<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment )*
RE CAPITAL CORPORATION
(Name of Issuer)
Common Stock, par value $.10 per share
(Title of Class of Securities)
754904 10 0
(CUSIP Number)
Mark R. Sarlitto, Esq.
Vice President and General Counsel
Zurich Reinsurance Centre Holdings, Inc.
One Chase Manhattan Plaza - 43rd Floor, New York, New York 10005
(212) 898-5000
(Name, Address and Telephone Number
of Person Authorized to
Receive Notices and Communications)
January 11, 1995
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ]
Check the following box if a fee is being paid with this statement /x/ (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendments subsequent
thereto reporting beneficial ownership of less than five percent of such
class. See Rule 13d-7.)
Note: Six copies of the this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosure provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Exhibit Index Appears on Page 15
Page 1 of 61 Pages
<PAGE>2
SCHEDULE 13D
CUSIP No. 754904 10 0 Page 2 of 61 Pages
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Zurich Reinsurance Centre Holdings, Inc.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3. SEC USE ONLY
4. SOURCE OF FUNDS*
OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6. CITIZENS OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7. SOLE VOTING POWER 0
SHARES
BENEFICIALLY 8. SHARED VOTING POWER 3,087,598
OWNED BY (the Reporting Person disclaims beneficial
EACH ownership of these shares)
REPORTING
PERSON 9. SOLE DISPOSITIVE POWER 0
WITH
10. SHARED DISPOSITIVE POWER 0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,087,598 (the Reporting Person disclaims beneficial ownership of
these shares)
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.8%
14. TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>3
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $.10 per share
(the "Common Stock"), of Re Capital Corporation, a Delaware corporation (the
"Issuer"). The Issuer's principal executive offices are located at Two
Stamford Plaza, P.O. Box 10148, Stamford, Connecticut 06904.
Item 2. Identity and Background.
This statement is being filed on behalf of Zurich Reinsurance Centre
Holdings, Inc., a Delaware corporation ("ZRC Holdings"). ZRC Holdings owns
all of the issued and outstanding shares of common stock of Zurich Reinsurance
Centre, Inc., a Connecticut insurance company which is engaged in the business
of property and casualty reinsurance underwriting. The principal place of
business and principal office of ZRC Holdings is located at One Chase
Manhattan Plaza, 43rd Floor, New York, New York 10005.
Zurich Centre Investments Limited, a corporation organized under the
laws of Bermuda ("Zurich Centre"), owns approximately 58% of the outstanding
common stock of ZRC Holdings. Zurich Centre is a holding company that does
not conduct any business of its own. Zurich Centre's principal place of
business and principal office is located at Cumberland House, One Victoria
Street, P.O. Box HM 1788, Hamilton, HM HX, Bermuda.
Zurich Insurance Company ("Zurich Insurance"), a Swiss insurance and
reinsurance holding company engaged in insurance and reinsurance operations,
owns approximately 65% of the outstanding common stock of Zurich Centre.
Zurich International (Bermuda) Ltd. ("Zurich International"), a Bermuda
insurance and reinsurance holding company engaged in insurance and reinsurance
operations, owns approximately 35% of the outstanding common stock of Zurich
Centre. Zurich Insurance's principal place of business and principal office
is located at 2 Mythenquai, CH-8002 Zurich, Switzerland. Zurich
International's principal place of business and principal office is located at
Cumberland House, One Victoria Street, P.O. Box HM 1788, Hamilton, HM HX,
Bermuda.
Schedule 1 attached hereto and incorporated herein by reference sets
forth certain additional information with respect to each executive officer
and director of (i) ZRC Holdings, (ii) Zurich Centre, (iii) Zurich Insurance
and (iv) Zurich International.
During the last five years, none of (i) ZRC Holdings, (ii) Zurich
Centre, (iii) Zurich Insurance, (iv) Zurich
<PAGE>4
International and, (v) to the best knowledge of ZRC Holdings, the persons
identified in Schedule 1, has been (a) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (b) a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or
finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 4 hereof, ZRC Holdings has entered
into an Option and Voting Agreement, dated January 11, 1995 (the "Option and
Voting Agreement"), with John Deere Insurance Group, Inc. ("John Deere"), to
induce ZRC Holdings and ZRC Merger-Sub Corp. ("Merger Sub"), a Delaware
corporation and a wholly-owned subsidiary of ZRC Holdings, to enter into an
Agreement and Plan and Merger, dated January 11, 1995 (the "Merger
Agreement"), with the Issuer (see Item 4 hereof). The descriptions of the
Merger Agreement and the Option and Voting Agreement contained herein are
qualified in their entirety by reference to the Merger Agreement and the
Option and Voting Agreement, copies of which are attached hereto as Exhibits 1
and 2, respectively. It is currently anticipated that, subject to the receipt
of applicable state insurance regulatory approval, the consideration required
to purchase the shares of Common Stock pursuant to the Option and Voting
Agreement and the Merger Agreement will be provided from internally available
funds.
Item 4. Purpose of Transaction.
On January 11, 1995, ZRC Holdings, Merger Sub and the Issuer
entered into the Merger Agreement, which provides that, on the effective date
(the "Effective Date") of the merger (the "Merger"), each share of Common
Stock outstanding immediately prior to the Effective Date 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 Issuer's existing 5-1/2% Convertible Debentures due
August 1, 2000 (approximately $69 million outstanding aggregate principal
amount) that are not converted into Common Stock prior to the closing of the
Merger. The closing of the Merger is subject to approval by the Issuer's
stockholders, certain state insurance regulatory approvals, the expiration of
the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and certain other customary conditions
and approvals.
<PAGE>5
As more fully described in the Merger Agreement, upon the
occurrence of certain specified events, including the occurrence of a Third
Party Business Combination (as defined in the Merger Agreement), the Issuer
will pay ZRC Holdings a fee of $4,500,000 plus an amount equal to the costs
and expenses incurred by ZRC Holdings in connection with the Merger Agreement,
not exceeding $1,000,000.
Concurrently with the execution and delivery of the Merger
Agreement, ZRC Holdings entered into the Option and Voting Agreement, pursuant
to which John Deere has (i) granted ZRC Holdings an option (the "Option") to
acquire under the circumstances set forth below and described in the Option
and Voting Agreement, at $18.50 per share, its 3,087,598 shares of Common
Stock and all future shares of Common Stock that John Deere may acquire (the
"Option Shares") and (ii) agreed to vote the Option Shares in favor of the
Merger Agreement and any other related transactions or matters presented in
connection with the Merger and against any other proposal which provides for
any merger, sale of assets or other Third Party Business Combination, between
the Issuer (or any subsidiary of the Issuer) and any person or entity, or
which is otherwise inconsistent with the Merger or the Merger Agreement.
During the term of the Option and Voting Agreement (which term
generally will expire on the earlier of the Effective Date and termination of
the Merger Agreement), ZRC Holdings may exercise the Option, in whole, but not
in part, if a (i) Third Party Business Combination occurs with respect to the
Issuer or (ii) the Merger Agreement is terminated and ZRC Holdings is entitled
to the payment of expenses and a fee pursuant to the terms of the Merger
Agreement. During the term of the Option and Voting Agreement, John Deere may
not sell, transfer or otherwise dispose of the Option Shares.
Pursuant to the Option and Voting Agreement, if, after purchasing
the Option Shares pursuant to the Option under the circumstances described in
the Option and Voting Agreement, ZRC Holdings or any of its affiliates
receives any cash or non-cash consideration in respect of the Option Shares in
connection with a Third Party Business Combination during the period through
the first anniversary of the closing of the Option, ZRC Holdings is required
to pay over to John Deere the excess, if any, of such consideration over the
purchase price paid for the Option Shares by ZRC Holdings less 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 Option Shares
by ZRC Holdings.
<PAGE>6
If the Merger is consummated as planned, the board of directors of
the Issuer will consist of the directors of Merger Sub immediately prior to
the Effective Date. At the Effective Date, the Certificate of Incorporation
and By-Laws of Merger Sub will be the Certificate of Incorporation and By-Laws
of the Issuer. Subsequent to the Merger, the registration of the Common Stock
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
will be terminated, the Common Stock will no longer be listed on the Nasdaq
National Market and the Issuer will cease filing reports with the Securities
and Exchange Commission.
Item 5. Interest in Securities of the Issuer.
(a) and (b) ZRC Holdings may be deemed to own beneficially (as that term
is defined in Rule 13d-3 ("Rule 13d-3") under the Exchange Act) the Option
Shares. Pursuant to information provided by the Issuer, there were 7,049,890
shares of outstanding Common Stock as of January 11, 1995. Based on such
number, the Option Shares that ZRC Holdings may be deemed to own beneficially
(as that term is defined in Rule 13d-3) represent approximately 43.8% of the
outstanding Common Stock. As of the date hereof, ZRC Holdings does not have
sole or shared power to vote or to direct the vote of or to dispose or to
direct the disposition of the Option Shares of which ZRC Holdings may be
deemed to own beneficially (as that term is defined in Rule 13d-3). As more
fully described in Items 3 and 4 hereof, John Deere has agreed, pursuant to
the Option and Voting Agreement, (i) to vote the Option Shares in favor of the
Merger Agreement and any other related transactions or matters presented in
connection with the Merger and against any other proposal which provides for
any merger, sale of assets or other Third Party Business Combination, between
the Issuer (or any subsidiary of the Issuer) and any person or entity, or
which is otherwise inconsistent with the Merger or the Merger Agreement and
(ii) not to sell, transfer or otherwise dispose of the Option Shares. ZRC
Holdings disclaims beneficial ownership of the Option Shares for all purposes.
Except as described herein, none of (i) ZRC Holdings, (ii) Zurich
Centre, (iii) Zurich Insurance, (iv) Zurich International and, (v) to the best
knowledge of ZRC Holdings, the persons identified in Schedule 1 hereto,
presently beneficially own any Common Stock.
(c) Except as indicated herein, no transactions in the shares of Common
Stock have been effected by (i) ZRC Holdings, (ii) Zurich Centre, (iii) Zurich
Insurance, (iv) Zurich International or, (v) to the best knowledge of ZRC
Holdings, by
<PAGE>7
any of the persons listed on Schedule 1 hereto, during the past 60 days.
(d) As of the date hereof (and at all times prior to the exercise, if
any, of the Option under the circumstances described in the Option and Voting
Agreement), John Deere has the right to receive dividends from, and the
proceeds from the sale of, the Option Shares (including receipt of
consideration in connection with the Merger). Additionally, as described in
Item 4 hereof, under the circumstances described in the Option and Voting
Agreement, John Deere has the right to share certain proceeds received by ZRC
Holdings or any of its affiliates in respect of the Option Shares within one
year of exercise of the Option.
(e) Not applicable.
Item 6. Contracts, Understandings or Relationships with
Respect to Securities of the Issuer.
ZRC Holdings entered into (i) the Merger Agreement with the Issuer
and Merger Sub and (ii) the Option and Voting Agreement with John Deere, which
are described in Items 3, 4 and 5 hereof.
Except as described herein, there are no contracts, arrangements,
understandings or relationships among the persons named in Item 2 hereof or
between such persons and any other person with respect to any securities of
the Issuer.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 - Agreement and Plan of Merger, dated January 11, 1995, among
Re Capital Corporation, Zurich Reinsurance Centre Holdings,
Inc. and ZRC Merger Sub-Corp.
Exhibit 2 - Option and Voting Agreement, dated January 11, 1995, between
Zurich Reinsurance Centre Holdings, Inc. and John Deere
Insurance Group, Inc.
<PAGE>8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: January 20, 1995
ZURICH REINSURANCE CENTRE HOLDINGS,
INC.
By: /s/ Mark R. Sarlitto
Name: Mark R. Sarlitto
Title: Vice President and
General Counsel
<PAGE>9
SCHEDULE 1
Set forth below are the name and position of each of the executive
officers and directors of (i) ZRC Holdings, (ii) Zurich Centre, (iii) Zurich
Insurance and (iv) Zurich International. Except as otherwise indicated, the
principal occupation of each person listed below is his or her executive
position with ZRC Holdings, Zurich Centre, Zurich Insurance and/or Zurich
International, as the case may be. Unless otherwise indicated, each person
listed below is a United States citizen.
The business address of each person at ZRC Holdings is One Chase
Manhattan Plaza, 43rd Floor, New York, New York 10005. The business address
of each person at Zurich Centre and Zurich International is Cumberland House,
One Victoria Street, P.O. Box HM 1788, Hamilton HM HX, Bermuda. The business
address of each person at Zurich Insurance is 2 Mythenquai, CH-8002 Zurich,
Switzerland.
Executive Officers of ZRC Holdings
Name Position
- ---- --------
Steven M. Gluckstern Chairman, President and Chief
Executive Officer
Richard E. Smith Executive Vice President and
Chief Operating Officer
Isaac Mashitz Senior Vice President and Chief
Actuary
Mark D. Mosca Senior Vice President and Chief
Underwriting Officer
Peter R. Porrino Senior Vice President and Chief
Financial Officer
John D. Shuck Senior Vice President and Chief
Administrative Officer
Mark R. Sarlitto Vice President and General
Counsel
<PAGE>10
Directors of ZRC Holdings
Principal Occupation
Name (if other than as indicated above)
- ---- ----------------------------------
Laurence W. Cheng President and Chief Executive
(Canadian) Officer of Zurich International;
Executive Vice President and
Chief Financial Officer of Zurich
Centre
Judith Richards Hope Senior Partner in the law firm
Paul, Hastings, Janofsky &
Walker
Michael D. Palm President and Chief Executive
Officer, Centre Reinsurance
Holdings Limited; Executive Vice
President of Zurich Centre
George G.C. Parker Associate Dean for Academic
Affairs, Director of the M.B.A.
Program and Professor of
Management, Stanford University
William H. Bolinder Member of Corporate Executive Board of Zurich
Insurance
John J. Byrne Chairman and Chief Executive Officer of Fund
American Enterprise Holdings, Inc.
Phillip Caldwell Director and Senior Managing
Director of Lehman Brothers Inc.
Robert T. Marto President and Chief Executive
Officer of White River
Rolf F. Huppi President and Chief Executive
(Swiss) Officer of Zurich Insurance
Steven M. Gluckstern
Detlef Steiner Member of Corporate Executive
(German) Board of Zurich Insurance
Richard E. Smith
<PAGE>11
Executive Officers of Zurich Centre
Name Position
- ---- --------
Steven M. Gluckstern President and Chief Executive
Officer
Michael D. Palm Executive Vice President
Laurence W. Cheng Executive Vice President and
(Canadian) Chief Financial Officer
Steven D. Germain Secretary
Directors of Zurich Centre
Principal Occupation
Name (if other than as indicated above)
- ---- ----------------------------------
Steven M. Gluckstern President and Chief Executive
Officer, ZRC Holdings, Chairman,
Centre Reinsurance Holdings
Limited
Michael D. Palm President and Chief Executive
Officer, Centre Reinsurance
Holdings Limited
Laurence W. Cheng President and Chief Executive
(Canadian) Officer of Zurich International;
Executive Vice President and
Chief Financial Officer of Zurich
Centre
Rolf F. Huppi President and Chief Executive
(Swiss) Officer of Zurich Insurance
Dr. Kaspar Hotz Corporate Secretary and General
(Swiss) Counsel of Zurich Insurance
Detlef Steiner Member of Corporate Executive
(German) Board of Zurich Insurance
<PAGE>12
Executive Officers of Zurich Insurance
Name Position
- ---- --------
Rolf F. Huppi President and Chief Executive
(Swiss) Officer
Rolf Hanggi Deputy Chief Executive Officer;
(Swiss) Member of Corporate Executive Board
Detlef Steiner Member of Corporate Executive
(German) Board
Dr. Kaspar Hotz Corporate Secretary and General
Counsel
William H. Bolinder Member of Corporate Executive Board
Directors of Zurich Insurance
Principal Occupation
Name (if other than as indicated above)
- ---- ----------------------------------
Fritz Gerber Chairman of the Board
(Swiss)
Henry C.M. Bodmer Deputy Chairman of the Board
(Swiss)
Peter Bockli
(Swiss)
Kaspar V. Cassani
(Swiss)
Markus Kundig
(Swiss)
Yves Oltramare
(Swiss)
Vreni Spoerry-Toneatti
(Swiss)
Helmut Maucher
(German)
<PAGE>13
David de Pury
(Swiss)
Karl Olto Pohl
(German)
Lodewijk van Wachem Chairman of the Supervisory
(Dutch) Board, Royal Dutch Petroleum
Company
Rolf F. Huppi President and Chief Executive
(Swiss) Officer of Zurich Insurance
Rolf Hanggi Deputy Chief Executive Officer
(Swiss) and Member of Corporate Executive
Board of Zurich Insurance
Executive Officers of Zurich International
Name Position
- ---- --------
Laurence W. Cheng President and Chief Executive
(Canadian) Officer
Rolf F. Huppi Chairman
(Swiss)
Detlef Steiner Vice Chairman
(German)
Michael R. Deevy Vice President and Comptroller
(Bermudian)
Nicholas B. Dill, Jr. Vice President and Secretary
(Bermudian)
Nigel J. Pooley Vice President
(Bermudian)
Directors of Zurich International
Principal Occupation
Name (if other than as indicated above)
- ---- ----------------------------------
Rolf F. Huppi President and Chief Executive
(Swiss) Officer of Zurich Insurance
<PAGE>14
Detlef Steiner Member of Corporate Executive
(German) Board of Zurich Insurance
Fritz Gerber Chairman of the Board of Zurich
(Swiss) Insurance
Rolf Hanggi Deputy Chief Executive Officer
(Swiss) and Member of Corporate Executive
Board of Zurich Insurance
Laurence W. Cheng President and Chief Executive
(Canadian) Officer of Zurich International;
Executive Vice President and
Chief Financial Officer of
Zurich Centre
Hon. Charles T.M. Collis Senior Partner of Conyers, Dill &
(Bermudian) Pearman
Nicholas B. Dill, Jr. Senior Partner of Conyers, Dill
(Bermudian) & Pearman
William D. Thomson Executive Vice President of The
(Bermudian) Bank of Bermuda Limited
<PAGE>15
EXHIBIT INDEX
Sequentially
Numbered
Page
Exhibit 1 - Agreement and Plan of Merger, 16
dated January 11, 1995, among
Re Capital Corporation, Zurich
Reinsurance Centre Holdings,
Inc. and ZRC Merger Sub-Corp.
Exhibit 2 - Option and Voting Agreement, 24
dated January 11, 1995, between
Zurich Reinsurance Centre Holdings,
Inc. and John Deere Insurance Group,
Inc.
<PAGE>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
<PAGE>2
TABLE OF CONTENTS
Page
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
Section 5.2 Capitalization . . . . . . . . . . . . . . . 8
<PAGE>3
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
<PAGE>4
ARTICLE IX
CONDITIONS PRECEDENT
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
<PAGE>5
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.
<PAGE>6
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 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.
<PAGE>7
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 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
<PAGE>8
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.
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
<PAGE>9
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
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.
<PAGE>10
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 (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
<PAGE>11
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 (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
<PAGE>12
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, 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.
<PAGE>13
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 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
<PAGE>14
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 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
<PAGE>15
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 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,
<PAGE>16
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.
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
<PAGE>17
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 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
<PAGE>18
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.
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.
<PAGE>19
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.
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
<PAGE>20
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 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.
<PAGE>21
(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 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
<PAGE>22
necessary for the consummation by Sub of the Merger or the transactions
contemplated by this Agreement, other than filings, registrations,
authorizations, consents or approvals 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
<PAGE>23
(D) perform in all material respects its obligations under 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 capital assets or any other assets
other than in the ordinary course of business, (D) incur additional
<PAGE>24
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
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;
<PAGE>25
(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 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
<PAGE>26
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 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
<PAGE>27
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]
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
<PAGE>28
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 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)
<PAGE>29
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 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
<PAGE>30
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.
(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,
<PAGE>31
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 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.
<PAGE>32
(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;
(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);
<PAGE>33
(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.
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
<PAGE>34
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.
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
<PAGE>35
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, 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
<PAGE>36
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
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.
<PAGE>37
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, 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.
<PAGE>38
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
<PAGE>1
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:
(a) a Third Party Business Combination (as defined in the
Merger Agreement) occurs; or
<PAGE>2
(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.
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
<PAGE>3
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 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
<PAGE>4
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.
(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
<PAGE>5
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 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
<PAGE>6
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
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
<PAGE>7
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 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.
<PAGE>8
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
NA950110.115/3+
