiaries, in each case such that the
conditions set forth in Section 6.2(a) or 6.2(b) would not be satisfied;
provided, however, that if such breach is cured by the breaching party
within ten (10) days following the discovery of such breach, Trenwick may
not terminate this Agreement pursuant to this Section 7.2.
(b) Trenwick may terminate this Agreement prior to the Effective
Time if LaSalle Holdings has (A) withdrawn or modified or changed in a
manner adverse to Trenwick its approval or recommendation of this
Agreement, or (B) determined in good faith, after consultation with outside
legal counsel to LaSalle Holdings that the failure to take such action as
set forth in the preceding clause (A) is reasonably likely to result in the
breach of the respective Board of Directors' fiduciary duties under
applicable law.
(c) Prior to the Effective Time, Trenwick may terminate this
Agreement as provided in Section 5.3(a)(ii); provided, that Trenwick shall
have given LaSalle Holdings forty-eight (48) hours advance notice of any
termination pursuant to this Section 7.2(b) and that Trenwick shall have
paid LaSalle Holdings the Trenwick Termination Fee required to be paid by
Trenwick pursuant to Section 7.4(b) hereof. Trenwick agrees to notify
LaSalle Holdings promptly if it is no longer prepared to accept the
Trenwick Superior Proposal.
Section 7.3. Termination by LaSalle Holdings.
(a) LaSalle Holdings may terminate this Agreement prior to the
Effective Time if Trenwick (x) breaches or fails in any material respect to
perform or comply with any of its covenants and agreements contained herein
or (y) breaches its representations or warranties and such breach would
have or would be reasonably likely to have a Material Adverse Effect on
Trenwick and its Subsidiaries, in each case such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied; provided,
however, that if such breach is cured by the breaching party within ten
(10) days following the discovery of such breach, LaSalle Holdings may not
terminate this Agreement pursuant to this Section 7.3(a).
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(b) LaSalle Holdings may terminate this Agreement prior to the
Effective Time if Trenwick has (A) withdrawn or modified or changed in a
manner adverse to LaSalle Holdings its approval or recommendation of this
Agreement, or (B) determined in good faith, after consultation with outside
legal counsel to Trenwick that the failure to take such actions as set
forth in the preceding clause (A) is reasonably likely to result in the
breach of the respective Board of Directors' fiduciary duties under
applicable law.
(c) Prior to the Effective Time, LaSalle Holdings may terminate
this Agreement as provided in Section 5.3(b)(ii); provided, that LaSalle
Holdings shall have given Trenwick forty-eight (48) hours advance notice of
any termination pursuant to this Section 7.3(b) and that LaSalle Holdings
shall have paid Trenwick the LaSalle Termination Fee required to be paid by
LaSalle Holdings pursuant to Section 7.4(c) hereof. LaSalle Holdings agrees
to notify Trenwick promptly if it is no longer prepared to accept the
LaSalle Holdings Superior Proposal.
Section 7.4. Procedure and Effect of Termination.
(a) In the event of the termination of this Agreement, except as
set forth in Section 7.4(b) and Section 7.4(c), none of the parties hereto
shall have any obligation to perform hereunder from and after the date of
such termination, except that Sections 5.4 (the last sentence only)
(Confidentiality), 5.6 (Public Announcements), 8.5 (Expenses and
Obligations), 8.7 (Notices) and 8.8 (Governing Law) shall survive such
termination and remain in full force and effect notwithstanding such
termination. No termination hereof shall relieve any party from any
liability resulting from any breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
(b) If this Agreement is terminated by (i) any party pursuant to
Section 7.1(b)(i) or 7.1(b)(iii), and in either case there shall have been
made or commenced a Trenwick Takeover Proposal, which Trenwick Takeover
Proposal shall not have been absolutely and unconditionally withdrawn and
abandoned as of the date of such termination, (ii) Trenwick pursuant to
Section 7.2(c) or (iii) LaSalle Holdings pursuant to Section 7.3(a) if
there is a Trenwick Takeover Proposal outstanding at the time of the breach
or 7.3(b), then Trenwick shall pay LaSalle Holdings a non-refundable
termination fee of $12,000,000, plus expenses not to exceed $2,000,000 (the
"Trenwick Termination Fee"), which amount shall be payable by wire transfer
of same-day funds prior to, and as a condition of, the effectiveness of
such termination.
(c) If this Agreement is terminated by (i) any party pursuant to
Section 7.1(b)(i) or 7.1(b)(iii), and in either case there shall have been
made or commenced a LaSalle Holdings Takeover Proposal, which LaSalle
Holdings Takeover Proposal shall not have been absolutely and
unconditionally withdrawn and abandoned as of the date of such termination,
(ii) LaSalle Holdings pursuant to Section 7.3(c) or (iii) Trenwick pursuant
to Section 7.2(a) if there is a LaSalle Holdings Takeover Proposal
outstanding at the time of the breach or 7.2(b), then LaSalle Holdings
shall pay Trenwick a non-refundable termination fee of $12,000,000, plus
expenses not to exceed $2,000,000 (the "LaSalle Termination Fee"), which
amount shall be payable by wire transfer of same-day funds prior to, and as
a condition of, the effectiveness of such termination.
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ARTICLE 8
MISCELLANEOUS PROVISIONS
Section 8.1. Non-Survival of Representations, Warranties,
Covenants and Agreements. None of the representations, warranties,
covenants or agreements contained in this Agreement or in any Disclosure
Letter, Exhibit or any document delivered pursuant to this Agreement shall
survive the Closing, except for those covenants and agreements contained in
this Agreement that by their terms apply or are to be performed in whole or
in part after the Closing.
Section 8.2. Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified or supplemented only by
written agreement signed on behalf of each party hereto at any time prior
to the earlier of the Merger Effective Time or the Scheme Effective Time
with respect to any of the terms contained herein except that (i) after the
meetings of the stockholders of Trenwick as contemplated by Section 5.8,
Trenwick Consideration to be paid pursuant to this Agreement to the holders
of Trenwick Shares shall in no event be decreased and the form of
consideration to be received by the holders of such Trenwick Shares in the
Plan of Merger shall in no event be altered without the approval of such
holders, (ii) after the meetings of the shareholders of LaSalle Holdings as
contemplated by Section 5.8, LaSalle Consideration to be paid pursuant to
this Agreement to the holders of LaSalle Holdings Shares shall in no event
be decreased and the form of consideration to be received by the holders of
such LaSalle Holdings Shares in the Scheme of Arrangement shall in no event
be altered without the approval of such holders, and (iii) after the
meetings of the stockholders of Trenwick, LaSalle Holdings or LaSalle Re as
contemplated by Section 5.8, there shall be made no amendment that by law
requires further approval by such stockholders without the further approval
of such stockholders.
Section 8.3. Waiver of Compliance; Consents.
(a) Any failure of any party to this Agreement to comply with any
obligation, covenant, agreement or condition herein may be waived by
written instrument executed by each other party to this Agreement, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
(b) Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set
forth in this Section 8.3.
Section 8.4. Severability and Validity. The provisions set forth
in this Agreement are severable. If any term, provision, covenant or
restriction of this Agreement is held by record of competent jurisdiction
or other authority to be invalid, void or unenforceable in any jurisdiction
or against its regulatory or public policy, the remainder of this
Agreement, and the application of such provision to other Persons or
circumstances, shall not be affected thereby and shall remain valid and
enforceable in such jurisdiction, and any such invalidity or
unenforceability in any jurisdiction shall
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not invalidate or render unenforceable such provision in any other
jurisdiction. Upon a determination that any term, provision, covenant or
restriction is invalid, void or unenforceable or against the regulatory or
public policy of the governing jurisdiction, 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 to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the extent
possible.
Section 8.5. Expenses and Obligations. Each of the parties shall
pay its own expenses incurred in connection with the negotiation and
preparation of this Agreement, the performance of its covenants herein and
the effectuation of the transactions contemplated hereby, including,
without limitation, all fees and disbursements of its respective legal
counsel, advisors and accountants; provided, however, that nothing in this
Section 8.5 shall negate any obligation of either LaSalle Holdings or
Trenwick to pay the termination fee specified in Sections 7.4(b) and (c).
Each of the LaSalle Holdings and Trenwick shall bear and pay one-half of
the filing fees, printing expenses and mailing costs incurred in connection
with (1) the filing, printing and mailing of the Form S-4 and the Joint
Proxy Statement (including SEC filing fees) and (2) the filings of any
required premerger notification and report forms under the HSR Act
(including filing fees) and one-half of the fees of the Settlement Auditor.
In the event that the transactions contemplated by this Agreement are not
consummated, each of the parties shall indemnify and hold harmless the
other parties against any claim for fees or commissions of brokers,
finders, agents or bankers retained or purportedly retained by the
indemnitor party in connection with the transactions contemplated by this
Agreement.
Section 8.6. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and nothing in
this Agreement, express or implied, is intended to confer upon any other
Person any rights or remedies of any nature whatsoever under or by reason
of this Agreement, except for Section 5.13 (which is intended to be for the
benefit of the Persons referred to therein and may be enforced by such
Persons).
Section 8.7. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by facsimile (which is confirmed) or sent by overnight courier
(providing proof of delivery) or by registered or certified mail (postage
prepaid, return receipt requested), to the other party at the following
address (or at such other address for a party as shall be specified by like
notice):
if to LaSalle Holdings before the Effective Date, to:
LaSalle Re Holdings Limited
25 Church Street
P.O. Box HM 1502
Hamilton HM FX, Bermuda
Fax: (441) 292-2656
Attention: Guy D. Hengesbaugh
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with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Fax: (312) 701-7711
Attention: Richard W. Shepro, Esq.
if to Trenwick before the Effective Date, to:
Trenwick Group Inc.
One Canterbury Green
Stamford, Connecticut 06901
Fax: (203) 353-5550
Attention: John V. Del Col, Esq.
with a copy to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Fax: (212) 891-3835
Attention: James R. Cameron, Esq.
if to LaSalle Holdings, Trenwick or New Holdings after the
Effective Date:
Gowin Holdings International Limited
c/o Appleby Spurling & Kempe
Cedar House
41 Cedar Avenue
P.O. Box HM 1178
Hamilton HM EX, Bermuda
Fax: (441) 292-8666
Attention: Warren Cabral, Esq.
with a copy to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Fax: (212) 891-3835
Attention: James R. Cameron, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
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Section 8.8. Governing Law. Except for Article 2, which shall be
governed by and construed in accordance with the laws of Bermuda and
Delaware, as applicable according to the context thereof (i.e., with
matters relating to the Scheme of Arrangement being governed by Bermuda law
and matters relating to the Plan of Merger being governed by Delaware law),
this Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the conflicts of laws
rules thereof. In addition, each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any Delaware Court in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement and (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction or venue by motion or other
request for leave from any such Delaware Court, and (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than any Delaware Court.
Section 8.9. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be an original, and all of which
shall be considered one and the same agreement and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other party.
Section 8.10. Headings. The Article and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of
the agreement of the parties and shall not affect in any way the meaning or
interpretation of this Agreement. References to Articles or Sections,
unless otherwise specified, are to Articles and Sections of this Agreement.
Section 8.11. Entire Agreement; Assignment. This Agreement,
including the documents and instruments referred to herein and therein, and
the Confidentiality Letters embodies the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein and
therein. There are no agreements, restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matters.
This Agreement shall not be assigned by operation of law or otherwise,
except with the prior written consent of each other party hereto; provided,
that all transactions contemplated by Section 2.1(b) and (c) shall not be
considered an assignment by operation of law or otherwise for purposes of
this Section 8.11. Any assignment in violation of the preceding sentence
shall be void. Subject to the preceding two sentences, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 8.12. Interpretation. When a reference is made in this
Agreement to an Article, Section, Exhibit, Letter or Schedule, such
reference shall be to an Article or Section of, or an Exhibit, Letter or
Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation." The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
The words "hereof", "herein" and "hereunder" and the words or similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. All terms defined in
this Agreement shall have the defined meanings when used in any
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certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term.
Any agreement, instrument or statute defined or referred to herein or in
any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by
waiver or consent and (in the case of statutes) by succession of comparable
successor statutes. References to a person are also to its permitted
successors and assigns.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed and sealed on its behalf by its duly authorized
officers, all as of the day and year first above written.
LASALLE RE HOLDINGS LIMITED
By: /s/ Guy D. Hengesbaugh
-------------------------------
Name: Guy D. Hengesbaugh
-----------------------------
Title: President & CEO
----------------------------
LASALLE RE LIMITED
By: /s/ Guy D. Hengesbaugh
-------------------------------
Name: Guy D. Hengesbaugh
-----------------------------
Title: President & CEO
----------------------------
GOWIN HOLDINGS INTERNATIONAL LIMITED
By: /s/ John V. Del Col
-------------------------------
Name: John V. Del Col
-----------------------------
Title: Director
----------------------------
TRENWICK GROUP INC.
By: /s/ James F. Billett, Jr.
-------------------------------
Name: James F. Billett, Jr.
-----------------------------
Title: Chairman, President and CEO
----------------------------
TRENWICK GROUP (DELAWARE) INC.
By: /s/ James F. Billett, Jr.
-------------------------------
Name: James F. Billett, Jr.
-----------------------------
Title: Chairman, President and CEO
-----------------------------
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SCHEDULE I
Combined Insurance Company of America
Virginia Surety Company, Inc.
Aon Risk Consultants (Bermuda) Ltd.
Continental Casualty Company
CNA (Bermuda) Services Limited
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EXHIBIT C
1. W. Marston Becker
2. James F. Billett, Jr.
3. Anthony S. Brown
4. Richard E. Cole
5. Robert M. DeMichele
6. Neil Dunn
7. Frank E. Grzelecki
8. P. Anthony Jacobs
9. John Sagan
10. Joseph D. Sargent
11. Frederick D. Watkins
12. Stephen R. Wilcox
13. Peter J. Rackley (for a term expiring in 2002)
14. Clement S. Dwyer, Jr. (for a term expiring in 2001)
15. Robert V. Deutsch (for a term expiring in 2000)
16. Michael A. Conway (for a term expiring in 2000)
82
LASALLE STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 19, 1999
(the "Agreement") by and between Trenwick Group Inc., a Delaware
corporation ("Trenwick" or the "Issuer"), and LaSalle Re Holdings Limited,
a company organized under the laws of Bermuda ("LaSalle").
WHEREAS, concurrently with the execution and delivery of
this Agreement, LaSalle, LaSalle Re Limited, a company organized under the
laws of Bermuda, Trenwick, Trenwick Group (Delaware) Inc., a Delaware
corporation and Gowin Holdings International Limited, a company organized
under the laws of Bermuda ("New Holdings"), are entering into an Agreement,
Scheme of Arrangement, Plan of Merger and Plan of Reorganization dated as
of the date hereof (the "Business Combination Agreement"); and
WHEREAS, as a condition to LaSalle's willingness to enter
into the Business Combination Agreement, LaSalle has requested that
Trenwick agree, and Trenwick has so agreed, to grant to LaSalle an option
to purchase up to 3,462,164 shares of common stock, par value $0.10 per
share, of Trenwick ("Trenwick Common Stock"), together with any associated
rights under the Rights Agreement dated as of September 24, 1997 between
Trenwick and First Chicago Trust Company of New York ("Trenwick Common
Stock"), in accordance with the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, to induce LaSalle to enter into the
Business Combination Agreement, and in consideration of the foregoing and
the mutual representations, warranties, covenants and agreements set forth
herein and in the Business Combination Agreement, the parties hereto agree
as follows. Capitalized terms used herein but not defined herein shall have
the meanings ascribed to them in the Business Combination Agreement.
1. Grant of Option. Subject to the terms and conditions
set forth herein, Trenwick hereby grants to LaSalle an irrevocable option
(the "Trenwick Option") to purchase up to 3,462,164 (as adjusted as set
forth herein) shares (the "Option Shares") of Trenwick Common Stock (such
number of Option Shares representing 19.9% of the Trenwick Common Stock
issued and outstanding on the date hereof) in the manner set forth below at
a price (the "Exercise Price") of $18.04 per Option Share (which price per
share is equal to the average of the last sale prices of Trenwick Common
Stock on the ten (10) trading days immediately prior to the date of public
announcement of the Business Combination Agreement payable in cash or by
cashless exercise in accordance with Section 4 hereof. Notwithstanding the
foregoing, in no event shall the number of Option Shares for which the
Trenwick Option is exercisable exceed 19.9% of the number of issued and
outstanding shares of Trenwick Common Stock.
2. Exercise of Option. The Trenwick Option may be
exercised by LaSalle, in whole or in part, at any time or from time to time
after the Business Combination Agreement becomes terminable by LaSalle
under circumstances which would or could entitle LaSalle to receive the
Trenwick Termination Fee pursuant to Section 7.4(b) of the Business
Combination Agreement (a "Trigger Event") (regardless of whether the
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Business Combination Agreement is actually terminated or whether there
occurs a closing involving LaSalle). In the event LaSalle wishes to
exercise the Trenwick Option, LaSalle shall deliver to Trenwick a written
notice (an "Exercise Notice") specifying the total number of Option Shares
it wishes to purchase, and specify whether such exercise is in cash or by
cashless exercise in accordance with Section 4 hereof. Each closing of a
purchase of Option Shares (an "Option Closing") shall occur, but subject to
the satisfaction or waiver of the conditions set forth in Section 3 hereof,
at a place, on a date and at a time designated by LaSalle in an Exercise
Notice delivered at least two (2) business days prior to the date of the
Option Closing. The Trenwick Option shall terminate upon the earlier of:
(i) the Effective Time; (ii) the termination of the Business Combination
Agreement other than under circumstances which also constitute a Trigger
Event; or (iii) the 180th day following a Trigger Event (or if, at the
expiration of such 180 day period the Trenwick Option cannot be exercised
by reason of any applicable judgment, decree, order, law or regulation, ten
(10) business days after such impediment to exercise shall have been
removed or shall have become final and not subject to appeal, but in no
event under this clause (iii) later than the 365th day following such
Trigger Event). Notwithstanding the foregoing, the Trenwick Option may not
be exercised if LaSalle is in material breach of any of its representations
or warranties, or in material breach of any of its covenants or agreements,
contained in this Agreement or in the Business Combination Agreement. Upon
the giving by LaSalle to Trenwick of the Exercise Notice and the tender of
the applicable aggregate Exercise Price, but subject to the satisfaction or
waiver of the conditions set forth in Section 3 hereof, LaSalle shall be
deemed to be the holder of record of the Option Shares issuable upon such
exercise, notwithstanding that the stock transfer books of Trenwick shall
then be closed or that certificates representing such Option Shares shall
not then be actually delivered to LaSalle.
3. Conditions to Closing. The obligation of Trenwick to
issue the Option Shares to LaSalle hereunder is subject to the conditions,
which (other than the conditions described in clauses (i), (iii) and (iv)
below) may be waived by Trenwick in its sole discretion, that (i) all
waiting periods, if any, under the HSR Act, applicable to the issuance of
the Option Shares hereunder shall have expired or have been terminated;
(ii) the Option Shares shall have been approved for listing on the NYSE
upon official notice of issuance; (iii) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
federal, state or local administrative agency or commission or other
federal, state or local Governmental Authority, including without
limitation, the Bermuda Monetary Authority, if any, required in connection
with the issuance of the Option Shares hereunder shall have been obtained
or made, as the case may be including, without limitation, by LaSalle; and
(iv) no preliminary or permanent injunction or other order or decree by any
court of competent jurisdiction, law or regulation prohibiting or otherwise
restraining such issuance shall be in effect.
4. Payment and Delivery of Certificates.
(a) At any Option Closing, LaSalle shall pay to Trenwick
the aggregate purchase price (equal to the Exercise Price multiplied by the
number of Option Shares to be purchased at such Option Closing) for the
shares of Trenwick Common Stock purchased pursuant to the exercise of the
Trenwick Option in immediately available funds by wire transfer
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to a bank account designated in writing by Trenwick; provided, however,
that failure or refusal of Trenwick to designate such account shall not
preclude LaSalle from exercising the Trenwick Option. At LaSalle's option,
in lieu of delivering the cash Exercise Price, LaSalle may instruct
Trenwick in writing to deduct from the number of shares of Trenwick Common
Stock that would otherwise be issued upon such exercise, a number of shares
of Trenwick Common Stock equal to the quotient obtained from dividing:
(x) the product obtained by multiplying (1) the number of
shares of Trenwick Common Stock for which the Trenwick Option is
being exercised and (2) the Exercise Price then in effect, by
(y) the Fair Market Value of a share of Trenwick Common Stock.
"Fair Market Value" shall have the meaning specified in Section 12(b)(v).
(b) At any Option Closing, simultaneously with the
delivery of immediately available funds as provided in Section 4(a),
Trenwick will deliver to LaSalle a certificate or certificates representing
the number of Option Shares to be purchased by LaSalle at such Option
Closing, which Option Shares will be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever and if the option is
exercised in part only, Trenwick shall deliver a new option evidencing the
rights of LaSalle thereof to purchase the balance of the shares purchasable
hereunder and (ii) LaSalle will deliver to Trenwick a copy of this
Agreement and a letter agreeing that LaSalle will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Agreement. If at the time of issuance of Option Shares
pursuant to an exercise of the option hereunder, Trenwick shall not have
redeemed the Trenwick Rights, or shall have issued any similar securities,
then each Option Share issued pursuant to such exercise will also represent
such a corresponding Trenwick Right or new rights with terms substantially
the same as and at least as favorable to LaSalle as are provided in the
Trenwick Rights Agreement or similar agreement then in effect. Trenwick
shall pay all expenses, and any and all United States federal, state and
local taxes and other charges that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 4
in the name of LaSalle or its designee. Trenwick shall use its reasonable
best efforts to cause the Trenwick Common Stock being delivered at the
Option Closing to be approved for listing on the NYSE and shall pay all
expenses in connection with the application for approval and the listing of
such shares.
5. Representations and Warranties of Trenwick. Trenwick
hereby represents and warrants to LaSalle that (a) Trenwick is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to
enter into this Agreement, (b) the execution and delivery of this Agreement
by Trenwick and the consummation by Trenwick of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Trenwick and no other corporate proceedings on the
part of Trenwick are necessary to authorize this Agreement or any of the
transactions contemplated hereby, (c) this Agreement has been duly executed
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and delivered by Trenwick, constitutes a valid and binding obligation of
Trenwick and, assuming this Agreement constitutes a valid and binding
obligation of LaSalle, is enforceable against Trenwick in accordance with
its terms, (d) Trenwick has taken all necessary corporate action to
authorize and reserve for issuance and to permit it to issue, upon exercise
of the Trenwick Option, and at all times from the date hereof through the
expiration of the Trenwick Option will have reserved, 3,462,164 authorized
and unissued Option Shares, such amount being subject to adjustment as
provided in Section 9, all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, will be validly issued, fully
paid and nonassessable, (e) upon delivery of the Option Shares to LaSalle
upon the exercise of the Trenwick Option, LaSalle will acquire the Option
Shares free and clear of all claims, liens, charges, encumbrances and
security interests of any nature whatsoever, (f) none of Trenwick, any of
its affiliates or anyone acting on its or their behalf has issued, sold or
offered any security of Trenwick to any person under circumstances that
would cause the issuance and sale of the Option Shares, as contemplated by
this Agreement, to be subject to the registration requirements of the
Securities Act as in effect on the date hereof and, assuming the
representations of LaSalle contained in Section 6(d) are true and correct
and based on LaSalle's commitment in its letter referred to in Section 4
hereof, the issuance, sale and delivery of the Option Shares hereunder
would be exempt from the registration and prospectus delivery requirements
of the Securities Act, as in effect on the date hereof (and Trenwick shall
not take any action which would cause the issuance, sale and delivery of
the Option Shares hereunder not to be exempt from such requirements), and
(g) the execution and delivery of this Agreement by Trenwick does not, and,
subject to compliance with applicable law, the consummation by Trenwick of
the transactions contemplated hereby will not, violate, conflict with, or
result in a breach of any provision of, or constitute a default (with or
without notice or a lapse of time, or both) under, or result in the
termination of, or accelerate the performance required by, or result in a
right of termination, cancellation, or acceleration of any obligation or
the loss of a material benefit under, or the creation of a lien, pledge,
security interest or other encumbrance on assets (any such violation,
conflict, breach, default, termination, acceleration, right of termination,
cancellation or acceleration, loss, or creation, a "Violation") of Trenwick
or any of its subsidiaries, pursuant to (i) any provision of the Trenwick
By-Laws, (ii) any provision of any material loan or credit agreement, note,
mortgage, indenture, lease, benefit plan or other agreement, obligation,
instrument, permit, concession, franchise or license (a "Material
Contract") of Trenwick or any of its subsidiaries or to which any of them
is a party or by which any of them or their properties or assets are bound,
or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Trenwick or any of its subsidiaries or any of
their respective properties or assets, which Violation, in the case of each
of clauses (ii) or (iii), would have Material Adverse Effect on Trenwick.
6. Representations and Warranties of LaSalle. LaSalle
represents and warrants to Trenwick that (a) LaSalle is a company duly
organized, validly existing and in good standing under the laws of Bermuda
and has the corporate power and authority to enter into this Agreement and
to carry out its obligations hereunder, (b) the execution and delivery of
this Agreement by LaSalle and the consummation by LaSalle of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of LaSalle and no other corporate proceedings
on the part of LaSalle are necessary to authorize this Agreement or
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any of the transactions contemplated hereby, (c) this Agreement has been
duly executed and delivered by LaSalle and constitutes a valid and binding
obligation of LaSalle, and, assuming this Agreement constitutes a valid and
binding obligation of Trenwick, is enforceable against LaSalle in
accordance with its terms, and (d) any Option Shares acquired upon exercise
of the Trenwick Option will be acquired for LaSalle's own account, for
investment purposes only and will not be, and the Trenwick Option is not
being, acquired by LaSalle with a view to the public distribution thereof
in violation of any applicable provision of the Securities Act, and (e) the
execution and delivery of this Agreement by LaSalle does not, and, subject
to compliance with applicable law, the consummation by LaSalle of the
transactions contemplated hereby will not, violate, conflict with, or
result in the breach of any provision of, or constitute a default (with or
without notice or a lapse of time, or both) under, or result in any
Violation by LaSalle or any of its subsidiaries, pursuant to (i) any
provision of the memorandum of association or bye-laws of LaSalle, (ii) any
Material Contract of LaSalle or any of its subsidiaries or to which any of
them is a party or by which any of them or any of their properties or
assets are bound, or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to LaSalle, any of its
subsidiaries or any of their respective properties or assets, which
Violation, in the case of each of clauses (ii) or (iii), would have a
Material Adverse Effect on LaSalle.
7. Restrictions on Transfer.
(a) Restrictions on Transfer. Prior to the first
anniversary of the date on which LaSalle purchases any Option Shares
hereunder (the "Expiration Date"), LaSalle shall not, directly or
indirectly, by operation of law or otherwise, sell, assign, pledge, or
otherwise dispose of or transfer any Option Shares acquired by LaSalle
pursuant to this Agreement ("Restricted Shares") beneficially owned by it,
other than in accordance with Section 7(b), 7(c) or Section 8. Subsequent
to the Expiration Date, LaSalle shall not, directly or indirectly, by
operation of law or otherwise, sell, assign, pledge or otherwise dispose of
or transfer any Restricted Shares beneficially owned by it to any
purchaser, assignee, pledgee or other transferee who would, immediately
after such sale, assignment, pledge, disposition or transfer, beneficially
own more than 4.9% of the then outstanding voting power of the Issuer of
the Restricted Shares, except in accordance with Section 7(b), 7(c) or
Section 8 and other than in market transactions at prevailing prices.
(b) Permitted Sales. Following the termination of the
Business Combination Agreement, LaSalle shall be permitted to sell or
transfer any Restricted Shares beneficially owned by it if such sale is
made pursuant to a tender or exchange offer or merger that has been
approved or recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of Trenwick, by a majority of the
members of the Board of Directors of Trenwick (which majority shall include
a majority of directors who were directors prior to the announcement of
such tender or exchange offer or merger).
(c) Trenwick's Right of First Refusal. At any time after
the first occurrence of a Trigger Event and prior to the expiration of
twenty-four (24) months immediately following the first purchase of
Trenwick Common Stock pursuant to the Trenwick Option, if LaSalle shall
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desire to sell, assign, transfer or otherwise dispose of any shares of
Trenwick Common Stock or other securities acquired by it pursuant to the
Trenwick Option, LaSalle shall give Trenwick written notice of the proposed
transaction (a "LaSalle Offer Notice"), identifying the proposed
transferee, accompanied by a copy of a binding offer to purchase such
Trenwick Common Stock or other securities signed by such transferee and
setting forth the terms of the proposed transaction. A LaSalle Offer Notice
shall be deemed an offer by LaSalle to Trenwick, which must be accepted, if
at all, within five (5) business days of the receipt of such LaSalle Offer
Notice, on the same terms and conditions and at the same price at which
LaSalle is proposing to transfer such Trenwick Common Stock or other
securities to such transferee. The purchase of any Trenwick Common Stock or
other securities by Trenwick shall be settled within five (5) business days
of the date of the acceptance of the offer and the purchase price shall be
paid to LaSalle in immediately available funds. In the event of the failure
or refusal of Trenwick to purchase all of the Trenwick Common Stock or
other securities covered by a LaSalle Offer Notice, LaSalle may sell all,
but not less than all, of such Trenwick Common Stock or other securities to
the proposed transferee at a price no less than the price specified and on
terms no more favorable to the transferee than those set forth in the
LaSalle Offer Notice; provided that the provisions of this sentence shall
not limit the rights LaSalle may otherwise have in the event Trenwick has
accepted the offer contained in the LaSalle Offer Notice and wrongfully
refuses to purchase the Trenwick Common Stock or other securities subject
thereto. The requirements of this Section 7(c) shall not apply to (i) any
disposition as a result of which the proposed transferee would not
beneficially own more than three percent (3%) of the outstanding voting
power of Trenwick, (ii) any disposition of Trenwick Common Stock or other
securities by a person to whom LaSalle has assigned its rights under the
Trenwick Option with the consent of Trenwick, (iii) any sale by means of a
public offering registered under the Securities Act, or (iv) any transfer
to a wholly-owned subsidiary of LaSalle which agrees in writing to be bound
by the terms hereof.
8. Registration Rights. Following the termination of the
Business Combination Agreement, but not later than the second anniversary
of the last date that LaSalle acquired Option Shares under this Agreement,
LaSalle may by written notice (the "Registration Notice") to Trenwick
("Trenwick") request Trenwick to register under the Securities Act all or
any part of the Restricted Shares beneficially owned by LaSalle (the
"Registrable Securities") pursuant to a bona fide firm commitment
underwritten public offering in which LaSalle and the underwriters shall
effect as wide a distribution of such Registrable Securities as is
reasonably practicable and shall use their commercially reasonable efforts
to prevent any person (including any Group (as used in Rule 13d-5 under the
Exchange Act)) and its affiliates from purchasing through such offering
Restricted Shares representing more than one percent (1%) of the
outstanding shares of common stock of Trenwick on a fully diluted basis (a
"Permitted Offering"). The Registration Notice shall include a certificate
executed by LaSalle and its proposed managing underwriter, which
underwriter shall be an investment banking firm of nationally recognized
standing (the "Manager"), stating that (i) they have a good faith intention
to commence promptly a Permitted Offering and (ii) the Manager in good
faith believes that, based on the then prevailing market conditions, it
will be able to sell the Registrable Securities at a per share price equal
to at least eighty percent (80%) of the then Fair Market Value (as defined
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below) of such shares. Trenwick (and/or any person designated by Trenwick)
shall thereupon have the option exercisable by written notice delivered to
LaSalle within five (5) business days after the receipt of the Registration
Notice, irrevocably to agree to purchase all or any part of the Registrable
Securities proposed to be so sold for cash at a price (the "Option Price")
equal to the product of (i) the number of Registrable Securities to be so
purchased by Trenwick and (ii) the then Fair Market Value of such shares.
Any such purchase of Registrable Securities by Trenwick (or its designee)
hereunder shall take place at a closing to be held at the principal
executive offices of Trenwick or at the offices of its counsel at any
reasonable date and time designated by Trenwick and/or such designee in
such notice within twenty (20) business days after delivery of such notice.
Any payment for the shares to be purchased shall be made by delivery at the
time of such closing of the Option Price in immediately available funds. As
used herein, the "Fair Market Value" of any share shall be the average of
the daily closing sales price for such share on the NYSE during the ten
(10) NYSE trading days immediately preceding the date such Fair Market
Value is to be determined.
If Trenwick does not elect to exercise its option
pursuant to this Section 8 with respect to all Registrable Securities, it
shall use its commercially reasonable efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities proposed to be so sold; provided, however, that (i)
LaSalle shall not be entitled to more than an aggregate of two effective
registration statements hereunder and (ii) Trenwick will not be required to
file any such registration statement during any period of time (not to
exceed ninety (90) days after such request in the case of clauses (A), (B)
or (C) below) when (A) Trenwick is in possession of material non-public
information which it reasonably believes would be detrimental to be
disclosed at such time and, in the opinion of counsel to Trenwick, such
information would have to be disclosed if a registration statement were
filed at that time; (B) Trenwick is required under the Securities Act to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion
in such registration statement; or (C) Trenwick determines, in its
reasonable judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving Trenwick or
any of its affiliates. Trenwick shall use its reasonable best efforts to
cause any Registrable Securities registered pursuant to this Section 8 to
be qualified for sale under the securities or blue sky laws of such
jurisdictions as LaSalle may reasonably request and shall continue such
registration or qualification in effect in such jurisdiction; provided,
however, that Trenwick shall not be required to qualify to do business in,
or consent to general service of process in, any jurisdiction by reason of
this provision.
The registration rights set forth in this Section 8 are
subject to the condition that LaSalle shall provide Trenwick with such
information with respect to such holder's Registrable Securities, the plans
for the distribution thereof, and such other information with respect to
such holder as, in the reasonable judgment of counsel for Trenwick, is
necessary to enable Trenwick to include in such registration statement all
material facts required to be disclosed with respect to a registration
thereunder.
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A registration effected under this Section 8 shall be
effected at Trenwick's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to LaSalle, and
Trenwick shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as
are customary in connection with underwritten public offerings as such
underwriters may reasonably require. In connection with any such
registration, the parties agree (i) to indemnify each other and the
underwriters in the customary manner (provided that LaSalle shall only be
required to indemnify other parties to such underwriting agreement for
information relating to such LaSalle and supplied by it for inclusion in
such registration statement), (ii) to enter into an underwriting agreement
in form and substance customary for transactions of such type with the
Manager and the other underwriters participating in such offering and (iii)
to take all further actions which shall be reasonably necessary to effect
such registration and sale (including, if the Manager deems it necessary,
participating in road show presentations).
Trenwick shall be entitled to include (at its expense)
additional shares of its common stock in a registration effected pursuant
to this Section 8 only if and to the extent the Manager determines that
such inclusion will not adversely affect the prospects for success of such
offering.
9. Adjustment upon Changes in Capitalization. (a) Without
limitation to any restriction on Trenwick contained in this Agreement or in
the Business Combination Agreement, in the event of any change in Trenwick
Common Stock by reason of stock dividends, split-ups, mergers,
amalgamations, recapitalizations, subdivisions, conversions, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the Trenwick Option, and the Exercise Price per Option Share
provided in Section 1, shall be adjusted appropriately to restore to
LaSalle its rights hereunder, including the right to purchase from the
Trenwick (or its successors) shares of Trenwick Common Stock representing
19.9% of the outstanding Trenwick Common Stock for the aggregate Exercise
Price calculated as of the date of this Agreement as provided in Section 1.
(b) In the event that Trenwick shall enter into an
agreement: (i) to consolidate with merge or amalgamate into any person,
other than LaSalle or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation, merger or
amalgamation; (ii) to permit any person, other than LaSalle or one of its
subsidiaries, to merge or amalgamate into Trenwick and Trenwick shall be
the continuing or surviving corporation, but, in connection with such
merger or amalgamation, the then-outstanding shares of Trenwick Common
Stock shall be changed into or exchanged for stock or other securities of
Trenwick or any other person or cash or any other property; or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than LaSalle or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction shall make proper
provision so that upon the consummation of such transaction and upon the
subsequent exercise of the Trenwick Option, LaSalle shall be entitled to
receive, for each share of Trenwick Common Stock with respect to which the
Trenwick Option has not theretofore been exercised, an amount of
consideration in the form of and equal to the per share amount of
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consideration that would be received by the holder of one share of Trenwick
Common Stock (and, in the event of an election or similar arrangement with
respect to the type of consideration to be received by the holders of
Trenwick Common Stock, subject to the foregoing, proper provision shall be
made so that the holder of the Trenwick Option would have the same election
or similar rights as would the holder of the number of shares of Trenwick
Common Stock for which the Trenwick Option is then exercisable).
10. Restrictive Legends. Each certificate representing
shares of Trenwick Common Stock issued to LaSalle at a Closing will have
typed or printed thereon a restrictive legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF DECEMBER 19,
1999, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER UPON
REQUEST.
It is understood and agreed that: (i) the reference to
the resale restrictions of the Securities Act in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if
such Option Shares have been registered pursuant to the Securities Act,
such Option Shares have been sold in reliance on and in accordance with
Rule 144 under the Securities Act or LaSalle has delivered to Trenwick a
copy of a letter from the staff of the Securities and Exchange Commission,
or an opinion of counsel, in form and substance satisfactory to Trenwick
and its counsel, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to restrictions pursuant
to this Agreement in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Option Shares
evidenced by certificate(s) containing such reference have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificate(s) shall bear any other legend as may be required by law.
Certificates representing shares sold in a registered public offering
pursuant to Section 8 shall not be required to bear the legend set forth in
this Section 10.
11. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement
or the Business Combination Agreement, in no event shall LaSalle's Total
Profit (as hereinafter defined) exceed $15 million (such amount, the
"Profit Limit") and, if it would otherwise exceed such amount, LaSalle, at
its sole election, shall, within five business days, either (i) deliver to
the Issuer for cancellation Option Shares (valued, for purposes of this
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Section 11, at their closing market price on the NYSE on the date of such
delivery), (ii) pay cash to the Issuer or refund in cash any Trenwick
Termination Fee previously paid to LaSalle or reduce or waive the amount of
any Trenwick Termination Fee payable to LaSalle pursuant to Section 7.4(b)
of the Business Combination Agreement, or (iii) undertake any combination
thereof, so that LaSalle's Total Profit shall not exceed the Profit Limit
after taking into account the foregoing actions. As used herein, "Total
Profit" means the aggregate amount (before taxes) of (i) $12 million,
payable in excess of expenses, pursuant to Section 7.4(c) of the Business
Combination Agreement, (ii) amounts paid by Trenwick pursuant to Section 12
hereof, and (iii) (x) the net cash amounts received by LaSalle pursuant to
the sale or other disposition of Option Shares (or any other securities
into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) LaSalle's purchase price for such Option
Shares.
(b) Notwithstanding any other provision of this Agreement
or the Business Combination Agreement, the Trenwick Option may not be
exercised for a number of Option Shares that would, as of the date of the
Exercise Notice, result in a Notional Total Profit (as hereinafter defined)
of more than the Profit Limit and, if exercise of the Trenwick Option
otherwise would exceed the Profit Limit, LaSalle, at its discretion, may
increase the Exercise Price for that number of Option Shares set forth in
the Exercise Notice so that the Notional Total Profit shall not exceed the
Profit Limit; provided, that nothing in this sentence shall restrict any
exercise of the Trenwick Option permitted hereby on any subsequent date at
the Exercise Price set forth in Section 1 hereof. As used herein, the term
"Notional Total Profit" with respect to any number of Option Shares as to
which LaSalle may propose to exercise the Trenwick Option shall be the
Total Profit determined as of the date of the Exercise Notice assuming that
the Trenwick Option were exercised on such date for such number of Option
Shares and assuming that such Option Shares, together with all other shares
of Trenwick Common Stock held by LaSalle and its subsidiaries as of such
date, were sold for cash at the closing market price for the Trenwick
Common Stock on the NYSE Composite Tape at the close of business on the
preceding trading day (less customary brokerage commissions).
12. Certain Repurchases.
(a) LaSalle "Put". Subject to the limitations set forth
in Section 11, upon delivery of written notice to Trenwick by LaSalle (the
"Repurchase Notice"):
(i) at any time during which the Trenwick Option is
exercisable pursuant to Section 2 (the "Repurchase Period"),
Trenwick and its successors in interest shall repurchase from
LaSalle all or any portion of the Trenwick Option, as specified by
LaSalle, at the Option Repurchase Price set forth in Section
12(b)(i); and
(ii) at any time prior to the fifth anniversary of the
date hereof, Trenwick and its successors in interest shall
repurchase from LaSalle all or any portion of the Trenwick Common
Stock purchased by LaSalle pursuant to the Trenwick Option, as
specified by LaSalle, at the Share Repurchase Price set forth in
Section 12(b)(iii).
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(b) Certain Definitions. For purposes of this Section 12,
the following definitions shall apply:
(i) "Option Repurchase Price" shall mean (A) the
difference between the Option Repurchase Market/Offer Price (as
defined below) for the Trenwick Common Stock as of the date of the
applicable Repurchase Notice and the Exercise Price, multiplied by
(B) the number of shares of Trenwick Common Stock purchasable
pursuant to the Trenwick Option or the portion thereof covered by
the applicable Repurchase Notice, but only if the Option
Repurchase Market/Offer Price is greater than the Exercise Price.
(ii) "Option Repurchase Market/Offer Price" shall mean,
as of any date, the higher of (X) the highest price per share
offered as of such date pursuant to any tender or exchange offer
or other offer with respect to a business combination offer
involving Trenwick or any of its material subsidiaries as the
target party which was made prior to such date and not terminated
or withdrawn as of such date and (Y) the Fair Market Value (as
defined in Section 12(b)(v)) of the Trenwick Common Stock as of
such date.
(iii) "Share Repurchase Price" shall mean the product of
(A) the sum of (I) the Exercise Price paid by LaSalle per share of
Trenwick Common Stock acquired pursuant to the Trenwick Option and
(II) if the Share Repurchase Market/Offer Price (as defined below)
is greater than the Exercise Price, the difference between the
Share Repurchase Market/Offer Price and the Exercise Price, and
(B) the number of Trenwick Common Stock to be repurchased pursuant
to this Section 12.
(iv) "Share Repurchase Market/Offer Price" shall mean, as
of any date, the higher of (X) the highest price per share offered
pursuant to a tender or exchange offer or other business
combination offer involving Trenwick as the target party during
the Repurchase Period prior to the delivery by LaSalle of a notice
of repurchase and (Y) the Fair Market Value of the Trenwick Common
Stock as of such date.
(v) "Fair Market Value" shall mean, with respect to any
security, the per share average of the last sale prices on the
NYSE (or such other national stock exchange or national market
system as shall then be the primary trading market for such
security) for the ten (10) trading days immediately preceding the
applicable date.
(c) Payment and Redelivery of Trenwick Options or
Trenwick Common Stock. In the event that LaSalle exercises its rights under
this Section 12, Trenwick shall, within ten (10) business days thereafter,
pay the required amount to LaSalle in immediately available funds and
LaSalle shall surrender to Trenwick the Trenwick Option or the certificate
or certificates evidencing the Trenwick Common Stock purchased by LaSalle
pursuant hereto, and LaSalle shall warrant that it has sole beneficial
ownership of the Trenwick Option or such Trenwick Common Stock and that the
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Trenwick Option or such Trenwick Common Stock are then free and clear of
all claims, liens, charges, encumbrances and security interests of any
nature whatsoever.
(d) Repurchase Price Reduced at LaSalle's Option. In the
event that payment of the repurchase price specified in Section 12(a) would
subject the repurchase of the Trenwick Option or the Trenwick Common Stock
purchased by LaSalle pursuant to the Trenwick Option to a vote of the
stockholders of Trenwick pursuant to applicable law, regulations, or
requirements of a national securities exchange or national market system or
the Trenwick By-Laws, then LaSalle may, at its election, reduce the
repurchase price or the number of shares covered by the LaSalle repurchase
request to an amount which would permit such repurchase without the
necessity for such a vote.
(e) Repurchase at the Election of Trenwick.
(i) Except to the extent that LaSalle shall have
previously exercised its rights under Section 12(a), at the
written request of Trenwick during the six-month period
immediately following the Repurchase Period, Trenwick may
repurchase from LaSalle, and LaSalle shall sell to Trenwick, all
(but not less than all) of the Trenwick Common Stock acquired by
LaSalle pursuant hereto and with respect to which LaSalle has
beneficial ownership at the time of such repurchase, at a price
equal to the sum of (A) the greater of (I) one hundred ten percent
(110%) of the Current Market Price (as defined in Section
12(e)(iii)) or (II) the sum of (X) the Purchase Price in respect
of the shares so acquired plus (Y) LaSalle's Pre-Tax Carrying Cost
(as defined in Section 12(e)(iii)), multiplied in either case by
the number of shares so acquired, and (B) the amount of the
documented out-of-pocket expenses (to the extent not previously
reimbursed or compensated for pursuant hereto or pursuant to the
Business Combination Agreement) incurred by LaSalle in connection
with the Business Combination Agreement and this Agreement and the
transactions contemplated thereby and hereby, including reasonable
accounting, investment banking and legal fees (the "Section 12(e)
Repurchase Consideration"); provided, that Trenwick's rights under
this Section 12(e) shall be suspended (with any such rights being
extended accordingly) during any period when the exercise of such
rights would subject LaSalle to liability or disgorgement of
profits pursuant to Section 16(b) of the Exchange Act.
(ii) If Trenwick exercises its rights under this Section
12(e), Trenwick shall, within ten (10) business days pay the
Section 12(e) Repurchase Consideration in immediately available
funds and LaSalle shall surrender to Trenwick certificates
evidencing the Trenwick Common Stock purchased hereunder with
respect to which LaSalle then has beneficial ownership, and
LaSalle shall warrant that it has sole beneficial ownership of
such Trenwick Common Stock and that all such shares are then free
and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever.
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(iii) As used in Section 12(e)(i), (A) "Current Market
Price" shall mean the average of the last sale prices per share of
Trenwick Common Stock on the NYSE for the ten (10) trading days
immediately preceding the date of Trenwick's request for
repurchase pursuant to this Section 12(e) and (B) "Pre-Tax
Carrying Cost" shall mean an amount equal to the interest on the
aggregate purchase price paid by LaSalle for the Trenwick Common
Stock purchased pursuant to the Trenwick Option from the date of
purchase to the date of repurchase at the rate of interest
announced by Citibank, N.A. at its prime or base lending or
reference rate during such period, less any dividends received on
the shares so purchased, divided by the number of shares of
Trenwick Common Stock so purchased.
13. Binding Effect; No Assignment; No Third Party
Beneficiaries. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor the rights or the obligations of either
party hereto are assignable, except by operation of law, or with the
written consent of the other party (it being agreed that all transactions
contemplated by Section 2.1(b) and (c) of the Business Combination
Agreement shall not be considered assignments in violation of this Section
13). Nothing contained in this Agreement, express or implied, is intended
to confer upon any person other than the parties hereto and their
respective permitted assigns any rights or remedies of any nature
whatsoever by reason of this Agreement. Any Restricted Shares sold by a
party in compliance with the provisions of Section 8 shall, upon
consummation of such sale, be free of the restrictions imposed with respect
to such shares by this Agreement, unless and until such party shall
repurchase or otherwise become the beneficial owner of such shares, and any
transferee of such shares shall not be entitled to the registration rights
of such party.
14. Specific Performance. The parties recognize and agree
that if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise
breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each
party agrees that, in addition to other remedies, the other party shall be
entitled to an injunction restraining any violation or threatened violation
of the provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is
adequate remedy at law.
15. Entire Agreement. This Agreement, the Business
Combination Agreement (including any exhibits and schedules thereto) and
the Confidentiality Agreement constitute the entire agreement, and
supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter of this
Agreement.
16. Further Assurances. Each party will execute and
deliver all such further documents and instruments and take all such
further action as may be necessary in order to consummate the transactions
contemplated hereby.
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17. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of the other provisions of this Agreement, which shall remain in full force
and effect. In the event any court or other competent authority holds any
provisions of this Agreement to be null, void or unenforceable, the parties
hereto shall negotiate in good faith the execution and delivery of an
amendment to this Agreement in order, as nearly as possible, to effectuate,
to the extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof. If for any
reason any such court or regulatory agency determines that LaSalle is not
permitted to acquire the full number of shares of Trenwick Common Stock
provided in Section 1 hereof (as the same may be adjusted), it is the
express intention of Trenwick to allow LaSalle to acquire such lesser
number of shares as may be permissible, without any amendment or
modification hereof. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith, or not take any action required herein, the other
party shall not be entitled to specific performance of such provision or
part hereof or to any other remedy, including but not limited to money
damages, for breach hereof or of any other provision of this Agreement or
part hereof as the result of such holding or order.
18. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if (i) delivered, personally, or (ii) sent by overnight
courier service (providing proof of delivery), or (iii) telecopied (which
is confirmed), or (iv) five (5) days after being mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
If to Trenwick:
Alan L. Hunte
Vice President and
Chief Financial Officer
Trenwick Group Inc.
One Canterbury Green
Stamford, CT 06901
Fax: (203) 353-5550
with a copy to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Attention: James R. Cameron
Fax: (212) 891-3835
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If to LaSalle, to:
LaSalle Re Holdings Limited
Continental Building
25 Church Street
Hamilton HM 12
Bermuda
Fax: (441) 292-1501
with a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, Illinois 60603
Attention: Richard W. Shepro
Fax: (312) 701-7711
19. Governing Law; Choice of Forum. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware without regard to the conflicts of law principles thereof. Each of
the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court
sitting in the state of Delaware or a Delaware state court.
20. Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation." The descriptive headings
herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but
both of which, taken together, shall constitute one and the same
instrument.
22. Expenses. Except as otherwise expressly provided
herein or in the Business Combination Agreement, all costs and expenses
incurred in connection with the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
23. Amendment. This Agreement may not be amended, except
by an instrument in writing signed on behalf of each of the parties.
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24. Waiver. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for performance,
will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise will not constitute a
waiver of such rights.
25. Loss or Mutilation. Upon receipt by Trenwick of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Agreement, if mutilated, Trenwick will execute and
deliver to LaSalle a new Agreement of like tenor and date. Any such new
Agreement executed and delivered will constitute an additional contractual
obligation on the part of Trenwick, whether or not the Agreement so lost,
stolen, destroyed, or mutilated shall at any time be enforceable by anyone.
26. Extension of Time Periods. The time periods for
exercises of certain rights hereunder shall be extended (but in no event by
more than six (6) months): (a) to the extent necessary to obtain all
governmental approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; and (b) to the extent
necessary to avoid any liability or disgorgement of profits under Section
16(b) of the Exchange Act by reason of such exercise.
27. Further Assurance. Each party agrees to execute and
deliver all such further documents and instruments and take all such
further action as may be necessary in order to consummate the transactions
contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers as of
the date first above written.
TRENWICK GROUP INC.
By: /s/ James F. Billett, Jr.
-------------------------------------
Name: James F. Billett, Jr.
-------------------------------
Title: Chairman, President and CEO
-------------------------------
LASALLE RE HOLDINGS LIMITED
By: /s/ Guy D. Hengesbaugh
--------------------------------------
Name: Guy D. Hengesbaugh
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Title: President & CEO
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TRENWICK STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of December 19, 1999
(the "Agreement") by and between Trenwick Group Inc., a Delaware
corporation ("Trenwick"), and LaSalle Re Holdings Limited, a company
organized under the laws of Bermuda ("LaSalle" or the "Issuer").
WHEREAS, concurrently with the execution and delivery of
this Agreement, LaSalle, LaSalle Re Limited, a company organized under the
laws of Bermuda, Trenwick, Trenwick Group (Delaware) Inc., a Delaware
corporation and Gowin Holdings International Limited, a company organized
under the laws of Bermuda ("New Holdings"), are entering into an Agreement,
Scheme of Arrangement, Plan of Merger, and Plan of Reorganization dated as
of the date hereof (the "Business Combination Agreement"); and
WHEREAS, as a condition to Trenwick's willingness to
enter into the Business Combination Agreement, Trenwick has requested that
LaSalle agree, and LaSalle has so agreed, to grant to Trenwick an option to
purchase up to 3,105,110 common shares, par value $1.00 per share, of
LaSalle ("LaSalle Common Shares") in accordance with the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, to induce Trenwick to enter into the
Business Combination Agreement, and in consideration of the foregoing and
the mutual representations, warranties, covenants and agreements set forth
herein and in the Business Combination Agreement, the parties hereto agree
as follows. Capitalized terms used herein but not defined herein shall have
the meanings ascribed to them in the Business Combination Agreement.
1. Grant of Option. Subject to the terms and conditions
set forth herein, LaSalle hereby grants to Trenwick an irrevocable option
(the "LaSalle Option") to purchase up to 3,105,110 (as adjusted as set
forth herein) shares (the "Option Shares") of LaSalle Common Shares (such
number of Option Shares representing 19.9% of the LaSalle Common Shares
issued and outstanding on the date hereof) in the manner set forth below at
a price (the "Exercise Price") of $12.81 per Option Share (which price per
share is equal to the average of the last sale prices of LaSalle Common
Shares on the ten (10) trading days immediately prior to the date of public
announcement of the Business Combination Agreement, payable in cash or by
cashless exercise in accordance with Section 4 hereof. Notwithstanding the
foregoing, in no event shall the number of Option Shares for which the
LaSalle Option is exercisable exceed 19.9% of the number of issued and
outstanding shares of LaSalle Common Shares.
2. Exercise of Option. The LaSalle Option may be
exercised by Trenwick, in whole or in part, at any time or from time to
time after the Business Combination Agreement becomes terminable by
Trenwick under circumstances which would or could entitle Trenwick to
receive the LaSalle Termination Fee pursuant to Section 7.4(c) of the
Business Combination Agreement (a "Trigger Event") (regardless of whether
the Business Combination Agreement is actually terminated or whether there
occurs a closing involving LaSalle). In the event Trenwick wishes to
exercise the LaSalle Option, Trenwick shall deliver to LaSalle a written
notice (an "Exercise Notice") specifying the total number of Option Shares
it wishes to purchase and whether such exercise is in cash or by cashless
exercise in accordance with Section 4 hereof. Each closing of a purchase of
Option Shares (an "Option Closing") shall occur, but subject to the
satisfaction or waiver of the conditions set forth in Section 3 hereof, at
a place, on a date and at a time designated by Trenwick in an Exercise
Notice delivered at least two (2) business days prior to the date of the
Option Closing. The LaSalle Option shall terminate upon the earlier of: (i)
the Effective Time; (ii) the termination of the Business Combination
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Agreement other than under circumstances which also constitute a Trigger
Event; or (iii) the 180th day following a Trigger Event (or if, at the
expiration of such 180 day period the LaSalle Option cannot be exercised by
reason of any applicable judgment, decree, order, law or regulation, ten
(10) business days after such impediment to exercise shall have been
removed or shall have become final and not subject to appeal, but in no
event under this clause (iii) later than the 365th day following such
Trigger Event). Notwithstanding the foregoing, the LaSalle Option may not
be exercised if Trenwick is in material breach of any of its
representations or warranties, or in material breach of any of its
covenants or agreements, contained in this Agreement or in the Business
Combination Agreement. Upon the giving by Trenwick to LaSalle of the
Exercise Notice and the tender of the applicable aggregate Exercise Price,
but subject to the satisfaction or waiver of the conditions set forth in
Section 3 hereof, Trenwick shall be deemed to be the holder of record of
the Option Shares issuable upon such exercise, notwithstanding that the
stock transfer books of LaSalle shall then be closed or that certificates
representing such Option Shares shall not then be actually delivered to
Trenwick.
3. Conditions to Closing. The obligation of LaSalle to
issue the Option Shares to Trenwick hereunder is subject to the conditions,
which (other than the conditions described in clauses (i), (iii) and (iv)
below) may be waived by LaSalle in its sole discretion, that (i) all
waiting periods, if any, under the HSR Act, applicable to the issuance of
the Option Shares hereunder shall have expired or have been terminated;
(ii) the Option Shares shall have been approved for listing on the NYSE
upon official notice of issuance; (iii) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
federal, state or local administrative agency or commission or other
federal, state or local Governmental Authority, including without
limitation, the Bermuda Monetary Authority, if any, required in connection
with the issuance of the Option Shares hereunder shall have been obtained
or made, as the case may be including, without limitation, by Trenwick; and
(iv) no preliminary or permanent injunction or other order or decree by any
court of competent jurisdiction, law or regulation prohibiting or otherwise
restraining such issuance shall be in effect.
4. Payment and Delivery of Certificates.
(a) At any Option Closing, Trenwick shall pay to LaSalle
the aggregate purchase price (equal to the Exercise Price multiplied by the
number of Option Shares to be purchased at such Option Closing) for the
shares of LaSalle Common Shares purchased pursuant to the exercise of the
LaSalle Option in immediately available funds by wire transfer to a bank
account designated in writing by LaSalle; provided, however, that failure
or refusal of LaSalle to designate such account shall not preclude Trenwick
from exercising the LaSalle Option. At Trenwick's option, in lieu of
delivering the cash Exercise Price, Trenwick may instruct LaSalle in
writing to deduct from the number of shares of LaSalle Common Shares that
would otherwise be issued upon such exercise, a number of shares of LaSalle
Common Shares equal to the quotient obtained from dividing:
(x) the product obtained by multiplying (1) the number of
shares of LaSalle Common Shares for which the LaSalle Option is
being exercised and (2) the Exercise Price then in effect, by
(y) the Fair Market Value of a share of LaSalle Common Shares.
"Fair Market Value" shall have the meaning specified in Section 12(b)(v).
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(b) At any Option Closing, simultaneously with the
delivery of immediately available funds as provided in Section 4(a),
LaSalle will deliver to Trenwick a certificate or certificates representing
the number of Option Shares to be purchased by Trenwick at such Option
Closing, which Option Shares will be free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever and if the option is
exercised in part only, LaSalle shall deliver a new option evidencing the
rights of Trenwick thereof to purchase the balance of the shares
purchasable hereunder and (ii) Trenwick will deliver to LaSalle a copy of
this Agreement and a letter agreeing that Trenwick will not offer to sell
or otherwise dispose of such shares in violation of applicable law or the
provisions of this Agreement. LaSalle shall pay all expenses, and any and
all United States federal, state and local taxes and other charges that may
be payable in connection with the preparation, issue and delivery of stock
certificates under this Section 4 in the name of Trenwick or its designee.
LaSalle shall use its reasonable best efforts to cause the LaSalle Common
Shares being delivered at the Option Closing to be approved for listing on
the NYSE and shall pay all expenses in connection with the application for
approval and the listing of such shares.
5. Representations and Warranties of LaSalle. LaSalle
hereby represents and warrants to Trenwick that (a) LaSalle is a company
duly organized, validly existing and in good standing under the laws of
Bermuda and has the corporate power and authority to enter into this
Agreement, (b) the execution and delivery of this Agreement by LaSalle and
the consummation by LaSalle of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
LaSalle and no other corporate proceedings on the part of LaSalle are
necessary to authorize this Agreement or any of the transactions
contemplated hereby, (c) this Agreement has been duly executed and
delivered by LaSalle, constitutes a valid and binding obligation of LaSalle
and, assuming this Agreement constitutes a valid and binding obligation of
Trenwick, is enforceable against LaSalle in accordance with its terms, (d)
LaSalle has taken all necessary corporate action to authorize and reserve
for issuance and to permit it to issue, upon exercise of the LaSalle
Option, and at all times from the date hereof through the expiration of the
LaSalle Option will have reserved, 3,105,110 authorized and unissued Option
Shares, such amount being subject to adjustment as provided in Section 9,
all of which, upon their issuance and delivery in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable,
(e) upon delivery of the Option Shares to Trenwick upon the exercise of the
LaSalle Option, Trenwick will acquire the Option Shares free and clear of
all claims, liens, charges, encumbrances and security interests of any
nature whatsoever, (f) none of LaSalle, any of its affiliates or anyone
acting on its or their behalf has issued, sold or offered any security of
LaSalle to any person under circumstances that would cause the issuance and
sale of the Option Shares, as contemplated by this Agreement, to be subject
to the registration requirements of the Securities Act as in effect on the
date hereof and, assuming the representations of Trenwick contained in
Section 6(d) are true and correct and based on Trenwick's commitment in its
letter referred to in Section 4 hereof, the issuance, sale and delivery of
the Option Shares hereunder would be exempt from the registration and
prospectus delivery requirements of the Securities Act, as in effect on the
date hereof (and LaSalle shall not take any action which would cause the
issuance, sale and delivery of the Option Shares hereunder not to be exempt
from such requirements), and (g) the execution and delivery of this
Agreement by LaSalle does not, and, subject to compliance with applicable
law, the consummation by LaSalle of the transactions contemplated hereby
will not, violate, conflict with, or result in a breach of any provision
of, or constitute a default (with or without notice or a lapse of time, or
both) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination, cancellation, or
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acceleration of any obligation or the loss of a material benefit under, or
the creation of a lien, pledge, security interest or other encumbrance on
assets (any such violation, conflict, breach, default, termination,
acceleration, right of termination, cancellation or acceleration, loss, or
creation, a "Violation") of LaSalle or any of its subsidiaries, pursuant to
(i) any provision of the LaSalle Bye-Laws, (ii) any provision of any
material loan or credit agreement, note, mortgage, indenture, lease,
benefit plan or other agreement, obligation, instrument, permit,
concession, franchise or license (a "Material Contract") of LaSalle or any
of its subsidiaries or to which any of them is a party or by which any of
them or their properties or assets are bound, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to LaSalle
or any of its subsidiaries or any of their respective properties or assets,
which Violation, in the case of each of clauses (ii) or (iii), would have
Material Adverse Effect on LaSalle.
6. Representations and Warranties of Trenwick. Trenwick
represents and warrants to LaSalle that (a) Trenwick is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder, (b) the
execution and delivery of this Agreement by Trenwick and the consummation
by Trenwick of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Trenwick and no
other corporate proceedings on the part of Trenwick are necessary to
authorize this Agreement or any of the transactions contemplated hereby,
(c) this Agreement has been duly executed and delivered by Trenwick and
constitutes a valid and binding obligation of Trenwick, and, assuming this
Agreement constitutes a valid and binding obligation of LaSalle, is
enforceable against Trenwick in accordance with its terms, and (d) any
Option Shares acquired upon exercise of the LaSalle Option will be acquired
for Trenwick's own account, for investment purposes only and will not be,
and the LaSalle Option is not being, acquired by Trenwick with a view to
the public distribution thereof in violation of any applicable provision of
the Securities Act, and (e) the execution and delivery of this Agreement by
Trenwick does not, and, subject to compliance with applicable law, the
consummation by Trenwick of the transactions contemplated hereby will not,
violate, conflict with, or result in the breach of any provision of, or
constitute a default (with or without notice or a lapse of time, or both)
under, or result in any Violation by Trenwick or any of its subsidiaries,
pursuant to (i) any provision of the certificate of incorporation or
by-laws of Trenwick, (ii) any Material Contract of Trenwick or any of its
subsidiaries or to which any of them is a party or by which any of them or
any of their properties or assets are bound, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Trenwick,
any of its subsidiaries or any of their respective properties or assets,
which Violation, in the case of each of clauses (ii) or (iii), would have a
Material Adverse Effect on Trenwick.
7. Restrictions on Transfer.
(a) Restrictions on Transfer. Prior to the first
anniversary of the date on which Trenwick purchases any Option Shares
hereunder (the "Expiration Date"), Trenwick shall not, directly or
indirectly, by operation of law or otherwise, sell, assign, pledge, or
otherwise dispose of or transfer any Option Shares acquired by Trenwick
pursuant to this Agreement ("Restricted Shares") beneficially owned by it,
other than in accordance with Section 7(b), 7(c) or Section 8. Subsequent
to the Expiration Date, Trenwick shall not, directly or indirectly, by
operation of law or otherwise, sell, assign, pledge or otherwise dispose of
or transfer any Restricted Shares beneficially owned by it to any
purchaser, assignee, pledgee or other transferee who would, immediately
after such sale, assignment, pledge, disposition or transfer, beneficially
own more than 4.9% of the then outstanding voting power of the Issuer of
the Restricted Shares, except in accordance with Section 7(b), 7(c) or
Section 8 and other than in market transactions at prevailing prices.
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(b) Permitted Sales. Following the termination of the
Business Combination Agreement, Trenwick shall be permitted to sell or
transfer any Restricted Shares beneficially owned by it if such sale is
made pursuant to a tender or exchange offer or merger that has been
approved or recommended, or otherwise determined to be fair to and in the
best interests of the shareholders of LaSalle, by a majority of the members
of the Board of Directors of LaSalle (which majority shall include a
majority of directors who were directors prior to the announcement of such
tender or exchange offer or merger).
(c) LaSalle's Right of First Refusal. At any time after
the first occurrence of a Trigger Event and prior to the expiration of
twenty-four (24) months immediately following the first purchase of LaSalle
Common Shares pursuant to the LaSalle Option, if Trenwick shall desire to
sell, assign, transfer or otherwise dispose of any shares of LaSalle Common
Shares or other securities acquired by it pursuant to the LaSalle Option,
Trenwick shall give LaSalle written notice of the proposed transaction (a
"Trenwick Offer Notice"), identifying the proposed transferee, accompanied
by a copy of a binding offer to purchase such LaSalle Common Shares or
other securities signed by such transferee and setting forth the terms of
the proposed transaction. A Trenwick Offer Notice shall be deemed an offer
by Trenwick to LaSalle, which must be accepted, if at all, within five (5)
business days of the receipt of such Trenwick Offer Notice, on the same
terms and conditions and at the same price at which Trenwick is proposing
to transfer such LaSalle Common Shares or other securities to such
transferee. The purchase of any LaSalle Common Shares or other securities
by LaSalle shall be settled within five (5) business days of the date of
the acceptance of the offer and the purchase price shall be paid to
Trenwick in immediately available funds. In the event of the failure or
refusal of LaSalle to purchase all of the LaSalle Common Shares or other
securities covered by a Trenwick Offer Notice, Trenwick may sell all, but
not less than all, of such LaSalle Common Shares or other securities to the
proposed transferee at a price no less than the price specified and on
terms no more favorable to the transferee than those set forth in the
Trenwick Offer Notice; provided that the provisions of this sentence shall
not limit the rights Trenwick may otherwise have in the event LaSalle has
accepted the offer contained in the Trenwick Offer Notice and wrongfully
refuses to purchase the LaSalle Common Shares or other securities subject
thereto. The requirements of this Section 7(c) shall not apply to (i) any
disposition as a result of which the proposed transferee would not
beneficially own more than three percent (3%) of the outstanding voting
power of LaSalle, (ii) any disposition of LaSalle Common Shares or other
securities by a person to whom Trenwick has assigned its rights under the
LaSalle Option with the consent of LaSalle, (iii) any sale by means of a
public offering registered under the Securities Act, or (iv) any transfer
to a wholly-owned subsidiary of Trenwick which agrees in writing to be
bound by the terms hereof.
8. Registration Rights. Following the termination of the
Business Combination Agreement, but not later than the second anniversary
of the last date that Trenwick acquired Option Shares under this Agreement,
Trenwick may by written notice (the "Registration Notice") to LaSalle
request LaSalle to register under the Securities Act all or any part of the
Restricted Shares beneficially owned by Trenwick (the "Registrable
Securities") pursuant to a bona fide firm commitment underwritten public
offering in which Trenwick and the underwriters shall effect as wide a
distribution of such Registrable Securities as is reasonably practicable
and shall use their commercially reasonable efforts to prevent any person
(including any Group (as used in Rule 13d-5 under the Exchange Act)) and
its affiliates from purchasing through such offering Restricted Shares
representing more than one percent (1%) of the outstanding shares of common
stock of LaSalle on a fully diluted basis (a "Permitted Offering"). The
Registration Notice shall include a certificate executed by Trenwick and
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its proposed managing underwriter, which underwriter shall be an investment
banking firm of nationally recognized standing (the "Manager"), stating
that (i) they have a good faith intention to commence promptly a Permitted
Offering and (ii) the Manager in good faith believes that, based on the
then prevailing market conditions, it will be able to sell the
Registrable Securities at a per share price equal to at least eighty
percent (80%) of the then Fair Market Value (as defined below) of such
shares. LaSalle (and/or any person designated by LaSalle) shall thereupon
have the option exercisable by written notice delivered to Trenwick within
five (5) business days after the receipt of the Registration Notice,
irrevocably to agree to purchase all or any part of the Registrable
Securities proposed to be so sold for cash at a price (the "Option Price")
equal to the product of (i) the number of Registrable Securities to be so
purchased by LaSalle and (ii) the then Fair Market Value of such shares.
Any such purchase of Registrable Securities by LaSalle (or its designee)
hereunder shall take place at a closing to be held at the principal
executive offices of LaSalle or at the offices of its counsel at any
reasonable date and time designated by LaSalle and/or such designee in such
notice within twenty (20) business days after delivery of such notice. Any
payment for the shares to be purchased shall be made by delivery at the
time of such closing of the Option Price in immediately available funds. As
used herein, the "Fair Market Value" of any share shall be the average of
the daily closing sales price for such share on the NYSE during the ten
(10) NYSE trading days immediately preceding the date such Fair Market
Value is to be determined.
If LaSalle does not elect to exercise its option pursuant
to this Section 8 with respect to all Registrable Securities, it shall use
its commercially reasonable efforts to effect, as promptly as practicable,
the registration under the Securities Act of the unpurchased Registrable
Securities proposed to be so sold; provided, however, that (i) Trenwick
shall not be entitled to more than an aggregate of two effective
registration statements hereunder and (ii) LaSalle will not be required to
file any such registration statement during any period of time (not to
exceed ninety (90) days after such request in the case of clauses (A), (B)
or (C) below) when (A) LaSalle is in possession of material non-public
information which it reasonably believes would be detrimental to be
disclosed at such time and, in the opinion of counsel to LaSalle, such
information would have to be disclosed if a registration statement were
filed at that time; (B) LaSalle is required under the Securities Act to
include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion
in such registration statement; or (C) LaSalle determines, in its
reasonable judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving LaSalle or
any of its affiliates. LaSalle shall use its reasonable best efforts to
cause any Registrable Securities registered pursuant to this Section 8 to
be qualified for sale under the securities or blue sky laws of such
jurisdictions as Trenwick may reasonably request and shall continue such
registration or qualification in effect in such jurisdiction; provided,
however, that LaSalle shall not be required to qualify to do business in,
or consent to general service of process in, any jurisdiction by reason of
this provision.
The registration rights set forth in this Section 8 are
subject to the condition that Trenwick shall provide LaSalle with such
information with respect to such holder's Registrable Securities, the plans
for the distribution thereof, and such other information with respect to
such holder as, in the reasonable judgment of counsel for LaSalle, is
necessary to enable LaSalle to include in such registration statement all
material facts required to be disclosed with respect to a registration
thereunder.
A registration effected under this Section 8 shall be
effected at LaSalle's expense, except for underwriting discounts and
commissions and the fees and the expenses of counsel to Trenwick, and
LaSalle shall provide to the underwriters such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as
are customary in connection with underwritten public offerings as such
underwriters may reasonably require. In connection with any such
registration, the parties agree (i) to indemnify each other and the
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underwriters in the customary manner (provided that Trenwick shall only be
required to indemnify other parties to such underwriting agreement for
information relating to such Trenwick and supplied by it for inclusion in
such registration statement), (ii) to enter into an underwriting agreement
in form and substance customary for transactions of such type with the
Manager and the other underwriters participating in such offering and (iii)
to take all further actions which shall be reasonably necessary to effect
such registration and sale (including, if the Manager deems it necessary,
participating in road show presentations).
LaSalle shall be entitled to include (at its expense)
additional shares of its common stock in a registration effected pursuant
to this Section 8 only if and to the extent the Manager determines that
such inclusion will not adversely affect the prospects for success of such
offering.
9. Adjustment upon Changes in Capitalization. (a) Without
limitation to any restriction on LaSalle contained in this Agreement or in
the Business Combination Agreement, in the event of any change in LaSalle
Common Shares by reason of stock dividends, split-ups, mergers,
amalgamations, recapitalizations, subdivisions, conversions, combinations,
exchange of shares or the like, the type and number of shares or securities
subject to the LaSalle Option, and the Exercise Price per Option Share
provided in Section 1, shall be adjusted appropriately to restore to
Trenwick its rights hereunder, including the right to purchase from the
LaSalle (or its successors) shares of LaSalle Common Shares representing
19.9% of the outstanding LaSalle Common Shares for the aggregate Exercise
Price calculated as of the date of this Agreement as provided in Section 1.
(b) In the event that LaSalle shall enter into an
agreement: (i) to consolidate with merge or amalgamate into any person,
other than Trenwick or one of its subsidiaries, and shall not be the
continuing or surviving corporation of such consolidation, merger or
amalgamation; (ii) to permit any person, other than Trenwick or one of its
subsidiaries, to merge or amalgamate into LaSalle and LaSalle shall be the
continuing or surviving corporation, but, in connection with such merger or
amalgamation, the then-outstanding shares of LaSalle Common Shares shall be
changed into or exchanged for stock or other securities of LaSalle or any
other person or cash or any other property; or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than
Trenwick or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that
upon the consummation of such transaction and upon the subsequent exercise
of the LaSalle Option, Trenwick shall be entitled to receive, for each
share of LaSalle Common Shares with respect to which the LaSalle Option has
not theretofore been exercised, an amount of consideration in the form of
and equal to the per share amount of consideration that would be received
by the holder of one share of LaSalle Common Shares (and, in the event of
an election or similar arrangement with respect to the type of
consideration to be received by the holders of LaSalle Common Shares,
subject to the foregoing, proper provision shall be made so that the holder
of the LaSalle Option would have the same election or similar rights as
would the holder of the number of shares of LaSalle Common Shares for which
the LaSalle Option is then exercisable).
10. Restrictive Legends. Each certificate representing
shares of LaSalle Common Shares issued to Trenwick at a Closing will have
typed or printed thereon a restrictive legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET
FORTH IN THE STOCK OPTION AGREEMENT, DATED AS OF DECEMBER 19,
1999, A COPY OF WHICH MAY BE OBTAINED FROM THE ISSUER UPON
REQUEST.
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It is understood and agreed that: (i) the reference to
the resale restrictions of the Securities Act in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if
such Option Shares have been registered pursuant to the Securities Act,
such Option Shares have been sold in reliance on and in accordance with
Rule 144 under the Securities Act or Trenwick has delivered to LaSalle a
copy of a letter from the staff of the Securities and Exchange Commission,
or an opinion of counsel, in form and substance satisfactory to LaSalle and
its counsel, to the effect that such legend is not required for purposes of
the Securities Act; (ii) the reference to restrictions pursuant to this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the Option Shares evidenced by
certificate(s) containing such reference have been sold or transferred in
compliance with the provisions of this Agreement and under circumstances
that do not require the retention of such reference; and (iii) the legend
shall be removed in its entirety if the conditions in the preceding clauses
(i) and (ii) are both satisfied. In addition, such certificate(s) shall
bear any other legend as may be required by law. Certificates representing
shares sold in a registered public offering pursuant to Section 8 shall not
be required to bear the legend set forth in this Section 10.
11. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement
or the Business Combination Agreement, in no event shall Trenwick's Total
Profit (as hereinafter defined) exceed $15 million (such amount, the
"Profit Limit") and, if it would otherwise exceed such amount, Trenwick, at
its sole election, shall, within five business days, either (i) deliver to
the Issuer for cancellation Option Shares (valued, for purposes of this
Section 11, at their closing market price on the NYSE on the date of such
delivery), (ii) pay cash to the Issuer or refund in cash any LaSalle
Termination Fee previously paid to Trenwick or reduce or waive the amount
of any LaSalle Termination Fee payable to Trenwick pursuant to Section
7.4(c) of the Business Combination Agreement, or (iii) undertake any
combination thereof, so that Trenwick's Total Profit shall not exceed the
Profit Limit after taking into account the foregoing actions. As used
herein, "Total Profit" means the aggregate amount (before taxes) of (i) $12
million, payable in excess of expenses, pursuant to Section 7.4(c) of the
Business Combination Agreement, (ii) amounts paid by LaSalle pursuant to
Section 12 hereof and (iii) (x) the net cash amounts received by Trenwick
pursuant to the sale or other disposition of Option Shares (or any other
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) Trenwick's purchase price for such Option
Shares.
(b) Notwithstanding any other provision of this Agreement
or the Business Combination Agreement, the LaSalle Option may not be
exercised for a number of Option Shares that would, as of the date of the
Exercise Notice, result in a Notional Total Profit (as hereinafter defined)
of more than the Profit Limit and, if exercise of the LaSalle Option
otherwise would exceed the Profit Limit, Trenwick, at its discretion, may
increase the Exercise Price for that number of Option Shares set forth in
the Exercise Notice so that the Notional Total Profit shall not exceed the
Profit Limit; provided, that nothing in this sentence shall restrict any
exercise of the LaSalle Option permitted hereby on any subsequent date at
the Exercise Price set forth in Section 1 hereof. As used herein, the term
"Notional Total Profit" with respect to any number of Option Shares as to
8
<PAGE>
which Trenwick may propose to exercise the LaSalle Option shall be the
Total Profit determined as of the date of the Exercise Notice assuming that
the LaSalle Option were exercised on such date for such number of Option
Shares and assuming that such Option Shares, together with all other shares
of LaSalle Common Shares held by Trenwick and its subsidiaries as of such
date, were sold for cash at the closing market price for the LaSalle
Common Shares on the NYSE Composite Tape at the close of business on the
preceding trading day (less customary brokerage commissions).
12. Certain Repurchases.
(a) Trenwick "Put". Subject to the limitations set forth
in Section 11, upon delivery of written notice to LaSalle by Trenwick (the
"Repurchase Notice"):
(i) at any time during which the LaSalle Option is
exercisable pursuant to Section 2 (the "Repurchase Period"),
LaSalle and its successors in interest shall repurchase from
Trenwick all or any portion of the LaSalle Option, as specified by
Trenwick, at the Option Repurchase Price set forth in Section
12(b)(i); and
(ii) at any time prior to the fifth anniversary of the
date hereof, LaSalle and its successors in interest shall
repurchase from Trenwick all or any portion of the LaSalle Common
Shares purchased by Trenwick pursuant to the LaSalle Option, as
specified by Trenwick, at the Share Repurchase Price set forth in
Section 12(b)(iii).
(b) Certain Definitions. For purposes of this Section 12,
the following definitions shall apply:
(i) "Option Repurchase Price" shall mean (A) the
difference between the Option Repurchase Market/Offer Price (as
defined below) for the LaSalle Common Shares as of the date of the
applicable Repurchase Notice and the Exercise Price, multiplied by
(B) the number of shares of LaSalle Common Shares purchasable
pursuant to the LaSalle Option or the portion thereof covered by
the applicable Repurchase Notice, but only if the Option
Repurchase Market/Offer Price is greater than the Exercise Price.
(ii) "Option Repurchase Market/Offer Price" shall mean,
as of any date, the higher of (X) the highest price per share
offered as of such date pursuant to any tender or exchange offer
or other offer with respect to a business combination offer
involving LaSalle or any of its material subsidiaries as the
target party which was made prior to such date and not terminated
or withdrawn as of such date and (Y) the Fair Market Value (as
defined in Section 12(b)(v)) of the LaSalle Common Shares as of
such date.
9
<PAGE>
(iii) "Share Repurchase Price" shall mean the product of
(A) the sum of (I) the Exercise Price paid by Trenwick per share
of LaSalle Common Shares acquired pursuant to the LaSalle Option
and (II) if the Share Repurchase Market/Offer Price (as defined
below) is greater than the Exercise Price, the difference between
the Share Repurchase Market/Offer Price and the Exercise Price,
and (B) the number of LaSalle Common Shares to be repurchased
pursuant to this Section 12.
(iv) "Share Repurchase Market/Offer Price" shall mean, as
of any date, the higher of (X) the highest price per share offered
pursuant to a tender or exchange offer or other business
combination offer involving LaSalle as the target party during the
Repurchase Period prior to the delivery by Trenwick of a notice of
repurchase and (Y) the Fair Market Value of the LaSalle Common
Shares as of such date.
(v) "Fair Market Value" shall mean, with respect to any
security, the per share average of the last sale prices on the
NYSE (or such other national stock exchange or national market
system as shall then be the primary trading market for such
security) for the ten (10) trading days immediately preceding the
applicable date.
(c) Payment and Redelivery of LaSalle Options or LaSalle
Common Shares. In the event that Trenwick exercises its rights under this
Section 12, LaSalle shall, within ten (10) business days thereafter, pay
the required amount to Trenwick in immediately available funds and Trenwick
shall surrender to LaSalle the LaSalle Option or the certificate or
certificates evidencing the LaSalle Common Shares purchased by Trenwick
pursuant hereto, and Trenwick shall warrant that it has sole beneficial
ownership of the LaSalle Option or such LaSalle Common Shares and that the
LaSalle Option or such LaSalle Common Shares are then free and clear of all
claims, liens, charges, encumbrances and security interests of any nature
whatsoever.
(d) Repurchase Price Reduced at Trenwick's Option. In the
event that payment of the repurchase price specified in Section 12(a) would
subject the repurchase of the LaSalle Option or the LaSalle Common Shares
purchased by Trenwick pursuant to the LaSalle Option to a vote of the
stockholders of LaSalle pursuant to applicable law, regulations, or
requirements of a national securities exchange or national market system or
the LaSalle Bye-Laws, then Trenwick may, at its election, reduce the
repurchase price or the number of shares covered by the Trenwick repurchase
request to an amount which would permit such repurchase without the
necessity for such a vote.
(e) Repurchase at the Election of LaSalle.
(i) Except to the extent that Trenwick shall have
previously exercised its rights under Section 12(a), at the
written request of LaSalle during the six-month period immediately
following the Repurchase Period, LaSalle may repurchase from
Trenwick, and Trenwick shall sell to LaSalle, all (but not less
than all) of the LaSalle Common Shares acquired by Trenwick
pursuant hereto and with respect to which Trenwick has beneficial
ownership at the time of such repurchase, at a price equal to the
sum of (A) the greater of (I) one hundred ten percent (110%) of
the Current Market Price (as defined in Section 12(e)(iii)) or
(II) the sum of (X) the Purchase Price in respect of the shares so
acquired plus (Y) Trenwick's Pre-Tax Carrying Cost (as defined in
Section 12(e)(iii)), multiplied in either case by the number of
shares so acquired, and (B) the amount of the documented
out-of-pocket expenses (to the extent not previously reimbursed or
10
<PAGE>
compensated for pursuant hereto or pursuant to the Business
Combination Agreement) incurred by Trenwick in connection with the
Business Combination Agreement and this Agreement and the
transactions contemplated thereby and hereby, including reasonable
accounting, investment banking and legal fees (the "Section 12(e)
Repurchase Consideration"); provided, that LaSalle's rights under
this Section 12(e) shall be suspended (with any such rights being
extended accordingly) during any period when the exercise of such
rights would subject Trenwick to liability or disgorgement of
profits pursuant to Section 16(b) of the Exchange Act.
(ii) If LaSalle exercises its rights under this Section
12(e), LaSalle shall, within ten (10) business days pay the
Section 12(e) Repurchase Consideration in immediately available
funds and Trenwick shall surrender to LaSalle certificates
evidencing the LaSalle Common Shares purchased hereunder with
respect to which Trenwick then has beneficial ownership, and
Trenwick shall warrant that it has sole beneficial ownership of
such LaSalle Common Shares and that all such shares are then free
and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever.
(iii) As used in Section 12(e)(i), (A) "Current Market
Price" shall mean the average of the last sale prices per share of
LaSalle Common Shares on the NYSE for the ten (10) trading days
immediately preceding the date of LaSalle's request for repurchase
pursuant to this Section 12(e) and (B) "Pre-Tax Carrying Cost"
shall mean an amount equal to the interest on the aggregate
purchase price paid by Trenwick for the LaSalle Common Shares
purchased pursuant to the LaSalle Option from the date of purchase
to the date of repurchase at the rate of interest announced by
Citibank, N.A. at its prime or base lending or reference rate
during such period, less any dividends received on the shares so
purchased, divided by the number of shares of LaSalle Common
Shares so purchased.
13. Binding Effect; No Assignment; No Third Party
Beneficiaries. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Neither this Agreement nor the rights or the obligations of either
party hereto are assignable, except by operation of law, or with the
written consent of the other party (it being agreed that all transactions
contemplated by Section 2.1(b) and (c) of the Business Combination
Agreement shall not be considered assignments in violation of this Section
13). Nothing contained in this Agreement, express or implied, is intended
to confer upon any person other than the parties hereto and their
respective permitted assigns any rights or remedies of any nature
whatsoever by reason of this Agreement. Any Restricted Shares sold by a
party in compliance with the provisions of Section 8 shall, upon
consummation of such sale, be free of the restrictions imposed with respect
to such shares by this Agreement, unless and until such party shall
repurchase or otherwise become the beneficial owner of such shares, and any
transferee of such shares shall not be entitled to the registration rights
of such party.
11
<PAGE>
14. Specific Performance. The parties recognize and agree
that if for any reason any of the provisions of this Agreement are not
performed in accordance with their specific terms or are otherwise
breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each
party agrees that, in addition to other remedies, the other party shall be
entitled to an injunction restraining any violation or threatened violation
of the provisions of this Agreement. In the event that any action should be
brought in equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there is
adequate remedy at law.
15. Entire Agreement. This Agreement, the Business
Combination Agreement (including any exhibits and schedules thereto) and
the Confidentiality Agreement constitute the entire agreement, and
supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter of this
Agreement.
16. Further Assurances. Each party will execute and
deliver all such further documents and instruments and take all such
further action as may be necessary in order to consummate the transactions
contemplated hereby.
17. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability
of the other provisions of this Agreement, which shall remain in full force
and effect. In the event any court or other competent authority holds any
provisions of this Agreement to be null, void or unenforceable, the parties
hereto shall negotiate in good faith the execution and delivery of an
amendment to this Agreement in order, as nearly as possible, to effectuate,
to the extent permitted by law, the intent of the parties hereto with
respect to such provision and the economic effects thereof. If for any
reason any such court or regulatory agency determines that Trenwick is not
permitted to acquire the full number of shares of LaSalle Common Shares
provided in Section 1 hereof (as the same may be adjusted), it is the
express intention of LaSalle to allow Trenwick to acquire such lesser
number of shares as may be permissible, without any amendment or
modification hereof. Each party agrees that, should any court or other
competent authority hold any provision of this Agreement or part hereof to
be null, void or unenforceable, or order any party to take any action
inconsistent herewith, or not take any action required herein, the other
party shall not be entitled to specific performance of such provision or
part hereof or to any other remedy, including but not limited to money
damages, for breach hereof or of any other provision of this Agreement or
part hereof as the result of such holding or order.
18. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if (i) delivered, personally, or (ii) sent by overnight
courier service (providing proof of delivery), or (iii) telecopied (which
is confirmed), or (iv) five (5) days after being mailed by registered or
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<PAGE>
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by
like notice):
If to Trenwick:
Alan L. Hunte
Vice President and
Chief Financial Officer
Trenwick Group Inc.
One Canterbury Green
Stamford, CT 06901
Fax: (203) 353-5550
with a copy to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Attention: James R. Cameron
Fax: (212) 891-3835
If to LaSalle, to:
LaSalle Re Holdings Limited
Continental Building
25 Church Street
Hamilton HM 12
Bermuda
Fax: (441) 292-1501
with a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, Illinois 60603
Attention: Richard W. Shepro
Fax: (312) 701-7711
19. Governing Law; Choice of Forum. This Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware without regard to the conflicts of law principles thereof. Each of
the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Delaware or any
13
<PAGE>
Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court
sitting in the state of Delaware or a Delaware state court.
20. Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this
Agreement unless otherwise indicated. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation." The descriptive headings
herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, but
both of which, taken together, shall constitute one and the same
instrument.
22. Expenses. Except as otherwise expressly provided
herein or in the Business Combination Agreement, all costs and expenses
incurred in connection with the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
23. Amendment. This Agreement may not be amended, except
by an instrument in writing signed on behalf of each of the parties.
24. Waiver. Any agreement on the part of a party to waive
any provision of this Agreement, or to extend the time for performance,
will be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise will not constitute a
waiver of such rights.
25. Loss or Mutilation. Upon receipt by LaSalle of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender
and cancellation of this Agreement, if mutilated, LaSalle will execute and
deliver to Trenwick a new Agreement of like tenor and date. Any such new
Agreement executed and delivered will constitute an additional contractual
obligation on the part of LaSalle, whether or not the Agreement so lost,
stolen, destroyed, or mutilated shall at any time be enforceable by anyone.
26. Extension of Time Periods. The time periods for
exercises of certain rights hereunder shall be extended (but in no event by
more than six (6) months): (a) to the extent necessary to obtain all
governmental approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; and (b) to the extent
necessary to avoid any liability or disgorgement of profits under Section
16(b) of the Exchange Act by reason of such exercise.
27. Further Assurance. Each party agrees to execute and
deliver all such further documents and instruments and take all such
further action as may be necessary in order to consummate the transactions
contemplated hereby.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers as of
the date first above written.
TRENWICK GROUP INC.
By: /s/ James F. Billett, Jr.
-----------------------------------------
Name: James F. Billett, Jr.
------------------------------
Title: Chairman, President and CEO
------------------------------
LASALLE RE HOLDINGS LIMITED
By: /s/ Guy D. Hengesbaugh
-----------------------------------------
Name: Guy D. Hengesbaugh
------------------------------
Title: President & CEO
-----------------------------
15
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement") dated as of December 19, 1999, by
and among Trenwick Group Inc., a Delaware corporation ("Trenwick"), and the
other parties signatory hereto (each, a "Shareholder" and together, the
"Shareholders").
RECITALS
WHEREAS, simultaneously herewith Trenwick is entering into an
Agreement, Scheme of Arrangement, Plan of Merger and Plan of
Reorganization, dated as of December 19, 1999, by and among LaSalle Re
Holdings, a company organized under the laws of Bermuda ("LaSalle
Holdings"), LaSalle Re Limited, a company organized under the laws of
Bermuda ("LaSalle Re"), Trenwick, Gowin Holdings International Limited, a
company organized under the laws of Bermuda ("New Holdings") and Trenwick
Group (Delaware) Inc., a Delaware corporation (the "Business Combination
Agreement");
WHEREAS, the Business Combination Agreement provides that Trenwick
and LaSalle Holdings will be entering into a series of transactions
pursuant to which (i) New Holdings will become the holding company of such
companies and (ii) shareholders of LaSalle Holdings and LaSalle Re and
stockholders of Trenwick will become shareholders of New Holdings as set
forth in such agreement;
WHEREAS, each Shareholder owns that number of (i) LaSalle
Holdings' common shares, par value $1.00 per share (the "Common Shares"),
and (ii) LaSalle Re's exchangeable non-voting shares (the "Non-Voting
Shares" and, together with the Common Shares, the "Shares", which term
shall include Shares which are acquired or may be acquired upon the
exercise of any and all options to acquire Common Shares and Non-Voting
Shares ("Options"), whether such Options exist on the date hereof or
otherwise) set forth next to such Shareholder's name on Exhibit A hereto;
and
WHEREAS, as a condition to its willingness to enter into the
Business Combination Agreement, Trenwick has required that each Shareholder
agree, and each Shareholder has agreed, among other things, to execute and
deliver this Agreement with respect to the Shares owned (whether by
conversion or otherwise) by such Shareholder, on the terms and conditions
provided for herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
1. Voting Agreement. At any meeting of the shareholders of
LaSalle Holdings or LaSalle Re called to vote upon the Scheme of Arrangement
or the Business Combination Agreement or at any adjournment thereof or in
<PAGE>
any other circumstances upon which a vote, consent or other approval of
shareholders of LaSalle Holdings or LaSalle Re with respect to any of the
other matters referred to below is sought, each Shareholder hereby agrees
to vote (or cause to be voted) the Shares held of record or beneficially
by such Shareholder as of the applicable record date (i) in favor of the
Scheme of Arrangement, the execution and delivery by LaSalle Holdings and
LaSalle Re of the Business Combination Agreement and the approval of the
terms thereof and each of the other actions contemplated by the Business
Combination Agreement, this Agreement and any actions required in
furtherance hereof and thereof; (ii) against any action or agreement that
would, to its knowledge, result in a breach of any covenant, representation
or warranty or any other obligation or agreement of LaSalle Holdings or
LaSalle Re under the Business Combination Agreement or this Agreement;
and (iii) against the following actions (other than the Scheme and the
transactions contemplated by the Business Combination Agreement): (1) any
extraordinary corporate transaction, such as a merger, consolidation,
amalgamation or other business combination involving LaSalle Holdings or any of
its subsidiaries (including, without limitation, LaSalle Re); (2) a sale, lease
or transfer of a material amount of assets of LaSalle Holdings or any of its
subsidiaries(including, without limitation, LaSalle Re) or a
reorganization, recapitalization, dissolution or liquidation of LaSalle
Holdings or any of its subsidiaries (including, without limitation, LaSalle
Re); (3) (a) any change in the majority of the Board of Directors of
LaSalle Holdings or LaSalle Re; (b) any material change in the present
capitalization of LaSalle Holdings or LaSalle Re or any material amendment
of LaSalle Holdings' or LaSalle Re's Memorandum of Association and
Bye-laws; (c) any other material change in LaSalle Holdings' or LaSalle
Re's corporate structure or business; or (d) any other action which is
intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, discourage or materially adversely affect the Scheme of
Arrangement or the transactions contemplated by the Business Combination
Agreement or this Agreement or the contemplated economic benefits of any of
the foregoing. Each Shareholder hereby revokes any proxy previously granted
by it with respect to the Shares. Each Shareholder hereby agrees, while
this Agreement is in effect, and except as contemplated hereby, not to take
any action that would make any representation or warranty of such
Shareholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Shareholder from performing his or its
obligations under this Agreement; provided, however, that nothing in this
Agreement shall be deemed to prohibit or restrict in any manner any
Shareholder from selling, transferring, or otherwise disposing of any
Shares or Options to any person. The provisions of this Section 1 shall
terminate and no longer bind the Shareholders at such time as the LaSalle
Holdings Board of Directors either (A) withdraws or modifies its approval
and recommendation of the Business Combination Agreement pursuant to clause
(x) of the second sentence of Section 5.3(b)(ii) thereof or (B) terminates
the Business Combination Agreement pursuant to clause (y) of the second
sentence of Section 5.3(b)(ii) thereof.
2. Representations and Warranties of Trenwick. Trenwick hereby
represents and warrants to each Shareholder that the execution and delivery
of this Agreement and the
<PAGE>
consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Trenwick and no other
corporate proceedings on the part of Trenwick are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Trenwick and
constitutes a valid and binding agreement of Trenwick, enforceable against
Trenwick in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
(ii) is subject to general principles of equity.
3. Representations and Warranties of the Shareholders. Each
Shareholder hereby represents and warrants, severally and not jointly, to
Trenwick as follows:
(a) Ownership of Shares and Options. Such Shareholder, as
of the date hereof, (i) is the owner of the number of
Shares and Options set forth next to such Shareholder's
name on Exhibit A hereto and (ii) has the sole power to
vote (or to give any consent that may be required in
respect of such Shares and Options) and dispose of such
Shares and Options.
(b) Power; Binding Agreement. Such Shareholder has the
legal capacity, power and authority to enter into and
perform all of its obligations under this Agreement. The
execution, delivery and performance of this Agreement by
such Shareholder will not violate any other agreement to
which such Shareholder is a party including, without
limitation, any voting agreement, shareholders agreement
or voting trust. This Agreement has been duly and validly
authorized, executed and delivered by such Shareholder
and constitutes a valid and binding agreement of such
Shareholder, enforceable against such Shareholder in
accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally
and (ii) is subject to general principles of equity.
(c) No Conflicts. (A) No filing by such Shareholder with,
and no permit, authorization, consent or approval of, any
state, federal or foreign public body or authority is
necessary for the execution of this Agreement by such
Shareholder and the consummation by such Shareholder of
the transactions contemplated hereby and (B) neither the
execution and delivery of this Agreement by such
Shareholder nor the consummation by such Shareholder of
the transactions contemplated hereby nor compliance by
such Shareholder with any of the provisions hereof shall
(1) conflict with or result in any breach of any
provision of the certificate of incorporation, by-laws,
trust or charitable instruments (or similar documents) of
such Shareholder, (2) result in a
<PAGE>
violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise
to any third party right of termination, cancellation,
material modification or acceleration) under any of the
terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, agreement or
other instrument or obligation to which such Shareholder
is a party or by which he or it or any of his or its
properties or assets may be bound or (3) violate any
order, writ, injunction, decree, statute, rule or
regulation applicable to such Shareholder or any of his
or its properties or assets, except in the case of (A) or
(B) for violations, breaches or defaults which would not
in the aggregate materially adversely affect the ability
of such Shareholder to perform its obligations hereunder.
4. Adjustments to Prevent Dilution, Etc. In the event of a stock
dividend or distribution, or any change in LaSalle Holdings' or LaSalle
Re's capital shares by reason of any share dividend, split-up,
reclassification, recapitalization, combination or the exchange of shares,
the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into
which or for which any or all of the Shares may be changed or exchanged.
5. Miscellaneous.
(a) Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject
matter hereof and may not be amended except by a writing
signed by the parties. Except as specifically provided
herein, this Agreement is not assignable by any of the
parties, provided that none of the transactions described
in Sections 2.1(b) and 2.1(c) of the Business Combination
Agreement shall be considered an assignment by Trenwick.
This Agreement shall be binding upon the respective
successors of the parties and upon transferees of the
Shares who are Affiliates of the transferring
Shareholder.
(b) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and
shall be given (and shall be deemed to have been duly
received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail,
postage prepaid, return receipt requested) or by any
courier service, such as Federal Express, providing proof
of delivery. All communications hereunder shall be
delivered to the respective parties at the following
addresses:
If to a Shareholder, to the address of such Shareholder
indicated on Exhibit A hereto.
<PAGE>
If to Trenwick:
Trenwick Group Inc.
One Canterbury Green
Stamford, Connecticut 06901
Attention: Steve Bensinger and
John Del Col, Esq.
Facsimile No.: (203) 353-5544
with a copy to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Attention: James R. Cameron, Esq.
Facsimile No.: (212) 891-3835
If to New Holdings:
Gowin Holdings International Limited
c/o Appleby Spurling & Kempe
Cedar House
41 Cedar Avenue
P.O. Box Hm 1179
Hamilton Bermuda HMEX
Attention: Warren Cabral
Facsimile No: (441) 292-8666
With a copy to:
Baker & McKenzie
805 Third Avenue
New York, New York 10022
Attention: James R. Cameron, Esq.
Facsimile No.: (212) 891-3835
or to such other address as the person to whom notice is given may have
previously furnished
<PAGE>
to the others in writing in the manner set forth above.
(c) Notification by Shareholder. Each Shareholder shall
notify Trenwick from time to time, upon request, of the
number of Shares beneficially owned by such Shareholder.
(d) Governing Law. This Agreement shall be governed in
all respects by the laws of the State of Delaware without
regard to any laws or regulations relating to choice of
laws (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of
Delaware.
(e) Cooperation. Subject to the terms and conditions of
this Agreement, each of the parties hereby agrees to use
its best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws,
rules and regulations to consummate and make effective
the actions contemplated by this Agreement. In case at
any time after the execution of this Agreement, further
action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and
directors of each of the parties shall take all such
necessary or desirable action.
(f) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any
covenants or agreements contained in this Agreement will
cause the other party to sustain damages for which it
would not have an adequate remedy at law for money
damages, and therefore, each of the parties hereto agrees
that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance
of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(g) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and
the same Agreement.
(h) Definitions. Capitalized terms used but not defined
herein shall have the meanings set forth in the Business
Combination Agreement.
(i) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning
or interpretation of this Agreement.
(j) Severability. Whenever possible, each provision or
portion of any
<PAGE>
provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law
but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable
in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or
portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had
never been contained herein.
(k) Termination. Unless earlier terminated as provided
herein, this Agreement shall terminate, without further
liability or obligation of the parties hereto, including
liability for damages, upon the earlier of (i) the 180th
calendar day following the termination of the Business
Combination Agreement in accordance with its terms and
(ii) consummation of the Scheme of Arrangement.
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each of the parties hereto, all as of the date first above
written.
TRENWICK GROUP INC.
By: /s/ James F. Billett, Jr.
--------------------------------
Name: James F. Billett, Jr.
Title: Chairman, President and CEO
SHAREHOLDERS:
COMBINED INSURANCE COMPANY OF
AMERICA
By: /s/ Michael A. Conway
--------------------------------
Name: Michael A. Conway
Title: Senior Vice President
<PAGE>
VIRGINIA SURETY COMPANY, INC.
By: /s/ Michael A. Conway
--------------------------------
Name: Michael A. Conway
Title: Vice President
AON RISK CONSULTANTS (BERMUDA) LTD.
By: /s/ Michael A. Conway
--------------------------------
Name: Michael A. Conway
Title: Authorized Agent
CONTINENTAL CASUALTY COMPANY
By: /s/ Robert V. Deutsch
-------------------------------
Name: Robert V. Deutsch
Title: Senior Vice President and CFO
CNA (BERMUDA) SERVICES LIMITED
By: /s/ Robert V. Deutsch
-------------------------------
Name: Robert V. Deutsch
Title: Authorized Agent
<PAGE>
EXHIBIT A
NUMBER OF NUMBER OF
COMMON SHARES EXCHANGEABLE NON- OPTIONS
SHAREHOLDER NAME OF LASALLE VOTING SHARES OF AND/OR
AND ADDRESS HOLDINGS LASALLE RE WARRANTS
- -------------------------------------------------------------------------------
Combined Insurance 322,715 1,221,750 0
Company of America
Virginia Surety Company, 322,715 1,221,750 0
Inc.
Aon Risk Consultants 555,244 0 0
(Bermuda), Ltd.
Continental Casualty 1,425,354 1,963,896 0
Company
CNA (Bermuda) Services 0 318,150 0
Limited
Sunday December 19, 2:27 pm Eastern Time
Press Release
Trenwick Group Inc. and LaSalle Re Holdings Limited to Merge
STAMFORD, Conn. & HAMILTON, Bermuda--(BUSINESS WIRE)-- Dec. 19, 1999--
Trenwick Group Inc. ("Trenwick") (NYSE: TWK - news) and LaSalle Re Holdings
Limited ("LaSalle Re") (NYSE: LSH - news) announced today that they have
signed a definitive agreement for Trenwick and LaSalle Re to merge, with
shareholders of both companies receiving shares in a new Bermuda holding
company to be named Trenwick Group Ltd. James F. Billett, Jr. will continue
as Chairman, President and Chief Executive Officer of the new Trenwick, and
Guy D. Hengesbaugh, President and Chief Executive Officer of LaSalle Re,
will continue in those roles at LaSalle Re, which will become a subsidiary
of the new Trenwick. The Board of Directors of the new Trenwick will
consist of the twelve current Trenwick directors, and four directors from
the present LaSalle Re Board.
Under the terms of the merger agreement, shareholders of Trenwick and
LaSalle Re will each receive shares in the newly formed Trenwick on a
one-for-one basis. The transaction is expected to be tax-free to
shareholders of both companies.
James F. Billett, Jr., Trenwick's Chairman, President and Chief Executive
Officer, said, "This strategic merger creates a significant new
Bermuda-based global insurance and reinsurance underwriting organization
with a total capitalization of over $1.2 billion. This transaction, which
is the most recent step in Trenwick's strategic evolution, is exciting for
us since it creates a company with larger scale and stronger competitive
capabilities in a consolidating global insurance/reinsurance market, adds
higher margin business to Trenwick's existing mix, creates a better
platform to enhance shareholder returns, and expands the management depth
of Trenwick by adding Guy Hengesbaugh and his team. The combined enterprise
will have a strong presence in the three most significant insurance markets
in the world: the United States, London and Bermuda."
"This merger represents a tremendous step forward in offering LaSalle Re
clients top-notch financial security while giving LaSalle Re shareholders
the opportunity to realize greater value," said Guy D. Hengesbaugh,
President and Chief Executive Officer of LaSalle Re.
On a combined basis, the new Trenwick would have had assets in excess of
$3.5 billion, shareholders' equity of over $950 million and total
capitalization of approximately $1.2 billion as
<PAGE>
of September 30, 1999. Based on current projections, combined 1999 gross
written premiums for all of the new Trenwick companies are expected to
approach $1.0 billion.
The companies believe that the transaction provides a cost-effective means
of augmenting capital and adding structural platforms for further
expansion. The addition of LaSalle Re's high margin specialist property
catastrophe reinsurance business continues Trenwick's strategy of entering
new markets and product lines that began with Trenwick's acquisition of
Trenwick International (formerly Sorema U.K.), completed in February 1998,
and Trenwick's recent acquisition of Chartwell Re Corporation, completed in
October 1999. The addition of LaSalle Re will provide the new Trenwick with
a significant level of financial flexibility and the opportunity to develop
new business products. Trenwick and LaSalle Re expect that consolidating
the two companies will generate significant financial benefits and will be
accretive to Trenwick's and LaSalle Re's shareholders.
CNA Financial Corporation and Aon Corporation, founding and significant
shareholders of LaSalle Re, have each agreed to vote in favor of the
merger.
Bernard L. Hengesbaugh, Chairman and Chief Executive Officer of CNA
Insurance, stated, "CNA wholeheartedly endorses the transaction, which is
highly beneficial for LaSalle Re's shareholders and clients. This
transaction further evidences CNA's commitment to providing creative
solutions, which are best met in a global platform."
Michael D. O'Halleran, President and Chief Operating Officer of Aon,
stated, "Aon is very pleased to support the merger of LaSalle Re with
Trenwick. We have worked with Trenwick and its CEO, Jim Billett, for many
years, and recognize the outstanding opportunity this transaction provides
for the combined companies and their shareholders and clients."
The transaction is subject to the approval of the respective companies'
shareholders, regulatory approvals and other customary closing conditions.
The transaction is expected to be completed early in the second quarter of
2000. The merger agreement provides for the payment of termination fees
under certain circumstances, and Trenwick and LaSalle Re have also entered
into customary "cross" stock option agreements.
Trenwick Group Inc. is a holding company with four principal operating
subsidiaries: Trenwick America Re, which provides treaty reinsurance to
insurers of property and casualty risks in the United States; Trenwick
International, which underwrites treaty and facultative reinsurance as well
as specialty insurance on a worldwide basis; Chartwell Managing Agents
Limited, Trenwick's managing agency at Lloyd's; and Canterbury Financial
Group Inc., which underwrites U.S. property and casualty insurance through
specialty program administrators. All of Trenwick's principal insurance and
reinsurance subsidiaries are rated A (Excellent) by A.M. Best Company and
are assigned a financial strength rating of A+ by Standard & Poor's.
<PAGE>
LaSalle Re is a property and casualty reinsurer writing worldwide
specialist products with an emphasis on catastrophe coverage. LaSalle Re is
rated A (Excellent) by A.M. Best Company and currently holds an A-
financial strength rating from Standard & Poor's.
Donaldson, Lufkin & Jenrette Securities Corporation acted as financial advisor
to Trenwick; Lazard Freres & Co. LLC, Salomon Smith Barney Inc. and Aon Capital
Markets, Inc. acted as financial advisors to LaSalle Re.
This press release contains forward looking statements of management's
beliefs, estimates, projections and assumptions for the financial
condition, results of operations, business and prospects of Trenwick after
the transaction. These forward looking statements involve certain risks and
uncertainties, including those detailed from time to time in Trenwick's and
LaSalle Re's reports and filings with the Securities and Exchange
Commission. Additional factors that may cause actual results to differ
materially from those contemplated by such forward looking statements
include, among others, that the completion of the transaction may be
delayed or not occur, that difficulties related to the integration of the
businesses of Trenwick and LaSalle Re are greater than expected or that
expectations for growth may not be realizable.
Contact:
Trenwick Group Inc. (NYSE: TWK - news)
Alan L. Hunte, Executive Vice President, and
Chief Financial Officer
203/353-5500
or
LaSalle Re Holdings Limited (NYSE: LSH - news)
Diane Newman, Investor Relations Manager
441/292-3339
