SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
National Re Corporation
Name of Issuer
Common Stock, no par value per share
Title of Class of Securities
637340209
CUSIP Number
Charles F. Barr, Esq
Vice President, General Counsel & Secretary
General Re Corporation
695 East Main Street
Stamford, Connecticut 06904-2351
Telephone: (203) 328-5000
Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
Copy to
James C. Freund, Esq
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
212) 735-3000
July 1, 1996
Date of Event which Requires Filing of this Statement
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this statement because of Rule
d-1(b)(3) or (4), check the following box: [ ]
Check the following box if a fee is being paid with the statement: [X]
Check the following box if a fee is being paid with the
statement: [X]
SCHEDULE 13D
CUSIP No. 637340209
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
General Re Corporation
06-1026471
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) ( )
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
None
NUMBER OF 8 SHARED VOTING POWER
SHARES 3,781,482 See Item 4
BENEFICIALLY
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH None
REPORTING
PERSON
WITH 10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,781,482 See Item 4
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
22.76%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 637340209
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
N Acquisition Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP.
(a) ( )
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
None
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 3,781,482 See Item 4
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING None
PERSON
WITH 10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,781,482 See Item 4
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES
CERTAIN SHARES ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
22.76%
14 TYPE OF REPORTING PERSON*
CO
Item 1. Security and Issuer.
This statement ("Statement") relates to the common stock, no
par value per share (the "National Re Common Stock"), of National
Re Corporation ("National Re"). The principal executive offices
of National Re are located at 777 Long Ridge Road, P.O. Box
10167, Stamford, Connecticut 06904-2167.
Item 2. Identity and Background.
This statement is filed by General Re Corporation, a Dela-
ware corporation ("General Re"). General Re's subsidiaries
operate four principal businesses: United States proper-
ty/casualty reinsurance, international property/casualty reinsur-
ance, life/health reinsurance and financial services. The
principal executive offices of General Re are located at 695 East
Main Street, Stamford, Connecticut 06904-2351. This statement
is also filed by N Acquisition Corporation, a Delaware corpora-
tion and a wholly owned subsidiary of General Re ("Sub"). The
address of the principal executive offices of Sub is the same as
that for General Re. Sub was organized on June 27, 1996 for the
purpose of acquiring National Re. General Re and Sub are collec-
tively referred to as the "Reporting Persons."
Schedule I attached hereto sets forth certain additional
information with respect to each director and executive officer
of General Re. Schedule II attached hereto sets forth certain
additional information with respect to each director and execu-
tive officer of Sub.
None of the Reporting Persons nor, to the best of their
knowledge, any person listed in Schedules I and II hereto, has
been during the last five years (a) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors)
or (b) a party to a civil proceeding of a judicial or administra-
tive body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
See Item 4. No funds were paid to the Major Stockholders
(as defined below) by the Reporting Persons in connection with
the execution and delivery of the Stockholders' Agreements (as
defined below).
Item 4. Purpose of the Transaction.
On July 1, 1996, General Re and Sub entered into an Agree-
ment and Plan of Merger (the "Merger Agreement") with National
Re, pursuant to which National Re would merge with and into Sub,
with Sub surviving as a wholly-owned subsidiary of General Re
(the "Merger"). A copy of the Merger Agreement is filed as
Exhibit 1 to this Statement and is incorporated herein by refer-
ence.
Pursuant to the Merger Agreement, each share of National Re
Common Stock outstanding immediately prior to the effective time
of the Merger (the "Effective Time") will (except for shares of
National Re Common Stock held by National Re as treasury stock or
owned by General Re or any subsidiary of General Re immediately
prior to the Effective Time and shares as to which dissenters
rights have been exercised in accordance with and subject to the
provisions of Delaware law) be converted into the right to
receive, at the election of the holder and subject to the limita-
tions set forth in the Merger Agreement, either: (i) a fraction
of a share of General Re common stock, par value $.50 per share
(the "General Re Common Stock"), together with the attached
General Re Preferred Stock Purchase Rights, determined by divid-
ing $53 by the average of the closing prices per share of General
Re Common Stock on the New York Stock Exchange ("NYSE") as
reported by the NYSE Composite Tape for the ten consecutive NYSE
trading days ending on the second NYSE trading day immediately
preceding the closing date of the Merger, but not more than
.39259 shares of General Re Common Stock nor less than .32121
shares of General Re Common Stock, or (ii) $53 in cash, without
any interest thereon. The Merger Agreement provides for a
minimum stock component of 50%. There is no minimum cash compo-
nent. The Merger is expected to qualify as a tax-free transac-
tion to General Re, National Re, Sub and the stockholders of
National Re, except to the extent such stockholders receive cash
in the Merger.
The Merger is subject to a number of conditions, including,
among other things, (i) approval of the Merger by National Re's
stockholders, (ii) receipt of all required governmental approv-
als, (iii) absence of any statute or injunction which would have
an adverse effect on the consummation of the Merger, (iv) decla-
ration of effectiveness of the registration statement relating to
the shares of General Re Common Stock issuable in the Merger, (v)
absence of any change that would have a material adverse effect
on any of General Re, National Re or Sub, (vi) receipt by each of
General Re and National Re of tax opinions from their respective
tax counsel, and (vii) approval for listing on the NYSE of the
shares of General Re Common Stock issuable in the Merger.
In connection with the Merger, on July 1, 1996, General Re
and Sub entered into Stockholders' Agreements (each, a
"Stockholder's Agreement") with the following major stockholders
(each, a "Major Stockholder") who own in the aggregate approxi-
mately 22.76% of the issued and outstanding shares of National Re
Common Stock: Acadia Partners, L.P., Keystone, Inc., Robert W.
Eager, Jr., Peter A. Cheney, William D. Warren and Timothy T.
McCaffrey. Each of the individual Major Stockholders named in
the preceding sentence are executive officers of National Re.
Pursuant to the Stockholders' Agreements, each Major Stockholder
agreed, among other things, to (i) vote all of such stockholder's
shares of National Re Common Stock (a) in favor of the Merger and
the Merger Agreement and the transactions contemplated by the
Merger Agreement, provided that no such obligation will exist if
National Re's Board of Directors withdraws its recommendation
that stockholders of National Re vote in favor of the approval
and adoption of the Merger Agreement and (b) against (1) approval
of any proposal made in opposition to or in competition with the
Merger or any of the other transactions contemplated by the
Merger Agreement, (2) any merger, consolidation, sale of assets,
business combination, share exchange, reorganization or recapi-
talization of National Re or any of its subsidiaries, with or
involving any party other than General Re or Sub, (3) any liqui-
dation or winding up of National Re, (4) any extraordinary
dividend by National Re, (5) any change in the capital structure
of National Re (other than pursuant to the Merger Agreement) and
(6) any other action that may reasonably be expected to impede,
interfere with, delay, postpone or attempt to discourage the
Merger or the other transactions contemplated by the Merger
Agreement or result in a breach of any of the covenants, repre-
sentations, warranties or other obligations or agreements of
National Re under the Merger Agreement which would materially and
adversely affect National Re or its ability to consummate the
transactions contemplated by the Merger Agreement; and (ii) not
sell or transfer any of such stockholder's shares of National Re
Common Stock prior to the earlier of the Effective Time or the
termination of the Merger Agreement in accordance with its terms.
From and after July 1, 1996, each of the Major Stockholders
has also agreed (i) not to commit any act that could restrict or
otherwise affect such stockholder's full legal power, authority
and right to vote such stockholder's shares of National Re Common
Stock in favor of the approval and adoption of the Merger Agree-
ment and the transactions contemplated by the Merger Agreement,
and (ii) without limiting the generality of the foregoing, not to
enter into any voting agreement with any person or entity with
respect to any of such stockholder's shares of National Re Common
Stock, grant any person or entity any proxy (revocable or irrevo-
cable) or power of attorney with respect to any of such
stockholder's shares of National Re Common Stock, deposit any of
such stockholder's shares of National Re Common Stock into a
voting trust or otherwise enter into any agreement or arrangement
limiting or affecting such Major Stockholder's legal power,
authority or right to vote such stockholder's shares of National
Re Common Stock in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated thereby.
For a period ending on the later of December 31, 1996 or
three months following the termination of the Merger Agreement
(other than as a result of a breach by General Re or Sub of any
Stockholder's Agreement or the Merger Agreement), each of the
Major Stockholders has further agreed not to enter into, execute,
or be a party to any agreement or understanding, written or
otherwise, with any person whereby such stockholder (i) grants or
otherwise gives to such person an option or right to purchase or
acquire any or all of such stockholder's shares of National Re
Common Stock other than sales made in open market transactions,
(ii) agrees or covenants to vote or to grant a proxy to vote any
or all of the shares of National Re Common Stock held of record
or beneficially owned by such stockholder, at any meeting (wheth-
er annual or special and whether or not an adjourned or postponed
meeting) of the holders of National Re Common Stock, however
called, or in connection with any written consent of the holders
of National Re Common Stock, or (iii) agrees or covenants to
tender any or all of the National Re Common Stock held of record
or beneficially owned by such stockholder into any tender offer
or exchange offer relating to National Re Common Stock; provided
that such stockholder is not prevented from granting a revocable
proxy or executing a revocable written consent or tendering
shares of National Re Common Stock into any tender offer or
exchange offer (the foregoing collectively, the "Share Restric-
tions").
If, in lieu of National Re's Special Meeting of Stockholders
held to approve the Merger and the Merger Agreement (the "Special
Meeting"), stockholder action in respect of the Merger Agreement
or any of the transactions contemplated thereby is taken by
written consent, each of the Major Stockholders has agreed that
the provisions of the Stockholders' Agreements imposing obliga-
tions in respect of or in connection with the Special Meeting
will similarly apply to such action by written consent.
If, after the date of the Stockholders' Agreements, a Major
Stockholder acquires the right to vote any additional shares of
National Re Common Stock (any such shares, "Additional Shares"),
including, without limitation, upon exercise of any option,
warrant, or other right to acquire shares of National Re Common
Stock or through any stock dividend or stock split, each of the
Major Stockholders has agreed that the provisions described above
will also apply to such Additional Shares.
The provisions of the Stockholders' Agreements will termi-
nate on the earliest to occur of (i) the consummation of the
Merger or (ii) the termination of the Merger Agreement; provided,
however, that the Share Restrictions discussed above will expire
on the later of December 31, 1996 or three months following the
termination of the Merger Agreement (other than as a result of a
breach by General Re or Sub of any Stockholder's Agreement or the
Merger Agreement).
Copies of the Stockholders' Agreements are filed as Exhibits
2 through 7 and are incorporated herein by reference.
Except as set forth in this Item 4, the Stockholders'
Agreements and the Merger Agreement, none of the Reporting
Persons has any plans or proposals which relate to or would
result in any of the actions specified in clauses (a) through (j)
of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) - (b) Pursuant to the Stockholders' Agreements, under
the circumstances set forth therein, the Reporting Persons may be
deemed to have shared voting power with the Major Stockholders.
The Major Stockholders beneficially own in the aggregate
3,781,482 shares of National Re Common Stock, constituting
approximately 22.76% of the 16,616,894 shares of National Re
Common Stock that were issued and outstanding as of June 28,
1996. As a result of the limited voting arrangements provided
for in the Stockholders' Agreements, the Reporting Persons
disclaim beneficial ownership of any shares of National Re Common
Stock.
(c) Except as set forth in Item 4, none of the Reporting
Persons has effected any transactions in shares of National Re
Common Stock during the past 60 days.
(d) - (e) Inapplicable
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
None, except as set forth in Item 4.
Item 7. Material to be Filed as Exhibits.
1 Agreement and Plan of Merger, dated as of July 1, 1996, by
and among General Re Corporation, N Acquisition Corporation
and National Re Corporation.
2 Stockholders Agreement, dated as of July 1, 1996, by and
among General Re Corporation, N Acquisition Corporation and
Acadia Partners, L.P.
3 Stockholders Agreement, dated as of July 1, 1996, by and
among General Re Corporation, N Acquisition Corporation and
Keystone, Inc.
4 Stockholders Agreement, dated as of July 1, 1996, by and
among General Re Corporation, N Acquisition Corporation and
Robert W. Eager, Jr.
5 Stockholders Agreement, dated as of July 1, 1996, by and
among General Re Corporation, N Acquisition Corporation and
Peter A. Cheney.
6 Stockholders Agreement, dated as of July 1, 1996, by and
among General Re Corporation, N Acquisition Corporation and
William D. Warren.
7 Stockholders Agreement, dated as of July 1, 1996, by and
among General Re Corporation, N Acquisition Corporation and
Timothy T. McCaffrey.
8 Joint Filing Agreement.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this state-
ment is true, complete and correct.
Dated: July 11, 1996
GENERAL RE CORPORATION
By: /s/ Charles F. Barr
__________________________
Name: Charles F. Barr
Title: Vice President,
General Counsel
& Secretary
N ACQUISITION CORPORATION
By: /s/ Charles F. Barr
__________________________
Name: Charles F. Barr
Title: Vice President &
Secretary
Schedule I
GENERAL RE CORPORATION
Set forth below is the name, current business address, and
the present principal occupation or employment of each director
and executive officer of General Re. Unless otherwise indicat-
ed, each person identified below is employed by General Re.
The principal address of General Re, and unless otherwise
indicated below, the current business address for each individ-
ual listed below, is General Re Corporation, 695 East Main
Street, Stamford, CT 06904. Each person listed below is a
citizen of the United States.
Name and Address Present Principal Occupation
or Employment
Directors:
Lucy Wilson Benson President,
46 Sunset Avenue Benson & Associates
Amherst, MA 01002
Walter M. Cabot Senior Adviser,
Standish, Ayer & Wood Standish, Ayer & Wood
One Financial Center, 26th Floor
Boston, MA 02111
Ronald E. Ferguson Chairman and Chief Executive
Officer, General Re
Corporation
William C. Ferguson Retired
NYNEX Corporation
400 Westchester Avenue, 2nd Floor
White Plains, NY 10604
Donald J. Kirk Executive-in-Residence,
c/o General Re Corporation Columbia University
695 East Main Street
Stamford, CT 06904
Kay Koplovitz Chairman and C.E.O.,
USA Networks USA Networks
1230 Avenue of the Americas
New York, NY 10020
Edward H. Malone Retired
c/o General Re Corporation
695 East Main Street
Stamford, CT 06904
Andrew W. Mathieson Executive Vice President,
Richard K. Mellon & Sons Richard K. Mellon & Sons
500 Grant Street, Suite 4106
Pittsburgh, PA 15219-2502
David E. McKinney Executive Secretary,
Watson Foundation Watson Foundation
191 Post Road West
Westport, CT 06880
Stephen A. Ross Professor of Economics and
110 Audubon Street Finance, Yale University
New Haven, CT 06510]
Walter F. Williams Retired
c/o General Re Corporation
695 East Main Street
Stamford, CT 06904
Officers:
Ronald E. Ferguson Chairman and Chief Executive
Officer
James E. Gustafson President and Chief Operating
Officer
Tom N. Kellogg Executive Vice President
Peter Luetke-Bornefeld Executive Vice President
Charles F. Barr Vice President, General
Counsel and Secretary
Joseph P. Brandon Vice President and Chief
Financial Officer
Ernest C. Frohboese Vice President - Investments
Christopher P. Garand Vice President - Enterprise
Risk Manager
Theron S. Hoffman, Jr. Vice President - Human
Resources
Elizabeth A. Monrad Vice President and Treasurer
Stephen P. Raye Vice President - Technology
Lee R. Steeneck Vice President and Actuary
William L. Thiele Vice President - Global
Casualty Facultative
Schedule II
N ACQUISITION CORPORATION
Set forth below is the name and present position with N
Acquisition of each director and executive officer of N Acqui-
sition. The principal address of N Acquisition and the current
business address for each individual listed below is 695 East
Main Street, Stamford, CT 06904. Each such person is a
citizen of the United States. In addition to any position with
N Acquisition indicated below, the present principal occupation
or employment of each person listed below is set forth in
Schedule I above.
Directors:
Charles F. Barr
Joseph P. Brandon
James E. Gustafson
Officers:
James E. Gustafson President
Charles F. Barr Vice President and Secretary
Joseph P. Brandon Vice President and Treasurer
EXHIBIT INDEX
Exhibit No. Description
1 Agreement and Plan of Merger, dated as of July
1, 1996, by and among General Re Corporation, N
Acquisition Corporation and National Re Corpo-
ration.
2 Stockholders Agreement, dated as of July
1, 1996, by and among General Re Corporation, N
Acquisition Corporation and Acadia Partners,
L.P.
3 Stockholders Agreement, dated as of July
1, 1996, by and among General Re Corporation, N
Acquisition Corporation and Keystone, Inc.
4 Stockholders Agreement, dated as of July
1, 1996, by and among General Re Corporation, N
Acquisition Corporation and Robert W. Eager,
Jr.
5 Stockholders Agreement, dated as of July
1, 1996, by and among General Re Corporation, N
Acquisition Corporation and Peter A. Cheney.
6 Stockholders Agreement, dated as of July
1, 1996, by and among General Re Corporation, N
Acquisition Corporation and William D. Warren.
7 Stockholders Agreement, dated as of July
1, 1996, by and among General Re Corpora-
tion, N Acquisition Corporation and Timo-
thy T. McCaffrey.
8 Joint Filing Agreement.
AGREEMENT AND PLAN OF MERGER
by and among
GENERAL RE CORPORATION,
N ACQUISITION CORPORATION
and
NATIONAL RE CORPORATION
dated as of
July 1, 1996
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER . . . . . . . . . . . 2
Section 1.1 The Merger. . . . . . . . . . . . . . . . . . 2
Section 1.2 Effective Time . . . . . . . . . . . . . . . 2
Section 1.3 Closing . . . . . . . . . . . . . . . . . . . 3
Section 1.4 Directors and Officers of the Surviving
Corporation . . . . . . . . . . . . . . . . 3
Section 1.5 Stockholders' Meeting . . . . . . . . . . . . 3
ARTICLE II
CONVERSION OF SHARES; ELECTION PROCEDURES . . . . 4
Section 2.1 Conversion of Shares . . . . . . . . . . . . 4
Section 2.2 Election Procedure . . . . . . . . . . . . . 5
Section 2.3 Issuance of Parent Common Stock and Payment of
Cash Consideration; Proration . . . . . . . . 7
Section 2.4 Issuance of Parent Common Stock . . . . . . . 10
Section 2.5 Payment of Cash Consideration . . . . . . . . 10
Section 2.6 Treatment of Company Stock Options . . . . . 11
Section 2.7 Stock Transfer Books . . . . . . . . . . . . 12
Section 2.8 Shares of Dissenting Stockholders . . . . . . 12
Section 2.9 Tax Opinion Adjustment. . . . . . . . . . . . 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . 14
Section 3.1 Organization . . . . . . . . . . . . . . . . 14
Section 3.2 Capitalization . . . . . . . . . . . . . . . 15
Section 3.3 Corporate Authorization; Validity of
Agreement; Company Action . . . . . . . . . . 16
Section 3.4 Consents and Approvals; No Violations . . . . 17
Section 3.5 SEC Reports and Financial Statements . . . . 18
Section 3.6 Absence of Certain Changes . . . . . . . . . 20
Section 3.7 No Undisclosed Liabilities . . . . . . . . . 20
Section 3.8 Information in Proxy Statement/Prospectus. . 21
Section 3.9 Employee Benefit Plans; ERISA . . . . . . . . 21
Section 3.10 Litigation; Compliance with Law . . . . . . . 24
Section 3.11 No Default. . . . . . . . . . . . . . . . . . 24
Section 3.12 Taxes . . . . . . . . . . . . . . . . . . . . 24
Section 3.13 Contracts . . . . . . . . . . . . . . . . . . 26
Section 3.14 Transactions with Affiliates. . . . . . . . 26
Section 3.15 Opinion of Financial Advisor . . . . . . . . 26
Section 3.16 Lincoln National Contract . . . . . . . . . . 26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB . . 27
Section 4.1 Organization . . . . . . . . . . . . . . . . 27
Section 4.2 Capitalization . . . . . . . . . . . . . . . 27
Section 4.3 Corporate Authorization; Validity of
Agreement; Necessary Action . . . . . . . . . 28
Section 4.4 Consents and Approvals; No Violations . . . . 28
Section 4.5 SEC Reports and Financial Statements . . . . 29
Section 4.6 Absence of Certain Changes . . . . . . . . . 30
Section 4.7 No Undisclosed Liabilities. . . . . . . . . . 30
Section 4.8 Information in Proxy Statement/Prospectus. . 31
Section 4.9 Litigation; Compliance with Law . . . . . . . 31
Section 4.10 Taxes . . . . . . . . . . . . . . . . . . . . 32
Section 4.11 Financing. . . . . . . . . . . . . . . . . . 32
Section 4.12 Opinion of Financial Advisor. . . . . . . . . 32
ARTICLE V
COVENANTS . . . . . . . . . . . . 33
Section 5.1 Interim Operations of the Company . . . . . . 33
Section 5.2 Interim Operations of Parent . . . . . . . . 36
Section 5.3 Access to Information . . . . . . . . . . . . 37
Section 5.4 Consents and Approvals . . . . . . . . . . . 37
Section 5.5 Employee Matters . . . . . . . . . . . . . . 38
Section 5.6 No Solicitation . . . . . . . . . . . . . . . 39
Section 5.7 Additional Agreements . . . . . . . . . . . . 41
Section 5.8 Publicity . . . . . . . . . . . . . . . . . . 41
Section 5.9 Notification of Certain Matters . . . . . . . 41
Section 5.10 Directors' and Officers' Insurance and Indem-
nification . . . . . . . . . . . . . . . . . 42
Section 5.11 Rule 145 Affiliates . . . . . . . . . . . . . 43
Section 5.12 Proxy Statement/Prospectus . . . . . . . . . 43
Section 5.13 Tax-Free Reorganization . . . . . . . . . . . 44
Section 5.14 Existing Stockholder Agreements and Registra-
tion Rights Agreement . . . . . . . . . . . . 44
ARTICLE VI
CONDITIONS . . . . . . . . . . . 45
Section 6.1 Conditions to the Obligations of Each Party . 45
Section 6.2 Conditions to the Obligations of Parent and
Sub . . . . . . . . . . . . . . . . . . . . . 46
Section 6.3 Conditions to the Obligations of the Company. 46
ARTICLE VII
TERMINATION . . . . . . . . . . . 48
Section 7.1 Termination . . . . . . . . . . . . . . . . . 48
Section 7.2 Effect of Termination . . . . . . . . . . . . 50
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . 51
Section 8.1 Fees and Expenses . . . . . . . . . . . . . . 51
Section 8.2 Finders' Fees . . . . . . . . . . . . . . . . 51
Section 8.3 Amendment and Modification. . . . . . . . . . 52
Section 8.4 Nonsurvival of Representations and Warranties 52
Section 8.5 Notices . . . . . . . . . . . . . . . . . . . 52
Section 8.6 Interpretation . . . . . . . . . . . . . . . 53
Section 8.7 Counterparts . . . . . . . . . . . . . . . . 54
Section 8.8 Entire Agreement; No Third Party Beneficia-
ries; Rights of Ownership . . . . . . . . . . 54
Section 8.9 Severability . . . . . . . . . . . . . . . . 54
Section 8.10 Specific Performance. . . . . . . . . . . . . 54
Section 8.11 Governing Law. . . . . . . . . . . . . . . . 54
Section 8.12 Assignment . . . . . . . . . . . . . . . . . 54
Exhibit A Form of Tax Representation Letter of Company
Exhibit B Form of Tax Representation Letter of Parent
Exhibit C Form of Affiliate Agreement
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July
1, 1996, by and among General Re Corporation, a Delaware
corporation ("Parent"), N Acquisition Corporation, a
Delaware corporation and wholly-owned subsidiary of
Parent ("Sub"), and National Re Corporation, a Delaware
corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Sub
and the Company have approved, and deem it advisable and
in the best interests of their respective stockholders to
consummate, the acquisition of the Company by Parent upon
the terms and subject to the conditions set forth herein;
WHEREAS, as a condition and inducement to
Parent's and Sub's entering into this Agreement and
incurring the obligations set forth herein, concurrently
with the execution and delivery of this Agreement, Parent
and Sub are entering into Stockholder Agreements (collec-
tively, the "Stockholder Agreements") with Keystone Inc.,
Acadia Partners, L.P., William D. Warren, Peter A.
Cheney, Robert W. Eager, Jr., and Timothy T. McCaffrey
(collectively, the "Stockholders"), pursuant to which,
among other things, such stockholders have agreed to vote
the shares of common stock, with no par value, of the
Company (the "Company Common Stock" or "Shares") then
owned by such stockholders in favor of the Merger (as
herein defined) provided for herein;
WHEREAS, the Board of Directors of the Company
has approved the transactions contemplated by this Agree-
ment and the Stockholder Agreements in accordance with
the provisions of Section 203 of the Delaware General
Corporation Law (the "DGCL") and has resolved to recom-
mend the approval of the Merger by the holders of shares
of Company Common Stock; and
WHEREAS, for United States federal income tax
purposes, it is intended that the Merger provided for
herein shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the forego-
ing and the respective representations, warranties,
covenants and agreements set forth herein and in the
Stockholder Agreements, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. (a) Subject to the
terms and conditions of this Agreement and in accordance
with the DGCL, at the Effective Time (as herein defined),
the Company and Sub shall consummate a merger (the "Merg-
er") pursuant to which (i) the Company shall be merged
with and into Sub and the separate corporate existence of
the Company shall thereupon cease, and (ii) Sub shall be
the surviving corporation (the "Surviving Corporation")
in the Merger and shall continue to be governed by the
laws of the State of Delaware. Pursuant to the Merger,
(x) the Certificate of Incorporation of Sub, as in effect
immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law and such
Certificate of Incorporation, and (y) the By-laws of Sub,
as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such By-
laws. The Merger shall have the effects set forth in the
DGCL.
Section 1.2 Effective Time. Parent, Sub and
the Company will cause a Certificate of Merger (the
"Certificate of Merger") with respect to the Merger to be
executed and filed on the date of the Closing (as defined
in Section 1.3) (or on such other date as Parent and the
Company may agree) with the Secretary of State of the
State of Delaware as provided in the DGCL. The Merger
shall become effective on the date on which the Certifi-
cate of Merger has been duly filed with the Secretary of
State of the State of Delaware or such time as is agreed
upon by the parties and specified in the Certificate of
Merger, and such time is hereinafter referred to as the
"Effective Time".
Section 1.3 Closing. The closing of the
Merger (the "Closing") will take place at 10:00 a.m., New
York City time, on a date to be specified by the parties,
which shall be no later than two New York Stock Exchange
("NYSE") trading days after satisfaction or waiver of all
of the conditions set forth in Article VI hereof (the
"Closing Date"), at the offices of Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York,
unless another time, date or place is agreed to in writ-
ing by the parties hereto.
Section 1.4 Directors and Officers of the
Surviving Corporation. The directors and officers of Sub
at the Effective Time shall, from and after the Effective
Time, be the initial directors and officers, respective-
ly, of the Surviving Corporation until their successors
shall have been duly elected or appointed or qualified or
until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate
of Incorporation and By-laws.
Section 1.5 Stockholders' Meeting. In order
to consummate the Merger, the Company, acting through its
Board of Directors, shall, in accordance with applicable
law duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Company Special Meet-
ing"), as soon as practicable after the Registration
Statement on Form S-4 (together with all amendments,
schedules, and exhibits thereto) to be filed by Parent in
connection with the registration of the shares of common
stock, $.50 par value, of Parent ("Parent Common Stock")
and the associated Preferred Stock Purchase Rights of
Parent (the "Parent Rights") to be issued by Parent in
the Merger (the "Registration Statement") is declared
effective, for the purpose of considering and taking
action upon this Agreement. (Unless the context other-
wise requires, all references in this Agreement to Parent
Common Stock shall include the corresponding Parent
Rights.) The Company shall include in the joint proxy
statement/prospectus forming a part of the Registration
Statement (the "Proxy Statement/Prospectus") the recom-
mendation of the Board of Directors of the Company that
stockholders of the Company vote in favor of the approval
of the Merger and the adoption of this Agreement; provid-
ed that the Company may withdraw, modify or change such
recommendation only to the extent that the Board of
Directors of the Company determines, after having re-
ceived the advice of outside legal counsel to the Company
and the advice of the Company's financial advisor, that
the failure to withdraw, modify or change such recommen-
dation is reasonably likely to result in a breach of the
Board of Directors' fiduciary duties under applicable
law.
ARTICLE II
CONVERSION OF SHARES; ELECTION PROCEDURES
Section 2.1 Conversion of Shares. (a) Each
share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than
Shares to be cancelled pursuant to Section 2.1(c) hereof
and Dissenting Shares (as herein defined)) shall, at the
Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, be converted
into the right to receive, at the election of the holder
as provided in and subject to the limitations set forth
in this Article II, either (A) a fraction (the "Conver-
sion Fraction") of a validly issued, fully paid and
nonassessable share of Parent Common Stock, determined by
dividing $53 by the average (without rounding) of the
closing prices per share of Parent Common Stock on the
NYSE as reported on the NYSE Composite Tape for the ten
(10) consecutive NYSE trading days ending on the second
NYSE trading day immediately preceding the Closing Date
(the "Average Parent Share Price") and rounding the
result to the nearest one one-hundred thousandth of a
share; provided, that Parent shall issue not more than
.39259 nor less than .32121 shares of Parent Common Stock
per Share (the "Stock Consideration") or (B) $53 in cash,
without any interest thereon (the "Cash Consideration").
(b) Each share of Common Stock, par value
$.01 per share, of Sub issued and outstanding immediately
prior to the Effective Time shall, at the Effective Time,
by virtue of the Merger and without any action on the
part of Parent, be converted into one fully paid and
nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
(c) All shares of Company Common Stock
that are owned by the Company as treasury stock and any
shares of Company Common Stock owned by Parent, Sub or
any other direct or indirect wholly owned Subsidiary (as
defined in Section 3.1 hereof) of Parent shall, at the
Effective Time, be cancelled and retired and shall cease
to exist and no Parent Common Stock or cash consideration
shall be delivered in exchange therefor.
(d) On and after the Effective Time,
holders of certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Cer-
tificates") shall cease to have any rights as stockhold-
ers of the Company, except the right to receive the
consideration set forth in this Article II (the "Merger
Consideration") for each Share held by them.
Section 2.2 Election Procedure. Each holder
of Shares (other than holders of Shares to be cancelled
as set forth in Section 2.1(c) and Dissenting Shares)
shall have the right, subject to the limitations set
forth in this Article II, to submit a request specifying
the number of Shares that such holder desires to have
converted into the Stock Consideration in the Merger and
the number of Shares that such holder desires to have
converted into the Cash Consideration in the Merger in
accordance with the following procedures:
(a) Each holder of Shares may specify in
a request made in accordance with the provisions of this
Section 2.2 (herein called an "Election") (i) the number
of Shares owned by such holder that such holder desires
to have converted into the right to receive the Stock
Consideration in the Merger (a "Stock Election") and (ii)
the number of Shares owned by such holder that such
holder desires to have converted into the right to re-
ceive the Cash Consideration in the Merger (a "Cash
Election").
(b) Parent shall prepare a form reason-
ably acceptable to the Company (the "Form of Election")
which shall be mailed to the Company's stockholders
entitled to vote at the Company Special Meeting so as to
permit the Company's stockholders to exercise their right
to make an Election prior to the Election Deadline (as
defined in Section 2.2(d)).
(c) Parent shall use all reasonable
efforts to make the Form of Election initially available
to all stockholders of the Company at least twenty busi-
ness days prior to the Election Deadline and shall use
all reasonable efforts to make available on a prompt
basis a Form of Election to any stockholder of the Compa-
ny who requests such Form following the initial mailing
of the Forms of Election and prior to the Election Dead-
line.
(d) Any Election shall have been made
properly only if the person authorized to receive Elec-
tions and to act as exchange agent under this Agreement,
which person shall be designated by Parent and shall be
reasonably satisfactory to the Company (the "Exchange
Agent"), shall have received, by 5:00 p.m. local time in
the city in which the principal office of such Exchange
Agent is located, on the date of the Election Deadline, a
Form of Election properly completed and signed and accom-
panied by certificates for the Shares to which such Form
of Election relates (or by an appropriate guarantee of
delivery of such certificates, as set forth in such Form
of Election, from a member of any registered national
securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust
company in the United States provided such certificates
are in fact delivered to the Exchange Agent by the time
required in such guarantee of delivery). Failure to
deliver Shares covered by such a guarantee of delivery
within the time set forth on such guarantee shall be
deemed to invalidate any otherwise properly made Elec-
tion. As used herein, "Election Deadline" means the date
mutually agreed to by Parent and Company, in a news
release delivered to the Dow Jones News Service, as the
last day on which Forms of Election will be accepted;
provided, that such date shall be a business day no
earlier than twenty business days prior to the Effective
Time and no later than the date on which the Effective
Time occurs and shall be at least ten business days
following the date of such news release and, unless the
Company and Parent otherwise agree, shall not precede the
date of the Company Special Meeting; provided, further,
that Parent shall have the right to set a later date of,
or to extend, the Election Deadline so long as such later
date is no later than the date on which the Effective
Time occurs.
(e) Any Company stockholder may at any
time prior to the Election Deadline change his or her
Election by written notice received by the Exchange Agent
prior to the Election Deadline accompanied by a properly
completed and signed, revised Form of Election.
(f) Any Company stockholder may, at any
time prior to the Election Deadline, revoke his or her
Election by written notice received by the Exchange Agent
prior to the Election Deadline or by withdrawal prior to
the Election Deadline of his or her certificates for
Shares, or of the guarantee of delivery of such certifi-
cates, previously deposited with the Exchange Agent. All
Elections shall be revoked automatically if the Exchange
Agent is notified in writing by Parent or the Company
that this Agreement has been terminated. Any Company
stockholder who shall have deposited certificates for
Shares with the Exchange Agent shall have the right to
withdraw such certificates by written notice received by
the Exchange Agent and thereby revoke his Election as of
the Election Deadline if the Merger shall not have been
consummated prior thereto.
(g) Parent shall have the right to make
rules, not inconsistent with the terms of this Agreement,
governing the validity of the Forms of Election, the
manner and extent to which Elections are to be taken into
account in making the determinations prescribed by Sec-
tion 2.3, the issuance and delivery of certificates for
Parent Common Stock into which Shares are converted in
the Merger and the payment of cash for Shares converted
into the right to receive the Cash Consideration in the
Merger.
Section 2.3 Issuance of Parent Common Stock
and Payment of Cash Consideration; Proration. The manner
in which each Share (other than Shares to be cancelled as
set forth in Section 2.1(c) and Dissenting Shares) shall
be converted into the right to receive either the Stock
Consideration or the Cash Consideration on the Effective
Date shall be as set forth in this Section 2.3. All
references to "outstanding" Shares in this Section 2.3
shall mean (i) all Shares outstanding immediately prior
to the Effective Time minus (ii) Shares owned by Parent
or by any direct or indirect wholly-owned subsidiary of
Parent.
(a) In the event that, between the date
of this Agreement and the Effective Time, the issued and
outstanding shares of Parent Common Stock shall have been
affected or changed into a different number of shares or
a different class of shares as a result of a stock split,
reverse stock split, stock dividend, spin-off, extraordi-
nary dividend, recapitalization, reclassification or
other similar transaction with a record date within such
period, the Conversion Fraction shall be appropriately
adjusted.
(b) As is more fully set forth below, the
Total Cash Consideration in the Merger pursuant to this
Agreement shall not be more than 50% of the value of all
outstanding Shares. "Total Cash Consideration" shall
mean the sum of (1) the fair market value of Shares to be
converted into the right to receive the Cash Consider-
ation, (2) cash paid in lieu of fractional Shares, and
(3) cash paid for Dissenting Shares. For these purposes,
cash paid for Dissenting Shares shall be computed as if
holders of Dissenting Shares had made the Cash Election.
(c) Each Share for which a Stock Election
has been received and each Share as to which an Election
is not in effect at the Election Deadline (a "Non-Elect-
ing Share") shall be converted into the right to receive
the Stock Consideration in the Merger.
(d) If the Total Cash Consideration is
50% or less of the value of the outstanding Shares, each
Share covered by a Cash Election shall be converted in
the Merger into the right to receive the Cash Consider-
ation.
(e) If the Total Cash Consideration is
more than 50% of the value of the outstanding Shares, the
Shares for which Cash Elections have been received shall
be converted into the right to receive the Cash Consider-
ation and the Stock Consideration in the following man-
ner:
(1) The Exchange Agent will distrib-
ute with respect to Shares as to
which a Cash Election has been made
the Cash Consideration with respect
to a fraction of such Shares, the
numerator of which fraction shall be
50% of the value (based on the clos-
ing price of the Shares on the last
full trading day prior to the Effec-
tive Time) of the outstanding Shares
and the denominator of which shall be
the sum of (A) the value (based on
the closing price of the Shares on
the last full trading day prior to
the Effective Time) of the aggregate
number of Shares covered by Cash
Elections, (B) cash to be paid in
lieu of fractional Shares and (C)
cash to be paid for Dissenting Shares
(computed as if holders of Dissenting
Shares had made the Cash Election)
and
(2) Shares covered by a Cash Elec-
tion and not fully converted into the
right to receive the Cash Consider-
ation as set forth in clause (1)
above shall be converted in the Merg-
er into the right to receive the
Stock Consideration.
(f) If Parent and the Company shall
determine that any Election is not properly made with
respect to any Shares, such Election shall be deemed to
be not in effect, and the Shares covered by such Election
shall, for purposes hereof, be deemed to be Non-Electing
Shares.
(g) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates, no
dividend or distribution with respect to shares shall be
payable on or with respect to any fractional share and
such fractional share interests shall not entitle the
owner thereof to vote or to any other rights of a stock-
holder of Parent. In lieu of any such fractional share
of Parent Common Stock, Parent shall pay to each former
stockholder of the Company who otherwise would be enti-
tled to receive a fractional share of Parent Common Stock
an amount in cash determined by multiplying (i) the
Average Parent Share Price but not more than $165.00 nor
less than $135.00 by (ii) the fractional interest in a
share of Parent Common Stock to which such holder would
otherwise be entitled.
Section 2.4 Issuance of Parent Common Stock.
Immediately following the Effective Time, Parent shall
deliver, in trust, to the Exchange Agent, for the benefit
of the holders of Shares, certificates representing an
aggregate number of shares of Parent Common Stock as
nearly as practicable equal to the product of the Conver-
sion Fraction and the number of Shares to be converted
into Parent Common Stock as determined in Section 2.3.
As soon as practicable after the Effective Time, each
holder of Shares converted into Parent Common Stock in
the Merger, upon surrender to the Exchange Agent (to the
extent not previously surrendered with a Form of Elec-
tion) of one or more certificates for such Shares for
cancellation, shall be entitled to receive certificates
representing the number of shares of Parent Common Stock
into which such Shares shall have been converted in the
Merger. No dividends or distributions that have been
declared will be paid to persons entitled to receive
certificates for shares of Parent Common Stock until such
persons surrender their certificates for Shares, at which
time all such dividends shall be paid. In no event shall
the persons entitled to receive such dividends be enti-
tled to receive interest on such dividends. If any
certificate for such Parent Common Stock is to be issued
in a name other than that in which the certificate for
Shares surrendered in exchange therefor is registered, it
shall be a condition of such exchange that the person
requesting such exchange shall pay to the Exchange Agent
any transfer or other Taxes (as herein defined) required
by reason of issuance of certificates for such Parent
Common Stock in a name other than the registered holder
of the certificate surrendered, or shall establish to the
reasonable satisfaction of the Exchange Agent that such
Tax has been paid or is not applicable. Notwithstanding
the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Shares for any
Parent Common Stock or dividends thereon delivered to a
public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 2.5 Payment of Cash Consideration. At
the Closing, Parent shall deposit in trust with the
Exchange Agent, for the benefit of the holders of Shares,
an amount in cash equal to the Cash Consideration multi-
plied by the number of Shares to be converted into the
right to receive the Cash Consideration as determined in
Section 2.3. As soon as practicable after the Effective
Time, the Exchange Agent shall distribute to holders of
Shares converted into the right to receive the Cash
Consideration, upon surrender to the Exchange Agent (to
the extent not previously surrendered with a Form of
Election) of one or more certificates for such Shares for
cancellation, a bank check for an amount equal to the
Cash Consideration times the number of Shares so convert-
ed. In no event shall the holder of any such surrendered
certificates be entitled to receive interest on any of
the Cash Consideration to be received in the Merger. If
such check is to be issued in the name of a person other
than the person in whose name the certificates for the
Shares surrendered for exchange therefor are registered,
it shall be a condition of the exchange that the person
requesting such exchange shall pay to the Exchange Agent
any transfer or other Taxes required by reason of issu-
ance of such check to a person other than the registered
holder of the certificates surrendered, or shall estab-
lish to the reasonable satisfaction of the Exchange Agent
that such Tax has been paid or is not applicable. Not-
withstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to a holder of
Shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar
law.
Section 2.6 Treatment of Company Stock Op-
tions. (a) Each option granted to a Company employee to
acquire shares of Company Common Stock ("Company Stock
Option") that is outstanding on the Effective Time,
whether or not then vested or exercisable, shall, effec-
tive as of the Effective Time, become and represent an
option for the number of shares of Parent Common Stock (a
"Substitute Option"), rounded up to the nearest whole
share, determined by multiplying (i) the number of shares
of Company Common Stock subject to such Company Stock
Option immediately prior to the Effective Time by (ii)
the Conversion Fraction at an exercise price per share of
Parent Common Stock (decreased to the nearest whole cent)
equal to the exercise price per share of such Company
Stock Option divided by the Conversion Fraction; provid-
ed, however, that in the case of any Company Stock Option
to which Section 421 of the Code applies by reason of its
qualification as an incentive stock option under Section
422 of the Code, the conversion formula shall be adjusted
if necessary to comply with Section 424(a) of the Code.
After the Effective Time, except as provided above in
this Section 2.6, each Substitute Option shall be exer-
cisable upon the same terms and conditions as were appli-
cable to the related Company Stock Option immediately
prior to the Effective Time. Notwithstanding the forego-
ing provisions of this Section 2.6(a) or any other provi-
sion of this Agreement, the Company and the holder of any
Company Stock Option may amend such Company Stock Option
so that the holder of such Company Stock Option (if it is
outstanding at the Effective Time) may elect to receive,
in settlement thereof, an amount in cash equal to the
excess of $53 over the exercise price of such Company
Stock Option multiplied by the number of Shares subject
to such Company Stock Option.
(b) Prior to the Effective Time, the
Company shall use all reasonable efforts to (i) obtain
any consents from holders of Company Stock Options and
(ii) amend the terms of its equity incentive plans or
arrangements, in each case as is necessary to give effect
to the provisions of paragraph (a) of this Section 2.6.
(c) Prior to the Effective Time, Parent
shall (i) file with the Securities and Exchange Commis-
sion ("SEC") a registration statement on Form S-8 or
another appropriate form for the registration of shares
of Parent Common Stock issuable pursuant to all Substi-
tute Options and (ii) amend the terms of its equity
incentive plans or arrangements, in each case as is
necessary to give effect to the provisions of paragraph
(a) of this Section 2.6.
Section 2.7 Stock Transfer Books. At the
Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registra-
tion of transfers of Shares on the records of the Compa-
ny. If, after the Effective Time, certificates repre-
senting Shares are presented to the Surviving Corpora-
tion, they shall be cancelled and exchanged for cash
and/or certificates representing Parent Common Stock
pursuant to this Article II.
Section 2.8 Shares of Dissenting Stockholders.
Notwithstanding anything in this Agreement to the con-
trary, any shares of Company Common Stock that are issued
and outstanding as of the Effective Time and that are
held by a stockholder who has properly exercised his
appraisal rights (the "Dissenting Shares") under the DGCL
shall not be converted into the right to receive the
Merger Consideration unless and until the holder shall
have failed to perfect, or shall have effectively with-
drawn or lost, his right to dissent from the Merger under
the DGCL and to receive such consideration as may be
determined to be due with respect to such Dissenting
Shares pursuant to and subject to the requirements of the
DGCL. If any such holder shall have so failed to perfect
or have effectively withdrawn or lost such right, each
share of such holder's Company Common Stock shall there-
upon be deemed to have been converted into and to have
become, as of the Effective Time, the right to receive,
without any interest thereon, the Stock Consideration or
the Cash Consideration or a combination thereof as deter-
mined by Parent in its sole discretion. The Company
shall give Parent (i) prompt notice of any notice or
demands for appraisal or payment for shares of Company
Common Stock received by the Company and (ii) the oppor-
tunity to participate in and direct all negotiations and
proceedings with respect to any such demands or notices.
The Company shall not, without the prior written consent
of Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
Section 2.9 Tax Opinion Adjustment. Subject
to the limitation of, and the proviso of Section 2.1(a),
if either (i) the tax opinion referred to in Section
6.3(e) cannot be rendered (as reasonably determined by
nationally recognized tax counsel to the Company) or (ii)
the tax opinion of nationally recognized tax counsel to
Parent referred to Section 6.2(d) cannot be rendered (as
reasonably determined by nationally recognized tax coun-
sel to Parent), in either case as a result of the Merger
potentially failing to satisfy continuity of interest
requirements under applicable federal income tax princi-
ples relating to reorganizations under Section 368(a) of
the Code, then Parent shall reduce the Cash Consideration
to the minimum extent necessary to enable the relevant
tax opinion or opinions, as the case may be, to be ren-
dered, and correspondingly increase the Stock Consider-
ation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent
and Sub as follows:
Section 3.1 Organization. Each of the Company
and its Subsidiaries is a corporation, partnership or
other entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incor-
poration or organization, and has all requisite corporate
or other power and authority and all necessary governmen-
tal approvals to own, lease and operate its properties
and to carry on its business as now being conducted,
except where the failure to be so organized, existing and
in good standing or to have such power, authority and
governmental approvals would not have a material adverse
effect (as defined below) on the Company and its Subsid-
iaries taken as a whole. Each of the Company and its
Subsidiaries is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of
the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would
not, in the aggregate, have a material adverse effect on
the Company and its Subsidiaries taken as a whole. As
used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organiza-
tion, whether incorporated or unincorporated, of which
(i) such party or any other Subsidiary of such party is a
general partner (excluding such partnerships where such
party or any Subsidiary of such party do not have a
majority of the voting interest in such partnership) or
(ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others
performing similar functions with respect to such corpo-
ration or other organization is directly or indirectly
owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and one or more of
its Subsidiaries. As used in this Agreement, any refer-
ence to any event, change or effect having a material
adverse effect on or with respect to any entity (or group
of entities taken as a whole) means such event, change or
effect, in the aggregate with such other events, changes,
or effects, which is materially adverse to the financial
condition, business or results of operations of such
entity. Section 3.1 of the Disclosure Schedule delivered
by the Company to Parent on or prior to the date hereof
(the "Disclosure Schedule") sets forth a complete list of
the Company's Subsidiaries.
Section 3.2 Capitalization. (a) The autho-
rized capital stock of the Company consists of 41,000,000
shares consisting of 40,000,000 shares of Company Common
Stock and 1,000,000 shares of Preferred Stock, $.01 par
value (the "Preferred Stock"). (i) As of June 28, 1996,
16,616,894 shares of Company Common Stock are issued and
outstanding and 599,400 shares of Company Common Stock
are held in the treasury of the Company, (ii) as of the
date hereof, no Shares of Preferred Stock are issued and
outstanding, and (iii) as of the date hereof, options to
acquire an aggregate of 1,143,000 shares of Company
Common Stock have been issued pursuant to Company Stock
Options. All the outstanding shares of the Company's
capital stock are duly authorized, validly issued, fully
paid and non-assessable. There are no bonds, debentures,
notes or other indebtedness having voting rights (or
convertible into securities having such rights) ("Voting
Debt") of the Company or any of its Subsidiaries issued
and outstanding. Except as set forth above, as set forth
on Section 3.2 of the Disclosure Schedule, and for the
transactions contemplated by this Agreement, (i) there
are no shares of capital stock of the Company authorized,
issued or outstanding and (ii) there are no existing
options, warrants, calls, pre-emptive rights, subscrip-
tions or other rights, convertible securities, agree-
ments, arrangements or commitments of any character,
relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries, obligating the Compa-
ny or any of its Subsidiaries to issue, transfer or sell
or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest
in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or
equity interests or obligations of the Company or any of
its Subsidiaries to grant, extend or enter into any such
option, warrant, call, subscription or other right,
convertible security, agreement, arrangement or commit-
ment. Except as set forth in Section 3.2 of the Disclo-
sure Schedule, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Shares or the
capital stock of the Company or any Subsidiary or affili-
ate of the Company or to provide funds to make any in-
vestment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary or any other entity. Except
as set forth in Section 3.2 of the Disclosure Schedule,
and as permitted by this Agreement, following the Merger,
neither the Company nor any of its Subsidiaries will have
any obligation to issue, transfer or sell any shares of
its capital stock other than pursuant to employee benefit
plans.
(b) All of the outstanding shares of
capital stock of each of the Subsidiaries are beneficial-
ly owned by the Company, directly or indirectly, and all
such shares have been validly issued and are fully paid
and nonassessable and are owned by either the Company or
one of its Subsidiaries free and clear of all liens,
charges, security interests, options, claims or encum-
brances of any nature whatsoever.
(c) Except as set forth in Section 3.2(c)
of the Disclosure Schedule, there are no voting trusts or
other agreements or understandings to which the Company
or any of its Subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the
Subsidiaries. None of the Company or its Subsidiaries is
required to redeem, repurchase or otherwise acquire
shares of capital stock of the Company, or any of its
Subsidiaries, respectively, as a result of the transac-
tions contemplated by this Agreement.
(d) At the Effective Time, the number of
shares of Company Common Stock outstanding shall not
exceed 17,859,894.
Section 3.3 Corporate Authorization; Validity
of Agreement; Company Action. (a) The Company has full
corporate power and authority to execute and deliver this
Agreement and, subject to obtaining any necessary approv-
al of its stockholders as contemplated by Section 1.5
hereof with respect to the Merger, to consummate the
transactions contemplated hereby. The execution, deliv-
ery and performance by the Company of this Agreement, and
the consummation by it of the transactions contemplated
hereby, have been duly and validly authorized by its
Board of Directors and, except for obtaining the approval
of its stockholders as contemplated by Section 1.5 hereof
with respect to the Merger, no other corporate action or
proceedings on the part of the Company is necessary to
authorize the execution and delivery by the Company of
this Agreement, and the consummation by it of the trans-
actions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding obligation
of Parent and Sub, constitutes a valid and binding obli-
gation of the Company enforceable against the Company in
accordance with its terms, except that (i) such enforce-
ment may be subject to applicable bankruptcy, insolvency
or other similar laws, now or hereafter in effect, af-
fecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceed-
ing therefor may be brought.
(b) The Board of Directors of the Company
has duly and validly approved and taken all corporate
action required to be taken by the Board of Directors for
the consummation of the transactions contemplated by this
Agreement and the Stockholder Agreements, including, but
not limited to, all actions necessary to render the
provisions of Section 203 of the DGCL inapplicable to
this Agreement and the Stockholder Agreements. The
affirmative vote of the holders of a majority of the
Shares is the only vote of the holders of any class or
series of Company capital stock necessary to approve the
Merger.
Section 3.4 Consents and Approvals; No
Violations. Except as set forth in Section 3.4 of the
Disclosure Schedule and for all filings, permits, autho-
rizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange
Act (as defined herein), the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the
state securities or "blue sky" laws, state takeover laws,
state and foreign insurance regulatory laws and commis-
sions, and for the approval of this Agreement by the
Company's stockholders and the filing and recordation of
the Certificate of Merger as required by the DGCL, nei-
ther the execution, delivery or performance of this
Agreement nor the consummation by the Company of the
transactions contemplated hereby nor compliance by the
Company with any of the provisions hereof will (i) con-
flict with or result in any breach of any provision of
the Certificate of Incorporation or by-laws or similar
organizational documents of the Company or of any of its
Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any court, arbi-
tral tribunal, administrative agency or commission or
other governmental or other regulatory authority, commis-
sion or agency (a "Governmental Entity"), except where
the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not
have a material adverse effect on the Company and its
Subsidiaries taken as a whole and would not, or would not
be reasonably likely to, materially impair the ability of
the Company to consummate the Merger or the other trans-
actions contemplated hereby, (iii) result in a violation
or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any
right of termination, amendment, cancellation or acceler-
ation) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, guarantee, other
evidence of indebtedness (collectively, the "Debt Instru-
ments"), lease, license, contract, agreement or other
instrument or obligation to which the Company or any of
its Subsidiaries is a party or by which any of them or
any of their properties or assets may be bound (a "Compa-
ny Agreement") or (iv) violate any order, writ, injunc-
tion, decree, statute, rule or regulation applicable to
the Company, any of its Subsidiaries or any of their
properties or assets, except in the case of clauses (iii)
and (iv) for violations, breaches or defaults which would
not have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
Section 3.5 SEC Reports and Financial
Statements. (a) The Company has filed with the SEC and
has heretofore made available to Parent true and complete
copies of, all forms, reports, schedules, statements and
other documents required to be filed by it and its Sub-
sidiaries since January 1, 1994 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and
the Securities Act of 1933, as amended (the "Securities
Act") (as such documents have been amended since the time
of their filing, collectively, the "Company SEC Docu-
ments"). As of their respective dates or, if amended, as
of the date of the last such amendment, the Company SEC
Documents, including, without limitation, any financial
statements or schedules included therein (a) did not
contain any untrue statement of a material fact or omit
to state a 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 and (b) complied in all material respects
with the applicable requirements of the Exchange Act and
the Securities Act, as the case may be, and the applica-
ble rules and regulations of the SEC thereunder. Each of
the consolidated financial statements included in the
Company SEC Documents have been prepared from, and are in
accordance with, the books and records of the Company
and/or its consolidated Subsidiaries, comply in all
material respects with applicable accounting requirements
and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance
with United States generally accepted accounting princi-
ples ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the
consolidated financial position and the consolidated
results of operations and cash flows (and changes in
financial position, if any) of the Company and its con-
solidated Subsidiaries as at the dates thereof or for the
periods presented therein (subject, in the case of unau-
dited interim financial statements, to normal year end
adjustments).
(b) The Annual Statements and Quarterly
Statement of National Reinsurance Corporation, a wholly
owned subsidiary of the Company ("National Re"), as filed
with the departments of insurance for all applicable
domiciliary states for the years ended December 31, 1995
and December 31, 1994 (the "Annual Statutory Statements")
and the quarter ended March 31, 1996 (the "Quarterly
Statutory Statement"), respectively, together with all
exhibits and schedules thereto (all Annual Statutory
Statements and the Quarterly Statutory Statement, togeth-
er with all exhibits and schedules thereto, referred to
as the "Statutory Financial Statements"), have been
prepared in accordance with the accounting practices
prescribed or permitted by the departments of insurance
for all applicable domiciliary states for purposes of
financial reporting to the state's insurance regulators
("State Statutory Accounting Principles"), and such
accounting practices have been applied on a basis consis-
tent with State Statutory Accounting Principles through-
out the periods involved, except as expressly set forth
in the notes, exhibits or schedules thereto, and the
Statutory Financial Statements of National Re present
fairly in all material respects the financial position
and the results of operations for National Re and its
Subsidiaries as of the dates and for the periods therein
in accordance with State Statutory Accounting Principles.
The Company has heretofore made available to Parent true
and complete copies of the Statutory Financial State-
ments.
Section 3.6 Absence of Certain Changes.
Except as disclosed in the Company SEC Documents or as
set forth in Section 3.6 of the Disclosure Schedule,
since January 1, 1996, the Company and its Subsidiaries
have conducted their respective businesses and operations
in the ordinary course of business consistent with past
practice. Since March 31, 1996, there has not occurred
(i) any events, changes, or effects (including the
incurrence of any liabilities of any nature, whether or
not accrued, contingent or otherwise) having or, which
would be reasonably likely to have, in the aggregate, a
material adverse effect on the Company and its Subsidiar-
ies taken as a whole (other than changes in insurance
laws and regulations affecting the reinsurance industry
generally); (ii) any declaration, setting aside or pay-
ment of any dividend or other distribution (whether in
cash, stock or property) with respect to the equity
interests of the Company or of any of its Subsidiaries,
other than regular quarterly cash dividends or dividends
paid by wholly owned Subsidiaries; or (iii) any change by
the Company or any of its Subsidiaries in accounting
principles or methods, except insofar as may be required
by a change in GAAP. Since January 1, 1996, except as
set forth on Section 3.6 of the Disclosure Schedule, the
Company and its Subsidiaries have conducted their respec-
tive businesses in the ordinary course consistent with
past practice.
Section 3.7 No Undisclosed Liabilities.
Except (a) as disclosed in Section 3.6 of the Disclosure
Schedule, (b) to the extent disclosed in the Company SEC
Documents filed prior to the date of this Agreement and
(c) for liabilities and obligations incurred in the
ordinary course of business consistent with past prac-
tice, since March 31, 1996, neither the Company nor any
of its Subsidiaries has incurred any liabilities or
obligations of any nature, whether or not accrued, con-
tingent or otherwise, that have, or would be reasonably
likely to have, a material adverse effect on the Company
and its Subsidiaries. Section 3.7 of the Disclosure
Schedule sets forth each instrument evidencing indebted-
ness of the Company and its Subsidiaries (other than
insurance treaties entered into in the ordinary course of
the Company's business) which will accelerate or become
due or payable, or result in a right of redemption or
repurchase on the part of the holder of such indebted-
ness, or with respect to which any other payment or
amount will become due or payable, in any such case with
or without due notice or lapse of time, as a result of
this Agreement, the Merger or the other transactions
contemplated hereby.
Section 3.8 Information in Proxy State-
ment/Prospectus. The Proxy Statement/Prospectus (or any
amendment thereof or supplement thereto), at the date
mailed to the Company's stockholders and at the time of
the Company Special Meeting, will not contain any untrue
statement of a material fact or omit to state any materi-
al fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading,
provided, however, that no representation is made by the
Company with respect to statements made therein based on
information supplied by Parent or Sub for inclusion in
the Proxy Statement/Prospectus. None of the information
supplied by the Company for inclusion or incorporation by
reference in the Registration Statement will, at the date
it becomes effective and at the time of the Company
Special Meeting contain any untrue statement of a materi-
al fact or omit to state any material fact required to be
stated therein or necessary in order to make the state-
ments therein, in light of the circumstances under which
they are made, not misleading. Subject to the proviso
set forth in the second preceding sentence, the Proxy
Statement/Prospectus will comply in all material respects
with the provisions of the Exchange Act and the rules and
regulations thereunder.
Section 3.9 Employee Benefit Plans; ERISA. As
of the date of this Agreement: (a) there are no material
employee or director benefit plans, arrangements, prac-
tices, contracts or agreements (including, without limi-
tation, employment agreements, change of control employ-
ment agreements and severance agreements, incentive
compensation, bonus, stock option, stock appreciation
rights and stock purchase plans) of any type (including
but not limited to plans described in section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), maintained by the Company, any of its
Subsidiaries or any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with
the Company would be deemed a "controlled group" within
the meaning of section 4001(a)(14) of ERISA, or with
respect to which the Company or any of its Subsidiaries
has or may have a liability, other than those listed on
Section 3.9(a) of the Disclosure Schedule (the "Benefit
Plans"). Except as disclosed in Section 3.9(a) or 5.5(c)
of the Disclosure Schedule (or as otherwise permitted by
this Agreement) neither the Company nor any ERISA Affili-
ate has any formal plan or commitment, whether legally
binding or not, to create any additional Benefit Plan or
modify or change any existing Benefit Plan that would
affect any employee or terminated employee of the Company
or any ERISA Affiliate.
(b) Except as disclosed in Section 3.9(b)
of the Disclosure Schedule, with respect to any Benefit
Plan, there are no material amounts accrued but unpaid as
of the most recent balance sheet date that are not re-
flected on that balance sheet prepared in accordance with
GAAP.
(c) With respect to each Benefit Plan
except as disclosed on Schedule 3.9(c) of the Disclosure
Schedule: (i) if intended to qualify under section
401(a), 401(k) or 403(a) of the Code, such plan has
received, or an application is pending for, a determina-
tion letter from the Service that the Plan so qualifies,
and its trust is exempt from taxation under section
501(a) of the Code and the Company knows of no event that
would prevent such qualification; (ii) such plan has been
administered in all material respects in accordance with
its terms and applicable law; (iii) no breaches of fidu-
ciary duty have occurred; (iv) no material disputes are
pending, or, to the knowledge of the Company, threatened;
(v) no prohibited transaction (within the meaning of
section 406 of ERISA) has occurred; (vi) all contribu-
tions and premiums due (including any extensions for such
contributions and premiums) have been made in full; (vii)
no such Plan has incurred or will incur any "accumulated
funding deficiency," as such term is defined in Section
412 of the Code, whether or not waived; (viii) no such
Plan provides medical or death benefits with respect to
current or former employees of the Company or any of its
Subsidiaries beyond their termination of employment,
other than on an employee-pay-all basis; and (ix) no Plan
is a "multiemployer plan," as such term is defined in
section 3(37) of ERISA, or is covered by section 4063 or
4064 of ERISA.
(d) Except as disclosed on Schedule
3.9(d) of the Disclosure Schedule: (i) neither the
Company nor any ERISA Affiliate has incurred any material
liability under Title IV of ERISA since the effective
date of ERISA that has not been satisfied in full (in-
cluding sections 4063-4064 and 4069 of ERISA) and, to the
knowledge of the Company, no basis for any such liability
exists; (ii) neither the Company nor any ERISA Affiliate
maintains (or contributes to), or has maintained (or has
contributed to) within the last six years, any employee
benefit plan that is subject to Title IV of ERISA (other
than a Benefit Plan).
(e) Except as set forth in Section 3.9(e)
of the Disclosure Schedule, Section 5.5(c) of the Disclo-
sure Schedule or to the extent disclosed in the Company
SEC Documents, the consummation of the transactions
contemplated by this Agreement will not entitle any
individual to severance pay or accelerate the time of
payment or vesting, or increase the amount, of compensa-
tion or benefits due to any individual with respect to
any Benefit Plan. As a result of the transactions de-
scribed herein, either alone or together with another
event such as termination of employment, except as set
forth in Section 3.9(e) of the Disclosure Schedule, no
party will be required to make a "parachute payment" to a
"disqualified individual" within the meaning of Section
280G of the Code.
(f) The Company has delivered or made
available to Parent accurate and complete copies of all
plan texts, summary plan descriptions, trust agreements
and other related agreements including all amendments to
the foregoing; the two most recent annual reports; the
most recent annual and periodic accounting of plan as-
sets; the most recent determination letter received from
the United States Internal Revenue Service (the "Ser-
vice"); and the two most recent actuarial reports, to the
extent any of the foregoing may be applicable to a par-
ticular Benefit Plan.
Section 3.10 Litigation; Compliance with Law.
(a) Except to the extent disclosed in the
Company SEC Documents filed prior to the date of this
Agreement, there is no suit, claim, action, proceeding,
review or investigation pending or, to the knowledge of
the Company, threatened against or affecting, the Company
or any of its Subsidiaries which, individually or in the
aggregate, is reasonably likely to have a material ad-
verse effect on the Company and its Subsidiaries taken as
a whole, or would, or would be reasonably likely to,
materially impair the ability of the Company to consum-
mate the Merger or the other transactions contemplated
hereby.
(b) The Company and its Subsidiaries have
complied in all material respects with all laws, stat-
utes, regulations, rules, ordinances, and judgments,
decrees, orders, writs and injunctions, of any court or
Governmental Entity relating to any of the property
owned, leased or used by them, or applicable to their
business, including, but not limited to, equal employment
opportunity, discrimination, occupational safety and
health, environmental, insurance regulatory, antitrust
laws, ERISA and laws relating to Taxes (as defined in
Section 3.12).
Section 3.11 No Default. Except as disclosed
in the Company SEC Documents, the business of the Company
and each of its Subsidiaries is not being conducted in
default or violation of any term, condition or provision
of (a) its respective certificate of incorporation or by-
laws or similar organizational documents, or (b) any
Company Agreement, excluding from the foregoing clause
(b), defaults or violations that would not have a materi-
al adverse effect on the Company and its Subsidiaries
taken as a whole or would not, or would not be reasonably
likely to, materially impair the ability of the Company
to consummate the Merger or the other transactions con-
templated hereby.
Section 3.12 Taxes. Except as set forth in
Section 3.12 of the Disclosure Schedule:
(a) the Company and its Subsidiaries have
(I) duly filed (or there have been filed on their behalf)
with the appropriate governmental authorities all materi-
al Tax Returns (as hereinafter defined) required to be
filed by them and such Tax Returns are true, correct and
complete, and (II) duly paid in full or made provision in
accordance with GAAP (or there has been paid or provision
has been made on their behalf) for the payment of all
Taxes (as hereinafter defined) that are due and payable
for all periods ending through the date hereof;
(b) no material federal, state, local or
foreign audits or other administrative proceedings or
court proceedings are presently pending with regard to
any Taxes or Tax Returns of the Company or its Subsidiar-
ies;
(c) no governmental authority has assert-
ed in writing against the Company or any of its Subsid-
iaries any deficiency or claim for a material amount of
Taxes;
(d) there are no material liens for Taxes
upon any property or assets of the Company or any Subsid-
iary thereof, except for liens for Taxes not yet due and
payable and liens for Taxes that are being contested in
good faith;
(e) the United States federal income Tax
Returns of the Company and its Subsidiaries have been
examined by the Service (or the applicable statutes of
limitation for the assessment of federal income Taxes for
such periods have expired) for all periods through and
including 1990; and
(f) the Company is not aware of any
reason that would preclude it from executing an opinion
representation letter, substantially similar to the form
letter attached hereto as Exhibit A, as of the Effective
Time.
"Taxes" shall mean any and all taxes, charges, fees,
levies or other assessments, including, without limita-
tion, all net income, gross income, gross receipts,
excise, stamp, real or personal property, ad valorem,
sales, withholding, estimated, social security, unemploy-
ment, occupation, use, service, service use, license, net
worth, payroll, franchise, severance, transfer, recording
or other taxes, assessments or charges, imposed by any
governmental authority and any interest, penalties, or
additions to tax attributable thereto. "Tax Return"
shall mean any report, return, document, declaration,
information, return, or filing (including any related or
supporting information).
Section 3.13 Contracts. Each material Company
Agreement is valid, binding and enforceable and in full
force and effect, except where failure to be valid,
binding and enforceable and in full force and effect
would not have a material adverse effect on the Company
and its Subsidiaries taken as a whole, and there are no
defaults thereunder, except those defaults that would not
have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Neither the Company nor
any Subsidiary is a party to any agreement that expressly
and materially limits the ability of the Company or any
Subsidiary to compete in or conduct any line of business
or compete with any person or in any geographic area or
during any period of time.
Section 3.14 Transactions with Affiliates.
Except to the extent disclosed in the Company SEC Docu-
ments filed prior to the date of this Agreement, since
January 1, 1993 there have been no material transactions,
agreements, arrangements or understandings between the
Company or its Subsidiaries, on the one hand, and the
Company's affiliates (other than wholly-owned Subsidiar-
ies of the Company) or other Persons, on the other hand,
that would be required to be disclosed under Item 404 of
Regulation S-K under the Securities Act.
Section 3.15 Opinion of Financial Advisor. The
Company has received an opinion from Goldman, Sachs & Co.
("Goldman Sachs") to the effect that the consideration to
be received by the stockholders of the Company pursuant
to the Merger, is fair to such stockholders.
Section 3.16 Lincoln National Contract. The
Aggregate Excess of Loss Reinsurance Contract between
National Re and Lincoln National Health and Casualty
Insurance Company dated April 30, 1990, a true and com-
plete copy of which has been delivered to Parent, is in
full force and effect and will continue in effect follow-
ing the Effective Time, subject to the terms and condi-
tions of such agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the
Company as follows:
Section 4.1 Organization. Each of Parent and
its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of Delaware,
and has all requisite corporate or other power and au-
thority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its
business as now being conducted, except where the failure
to be so organized, existing and in good standing or to
have such power, authority and governmental approvals
would not have a material adverse effect on Parent and
its Subsidiaries. Parent and each of its Subsidiaries is
duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or
licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not
have a material adverse effect on Parent and its Subsid-
iaries taken as a whole. Sub has not heretofore conduct-
ed any business other than in connection with this Agree-
ment and the transactions contemplated hereby.
Section 4.2 Capitalization. The authorized
capital stock of Parent consists of 270,000,000 shares of
capital stock, consisting of 250,000,000 shares of Parent
Common Stock and 20,000,000 shares of preferred stock,
without par value (the "Parent Preferred Stock"). As of
June 30, 1996, (i) 78,740,961 shares of Parent Common
Stock are issued and outstanding, (ii) approximately
1,724,386 shares of Parent ESOP Convertible Preferred
Stock are issued and outstanding, (iii) 24,086,383 shares
of Parent Common Stock are issued and held in the trea-
sury of Parent, and (iv) not more than 8,000,000 shares
of Parent Common Stock are reserved for option and em-
ployee benefit plans of Parent. All of the outstanding
shares of Parent's capital stock are duly authorized,
validly issued, fully paid and non-assessable. There are
no bonds, debentures, notes or other indebtedness having
voting rights (or convertible into securities having such
rights) ("Parent Voting Debt") of Parent or any of its
Subsidiaries issued and outstanding.
Section 4.3 Corporate Authorization; Validity
of Agreement; Necessary Action. Each of Parent and Sub
has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and perfor-
mance by Parent and Sub of this Agreement and the consum-
mation by Parent and Sub of the transactions contemplated
hereby have been duly and validly authorized by their
respective Boards of Directors and no other corporate
action or proceedings on the part of Parent and Sub are
necessary to authorize the execution and delivery by
Parent and Sub of this Agreement, and the consummation by
Parent and Sub of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by
Parent and Sub, and, assuming this Agreement constitutes
a valid and binding obligation of the Company, consti-
tutes a valid and binding obligation of each of Parent
and Sub, enforceable against each of them in accordance
with their terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of
specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceed-
ing therefor may be brought. The shares of Parent Common
Stock to be issued pursuant to the Merger will be duly
authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights. No vote of the
stockholders of Parent is necessary for Sub to consummate
the Merger.
Section 4.4 Consents and Approvals; No
Violations. Except for filings, permits, authorizations,
consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the
Securities Act, the DGCL, the HSR Act, state blue sky
laws and any applicable state takeover laws and insurance
regulatory laws and commissions, neither the execution,
delivery or performance of this Agreement by Parent and
Sub nor the consummation by Parent and Sub of the trans-
actions contemplated hereby nor compliance by Parent and
Sub with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the
Certificate of Incorporation or by-laws of Parent and any
of its Subsidiaries, (ii) require any filing with, or
permit, authorization, consent or approval of, any Gov-
ernmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make
such filings would not have a material adverse effect on
Parent and its Subsidiaries taken as a whole or would
not, or would not be reasonably likely to, materially
impair the ability of Parent and Sub to consummate the
Merger or the other transactions contemplated hereby),
(iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amend-
ment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mort-
gage, indenture, guarantee, other evidence of indebted-
ness, lease, license, contract, agreement or other in-
strument or obligation to which Parent or any of its
Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound or (iv) violate
any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent, any of its Subsidiaries
or any of their properties or assets, except in the case
of clauses (iii) and (iv) for violations, breaches or
defaults which would not have a material adverse effect
on Parent and its Subsidiaries taken as a whole or would
not, or would not be reasonably likely to, materially
impair the ability of Parent or Sub to consummate the
Merger or the other transactions contemplated hereby.
Section 4.5 SEC Reports and Financial
Statements. Parent has filed with the SEC, and has
heretofore made available to the Company true and com-
plete copies of, all forms, reports, schedules, state-
ments and other documents required to be filed by it and
its Subsidiaries since January 1, 1994 under the Exchange
Act or the Securities Act (as such documents have been
amended since the time of their filing, collectively, the
"Parent SEC Documents"). As of their respective dates
or, if amended, as of the date of the last such amend-
ment, the Parent SEC Documents, including, without limi-
tation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a
material fact or omit to state a 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 and (b) complied in
all material respects with the applicable requirements of
the Exchange Act and the Securities Act, as the case may
be, and the applicable rules and regulations of the SEC
thereunder. Each of the consolidated financial state-
ments included in the Parent SEC Documents have been
prepared from, and are in accordance with, the books and
records of Parent and/or its consolidated Subsidiaries,
comply in all material respects with applicable account-
ing requirements and with the published rules and regula-
tions of the SEC with respect thereto, have been prepared
in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated
in the notes thereto) and fairly present in all material
respects the consolidated financial position and the
consolidated results of operations and cash flows (and
changes in financial position, if any) of Parent and its
consolidated Subsidiaries as at the dates thereof or for
the periods presented therein (subject, in the case of
unaudited interim financial statements, to normal year
end adjustments).
Section 4.6 Absence of Certain Changes. Since
January 1, 1996, Parent and its Subsidiaries have con-
ducted their respective businesses in the ordinary course
of business consistent with past practice. Since March
31, 1996, there has not occurred (i) any events, changes,
or effects (including the incurrence of any liabilities
of any nature, whether or not accrued, contingent or
otherwise) having or, which would be reasonably likely to
have, individually or in the aggregate, a material ad-
verse effect on Parent and its Subsidiaries taken as a
whole; (ii) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash,
stock or property) with respect to the equity interests
of Parent or of any of its Subsidiaries other than regu-
lar quarterly cash dividends or dividends paid by wholly
owned Subsidiaries; or (iii) any change by Parent or any
of its Subsidiaries in accounting principles or methods,
except insofar as may be required by a change in GAAP.
Section 4.7 No Undisclosed Liabilities.
Except (a) to the extent disclosed in the Parent SEC
Documents filed prior to the date of this Agreement and
(b) for liabilities and obligations incurred in the
ordinary course of business consistent with past prac-
tice, since March 31, 1996, neither Parent nor any of its
Subsidiaries has incurred any liabilities or obligations
of any nature, whether or not accrued, contingent or
otherwise, that have, or would be reasonably likely to
have, a material adverse effect on Parent and its Subsid-
iaries.
Section 4.8 Information in Proxy State-
ment/Prospectus. The Registration Statement (or any
amendment thereof or supplement thereto), at the date it
becomes effective and at the time of the Company Special
Meeting, will not 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 are made, not misleading, provided, however,
that no representation is made by Parent or Sub with
respect to statements made therein based on information
supplied by the Company for inclusion in the Proxy State-
ment/Prospectus or the Registration Statement. None of
the information supplied by Parent or Sub for inclusion
or incorporation by reference in the Proxy State-
ment/Prospectus will, at the date mailed to stockholders
of the Company and at the time of the Company Special
Meeting, 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
are made, not misleading. Subject to the proviso set
forth in the second preceding sentence, the Registration
Statement will comply in all material respects with the
provisions of the Securities Act and the rules and regu-
lations thereunder.
Section 4.9 Litigation; Compliance with Law.
(a) Except to the extent disclosed in the
Parent SEC Documents filed prior to the date of this
Agreement, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent,
threatened against or affecting, Parent or any of its
Subsidiaries, which, individually or in the aggregate, is
reasonably likely to have a material adverse effect on
Parent and its Subsidiaries or would, or would be reason-
ably likely to, materially impair the ability of Parent
to consummate the Merger or the other transactions con-
templated hereby.
(b) Parent and its Subsidiaries have
complied in all material respects with all laws, stat-
utes, regulations, rules, ordinances, and judgments,
decrees, orders, writs and injunctions, of any court or
Governmental Entity relating to any of the property
owned, leased or used by them, or applicable to their
business, including, but not limited to, equal employment
opportunity, discrimination, occupational safety and
health, environmental, insurance regulatory, and anti-
trust laws.
Section 4.10 Taxes. (a) Parent and its Sub-
sidiaries have (i) duly filed (or there have been filed
on their behalf) with the appropriate governmental au-
thorities all material Tax Returns required to be filed
by them and such Tax Returns are true, correct and com-
plete, and (ii) duly paid in full or made provision in
accordance with GAAP (or there has been paid or provision
has been made on their behalf) for the payment of all
material Taxes due and payable for all periods ending
through the date hereof.
(b) Parent is not aware of any reason that
would preclude it from executing an opinion representa-
tion letter on behalf of Parent and Sub, substantially
similar to the form letter attached hereto as Exhibit B,
as of the Effective Time.
Section 4.11 Financing. Either Parent or Sub
has, or will have prior to the consummation of the Merg-
er, sufficient funds available to purchase the maximum
amount of Shares which may be converted into the right to
receive the Cash Consideration in the Merger.
Section 4.12 Opinion of Financial Advisor.
Parent has received an opinion from Morgan Stanley & Co.
Incorporated ("Morgan Stanley") dated the date of this
Agreement to the effect that, as of such date, the con-
sideration to be paid by Parent in the Merger is fair to
Parent from a financial point of view, a copy of which
opinion has been delivered to the Company.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company.
The Company covenants and agrees that, except (i) as
expressly provided in this Agreement, (ii) with the prior
written consent of Parent or (iii) as set forth on Sec-
tion 5.1 of the Disclosure Schedule, after the date
hereof and prior to the Effective Time:
(a) the business of the Company and its
Subsidiaries, including, without limitation, investment
practices and policies, shall be conducted only in the
ordinary course of business consistent with past practice
and, each of the Company and its Subsidiaries shall use
all reasonable efforts to preserve its business organiza-
tion intact and maintain its existing relations with
material customers, retrocessionaires, employees, credi-
tors and business partners;
(b) the Company will not, directly or
indirectly, split, combine or reclassify the outstanding
Company Common Stock, or any outstanding capital stock of
any of the Subsidiaries of the Company;
(c) neither the Company nor any of its
Subsidiaries shall: (i) amend its certificate of incor-
poration or by-laws or similar organizational documents;
(ii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with
respect to its capital stock other than dividends paid by
the Company's wholly-owned Subsidiaries to the Company or
its wholly-owned Subsidiaries and other than ordinary
quarterly cash dividends by the Company not to exceed
$.05 per quarter; (iii) issue, sell, transfer, pledge,
dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any
kind to acquire, any shares of capital stock of any class
of the Company or its Subsidiaries, other than issuances
pursuant to exercise of stock-based awards outstanding on
the date hereof as disclosed in Section 3.2 hereof or
with respect to any shares issued under the Company's
Employee Stock Purchase Plan prior to its termination in
accordance with Section 5.5(e); (iv) transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber
any assets that are material to the Company and its
Subsidiaries taken as a whole other than sales of invest-
ment assets in the ordinary course of business consistent
with past practice; or (v) redeem, purchase or otherwise
acquire directly or indirectly any of its capital stock;
(d) neither the Company nor any of its
Subsidiaries shall: (i) grant any increase in the com-
pensation payable or to become payable by the Company or
any of its Subsidiaries to any officer or employee other
than scheduled annual increases in the ordinary course of
business consistent with past practice in an amount not
to exceed 10% for any individual; (ii) adopt any new, or
amend or otherwise increase, or accelerate the payment or
vesting of the amounts payable or to become payable under
any existing, bonus, incentive compensation, deferred
compensation, severance, profit sharing, stock option,
stock purchase, insurance, pension, retirement or other
employee benefit plan agreement or arrangement; (iii)
enter into any, or amend any existing, employment, con-
sulting or severance agreement with or, except in accor-
dance with the existing written policies of the Company,
grant any severance or termination pay to any officer,
director or employee of the Company or any of its Subsid-
iaries; (iv) make any additional contributions to any
grantor trust created by the Company to provide funding
for non-tax-qualified employee benefits or compensation;
or (v) provide any severance program to any Subsidiary
which does not have a severance program as of the date of
this Agreement;
(e) neither the Company nor any of its
Subsidiaries shall modify, amend or terminate any of the
material Company Agreements or waive, release or assign
any material rights or claims, except in the ordinary
course of business consistent with past practice ;
(f) neither the Company nor any of its
Subsidiaries shall permit any material insurance policy
naming it as a beneficiary or a loss payable payee to be
cancelled or terminated, except in the ordinary course of
business consistent with past practice;
(g) neither the Company nor any of its
Subsidiaries shall: (i) incur or assume any debt except
for (A) borrowings under existing credit facilities in an
amount not to exceed $10 million; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (wheth-
er directly, contingently or otherwise) for the obliga-
tions of any other person, except in the ordinary course
of business consistent with past practice; (iii) make any
loans, advances or capital contributions to, or invest-
ments in, any other person (other than to wholly owned
Subsidiaries of the Company or customary loans or advanc-
es to employees in accordance with past practice and
other than as to such matters related to the Company's or
any of its Subsidiaries' investment portfolios in the
ordinary course of business consistent with past prac-
tice); or (iv) enter into any material commitment (in-
cluding, but not limited to, any capital expenditure or
purchase of assets) other than in the ordinary course of
business consistent with past practice;
(h) neither the Company nor any of its
Subsidiaries shall change any of the accounting princi-
ples used by it unless required by Statutory Accounting
Principles or GAAP;
(i) neither the Company nor any of its
Subsidiaries shall pay, discharge or satisfy any material
claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of any such
claims, liabilities or obligations, (x) reflected or
reserved against in, or contemplated by, the consolidated
financial statements (or the notes thereto) of the Compa-
ny and its consolidated Subsidiaries, (y) incurred in the
ordinary course of business consistent with past practice
or (z) which are legally required to be paid, discharged
or satisfied;
(j) neither the Company nor any of its
Subsidiaries will adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restruc-
turing, recapitalization or other material reorganization
of the Company or any of its Subsidiaries or any agree-
ment relating to a Takeover Proposal (as defined in
Section 5.6) (other than the Merger) other than confiden-
tiality agreements as provided in Section 5.6(a);
(k) neither the Company nor any of its
Subsidiaries will engage in any transaction with, or
enter into any agreement, arrangement, or understanding
with, directly or indirectly, any of the Company's affil-
iates, including, without limitation, any transactions,
agreements, arrangements or understandings with any
affiliate or other Person covered under Item 404 of
Regulation S-K under the Securities Act that would be
required to be disclosed under such Item 404 other than
such transactions of the same general nature, scope and
magnitude as are disclosed in the Company SEC Documents;
(l) except upon the prior written consent
of Parent, the Company shall not make any Tax election
that would have a material adverse effect on the Company
or any of its Subsidiaries, except in the ordinary course
of business consistent with past practice; and
(m) neither the Company nor any of its
Subsidiaries will enter into an agreement, contract,
commitment or arrangement to do any of the foregoing, or
to authorize, recommend, propose or announce an intention
to do any of the foregoing.
Section 5.2 Interim Operations of Parent.
Parent covenants and agrees that, except (i) as expressly
provided in this Agreement, or (ii) with the prior writ-
ten consent of the Company, after the date hereof and
prior to the Effective Time:
(a) the business of Parent and its Sub-
sidiaries, including, without limitation, investment
practices and policies, shall be conducted in the ordi-
nary course of business consistent with past practice;
(b) Parent will not, directly or indi-
rectly, split, combine or reclassify the outstanding
Parent Common Stock;
(c) Parent will not: (i) amend its
certificate of incorporation or by-laws; or (ii) declare,
set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its
capital stock except for quarterly cash dividends consis-
tent in amount and timing with past practice, provided
that Parent may increase its dividend rate consistent
with prior practice;
(d) neither Parent nor any of its Subsid-
iaries shall change any of the accounting principles used
by it unless required by GAAP or Statutory Accounting
Principles; and
(e) neither Parent nor any of its Subsid-
iaries will enter into an agreement, contract, commitment
or arrangement to do any of the foregoing, or to autho-
rize, recommend, propose or announce an intention to do
any of the foregoing.
Section 5.3 Access to Information. (a) The
Company shall (and shall cause each of its Subsidiaries
to) afford to the officers, employees, accountants,
counsel, financing sources and other representatives of
Parent, reasonable access, during normal business hours,
during the period prior to the Effective Time, to all of
its and its Subsidiaries' properties, books, contracts,
commitments and records (including any Tax Returns or
other Tax related information pertaining to the Company
and its Subsidiaries) and, during such period, the Compa-
ny shall (and shall cause each of its Subsidiaries to)
furnish promptly to Parent (a) a copy of each report,
schedule, registration statement and other document filed
or received by it during such period pursuant to the
requirements of the federal securities laws or any insur-
ance regulatory laws and (b) all other information con-
cerning its business, properties and personnel as Parent
may reasonably request (including any Tax Returns or
other Tax related information pertaining to the Company
and its Subsidiaries). Parent will hold any such infor-
mation which is nonpublic in confidence in accordance
with the provisions of the existing confidentiality
agreement between the Company and Parent, dated June 27,
1996 (the "Confidentiality Agreement").
Section 5.4 Consents and Approvals. (a) Each
of the Company, Parent and Sub will take all reasonable
actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated hereby
which actions shall include, without limitation, furnish-
ing all information in connection with approvals of or
filings with any Governmental Entity, including, without
limitation, any schedule, or reports required to be filed
with the SEC, and will promptly cooperate with and fur-
nish information to each other in connection with any
such requirements imposed upon any of them or any of
their Subsidiaries in connection with this Agreement and
the transactions contemplated hereby. Each of the Compa-
ny, Parent and Sub will, and will cause its Subsidiaries
to, take all reasonable actions necessary to obtain any
consent, authorization, order or approval of, or any
exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by
Parent, Sub, the Company or any of their Subsidiaries in
connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
Section 5.5 Employee Matters.
(a) Benefit Plans. After the Effective
Time, Parent shall either continue the existing Benefit
Plans of the Company or shall provide, or cause Sub to
provide, benefits to employees of the Company and its
Subsidiaries that are no less favorable in the aggregate
to such employees than those provided under the "Parent
Benefit Plans" (as defined below) (as they may be amended
from time to time) to similarly situated employees of
Parent and its Subsidiaries. "Parent Benefit Plan" means
any material employee or director benefit plan, arrange-
ment, practice, contract or agreement of any type (in-
cluding but not limited to a plan described in Section
3(3) of ERISA), maintained by Parent or General Reinsur-
ance Corporation, Parent's wholly owned Subsidiary.
(b) Service Credit. With respect to any
Parent Benefit Plan which is an "employee benefit plan"
as defined in Section 3(3) of ERISA, for purposes of
determining eligibility to participate, vesting, and
entitlement to benefits, including for severance bene-
fits, vacation entitlement and service awards (but not
for accrual of pension benefits), service with the Compa-
ny or any Subsidiary shall be treated as service with
Parent or its Subsidiaries; 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 require-
ments, or the application of any preexisting condition
limitations. Company 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 Parent Plan.
(c) Severance and Stay Protection Plan.
At or before the Effective Time, the Company shall adopt
a severance and stay protection plan, the substantive
terms of which are set forth on Section 5.5(c) in the
Disclosure Schedule. From and after the Effective Time,
Parent shall cause Sub to honor such plan in accordance
the terms thereof.
(d) Third Party Beneficiary. For one
year following the Effective Time, the provisions of this
Section 5.5 are intended for the benefit of, and shall be
enforceable by, the continuing employees of the Company
and its subsidiaries.
(e) Promptly following the date hereof
but in no event later than August 1, 1996, Parent and the
Company shall cooperate to cause the termination as soon
as practicable, of the Company's Employee Stock Purchase
Plan.
Section 5.6 No Solicitation. (a) The Company
(and its Subsidiaries and affiliates) will not, and the
Company (and its Subsidiaries and affiliates) will use
their reasonable best efforts to ensure that their re-
spective officers, directors, employees, investment
bankers, attorneys, accountants and other agents do not,
directly or indirectly: (i) initiate, solicit or encour-
age, or (except to the extent permitted by clause (ii)
below) take any action to facilitate the making of, any
offer or proposal which constitutes or is reasonably
likely to lead to any Takeover Proposal (as defined
below) of the Company or any Subsidiary or an inquiry
with respect thereto, or, (ii) in the event of an unso-
licited bona fide Takeover Proposal for the Company or
any Subsidiary of the Company, engage in negotiations or
discussions with, or provide any information or data to,
any corporation, partnership, person or other entity or
group (other than Parent, Sub or any of their affiliates
or representatives) ("Person") relating to any Takeover
Proposal, except in the case of clause (ii) above, to the
extent that the Company's Board of Directors determines,
after having received the advice of outside legal counsel
to the Company and the advice of the Company's financial
advisor, that the failure to engage in such negotiations
or discussions or provide such information is reasonably
likely to result in a breach of the Board of Directors'
fiduciary duties under applicable law; provided, however,
that notwithstanding the foregoing, the Company's Board
of Directors may take, and disclose to the Company's
stockholders a position contemplated by Rules for 14d-9
and 14e-2 promulgated under the Exchange Act with respect
to any tender offer for shares of capital stock of the
Company. Prior to furnishing any information to any such
Person making a Takeover Proposal, the Company shall have
obtained a confidentiality agreement from such Person
substantially similar to the Confidentiality Agreement.
The Company shall notify Parent of any such offers,
proposals, inquiries or Takeover Proposals (including,
without limitation, the material terms and conditions
thereof and the identity of the Person making it), within
24 hours of the receipt thereof, and shall provide Parent
with a copy of any written Takeover Proposal or amend-
ments or supplements thereto, and shall thereafter inform
Parent on a reasonable basis of the status of any discus-
sions or negotiations with such a third party, and any
material changes to the terms and conditions of such
Takeover Proposal, and shall promptly give Parent a copy
of any information delivered to such Person which has not
previously been reviewed by Parent. The Company shall,
and shall cause its Subsidiaries and affiliates, and
their respective officers, directors, employees, invest-
ment bankers, attorneys, accountants and other agents to,
immediately cease and cause to be terminated all discus-
sions and negotiations that have taken place prior to the
date hereof, if any, with any parties conducted hereto-
fore with respect to any Takeover Proposal relating to
the Company and shall not renew any such discussions or
negotiations unless permitted by the first sentence of
clause (a)(ii) of this Section 5.6.
(b) As used in this Agreement, "Takeover
Proposal" shall mean any tender or exchange offer involv-
ing the capital stock of the Company, any proposal for a
merger, consolidation or other business combination
involving the Company, any proposal or offer to acquire
in any manner a substantial equity interest in, or a
substantial portion of the business or assets of, the
Company or any Subsidiary of the Company, any proposal or
offer with respect to any recapitalization or restructur-
ing with respect to the Company or any Subsidiary of the
Company or any proposal or offer with respect to any
other transaction similar to any of the foregoing with
respect to the Company or any Subsidiary of the Company
other than pursuant to the transactions to be effected
pursuant to this Agreement.
Section 5.7 Additional Agreements. Subject to
the terms and conditions herein provided, each of the
parties hereto 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, whether
under applicable laws and regulations or otherwise, or to
remove any injunctions or other impediments or delays,
legal or otherwise, to consummate and make effective the
Merger and the other transactions contemplated by this
Agreement. In case 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 and
directors of the Company, Parent and Sub shall use their
best efforts to take, or cause to be taken, all such
necessary actions.
Section 5.8 Publicity. So long as this Agree-
ment is in effect, neither the Company nor Parent nor
their affiliates shall issue or cause the publication of
any press release or other public statement or announce-
ment with respect to this Agreement or the transactions
contemplated hereby without prior consultation with the
other party, except as may be required by law or by
obligations pursuant to any listing agreement with a
national securities exchange, and in such case shall use
all reasonable efforts to consult with the other party
prior to such release or announcement being issued.
Section 5.9 Notification of Certain Matters.
The Company shall give prompt notice to Parent, and
Parent shall give prompt notice to the Company, of (a)
the occurrence, or non-occurrence of any event the occur-
rence or non-occurrence of which would cause any repre-
sentation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect at or prior
to the Effective Time and (b) any material failure of the
Company or Parent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be com-
plied with or satisfied by it hereunder; provided, howev-
er, that the delivery of any notice pursuant to this
Section 5.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such
notice.
Section 5.10 Directors' and Officers'
Insurance and Indemnification. Parent agrees that at all
times after the Effective Time, it shall indemnify each
person who is now, or has been at any time prior to the
date hereof, a director or officer of the Company or of
any of the Company's Subsidiaries or person entitled to
indemnification (individually an "Indemnified Party" and
collectively the "Indemnified Parties"), to the same
extent and in the same manner as is now provided in the
respective charters or by-laws of the Company and such
Subsidiaries or otherwise in effect on the date hereof,
with respect to any claim, liability, loss, damage, cost
or expense (whenever asserted or claimed) ("Indemnified
Liability") based in whole or in part on, or arising in
whole or in part out of, any matter existing or occurring
at or prior to the Effective Time. The Indemnified
Parties shall be entitled to advancement of expenses
provided such Indemnified Party provides Parent with an
undertaking to reimburse Parent in a form comparable to
the undertaking provided for by the DGCL. Parent shall,
or shall cause the Surviving Corporation to, maintain in
effect for not less than six (6) years after consummation
of the Merger the current policies of directors' and
officers' liability insurance maintained by the Company
and its Subsidiaries on the date hereof (provided that
Parent may substitute therefor policies having at least
the same coverage and containing terms and conditions
which are no less advantageous to the persons currently
covered by such policies and with carriers comparable to
the Company's existing carriers in terms of creditworthi-
ness) with respect to matters existing or occurring at or
prior to the Effective Time. Promptly after receipt by
an Indemnified Party of notice of the assertion (an
"Assertion") of any claim or the commencement of any
action against him or her in respect to which indemnity
or reimbursement may be sought against Parent, the Compa-
ny, the Surviving Corporation or a Subsidiary of the
Company or the Surviving Corporation ("Indemnitors")
hereunder, such Indemnified Party shall notify any Indem-
nitor in writing of the Assertion, but the failure to so
notify any Indemnitor shall not relieve any Indemnitor of
any liability it may have to such Indemnified Party
hereunder except where such failure shall have materially
prejudiced Indemnitor in defending against such Asser-
tion. No Indemnified Party shall settle any Assertion
without the prior written consent of Parent provided,
however, that if Parent withholds such consent, then
Parent shall provide the Indemnified Party reasonable
assurances that it shall honor the indemnification provi-
sions of this Section 5.10. The provisions of this
Section 5.10 are intended for the benefit of, and shall
be enforceable by, the respective Indemnified Parties.
Section 5.11 Rule 145 Affiliates. At least 30
days prior to the Closing Date, the Company shall deliver
to Parent a letter identifying, to the best of the
Company's knowledge, all persons who are, at the time of
the Company Special Meeting, deemed to be "affiliates" of
the Company for purposes of Rule 145 under the Securities
Act ("Company Affiliates"). The Company shall use all
reasonable efforts to cause each Person who is identified
as a Company Affiliate to deliver to Parent prior to the
Closing Date an agreement substantially in the form of
Exhibit C to this Agreement.
Section 5.12 Proxy Statement/Prospectus. As
soon as practicable following the date of this Agreement,
Parent and the Company shall prepare and file with the
SEC the Proxy Statement/Prospectus and each shall use all
reasonable efforts to have the Proxy Statement/Prospectus
cleared by the SEC as promptly as practicable. As soon
as practicable following such clearance, Parent shall
prepare and file with the SEC the Registration Statement,
of which the Proxy Statement/Prospectus will form a part,
and shall use its best efforts to have the Registration
Statement declared effective by the SEC as promptly as
practicable thereafter. Parent and the Company shall
cooperate with each other in the preparation of the Proxy
Statement/Prospectus, and each will provide to the other
promptly copies of all correspondence between it or any
of its representatives and the SEC. Each of the Company
and Parent shall furnish all information concerning it
required to be included in the Registration Statement and
the Proxy Statement/Prospectus, and as promptly as prac-
ticable after the effectiveness of the Registration
Statement, the Proxy Statement/Prospectus will be mailed
to the stockholders of the Company. No amendment or
supplement to the Registration Statement or the Proxy
Statement/Prospectus will be made without the approval of
each of the Company and Parent, which approval will not
be unreasonably withheld or delayed. Each of the Company
and Parent will advise the other promptly after it re-
ceives notice thereof, of the time when the Registration
Statement has become effective or any amendment thereto
or any supplement or amendment to the Proxy State-
ment/Prospectus has been filed, or the issuance of any
stop order, or the suspension of the qualification of the
Parent Common Stock to be issued in the Merger for offer-
ing or sale in any jurisdiction, or of any request by the
SEC or the NYSE for amendment of the Registration State-
ment or the Proxy Statement/Prospectus.
Section 5.13 Tax-Free Reorganization. The
parties intend the transaction to qualify as a reorgani-
zation under Section 368(a) of the Code; each party and
its affiliates shall use all reasonable efforts to cause
the Merger so to qualify; and neither party nor any
affiliate shall take any action, including any transfer
or other disposition of assets or any interest in the
Company after the Closing, that would cause the Merger
not to qualify as a reorganization under Section 368(a)
of the Code. Parent shall report the Merger for income
tax purposes as a reorganization within the meaning of
section 368(a) of the Code and any comparable state or
local tax statute.
Section 5.14 Existing Stockholder Agreements
and Registration Rights Agreement. The Company will
cooperate to terminate or cause to be terminated, prior
to the Effective Time, the Amended and Restated Manage-
ment Stockholder Agreement, dated as of February 5, 1992,
and the Stockholders Agreement dated as of February 5,
1992, by and among Lincoln National Corporation, Key-
stone, Inc., Acadia Partners, L.P. and the persons listed
on Schedule A thereto. The Company will cooperate to
cause the Amended and Restated Investor Stockholders
Agreement, dated as of February 5, 1992, to remain in
full force and effect until the Company Stockholder
Meeting and to terminate such Agreement immediately
following such Meeting. The Company will suspend all
sales under the shelf Registration Statement filed pursu-
ant to the Registration Rights Agreement ("Registration
Rights Agreement") by and among the Company Keystone,
Inc., Acadia Partners, L.P. and the other stockholders of
the Company named therein at least one business day prior
to the Closing Date and will cause the Registration
Rights Agreement not to have any application to any
securities of Parent or its Subsidiaries following the
Effective Time.
Section 5.15 Stock Exchange Listing. Parent
shall use all reasonable efforts to cause the shares of
Parent Common Stock issued in the Merger and the shares
of Parent Common Stock to be reserved for issuance upon
exercise of the Parent Stock Options to be approved for
listing on the NYSE prior to the Closing Date.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to the Obligations of
Each Party. The obligations of the Company, on the one
hand, and Parent, and Sub, on the other hand, to consum-
mate the Merger are subject to the satisfaction (or, if
permissible, waiver by the party for whose benefit such
conditions exist) of the following conditions:
(a) this Agreement shall have been adopt-
ed by the stockholders of the Company in accordance with
the DGCL;
(b) no court, arbitrator or governmental
body, agency or official shall have issued any order,
decree or ruling and there shall not be any statute, rule
or regulation, restraining, enjoining or prohibiting the
consummation of the Merger;
(c) the Registration Statement shall have
become effective under the Securities Act and no stop
order suspending effectiveness of the Registration State-
ment shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the
SEC;
(d) any waiting period applicable to the
Merger under the HSR Act shall have expired or been
terminated; and
(e) all actions by or in respect of or
filing or any governmental body, agency, official, or
authority required to permit the consummation of the
Merger (including insurance regulatory commission approv-
als) shall have been obtained and such approval shall be
in full force and effect.
Section 6.2 Conditions to the Obligations of
Parent and Sub. The obligations of Parent and Sub to
consummate the Merger are subject to the satisfaction (or
waiver by Parent) of the following further conditions:
(a) the representations and warranties of
the Company shall have been true and accurate as of the
Effective Time as if made at and as of such time (except
for those representations and warranties that address
matters only as of a particular date or only with respect
to a specific period of time which need only be true and
accurate as of such date or with respect to such period),
except where the failure of such representations and
warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material
adverse effect" set forth therein), would not have, and
is not reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Company and
its Subsidiaries taken as a whole;
(b) the Company shall have performed in
all material respects its obligations hereunder required
to be performed by it at or prior to the Effective Time;
(c) since March 31, 1996, except as set
forth in Section 3.6 of the Disclosure Schedule, there
shall not have occurred any event, change or effect
having, or which would be reasonably likely to have, in
the aggregate, a material adverse effect on the Company
and its Subsidiaries, taken as a whole (other than chang-
es in insurance laws and regulations affecting the rein-
surance industry generally); and
(d) Parent shall have received an opinion
of nationally recognized tax counsel to Parent, to the
effect that the Merger will qualify as a reorganization
within the meaning of Section 368 of the Code and in
rendering such opinion tax counsel may rely upon repre-
sentations provided by the parties hereto as well as
certain stockholders of the Company.
Section 6.3 Conditions to the Obligations of
the Company. The obligations of the Company to consum-
mate the Merger are subject to the satisfaction (or
waiver by the Company) of the following further condi-
tions:
(a) the representations and warranties of
Parent and Sub shall be true and accurate as of the
Effective Time as if made at and as of such time (except
for those representations and warranties that address
matters only as of a particular date or only with respect
to a specific period of time which need only be true and
accurate as of such date or with respect to such period),
except where the failure of such representations and
warranties to be so true and correct (without giving
effect to any limitation as to "materiality" or "material
adverse effect" set forth therein), would not have, and
is not reasonably likely to have, individually or in the
aggregate, a material adverse effect on Parent and its
Subsidiaries;
(b) each of Parent and Sub shall have
performed in all material respects all of the respective
obligations hereunder required to be performed by Parent
or Sub, as the case may be, at or prior to the Effective
Time;
(c) the Parent Common Stock to be issued
in the Merger shall have been approved for listing on the
New York Stock Exchange, subject to official notice of
issuance;
(d) since March 31, 1996, there shall not
have occurred any event, change or effect having, or
which would be reasonably likely to have, individually or
in the aggregate, a material adverse effect on Parent and
its Subsidiaries, taken as a whole (other than changes in
insurance laws and regulations affecting the reinsurance
industry generally);
(e) the Company shall have received an
opinion of nationally recognized tax counsel to the
Company, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of
the Code and in rendering such opinion tax counsel may
rely upon representations provided by the parties hereto
as well as certain stockholders of the Company; and
(f) the Average Parent Share Price shall
not be less than $125 per share.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or
elsewhere to the contrary notwithstanding, this Agreement
may be terminated and the Merger contemplated herein may
be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) By the mutual consent of the Board of
Directors of Parent and the Board of Directors of the
Company;
(b) By either of the Board of Directors
of the Company or the Board of Directors of Parent:
(i) if the Merger shall not have
occurred on or prior to December 31, 1996; 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 re-
sulted in, the failure of the Merger to occur on or
prior to such date; or
(ii) if any Governmental Entity
shall have issued an order, decree or ruling or
taken any other action (which order, decree, ruling
or other action the parties hereto shall use their
best 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 non-appealable;
(c) By the Board of Directors of the
Company:
(i) if the Board of Directors of the
Company shall have (A) withdrawn, or modified or changed
in a manner adverse to Parent or Sub its approval or
recommendation of this Agreement or the Merger in order
to approve and permit the Company to execute a defini-
tive agreement relating to a Takeover Proposal, and (B)
determined, after having received the advice of outside
legal counsel to the Company and the advice of the
Company's financial advisor, that the failure to
take such action as set forth in the preceding clause
(A) is reasonably likely to result in a breach of the
Board of Directors' fiduciary duties under applicable
law; provided, however, that the Company shall have
given Parent and Sub forty-eight (48) hours advance
notice of any termination pursuant to this Section
7.1(c)(i) and that the Company shall have paid Parent
the fees and expenses required by Section 8.1(b) hereof;
(ii) if Parent or Sub (x) breaches
or fails in any material respect to perform or com-
ply with any of its material covenants and agree-
ments contained herein or (y) breaches its represen-
tations and warranties in any material respect and
such breach would have or would be reasonably likely
to have a material adverse effect on Parent and its
Subsidiaries, in each case such that the conditions
set forth in Section 6.1 or Section 6.3 would not be
satisfied; provided, however, that if any such
breach is curable by the breaching party through the
exercise of the breaching party's best efforts and
for so long as the breaching party shall be so using
its best efforts to cure such breach, the Company
may not terminate this Agreement pursuant to this
Section 7.1(c)(ii); or
(iii) if the Company fails to obtain
the required approval of its stockholders at the
Company Special Meeting and the Company shall have
paid Parent any fees and expenses required by Sec-
tion 8.1(b) hereof.
(d) By the Board of Directors of Parent:
(i) if the Company (x) breaches or
fails in any material respect to perform or comply
with any of its material covenants and agreements
contained herein or (y) breaches its representations
and warranties in any material respect and such
breach would have or would be reasonably likely to
have a material adverse effect on the Company and
its Subsidiaries, in each case such that the condi-
tions set forth in Section 6.1 or Section 6.2 would
not be satisfied; provided, however, that if any
such breach is curable by the Company through the
exercise of the Company's best efforts and for so
long as the Company shall be so using its best ef-
forts to cure such breach, Parent may not terminate
this Agreement pursuant to this Section 7.1(d)(i);
(ii) if (A) the Board of Directors
of the Company shall have withdrawn, or modified or
changed in a manner adverse to Parent or Sub its
approval or recommendation of this Agreement or the
Merger or shall have recommended a Takeover Proposal
or other business combination, or the Company shall
have entered into an agreement in principle (or
similar agreement) or definitive agreement providing
for a Takeover Proposal or other business combina-
tion with a person or entity other than Parent, Sub
or their Subsidiaries (or the Board of Directors of
the Company resolves to do any of the foregoing), or
(B) prior to the certification of the vote of the
Company's stockholders to approve the Merger at the
Company Special Meeting, it shall have been publicly
disclosed or Parent or Sub shall have learned that
any person, entity or "group" (as that term is de-
fined in Section 13(d)(3) of the Exchange Act) (an
"Acquiring Person"), other than Parent or its Sub-
sidiaries or the Stockholders, shall have acquired
beneficial ownership (determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of more
than 40% of any class or series of capital stock of
the Company (including the Shares), through the
acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option,
right or warrant, conditional or otherwise, to ac-
quire beneficial ownership of more than 40% of any
class or series of capital stock of the Company
(including the Shares) other than as disclosed in a
Schedule 13D on file with the SEC on the date here-
of; or
(iii) if the stockholders of the
Company do not approve the Merger at the Company
Special Meeting.
Section 7.2 Effect of Termination. In the
event of the termination of this Agreement as provided in
Section 7.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provi-
sion hereof pursuant to which such termination is made,
and this Agreement shall forthwith become null and void,
and there shall be no liability on the part of Parent,
Sub or the Company except (A) for fraud or for willful
breach of this Agreement and (B) as set forth in Sections
8.1 and 8.2 hereof and in the last sentence of Section
5.3.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as
set forth in Section 8.1(b) and except for expenses
incurred in connection with printing the Proxy State-
ment/Prospectus and the Registration Statement, as well
as the filing fees relating thereto, which costs shall be
shared equally by Parent and the Company, all costs and
expenses incurred in connection with this Agreement and
the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses.
(b) If (w) the Board of Directors of the
Company shall terminate this Agreement pursuant to Sec-
tion 7.1(c)(i) hereof, (x) the Board of Directors of
Parent shall terminate this Agreement pursuant to Section
7.1(d)(ii), (y) the Board of Directors of Parent shall
terminate this Agreement pursuant to Section 7.1(d)(iii)
hereof or the Board of Directors of the Company shall
have terminated this Agreement pursuant to Section
7.1(c)(iii) and in either case there shall have been made
or commenced a Takeover Proposal (other than the Merger)
with respect to the Company, or (z) the Board of Direc-
tors of Parent shall terminate this Agreement pursuant to
Section 7.1(d)(i) and within one year of such termina-
tion, a Person shall acquire or beneficially own a major-
ity of the then outstanding Shares or shall have obtained
majority representation on the Company's Board of Direc-
tors or shall enter into a definitive agreement with the
Company with respect to a Takeover Proposal or similar
business combination (each such case of termination being
referred to as a "Trigger Event"), then the Company shall
pay to Parent (not later than the date of termination of
this Agreement in the case of clauses (w), (x) and (y)
above) $25 million in cash.
Section 8.2 Finders' Fees. (a) Except for
Morgan Stanley, whose fees will be paid by Parent, there
is no investment banker, broker, finder or other interme-
diary which has been retained by or is authorized to act
on behalf of Parent or any of its Subsidiaries who might
be entitled to any fee or commission from Parent or any
of its Subsidiaries upon consummation of the transactions
contemplated by this Agreement.
(b) Except for Goldman Sachs, a copy of
whose engagement agreement has been provided to Parent
and whose fees will be paid by the Company, there is no
investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on
behalf of the Company or any of its Subsidiaries who
might be entitled to any fee or commission from the
Company or any of its Subsidiaries upon consummation of
the transactions contemplated by this Agreement.
Section 8.3 Amendment and Modification.
Subject to applicable law, this Agreement may be amended,
modified and supplemented in any and all respects, wheth-
er before or after any vote of the stockholders of the
Company contemplated hereby, by written agreement of the
parties hereto, pursuant to action taken by their respec-
tive Boards of Directors, at any time prior to the Clos-
ing Date with respect to any of the terms contained
herein; provided, however, that after the approval of
this Agreement by the stockholders of the Company, no
such amendment, modification or supplement shall reduce
or change the consideration to be received by the
Company's stockholders in the Merger.
Section 8.4 Nonsurvival of Representations and
Warranties. None of the representations and warranties
in this Agreement or in any schedule, instrument or other
document delivered pursuant to this Agreement shall
survive the Effective Time.
Section 8.5 Notices. All notices and other
communications hereunder shall be in writing and shall be
deemed given if delivered personally, telecopied (which
is confirmed) or sent by an overnight courier service,
such as FedEx, to the parties at the following addresses
(or at such other address for a party as shall be speci-
fied by like notice):
(a) if to Parent or Sub, to:
General Re Corporation
695 East Main Street
Stamford, CT 06904
Attention: Charles F. Barr, Esq.
General Counsel
Telephone No.: (203) 328-5506
Telecopy No.: (203) 328-5877
with a copy to:
James C. Freund, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2001
and
(b) if to the Company, to:
National Re Corporation
777 Long Ridge Road
Stamford, CT 06904
Attention: Mary Ellen Burns, Esq.
General Counsel
Telephone No.: (203) 329-5391
Telecopy No.: (203) 329-5220
with a copy to:
Paul, Weiss, Rifkind, Wharton
& Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Matthew Nimetz, Esq.
Telephone No.: (212) 373-3000
Telecopy No.: (212) 757-3990
Section 8.6 Interpretation. When a reference
is made in this Agreement to Sections, 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 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 phrases "the date of this Agree-
ment", "the date hereof", and terms of similar import,
unless the context otherwise requires, shall be deemed to
refer to July 1, 1996. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in
Rule l2b-2 of the Exchange Act.
Section 8.7 Counterparts. This Agreement may
be executed in two or more counterparts, all of which
shall be considered one and the same agreement and shall
become effective when two or more counterparts have been
signed by each of the parties and delivered to the other
parties, it being understood that all parties need not
sign the same counterpart.
Section 8.8 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership. This Agreement and
the Confidentiality Agreement (including the exhibits
hereto and the documents and the instruments referred to
herein and therein): (a) constitute the entire agreement
and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to
the subject matter hereof, and (b) except as provided in
Sections 5.5 (as provided therein) and 5.10 with respect
to the obligations of Parent thereunder, are not intended
to confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 8.9 Severability. If any term, provi-
sion, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regula-
tory policy, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 8.10 Specific Performance. The par-
ties hereto agree that irreparable damage would occur in
the event any provision of this Agreement was not per-
formed in accordance with the terms hereof and that the
parties shall be entitled to the remedy of specific
performance of the terms hereof, in addition to any other
remedy at law or equity.
Section 8.11 Governing Law. This Agreement
shall be governed and construed in accordance with the
laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof.
Section 8.12 Assignment. Neither this Agree-
ment nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the
prior written consent of the other parties, except that
Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to Parent or
to any direct or indirect wholly owned Subsidiary of
Parent; provided, however, that no such assignment shall
relieve Parent from any of its obligations hereunder.
Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and as-
signs.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respec-
tive officers thereunto duly authorized as of the date
first written above.
GENERAL RE CORPORATION
By: /s/ James E. Gustafson
Name: James E. Gustafson
Title: President and Chief
Operating Officer
N ACQUISITION CORPORATION
By: /s/ Joseph P. Brandon
Name: Joseph P. Brandon
Title: Vice President
NATIONAL RE CORPORATION
By: /s/ William D. Warren
Name: William D. Warren
Title: President, Chief
Executive Officer and
Chairman of the Board
EXHIBIT A
FORM OF COMPANY TAX OPINION REPRESENTATION LETTER
, 1996
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Dear Sirs:
On behalf of the Company, the undersigned, in
connection with the opinions to be delivered by you
pursuant to Sections 6.2(e) and 6.3(e) of the Agreement
and Plan of Merger dated as of July , 1996, among
Parent, Sub and the Company,* hereby certifies that, to
the extent the facts relate to the Company, to his
knowledge and after due diligence, and to the extent
otherwise (including with respect to matters involving
Sub) without knowledge to the contrary, the descriptions
of the facts contained in the Proxy Statement/Prospectus
and Registration Statement, dated ___________, 1996,
relating to the proposed Merger of the Company into Sub
completely and accurately describe the Merger and the
transactions leading up thereto and further that:
1. The Merger will be consummated in
compliance with the terms of the Agreement and Plan of
Merger, and none of the material terms and conditions
therein have been or, except as scheduled, will have
been, waived or modified.
2. The fair market value of the Parent Common
Stock and Cash Consideration received by each Company
shareholder will be approximately equal to the fair
market value of the Company Common Stock surrendered in
the exchange and was arrived at through arm's length
negotiation.
3. There is no intercorporate indebtedness
existing between Parent and the Company or between Sub
and the Company that was issued, acquired, or will be
settled at a discount.
4. The Company is not an investment company as
defined in section 368(a)(2)(F)(iii) and (iv) of the
Internal Revenue Code.
* For purposes of this certificate, capitalized terms
used and not otherwise defined herein shall have the
meaning ascribed thereto in the Agreement and Plan
of Merger.
5. At the Effective Time, Sub will acquire at
least 90 percent of the fair market value of the net
assets and at least 70 percent of the fair market value
of the gross assets held by the Company immediately prior
to the Merger. For purposes of this representation,
amounts used by the Company to pay its reorganization
expenses and dissenters and to make all redemptions and
distributions (except for regular, normal dividends) made
by the Company immediately preceding the transfer will be
included as assets of the Company held immediately prior
to the Merger.
6. Following the Merger, Sub will continue the
historic business of the Company or use a significant
portion of the Company's business assets in a business.
7. The payment of cash in lieu of fractional
shares of Parent Common Stock does not represent
separately bargained-for consideration.
8. None of the compensation received (or to be
received) by any shareholder-employee of the Company will
be separate consideration for, or allocable to, any of
his shares of Company Common Stock. None of the Parent
Common Stock received by any shareholder-employee of the
Company pursuant to the Merger will be separate
consideration for, or allocable to, any employment
agreement or arrangement. The compensation paid to any
shareholder-employee of the Company will be commensurate
with amounts that would be paid to a third party
bargaining at arm's length for similar services.
9. The Company, the Parent,Sub and the
shareholders of the Company will each pay their
respective expenses, if any, incurred in connection with
the Merger and the transactions related thereto.
10. On the date hereof, there is no plan or
intention on the part of the shareholders of the Company
who own 5 percent or more of the Common Stock of the
Company and, to the best knowledge of the management of
the Company, there is no plan or intention on the part of
the remaining shareholders of the Company, to sell,
exchange or dispose otherwise of a number of shares of
Parent Common Stock received in the Merger that would
reduce such Company shareholders' ownership of Parent
Common Stock to a number of shares having a value, as of
the date of the Merger, of less than 50 percent of the
value of all of the formerly outstanding Company Common
Stock as of the same date. For purposes of this
representation, shares of Company Common Stock exchanged
for cash or other property in the Merger, surrendered by
dissenters or exchanged for cash in lieu of fractional
shares of Parent Common Stock will be treated as
outstanding Company Common Stock on the date of the
Merger. In addition, and not in limitation of the
foregoing, the Company has considered, in making this
representation, any shares of Company Common Stock that
have been sold, redeemed or otherwise disposed of by
shareholders who own 5 percent or more of the Company
Common Stock, or by shareholders who are officers or
directors of the Company, after the announcement of the
Merger and prior to the Effective Time, to the extent the
management of the Company has knowledge on the date
hereof of any such sales, redemptions or dispositions.
Except as set forth on Annex I to this letter, to the
knowledge of the management of the Company, there are no
shareholders who own 5 percent or more of the Company
Common Stock on the date hereof.
11. The liabilities of the Company assumed by
Sub and the liabilities to which the transferred assets
of the Company are subject were incurred by the Company
in the ordinary course of its business.
12. The fair market value of the assets of the
Company transferred to Sub will equal or exceed the sum
of the liabilities assumed by Sub, plus the amount of
liabilities, if any, to which the transferred assets are
subject.
13. The Company is not under the jurisdiction
of a court in a Title 11 or similar case within the
meaning of section 368(a)(3)(A) of the Internal Revenue
Code.
I understand that Paul, Weiss, Rifkind, Wharton
& Garrison, as counsel for the Company, and Skadden,
Arps, Slate, Meagher & Flom, as counsel for Parent and
Sub, will rely on this certificate in rendering their
respective opinions concerning certain of the federal
income tax consequences of the Merger and hereby commit
to inform them if, for any reason, any of the foregoing
representations ceases to be true prior to the Effective
Time.
NATIONAL RE CORPORATION
By: ____________________________
Name:
Title:
EXHIBIT B
FORM OF PARENT TAX OPINION REPRESENTATION LETTER
, 1996
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Dear Sirs:
On behalf of Parent and Sub, the undersigned,
in connection with the opinions to be delivered by your
firms pursuant to Sections 6.2(e) and 6.3(e) of the
Agreement and Plan of Merger dated as of July __, 1996,
among Parent, Sub and the Company,* hereby certifies
that, to the extent the facts relate to Parent and Sub,
to his knowledge and after due diligence, and to the
extent otherwise without knowledge to the contrary, the
descriptions of the facts contained in the Registration
Statement and the Proxy Statement completely and
accurately describe the Merger and the transactions
leading up thereto and further that:
1. The Merger will be consummated in
compliance with the terms of the Agreement and Plan of
Merger, and none of the material terms and conditions
therein have been or, except as scheduled, will have
been, waived or modified.
2. Prior to the Merger, Parent will be in
control of Sub within the meaning of section 368(c) of
the Internal Revenue Code.
3. The fair market value of the Parent Common
Stock and other consideration received by each Company
shareholder will be approximately equal to the fair
market value of the Company Common Stock surrendered in
the exchange and was arrived at through arm's length
negotiation.
4. There is no intercorporate indebtedness
existing between Parent and the Company or between Sub
and the Company that was issued, acquired, or will be
settled at a discount.
5. Neither Parent nor Sub is an investment
company as defined in section 368(a)(2)(F)(iii) and (iv)
of the Internal Revenue Code.
* For purposes of this certificate, capitalized terms
used and not otherwise defined herein shall have the
meaning ascribed thereto in the Agreement and Plan of
Merger.
6. At the Effective Time, Sub will acquire at
least 90 percent of the fair market value of the net
assets and at least 70 percent of the fair market value
of the gross assets held by the Company immediately prior
to the Merger. For purposes of this representation,
amounts used by the Company to pay its reorganization
expenses and dissenters and to make all redemptions and
distributions (except for regular, normal dividends) made
by the Company immediately preceding the transfer will be
included as assets of the Company held immediately prior
to the Merger.
7. Parent has no plan or intention to redeem
or acquire after the date of the Merger any of the Parent
Common Stock to be issued in the Merger. Parent publicly
announced on that its Board of
Directors authorized the repurchase of up to $500,000,000
of its Common Stock through open market purchases (the
"Buy Back"). Pursuant to the Buy Back, (a) any
redemptions will be undertaken for a corporate business
purpose, (b) the Parent Common Stock to be purchased will
be widely held, (c) the purchases of Parent Common Stock
will be made in the open market, and to the best of
Parent's knowledge, will not be made from (i) directors
or officers of Parent or Sub, or (ii) any shareholder
owning one percent or more of the outstanding Parent
Common Stock, and (d) there is no plan or intention that
the aggregate amount of Parent Common Stock purchased in
the Buy Back will equal or exceed 20 percent of the
outstanding Parent Common Stock.
8. Parent has no plan or intention to
liquidate Sub, merge Sub with and into another
corporation, sell or dispose otherwise of any of the
stock of Sub, or cause Sub to sell or otherwise dispose
of any of the assets of the Company acquired in the
Merger, except for dispositions made in the ordinary
course of business, or transfers described in section
368(a)(2)(C) of the Internal Revenue Code.
9. Following the Merger, Sub will continue
the historic business of the Company or use a significant
portion of the Company's business assets in a business.
10. Following the Merger, Sub will not issue
additional shares of its stock that would result in
Parent losing control of Sub within the meaning of
section 368(c) of the Internal Revenue Code.
11. No stock of Sub will be issued in the
Merger.
12. The payment of cash in lieu of fractional
shares of Parent Common Stock is solely for the purpose
of avoiding the expense and inconvenience to Parent of
issuing fractional shares of Parent Common Stock and does
not represent separately bargained-for consideration.
13. None of the compensation received (or to
be received) by any shareholder-employee of the Company
will be separate consideration for, or allocable to, any
of his shares of Company Common Stock. None of the
Parent Common Stock received by any shareholder-employee
of the Company pursuant to the Merger will be separate
consideration for, or allocable to, any employment
agreement or arrangement. The compensation paid to any
shareholder-employee of the Company will be commensurate
with amounts that would be paid to a third party
bargaining at arm's length for similar services.
14. The Company, the Parent, Sub and the
shareholders of the Company will each pay their
respective expenses, if any, incurred in connection with
the Merger and the transactions related thereto.
I understand that Paul, Weiss, Rifkind, Wharton
& Garrison as counsel for the Company, and Skadden, Arps,
Slate, Meagher & Flom, as counsel for Parent, will rely
on this certificate in rendering their opinion concerning
certain of the federal income tax consequences of the
Merger and hereby commit to inform them if, for any
reason, any of the foregoing representations ceases to be
true prior to the Effective Time.
GENERAL RE CORPORATION
By:
_______________________________
Name:
Title:
STOCKHOLDERS AGREEMENT
Agreement, dated as of July 1, 1996, by and
among Acadia Partners, L.P., a Delaware Partnership (the
"Stockholder"), General Re Corporation, a Delaware
corporation ("Parent"), and N Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"). Capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in
the Merger Agreement (as defined below).
In consideration of the execution by National
Re Corporation, a Delaware corporation (the "Company"),
of the Agreement and Plan of Merger, dated as of July 1,
1996 (the "Merger Agreement"), by and among the Company,
Parent and Sub and other good and valuable consideration,
receipt of which is hereby acknowledged, the Stockholder,
Parent and Sub hereby agree as follows:
1. Representations and Warranties of the
Stockholder. The Stockholder hereby represents and
warrants to Parent and Sub as follows:
(a) Title. As of the date hereof, the
Stockholder beneficially owns (exclusive of options)
approximately 1,460,013 shares (the "Shares") of Common
Stock, no par value (the "Company Common Stock"), of the
Company.
(b) Right to Vote. The Stockholder has
full legal power, authority and right to vote all Shares
in favor of approval and adoption of the Merger Agreement
and the transactions contemplated by the Merger Agreement
without the consent or approval of, or any other action
on the part of, any other person or entity. Without
limiting the generality of the foregoing, except for this
Agreement, the Amended and Restated Management
Stockholder Agreement dated as of February 5, 1992, the
Amended and Restated Investor Stockholders Agreement
dated as of February 5, 1992 and the Stockholders
Agreement dated as of February 5, 1992, by and among
Lincoln National Corporation, Keystone, Inc., Acadia
Partners, L.P. and the persons listed on Schedule A
thereto, the Stockholder is not a party to any voting
agreement with any person or entity with respect to any
of the Shares, granted any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposited any of the Shares
in a voting trust or entered into any arrangement or
agreement with any person or entity limiting or affecting
the Stockholder's legal power, authority or right to vote
the Shares in favor of the approval and adoption of the
Merger Agreement or any of the transactions contemplated
by the Merger Agreement. From and after the date hereof,
the Stockholder will not commit any act that could
restrict or otherwise affect such legal power, authority
and right to vote all Shares in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement. Without limiting
the generality of the foregoing, from and after the date
hereof the Stockholder will not enter into any voting
agreement with any person or entity with respect to any
of the Shares, grant any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposit any of the Shares
into a voting trust or otherwise enter into any agreement
or arrangement limiting or affecting the Stockholder's
legal power, authority or right to vote the Shares in
favor of the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger
Agreement (other than this Agreement).
(c) Authority. The Stockholder has full
legal power, authority and right to execute and deliver,
and to perform the obligations under, this Agreement.
This Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the
Stockholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally and (ii) general principles
of equity (regardless of whether considered in a
proceeding at law or in equity).
(d) Conflicting Instruments; No Transfer.
Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the agreements and
obligations hereunder will result in any breach,
violation of, conflict with, or default under any term of
any agreement, judgment, injunction, order, decree, law,
regulation or arrangement to which the Stockholder is a
party or by which the Stockholder (or any assets of the
Stockholder) is bound, except for any such breach,
violation, conflict or default which, individually or in
the aggregate, would not impair or affect the
Stockholder's ability to cast all votes represented by
the Shares in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated by the
Merger Agreement.
2. Representations and Warranties of Parent
and Sub. Parent and Sub hereby represent and warrant to
the Stockholder that this Agreement has been duly
authorized by all necessary corporate action on the part
of Parent and Sub, has been duly executed and delivered
by Parent and Sub and is a valid and binding agreement of
Parent and Sub enforceable against each of them in
accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance
companies generally and (ii) general principles of equity
(regardless of whether considered in a proceeding at law
or in equity).
3. Restriction on Transfer. The Stockholder
agrees that (other than pursuant to the Merger Agreement)
the Stockholder will not, and will not agree to, sell,
assign, tender, dispose of, encumber, mortgage,
hypothecate or otherwise transfer (collectively,
"Transfer") any Shares or any options, warrants or other
rights to acquire shares of Company Common Stock to any
person or entity prior to the termination of this
Agreement as provided in Section 10(b) hereof.
4. Agreement to Vote of the Stockholder. The
Stockholder hereby irrevocably and unconditionally agrees
to vote or to cause to be voted all Shares at the Company
Special Meeting and at any other annual or special
meeting of stockholders of the Company where the
following matters arise: (a) in favor of the approval
and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement, provided that the
Stockholder shall have no obligation to so vote if the
Board of Directors of the Company has withdrawn its
recommendation that stockholders of the Company vote in
favor of the approval and adoption of the Merger
Agreement, and (b) against (i) approval of any proposal
made in opposition to or in competition with the Merger
or any of the other transactions contemplated by the
Merger Agreement, (ii) any merger, consolidation, sale of
assets, business combination, share exchange,
reorganization or recapitalization of the Company or any
of its Subsidiaries, with or involving any party other
than Parent or Sub, (iii) any liquidation or winding up
of the Company, (iv) any extraordinary dividend by the
Company, (v) any change in the capital structure of the
Company (other than pursuant to the Merger Agreement) and
(vi) any other action that may reasonably be expected to
impede, interfere with, delay, postpone or attempt to
discourage the Merger or the other transactions
contemplated by the Merger Agreement or result in a
breach of any of the covenants, representations,
warranties or other obligations or agreements of the
Company under the Merger Agreement which would materially
and adversely affect the Company or its ability to
consummate the transactions contemplated by the Merger
Agreement.
5. Stockholder Covenant. Except as
contemplated by this Agreement, the Stockholder shall not
for a period ending on the later of December 31, 1996 and
three months following the termination of the Merger
Agreement (other than as a result of a breach by Parent
or Sub of this Agreement or the Merger Agreement) enter
into, execute, or be a party to any agreement or
understanding, written or otherwise, with any Person
whereby the Stockholder (i) grants or otherwise gives to
such Person an option or right to purchase or acquire any
or all of the Shares other than sales made in open market
transactions; (ii) agrees or covenants to vote or to
grant a proxy to vote any or all of the Shares held of
record or Beneficially Owned by the Stockholder, at any
meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock;
or (iii) agrees or covenants to tender any or all of the
Shares held of record or Beneficially Owned by the
Stockholder into any tender offer or exchange offer
relating to the Company Common Stock; provided that
nothing herein shall prevent the granting of a revocable
proxy or execution of a revocable written consent or the
tender of Shares into any tender offer of exchange offer
by the Stockholder.
6. Tax Matters. The Stockholder agrees to
execute the continuity of interest letter set forth as
Exhibit A hereto at or prior to the Effective Time.
7. Invalid Provisions. If any provision of
this Agreement shall be invalid or unenforceable under
applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only,
without it affecting the remaining provisions of this
Agreement,
8. Executed in Counterparts. This Agreement
may be executed in counterparts, each of which shall be
an original with the same effect as of the signatures
hereto and thereto were upon the same instrument.
9. Specific Performance. The parties hereto
agree that if for any reason the Stockholder fails to
perform any of its agreements or obligations under this
Agreement irreparable harm or injury to Parent and Sub
would be caused for which money damages would not be an
adequate remedy. Accordingly, the Stockholder agrees
that in seeking to enforce this Agreement against the
Stockholder, Parent and Sub shall be entitled to specific
performance and injunctive and other equitable relief;
provided that, with respect to the Stockholder's
agreements and obligations under this Agreement, the
provisions of this Section 9 are without prejudice to any
other rights or remedies, whether at law or in equity,
that Parent and Sub may have against the Stockholder for
any failure to perform any of its agreements or
obligations under this Agreement.
10. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
11. Amendments; Termination. (a) This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
(b) The provisions of this Agreement shall
terminate upon the earliest to occur of (i) the
consummation of the Merger or (ii) the termination of the
Merger Agreement, except for Section 5 hereof which shall
survive for the period specified therein.
(c) For purposes of this Agreement, the
term "Merger Agreement" includes the Merger Agreement, as
the same may be modified or amended from time to time;
provided that no such amendment or modification amends or
modifies the Merger Agreement in a manner such that the
Merger Agreement, as so amended or modified, is less
favorable to the Stockholder in any material respect than
is the Merger Agreement in effect on the date hereof.
12. Additional Shares. If, after the date
hereof, the Stockholder acquires the right to vote any
additional shares of Company Common Stock (any such
shares are called "Additional Shares"), including,
without limitation, upon exercise of any option, warrant
or right to acquire shares of Company Common Stock or
through any stock dividend or stock split, the provisions
of this Agreement (other than those set forth in Section
1) applicable to the Shares shall be applicable to such
Additional Shares as if such Additional Shares had been
Shares as of the date hereof. The provisions of the
immediately preceding sentence shall be effective with
respect to Additional Shares without action by any person
or entity immediately upon the acquisition by the
Stockholder of beneficial ownership of such Additional
Shares.
13. Action by Written Consent. If, in lieu of
the Company Special Meeting, shareholder action in
respect of the Merger Agreement or any of the
transactions contemplated by the Merger Agreement is
taken by written consent, the provisions of this
Agreement imposing obligations in respect of or in
connection with the Company Special Meeting shall apply
mutatis mutandis to such action by written consent.
14. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
successors (including, in the case of any individual, any
executors, administrators, estates, legal representatives
and heirs of such individual) and permitted assigns;
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto.
Without limiting the scope or effect of the restrictions
on Transfer set forth in Section 3 hereof, the
Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and
shall be binding upon any person or entity to which legal
or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of this 1st day of July, 1996.
ACADIA PARTNERS, L.P.
By: Acadia FW Partners, L.P.,
its general partner
By: Acadia MGP, Inc., its
general partner
By: /s/ Steven B. Gruber
Name: Steven B. Gruber
Title: Vice President
GENERAL RE CORPORATION
By: /s/ James E. Gustafson
Name: James E. Gustafson
Title: President and Chief
Operating Officer
N ACQUISITION CORPORATION
By: /s/ Joseph P. Brandon
Name: Joseph P. Brandon
Title: Vice President
EXHIBIT A
CONTINUITY OF INTEREST AGREEMENT
General Re Corporation, a Delaware corporation
("Parent"), N Acquisition Corporation , a Delaware
corporation ("Sub") and a direct wholly-owned subsidiary of
Parent and the undersigned shareholder (the "Shareholder")
of National Re Corporation, a Delaware corporation
("Company"), hereby enter into this Agreement on July 1,
1996 for the purposes hereinafter set forth (Parent, Sub and
the Shareholder are collectively referred to as the
"Parties").
WHEREAS, Parent, Sub and Company entered into an
Agreement and Plan of Merger dated as of July 1, 1996 (the
"Merger Agreement");
WHEREAS, pursuant to the Merger Agreement, Company
will merge (the "Merger") with and into Sub and pursuant to
such Merger, each Shareholder will surrender all of its
shares of common stock of Company ("Company Common Stock")
in exchange for cash and shares of common stock of Parent
("Parent Common Shares");
WHEREAS, the Parties wish to take certain steps to
qualify the Merger as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of
1986 (the "Code");
NOW, THEREFORE, the parties agree as follows:
1. The Shareholder represents that the
Shareholder has not purchased, sold, exchanged, transferred
by gift or otherwise disposed of shares of Company Common
Stock prior to the date hereof either in contemplation of or
as part of the Merger or otherwise.
2. The Shareholder represents that the
Shareholder does not have any plan or intention to sell,
exchange, transfer by gift or otherwise dispose (including
by transactions which would have the ultimate economic
effect of a disposition including, but not limited to, puts,
short-sales and equity swap type of arrangement)
(collectively, "dispose" or "disposition") any Parent Common
Shares to be received by such Shareholder pursuant to the
Merger.
3. The Shareholder further agrees that for a
period of eighteen months after the Merger (the "Post-Merger
Continuity Period"), the Shareholder will not sell,
exchange, transfer by gift or otherwise dispose of any of
the Parent Common Shares that the Shareholder receives in
exchange for Company Common Stock pursuant to the Merger;
provided, however, the Shareholder (or the estate of the
Shareholder) is expressly permitted to transfer the Parent
Common Shares pursuant to a pledge that is not a
disposition, upon the Shareholder's death or to a "grantor"
trust created for the Shareholder's benefit in which the
Shareholder is treated as the owner pursuant to Sections 671
through 678 of the Code and, if the Shareholder is a
partnership for U.S. Federal income tax purposes, the
Shareholder is expressly permitted to transfer its Parent
Common Shares to its Partners pro rata in accordance with
their interests in the Shareholder on the condition that,
prior to any such transfer of Parent Common Shares, each
Partner that would have owned (or would have been treated as
owning) 5% of Company Common Stock at the time of the Merger
(if the Shareholder had distributed its Company Common Stock
pro rata to its Partners in accordance with their interests
in the Shareholder at such time) executes a continuity of
interest agreement (i) identical to this Agreement or (ii)
substantially similar to this agreement and reasonably
acceptable to Skadden Arps or Other Tax Counsel.
Notwithstanding this paragraph 3, the Shareholder may, prior
to the end of the Post-Merger Continuity Period, sell,
exchange, transfer by gift or otherwise dispose of Parent
Common Shares that the Shareholder receives pursuant to the
Merger, if, prior to the date of such disposition, the
Shareholder (i) obtains the written consent of Skadden,
Arps, Slate, Meagher & Flom ("Skadden Arps") and Paul,
Weiss, Wharton, Rifkind and Garrison or (ii) obtains a
written opinion of Cleary, Gottlieb, Steen & Hamilton or
another nationally recognized tax counsel experienced in
tax-free corporate reorganizations ("Other Tax Counsel")
(which opinion will specifically set forth the facts and
analysis forming the basis of such opinion), that such
disposition will not prevent such Parent Common Shares from
qualifying as stock that satisfies the "continuity of
interest" requirement under Section 368 of the Code.
Notwithstanding the foregoing, to the extent that the Stock
Consideration (excluding cash in lieu of fractional shares)
issued in the Merger is issued in exchange for more than 50%
of the shares of Company Common Stock, the Shareholder may
dispose of a number of shares of Parent Common Stock that
bears the same relationship to the number of shares of
Parent Common Stock issued in excess of 50% of the shares of
Company Common Stock that (i) the number of shares of Parent
Common Stock held by the Shareholder bears to (ii) the
number of shares of Parent Common Stock held by all
shareholders who execute continuity of interest agreements
substantially similar to this Agreement.
4. The Shareholder agrees that, during the Post-
Merger Continuity Period, the Shareholder will give notice
to Parent at least 30 days prior to any proposed disposition
of Parent Common Shares received pursuant to the Merger,
which notice shall describe (i) the number of Parent Common
Shares that will be subject to the proposed disposition, and
(ii) the manner of such disposition.
5. This Agreement shall be binding upon and
shall be enforceable against the successors and assigns of
the Parties hereto.
6. This Agreement shall not be modified,
amended, altered or supplemented except by a written
agreement executed by all of the Parties hereto.
7. All notices to Parent should be sent to:
General Re Corporation
695 East Main Street
Stamford, CT 06904
8. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and
the same document. This Agreement constitutes the entire
agreement among the Parties with respect to the subject
matter hereof.
9. Capitalized terms used but not defined herein
have the same meaning as in the Merger Agreement.
IN WITNESS WHEREOF, the Parties hereto have caused
this Agreement to be duly executed on the date first set
forth above.
GENERAL RE CORPORATION
By:
Name:
Title:
N ACQUISITION CORPORATION
By:
Name:
Title:
ACADIA PARTNERS, L.P.
By: Acadia FW Partners, L.P.,
its general partner
By: Acadia MGP, Inc., its
general partner
By:__________________
Name:
Title:
STOCKHOLDERS AGREEMENT
Agreement, dated as of July 1, 1996, by and
among Keystone, Inc., a Texas Corporation (the
"Stockholder"), General Re Corporation, a Delaware
corporation ("Parent"), and N Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"). Capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in
the Merger Agreement (as defined below).
In consideration of the execution by National
Re Corporation, a Delaware corporation (the "Company"),
of the Agreement and Plan of Merger, dated as of July 1,
1996 (the "Merger Agreement"), by and among the Company,
Parent and Sub and other good and valuable consideration,
receipt of which is hereby acknowledged, the Stockholder,
Parent and Sub hereby agree as follows:
1. Representations and Warranties of the
Stockholder. The Stockholder hereby represents and
warrants to Parent and Sub as follows:
(a) Title. As of the date hereof, the
Stockholder beneficially owns (exclusive of options)
approximately 1,825,335 shares (the "Shares") of Common
Stock, no par value (the "Company Common Stock"), of the
Company.
(b) Right to Vote. The Stockholder has
full legal power, authority and right to vote all Shares
in favor of approval and adoption of the Merger Agreement
and the transactions contemplated by the Merger Agreement
without the consent or approval of, or any other action
on the part of, any other person or entity. Without
limiting the generality of the foregoing, except for this
Agreement, the Amended and Restated Management
Stockholder Agreement dated as of February 5, 1992, the
Amended and Restated Investor Stockholders Agreement
dated as of February 5, 1992 and the Stockholders
Agreement dated as of February 5, 1992, by and among
Lincoln National Corporation, Keystone, Inc., Acadia
Partners, L.P. and the persons listed on Schedule A
thereto, the Stockholder is not a party to any voting
agreement with any person or entity with respect to any
of the Shares, granted any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposited any of the Shares
in a voting trust or entered into any arrangement or
agreement with any person or entity limiting or affecting
the Stockholder's legal power, authority or right to vote
the Shares in favor of the approval and adoption of the
Merger Agreement or any of the transactions contemplated
by the Merger Agreement. From and after the date hereof,
the Stockholder will not commit any act that could
restrict or otherwise affect such legal power, authority
and right to vote all Shares in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement. Without limiting
the generality of the foregoing, from and after the date
hereof the Stockholder will not enter into any voting
agreement with any person or entity with respect to any
of the Shares, grant any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposit any of the Shares
into a voting trust or otherwise enter into any agreement
or arrangement limiting or affecting the Stockholder's
legal power, authority or right to vote the Shares in
favor of the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger
Agreement (other than this Agreement).
(c) Authority. The Stockholder has full
legal power, authority and right to execute and deliver,
and to perform the obligations under, this Agreement.
This Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the
Stockholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally and (ii) general principles
of equity (regardless of whether considered in a
proceeding at law or in equity).
(d) Conflicting Instruments; No Transfer.
Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the agreements and
obligations hereunder will result in any breach,
violation of, conflict with, or default under any term of
any agreement, judgment, injunction, order, decree, law,
regulation or arrangement to which the Stockholder is a
party or by which the Stockholder (or any assets of the
Stockholder) is bound, except for any such breach,
violation, conflict or default which, individually or in
the aggregate, would not impair or affect the
Stockholder's ability to cast all votes represented by
the Shares in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated by the
Merger Agreement.
2. Representations and Warranties of Parent
and Sub. Parent and Sub hereby represent and warrant to
the Stockholder that this Agreement has been duly
authorized by all necessary corporate action on the part
of Parent and Sub, has been duly executed and delivered
by Parent and Sub and is a valid and binding agreement of
Parent and Sub enforceable against each of them in
accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance
companies generally and (ii) general principles of equity
(regardless of whether considered in a proceeding at law
or in equity).
3. Restriction on Transfer. The Stockholder
agrees that (other than pursuant to the Merger Agreement)
the Stockholder will not, and will not agree to, sell,
assign, tender, dispose of, encumber, mortgage,
hypothecate or otherwise transfer (collectively,
"Transfer") any Shares or any options, warrants or other
rights to acquire shares of Company Common Stock to any
person or entity prior to the termination of this
Agreement as provided in Section 10(b) hereof.
4. Agreement to Vote of the Stockholder. The
Stockholder hereby irrevocably and unconditionally agrees
to vote or to cause to be voted all Shares at the Company
Special Meeting and at any other annual or special
meeting of stockholders of the Company where the
following matters arise: (a) in favor of the approval
and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement, provided that the
Stockholder shall have no obligation to so vote if the
Board of Directors of the Company has withdrawn its
recommendation that stockholders of the Company vote in
favor of the approval and adoption of the Merger
Agreement, and (b) against (i) approval of any proposal
made in opposition to or in competition with the Merger
or any of the other transactions contemplated by the
Merger Agreement, (ii) any merger, consolidation, sale of
assets, business combination, share exchange,
reorganization or recapitalization of the Company or any
of its Subsidiaries, with or involving any party other
than Parent or Sub, (iii) any liquidation or winding up
of the Company, (iv) any extraordinary dividend by the
Company, (v) any change in the capital structure of the
Company (other than pursuant to the Merger Agreement) and
(vi) any other action that may reasonably be expected to
impede, interfere with, delay, postpone or attempt to
discourage the Merger or the other transactions
contemplated by the Merger Agreement or result in a
breach of any of the covenants, representations,
warranties or other obligations or agreements of the
Company under the Merger Agreement which would materially
and adversely affect the Company or its ability to
consummate the transactions contemplated by the Merger
Agreement.
5. Stockholder Covenant. Except as
contemplated by this Agreement, the Stockholder shall not
for a period ending on the later of December 31, 1996 and
three months following the termination of the Merger
Agreement (other than as a result of a breach by Parent
or Sub of this Agreement or the Merger Agreement) enter
into, execute, or be a party to any agreement or
understanding, written or otherwise, with any Person
whereby the Stockholder (i) grants or otherwise gives to
such Person an option or right to purchase or acquire any
or all of the Shares other than sales made in open market
transactions; (ii) agrees or covenants to vote or to
grant a proxy to vote any or all of the Shares held of
record or Beneficially Owned by the Stockholder, at any
meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock;
or (iii) agrees or covenants to tender any or all of the
Shares held of record or Beneficially Owned by the
Stockholder into any tender offer or exchange offer
relating to the Company Common Stock; provided that
nothing herein shall prevent the granting of a revocable
proxy or execution of a revocable written consent or the
tender of Shares into any tender offer of exchange offer
by the Stockholder.
6. Tax Matters. The Stockholder agrees to
execute the continuity of interest letter set forth as
Exhibit A hereto at or prior to the Effective Time.
7. Invalid Provisions. If any provision of
this Agreement shall be invalid or unenforceable under
applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only,
without it affecting the remaining provisions of this
Agreement,
8. Executed in Counterparts. This Agreement
may be executed in counterparts, each of which shall be
an original with the same effect as of the signatures
hereto and thereto were upon the same instrument.
9. Specific Performance. The parties hereto
agree that if for any reason the Stockholder fails to
perform any of its agreements or obligations under this
Agreement irreparable harm or injury to Parent and Sub
would be caused for which money damages would not be an
adequate remedy. Accordingly, the Stockholder agrees
that in seeking to enforce this Agreement against the
Stockholder, Parent and Sub shall be entitled to specific
performance and injunctive and other equitable relief;
provided that, with respect to the Stockholder's
agreements and obligations under this Agreement, the
provisions of this Section 9 are without prejudice to any
other rights or remedies, whether at law or in equity,
that Parent and Sub may have against the Stockholder for
any failure to perform any of its agreements or
obligations under this Agreement.
10. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
11. Amendments; Termination. (a) This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
(b) The provisions of this Agreement shall
terminate upon the earliest to occur of (i) the
consummation of the Merger or (ii) the termination of the
Merger Agreement, except for Section 5 hereof which shall
survive for the period specified therein.
(c) For purposes of this Agreement, the
term "Merger Agreement" includes the Merger Agreement, as
the same may be modified or amended from time to time;
provided that no such amendment or modification amends or
modifies the Merger Agreement in a manner such that the
Merger Agreement, as so amended or modified, is less
favorable to the Stockholder in any material respect than
is the Merger Agreement in effect on the date hereof.
12. Additional Shares. If, after the date
hereof, the Stockholder acquires the right to vote any
additional shares of Company Common Stock (any such
shares are called "Additional Shares"), including,
without limitation, upon exercise of any option, warrant
or right to acquire shares of Company Common Stock or
through any stock dividend or stock split, the provisions
of this Agreement (other than those set forth in Section
1) applicable to the Shares shall be applicable to such
Additional Shares as if such Additional Shares had been
Shares as of the date hereof. The provisions of the
immediately preceding sentence shall be effective with
respect to Additional Shares without action by any person
or entity immediately upon the acquisition by the
Stockholder of beneficial ownership of such Additional
Shares.
13. Action by Written Consent. If, in lieu of
the Company Special Meeting, shareholder action in
respect of the Merger Agreement or any of the
transactions contemplated by the Merger Agreement is
taken by written consent, the provisions of this
Agreement imposing obligations in respect of or in
connection with the Company Special Meeting shall apply
mutatis mutandis to such action by written consent.
14. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
successors (including, in the case of any individual, any
executors, administrators, estates, legal representatives
and heirs of such individual) and permitted assigns;
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto.
Without limiting the scope or effect of the restrictions
on Transfer set forth in Section 3 hereof, the
Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and
shall be binding upon any person or entity to which legal
or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of this 1st day of July, 1996.
KEYSTONE, INC.
By: /s/ Daniel L. Doctoroff
Name: Daniel L. Doctoroff
Title: Vice President
GENERAL RE CORPORATION
By: /s/ James E. Gustafson
Name: James E. Gustafson
Title: President and Chief
Operating Officer
N ACQUISITION CORPORATION
By: /s/ Joseph P. Brandon
Name: Joseph P. Brandon
Title: Vice President
EXHIBIT A
CONTINUITY OF INTEREST AGREEMENT
General Re Corporation, a Delaware corporation
("Parent"), N Acquisition Corporation, a Delaware
corporation ("Sub") and a direct wholly-owned subsidiary
of Parent and the undersigned shareholder (the
"Shareholder") of National Re Corporation, a Delaware
corporation ("Company"), hereby enter into this Agreement
on July 1, 1996 for the purposes hereinafter set forth
(Parent, Sub and the Shareholder are collectively
referred to as the "Parties").
WHEREAS, Parent, Sub and Company entered into
an Agreement and Plan of Merger dated as of July 1, 1996
(the "Merger Agreement");
WHEREAS, pursuant to the Merger Agreement,
Company will merge (the "Merger") with and into Sub and
pursuant to such Merger, each Shareholder will surrender
all of its shares of common stock of Company ("Company
Common Stock") in exchange for cash and shares of common
stock of Parent ("Parent Common Shares");
WHEREAS, the Parties wish to take certain steps
to qualify the Merger as a tax-free reorganization within
the meaning of Section 368(a) of the Internal Revenue
Code of 1986 (the "Code");
NOW, THEREFORE, the parties agree as follows:
1. The Shareholder represents that the
Shareholder has not purchased, sold, exchanged,
transferred by gift or otherwise disposed of shares of
Company Common Stock prior to the date hereof either in
contemplation of or as part of the Merger or otherwise.
2. The Shareholder represents that the
Shareholder does not have any plan or intention to sell,
exchange, transfer by gift or otherwise dispose
(including by transactions which would have the ultimate
economic effect of a disposition including, but not
limited to, puts, short-sales and equity swap type of
arrangement) (collectively, "dispose" or "disposition")
any Parent Common Shares to be received by such
Shareholder pursuant to the Merger.
3. The Shareholder further agrees that for a
period of eighteen months after the Merger (the "Post-
Merger Continuity Period"), the Shareholder will not
sell, exchange, transfer by gift or otherwise dispose of
any of the Parent Common Shares that the Shareholder
receives in exchange for Company Common Stock pursuant to
the Merger; provided, however, the Shareholder (or the
estate of the Shareholder) is expressly permitted to
transfer the Parent Common Shares pursuant to a pledge
that is not a disposition, upon the Shareholder's death
or to a "grantor" trust created for the Shareholder's
benefit in which the Shareholder is treated as the owner
pursuant to Sections 671 through 678 of the Code and, if
the Shareholder is a partnership for U.S. Federal income
tax purposes, the Shareholder is expressly permitted to
transfer its Parent Common Shares to its Partners pro
rata in accordance with their interests in the
Shareholder on the condition that, prior to any such
transfer of Parent Common Shares, each Partner that would
have owned (or would have been treated as owning) 5% of
Company Common Stock at the time of the Merger (if the
Shareholder had distributed its Company Common Stock pro
rata to its Partners in accordance with their interests
in the Shareholder at such time) executes a continuity of
interest agreement (i) identical to this Agreement or
(ii) substantially similar to this agreement and
reasonably acceptable to Skadden Arps or Other Tax
Counsel. Notwithstanding this paragraph 3, the
Shareholder may, prior to the end of the Post-Merger
Continuity Period, sell, exchange, transfer by gift or
otherwise dispose of Parent Common Shares that the
Shareholder receives pursuant to the Merger, if, prior to
the date of such disposition, the Shareholder (i) obtains
the written consent of Skadden, Arps, Slate, Meagher &
Flom ("Skadden Arps") and Paul, Weiss, Wharton, Rifkind
and Garrison or (ii) obtains a written opinion of Cleary,
Gottlieb, Steen & Hamilton or another nationally
recognized tax counsel experienced in tax-free corporate
reorganizations ("Other Tax Counsel") (which opinion will
specifically set forth the facts and analysis forming the
basis of such opinion), that such disposition will not
prevent such Parent Common Shares from qualifying as
stock that satisfies the "continuity of interest"
requirement under Section 368 of the Code.
Notwithstanding the foregoing, to the extent that the
Stock Consideration (excluding cash in lieu of fractional
shares) issued in the Merger is issued in exchange for
more than 50% of the shares of Company Common Stock, the
Shareholder may dispose of a number of shares of Parent
Common Stock that bears the same relationship to the
number of shares of Parent Common Stock issued in excess
of 50% of the shares of Company Common Stock that (i) the
number of shares of Parent Common Stock held by the
Shareholder bears to (ii) the number of shares of Parent
Common Stock held by all shareholders who execute
continuity of interest agreements substantially similar
to this Agreement.
4. The Shareholder agrees that, during the
Post-Merger Continuity Period, the Shareholder will give
notice to Parent at least 30 days prior to any proposed
disposition of Parent Common Shares received pursuant to
the Merger, which notice shall describe (i) the number of
Parent Common Shares that will be subject to the proposed
disposition, and (ii) the manner of such disposition.
5. This Agreement shall be binding upon and
shall be enforceable against the successors and assigns
of the Parties hereto.
6. This Agreement shall not be modified,
amended, altered or supplemented except by a written
agreement executed by all of the Parties hereto.
7. All notices to Parent should be sent to:
General Re Corporation
695 East Main Street
Stamford, Connecticut 06904
8. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one
and the same document. This Agreement constitutes the
entire agreement among the Parties with respect to the
subject matter hereof.
9. Capitalized terms used but not defined
herein have the same meaning as in the Merger Agreement.
IN WITNESS WHEREOF, the Parties hereto have
caused this Agreement to be duly executed on the date
first set forth above.
GENERAL RE CORPORATION
By:
Name:
Title:
N ACQUISITION CORPORATION
By:
Name:
Title:
KEYSTONE, INC.
By:
Name:
Title:
STOCKHOLDERS AGREEMENT
Agreement, dated as of July 1, 1996, by and
among Robert W. Eager, Jr. (the "Stockholder"), General
Re Corporation, a Delaware corporation ("Parent"), and N
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"). Capitalized
terms used but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement (as
defined below).
In consideration of the execution by National
Re Corporation, a Delaware corporation (the "Company"),
of the Agreement and Plan of Merger, dated as of July 1,
1996 (the "Merger Agreement"), by and among the Company,
Parent and Sub and other good and valuable consideration,
receipt of which is hereby acknowledged, the Stockholder,
Parent and Sub hereby agree as follows:
1. Representations and Warranties of the
Stockholder. The Stockholder hereby represents and
warrants to Parent and Sub as follows:
(a) Title. As of the date hereof, the
Stockholder beneficially owns (exclusive of options)
approximately 112,114 shares (the "Shares") of Common
Stock, no par value (the "Company Common Stock"), of the
Company.
(b) Right to Vote. The Stockholder has
full legal power, authority and right to vote all Shares
in favor of approval and adoption of the Merger Agreement
and the transactions contemplated by the Merger Agreement
without the consent or approval of, or any other action
on the part of, any other person or entity. Without
limiting the generality of the foregoing, except for this
Agreement, the Amended and Restated Management
Stockholder Agreement dated as of February 5, 1992, the
Amended and Restated Investor Stockholders Agreement
dated as of February 5, 1992 and the Stockholders
Agreement dated as of February 5, 1992, by and among
Lincoln National Corporation, Keystone, Inc., Acadia
Partners, L.P. and the persons listed on Schedule A
thereto, the Stockholder is not a party to any voting
agreement with any person or entity with respect to any
of the Shares, granted any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposited any of the Shares
in a voting trust or entered into any arrangement or
agreement with any person or entity limiting or affecting
the Stockholder's legal power, authority or right to vote
the Shares in favor of the approval and adoption of the
Merger Agreement or any of the transactions contemplated
by the Merger Agreement. From and after the date hereof,
the Stockholder will not commit any act that could
restrict or otherwise affect such legal power, authority
and right to vote all Shares in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement. Without limiting
the generality of the foregoing, from and after the date
hereof the Stockholder will not enter into any voting
agreement with any person or entity with respect to any
of the Shares, grant any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposit any of the Shares
into a voting trust or otherwise enter into any agreement
or arrangement limiting or affecting the Stockholder's
legal power, authority or right to vote the Shares in
favor of the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger
Agreement (other than this Agreement).
(c) Authority. The Stockholder has full
legal power, authority and right to execute and deliver,
and to perform the obligations under, this Agreement.
This Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the
Stockholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally and (ii) general principles
of equity (regardless of whether considered in a
proceeding at law or in equity).
(d) Conflicting Instruments; No Transfer.
Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the agreements and
obligations hereunder will result in any breach,
violation of, conflict with, or default under any term of
any agreement, judgment, injunction, order, decree, law,
regulation or arrangement to which the Stockholder is a
party or by which the Stockholder (or any assets of the
Stockholder) is bound, except for any such breach,
violation, conflict or default which, individually or in
the aggregate, would not impair or affect the
Stockholder's ability to cast all votes represented by
the Shares in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated by the
Merger Agreement.
2. Representations and Warranties of Parent
and Sub. Parent and Sub hereby represent and warrant to
the Stockholder that this Agreement has been duly
authorized by all necessary corporate action on the part
of Parent and Sub, has been duly executed and delivered
by Parent and Sub and is a valid and binding agreement of
Parent and Sub enforceable against each of them in
accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance
companies generally and (ii) general principles of equity
(regardless of whether considered in a proceeding at law
or in equity).
3. Restriction on Transfer. The Stockholder
agrees that (other than pursuant to the Merger Agreement)
the Stockholder will not, and will not agree to, sell,
assign, tender, dispose of, encumber, mortgage,
hypothecate or otherwise transfer (collectively,
"Transfer") any Shares or any options, warrants or other
rights to acquire shares of Company Common Stock to any
person or entity prior to the termination of this
Agreement as provided in Section 10(b) hereof.
4. Agreement to Vote of the Stockholder. The
Stockholder hereby irrevocably and unconditionally agrees
to vote or to cause to be voted all Shares at the Company
Special Meeting and at any other annual or special
meeting of stockholders of the Company where the
following matters arise: (a) in favor of the approval
and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement, provided that the
Stockholder shall have no obligation to so vote if the
Board of Directors of the Company has withdrawn its
recommendation that stockholders of the Company vote in
favor of the approval and adoption of the Merger
Agreement, and (b) against (i) approval of any proposal
made in opposition to or in competition with the Merger
or any of the other transactions contemplated by the
Merger Agreement, (ii) any merger, consolidation, sale of
assets, business combination, share exchange,
reorganization or recapitalization of the Company or any
of its Subsidiaries, with or involving any party other
than Parent or Sub, (iii) any liquidation or winding up
of the Company, (iv) any extraordinary dividend by the
Company, (v) any change in the capital structure of the
Company (other than pursuant to the Merger Agreement) and
(vi) any other action that may reasonably be expected to
impede, interfere with, delay, postpone or attempt to
discourage the Merger or the other transactions
contemplated by the Merger Agreement or result in a
breach of any of the covenants, representations,
warranties or other obligations or agreements of the
Company under the Merger Agreement which would materially
and adversely affect the Company or its ability to
consummate the transactions contemplated by the Merger
Agreement.
5. Stockholder Covenant. Except as
contemplated by this Agreement, the Stockholder shall not
for a period ending on the later of December 31, 1996 and
three months following the termination of the Merger
Agreement (other than as a result of a breach by Parent
or Sub of this Agreement or the Merger Agreement) enter
into, execute, or be a party to any agreement or
understanding, written or otherwise, with any Person
whereby the Stockholder (i) grants or otherwise gives to
such Person an option or right to purchase or acquire any
or all of the Shares other than sales made in open market
transactions; (ii) agrees or covenants to vote or to
grant a proxy to vote any or all of the Shares held of
record or Beneficially Owned by the Stockholder, at any
meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock;
or (iii) agrees or covenants to tender any or all of the
Shares held of record or Beneficially Owned by the
Stockholder into any tender offer or exchange offer
relating to the Company Common Stock; provided that
nothing herein shall prevent the granting of a revocable
proxy or execution of a revocable written consent or the
tender of Shares into any tender offer of exchange offer
by the Stockholder.
6. Invalid Provisions. If any provision of
this Agreement shall be invalid or unenforceable under
applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only,
without it affecting the remaining provisions of this
Agreement,
7. Executed in Counterparts. This Agreement
may be executed in counterparts, each of which shall be
an original with the same effect as of the signatures
hereto and thereto were upon the same instrument.
8. Specific Performance. The parties hereto
agree that if for any reason the Stockholder fails to
perform any of its agreements or obligations under this
Agreement irreparable harm or injury to Parent and Sub
would be caused for which money damages would not be an
adequate remedy. Accordingly, the Stockholder agrees
that in seeking to enforce this Agreement against the
Stockholder, Parent and Sub shall be entitled to specific
performance and injunctive and other equitable relief;
provided that, with respect to the Stockholder's
agreements and obligations under this Agreement, the
provisions of this Section 8 are without prejudice to any
other rights or remedies, whether at law or in equity,
that Parent and Sub may have against the Stockholder for
any failure to perform any of its agreements or
obligations under this Agreement.
9. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
10. Amendments; Termination. (a) This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
(b) The provisions of this Agreement shall
terminate upon the earliest to occur of (i) the
consummation of the Merger or (ii) the termination of the
Merger Agreement, except for Section 5 hereof which shall
survive for the period specified therein.
(c) For purposes of this Agreement, the
term "Merger Agreement" includes the Merger Agreement, as
the same may be modified or amended from time to time;
provided that no such amendment or modification amends or
modifies the Merger Agreement in a manner such that the
Merger Agreement, as so amended or modified, is less
favorable to the Stockholder in any material respect than
is the Merger Agreement in effect on the date hereof.
11. Additional Shares. If, after the date
hereof, the Stockholder acquires the right to vote any
additional shares of Company Common Stock (any such
shares are called "Additional Shares"), including,
without limitation, upon exercise of any option, warrant
or right to acquire shares of Company Common Stock or
through any stock dividend or stock split, the provisions
of this Agreement (other than those set forth in Section
1) applicable to the Shares shall be applicable to such
Additional Shares as if such Additional Shares had been
Shares as of the date hereof. The provisions of the
immediately preceding sentence shall be effective with
respect to Additional Shares without action by any person
or entity immediately upon the acquisition by the
Stockholder of beneficial ownership of such Additional
Shares.
12. Action by Written Consent. If, in lieu of
the Company Special Meeting, shareholder action in
respect of the Merger Agreement or any of the
transactions contemplated by the Merger Agreement is
taken by written consent, the provisions of this
Agreement imposing obligations in respect of or in
connection with the Company Special Meeting shall apply
mutatis mutandis to such action by written consent.
13. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
successors (including, in the case of any individual, any
executors, administrators, estates, legal representatives
and heirs of such individual) and permitted assigns;
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto.
Without limiting the scope or effect of the restrictions
on Transfer set forth in Section 3 hereof, the
Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and
shall be binding upon any person or entity to which legal
or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of this 1st day of July, 1996.
/s/ Robert W. Eager, Jr.
Robert W. Eager, Jr.
GENERAL RE CORPORATION
By: /s/ James E. Gustafson
Name: James E. Gustafson
Title: President and Chief
Operating Officer
N ACQUISITION CORPORATION
By: /s/ Joseph P. Brandon
Name: Joseph P. Brandon
Title: Vice President
STOCKHOLDERS AGREEMENT
Agreement, dated as of July 1, 1996, by and
among Peter A. Cheney (the "Stockholder"), General Re
Corporation, a Delaware corporation ("Parent"), and N
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"). Capitalized
terms used but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement (as
defined below).
In consideration of the execution by National
Re Corporation, a Delaware corporation (the "Company"),
of the Agreement and Plan of Merger, dated as of July 1,
1996 (the "Merger Agreement"), by and among the Company,
Parent and Sub and other good and valuable consideration,
receipt of which is hereby acknowledged, the Stockholder,
Parent and Sub hereby agree as follows:
1. Representations and Warranties of the
Stockholder. The Stockholder hereby represents and
warrants to Parent and Sub as follows:
(a) Title. As of the date hereof, the
Stockholder beneficially owns (exclusive of options)
approximately 85,069 shares (the "Shares") of Common
Stock, no par value (the "Company Common Stock"), of the
Company.
(b) Right to Vote. The Stockholder has
full legal power, authority and right to vote all Shares
in favor of approval and adoption of the Merger Agreement
and the transactions contemplated by the Merger Agreement
without the consent or approval of, or any other action
on the part of, any other person or entity. Without
limiting the generality of the foregoing, except for this
Agreement, the Amended and Restated Management
Stockholder Agreement dated as of February 5, 1992, the
Amended and Restated Investor Stockholders Agreement
dated as of February 5, 1992 and the Stockholders
Agreement dated as of February 5, 1992, by and among
Lincoln National Corporation, Keystone, Inc., Acadia
Partners, L.P. and the persons listed on Schedule A
thereto, the Stockholder is not a party to any voting
agreement with any person or entity with respect to any
of the Shares, granted any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposited any of the Shares
in a voting trust or entered into any arrangement or
agreement with any person or entity limiting or affecting
the Stockholder's legal power, authority or right to vote
the Shares in favor of the approval and adoption of the
Merger Agreement or any of the transactions contemplated
by the Merger Agreement. From and after the date hereof,
the Stockholder will not commit any act that could
restrict or otherwise affect such legal power, authority
and right to vote all Shares in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement. Without limiting
the generality of the foregoing, from and after the date
hereof the Stockholder will not enter into any voting
agreement with any person or entity with respect to any
of the Shares, grant any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposit any of the Shares
into a voting trust or otherwise enter into any agreement
or arrangement limiting or affecting the Stockholder's
legal power, authority or right to vote the Shares in
favor of the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger
Agreement (other than this Agreement).
(c) Authority. The Stockholder has full
legal power, authority and right to execute and deliver,
and to perform the obligations under, this Agreement.
This Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the
Stockholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally and (ii) general principles
of equity (regardless of whether considered in a
proceeding at law or in equity).
(d) Conflicting Instruments; No Transfer.
Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the agreements and
obligations hereunder will result in any breach,
violation of, conflict with, or default under any term of
any agreement, judgment, injunction, order, decree, law,
regulation or arrangement to which the Stockholder is a
party or by which the Stockholder (or any assets of the
Stockholder) is bound, except for any such breach,
violation, conflict or default which, individually or in
the aggregate, would not impair or affect the
Stockholder's ability to cast all votes represented by
the Shares in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated by the
Merger Agreement.
2. Representations and Warranties of Parent
and Sub. Parent and Sub hereby represent and warrant to
the Stockholder that this Agreement has been duly
authorized by all necessary corporate action on the part
of Parent and Sub, has been duly executed and delivered
by Parent and Sub and is a valid and binding agreement of
Parent and Sub enforceable against each of them in
accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance
companies generally and (ii) general principles of equity
(regardless of whether considered in a proceeding at law
or in equity).
3. Restriction on Transfer. The Stockholder
agrees that (other than pursuant to the Merger Agreement)
the Stockholder will not, and will not agree to, sell,
assign, tender, dispose of, encumber, mortgage,
hypothecate or otherwise transfer (collectively,
"Transfer") any Shares or any options, warrants or other
rights to acquire shares of Company Common Stock to any
person or entity prior to the termination of this
Agreement as provided in Section 10(b) hereof.
4. Agreement to Vote of the Stockholder. The
Stockholder hereby irrevocably and unconditionally agrees
to vote or to cause to be voted all Shares at the Company
Special Meeting and at any other annual or special
meeting of stockholders of the Company where the
following matters arise: (a) in favor of the approval
and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement, provided that the
Stockholder shall have no obligation to so vote if the
Board of Directors of the Company has withdrawn its
recommendation that stockholders of the Company vote in
favor of the approval and adoption of the Merger
Agreement, and (b) against (i) approval of any proposal
made in opposition to or in competition with the Merger
or any of the other transactions contemplated by the
Merger Agreement, (ii) any merger, consolidation, sale of
assets, business combination, share exchange,
reorganization or recapitalization of the Company or any
of its Subsidiaries, with or involving any party other
than Parent or Sub, (iii) any liquidation or winding up
of the Company, (iv) any extraordinary dividend by the
Company, (v) any change in the capital structure of the
Company (other than pursuant to the Merger Agreement) and
(vi) any other action that may reasonably be expected to
impede, interfere with, delay, postpone or attempt to
discourage the Merger or the other transactions
contemplated by the Merger Agreement or result in a
breach of any of the covenants, representations,
warranties or other obligations or agreements of the
Company under the Merger Agreement which would materially
and adversely affect the Company or its ability to
consummate the transactions contemplated by the Merger
Agreement.
5. Stockholder Covenant. Except as
contemplated by this Agreement, the Stockholder shall not
for a period ending on the later of December 31, 1996 and
three months following the termination of the Merger
Agreement (other than as a result of a breach by Parent
or Sub of this Agreement or the Merger Agreement) enter
into, execute, or be a party to any agreement or
understanding, written or otherwise, with any Person
whereby the Stockholder (i) grants or otherwise gives to
such Person an option or right to purchase or acquire any
or all of the Shares other than sales made in open market
transactions; (ii) agrees or covenants to vote or to
grant a proxy to vote any or all of the Shares held of
record or Beneficially Owned by the Stockholder, at any
meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock;
or (iii) agrees or covenants to tender any or all of the
Shares held of record or Beneficially Owned by the
Stockholder into any tender offer or exchange offer
relating to the Company Common Stock; provided that
nothing herein shall prevent the granting of a revocable
proxy or execution of a revocable written consent or the
tender of Shares into any tender offer of exchange offer
by the Stockholder.
6. Invalid Provisions. If any provision of
this Agreement shall be invalid or unenforceable under
applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only,
without it affecting the remaining provisions of this
Agreement,
7. Executed in Counterparts. This Agreement
may be executed in counterparts, each of which shall be
an original with the same effect as of the signatures
hereto and thereto were upon the same instrument.
8. Specific Performance. The parties hereto
agree that if for any reason the Stockholder fails to
perform any of its agreements or obligations under this
Agreement irreparable harm or injury to Parent and Sub
would be caused for which money damages would not be an
adequate remedy. Accordingly, the Stockholder agrees
that in seeking to enforce this Agreement against the
Stockholder, Parent and Sub shall be entitled to specific
performance and injunctive and other equitable relief;
provided that, with respect to the Stockholder's
agreements and obligations under this Agreement, the
provisions of this Section 8 are without prejudice to any
other rights or remedies, whether at law or in equity,
that Parent and Sub may have against the Stockholder for
any failure to perform any of its agreements or
obligations under this Agreement.
9. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
10. Amendments; Termination. (a) This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
(b) The provisions of this Agreement shall
terminate upon the earliest to occur of (i) the
consummation of the Merger or (ii) the termination of the
Merger Agreement, except for Section 5 hereof which shall
survive for the period specified therein.
(c) For purposes of this Agreement, the
term "Merger Agreement" includes the Merger Agreement, as
the same may be modified or amended from time to time;
provided that no such amendment or modification amends or
modifies the Merger Agreement in a manner such that the
Merger Agreement, as so amended or modified, is less
favorable to the Stockholder in any material respect than
is the Merger Agreement in effect on the date hereof.
11. Additional Shares. If, after the date
hereof, the Stockholder acquires the right to vote any
additional shares of Company Common Stock (any such
shares are called "Additional Shares"), including,
without limitation, upon exercise of any option, warrant
or right to acquire shares of Company Common Stock or
through any stock dividend or stock split, the provisions
of this Agreement (other than those set forth in Section
1) applicable to the Shares shall be applicable to such
Additional Shares as if such Additional Shares had been
Shares as of the date hereof. The provisions of the
immediately preceding sentence shall be effective with
respect to Additional Shares without action by any person
or entity immediately upon the acquisition by the
Stockholder of beneficial ownership of such Additional
Shares.
12. Action by Written Consent. If, in lieu of
the Company Special Meeting, shareholder action in
respect of the Merger Agreement or any of the
transactions contemplated by the Merger Agreement is
taken by written consent, the provisions of this
Agreement imposing obligations in respect of or in
connection with the Company Special Meeting shall apply
mutatis mutandis to such action by written consent.
13. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
successors (including, in the case of any individual, any
executors, administrators, estates, legal representatives
and heirs of such individual) and permitted assigns;
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto.
Without limiting the scope or effect of the restrictions
on Transfer set forth in Section 3 hereof, the
Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and
shall be binding upon any person or entity to which legal
or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of this 1st day of July, 1996.
/s/ Peter A. Cheney
Peter A. Cheney
GENERAL RE CORPORATION
By: /s/ James E. Gustafson
Name: James E. Gustafson
Title: President and Chief
Operating Officer
N ACQUISITION CORPORATION
By: /s/ Joseph P. Brandon
Name: Joseph P. Brandon
Title: Vice President
STOCKHOLDERS AGREEMENT
Agreement, dated as of July 1, 1996, by and
among William D. Warren (the "Stockholder"), General Re
Corporation, a Delaware corporation ("Parent"), and N
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"). Capitalized
terms used but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement (as
defined below).
In consideration of the execution by National
Re Corporation, a Delaware corporation (the "Company"),
of the Agreement and Plan of Merger, dated as of July 1,
1996 (the "Merger Agreement"), by and among the Company,
Parent and Sub and other good and valuable consideration,
receipt of which is hereby acknowledged, the Stockholder,
Parent and Sub hereby agree as follows:
1. Representations and Warranties of the
Stockholder. The Stockholder hereby represents and
warrants to Parent and Sub as follows:
(a) Title. As of the date hereof, the
Stockholder beneficially owns (exclusive of options)
approximately 214,882 shares (the "Shares") of Common
Stock, no par value (the "Company Common Stock"), of the
Company.
(b) Right to Vote. The Stockholder has
full legal power, authority and right to vote all Shares
in favor of approval and adoption of the Merger Agreement
and the transactions contemplated by the Merger Agreement
without the consent or approval of, or any other action
on the part of, any other person or entity. Without
limiting the generality of the foregoing, except for this
Agreement, the Amended and Restated Management
Stockholder Agreement dated as of February 5, 1992, the
Amended and Restated Investor Stockholders Agreement
dated as of February 5, 1992 and the Stockholders
Agreement dated as of February 5, 1992, by and among
Lincoln National Corporation, Keystone, Inc., Acadia
Partners, L.P. and the persons listed on Schedule A
thereto, the Stockholder is not a party to any voting
agreement with any person or entity with respect to any
of the Shares, granted any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposited any of the Shares
in a voting trust or entered into any arrangement or
agreement with any person or entity limiting or affecting
the Stockholder's legal power, authority or right to vote
the Shares in favor of the approval and adoption of the
Merger Agreement or any of the transactions contemplated
by the Merger Agreement. From and after the date hereof,
the Stockholder will not commit any act that could
restrict or otherwise affect such legal power, authority
and right to vote all Shares in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement. Without limiting
the generality of the foregoing, from and after the date
hereof the Stockholder will not enter into any voting
agreement with any person or entity with respect to any
of the Shares, grant any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposit any of the Shares
into a voting trust or otherwise enter into any agreement
or arrangement limiting or affecting the Stockholder's
legal power, authority or right to vote the Shares in
favor of the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger
Agreement (other than this Agreement).
(c) Authority. The Stockholder has full
legal power, authority and right to execute and deliver,
and to perform the obligations under, this Agreement.
This Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the
Stockholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally and (ii) general principles
of equity (regardless of whether considered in a
proceeding at law or in equity).
(d) Conflicting Instruments; No Transfer.
Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the agreements and
obligations hereunder will result in any breach,
violation of, conflict with, or default under any term of
any agreement, judgment, injunction, order, decree, law,
regulation or arrangement to which the Stockholder is a
party or by which the Stockholder (or any assets of the
Stockholder) is bound, except for any such breach,
violation, conflict or default which, individually or in
the aggregate, would not impair or affect the
Stockholder's ability to cast all votes represented by
the Shares in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated by the
Merger Agreement.
2. Representations and Warranties of Parent
and Sub. Parent and Sub hereby represent and warrant to
the Stockholder that this Agreement has been duly
authorized by all necessary corporate action on the part
of Parent and Sub, has been duly executed and delivered
by Parent and Sub and is a valid and binding agreement of
Parent and Sub enforceable against each of them in
accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance
companies generally and (ii) general principles of equity
(regardless of whether considered in a proceeding at law
or in equity).
3. Restriction on Transfer. The Stockholder
agrees that (other than pursuant to the Merger Agreement)
the Stockholder will not, and will not agree to, sell,
assign, tender, dispose of, encumber, mortgage,
hypothecate or otherwise transfer (collectively,
"Transfer") any Shares or any options, warrants or other
rights to acquire shares of Company Common Stock to any
person or entity prior to the termination of this
Agreement as provided in Section 10(b) hereof.
4. Agreement to Vote of the Stockholder. The
Stockholder hereby irrevocably and unconditionally agrees
to vote or to cause to be voted all Shares at the Company
Special Meeting and at any other annual or special
meeting of stockholders of the Company where the
following matters arise: (a) in favor of the approval
and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement, provided that the
Stockholder shall have no obligation to so vote if the
Board of Directors of the Company has withdrawn its
recommendation that stockholders of the Company vote in
favor of the approval and adoption of the Merger
Agreement, and (b) against (i) approval of any proposal
made in opposition to or in competition with the Merger
or any of the other transactions contemplated by the
Merger Agreement, (ii) any merger, consolidation, sale of
assets, business combination, share exchange,
reorganization or recapitalization of the Company or any
of its Subsidiaries, with or involving any party other
than Parent or Sub, (iii) any liquidation or winding up
of the Company, (iv) any extraordinary dividend by the
Company, (v) any change in the capital structure of the
Company (other than pursuant to the Merger Agreement) and
(vi) any other action that may reasonably be expected to
impede, interfere with, delay, postpone or attempt to
discourage the Merger or the other transactions
contemplated by the Merger Agreement or result in a
breach of any of the covenants, representations,
warranties or other obligations or agreements of the
Company under the Merger Agreement which would materially
and adversely affect the Company or its ability to
consummate the transactions contemplated by the Merger
Agreement.
5. Stockholder Covenant. Except as
contemplated by this Agreement, the Stockholder shall not
for a period ending on the later of December 31, 1996 and
three months following the termination of the Merger
Agreement (other than as a result of a breach by Parent
or Sub of this Agreement or the Merger Agreement) enter
into, execute, or be a party to any agreement or
understanding, written or otherwise, with any Person
whereby the Stockholder (i) grants or otherwise gives to
such Person an option or right to purchase or acquire any
or all of the Shares other than sales made in open market
transactions; (ii) agrees or covenants to vote or to
grant a proxy to vote any or all of the Shares held of
record or Beneficially Owned by the Stockholder, at any
meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock;
or (iii) agrees or covenants to tender any or all of the
Shares held of record or Beneficially Owned by the
Stockholder into any tender offer or exchange offer
relating to the Company Common Stock; provided that
nothing herein shall prevent the granting of a revocable
proxy or execution of a revocable written consent or the
tender of Shares into any tender offer of exchange offer
by the Stockholder.
6. Invalid Provisions. If any provision of
this Agreement shall be invalid or unenforceable under
applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only,
without it affecting the remaining provisions of this
Agreement,
7. Executed in Counterparts. This Agreement
may be executed in counterparts, each of which shall be
an original with the same effect as of the signatures
hereto and thereto were upon the same instrument.
8. Specific Performance. The parties hereto
agree that if for any reason the Stockholder fails to
perform any of its agreements or obligations under this
Agreement irreparable harm or injury to Parent and Sub
would be caused for which money damages would not be an
adequate remedy. Accordingly, the Stockholder agrees
that in seeking to enforce this Agreement against the
Stockholder, Parent and Sub shall be entitled to specific
performance and injunctive and other equitable relief;
provided that, with respect to the Stockholder's
agreements and obligations under this Agreement, the
provisions of this Section 8 are without prejudice to any
other rights or remedies, whether at law or in equity,
that Parent and Sub may have against the Stockholder for
any failure to perform any of its agreements or
obligations under this Agreement.
9. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
10. Amendments; Termination. (a) This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
(b) The provisions of this Agreement shall
terminate upon the earliest to occur of (i) the
consummation of the Merger or (ii) the termination of the
Merger Agreement, except for Section 5 hereof which shall
survive for the period specified therein.
(c) For purposes of this Agreement, the
term "Merger Agreement" includes the Merger Agreement, as
the same may be modified or amended from time to time;
provided that no such amendment or modification amends or
modifies the Merger Agreement in a manner such that the
Merger Agreement, as so amended or modified, is less
favorable to the Stockholder in any material respect than
is the Merger Agreement in effect on the date hereof.
11. Additional Shares. If, after the date
hereof, the Stockholder acquires the right to vote any
additional shares of Company Common Stock (any such
shares are called "Additional Shares"), including,
without limitation, upon exercise of any option, warrant
or right to acquire shares of Company Common Stock or
through any stock dividend or stock split, the provisions
of this Agreement (other than those set forth in Section
1) applicable to the Shares shall be applicable to such
Additional Shares as if such Additional Shares had been
Shares as of the date hereof. The provisions of the
immediately preceding sentence shall be effective with
respect to Additional Shares without action by any person
or entity immediately upon the acquisition by the
Stockholder of beneficial ownership of such Additional
Shares.
12. Action by Written Consent. If, in lieu of
the Company Special Meeting, shareholder action in
respect of the Merger Agreement or any of the
transactions contemplated by the Merger Agreement is
taken by written consent, the provisions of this
Agreement imposing obligations in respect of or in
connection with the Company Special Meeting shall apply
mutatis mutandis to such action by written consent.
13. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
successors (including, in the case of any individual, any
executors, administrators, estates, legal representatives
and heirs of such individual) and permitted assigns;
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto.
Without limiting the scope or effect of the restrictions
on Transfer set forth in Section 3 hereof, the
Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and
shall be binding upon any person or entity to which legal
or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of this 1st day of July, 1996.
/s/ William D. Warren
William D. Warren
GENERAL RE CORPORATION
By: /s/ James E. Gustafson
Name: James E. Gustafson
Title: President and Chief
Operating Officer
N ACQUISITION CORPORATION
By: /s/ Joseph P. Brandon
Name: Joseph P. Brandon
Title: Vice President
STOCKHOLDERS AGREEMENT
Agreement, dated as of July 1, 1996, by and
among Timothy T. McCaffrey (the "Stockholder"), General
Re Corporation, a Delaware corporation ("Parent"), and N
Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"). Capitalized
terms used but not defined herein shall have the meanings
ascribed to such terms in the Merger Agreement (as
defined below).
In consideration of the execution by National
Re Corporation, a Delaware corporation (the "Company"),
of the Agreement and Plan of Merger, dated as of July 1,
1996 (the "Merger Agreement"), by and among the Company,
Parent and Sub and other good and valuable consideration,
receipt of which is hereby acknowledged, the Stockholder,
Parent and Sub hereby agree as follows:
1. Representations and Warranties of the
Stockholder. The Stockholder hereby represents and
warrants to Parent and Sub as follows:
(a) Title. As of the date hereof, the
Stockholder beneficially owns (exclusive of options)
approximately 84,069 shares (the "Shares") of Common
Stock, no par value (the "Company Common Stock"), of the
Company.
(b) Right to Vote. The Stockholder has
full legal power, authority and right to vote all Shares
in favor of approval and adoption of the Merger Agreement
and the transactions contemplated by the Merger Agreement
without the consent or approval of, or any other action
on the part of, any other person or entity. Without
limiting the generality of the foregoing, except for this
Agreement, the Amended and Restated Management
Stockholder Agreement dated as of February 5, 1992, the
Amended and Restated Investor Stockholders Agreement
dated as of February 5, 1992 and the Stockholders
Agreement dated as of February 5, 1992, by and among
Lincoln National Corporation, Keystone, Inc., Acadia
Partners, L.P. and the persons listed on Schedule A
thereto, the Stockholder is not a party to any voting
agreement with any person or entity with respect to any
of the Shares, granted any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposited any of the Shares
in a voting trust or entered into any arrangement or
agreement with any person or entity limiting or affecting
the Stockholder's legal power, authority or right to vote
the Shares in favor of the approval and adoption of the
Merger Agreement or any of the transactions contemplated
by the Merger Agreement. From and after the date hereof,
the Stockholder will not commit any act that could
restrict or otherwise affect such legal power, authority
and right to vote all Shares in favor of the approval and
adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement. Without limiting
the generality of the foregoing, from and after the date
hereof the Stockholder will not enter into any voting
agreement with any person or entity with respect to any
of the Shares, grant any person or entity any proxy
(revocable or irrevocable) or power of attorney with
respect to any of the Shares, deposit any of the Shares
into a voting trust or otherwise enter into any agreement
or arrangement limiting or affecting the Stockholder's
legal power, authority or right to vote the Shares in
favor of the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger
Agreement (other than this Agreement).
(c) Authority. The Stockholder has full
legal power, authority and right to execute and deliver,
and to perform the obligations under, this Agreement.
This Agreement has been duly executed and delivered by
the Stockholder and constitutes a valid and binding
agreement of the Stockholder enforceable against the
Stockholder in accordance with its terms, subject to (i)
bankruptcy, insolvency, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally and (ii) general principles
of equity (regardless of whether considered in a
proceeding at law or in equity).
(d) Conflicting Instruments; No Transfer.
Neither the execution and delivery of this Agreement nor
the performance by the Stockholder of the agreements and
obligations hereunder will result in any breach,
violation of, conflict with, or default under any term of
any agreement, judgment, injunction, order, decree, law,
regulation or arrangement to which the Stockholder is a
party or by which the Stockholder (or any assets of the
Stockholder) is bound, except for any such breach,
violation, conflict or default which, individually or in
the aggregate, would not impair or affect the
Stockholder's ability to cast all votes represented by
the Shares in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated by the
Merger Agreement.
2. Representations and Warranties of Parent
and Sub. Parent and Sub hereby represent and warrant to
the Stockholder that this Agreement has been duly
authorized by all necessary corporate action on the part
of Parent and Sub, has been duly executed and delivered
by Parent and Sub and is a valid and binding agreement of
Parent and Sub enforceable against each of them in
accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent transfer,
moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally and the rights of creditors of insurance
companies generally and (ii) general principles of equity
(regardless of whether considered in a proceeding at law
or in equity).
3. Restriction on Transfer. The Stockholder
agrees that (other than pursuant to the Merger Agreement)
the Stockholder will not, and will not agree to, sell,
assign, tender, dispose of, encumber, mortgage,
hypothecate or otherwise transfer (collectively,
"Transfer") any Shares or any options, warrants or other
rights to acquire shares of Company Common Stock to any
person or entity prior to the termination of this
Agreement as provided in Section 10(b) hereof.
4. Agreement to Vote of the Stockholder. The
Stockholder hereby irrevocably and unconditionally agrees
to vote or to cause to be voted all Shares at the Company
Special Meeting and at any other annual or special
meeting of stockholders of the Company where the
following matters arise: (a) in favor of the approval
and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement, provided that the
Stockholder shall have no obligation to so vote if the
Board of Directors of the Company has withdrawn its
recommendation that stockholders of the Company vote in
favor of the approval and adoption of the Merger
Agreement, and (b) against (i) approval of any proposal
made in opposition to or in competition with the Merger
or any of the other transactions contemplated by the
Merger Agreement, (ii) any merger, consolidation, sale of
assets, business combination, share exchange,
reorganization or recapitalization of the Company or any
of its Subsidiaries, with or involving any party other
than Parent or Sub, (iii) any liquidation or winding up
of the Company, (iv) any extraordinary dividend by the
Company, (v) any change in the capital structure of the
Company (other than pursuant to the Merger Agreement) and
(vi) any other action that may reasonably be expected to
impede, interfere with, delay, postpone or attempt to
discourage the Merger or the other transactions
contemplated by the Merger Agreement or result in a
breach of any of the covenants, representations,
warranties or other obligations or agreements of the
Company under the Merger Agreement which would materially
and adversely affect the Company or its ability to
consummate the transactions contemplated by the Merger
Agreement.
5. Stockholder Covenant. Except as
contemplated by this Agreement, the Stockholder shall not
for a period ending on the later of December 31, 1996 and
three months following the termination of the Merger
Agreement (other than as a result of a breach by Parent
or Sub of this Agreement or the Merger Agreement) enter
into, execute, or be a party to any agreement or
understanding, written or otherwise, with any Person
whereby the Stockholder (i) grants or otherwise gives to
such Person an option or right to purchase or acquire any
or all of the Shares other than sales made in open market
transactions; (ii) agrees or covenants to vote or to
grant a proxy to vote any or all of the Shares held of
record or Beneficially Owned by the Stockholder, at any
meeting (whether annual or special and whether or not an
adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any
written consent of the holders of Company Common Stock;
or (iii) agrees or covenants to tender any or all of the
Shares held of record or Beneficially Owned by the
Stockholder into any tender offer or exchange offer
relating to the Company Common Stock; provided that
nothing herein shall prevent the granting of a revocable
proxy or execution of a revocable written consent or the
tender of Shares into any tender offer of exchange offer
by the Stockholder.
6. Invalid Provisions. If any provision of
this Agreement shall be invalid or unenforceable under
applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only,
without it affecting the remaining provisions of this
Agreement,
7. Executed in Counterparts. This Agreement
may be executed in counterparts, each of which shall be
an original with the same effect as of the signatures
hereto and thereto were upon the same instrument.
8. Specific Performance. The parties hereto
agree that if for any reason the Stockholder fails to
perform any of its agreements or obligations under this
Agreement irreparable harm or injury to Parent and Sub
would be caused for which money damages would not be an
adequate remedy. Accordingly, the Stockholder agrees
that in seeking to enforce this Agreement against the
Stockholder, Parent and Sub shall be entitled to specific
performance and injunctive and other equitable relief;
provided that, with respect to the Stockholder's
agreements and obligations under this Agreement, the
provisions of this Section 8 are without prejudice to any
other rights or remedies, whether at law or in equity,
that Parent and Sub may have against the Stockholder for
any failure to perform any of its agreements or
obligations under this Agreement.
9. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of
the State of Delaware without giving effect to the
principles of conflicts of laws thereof.
10. Amendments; Termination. (a) This
Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto.
(b) The provisions of this Agreement shall
terminate upon the earliest to occur of (i) the
consummation of the Merger or (ii) the termination of the
Merger Agreement, except for Section 5 hereof which shall
survive for the period specified therein.
(c) For purposes of this Agreement, the
term "Merger Agreement" includes the Merger Agreement, as
the same may be modified or amended from time to time;
provided that no such amendment or modification amends or
modifies the Merger Agreement in a manner such that the
Merger Agreement, as so amended or modified, is less
favorable to the Stockholder in any material respect than
is the Merger Agreement in effect on the date hereof.
11. Additional Shares. If, after the date
hereof, the Stockholder acquires the right to vote any
additional shares of Company Common Stock (any such
shares are called "Additional Shares"), including,
without limitation, upon exercise of any option, warrant
or right to acquire shares of Company Common Stock or
through any stock dividend or stock split, the provisions
of this Agreement (other than those set forth in Section
1) applicable to the Shares shall be applicable to such
Additional Shares as if such Additional Shares had been
Shares as of the date hereof. The provisions of the
immediately preceding sentence shall be effective with
respect to Additional Shares without action by any person
or entity immediately upon the acquisition by the
Stockholder of beneficial ownership of such Additional
Shares.
12. Action by Written Consent. If, in lieu of
the Company Special Meeting, shareholder action in
respect of the Merger Agreement or any of the
transactions contemplated by the Merger Agreement is
taken by written consent, the provisions of this
Agreement imposing obligations in respect of or in
connection with the Company Special Meeting shall apply
mutatis mutandis to such action by written consent.
13. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective legal
successors (including, in the case of any individual, any
executors, administrators, estates, legal representatives
and heirs of such individual) and permitted assigns;
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this
Agreement without the consent of the other party hereto.
Without limiting the scope or effect of the restrictions
on Transfer set forth in Section 3 hereof, the
Stockholder agrees that this Agreement and the
obligations hereunder shall attach to the Shares and
shall be binding upon any person or entity to which legal
or beneficial ownership of such Shares shall pass,
whether by operation of law or otherwise.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of this 1st day of July, 1996.
/s/ Timothy T. McCaffrey
Timothy T. McCaffrey
GENERAL RE CORPORATION
By: /s/ James E. Gustafson
Name: James E. Gustafson
Title: President and Chief
Operating Officer
N ACQUISITION CORPORATION
By: /s/ Joseph P. Brandon
Name: Joseph P. Brandon
Title: Vice President
Exhibit 8
JOINT FILING AGREEMENT
This will confirm the agreement by and between the
undersigned that the Statement on Schedule 13D (the "State-
ment") filed on or about this date with respect to the benefi-
cial ownership by the undersigned of shares of common stock,
no par value per share, of National Re Corporation, a Delaware
corporation, is being filed on behalf of the undersigned.
Each of the undersigned hereby acknowledges that pursuant
to Rule 13d-1(f) promulgated under the Securities Exchange Act
of 1934, as amended, that each person on whose behalf the
Statement is filed is responsible for the timely filing of
such statement and any amendments thereto, and for the com-
pleteness and accuracy of the information concerning such
person contained therein; and that such person is not respon-
sible for the completeness or accuracy of the information
concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is
inaccurate.
This Agreement may be executed in one or more counter-
parts by each of the undersigned, and each of which, taken
together, shall constitute one and the same instrument.
Date: July 11, 1996
GENERAL RE CORPORATION
By: /s/ Charles F. Barr
_________________________________
Name: Charles F. Barr
Title: Vice President, General
Counsel & Secretary
N ACQUISITION CORPORATION
By: /s/ Charles F. Barr
_________________________________
Name: Charles F. Barr
Title: Vice President & Secretary
