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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 11, 1995
RE CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 1-5429
DELAWARE
(State or other jurisdiction of
incorporation of organization)
Two Stamford Plaza
Stamford, Connecticut
(Address of principal executive offices)
13-3351768
(IRS Employer
Identification No.)
06904-2148
(Zip Code)
Registrant's telephone number, including area code: (203) 977-6100
Exhibit Index Appears on Page 5
Page 1 of 5 Pages
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Item 5. Other Events.
On January 11, 1995, Re Capital Corporation (the "Registrant") entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Zurich
Reinsurance Centre Holdings, Inc. ("ZRC Holdings") and ZRC Merger-Sub Corp., a
wholly-owned subsidiary of ZRC Holdings.
The Merger Agreement provides that, at the effective time of the Merger
(the "Merger"), each share of the Registrant's common stock, par value $.10 per
share (the "Registrant's Common Stock"), outstanding immediately prior to the
effective time of the Merger will, without any action on the part of the
holder thereof, be converted into the right to receive $18.50 in cash, without
interest. ZRC Holdings will assume all obligations under the Registrant's
existing 5-1/2% Convertible Debentures due August 1, 2000 ($69 million
outstanding aggregate principal amount as of January 11, 1995) that are not
converted into the Registrant's Common Stock prior to the closing of the Merger.
Pursuant to an Option and Voting Agreement, dated as of January 11,
1995 (the "Option and Voting Agreement"), between John Deere Insurance Group,
Inc. ("John Deere") and ZRC Holdings, John Deere has (i) granted ZRC Holdings
an option to acquire under the circumstances described in the Option and Voting
Agreement, at $18.50 per share, its 3,087,598 shares of the Registrant's Common
Stock, comprising approximately 43.8% of the outstanding shares of the
registrant's Common Stock, and all future shares that John Deere may acquire,
and (ii) agreed to vote its shares in favor of the approval and adoption of the
Merger and against other proposals.
The closing of the Merger is subject to approval by the Registrant's
stockholders, certain state insurance regulatory approvals and certain other
customary conditions and approvals. The description contained herein of the
Merger and related agreements is qualified in its entirety by reference to the
Merger Agreement, the Option and Voting Agreement and the description contained
in the Press Release, dated January 12, 1995, copies of which are attached
hereto as Exhibits 99.1, 99.2 and 99.3, respectively, and which are
incorporated herein by reference.
Page 2 of 5 Pages
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Item 7. Financial Statement and Exhibits.
EXHIBITS
99.1 Agreement and Plan of Merger, dated as of January 11, 1995, among
Zurich Reinsurance Centre Holdings, Inc., Re Capital Corporation and
ZRC Merger-Sub Corp.
99.2 Option and Voting Agreement, dated as of January 11, 1995, between
John Deere Insurance Group, Inc. and Zurich Reinsurance Centre
Holdings, Inc.
99.3 Press Release, dated January 12, 1995
Page 3 of 5 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Current Report on Form 8-K to be
signed on its behalf by the undersigned hereunto duly authorized.
RE CAPITAL CORPORATION
(Registrant)
By: /s/ Conor D. Reilly
-------------------
Conor D. Reilly
Secretary
Dated: January 19, 1995
Page 4 of 5 Pages
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EXHIBIT INDEX
The following Exhibits are filed herewith.
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number DESCRIPTION Page
- ------- ----------- ------------
<S> <C>
No. 99.1 Agreement and Plan of Merger, dated as of January 11, 1995, 6
among Zurich Reinsurance Centre Holdings, Inc., Re Capital
Corporation and ZRC Merger-Sub Corp.
No. 99.2 Option and Voting Agreement, dated as of January 11, 1995, 46
between John Deere Insurance Group, Inc. and Zurich
Reinsurance Centre Holdings, Inc.
No. 99.3 Press Release, dated January 12, 1995 54
</TABLE>
Page 5 of 5 Pages
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EXHIBIT NO. 99.1
AGREEMENT AND PLAN
OF MERGER
DATED AS OF
JANUARY 11, 1995
AMONG
ZURICH REINSURANCE CENTRE HOLDINGS, INC.,
ZRC MERGER-SUB CORP.
AND
RE CAPITAL CORPORATION
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 By-Laws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Board of Directors of the Surviving Corporation . . . . . . . . . . . . . . 2
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.2 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.3 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.4 Conversion of Sub Securities . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.5 Stockholders to Have No Further Rights . . . . . . . . . . . . . . . . . . . 4
Section 3.6 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.7 Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.8 Shareholders' Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.9 Closing of the Company's Transfer Books . . . . . . . . . . . . . . . . . . 5
Section 3.10 Assistance in Consummation of the Merger . . . . . . . . . . . . . . . . . . 5
Section 3.11 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . 6
Section 4.3 Information in Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4 Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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<TABLE>
Caption>
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Section 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . 9
Section 5.5 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.6 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 12
Section 5.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.8 Information in Disclosure Documents . . . . . . . . . . . . . . . . . . . . 13
Section 5.9 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.11 Takeover Provisions Inapplicable . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.12 Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.13 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.14 Financial Advisor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.15 Compliance with Applicable Laws. . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.17 Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.18 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.19 Reinsurance; Retrocession. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.20 No Company Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Section 6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.3 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . 18
Section 6.4 Sub Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.5 Interim Operations of Sub. . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.1 Conduct of Business by the Company . . . . . . . . . . . . . . . . . . . . . 19
Section 7.2 Conduct of Business of Sub . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.3 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.2 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.3 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.4 [Intentionally Omitted]. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.6 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.7 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.8 No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE IX
CONDITIONS PRECEDENT
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Section 9.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . 27
Section 9.2 Conditions to Obligation of the Company to Effect the Merger . . . . . . . . 28
Section 9.3 Conditions to Obligations of Parent and Sub to Effect the Merger . . . . . . 28
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 10.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 10.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations, Warranties and Agreements . . . . . . . . . 31
Section 11.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.3 Expenses; Termination Fees . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.4 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 11.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 11.6 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 11.7 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of January 11, 1995, by and among ZURICH REINSURANCE CENTRE HOLDINGS, INC., a
Delaware corporation ("Parent"), ZRC MERGER-SUB CORP., a Delaware corporation
and a wholly owned subsidiary of Parent ("Sub"), and RE CAPITAL CORPORATION, a
Delaware corporation (the "Company"):
W I T N E S S E T H:
WHEREAS, Parent and the Company desire to effect a business
combination by means of the merger of Sub with and into 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 shareholders to consummate, the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties and agreements contained herein the parties
hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, on the Effective Date (as defined in Section 1.2), Sub shall
be merged into the Company and the separate existence of Sub shall thereupon
cease, and the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall by virtue of the Merger continue its corporate
existence under the laws of the State of Delaware.
Section 1.2 Effective Date of the Merger. The Merger shall
become effective at the date and time (the "Effective Date") when a properly
executed Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, which filing shall be made as soon as practicable following
fulfillment of the conditions set forth in Article IX hereof, or at such time
thereafter as is provided in such Certificate.
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ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of Sub, as in effect on the Effective Date, shall be the
Certificate of Incorporation of the Surviving Corporation.
Section 2.2 By-Laws of the Surviving Corporation. The
By-laws of the Sub as in effect on the Effective Date shall be the By-laws of
the Surviving Corporation.
Section 2.3 Board of Directors of the Surviving Corporation.
The directors of Sub immediately prior to the Effective Date, subject to the
applicable provisions of the Certificate of Incorporation and By-Laws of the
Surviving Corporation, shall be the directors of the Surviving Corporation
until their respective successors shall be duly elected or appointed and
qualified.
Section 2.4 Effects of Merger. The Merger shall have the
effects set forth in Section 259 of the Delaware General Corporation Law (the
"DGCL"). The corporate existence of the Company, with all its purposes, powers
and objects, shall continue unaffected and unimpaired by the Merger and, as the
Surviving Corporation, it shall be governed by the laws of the State of
Delaware and succeed to all rights, assets, liabilities and obligations of Sub
in accordance with Section 259(a) of the DGCL.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Merger Consideration. On the Effective Date,
each share (a "Share") of common stock, par value $0.10 per share, of the
Company ("Company Common Stock") issued and outstanding immediately prior to
the Effective Date (other than (i) Shares held by Parent or Sub, (ii) Shares
held in the treasury of the Company or by any subsidiary of the Company and
(iii) Dissenting Shares (as defined below) in respect of which appraisal rights
are properly exercised and perfected) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $18.50 per Share in cash, without interest thereon (the
"Merger Consideration"), upon surrender of the certificate representing such
Share (a "Certificate") in the manner provided in Section 3.2(b). Each Share
then held in the treasury of the Company or by any of its subsidiaries shall be
cancelled without conversion and without payment of consideration and shall
cease to exist. Each Share owned
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beneficially or of record by the Parent or Sub immediately prior to the Merger,
by virtue of the Merger and without any action on the part of the holder
thereof, shall be cancelled without conversion and without payment of
consideration and shall cease to exist.
Section 3.2 Paying Agent. (a) Prior to the Effective Date,
the Company and Parent shall appoint a bank selected by Parent and reasonably
acceptable to the Company, and having a place of business in New York City, as
paying agent (the "Paying Agent") for purposes of this Agreement.
(b) Promptly after the Effective Date, the Surviving
Corporation shall cause the Paying Agent to mail to each person who was a
record holder of Shares at the Effective Date (other than Parent, Sub, the
Company and the Company's subsidiaries), a form of letter of transmittal and
instructions for use in effecting the surrender for payment of Certificates
which immediately prior to the Effective Date represented Shares. Upon
surrender of a Certificate, together with a duly executed letter of
transmittal, the holder of the Certificate shall be entitled to receive in
exchange therefor cash in an amount equal to the product of the number of
Shares represented by the Certificate and the Merger Consideration. The
parties hereto will make available to the Paying Agent at the Closing funds
which will be sufficient to enable the Paying Agent to make payments (i) with
respect to all outstanding Certificates representing Shares for which the
Merger Consideration is payable in accordance with Section 3.2, promptly after
the Certificates are surrendered, and (ii) with respect to all Outstanding
Options and Outstanding Warrants which consideration is payable pursuant to
Sections 3.6 and 3.7 hereof, respectively. No interest will be paid or accrued
on the cash payable upon the surrender of the Certificates. If the payment is
to be made to a person other than the person in whose name a Certificate
surrendered is registered, it shall be a condition of payment that (x) the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that (y) the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificate surrendered or establish to the
satisfaction of Parent or the Paying Agent that such tax has been paid or is
not applicable. After the Effective Date, until surrendered in accordance with
the provisions of this Section 3.2(b), a Certificate shall represent only the
right to receive the Merger Consideration in cash multiplied by the number of
Shares evidenced by such Certificate, without any interest thereon.
Section 3.3 Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, Shares which
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immediately prior to the Effective Date are held by stockholders who have
properly exercised and perfected appraisal rights under Section 262 of the DGCL
(the "Dissenting Shares") shall not be converted into the right to receive cash
as provided in Section 3.1, but the holders of Dissenting Shares shall be
entitled to receive such consideration as shall be determined pursuant to
Section 262 of the DGCL; provided, however, that, if any such holder shall have
failed to perfect or shall withdraw or lose his right to appraisal and payment
under the DGCL, such holder's Shares shall thereupon be deemed to have been
converted as of the Effective Date into the right to receive the Merger
Consideration, without any interest thereon, as provided in Section 3.1, and
such Shares shall no longer be Dissenting Shares.
Section 3.4 Conversion of Sub Securities. At the Effective
Date, each share of common stock, par value $1.00 per share, of Sub issued and
outstanding immediately prior to the Effective Date shall be converted, by
virtue of the Merger and without any action on the part of the holder thereof,
into one fully paid and nonassessable share of the common stock of the
Surviving Corporation.
Section 3.5 Stockholders to Have No Further Rights. At and
after the Effective Date, the holder of a Certificate shall cease to have any
rights as a stockholder of the Company, except for (i) the right to surrender
such Certificate in exchange for the amount of Merger Consideration to which
such holder is entitled under this Agreement and (ii) the rights available
under the DGCL for Dissenting Shares.
Section 3.6 Stock Options. Each of the options to purchase
Company Common Stock, whether vested or unvested, issued under the Company's
1989 Long Term Incentive Plan (the "Stock Option Plan"), or pursuant to
separate option agreements or stock appreciation rights plans, and which are
(A) listed on Schedule 3.6 and (B) outstanding as of the Effective Date (the
"Outstanding Options") shall be converted without any action on the part of the
holder thereof into the right to receive, as of the Effective Date, an amount
equal to the product of (i) the number of shares of Company Common Stock
subject to such Outstanding Option and (ii) the amount by which $18.50 exceeds
the exercise or strike price per share of Company Common Stock subject to such
Outstanding Option. The Company shall cause all holders of Outstanding Options
to surrender to the Company their option award agreements for cancellation or
provide other satisfactory evidence of the cancellation of the Outstanding
Options, and thereupon such holders shall receive the requisite cash
consideration, subject to applicable withholding taxes.
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Section 3.7 Warrants. Each of the warrants to purchase
Company Common Stock, whether vested or unvested, which are (A) listed on
Schedule 3.7, and (B) outstanding as of the Effective Date (the "Outstanding
Warrants") shall be converted without any action on the part of the holder
thereof into the right to receive, as of the Effective Date, an amount equal to
the product of (i) the number of shares of Company Common Stock subject to such
Outstanding Warrant, and (ii) the amount by which $18.50 exceeds the exercise
price per share of Company Common Stock subject to such Outstanding Warrant.
The Company shall cause all holders of Outstanding Warrants to surrender to the
Company their warrant agreements for cancellation or provide other satisfactory
evidence of the cancellation of the Outstanding Warrants, and thereupon such
holders shall receive the requisite cash consideration, subject to applicable
withholding taxes.
Section 3.8 Shareholders' Meeting. The Company shall take
all action necessary, in accordance with applicable law and its Certificate of
Incorporation and By-laws, to convene a special meeting of the holders of
Company Common Stock (the "Company Meeting") as promptly as practicable for the
purpose of considering and taking action to authorize this Agreement and the
transactions contemplated hereby. Subject to its fiduciary duties, as advised
by outside counsel in connection with the receipt by the Company of a Business
Combination Proposal (as defined in Section 8.8) that the Board of Directors of
the Company reasonably believes will result in a Superior Proposal (as defined
in Section 8.8), the Board of Directors of the Company will recommend that
holders of Company Common Stock vote in favor of and approve the Merger and the
adoption of this Agreement at the Company Meeting. At the Company Meeting, all
of the shares of Company Common Stock then owned by Parent, Sub, or any other
subsidiary of Parent, or with respect to which Parent, Sub, or any other
subsidiary of Parent holds the power to direct the voting, will be voted in
favor of approval of the Merger and adoption of this Agreement.
Section 3.9 Closing of the Company's Transfer Books. At the
Effective Date, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall be made thereafter. In the
event that, after the Effective Date, Certificates are presented to the
Surviving Corporation, they shall be cancelled and exchanged for cash as
provided in Section 3.1.
Section 3.10 Assistance in Consummation of the Merger. Each
of Parent, Sub and the Company shall provide all reasonable assistance to, and
shall cooperate with, each other to bring about the consummation of the Merger
as soon as possible in accordance with the terms and conditions of this
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Agreement. Parent shall cause Sub to perform all of its obligations in
connection with this Agreement.
Section 3.11 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place (i) at the
offices of Parent, One Chase Manhattan Plaza, 43rd Floor, New York, New York
10005, at 11:59 P.M. local time on the day which is at least one business day
after the day on which the last of the conditions set forth in Article IX is
fulfilled or waived or (ii) at such other time and place as Parent and the
Company shall agree in writing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 4.1 Organization and Qualification. Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power to carry on its
business as it is now being conducted and currently proposed to be conducted.
Parent is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities make such qualification
necessary, except where the failure to be so qualified will not, individually
or in the aggregate, have a material adverse effect on the business,
properties, assets, condition (financial or otherwise), liabilities or
operations of Parent and its subsidiaries taken as a whole (a "Parent Material
Adverse Effect").
Section 4.2 Authority Relative to this Agreement. Parent has
the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by Parent's Board of Directors. This Agreement constitutes a valid and binding
obligation of Parent enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought. No other corporate proceedings on the part of Parent are necessary to
authorize this Agreement and the transactions contemplated hereby. Parent is
not subject to or obligated under (i) any charter, by-law, indenture or
other loan document provision or
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(ii) any other contract, license, franchise, permit, order, decree, concession,
lease, instrument, judgment, statute, law, ordinance, rule or regulation
applicable to Parent or any of its subsidiaries or their respective properties
or assets, which would be breached or violated, or under which there would be a
default (with or without notice or lapse of time, or both), or under which
there would arise a right of termination, cancellation or acceleration of any
obligation or the loss of a material benefit, by its executing and carrying out
this Agreement other than, in the case of clause (ii) only, (A) any breaches,
violations, defaults, terminations, cancellations, accelerations or losses
which, either singly or in the aggregate, will not have a Parent Material
Adverse Effect or prevent the consummation of the transactions contemplated
hereby and (B) the laws and regulations referred to in the next sentence.
Except as disclosed in Section 4.2 of the Parent Disclosure Schedule or, in
connection, or in compliance, with the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the corporation, securities or blue
sky laws or regulations of the various states, no filing or registration with,
or authorization, consent or approval of, any public body or authority is
necessary for the consummation by Parent of the Merger or the other
transactions contemplated by this Agreement, other than filings, registrations,
authorizations, consents or approvals the failure of which to make or obtain
would not have a Parent Material Adverse Effect or prevent the consummation of
the transactions contemplated hereby.
Section 4.3 Information in Proxy Statement. None of the
information supplied by Parent or Sub to be included or incorporated by
reference in the proxy statement of the Company (the "Proxy Statement")
required to be mailed to the shareholders of the Company in connection with the
Merger will at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the Company Meeting of
shareholders to be held in connection with the Merger, 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.
Section 4.4 Financial Advisor. Parent represents and
warrants that, (i) except for CS First Boston, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent, and
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(ii) the fees and commissions payable to CS First Boston as contemplated by
this Section 4.4 will not exceed the aggregate amount set forth in that certain
letter, dated December 16, 1994, from CS First Boston to Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as
follows:
Section 5.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power to carry on its
business as it is now being conducted and currently proposed to be conducted.
The Company is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified will not
have a material adverse effect on the business, properties, assets, condition
(financial or otherwise), liabilities or operations of the Company and its
subsidiaries taken as a whole (a "Company Material Adverse Effect"). Complete
and correct copies as of the date hereof of the Certificate of Incorporation
and By-laws of the Company and each of its subsidiaries have been delivered to
Parent as part of a disclosure schedule delivered by the Company to Parent on
the date of this Agreement (the "Company Disclosure Schedule").
Section 5.2 Capitalization. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $0.10 per share. As of December 31, 1994,
7,049,890 shares of Company Common Stock were validly issued and outstanding,
fully paid and nonassessable, 2,490,284 shares of Company Common Stock were
held in the Company's treasury, and no shares of preferred stock were
outstanding and there have been no material changes in such numbers through the
date hereof. As of the date hereof, except for the Company's 5-1/2%
Convertible Debentures due August 1, 2000 (the "Debentures"), there are no
bonds, debentures, notes or other evidences of indebtedness having the right to
vote on any matters on which the Company's shareholders may vote ("Company
Voting Debt") issued or outstanding. As of December 31, 1994, except for (i)
options to acquire 743,000 shares of Company Common Stock, (ii) 4,014,545
shares issuable upon conversion of the Debentures, and (iii) 17,687 shares of
Company Common Stock issuable pursuant to outstanding stock appreciation
rights,
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there are no options, warrants, calls or other rights, agreements or
commitments outstanding obligating the Company to issue, deliver or sell shares
of its capital stock or debt securities, or obligating the Company to grant,
extend or enter into any such option, warrant, call or other such right,
agreement or commitment, and there have been no material changes in such
numbers through the date hereof.
Section 5.3 Subsidiaries. The only "Significant Subsidiary"
(as such term is defined in Rule 1-02 of Regulation S-X of the Securities and
Exchange Commission (the "Commission")) of the Company is Re Capital
Reinsurance Corporation ("RCRC"), which has been named in the Company SEC
Reports (as hereinafter defined). RCRC is a corporation duly organized,
validly existing and in good standing under the laws of New Jersey and has the
corporate power to carry on its business as it is now being conducted and
currently proposed to be conducted. RCRC is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary except where the failure to be so
qualified will not have a Company Material Adverse Effect. All the outstanding
shares of capital stock of RCRC are validly issued, fully paid and
nonassessable and are owned by the Company free and clear of any liens, claims
or encumbrances. There are no existing options, warrants, calls or other
rights, agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of any RCRC. Except as set forth in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1993 or as disclosed in Section 5.3 of the Company Disclosure Schedule, the
Company does not directly or indirectly own any interest in any other
corporation, partnership, joint venture or other business association or
entity.
Section 5.4 Authority Relative to this Agreement. The
Company has the corporate power to enter into this Agreement and, subject to
approval of this Agreement by the holders of the Company Common Stock, to carry
out its obligations hereunder. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors. This Agreement constitutes a
valid and binding obligation of the Company enforceable in accordance with its
terms except as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. Except for the
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approval of the holders of Company Common Stock described in Section 3.8, no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement and the transactions contemplated hereby. Except as
set forth in Section 5.4 of the Company Disclosure Schedule, the Company is not
subject to or obligated under (i) any charter, by-law, indenture or other loan
document provision or (ii) any other contract, license, franchise, permit,
order, decree, concession, lease, instrument, judgment, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets which would be breached
or violated, or under which there would be a default (with or without notice or
lapse of time, or both), or under which there would arise a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit, by its executing and carrying out this Agreement, other than,
in the case of clause (ii) only, (A) any breaches, violations, defaults,
terminations, cancellations, accelerations or losses which, either singly or in
the aggregate, will not have a Company Material Adverse Effect or prevent the
consummation of the transactions contemplated hereby and (B) the laws and
regulations referred to in the next sentence. Except as disclosed in Section
5.4 of the Company Disclosure Schedule or, in connection, or in compliance,
with the provisions of the HSR Act, the Securities Act, the Exchange Act, and
the corporation, securities or blue sky laws or regulations of the various
states, no filing or registration with, or authorization, consent or approval
of, any public body or authority is necessary for the consummation by the
Company of the Merger or the other transactions contemplated hereby, other than
filings, registrations, authorizations, consents or approvals the failure of
which to make or obtain would not have a Company Material Adverse Effect or
prevent the consummation of the transactions contemplated hereby.
Section 5.5 Reports and Financial Statements. (a) The
Company has furnished Parent with true and complete copies of its (i) Annual
Reports on Form 10-K for the fiscal years ended December 31, 1992 and December
31, 1993, as filed with the Commission, (ii) Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1993, June 30, 1993, September 30, 1993, March 31,
1994, June 30, 1994 and September 30, 1994, as filed with the Commission, (iii)
proxy statements related to all meetings of its shareholders (whether annual or
special) held since January 1, 1993 and (iv) all other reports on Forms 8-K
(all of which related to Company Stock repurchase programs) and 11-K and
registration statements declared effective by the Commission since December 31,
1992, except registration statements on Form S-8 relating to employee benefit
plans, which are all the documents (other than preliminary material) that the
Company was required to file
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with the Commission since that date (clauses (i) through (iv) being referred to
herein collectively as the "Company SEC Reports"). As of their respective
dates, the Company SEC Reports complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the Commission thereunder applicable to such
Company SEC Reports. As of their respective dates, the Company SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports comply as to form
in all material respects with applicable accounting requirements of the
Securities Act and with the published rules and regulations of the Commission
with respect thereto. The financial statements included in the Company SEC
Reports (i) have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein or
in the notes thereto), (ii) present fairly, in all material respects, the
financial position of the Company and its subsidiaries as at the dates thereof
and the results of their operations and cash flow for the periods then ended
subject, in the case of the unaudited interim financial statements, to normal
year-end audit adjustments and any other adjustments described therein and the
fact that certain information and notes have been condensed or omitted in
accordance with the Exchange Act and the rules promulgated thereunder, and
(iii) are in all material respects, in accordance with the books of account and
records of the Company.
(b) The Company has heretofore delivered to Parent true,
complete and correct copies of the Annual Statements (the "Annual Statements")
and Quarterly Statements (the "Quarterly Statements") of RCRC as filed with the
New Jersey Department of Insurance for the three years ended December 31, 1993,
December 31, 1992 and December 31, 1991 and for the quarterly periods ended
March 31, 1994, June 30, 1994 and September 30, 1994, together with the
exhibits, schedules and notes thereto and any affirmations and certifications
filed therewith. The balance sheet of RCRC as of December 31, 1993, and the
related summaries of operations and statement of cash flows for the year then
ended, included in the Annual Statement, were prepared in conformity with
statutory accounting practices prescribed or permitted by the New Jersey
Department of Insurance ("Statutory Accounting Practices") consistently applied
for the period covered thereby, were prepared in accordance with the books and
records of RCRC and present fairly the statutory financial position of RCRC as
at the date thereof and the statutory results of operations of
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RCRC and other date contained therein for the period then ended. The balance
sheets of RCRC in respect of any period ending after December 31, 1993, and the
related summaries of operations and statements of cash flows for the periods
then ended included in the Quarterly Statements, were prepared in conformity
with Statutory Accounting Practices applicable to interim financial statements
consistently applied during the periods involved, subject to normal year-end
adjustments, and fairly present the results of operations of RCRC for the
periods then ended. Except as set forth in the Company Disclosure Schedule,
each of such Annual Statements and Quarterly Statements was correct in every
material respect when filed and there were no material omissions therefrom,
subject, in the case of the Quarterly Statements, to year-end adjustments.
Section 5.6 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports or as disclosed in Section 5.6 of the
Company Disclosure Schedule, since September 30, 1994, there has not been (i)
any transaction, commitment, dispute or other event or condition (financial or
otherwise) of any character (whether or not in the ordinary course of business)
individually or in the aggregate having, or which could reasonably be expected
to have, a Company Material Adverse Effect (other than as a result of changes
in laws or regulations of general applicability), (ii) any damage, destruction
or loss, whether or not covered by insurance, which, insofar as reasonably can
be foreseen, in the future would have a Company Material Adverse Effect, or
(iii) any entry into any commitment or transaction material to the Company and
its subsidiaries taken as a whole (including, without limitation, any borrowing
or sale of assets) except in the ordinary course of business consistent with
past practice.
Section 5.7 Litigation. Except as disclosed in the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, or the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1994 or as disclosed in Section 5.7 of the Company Disclosure Schedule or
reinsurance claims in the ordinary course of business of RCRC, there is no
claim, suit, action or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or RCRC which, either alone or in
the aggregate, could reasonably be expected to have a Company Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of any
court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against the Company or RCRC having, or which in the
future could reasonably be expected to have, either alone or in the aggregate,
any such Company Material Adverse Effect.
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Section 5.8 Information in Disclosure Documents. None of the
information with respect to the Company or its subsidiaries to be included or
incorporated by reference in the Proxy Statement will at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto, at
the time of the Company Meeting of shareholders to be held in connection with
the Merger, 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 this provision shall not apply to
statements or omissions in the Proxy Statement based upon information furnished
by or on behalf of Parent or Sub for use therein. The Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder. No representation or warranty
made by the Company contained in this Agreement and no statement contained in
any certificate, list, exhibit or other instrument specified in this Agreement,
including without limitation the Company Disclosure Schedule, contains any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading, and no fact or
circumstance exists or has occurred which has, or in the future can reasonably
be expected to have, a Company Material Adverse Effect which has not been
disclosed in this Agreement, the Company Disclosure Schedule or the Company SEC
Reports.
Section 5.9 Employee Benefit Plans. Except as disclosed in
the Company SEC Reports or as disclosed in Section 5.9 of the Company
Disclosure Schedule, there are no material employee benefit or compensation
plans, agreements or arrangements, including "employee benefit plans," as
defined in Section 3(3) of ERISA, and including, but not limited to, plans,
agreements or arrangements relating to former employees, including, but not
limited to, retiree medical plans, maintained by the Company or any of its
subsidiaries or material collective bargaining agreements to which the Company
or any of its subsidiaries is a party (together, the "Company Benefit Plans").
To the best knowledge of the Company, no default exists with respect to the
obligations of the Company or any of its subsidiaries under any such Company
Benefit Plan, which default, either alone or in the aggregate, would have a
Company Material Adverse Effect. Since January 1, 1993, there have been no
disputes or grievances subject to any grievance procedure, unfair labor
practice proceedings, arbitration or litigation under such Company Benefit
Plans, which have not been finally resolved, settled or otherwise disposed of,
nor is there any default, or any condition which, with notice or lapse of time
or both, would constitute such a default, under any such Company Benefit Plans,
by the Company or its subsidiaries or, to the best knowledge of the Company
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and its subsidiaries, any other party thereto, which failure to resolve, settle
or otherwise dispose of or default, either alone or in the aggregate, would
have a Company Material Adverse Effect. Since January 1, 1993 there have been
no strikes, lockouts or work stoppages or slowdowns, or to the best knowledge
of the Company and its subsidiaries, jurisdictional disputes or organizing
activity occurring or threatened with respect to the business or operations of
the Company or its subsidiaries which have had or would have a Company Material
Adverse Effect.
Section 5.10 ERISA. All Company Benefit Plans have been
administered in accordance with, and are in compliance with, the applicable
provisions of ERISA, except where such failures to administer or comply would
not have a Company Material Adverse Effect. Except as disclosed in Section
5.10 of the Company Disclosure Schedule, each of the Company Benefit Plans
which is intended to meet the requirements of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be "qualified," within the
meaning of such section of the Code, and the Company knows of no fact which is
likely to have an adverse effect on the qualified status of such plans. None
of the Company Benefit Plans which are defined benefit pension plans have
incurred any "accumulated funding deficiency" (whether or not waived) as that
term is defined in Section 412 of the Code and the fair market value of the
assets of each such plan equal or exceed the accrued liabilities of such plan.
To the best knowledge of the Company, there are not now nor have there been any
non-exempt "prohibited transactions," as such term is defined in Section 4975
of the Code or Section 406 of ERISA, involving the Company's Benefit Plans
which could subject the Company, its subsidiaries or Parent to the penalty or
tax imposed under Section 502(i) of ERISA or Section 4975 of the Code. No
Company Benefit Plan which is subject to Title IV of ERISA has been completely
or partially terminated; no proceedings to completely or partially terminate
any Company Benefit Plan have been instituted within the meaning of Subtitle C
of said Title IV of ERISA; and no reportable event within the meaning of
Section 4043(b) of said Subtitle C of ERISA has occurred with respect to any
Company Benefit Plan. Neither the Company nor any of its subsidiaries has made
a complete or partial withdrawal, within the meaning of Section 4201 of ERISA,
from any multiemployer plan which has resulted in, or is reasonably expected to
result in, any withdrawal liability to the Company or any of its subsidiaries
except for any such liability which would not have a Company Material Adverse
Effect. Neither the Company nor any of its subsidiaries has engaged in any
transaction described in Section 4069 of ERISA within the last five years
except for any such transaction which would not have a Company Material Adverse
Effect.
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Section 5.11 Takeover Provisions Inapplicable. As of the
date hereof and at all times on or prior to the Effective Date, Section 203 of
the DGCL is, and shall be, inapplicable to the Merger, the Option and Voting
Agreement, dated as of the date hereof (the "Option"), between John Deere
Insurance Company and Parent, and the transactions contemplated by this
Agreement and the Option.
Section 5.12 Company Action. The Board of Directors of the
Company (at a meeting duly called and held) has by the requisite vote of all
directors present (i) determined that the Merger is advisable and in the best
interests of the Company and its shareholders, (ii) approved the Merger in
accordance with the provisions of Section 251 of the DGCL, (iii) recommended
the approval of this Agreement and the Merger by the holders of the Company
Common Stock and directed that the Merger be submitted for consideration by the
Company's shareholders at the Company Meeting, (iv) taken all necessary steps
to render Section 203 of the DGCL inapplicable to the Merger, the Option and
the transactions contemplated by this Agreement and the Option, (v) taken all
necessary steps to render all existing severance compensation agreements
between the Company and its executives (other than as respects any Constructive
Discharge as such term may be construed pursuant to the Amended and Restated
Employment Agreements between the Company and James E. Roberts and David C.
Smith) inapplicable to the Merger, the Option transactions contemplated by this
Agreement and the Option and (vi) adopted a resolution having the effect of
causing the Company not to be subject, to the extent permitted by applicable
law, to any state takeover law that may purport to be applicable to the Merger
and the transactions contemplated by this Agreement.
Section 5.13 Fairness Opinion. The Company has received the
written opinion of Smith Barney Inc. ("Smith Barney"), financial advisors to
the Company, dated the date hereof, to the effect that the Merger Consideration
is fair to the shareholders of the Company from a financial point of view.
Section 5.14 Financial Advisor. The Company represents and
warrants that, (i) except for Smith Barney, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company, and (ii) the fees
and commissions payable to Smith Barney as contemplated by this Section 5.14
will not exceed the aggregate amount set forth in the engagement letter between
Smith Barney and the Company.
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Section 5.15 Compliance with Applicable Laws. Except as
disclosed in the Company SEC Reports filed prior to the date of this Agreement
or in Section 5.15 of the Company Disclosure Schedule, the businesses of the
Company and its subsidiaries are not being conducted in violation of any law,
ordinance, regulation, order or writ of any Governmental Entity, including,
without limitation, applicable state insurance commissions, except for possible
violations which individually or in the aggregate do not and would not have a
Company Material Adverse Effect. Neither the Company nor any of its
subsidiaries has received notice of violation of any law, ordinance,
regulation, order or writ, or is in default with respect to any order, writ,
judgment, award, injunction or decree of any Governmental Entity, which would
affect any of their respective assets, properties or operations, except for
such violations or defaults as would not, individually or in the aggregate,
have a Company Material Adverse Effect. Except as disclosed in Section 5.15 of
the Company Disclosure Schedule, no investigation or review by any Governmental
Entity, including, without limitation, any applicable state insurance
commission, with respect to the Company nor any of its subsidiaries is pending,
or, to the knowledge of the Company, threatened, nor has any Governmental
Entity, including, without limitation, any applicable state insurance
commission, indicated an intention to conduct the same, other than those the
outcome of which would not have a Company Material Adverse Effect.
Section 5.16 Taxes. Each of the Company and its subsidiaries
has filed all tax returns required to be filed by any of them and has paid (or
the Company has paid on its behalf), or has set up an adequate reserve for the
payment of, all taxes required to be paid in respect of the periods covered by
such returns (except where the failure to pay would not have a Company Material
Adverse Effect). The information contained in such tax returns is true,
complete and accurate in all material respects, except where a failure to be so
would not have a Company Material Adverse Effect. Except as disclosed in
Section 5.16 of the Company Disclosure Schedule, neither the Company nor any
subsidiary of the Company is delinquent in the payment of any tax, assessment
or governmental charge, except where such delinquency would not have a Company
Material Adverse Effect. Except as disclosed in Section 5.16 of the Company
Disclosure Schedule, no deficiencies for any taxes have been proposed, asserted
or assessed against the Company or any of its subsidiaries that have not been
finally settled or paid in full, which would have a Company Material Adverse
Effect, and no requests for waivers of the time to assess any such tax are
pending.
Section 5.17 Certain Agreements. Neither the Company nor any
of its subsidiaries is in default (or would be
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in default with notice or lapse of time, or both) under any agreement or
instrument filed as an exhibit to any of the Company SEC Reports, whether or
not such default has been waived, which default, alone or in the aggregate with
other such defaults, would have a Company Material Adverse Effect.
Section 5.18 Licenses. The Company and RCRC have obtained
and hold all permits, licenses, certificates of authorizations, variances,
exemptions, orders and approvals of, and have made all registrations or filings
with, all Governmental Entities, including, without limitation, applicable state
insurance commissions as required in connection with the conduct of the
businesses of the Company and RCRC other than licenses, certificates, permits,
the failure of which to make, obtain or hold would not have a Company Material
Adverse Effect (collectively, the "Licenses"). The Company and RCRC are in
compliance with the terms of the Licenses, except for such failures to comply,
which singly or in the aggregate, would not have a Company Material Adverse
Effect. Section 5.18 of the Company Disclosure Schedules sets forth a true and
complete list of the Company's and RCRC's Licenses (including the jurisdictions
in which the Company and RCRC possess Licenses or other approvals to conduct
their insurance businesses) together with a description of the nature thereof.
The Company has heretofore made available to the Parent true and complete
copies of all of such Licenses as are currently in effect. Neither the Company
nor RCRC is improperly transacting any insurance or reinsurance business in any
jurisdiction in which it is not authorized or permitted to transact such
business. No Licenses are the subject of a proceeding for suspension or
revocation or similar proceedings and, to the knowledge of the Company and
RCRC, no threat of any such suspension, revocation or similar proceeding
therefor has been made to the Company or RCRC by any Governmental Entity. No
jurisdiction has demanded or requested that the Company or RCRC qualify or
become licensed as a foreign corporation, except with respect to their
respective insurance or reinsurance business.
Section 5.19 Reinsurance; Retrocession. (a) The Company
Disclosure Schedule sets forth a true and complete list of (i) all material
reinsurance treaties and contracts (including retrocessions assumed) with
parties reinsured by the Company or RCRC and (ii) all retrocessional treaties
and contracts (reinsurance and retrocessions ceded) with parties that reimburse
the Company or RCRC.
(b) RCRC does not engage and has never engaged in any business
other than reinsurance.
Section 5.20 No Company Material Adverse Effect. Except as
disclosed in the Company SEC Reports filed prior to
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the date hereof or in the Company Disclosure Schedule, there does not exist any
fact or circumstance which, alone or together with another fact or circumstance,
could reasonably be expected to result in a Company Material Adverse Effect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to
the Company as follows:
Section 6.1 Organization. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Complete and correct copies as of the date hereof of the Certificate
of Incorporation and By-laws of Sub have been delivered to the Company as part
of the Parent Disclosure Schedule.
Section 6.2 Capitalization. The authorized capital stock of
Sub consists of 1,000 shares of common stock, par value $1.00 per share, all of
which shares are validly issued and outstanding, fully paid and nonassessable
and are owned by Parent free and clear of all liens, claims and encumbrances.
Section 6.3 Authority Relative to this Agreement. Sub has
the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by its Board of Directors and sole shareholder, and no other corporate
proceedings on the part of Sub are necessary to authorize this Agreement and
the transactions contemplated hereby. This Agreement constitutes a valid and
binding obligation of Sub enforceable in accordance with its terms except as
enforcement may be limited to bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought. Sub is not subject to or obligated under any charter or by-law
provision which would be breached or violated by its executing and carrying out
this Agreement. Except as referred to herein or in connection, or in
compliance, with the provisions of the HSR Act, the Securities Act, the
Exchange Act and the environmental, corporation, securities or blue sky laws or
regulations of the various states, no filing or registration with, or
authorization, consent or approval of, any public body or authority is
necessary for the consummation by Sub of the Merger or the transactions
contemplated by this Agreement, other than filings, registrations,
authorizations, consents or approvals
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the failure to make or obtain would not prevent the consummation of the
transactions contemplated hereby.
Section 6.4 Sub Action. The Board of Directors of Sub (at a
meeting duly called and held) has by the requisite vote of all directors
present (i) determined that the Merger is advisable and in the best interests
of Sub, (ii) approved the Merger in accordance with the provisions of Section
251 of the DGCL, (iii) taken all necessary steps to render Section 203 of the
DGCL inapplicable to the Merger and the transactions contemplated by this
Agreement, and (iv) adopted a resolution having the effect of causing Sub not
to be subject, to the extent permitted by applicable law, to any state takeover
law that may purport to be applicable to the Merger and the transactions
contemplated by this Agreement.
Section 6.5 Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only
as contemplated hereby.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.1 Conduct of Business by the Company. Prior to the
Effective Date, unless Parent shall otherwise agree in writing:
(i) the Company shall, and shall cause its subsidiaries
to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted, and shall, and shall cause its subsidiaries to, use their
best reasonable efforts to preserve intact their present business
organizations, keep available the services of their present officers
and employees and preserve their relationships with customers,
suppliers and others having business dealings with them to the end
that their goodwill and on-going businesses shall be unimpaired at the
Effective Date, except such impairment as would not have a Company
Material Adverse Effect. The Company shall, and shall cause its
subsidiaries to, (A) maintain insurance coverages and its books,
accounts and records in a manner consistent with prior practices, (B)
comply in all material respects with all laws, ordinances and
regulations of Governmental Entities applicable to the Company and its
subsidiaries, (C) maintain and keep its properties and equipment in
good repair, working order and condition, ordinary wear and tear
excepted, and (D) perform in all material respects its obligations
under
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all contracts and commitments to which it is a party or by which it is
bound; except in each case where the failure to so maintain, comply or
perform, either individually or in the aggregate, would not result in
a Company Material Adverse Effect;
(ii) the Company shall not, nor shall it propose to,
except as required by this Agreement, (A) sell or pledge or agree to
sell or pledge any capital stock owned by it in any of its
subsidiaries, (B) amend its Certificate of Incorporation or By-laws,
(C) split, combine or reclassify its outstanding capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of the capital
stock, or, except at contemplated by this Agreement, declare, set
aside or pay any dividend or other distribution payable in cash, stock
or property, other than the Company's regular quarterly cash dividend
of $.08 per share, or (D) directly or indirectly redeem, purchase or
otherwise acquire or agree to redeem, purchase or otherwise acquire
any shares of its capital stock, except as contemplated by this
Agreement or except pursuant to (A) the exercise of rights granted to
such party to repurchase shares of its capital stock from employees
upon termination of employment or (B) contractual obligations arising
under agreements existing on the date hereof and disclosed in the
Company Disclosure Schedule;
(iii) the Company shall not, nor shall it permit any of its
subsidiaries to, (A) except as required by this Agreement, issue,
deliver or sell or agree to issue, deliver or sell any additional
shares of, or stock appreciation rights or rights of any kind to
acquire any shares of, its capital stock of any class, any Company
Voting Debt, or any option, rights or warrants to acquire, or
securities convertible into, shares of capital stock other than (x)
issuances of Company Common Stock pursuant to the exercise of warrants
or stock options outstanding on the date hereof or pursuant to the
Indenture, dated as of July 27, 1993, between the Company and Chemical
Bank, as trustee, or (y) the grant of employee stock options and the
issuance of Company Common Stock upon exercise thereof, at fair market
value at the time of grant of the options, to new employees in
connection with the commencement of their employment, in each case in
the ordinary course of business and consistent with past practice, (B)
make any material change in the underwriting, establishment of
reserves, investment or claims adjustment policies, principles and
practices of the Company or RCRC, (C) acquire, lease or dispose or
agree to acquire, lease or dispose of any
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capital assets or any other assets other than in the ordinary course
of business, (D) incur additional indebtedness or encumber or grant a
security interest in any asset or enter into any other material
transaction other than in each case in the ordinary course of
business, (E) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in, or by any
other manner, any business or any corporation, partnership,
association or other business organization or division thereof, in
each case in this clause (E) which are material, individually or in
the aggregate, to the Company and its subsidiaries taken as a whole,
or (F) adopt, enter into, amend or terminate any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(iv) the Company shall not, nor shall it permit any of its
subsidiaries to, except as required to comply with applicable law and
except as provided in Section 8.3 hereof, (A) adopt, enter into,
terminate or amend any bonus, profit sharing, compensation, severance,
termination, stock option, pension, retirement, deferred compensation,
employment or other Company Benefit Plan agreement, trust, fund or
other arrangement for the benefit or welfare of any director, officer
or current or former employee, (B) increase in any manner the
compensation or fringe benefits of any director, officer or employee
(except for normal increases in the ordinary course of business that
are consistent with past practice and that, in the aggregate, do not
result in a material increase in benefits or compensation expense to
such party and its subsidiaries relative to the level in effect prior
to such increase), (C) pay any benefit not provided under any existing
plan or arrangement, (D) grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Company
Benefit Plan (including, without limitation, the grant of stock
options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of
existing restrictions in any benefit plans or agreements or awards
made thereunder) except for (x) payment of year-end bonuses to
employees, (y) making of matching contributions to 401(k) plans and
(z) the grant of employee stock options and the issuance of Company
Common Stock upon exercise thereof, at fair market value at the time
of grant of the options, to new employees in connection with the
commencement of their employment, in each case in the ordinary course
of business and consistent with past practice, (E) take any action to
fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or arrangement
or Company Benefit
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Plan, other than in the ordinary course of business consistent with
past practice, or (F) adopt, enter into, amend or terminate any
contract, agreement, commitment or arrangement to do any of the
foregoing;
(v) the Company shall not, nor shall it permit any of its
subsidiaries to, make any investments in non-investment grade
securities;
(vi) the Company shall not, nor shall it permit its
subsidiaries to make any change in its accounting policies or
procedures except as required under Statutory Accounting Practices or
GAAP, as applicable; and
(vii) the Company shall use its best reasonable efforts to
refrain from taking, nor shall it permit any of its subsidiaries to
take, any action that would, or reasonably might be expected to,
result in any of its representations and warranties set forth in this
Agreement being or becoming untrue in any material respect, or in any
of the conditions to the Merger set forth in Article IX not being
satisfied, or (unless such action is required by applicable law) which
would adversely affect the ability of the Company to obtain any of the
regulatory approvals required to consummate the Merger.
Section 7.2 Conduct of Business of Sub. During the period
from the date of this Agreement to the Effective Date, Sub shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.
Section 7.3 Notice of Breach. Each party shall promptly give
written notice to the other party upon becoming aware of the occurrence or, to
its knowledge, impending or threatened occurrence, of any event which would
cause any of its representations or warranties to be untrue on the Effective
Date or cause a breach of any covenant contained or referenced in this Agreement
and will use its best reasonable efforts to prevent or promptly remedy the same.
Any such notification shall not be deemed an amendment of the Company Disclosure
Schedule or the Parent Disclosure Schedule.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Access and Information. The Company and its
subsidiaries shall afford to Parent and to Parent's accountants, counsel and
other representatives full access during normal business hours (and at such
other times as the parties may mutually agree) throughout the period prior to
the
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Effective Date to all of its properties, books, contracts, commitments, records
and personnel and, during such period, the Company shall furnish promptly to
Parent (i) a copy of each report, schedule and other document filed or received
by it pursuant to the requirements of federal or state securities and insurance
laws, and (ii) all other information concerning its business, properties and
personnel as the other may reasonably request. Parent shall hold, and shall
cause its employees and agents to hold, in confidence all such information in
accordance with the terms of the Confidentiality Agreement, dated December 6,
1994, between Parent and the Company (the "Confidentiality Agreement").
Section 8.2 Proxy Statement. (a) As promptly as practicable
after the execution of this Agreement, the Company shall prepare and file with
the Commission preliminary proxy materials with respect to the actions to be
taken at the Company Meeting, which, as to those matters relating to Parent,
shall be in form and substance satisfactory to Parent. As promptly as
practicable after comments are received from the Commission with respect to
such preliminary proxy materials and after the furnishing by the Company of all
information required to be contained therein, the Company shall file with the
Commission the definitive Proxy Statement and the Company shall use its best
reasonable efforts to have the Proxy Statement cleared by the Commission as
soon thereafter as practicable. The Company shall mail the Proxy Statement to
its stockholders as promptly as practicable after clearance by the Commission.
(b) The Company shall retain the services of a proxy
soliciting firm mutually acceptable to Parent and the Company for the purpose
of communicating to the Company's stockholders the recommendation of the
Company's Board of Directors in favor of the Merger and of seeking to ensure
that sufficient votes are cast to satisfy the requirements of Section 3.8 and
of applicable law for the completion of the Merger.
(c) Parent and the Company shall make all necessary filings
applicable to it with respect to the Merger under the Securities Act and the
Exchange Act and the rules and regulations thereunder and under applicable Blue
Sky or similar securities laws and shall use its best reasonable efforts to
obtain required approvals and clearances with respect thereto.
Section 8.3 Employee Matters. (a) Subject to the provisions
of Section 8.3(b), Parent shall take all actions necessary or appropriate to
permit the employees of the Company and its subsidiaries on the Effective Date
("Affected Employees") to participate after the Effective Date in
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Parent's employee benefit programs and, except as otherwise provided in Section
8.5(b), to cause the Surviving Corporation to take all actions necessary or
appropriate to adopt Parent's employee benefit programs effective as of the
Effective Date or to make provision that the Affected Employees are eligible to
participate in Parent's employee benefit programs effective as of the Effective
Date. Parent will cause the Surviving Corporation to give each Affected
Employee full credit for service with the Company for purposes of eligibility
to participate in, vesting and payment of benefits under, amounts of and
eligibility for any subsidized benefit provided under, any Parent employee
benefit plan. The foregoing shall not constitute an obligation on the part of
Parent or the Surviving Corporation to offer employment to any employee of the
Company or its subsidiaries.
(b) After the Effective Date, Parent shall have a
reasonable period not to exceed one year (the "Review Period") in which to
review all of the employee and fringe benefit plans (not including plans
pursuant to which capital stock or options to acquire capital stock are issued
to employees, which plans shall be governed by Section 8.3(a)) maintained by
the Company or any of its subsidiaries (the "Company Plans") for compatibility
and consistency with Parent's employee benefit programs. During the Review
Period, Parent may determine to have the Surviving Corporation continue in
effect any one or more of the Company Plans, amend or modify any one or more of
the Company Plans, merge one or more of the Company Plans into a comparable
Parent employee benefit plan adopted by the Surviving Corporation or terminate
any one or more of the Company Plans in its or their entirety. Any such
amendment, modification or termination shall not deprive any Affected Employee
of any accrued benefit or benefit payment to which such Affected Employee has
become entitled to prior to the Effective Date. If the Surviving Corporation
is continuing in effect any of the Company Plans during the Review Period, then
(i) neither it nor Parent shall be obligated to adopt a comparable Parent
employee benefit plan for Affected Employees, it being intended by the parties
that there be no duplication of benefits, and (ii) the obligation to have the
Surviving Corporation adopt the comparable Parent employee benefit plan or
program, as set out in Section 8.3(a), shall arise, and such adoption shall be
effective only as of the date the comparable Company Plan is discontinued and
not as of the Effective Date. If Parent does not maintain an employee benefit
plan comparable to one of the Company Plans, there shall be no obligation to
adopt any plan or program upon the discontinuance or termination of such
Company Plan.
Section 8.4 [Intentionally Omitted]
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Section 8.5 Indemnification. (a) From and after the
Effective Date, Parent shall indemnify, defend and hold harmless the officers,
directors and employees of the Company (the "Indemnified Parties") against all
losses, expenses, claims, damages or liabilities arising out of the
transactions contemplated by this Agreement to the fullest extent permitted or
required under applicable law, including, without limitation, the advancement
of expenses (including, without limitation, reasonable attorneys' fees).
Parent agrees that all rights to indemnification existing in favor of the
directors, officers or employees of the Company as provided in the Company's
Certificate of Incorporation, By-Laws or existing indemnification agreements,
as in effect as of the date hereof, with respect to matters occurring through
the Effective Date, shall survive the Merger and shall continue in full force
and effect for a period of not less than six years from the Effective Date, and
Parent shall guaranty the obligations of the Company in respect thereof.
Parent agrees to cause Surviving Corporation to maintain in effect for not less
than three years after the Effective Date the current policies of directors'
and officers' liability insurance maintained by the Company with respect to
matters occurring prior to the Effective Date; provided, however, that (i)
Surviving Corporation may substitute therefor policies of at least the same
coverage (with carriers comparable to the Company's existing carriers)
containing terms and conditions which are no less advantageous to the
Indemnified Parties and (ii) Surviving Corporation shall not be required to pay
an annual premium for such insurance in excess of one and one-half times the
last annual premium paid prior to the date hereof, but in such case shall
purchase as much coverage as possible for such amount.
(b) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated by this
Agreement is commenced, whether before or after the Effective Date, the parties
hereto agree to cooperate and use their respective best reasonable efforts to
vigorously defend against and respond thereto.
Section 8.6 HSR Act. The Company and Parent shall use their
best reasonable efforts to file as soon as practicable notifications under the
HSR Act in connection with the Merger and the transactions contemplated hereby,
and to respond as promptly as practicable to any inquiries received from the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with
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antitrust matters relating to the transactions contemplated by this Agreement.
Section 8.7 Additional Agreements. (a) Subject to the terms
and conditions herein provided, each of the parties hereto agrees to cooperate
with each other and use its best reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Option,
including using its best reasonable efforts to obtain all necessary waivers,
consents and approvals, to effect all necessary registrations and filings
(including, but not limited to, filings under the HSR Act and applicable state
insurance laws and regulations and with all applicable Governmental Entities)
and to lift any injunction or other legal bar to the Merger (and, in such case,
to proceed with the Merger as expeditiously as possible) or the Option,
subject, however, in the case of the Merger, to the appropriate vote of the
shareholders of the Company.
(b) In case at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
Parent and the Surviving Corporation shall take all such necessary action.
(c) The Company hereby waives all of its rights under the
Right of First Refusal Agreement, dated October 31, 1990, between the Company
and John Deere Insurance Company and its affiliates (the "Refusal Rights")
relating to the Option and all transactions effected pursuant to the Option.
Upon consummation of any conveyance pursuant to an exercise of the Option, the
Refusal Rights shall automatically terminate and expire and be of no further
force and effect.
Section 8.8 No Solicitation. (a) Except as contemplated by
this Agreement and the Option, the Company shall not, nor shall any of its
subsidiaries, directly or indirectly, take (nor shall the Company authorize or
permit its subsidiaries, officers, directors, employees, representatives,
investment bankers, attorneys, accountants or other agents or affiliates, to
take) any action to (i) encourage, solicit or initiate the submission of any
Business Combination Proposal (as defined below), (ii) enter into any agreement
with respect to any Business Combination Proposal or (iii) participate in any
way in discussions or negotiations with, or furnish any information to, any
person in connection with, or take any other action to facilitate any inquiries
or the making of any proposal that constitutes, or may reasonably be expected
to lead to, any Business Combination Proposal; provided, however, that (i) the
Company may participate in discussions or negotiations with or furnish
information to any
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Third Party (as defined in Section 11.3(b)) which makes an unencouraged and
unsolicited proposal of a transaction which the Board of Directors of the
Company reasonably believes will result in a Superior Proposal (as defined
below) (provided that any such information so furnished shall at the same time
be furnished to Parent) and (ii) the Company may recommend to its shareholders
a Business Combination Proposal which it has reasonably determined will result
in a Superior Proposal. Any actions permitted under, and taken in compliance
with this Section 8.8, shall not be deemed a breach of any other covenant or
agreement of the Company contained in this Agreement. For purposes of this
Section, "Business Combination Proposal" shall mean, with respect to the
Company, any tender or exchange offer, proposal for a merger, consolidation or
other business combination involving the Company or any Significant Subsidiary
of the Company or any other proposal or offer to enter into the transactions
described in subdivisions (A) through (D) of the definition of a Third Party
Business Combination (as defined in Section 11.3(b)), and "Superior Proposal"
shall mean, with respect to the Company, any bona fide Business Combination
Proposal which the Board of Directors of the Company reasonably determines will
be more favorable to its shareholders than the Merger.
(b) In addition to the obligations of the Company set forth
in Section 8.8(a), the Company shall promptly advise Parent of any request for
information or of any Business Combination Proposal, or any inquiry with
respect to or which appears to be intended to or could reasonably be expected
to lead to any Business Combination Proposal, the material terms and conditions
of such request, Business Combination Proposal or inquiry, and the identity of
the person making any such request, Business Combination Proposal or inquiry.
The Company shall keep Parent fully informed of the status and details of any
such request, Business Combination Proposal or inquiry.
ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Date of the
following conditions, any one or more of which may be waived in a writing
executed by Parent and the Company subject to and in accordance with Section
10.4 hereof:
(a) This Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the holders of
the Company Common Stock.
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(b) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) All approvals necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained from the
Insurance Commissioners of the respective Departments of Insurance of the
States of New Jersey and Connecticut, and such approvals shall be in full force
and effect.
(d) No preliminary or permanent injunction or other order by
any federal or state court in the United States which prevents the consummation
of the Merger shall have been issued and remain in effect (each party agreeing
to use its best reasonable efforts to have any such injunction lifted).
Section 9.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Date of the additional
following conditions, unless waived in writing by the Company in accordance
with Section 10.4 hereof:
(a) Parent and Sub shall have performed in all material
respects their agreements contained in this Agreement required to be performed
on or prior to the Effective Date and the representations and warranties of
Parent and Sub contained in this Agreement shall be true in all material
respects when made and on and as of the Effective Date as if made on and as of
such date (except to the extent they relate to the date of this Agreement or
any other particular date), and the Company shall have received a certificate
of the President or Chief Executive Officer or a Vice President of Parent and
Sub to that effect.
(b) All permits, consents, authorizations, approvals,
registrations, qualifications, designations and declarations set forth in
Section 4.4 of the Parent Disclosure Schedule shall have been obtained, and, to
the extent required to be submitted prior to the Effective Date, all filings
and notices set forth in Section 4.4 of the Parent Disclosure Schedule shall
have been submitted by Parent.
(c) The Company shall have received an opinion of Willkie
Farr & Gallagher, dated the Closing Date, in form and substance reasonably
satisfactory to the Company.
Section 9.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Date of the
additional following
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conditions, unless waived in writing by Parent in accordance with Section 10.4
hereof:
(a) The Company shall have performed in all material respects
its agreements contained in this Agreement required to be performed on or prior
to the Effective Date and the representations and warranties of the Company
contained in this Agreement shall be true in all material respects when made
and on and as of the Effective Date as if made on and as of such date (except
to the extent they relate to the date of this Agreement or any other particular
date), except as contemplated or permitted by this Agreement, and Parent and
Sub shall have received a certificate of the President or Chief Executive
Officer or a Vice President of the Company to that effect.
(b) All permits, consents, authorizations, approvals,
registrations, qualifications, designations and declarations set forth in
Section 5.4 of the Company Disclosure Schedule shall have been obtained and, to
the extent required to be submitted prior to the Effective Date, all filings
and notices set forth in Section 5.4 of the Company Disclosure Schedule shall
have been submitted by the Company.
(c) Neither the Board of Directors of the Company nor any
committee thereof shall have amended, modified, rescinded or repealed the
recommendation of the Company's Board of Directors to the shareholders of the
Company to approve the Merger and the adoption of this Agreement, and neither
the Board of Directors of the Company nor any committee thereof shall have
adopted any other resolutions in connection with this Agreement and the
transactions contemplated hereby inconsistent with such recommendation of the
consummation of the transactions contemplated hereby.
(d) Parent shall have received an opinion of Gibson, Dunn &
Crutcher, dated the Closing Date, in form and substance reasonably satisfactory
to Parent.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. This Agreement may be terminated
at any time prior to the Effective Date, whether before or after approval of
the matters presented in connection with the Merger by the shareholders of the
Company:
(a) by mutual consent of the Board of Directors of Parent and
the Board of Directors of the Company;
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(b) by either Parent or the Company if the Merger shall not
have been consummated on or before June 30, 1995 (provided the terminating
party is not otherwise in material breach of its representations, warranties,
covenants or agreements under this Agreement);
(c) by the Company if any of the conditions specified in
Sections 9.1 or 9.2 have not been met or waived by the Company at such time as
such condition is no longer capable of satisfaction, including the failure to
obtain any required approval of its shareholders or the shareholders of Parent
at a duly held meeting of shareholders or at an adjournment thereof (provided
the Company is not otherwise in material breach of its representations,
warranties, covenants or agreements under this Agreement);
(d) by Parent if any of the conditions specified in Sections
9.1 or 9.3 have not been met or waived by Parent at such time as such condition
is no longer capable of satisfaction, including the failure to obtain any
required approval of its shareholders or the shareholders of the Company at a
duly held meeting of shareholders or at an adjournment thereof (provided Parent
is not otherwise in material breach of its representations, warranties
covenants or agreements under this Agreement);
(e) by either Parent or the Company if there has been a
material breach on the part of the other of any representation, warranty,
covenant or agreement set forth in this Agreement, which breach, has not been
cured within fifteen business days following receipt by the breaching party of
written notice of such breach;
(f) by either Parent or the Company upon written notice to
the other party if any Governmental Entity of competent jurisdiction shall have
issued a final permanent order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement, and in any
such case the time for appeal or petition for reconsideration of such order
shall have expired without such appeal or petition being granted; or
(g) by the Company if the Board of Directors of the Company
reasonably determines that a Business Combination Proposal will result in a
Superior Proposal; provided, however, that termination of this Agreement under
this Section 10.1(g) shall not be effective unless and until (i) simultaneously
with such termination the terminating party enters into a definitive agreement
to effect the Business Combination Proposal and (ii) the terminating party has
made payment in full of the fee required in Section 11.3(b) hereof.
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Section 10.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company as provided
above, this Agreement shall forthwith become void and (except for termination
of this Agreement pursuant to Section 10.1(e)) there shall be no liability on
the part of either the Company, Parent or Sub or their respective officers or
directors; provided that Sections 4.4 and 5.14, the last sentence of Section
8.1, Section 8.6 (with respect to the Option and the transactions contemplated
thereby), Section 8.7 (with respect to the Option and the transactions
contemplated thereby), this Section 10.2 and Sections 11.3, 11.5, 11.6 and 11.7
shall survive the termination.
Section 10.3 Amendment. This Agreement may be amended by the
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval hereof by the shareholders of
the Company, but, after such approval, no amendment shall be made which in any
way materially adversely affects the rights of such shareholders, without the
further approval of such shareholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 10.4 Waiver. At any time prior to the Effective
Date, the parties hereto, by or pursuant to action taken by their respective
Boards of Directors, may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of any other party contained
herein or in any documents delivered pursuant hereto by any other party and
(iii) waive compliance with any of the agreements or conditions contained
herein; provided, however, that no such waiver shall materially adversely
affect the rights of the shareholders of the Company or Parent, as the case may
be. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations, Warranties and
Agreements. All representations and warranties set forth in this Agreement
shall terminate at the earlier of (x) the Effective Date and (y) termination of
this Agreement in accordance with Article X hereof. All covenants and
agreements set forth in this Agreement shall survive in accordance with their
terms.
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Section 11.2 Notices. All notices or other communications
under this Agreement shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, telex or other standard form of telecommunications, or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company:
Re Capital Corporation
Two Stamford Plaza
P.O. Box 10148
Stamford, CT 06904
Attention: James E. Roberts
Telecopy No.: (203) 325-8968
With a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
New York, NY 10166-0193
Attention: Conor D. Reilly, Esq.
Telecopy No.: (212) 949-7606
If to Parent or Sub:
Zurich Reinsurance Centre Holdings, Inc.
One Chase Manhattan Plaza
43rd Floor
New York, NY 10005
Attention: Steven M. Gluckstern
Telecopy No.: (212) 898-5007
With a copy to:
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Peter A. Appel, Esq.
Telecopy No.: (212) 821-8111
or to such other address as any party may have furnished to the other parties
in writing in accordance with this Section 11.2.
Section 11.3 Expenses; Termination Fees. (a) Subject to
Section 11.3(b), if (i) the Merger is consummated or (ii) this Agreement is
terminated in accordance with Section 10.1(a), 10.1(b), 10.1(d) or 10.1(f)
hereof, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by Parent,
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including legal and accounting expenses and expenses incurred in connection
with the preparation, filing, printing and mailing of the preliminary and
definitive Proxy Statement (not including investment banking fees in the case
of clause (ii) above).
(b) Except as otherwise provided in this Section 11.3(b), if
this Agreement is terminated by Parent as provided in Section 10.1(e) hereof,
the Company shall pay to Parent within five business days after receipt of a
written request therefor, in same day funds, an amount equal to (i) all costs
and expenses (not in excess of $1,000,000) reasonably incurred by Parent in
connection with this Agreement and the transactions contemplated hereby,
including all reasonable legal, professional and service fees and expenses, and
(ii) $1,000,000. Notwithstanding the foregoing, if (i) the Merger is not
consummated as a result of a material breach by the Company of Section 8.8
hereof, (ii) the Agreement is terminated pursuant to Section 10.1(g) hereof, or
(iii) a transaction described in subdivisions (A) through (D) of the definition
of a Third Party Business Combination (as defined below) shall occur either
prior to the termination of this Agreement pursuant to Section 10.1(a),
10.1(b), 10.1(c), 10.1(d), 10.1(f) or 10.1(g) hereof or within one year of the
date this Agreement is terminated by Parent pursuant to Section 10.1(e) hereof,
then the Company shall pay to Parent, within five business days after receipt
of a written request therefor in the case of clause (i) and immediately after
the termination of this Agreement pursuant to Section 10.1(g) or the occurrence
of a transaction described in subdivisions (A) through (D) of the definition of
a Third Party Business Combination in the case of clauses (ii) and (iii),
respectively, an amount in same day funds equal to (i) all costs and expenses
(not in excess of $1,000,000) reasonably incurred by Parent in connection with
this Agreement and the transactions contemplated hereby, including all
reasonable legal, professional and service fees and expenses, and (ii)
$4,500,000 (less, in the case of a termination of this Agreement by Parent
pursuant to Section 10.1(e) hereof, any amounts paid to Parent pursuant to the
preceding sentence). The term "Third Party Business Combination" of the
Company means the occurrence of any of the following events: (A) the Company
or any Significant Subsidiary of the Company is acquired by merger or otherwise
by any person or group, other than the other party hereto or any affiliate
thereof (a "Third Party"); (B) the Company or any subsidiary of the Company
enters into an agreement with a Third Party which contemplates the acquisition
of 20% or more of the total assets of the Company and its subsidiaries taken as
a whole; (C) the Company enters into a merger or other agreement with a Third
Party which contemplates the acquisition of more than 20% of the outstanding
shares of the Company's capital stock; (D) a Third
33
<PAGE> 38
Party acquires more than 30% of the total assets of the Company and its
subsidiaries taken as a whole; (E) a Third Party who owns no shares of the
Company's capital stock acquires more than 30% of the outstanding shares of the
Company's capital stock, or any person or group which beneficially owns (or has
the right to acquire) 15% or more of the outstanding shares of the Company's
capital stock acquires 15% or more shares of the Company's capital stock; (F)
the Company adopts a plan of liquidation relating to more than 30% of the total
assets of the Company and its Subsidiaries taken as a whole; (G) the Company
repurchases more than 30% of the outstanding shares of the Company's capital
stock; or (H) there is a public announcement or written proposal with respect
to a plan or intention by the Company or a Third Party to effect any of the
foregoing transactions, which transaction is effected during the one year
period following such public announcement or written proposal. For purposes of
this Agreement, the term "beneficial ownership" shall have the meaning set
forth in Rule 13d-3 of the Exchange Act.
Section 11.4 Publicity. So long as this Agreement is in
effect, Parent, Sub and the Company agree to consult with each other in issuing
any press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement, and none of them shall issue any
press release or make any public statement prior to such consultation. The
commencement of litigation relating to this Agreement or the transactions
contemplated hereby or any proceedings in connection therewith shall not be
deemed a violation of this Section 11.4.
Section 11.5 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
Section 11.6 Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11.7 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (i) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral,
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<PAGE> 39
among the parties, or any of them, with respect to the subject matter hereof
(other than as provided in the Confidentiality Agreement), (ii) except as
provided in the last sentence of Sections 8.3 and 8.5, is not intended to
confer upon any other person any rights or remedies hereunder and shall be
binding upon and inure to the benefit solely of each party hereto, and their
respective successors and assigns, (iii) shall not be assigned by operation of
law or otherwise, except that Sub shall have the right to assign to any direct
wholly owned subsidiary of Parent any and all rights and obligations of Sub
under this Agreement, and (iv) shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Delaware
(without giving effect to the provisions thereof relating to conflicts of law).
This Agreement may be executed in any number of counterparts which together
shall constitute a single agreement.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
ZURICH REINSURANCE CENTRE HOLDINGS, INC.
By: /s/ Peter R. Porrino
---------------------------------
Name: Peter R. Porrino
Title: Senior Vice President and
Chief Financial Officer
ZRC MERGER-SUB CORP.
By: /s/ Peter R. Porrino
---------------------------------
Name: Peter R. Porrino
Title: Treasurer
RE CAPITAL CORPORATION
By: /s/ Conor D. Reilly
---------------------------------
Name: Conor D. Reilly
Title: Secretary
35
<PAGE> 40
ATTACHMENT TO THE AGREEMENT AND PLAN OF MERGER:
AGREEMENT TO FURNISH OMITTED SCHEDULES UPON REQUEST AND LIST
OF OMITTED SCHEDULES
AGREEMENT: The Registrant hereby agrees to furnish
supplementally a copy of any omitted schedule to the Commission upon request.
LIST OF OMITTED SCHEDULES:
Schedule 3.6--Stock Options
Schedule 3.7--Warrants (None)
Schedule 4.2--Approvals
Schedule 5.1--Certificates of Incorporation and By-Laws
Schedule 5.3--Subsidiaries
Schedule 5.4--Default and/or Rights of Termination,
Cancellation or Acceleration
Schedule 5.6--Absence of Certain Changes or Events
Schedule 5.7--Litigation (None)
Schedule 5.9--Employee Benefit Plans
Schedule 5.10--ERISA
Schedule 5.15--Compliance with Applicable Laws
Schedule 5.16--Taxes
Schedule 5.18--List of Insurance Licenses/Certificates of
Authority of Re Capital Reinsurance Corporation to Conduct its Reinsurance
Business in the Ordinary Course in the Jurisdiction Indicated
Schedule 5.19--Reinsurance; Retrocession
Schedule 5.20--Company Material Adverse Effects (None)
<PAGE> 1
EXHIBIT NO. 99.2
OPTION AND VOTING AGREEMENT
THIS AGREEMENT, dated as of January 11, 1995, between Zurich
Reinsurance Centre Holdings, Inc., a Delaware corporation ("ZRC"), and John
Deere Insurance Group, Inc. (the "Shareholder"), a major shareholder of Re
Capital Corporation, a Delaware corporation ("Re Cap").
W I T N E S S E T H:
WHEREAS, contemporaneously with the execution of this
Agreement, Re Cap and ZRC are entering into an Agreement and Plan of Merger
(the "Merger Agreement") pursuant to which a wholly-owned subsidiary of ZRC
will be merged into Re Cap (the "Merger") and the holders of Re Cap's common
stock, par value $0.10 per share ("Re Cap Common Stock"), will receive $18.50
per share of Re Cap Common Stock;
WHEREAS, ZRC may be required to incur substantial expenses in
connection with the performance of the Merger Agreement;
WHEREAS, ZRC, as a condition to its willingness to enter into
the Merger Agreement, has required the Shareholder to enter into this Agreement
with respect to all of the shares of Re Cap Common Stock owned by the
Shareholder, together with any additional shares of Re Cap Common Stock
hereafter acquired by the Shareholder (pursuant to Section 7, by purchase or
otherwise) (such specified number of shares, and any additional shares when and
if they are acquired, being referred to as the "Shares") on the terms and
conditions hereinafter set forth; and
WHEREAS, the Board of Directors of Re Cap has approved ZRC
becoming an "interested stockholder" for purposes of Section 203 of the
Delaware General Corporation Law;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Shareholder hereby grants to
ZRC an option (the "Option") to purchase all but not less than all of the
Shares at a purchase price of $18.50 per share (the "Purchase Price") in cash
(subject to adjustment pursuant to Section 7 below) for each Share purchased.
2. Exercise of Option. At any time prior to the
termination of this Agreement in accordance with the terms of Section 12, ZRC
may exercise the Option, in whole, but not in part, if:
<PAGE> 2
(a) a Third Party Business Combination (as defined in the
Merger Agreement) occurs; or
(b) the Merger Agreement is terminated and ZRC is entitled to
payment of expenses and a fee pursuant to section 11.3(b) of the
Merger Agreement.
At any time ZRC wishes to exercise the Option, ZRC shall give written
notice (the "Notice") to the Shareholder specifying a place and a date not less
than two nor more than fifteen business days from the date of the Notice for
the closing (the "Closing") of such purchase; provided, however, that, subject
to the termination provision set forth in Section 12, the date for such Closing
shall be extended to a date that shall not be later than 35 days after the
later of (a) the expiration or termination of any applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the regulations thereunder (the "HSR Act") and (b) the receipt by ZRC of all
necessary approvals under applicable state insurance laws and regulations.
3. Payment and Delivery of Certificate(s). At the Closing
hereunder:
(a) ZRC will make payment to the Shareholder of the aggregate
Purchase Price for the Shares being purchased upon exercise of the
Option in immediately available funds by wire transfer to a bank
designated by the Shareholder at least one (1) business day prior to
such Closing in an amount equal to the Purchase Price multiplied by the
total number of Shares being purchased; and
(b) The Shareholder will deliver to ZRC, against payment to
the Shareholder as provided in Section 3(a), a certificate or
certificates representing the number of Shares so purchased by ZRC duly
endorsed or with executed blank stock powers attached, in either event
with signature guaranteed such that registered ownership of the Shares
may be registered for transfer on the books of Re Cap.
4. Agreement to Vote. The Shareholder hereby agrees, during the
term of this Agreement, to vote all of the Shares at any meeting, or in
connection with any written consent, of the Re Cap shareholders (a) in favor of
the Merger Agreement and any other related transactions or matters presented in
connection with the Merger and (b) against any other proposal which provides for
any merger, sale of assets or other Third Party Business Combination (as defined
in the Merger Agreement) between Re Cap (or any subsidiary of Re Cap) and any
other person or entity or which is otherwise inconsistent with the Merger or the
Merger Agreement.
2
<PAGE> 3
5. Legending of Certificates. The Shareholder agrees to
submit to ZRC contemporaneously with or promptly following execution of this
Agreement (or promptly following receipt of any additional certificates
representing any additional Shares) all certificates representing the Shares so
that ZRC may note thereon a legend referring to the option granted to it by,
and voting agreement contained in, this Agreement.
6. Payment of Additional Purchase Price. If, after
purchasing the Shares pursuant to the Option, ZRC or any of its affiliates
receives any cash or non-cash consideration in respect of the Shares in
connection with a Third Party Business Combination during the period commencing
on the date of the Closing hereunder and ending on the first anniversary
thereof, ZRC shall promptly pay over to the Shareholder, as an addition to the
Purchase Price, (a) the excess, if any, of such consideration over the
aggregate Purchase Price paid for the shares by ZRC less (b) the amount of any
federal, state, local or other tax paid or payable as a result of, or otherwise
attributable to, the sale or other disposition of the Shares by ZRC; provided
that, (X) if the consideration received by ZRC or such affiliates shall be
securities listed on a national securities exchange or traded on the NASDAQ
National Market ("NASDAQ"), the per share value of such consideration shall be
equal to the closing price per share listed on such national securities
exchange or NASDAQ on the date such transaction is consummated and (Y) if the
consideration received by ZRC or such affiliates shall be in a form other than
securities, the per share value shall be determined in good faith as of the
date such transaction is consummated by ZRC and the Shareholder, or, if ZRC and
the Shareholder cannot reach agreement, by a nationally recognized investment
banking firm reasonably acceptable to the parties.
7. Adjustments to Prevent Dilution, Etc. In the event
of a stock dividend or distribution, or any change in Re Cap Common Stock by
reason of any stock dividend, split-up, recapitalization, combination, exchange
of shares or the like, the term "Shares" shall be deemed to refer to and
include the Shares as well as all such stock dividends and distributions and
any shares into which or for which any or all of the Shares may be changed or
exchanged. In such event, the amount to be paid per share by ZRC shall be
proportionately adjusted.
8. Representations and Warranties of the Shareholder.
The Shareholder represents and warrants to ZRC that:
(a) The Shareholder is the sole beneficial owner of
the Shares; the Shares are all of the shares of the
3
<PAGE> 4
capital stock of Re Cap owned beneficially or of record by the Shareholder; and
the Shareholder owns the Shares, free and clear of any agreements, liens,
adverse claims or encumbrances whatsoever with respect to the ownership of or
the right to vote the Shares.
(b) The Shareholder has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action on the part of the
Shareholder. This Agreement has been duly executed and delivered by the
Shareholder.
(c) The execution, delivery and performance of this
Agreement will not, with or without the giving of notice or the passage of
time, (i) violate any judgment, injunction, order or decree of any court,
arbitrator or governmental agency applicable to the Shareholder, or (ii)
conflict with, result in the breach of any provision of, constitute a default
under, or require the consent of any third party under, any agreement or
instrument to which the Shareholder is a party or by which the Shareholder is
bound.
9. Additional Covenants of the Shareholder. The
Shareholder hereby covenants and agrees that:
(a) Until the termination of this Agreement, the
Shareholder will not enter into any transaction, take any action or by inaction
permit any event to occur that would result in any of the representations or
warranties of the Shareholder herein contained not being true and correct.
(b) Until the termination of this Agreement, the
Shareholder shall not, directly or indirectly, through any employee, agent or
otherwise: (i) solicit, initiate or encourage submission of proposals or
offers from any person relating to any acquisition or purchase of all or a
material part of the assets of, or any equity interest in, or any merger,
consolidation or business combination with, Re Cap or any of its subsidiaries
(an "acquisition proposal"), or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way or assist, facilitate or
encourage any acquisition proposal by any other person.
(c) From and after the date hereof until the
termination of this Agreement, the Shares shall not be sold, transferred,
pledged, hypothecated, transferred by gift, or otherwise disposed of in any
manner whatsoever.
4
<PAGE> 5
(d) The Shareholder shall execute and deliver any
additional documents reasonably necessary or desirable, in the opinion of ZRC's
or Re Cap's counsel, to evidence the Option granted in Section 1 and the
agreement to vote granted in Section 4 with respect to the Shares or otherwise
implement and effect the provisions of this Agreement.
10. Representations and Warranties of ZRC.
ZRC represents and warrants to the Shareholder that:
(a) ZRC has all requisite corporate power and
authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement and all
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of ZRC. This Agreement has been duly
executed and delivered by ZRC.
(b) Neither the execution, delivery or
performance of this Agreement by ZRC nor the consummation of the transactions
contemplated herein will (i) violate the Certificate of Incorporation or Bylaws
of ZRC, (ii) violate any judgment, injunction, order or decree of any court,
arbitrator or governmental agency applicable to ZRC, or (iii) conflict with,
result in the breach of any provision of, or constitute a default under, any
agreement or instrument to which ZRC is a party or by which ZRC is bound.
(c) If the Option is exercised, the Shares will
be acquired for investment for ZRC's own account, not as a nominee or agent and
not with a view to the distribution of any part thereof. ZRC has no present
intention of selling, granting any participation in, or otherwise distributing
the same nor does ZRC have any contract, undertaking, agreement or arrangement
with any person or to any third person, with respect to any of the Shares.
(d) ZRC understands that the Shares may not be
sold, transferred, or otherwise disposed of without registration under the
Securities Act of 1933, as amended (the "1933 Act"), or an exemption therefrom,
and that in the absence of an effective registration statement covering the
Shares or an available exemption from registration under the 1933 Act, the
Shares must be held indefinitely. In the absence of an effective registration
statement covering the Shares, ZRC will sell, transfer, or otherwise dispose of
the Shares only in a matter consistent with its representations and agreements
set forth herein.
11. Cooperation as to Regulatory Matters. As promptly as
possible after the execution hereof, ZRC will file
5
<PAGE> 6
any required notifications with the Federal Trade Commission ("FTC") and the
Antitrust Division of the Department of Justice ("Justice") pursuant to and in
compliance with the HSR Act and seek all regulatory approvals required in
connection with the transactions contemplated hereby. ZRC will comply fully
with all applicable notification, reporting and other requirements of the HSR
Act and will cooperate with Re Cap in satisfying such requirements. ZRC shall
not unreasonably delay submission of information required by the FTC and
Justice under the HSR Act and shall use its best efforts to supply such
information promptly. At all times from the date hereof until the termination
of this Agreement, ZRC will use its reasonable best efforts promptly to obtain
any and all regulatory approvals and to make any filings under federal and
state securities laws necessary in connection with the acquisition of Shares
pursuant to this Agreement. The Shareholder will cooperate fully and promptly
with ZRC.
12. Termination. This Agreement shall terminate on the
earlier of (a) the Effective Date (as defined in the Merger Agreement) and (b)
the date of termination of the Merger Agreement, unless the Merger Agreement is
terminated by ZRC pursuant to Section 10.1(d) or Section 10.1(e) thereto or by
Re Cap pursuant to Section 10.1(g) thereto, in which case this Agreement shall
terminate 15 days after termination of the Merger Agreement; provided, however,
that if, during such 15-day period, ZRC delivers the Notice, this Agreement
shall terminate six months after termination of the Merger Agreement.
13. Binding Effect; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
successors and permitted assigns. ZRC may assign its rights and obligations
hereunder to an entity controlled by or under common control with ZRC. The
Shareholder shall not assign its rights or obligations hereunder without ZRC's
consent.
14. Notices. All notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally or by Federal Express or other courier service or sent by express
mail, postage prepaid, return receipt requested, addressed to the respective
party at the applicable address below, on the date of such personal delivery or
on the date received:
If to ZRC: Zurich Reinsurance Centre Holdings, Inc.
One Chase Manhattan Plaza
43rd Floor
New York, New York 10005
Attention: Steven M. Gluckstern
Telecopy No.: (212) 898-5007
6
<PAGE> 7
with a copy to: Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
Attention: Peter A. Appel, Esq.
Telecopy No.: (212) 821-8111
If to the Shareholder: John Deere Insurance Group, Inc.
3400 80th Street
Moline, Illinois 61265
Attention: Dennis E. Hoffmann
Telecopy No.: (309) 765-5892
with a copy to: Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Bonnie Greaves, Esq.
Telecopy No.: (212) 848-7179
Any party may change the foregoing address from time to time by giving the
other party notice thereof.
15. Injunctive Relief; Remedies Cumulative.
(a) Each party hereto acknowledges that the other
party will be irreparably harmed and that there will be no adequate remedy at
law for a violation of any of the covenants or agreements of such party that
are contained in this Agreement. It is accordingly agreed that, in addition to
any other remedies that may be available to the non-breaching party upon the
breach by any other party of such covenants and agreements, the non-breaching
party shall have the right to obtain injunctive relief to restrain any breach
or threatened breach of such covenants or agreements or otherwise to obtain
specific performance of any of such covenants or agreements.
(b) No remedy conferred upon or reserved to any
party herein is intended to be exclusive of any other remedy, and every remedy
shall be cumulative and in addition to every other remedy herein or now or
hereafter existing at law, in equity or by statute.
16. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws thereof.
17. Counterparts. This Agreement may be executed in
any number of counterparts, all of which together shall constitute a single
agreement.
18. Effect of Partial Invalidity. Whenever possible,
each provision of this Agreement shall be construed
7
<PAGE> 8
in such a manner as to be effective and valid under applicable law. If any
provision of this Agreement or the application thereof to any party or
circumstance shall be prohibited by or invalid under applicable law, such
provisions shall be ineffective to the extent of such prohibition without
invalidating the remainder of such provision or any other provisions of this
Agreement or the application of such provision to the other party or other
circumstances.
IN WITNESS WHEREOF, this Agreement has been executed by the
parties as of the date first above written.
ZURICH REINSURANCE CENTRE HOLDINGS, INC.
By: /s/ Peter R. Porrino
---------------------------------
Name: Peter R. Porrino
Title: Senior Vice President and
Chief Financial Officer
JOHN DEERE INSURANCE GROUP, INC.
By: /s/ Dennis E. Hoffmann
---------------------------------
Name: Dennis E. Hoffmann
Title: President and Chief
Executive Officer
<PAGE> 1
EXHIBIT 99.3
FOR IMMEDIATE RELEASE
Contact: Elizabeth A. Ventura
Vice President
Investor Relations & Corporate Communications
Zurich Reinsurance Centre Holdings, Inc.
(212) 898-5050
ZRC TO ACQUIRE RE CAPITAL CORPORATION
(New York, New York, January 12, 1995) - Zurich Reinsurance Centre Holdings,
Inc. (NYSE: ZRC) and Re Capital Corporation (NASDAQ: RCAP) today announced
they have entered into a definitive agreement for the acquisition of Re Capital
by ZRC. Under the terms of the agreement, which was unanimously approved by
the board of directors of Re Capital, shareholders of Re Capital's common stock
will receive cash consideration of $18.50 per share, and ZRC will assume all
obligations under Re Capital's existing 5-1/2% Convertible Debentures, due
August 1, 2000, that are not converted into common shares prior to the closing.
The transaction, expected to be completed in the first half of 1995, is
conditioned upon the receipt of regulatory approvals and the approval of Re
Capital's shareholders.
Additionally, John Deere Insurance Group has granted ZRC an option to acquire,
at $18.50 per share, its 3,087,598 shares of Re Capital, comprising 43.8% of Re
Capital's outstanding shares subject to regulatory approvals. John Deere
Insurance Group has agreed to vote its shares in favor of the transaction.
"I am pleased that the terms of the merger recognize the success Re Capital has
had in creating a valuable franchise in the reinsurance marketplace. I believe
that the combination of these companies will serve to further strengthen the
broker distribution channel," said James E. Roberts, President and Chief
Executive Officer of Re Capital Corporation.
Steven M. Gluckstern, Chairman, President and Chief Executive Officer of ZRC
commented, "We are excited about this transaction and the opportunity it
presents ZRC to further our strategic goals by broadening our business in a way
that is fundamentally compatible with our underwriting practices. Re Capital,
like ZRC, has been a lead underwriter of casualty and property reinsurance and
Re Capital's book of short-tail casualty business is complementary to the
long-tail casualty lines ZRC writes. We believe this merger represents an
attractive and efficient use of ZRC's capital."
Re Capital Corporation, located in Stamford, CT, through its wholly-owned
subsidiary Re Capital Reinsurance Corporation,
<PAGE> 2
provides treaty Reinsurance to domestic property-casualty insurers exclusively
through reinsurance intermediaries. Both Standard and Poor's Corporation and
A.M. Best's have rated the Company "A." For the nine months ended September
30, 1994, Re Capital Corporation reported net premiums written of approximately
$102 million and had at September 30, 1994, statutory capital and surplus of
$165 million.
Headquartered in New York City, Zurich Reinsurance Centre Holdings, Inc.,
through its operating subsidiary, is the principal underwriting affiliate of
the Zurich Insurance Company in North American market for traditional property
and casualty reinsurance. ZRC is 58% owned by Zurich Centre Investments
Limited, a Bermuda-based holding company, and 42% publicly held. The Company
holds a claims-paying rating of AA- (excellent) from Standard & Poor's. ZRC
writes treaty Reinsurance exclusively through intermediaries and writes
facultative reinsurance directly and through intermediaries. The Company has
branch facultative offices in Atlanta, Chicago, New York, San Francisco and
Stamford. For the nine months ended September 30, 1994, ZRC reported net
premiums written of approximately $201 million and had at September 30, 1994,
statutory capital and surplus of $600 million.
2
