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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 28, 1997
CROP GROWERS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-23830 81-0491497
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
10895 Lowell; Suite 300
Overland Park, Kansas 66210
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 338-7800
Not Applicable
(Former name or former address, if changed since last report.)
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Item 5. Other Events
Fireman's Fund Insurance Company Enters into Acquisition Agreement
On March 5, 1997, Fireman's Fund Insurance Company ("Fireman's
Fund") and Crop Growers Corporation (the "Company") entered into a definitive
agreement by which Fireman's Fund would acquire the Company in a cash merger
at $10.25 per share. Fireman's Fund presently owns convertible preferred
stock of the Company and has exercised the right to purchase an additional
1,827,477 shares of common stock from former Company executives for $10.00
per share. The Company has consented to such purchases, subject to certain
restrictions. The Company had 7,962,251 shares of common stock outstanding
as of February 28, 1997.
The transaction is subject to, among other things, Company
stockholder approval, regulatory approvals and other customary conditions.
Because of regulatory approvals and clearances, the transaction is not expected
to close for several months.
The terms of the transaction were unanimously approved by the
Company's Board of Directors. The Company has received an opinion from Dean
Witter Reynolds Inc., its financial advisor, that the offer is fair from a
financial point of view to the Company's stockholders (other than Fireman's Fund
and its affiliates).
Through March 28, 1997, the Company may seek alternative acquisition
proposals from certain companies and may receive unsolicited proposals. Acting
through its investment bankers, the Company intends to initiate appropriate
contacts with respect to alternative acquisition proposals. If the Company's
Board of Directors finds that an alternative acquisition proposal is superior to
the transaction with Fireman's Fund, it may terminate the agreement with
Fireman's Fund upon payment of a break-up fee of $2.4 million. After March 28,
1997, the Company may receive unsolicited proposals and terminate the Fireman's
Fund agreement under certain, more limited, circumstances.
Reference is made to the agreements between the Company and Fireman's
Fund dated March 5, 1997, attached as exhibits 2.1 to 2.3 to this Form 8-K
Current Report and incorporated by reference herein.
Settlement of Shareholder Litigation
On February 28, 1997, a settlement (the "Settlement") was reached
between the Company, John Hemmingson and Gary A. Black, former executives of the
Company, and plaintiffs (on behalf of a class of purchasers of the Company's
common stock during the period February 13, 1995 and May 16, 1995, inclusive).
In re Crop Growers Corporation Securities Litigation, Master File No.
CV-95-58-GF-PGH (the "Action").
Under the Settlement, the Company has agreed to pay $2.5 million to
members of the class in settlement of all claims in the Action. Of the total
settlement amount, the Company will pay $1.22 million and the balance will be
paid under the terms of a directors' and officers' insurance policy. The
Settlement is subject to approval by the United States District Court for
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Montana. The Company will accrue the cost of the Settlement in the fourth
quarter of 1996.
Reference is made to the Crop Growers Corporation Securities
Litigation - Memorandum of Understanding dated February 28, 1997, attached as
exhibit 99(2) to this Form 8-K Current Report and incorporated by reference
herein.
Item 7. Financial Statements and Exhibits
(c) Exhibits
2.1 Acquisition Agreement dated March 5, 1997, between Crop Growers
Corporation and Fireman's Fund Insurance Company.
2.2 Consent Agreement dated March 5, 1997, between Crop Growers
Corporation and Fireman's Fund Insurance Company.
2.3 Letter of Intent re Revolving Credit Working Capital Facility dated
March 5, 1997 between Crop Growers Corporation and Fireman's Fund
Insurance Company.
2.4 Press release dated March 6, 1997
99(1) Press Release dated March 3, 1997
99(2) Crop Growers Corporation Securities Litigation - Memorandum of
Understanding dated February 28, 1997
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Signature
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: March 7, 1997
CROP GROWERS CORPORATION
By /s/David E. Hill
David E. Hill
Chief Financial Officer
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INDEX TO EXHIBITS
2.1 Acquisition Agreement dated March 5, 1997,
between Crop Growers Corporation and Fireman's
Fund Insurance Company.
2.2 Consent Agreement dated March 5, 1997,
between Crop Growers Corporation and
Fireman's Fund Insurance Company.
2.3 Letter of Intent re Revolving Credit Working
Capital Facility dated March 5, 1997 between
Crop Growers Corporation and Fireman's
Fund Insurance Company.
2.4 Press release dated March 6, 1997.
99(1) Press Release dated March 3, 1997.
99(2) Crop Growers Corporation Securities Litigation - Memorandum
of Understanding dated February 28, 1997.
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Exhibit 2.1
Acquisition Agreement
This Acquisition Agreement dated March 5, 1997 between Crop Growers
Corporation, a Delaware corporation (the "Company"), and Fireman's Fund
Insurance Company, a California corporation (the "Buyer"), sets forth the
agreement of the parties with respect to an acquisition (the "Acquisition") on
the terms and conditions set forth herein.
1. Acquisition. The Acquisition will consist of the merger of a
subsidiary or affiliate of the Buyer into the Company, with the Company being
the surviving corporation, in which (i) the common stockholders of the Company
will be entitled to receive cash in the amount of $10.25 per share (as
constituted on the date hereof) upon surrender of the relevant stock certificate
following the closing, (ii) the holders of options to acquire common stock of
the Company will receive a cash settlement equal to the spread (if any)
represented by each option, based on such price per share, and (iii) the Buyer
or an affiliate of the Buyer will become the holder of all the outstanding
common stock and rights to acquire common stock of the Company.
2. Effect of This Acquisition Agreement; Implementation Documentation.
It is understood that this Acquisition Agreement constitutes a binding agreement
as to the terms of and the parties' respective obligations with respect to the
Acquisition. The parties hereto shall promptly and diligently negotiate in good
faith and use their respective best efforts to enter into implementing
agreements with respect to the Acquisition (collectively, the "Implementation
Agreements"), each of which shall be consistent with the terms hereof. Although
the parties hereto intend to diligently negotiate and promptly enter into the
Implementation Agreements, the parties acknowledge and agree that this
Acquisition Agreement contains all of the substantive terms of the Acquisition,
and, in the event that the parties do not enter into the Implementation
Agreements, that this Acquisition Agreement is a binding agreement and shall
form the basis for consummation of the Acquisition as contemplated hereby.
3. No Solicitation.
(a) Except with respect to those entities listed in the Company's
letter to the Buyer (the "Excepted Contacts") (but with respect to the Excepted
Contacts only through March 28, 1997), until the earlier of the termination of
this Acquisition Agreement pursuant to its terms or the consummation of the
Acquisition, neither the Company nor any of its subsidiaries or representatives
shall, directly or indirectly, take any action to (i) encourage, solicit or
initiate the submission of any Acquisition Proposal, (ii) enter into any
agreement for or relating to a Third Party Transaction, or (iii) participate in
any way in discussions or negotiations with, or furnish any non-public
information to, any person in connection with any Acquisition Proposal.
Notwithstanding any other provision of this Section 3(a), the Company may, in
response to an unsolicited bona fide offer or proposal made by a third party to
it, provide information to or have discussions or negotiations with such third
party; provided, however, that if such offer or proposal is received after March
28, 1997, the Board of Directors must first make a determination in good faith,
after hearing advice
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of its outside counsel, that such action is necessary in order for the Board of
Directors to comply with its fiduciary duties under applicable law. The Company
will immediately communicate to the Buyer the receipt of any third party
solicitation, proposal or bona fide inquiry that the Company or any of its
representatives may receive in respect of any such transaction, or of any
request for such information, including in each case a copy thereof and all
other particulars thereof.
(b) "Acquisition Proposal" means any proposed Acquisition
Transaction. "Acquisition Transaction" means any (i) merger, consolidation or
similar transaction involving the Company, (ii) sale, lease or other disposition
directly or indirectly by merger, consolidation, share exchange or otherwise of
any assets of the Company or its subsidiaries representing 15% or more of the
consolidated assets of the Company and its subsidiaries, (iii) issue, sale or
other disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities (or options, rights or warrants to
purchase, or securities convertible into, such securities) representing 15% or
more of the votes attached to the outstanding securities of the Company, (iv)
transaction in which any person shall acquire Beneficial Ownership or the right
to acquire Beneficial Ownership, or any Group shall have been formed which has
Beneficial Ownership or has the right to acquire Beneficial Ownership, of 15% or
more of the outstanding shares of common stock of the Company, (v)
recapitalization, restructuring, liquidation, dissolution, or other similar type
of transaction with respect to the Company or any of its subsidiaries, or (vi)
transaction which is similar in form, substance or purpose to any of the
foregoing transactions. "Third Party Transaction" shall mean an Acquisition
Transaction with a party unrelated to the Buyer. "Beneficial Ownership" and
"Group" shall have the meanings stated in Regulation 13D-G under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(c) The Company will use its best efforts to take all action
necessary in accordance with applicable law and its certificate of incorporation
and bylaws to convene a meeting of its stockholders as promptly as practicable
to consider and vote upon the approval of the Acquisition. The Board of
Directors of the Company shall recommend and declare advisable to its
stockholders such approval and the Company shall take all lawful action to
solicit, and use all best efforts to obtain, approval of its stockholders, and
neither the Board of Directors of the Company nor any committee of such Board of
Directors shall (i) withdraw or modify the approval or recommendation by such
Board of Directors or such committee of the Acquisition, (ii) approve or
recommend any Acquisition Proposal other than the Acquisition, or (iii) cause
the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement with respect to any Acquisition
Proposal other than the Acquisition. Notwithstanding the foregoing, no later
than March 28, 1997, the Board of Directors of the Company may withdraw or
modify its approval or recommendation of the Acquisition, approve or recommend a
Superior Proposal or terminate this Acquisition Agreement, but in each case
only concurrently with the payment of the amount required by Section 14(d) or
14(e), as applicable. A "Superior Proposal" means any bona fide Acquisition
Proposal, the terms of which the Board of Directors of the Company determines in
its good faith judgment (after hearing the advice of a financial advisor of
nationally recognized reputation) to be more favorable to the Company's
stockholders than the Acquisition. Further, after March 28, 1997, the Board of
Directors of the Company may withdraw or modify its approval or recommendation
of the Acquisition, approve or recommend a Superior Proposal or terminate this
Acquisition Agreement, but in each case
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only concurrently with the payment of the amount required by Section 14(d) or
14(e), as applicable, and after a determination in good faith, after hearing
advice of its outside counsel, that such action is necessary in order for the
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law.
4. Access. The Company shall (and shall cause each of its subsidiaries
to) afford to the Buyer and its agents and representatives full access during
normal business hours throughout the period prior to the consummation of the
Acquisition to all of its properties, books, contracts, commitments and records
and during such period shall (and shall cause each of its subsidiaries to)
furnish promptly to such parties (i) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of federal or
state securities or insurance laws and (ii) all other information concerning its
business, properties and personnel as such party may reasonably request,
including any financial and operating data. Any such access shall commence
forthwith, and shall be conducted in such a manner so as not to interfere
unreasonably with the business or operations of the Company. The Buyer shall
maintain the confidentiality of any non-public information received by it or its
representatives pursuant to this Section 4.
5. Consents. The parties hereto will use their respective reasonable
best efforts to (i) obtain all material consents, authorizations, orders and
approvals of or from private parties or Government Entities, required, proper or
advisable in connection with this Acquisition Agreement and the Acquisition and
(ii) resolve any action, suit, proceeding or investigation which shall have been
instituted or which a Government Entity shall have indicated its intention to
institute which jeopardizes the Acquisition; provided, however, that no party
hereto shall be obligated to take any such action which, in the reasonable
opinion of such party (following consultation with its counsel), would (x) have
a material adverse effect on the assets, properties, liabilities, obligations,
financial condition, results of operations or business (a "Material Adverse
Effect") of such party and its subsidiaries taken as a whole or (y) have a
Material Adverse Effect or materially restrict or impair the effective
ownership, operation or control of the Company by the Buyer following the
consummation of the Acquisition. "Governmental Entity" means any federal, state
or local governmental or regulatory agency, authority or instrumentality,
whether domestic or foreign.
6. Announcements. The parties hereto will consult and cooperate with
each other and agree upon the terms and substance of all press releases,
announcements and public statements with respect to this Acquisition Agreement
and the Acquisition, provided that such consultation and cooperation shall not
interfere with any obligation of either party hereto to disclose any information
as required by applicable law. Any press release or other announcement by any
party with respect to the Acquisition will be subject to the consent and
approval of the other party, which consent or approval will not be unreasonably
withheld.
7. Interim Operations. Except as set forth on the disclosure schedule
delivered concurrently herewith ("Disclosure Schedule") or expressly required or
permitted by this Acquisition Agreement, from and after the date hereof until
the earlier of (i) the consummation of the Acquisition or (ii) the termination
of this Acquisition Agreement pursuant to its terms, the Company will and will
cause its subsidiaries to (w), except as otherwise agreed to by Buyer orally or
in writing, operate its businesses in the ordinary course of business, (x) not
take any action or fail to take any
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action which would or could reasonably be expected to jeopardize any of its
material contracts or its good standing with all applicable Departments of
Insurance and similar regulatory agencies with jurisdiction over the Company,
(y) not take any extraordinary action or fail to take any action, the failure of
which to be taken would be an extraordinary action, and (z) not declare, set
aside or pay any dividend (other than stated dividends on its preferred stock)
or other distribution in respect of its capital stock, whether in stock, cash or
other property, or issue any capital stock or any right to acquire, convert into
or exchange for capital stock except pursuant to stock options outstanding on
the date hereof. The Company agrees that, in the event it adopts a "rights
plan," "poison pill" or similar plan or arrangement, it will include a provision
expressly exempting the Buyer from the operation thereof.
8. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Buyer that:
(a) Organization and Qualifications. The Company and each subsidiary
of the Company is a corporation duly incorporated or organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite corporate power and authority, and all
governmental permits, approvals and other authorizations, necessary to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except for such exceptions as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company and its subsidiaries
taken as a whole (a "Company Material Adverse Effect").
(b) Capitalization. The authorized capital stock of the Company is
as set forth on the Disclosure Schedule. Except as set forth thereon, no shares
of capital stock or other voting securities of the Company are issued, reserved
for issuance or outstanding. Except as set forth above and except as
contemplated herein, there are no options or agreements relating to the issued
or unissued capital stock of the Company or any subsidiary of the Company, or
obligating the Company or any subsidiary to issue, transfer, grant or sell any
shares of capital stock of, or other equity interests in, or securities
convertible into or exchangeable for any capital stock or other equity interests
in, the Company or any subsidiary. There are no outstanding contractual
obligations of the Company or any subsidiary to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or any subsidiary.
(c) Authority Relative to This Acquisition Agreement. The Company
has all necessary corporate power and authority to execute and deliver this
Acquisition Agreement, to perform its obligations hereunder and, subject to
adoption of this Acquisition Agreement (or the Implementation Agreements) by the
stockholders of the Company as contemplated hereby (the "Stockholder Approval"),
to consummate the Acquisition. The execution and delivery of this Acquisition
Agreement by the Company and the consummation by it of the Acquisition have been
duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company is necessary to authorize this
Acquisition Agreement or to consummate the Acquisition (other than the
Stockholder Approval). This Acquisition Agreement has been duly and validly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery thereof by each other party hereto, constitutes the
legal, valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except as enforcement may
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be limited by bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights generally and by equitable principles.
(d) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Acquisition Agreement by
the Company does not, and the performance of its obligations hereunder and the
consummation of the Acquisition by it will not, (A) conflict with or violate the
certificate of incorporation or bylaws of the Company or any of its
subsidiaries, (B) subject to the making of the filings and obtaining the
approvals identified in Section 8(d)(ii), conflict with or violate any law,
rule, regulation, order, judgment or decree (collectively, "Laws") applicable to
the Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected, or (C) except as
disclosed in the Disclosure Schedule, conflict with, result in any breach of,
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in a loss or modification adverse to the
Company or its subsidiaries of any right or benefit under, give to others any
right of termination, amendment, acceleration, repurchase, repayment, increased
payments or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, whether written or oral
(collectively, a "Contract"), to which the Company or any subsidiary is a party
or by which the Company or any subsidiary or any property or asset of the
Company or any subsidiary is bound or affected, except, in the case of clauses
(B) and (C), for any such conflicts, violations or other consequences which
would not, individually or in the aggregate, prevent or delay in any material
respect the consummation of the Acquisition or prevent the Company from
performing its obligations under this Acquisition Agreement in any material
respect and which, in any case, would not, individually or in the aggregate,
have a Company Material Adverse Effect.
(ii) The execution and delivery of this Acquisition Agreement by
the Company does not, and the performance of its obligations hereunder and the
consummation of the Acquisition by it will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Government
Entity for or by either party, except (A) for applicable requirements of (1) the
Exchange Act (in the case of the Company only) and the filing of a certificate
of merger under the Delaware General Corporation Law, (2), to the knowledge of
the Company on the date hereof, the state insurance holding company laws of the
states of Kansas, Nebraska, North Dakota and Texas (in the case of the Buyer
only) and (3) the Hart-Scott-Rodino Antitrust Improvement Act (the "HSR Act")
and (B) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not, individually or in
the aggregate, prevent or delay in any material respect consummation of the
Acquisition, or otherwise prevent the Company from performing its obligations
hereunder in any material respect, and would not, individually or in the
aggregate, have a Company Material Adverse Effect.
(e) Securities Reports and Financial Statements. Except as set forth
on the Disclosure Schedule, each form, report, schedule, registration statement
and definitive proxy statement filed by the Company with the Securities and
Exchange Commission ("SEC") since December 31, 1995 and prior to the date hereof
(as such documents have been amended prior to the date
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hereof, collectively the "Company SEC Reports"), as of their respective dates,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations thereunder.
Except as set forth in the Disclosure Schedule, none of the Company SEC Reports,
as of their respective dates, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except for such statements, if any, as have been
modified or superseded by subsequent Company SEC Reports filed prior to the date
hereof. The consolidated financial statements of the Company and its
subsidiaries included in such reports comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited interim financial statements, as permitted by Form 10-Q of
the SEC) and fairly present (subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments) the consolidated
financial position of the Company and its subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods
then ended. Except as set forth in the Disclosure Schedule, since December 31,
1995, neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations (whether absolute, accrued, fixed, contingent,
liquidated, unliquidated or otherwise and whether due or to become due) of any
nature, except liabilities, obligations or contingencies (i) which are reflected
on the unaudited balance sheet of the Company and its subsidiaries, as of
September 30, 1996 (including the notes thereto), or (ii) which (A) were
incurred in the ordinary course of business after such interim date and are
consistent with past practices, (B) are disclosed in the Company SEC Reports
filed after such date, or (C) would not, individually or in the aggregate, have
a Company Material Adverse Effect. Since December 31, 1995, there has been no
change in any of the significant accounting (including tax accounting) policies,
practices or procedures of the Company or any material subsidiary.
(f) Absence of Certain Changes or Events. Except as contemplated by
this Acquisition Agreement, as disclosed in any Company SEC Report or as set
forth in the Disclosure Schedule, since December 31, 1995, (i) the Company and
its subsidiaries have conducted their respective businesses only in the ordinary
course, consistent with past practice, and have not taken any action that would
be inconsistent with the covenants set forth in Section 7 if they had applied
during such period, and (ii) there has not occurred or arisen any event that,
individually or in the aggregate, has had or, insofar as reasonably can be
foreseen, is likely in the future to have, a Company Material Adverse Effect
other than any developments that generally affect the industry in which the
Company operates.
9. Representations and Warranties of the Buyer.
(a) Organization and Qualifications. The Buyer is a corporation duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all governmental permits, approvals and other authorizations
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted, except for such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect on the
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Buyer and its subsidiaries, taken as a whole (a "Buyer Material Adverse
Effect").
(b) Authority Relative to This Acquisition Agreement. The Buyer has
all necessary corporate power and authority to execute and deliver this
Acquisition Agreement, to perform its obligations hereunder and to consummate
the Acquisition. The execution and delivery of this Acquisition Agreement by
the Buyer and the consummation by it of the Acquisition have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Buyer is necessary to authorize this Acquisition
Agreement or to consummate the Acquisition. This Acquisition Agreement has been
duly and validly executed and delivered by the Buyer and, assuming the due
authorization, execution and delivery thereof by each other party hereto,
constitutes the legal, valid and binding obligations of the Buyer, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and by equitable
principles.
(c) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Acquisition Agreement by
the Buyer does not, and the performance of its obligations hereunder and the
consummation of the Acquisition by it will not (A) conflict with or violate the
certificate of incorporation or bylaws of the Buyer, (B) subject to the making
of the filings and obtaining the approvals identified in Section 9(c)(ii),
conflict with or violate any Laws applicable to the Buyer or by which any
property or asset of the Buyer is bound or affected, or (C) conflict with or
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, result in the loss or
modification in a manner materially adverse to the Buyer of any material right
or benefit under, or give to others any right of termination, amendment,
acceleration, repurchase or repayment, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any property or asset
of the Buyer pursuant to, any Contract to which the Buyer is a party or by which
the Buyer or any property or asset of the Buyer is bound or affected, except, in
the case of clauses (B) and (C), for any such conflicts or violations which
would not prevent or delay in any material respect the consummation of the
Acquisition, or otherwise, individually or in the aggregate, prevent the Buyer
from performing its obligations under this Acquisition Agreement in any material
respect.
(ii) The execution and delivery of this Acquisition Agreement by
the Buyer does not, and the performance of its obligations hereunder and the
consummation of the Acquisition by it will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity, except (A) for applicable requirements of (1) the insurance company
holding laws of certain states and (2) the HSR Act, and (B) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, individually or in the aggregate, prevent
or delay in any material respect consummation of the Acquisition, or otherwise
prevent the Buyer from performing its obligations hereunder in any material
respect.
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10. Conditions to the Company's Obligation. The obligation of the Company
to consummate the Acquisition is subject to the satisfaction of each of the
following conditions:
(a) All waivers, consents, authorizations, orders, approvals or
expiration of waiting periods required under any Law or Contract to be obtained
by the Company in order to consummate the Acquisition shall have been obtained,
except where the failure to have obtained any such waiver, consent,
authorization, order or approval would not have a Company Material Adverse
Effect.
(b) The representations and warranties of the Buyer set forth herein
shall be true and correct in all respects as of the date hereof, and as of the
time the Acquisition is consummated, other than, in all such cases, such
failures to be true and/or correct as would not in the aggregate reasonably be
expected to have a Buyer Material Adverse Effect; provided, however, that if any
of the representations and warranties are already qualified in any respect by
materiality or as to a Buyer Material Adverse Effect, for purposes of this
Section 10(b) such materiality or Buyer Material Adverse Effect qualification
will be in all respects ignored (but subject to the overall standard as to Buyer
Material Adverse Effect set forth immediately prior to this proviso), and the
Buyer shall have complied in all material respects with all covenants and
agreements set forth herein to be performed by it.
(c) No injunction, restraining order or other order of any federal or
state court which prevents the consummation of the Acquisition shall be in
effect.
(d) No statute, rule or regulation shall have been enacted by any
state or governmental agency that would prevent the consummation of the
Acquisition.
(e) The Stockholder Approval shall have been obtained.
11. Conditions to the Buyer's Obligation. The obligation of the Buyer to
consummate the Acquisition is subject to the satisfaction of each of the
following conditions:
(a) All waivers, consents, authorizations, orders, approvals or
expiration of waiting periods required under any Law or Contract to be obtained
by any of the parties hereof in order to consummate the Acquisition shall have
been obtained, except where the failure to have obtained any waiver, consent,
authorization, order or approval would not have a Company Material Adverse
Effect or a Buyer Material Adverse Effect.
(b) The representations and warranties of the Company set forth
herein shall be true and correct in all respects as of the date hereof, and as
of the time the Acquisition is consummated, other than, in all such cases, such
failures to be true and/or correct as would not in the aggregate reasonably be
expected to have a Company Material Adverse Effect; provided, however, that if
any of the representations and warranties is already qualified in any respect by
materiality or as to a Company Material Adverse Effect, for purposes of this
Section 11(b) such materiality or Company Material Adverse Effect qualification
will be in all respects ignored (but subject to the overall standard as to
Material Adverse Effect set forth immediately prior to this proviso), and the
Company shall have complied in all
<PAGE>
material respects with all covenants and agreements set forth herein to be
performed by it.
(c) No injunction, restraining order or other order of any federal or
state court which prevents the consummation of the Acquisition shall be in
effect.
(d) No statute, rule or regulation shall have been enacted by any
state or governmental agency that would prevent the consummation of the
Acquisition.
(e) Except as set forth in the Disclosure Schedule, no Company
Material Adverse Effect shall have occurred between the date hereof and
consummation of the Acquisition other than any developments that generally
affect the industry in which the Company operates.
(f) The Stockholder Approval shall have been obtained.
12. Consent. Concurrently herewith, the Company and the Buyer have
entered into a Consent Agreement (the "Consent Agreement"), subject to the terms
and conditions stated therein, pursuant to which the Company is delivering its
consent to the Buyer's purchase of up to (i) 1,145,703 shares of Company common
stock from John J. Hemmingson and (ii) 681,774 shares of Company common stock
from Gary A. Black.
13. Working Capital Line of Credit. Concurrently herewith, the Buyer and
the Company have entered into a Letter of Intent re Revolving Credit Working
Capital Facility (the "Letter of Intent"), subject to the terms and conditions
stated therein, to furnish the Company a working capital line of credit.
14. Termination. This Acquisition Agreement shall terminate at the
earlier of:
(a) Such time as the parties shall mutually agree.
(b) At the option of the Company, on or after December 31, 1997, if
by that date all of the conditions set forth in Section 10 shall not have been
satisfied or waived.
(c) At the option of the Buyer, on or after December 31, 1997, if by
that date all of the conditions set forth in Section 11 shall not have been
satisfied or waived.
(d) At the option of the Company in accordance with Section 3(c),
provided the Company has complied with all provisions thereof, and provided
further that the Company simultaneously pays to the Buyer the sum of $2.4
million plus, if said termination occurs after March 28, 1997, Buyer's
out-of-pocket costs (including, without limitation, outside legal fees and
expenses) and internal legal costs as the Buyer shall reasonably determine
(collectively, the "Termination Fee Amount") in immediately available funds.
(e) At the option of the Buyer, if (i) the Board of Directors of the
Company or any committee of such Board of Directors shall have (A) withdrawn or
modified its approval or recommendation of this Acquisition Agreement (or the
Implementation Agreements) or the Acquisition, or (B) failed to recommend that
the stockholders of the Company vote in favor of the
<PAGE>
Acquisition, or (C) approved or recommended any Acquisition Proposal other than
the Acquisition, or (ii) the Board of Directors of the Company or any committee
of such Board of Directors shall have resolved to do any of the foregoing. The
Company shall promptly following termination for any of the reasons set forth in
this clause (e) pay to the Buyer the Termination Fee Amount in immediately
available funds.
(f) At the option of any of the parties hereto if the stockholders of
the Company do not approve the Acquisition.
In the event this Acquisition Agreement is terminated pursuant to Section 14(f)
because the Company stockholders did not approve the Acquisition and prior to
eighteen (18) months following such termination the Company enters into a
binding agreement for a Third Party Transaction, the Company shall pay to the
Buyer the Termination Fee Amount in immediately available funds simultaneously
with its entry into such binding agreement.
15. Record Date. The Company agrees that the record date for determining
stockholders entitled to vote on (or give consents or exercise appraisal rights
with respect to) the Acquisition or any Third Party Transaction will be no
earlier than 10 business days after the Buyer's receipt of all required
approvals under the insurance holding company laws of states with applicable
jurisdiction, and the expiration of the applicable waiting period under the HSR
Act, with respect to the Buyer's purchase of 1,145,703 shares of Company common
stock from John J. Hemmingson and 681,774 shares of Company common stock from
Gary A. Black, provided that, in the case of a Third Party Transaction, this
Section 15 shall not require the Company to set a record date later than
December 31, 1997. This Section 15 shall continue in effect (with respect to
any Third Party Transaction) notwithstanding any termination of this Acquisition
Agreement in accordance with its terms or otherwise
16. Miscellaneous.
(a) Amendments and Waivers. This Acquisition Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, in its sole election, solely as to itself and not
as to any other party hereto, only by an instrument in writing, waive compliance
by another party hereto with any term or provision hereof on the part of such
other party hereto to be performed or complied with. The waiver by any party
hereto of a breach of any term or provision hereof shall not be construed as a
waiver of any subsequent breach.
(b) Entire Agreement. This Acquisition Agreement, the Letter of
Intent, the Consent Agreement and the Stock Purchase Agreement dated July 10,
1996, each between the Company and Buyer, contain the entire agreement between
the parties hereto with respect to the transactions contemplated hereby and
thereby. This Acquisition Agreement is not intended to confer upon any other
person any rights or remedies hereunder.
(c) Applicable Law. This Acquisition Agreement shall be exclusively
governed by and construed in accordance with the internal laws of the State of
Delaware without regard to its rules of conflicts of laws.
(d) Expenses. Except as otherwise included herein, in the event the
Acquisition contemplated hereby is not consummated for any reason, then
<PAGE>
all expenses incurred by each party will be borne by the party incurring such
expenses
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Acquisition Agreement.
(f) Counterparts. This Acquisition Agreement and any amendments
hereto may be executed in any number of counterparts, each of which shall be
deemed to be an original but all of which together shall constitute but one
agreement
(g) Successors and Assigns. This Acquisition Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors. This Acquisition Agreement may not be assigned by any party without
prior consent of all parties hereto, provided that any party hereto may assign
its rights and obligations hereunder to any affiliate to implement the
Acquisition, provided that such affiliate agrees to be bound hereby, provided
that such party remains liable hereunder, and that such assignment does not
adversely effect the Acquisition from the perspective of the other parties.
(h) Binding Effect. This Acquisition Agreement shall, subject to the
terms and conditions hereof, be in all respects binding upon each of the Company
and the Buyer from and after the date hereof
(i) Survival. None of the representations or warranties set forth in
Sections 8 and 9 hereof shall survive the consummation of the Acquisition.
(j) Board of Directors. Effective as of the closing of the
Acquisition, the Board of Directors of the Company will consist of nominees
selected by the Buyer.
(k) Indemnification; Insurance. The Implementation Documents will
provide, among other things, that the Company will maintain in effect all rights
to indemnification existing in favor of any director, officer, employee or agent
of the Company and its subsidiaries (the "Indemnified Parties") as provided in
its certificate of incorporation, by-laws or in indemnification agreements with
the Company or any of its subsidiaries, all of which shall survive the
consummation of the Acquisition and shall continue in full force and effect for
a period of not less than four years from the effective time of the Acquisition
(the "Effective Time"); provided, that in the event any claim or claims are
asserted or made within such four-year period, all rights to indemnification in
respect of any such claim or claims shall continue until final disposition of
any and all such claims. It is understood and agreed that the Company shall
advance, indemnify and hold harmless, as and to the full extent permitted by
applicable law, each Indemnified Party against any losses, claims, damages
liabilities, costs, expenses (including attorneys' fees and expenses),
judgments, fines and amounts paid in settlement in connection with any
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time). In addition, the
Implementation Documents will provide that the Company shall cause to be
maintained in effect for not less than four years from the Effective Time any
current policies of the directors' and officers' liability insurance maintained
by the Company; provided, that the Company will be permitted to substitute
therefor policies of at least the same coverage
<PAGE>
containing terms and conditions which are no less advantageous and provided that
such substitution shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time; provided, further,
that the Company shall not be required to pay an annual premium in excess of
200% of the last annual premium paid by the Company prior to the date hereof and
if it is unable to obtain the insurance required, it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount
IN WITNESS WHEREOF, the parties hereto have executed this Acquisition
Agreement.
CROP GROWERS CORPORATION
By:/s/Lawrence T. Martinez
Name: Lawrence T. Martinez
Title: Chief Executive Officer
FIREMAN'S FUND INSURANCE COMPANY
By:/s/Harold N. Marsh, III
Name: Harold N. Marsh, III
Title: Senior Vice President and
Treasurer
<PAGE>
Exhibit 2.2
Consent Agreement
This Consent Agreement dated March 5, 1997 is entered into between Crop
Growers Corporation, a Delaware corporation (the "Company"), and Fireman's Fund
Insurance Company, a California corporation (the "Investor").
The Company and the Investor are parties to a Stock Purchase Agreement (the
"Stock Purchase Agreement") dated July 10, 1996. The Company, the Investor and
John J. Hemmingson ("Hemmingson") are parties to a Right of First Offer and
First Refusal Agreement dated September 23, 1996 (the "Hemmingson Agreement").
The Company, the Investor and Gary A. Black ("Black") are parties to a Right of
First Offer and First Refusal Agreement dated September 23, 1996 (the "Black
Agreement").
Pursuant to the Hemmingson Agreement and, in the view of the Investor,
pursuant to the Black Agreement, the Investor has been given the right of first
refusal with respect to a pending sale by Hemmingson of 1,145,703 shares of
Company common stock and by Black of 681,774 shares of Company common stock.
Such 1,145,703 shares and 681,774 shares of Company common stock are herein
collectively called the "Shares."
The Company has determined that it is in the best interests of it and its
stockholders to give its consent to the Investor's exercise of its right of
first refusal as to the Shares on the terms and conditions stated in this
Agreement.
NOW, THEREFORE, the parties hereby agree as follows
1. Consent. (a) The Company hereby consents, to the extent necessary, to
the Investor's purchases (the "Purchases") of up to (i) 1,145,703 shares of
Company common stock from Hemmingson and (ii) 681,774 shares of Company common
stock from Black. Without limiting the generality of the foregoing consent, it
shall be deemed given under (i) Section 5.2 of the Stock Purchase Agreement,
(ii) Section 4.3 of the Separation Agreement dated September 23, 1996 between
the Company and Hemmingson and (iii) Section 203 of the Delaware General
Corporation Law.
(b) The Company hereby represents and warrants that its Board of Directors
has approved the Purchases.
2. Voting; Tender.
(a) With respect to any vote or consent of stockholders of the Company
with respect to (or tender offer approved by the Board of Directors ("Approved
Tender"), the consummation of which would constitute) any Acquisition
Transaction taken on or before December 31, 1997, the Investor agrees to vote
(or give a consent with respect to or tender in an Approved Tender, as the case
may be), and to cause its Affiliates to vote (or give a consent with respect to
or tender in an Approved Tender, as the case may be), the Excess Shares in the
manner stated in Section 2(c).
(b) "Acquisition Transaction" means any (i) merger, consolidation or
similar transaction involving the Company, (ii) sale, lease or other
<PAGE>
disposition directly or indirectly by merger, consolidation, share exchange or
otherwise of any assets of the Company or its subsidiaries representing 15% or
more of the consolidated assets of the Company and its subsidiaries, (iii)
issue, sale or other disposition of (including without limitation, by way of
merger, consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into, such
securities) representing 15% or more of the votes attached to the outstanding
securities of the Company, (iv) transaction in which any Person shall acquire
Beneficial Ownership or the right to acquire Beneficial Ownership, or any Group
shall have been formed which has Beneficial Ownership or has the right to
acquire Beneficial Ownership, of 15% or more of the outstanding shares of common
stock of the Company, (v) recapitalization, restructuring, liquidation,
dissolution, or other similar type of transaction with respect to the Company or
any of its subsidiaries, or (vi) transaction which is similar in form, substance
or purpose to any of the foregoing transactions. "Excess Shares" means the
number of shares of Company common stock, if any, owned or controlled by the
Investor or any of its Affiliates whose voting power, together with the voting
power of all Voting Stock owned or controlled by the Investor or any of its
Affiliates, exceeds the greater of (i) 1,742,593 votes (as the shares of the
Company's Voting Stock is constituted on the date hereof, as adjusted for any
stock split, stock dividend, combination, reverse stock split or
recapitalization effected after the date of this Agreement) and (ii) 20% of the
voting power of all Voting Stock outstanding at the time of such vote or
consent. "Beneficial Ownership," "Affiliate" and "Group" have the meanings
stated in Regulation 13D-G under the Securities Exchange Act of 1934, as
amended. "Voting Stock" means any stock or other security that has the right,
irrespective of contingent events or conditions, to vote on or consent to a
particular Acquisition Transaction. A "Person" means any individual,
corporation, partnership, limited liability company, trust, unincorporated
association or entity of any kind.
(c) For the period specified in Section 2(a), the Investor will vote (or
give consents with respect to or tender in an Approved Tender, as the case may
be) and cause its Affiliates to vote (or give consents with respect to or tender
in an Approved Tender, as the case may be), or abstain or refrain from voting
(or giving consents with respect to or tendering in an Approved Tender, as the
case may be) and cause its Affiliates to abstain or refrain from voting (or
giving consents with respect to or tendering in an Approved Tender, as the case
may be), the Excess Shares with respect to any Acquisition Transaction in the
same proportions as the shares held by all Non-Interested Stockholders.
"Non-Interested Stockholders" means the stockholders of the Company, other than
the Investor and "interested stockholders" of the Company, as such term is
defined in Section 203 of the Delaware General Corporation Law (an "Interested
Stockholder") .
(d) The restrictions of this Section 2 shall (i) not apply to any
Acquisition Transaction with, or proposed by, any Person or Group that, after
the date hereof, becomes an Interested Stockholder of the Company without the
prior or concurrent approval of the Board of Directors of the Company and (ii)
terminate (to the extent not already expired under Section 2(a)) at the time, if
any, when any Person or Group publicly announces an intention to make or makes
or commences a tender or exchange offer, other than a tender or exchange offer
which has been approved by the Board of Directors of the Company on or before
the earliest to occur of such announcement, making or commencement, for more
than 15% of the outstanding common stock of the Company.
<PAGE>
(e) It is expressly understood that nothing in this Section 2, nor any
other understanding between the Company and the Investor, shall restrict the
Investor in voting, giving consent with respect to or tendering in an Approved
Tender, as the case may be (or not voting, giving consent with respect to or
tendering in an Approved Tender, as the case may be) any stock it holds in the
Company from time to time other than the Excess Shares.
3. Amendment of Standstill. Section 5.2 of the Stock Purchase Agreement
is hereby amended by adding at the end thereof the following:
Notwithstanding anything to the contrary in this Section 5.2, the
restrictions of this Section 5.2 will immediately terminate (to the extent
not terminated theretofore pursuant to the terms of this Section 5.2) at
the time, if any, when any person or group (as such term is defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended) publicly
announces an intention to make or makes or commences a tender or exchange
offer, other than a tender or exchange offer which has been approved by the
Board of Directors of the Company on or before the earliest to occur of
such announcement, making or commencement, for more than 15% of the
outstanding common stock of the Company.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that:
(a) Organization and Qualifications. The Company and each subsidiary of
the Company is a corporation duly incorporated or organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite corporate power and authority, and all
governmental permits, approvals and other authorizations necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except for such exceptions as would not, individually or in the
aggregate, have a material adverse effect on the assets, properties,
liabilities, obligations, financial condition, results of operations or business
(a "Material Adverse Effect") on the Company and its subsidiaries taken as a
whole (a "Company Material Adverse Effect").
(b) Authority Relative to This Consent Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Consent
Agreement and to perform its obligations hereunder. The execution and delivery
of this Consent Agreement by the Company have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the part
of the Company is necessary to authorize this Consent Agreement. This Consent
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery thereof by the Investor,
constitutes the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and by equitable principles.
(c) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Consent Agreement by the
Company does not, and the performance of its obligations hereunder by it
will not, (A) conflict with or violate the certificate of incorporation or
bylaws of the Company or any of its subsidiaries, (B) subject to the making
of the filings and obtaining the approvals identified herein,
<PAGE>
conflict with or violate any law, rule, regulation, order, judgment or
decree (collectively, "Laws") applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected, or (C) conflict with, result in any
breach of, constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss or
modification in a manner materially adverse to the Company or its
subsidiaries of any material right or benefit under, give to others any
right of termination, amendment, acceleration, repurchase or repayment,
increased payments or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or any
subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation, whether written or oral (collectively, a "Contract"), to which
the Company or any subsidiary is a party or by which the Company or any
subsidiary or any property or asset of the Company or any subsidiary is
bound or affected.
(ii) The execution and delivery of this Consent Agreement by the
Company does not, and the performance of its obligations hereunder by it
will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any federal, state or local governmental or
regulatory agency, authority or instrumentality, whether domestic or
foreign ("Governmental Entity") except for applicable requirements of the
Hart-Scott-Rodino Antitrust Improvement Act (the "HSR Act").
5. Representations and Warranties of the Investor.
(a) Organization and Qualifications. The Investor is a corporation duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and all governmental permits, approvals and other authorizations
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted, except for such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect on the Investor
and its subsidiaries, taken as a whole (an "Investor Material Adverse Effect").
(b) Authority Relative to This Consent Agreement. The Investor has all
necessary corporate power and authority to execute and deliver this Consent
Agreement and to perform its obligations hereunder. The execution and delivery
of this Consent Agreement by the Investor have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the part
of the Investor is necessary to authorize this Consent Agreement. This Consent
Agreement has been duly and validly executed and delivered by the Investor and,
assuming the due authorization, execution and delivery thereof by the Company,
constitutes the legal, valid and binding obligation of the Investor, enforceable
against it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and by equitable principles.
(c) No Conflict; Required Filings and Consents.
(i) The execution and delivery of this Consent Agreement by the
Investor does not, and the performance of its obligations hereunder by it
will not, (A) conflict with or violate the certificate of
<PAGE>
incorporation or bylaws of the Investor, (B) subject to the making of the
filings and obtaining the approvals identified herein, conflict with or
violate any Laws applicable to the Investor or by which any property or
asset of the Investor is bound or affected, or (C) conflict with, result in
any breach of, constitute a default (or an event which with notice or lapse
of time or both would become a default) under, result in the loss or
modification in a manner materially adverse to the Investor of any material
right or benefit under, or give to others any right of termination,
amendment, acceleration, repurchase or repayment, increased payments or
cancellation of, or result in the creation of a lien or other encumbrance
on any property or asset of the Investor pursuant to, any Contract to which
the Investor is a party or by which the Investor or any property or asset
of the Investor is bound or affected.
(ii) The execution and delivery of this Consent Agreement by the
Investor does not, and the performance of its obligations hereunder by it
will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity, except for
applicable requirements of (1) the insurance company holding laws of
certain states and (2) the HSR Act.
6. Miscellaneous.
(a) Amendments and Waivers. This Consent Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Any
party hereto may, in its sole election, solely as to itself and not as to any
other party hereto, only by an instrument in writing, waive compliance by
another party hereto with any term or provision hereof on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto
of a breach of any term or provision hereof shall not be construed as a waiver
of any subsequent breach.
(b) Entire Agreement. This Consent Agreement, the Stock Purchase
Agreement dated July 10, 1996, the Acquisition Agreement of even date herewith
and the Letter of Intent re Revolving Credit Working Capital Facility of even
date herewith, each between the Investor and the Company, contain the entire
agreement between the parties hereto with respect to the transactions
contemplated hereby and thereby. This Consent Agreement is not intended to
confer upon any other person any rights or remedies hereunder.
(c) Applicable Law. This Consent Agreement shall be exclusively governed
by and construed in accordance with the internal laws of the State of Delaware
without regard to its rules of conflicts of laws.
(d) Expenses. All expenses incurred by each party will be borne by the
party incurring such expenses.
(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Consent Agreement.
(f) Counterparts. This Consent Agreement and any amendments hereto may be
executed in any number of counterparts, each of which shall be deemed to be an
original but all of which together shall constitute but one agreement.
<PAGE>
(g) Successors and Assigns. This Consent Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors.
This Consent Agreement may not be assigned by any party without prior consent of
all parties hereto.
(h) Binding Effect. This Consent Agreement shall, subject to the terms
and conditions hereof, be in all respects binding upon each of the Company and
the Investor from and after the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Consent
Agreement.
CROP GROWERS CORPORATION
By:/s/Lawrence T. Martinez
Name: Lawrence T. Martinez
Title: Chief Executive Officer
FIREMAN'S FUND INSURANCE COMPANY
By:/s/Harold N. Marsh, III
Name: Harold N. Marsh, III
Title: Senior Vice President and
Treasurer
<PAGE>
Exhibit 2.3
Fireman's Fund Insurance Company
March 5, 1997
Mr. Lawrence Martinez
Crop Growers Corporation
Executive Centre II
10895 Lowell, Suite 300
Overland Park, Kansas 66210
Re: Letter of Intent re Revolving Credit Working Capital Facility
Dear Larry:
This letter sets forth the key terms discussed in our recent conversations with
Crop Growers Corporation ("Crop Growers") regarding the proposed $15 million
revolving credit working capital facility ("Revolving Credit Facility") to be
provided to Crop Growers by Fireman's Fund Insurance Company ("Fireman's Fund").
The Revolving Credit Facility will be available in the event Crop Growers, after
using its reasonable best efforts, is unable to obtain a working capital
facility from a commercial bank or banks on reasonable terms not involving any
guarantee or similar support by Fireman's Fund, by March 31, 1997.
An express condition precedent to Fireman's Fund providing the Revolving Credit
Facility to Crop Growers shall be in the execution of an Acquisition Agreement
("Acquisition Agreement") between Fireman's Fund and Crop Growers for Fireman's
Fund's acquisition of all of the shares of Crop Growers and the absence of any
default or termination by Crop Growers thereunder. This Letter of Intent shall
be attached to and/or incorporated into the terms and conditions of the
Acquisition Agreement as an express condition of the Acquisition Agreement.
Further, the terms and conditions of the proposed Revolving Credit Facility
shall include those specified on the attached "Crop Growers Executive Summary"
of "Terms and Conditions--Working Capital Financing" and to be incorporated into
a revolving credit agreement.
If you agree to the terms set forth herein, please signify your agreement by
countersigning a copy of this Letter of Intent and returning it to me.
Very truly yours,
Harold N. Marsh III
Senior Vice President & Treasurer
Attachment
Agreed & Accepted
CROP GROWERS CORPORATION
/s/Lawrence T. Martinez
By: Lawrence T. Martinez
Its: Chief Executive Officer
<PAGE>
Fireman's Fund Insurance Company
March 5, 1997
Mr. Lawrence Martinez
Crop Growers Corporation
Executive Centre II
10895 Lowell, Suite 300
Overland Park, Kansas 66210
Re: Letter of Intent re Revolving Credit Working Capital Facility
Dear Larry:
This letter sets forth the key terms discussed in our recent conversations with
Crop Growers Corporation ("Crop Growers") regarding the proposed $15 million
revolving credit working capital facility ("Revolving Credit Facility") to be
provided to Crop Growers by Fireman's Fund Insurance Company ("Fireman's Fund").
The Revolving Credit Facility will be available in the event Crop Growers, after
using its reasonable best efforts, is unable to obtain a working capital
facility from a commercial bank or banks on reasonable terms not involving any
guarantee or similar support by Fireman's Fund, by March 31, 1997.
An express condition precedent to Fireman's Fund providing the Revolving Credit
Facility to Crop Growers shall be in the execution of an Acquisition Agreement
("Acquisition Agreement") between Fireman's Fund and Crop Growers for Fireman's
Fund's acquisition of all of the shares of Crop Growers and the absence of any
default or termination by Crop Growers thereunder. This Letter of Intent shall
be attached to and/or incorporated into the terms and conditions of the
Acquisition Agreement as an express condition of the Acquisition Agreement.
Further, the terms and conditions of the proposed Revolving Credit Facility
shall include those specified on the attached "Crop Growers Executive Summary"
of "Terms and Conditions--Working Capital Financing" and to be incorporated into
a revolving credit agreement.
If you agree to the terms set forth herein, please signify your agreement by
countersigning a copy of this Letter of Intent and returning it to me.
Very truly yours,
/s/Harold N. Marsh III
Harold N. Marsh III
Senior Vice President & Treasurer
Attachment
Agreed & Accepted
CROP GROWERS CORPORATION
By:
Its:
<PAGE>
CROP GROWERS
Executive Summary
TERMS AND CONDITIONS - WORKING CAPITAL FINANCING
TERMS AND CONDITIONS
Borrower: Crop Growers Corporation ("CGRO") and its
majority-owned agency subsidiaries
Guarantor: None
Type of Financing: Revolving Line of Credit
Amount: up to $15 million (maximum)
Use of Proceeds: Provide working capital financing
Collateral: Pledge of all assets, including security interest in
expiration rights and records, of CGRO and each of
its agency subsidiaries
Borrowing Base: To be determined (based on MPCI expense
reimbursement and underwriting gain receivable by
CGRO at time of advance)
Term: One year facility
Interest Rate: Bank of America Base Rate
Fees: None
Source of Repayment: Collection of MPCI expense reimbursement
(commissions) and underwriting gain under MPCI and
other farm and crop insurance programs
Repayment Schedule: Interest payments monthly/arrears/due 1st of month
Interest calculation - actual days/360 basis
Annual cleanup by October 1 (30 days)
Prepayment Provisions: Prepayment allowed without penalty (mandatory if
Borrower accepts an Acquisition Proposal other than
the Acquisition)
Conditions Precedent: Completion of customary loan documentation
<PAGE>
Financial Covenants: In addition to the financial reporting covenants
currently in the MGA, CGRO will not, during the term
of FFIC's financing:
--pay dividends or retire, redeem any of its
stock (except for Series A Preferred Stock)
--incur any indebtedness, with specified
exceptions
--make any acquisitions or expenditures for
fixed assets (in excess of $500,000)
--make any capital contributions to any
affiliate
--create, incur, assume liens with specified
exceptions, without FFIC consent
--sell assets, with specified exceptions,
without FFIC consent
Maintenance of financial ratios and minimum tangible
net worth to be determined
Default Rate: Customary terms and practices
Reporting requirements: SEC Forms 10-K and 10-Q within 5 days of filing due
date Monthly borrowing base certificate
Subject To: Legal and documentation review
<PAGE>
Exhibit 2.4
FIREMAN'S FUND AND CROP GROWERS ANNOUNCE
ACQUISITION AGREEMENT
For release on March 6, 1997 at 6:00 a.m. CST
Contacts: John Kozero Bob Rousey
Fireman's Fund Insurance Company Crop Growers Corporation
415-899-2166 913-323-5612
Novato, CA and Overland Park, KS - Fireman's Fund Insurance Company and Crop
Growers Corporation (NASDAQ: CGRO) announced today that they have entered into
a definitive agreement by which Fireman's Fund would acquire Crop Growers in a
cash merger at $10.25 per share. Fireman's Fund presently owns convertible
preferred stock of Crop Growers and has exercised the right to purchase an
additional 1,827,477 shares of common stock from former Crop Growers executives
for $10.00 per share. Crop Growers has consented to such purchases, subject to
certain restrictions.
The transaction is subject to, among other things, Crop Growers stockholder
approval, regulatory approvals and other customary conditions. Because of
regulatory approvals and clearances, the transaction is not expected to close
for several months.
The terms of the transaction were unanimously approved by Crop Growers
Board of Directors. Crop Growers has received an opinion from Dean Witter
Reynolds Inc., its financial advisor, that the offer is fair from a financial
point of view to Crop Growers stockholders (other than Fireman's Fund and its
affiliates).
Through March 28, 1997, Crop Growers may seek alternative acquisition
proposals from certain companies and may receive unsolicited proposals. Acting
through its investment bankers, Crop Growers intends to initiate appropriate
contacts with respect to alternative acquisition proposals. If Crop Growers
Board of Directors finds an alternative acquisition proposal that is superior to
the transaction with Fireman's Fund, it may terminate the agreement with
Fireman's Fund upon payment of a break-up fee of $2.4 million. After March 28,
1997, Crop Growers may receive unsolicited proposals and terminate the Fireman's
Fund agreement under certain, more limited, circumstances.
Crop Growers CEO, Larry Martinez, said "We have enjoyed a very positive
strategic relationship with Fireman's Fund over the past several years and this
transaction will further strengthen both of our companies' desires to be the
premier provider of crop insurance."
"In 1876 Fireman's Fund became the first company in the world to insure
standing grain," said Joe Stinnette, president and CEO of Fireman's Fund. "This
arrangement with Crop Growers reaffirms our early roots and helps us
<PAGE>
respond more thoroughly to risk management needs of farmers not only in the
Heartland but throughout rural America. We expect Crop Growers to help us
achieve our mission to be the premier provider of property and casualty
coverages to the American farmer, one of our key customer groups."
One of the top 20 property and casualty insurance companies in the U.S.,
Fireman's Fund in 1996 had total assets of $16.5 billion and gross premiums
written of $4 billion. The 134-year old Fireman's Fund is assigned an "A"
rating from A.M. Best Company and "Aa1" from Moody's. Fireman's Fund has 7,885
employees who operate out of 40 major offices, distributing business and
personal lines insurance through more than 6,000 independent agents.
Crop Growers markets and services federal multi-peril crop insurance and
crop hail insurance for third party insurance companies and its own insurance
company subsidiaries. The company also develops, markets and sells farm
management software and related mapping products. Crop Growers had 7,962,251
common shares outstanding as of February 28, 1997.
# # #
<PAGE>
Exhibit 99(1)
CROP GROWERS CORPORATION
Crop Growers Settles Shareholder Litigation
For release on March 3, 1997 at 6:00 a.m.CST
Contact: Bob Rousey
Crop Growers Corporation
913-323-5612
Overland Park, KS--Crop Growers Corporation (NASDAQ: CGRO) announced today that
it has agreed to settle the shareholder action filed against it and two of its
former officers in May of 1995. Under the settlement, the company has agreed to
pay $2.5 million to members of a class consisting of purchasers of the company's
common stock during the period from February 13, 1995 to May 16, 1995. The
settlement is subject to approval by the United States District Court of
Montana. Of the total settlement amount, the company will pay $1.22 million and
the balance will be paid under the terms of a directors' and officers' insurance
policy. The company will accrue the cost of the settlement in the fourth
quarter of 1996.
Crop Growers markets and services federal multi-peril crop insurance and
crop hail insurance for third party insurance companies and its own insurance
company subsidiaries. The company also develops, markets and sells farm
management software and related mapping products.
# # #
<PAGE>
Exhibit 99(2)
CROP GROWERS CORPORATION SECURITIES LITIGATION
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("MOU") contains the principal terms of a
settlement (the "Settlement") between JOHN HEMMINGSON, GARY A. BLACK and CROP
GROWERS CORPORATION, and plaintiffs (on behalf of a class of purchasers of
securities during the period February 13, 1995 and May 16, 1995, inclusive) in
the In re CROP GROWERS CORPORATION SECURITIES LITIGATION, Master File No.
CV-95-58-GF-PGH (the "Action"). This Memorandum of Understanding Settlement
Agreement has been reached in principal as of February 28, 1997.
1. Plaintiffs and Defendants (collectively, the "Parties") will cooperate
in good faith to expeditiously prepare a stipulation of settlement embodying
this MOU, and will jointly seek preliminary approval of the Settlement and
approve of notice as soon as practicable but no later than March 31, 1997.
2. Defendants will cause to be paid $2.5 million in settlement of all
claims in the above Action into an escrow fund located in California and
controlled by Milberg Weiss Bershad Hynes & Lerach LLP ("Milberg Weiss")
(subject to Court oversight) by the later of (i) May 1 1997 or (ii) 10 days
following preliminary approval of the Settlement by the Court.
3. If the foregoing payment is deposited in the Milberg Weiss Bershad
escrow account by the later of May 1, 1997 or 10 days following preliminary
approval of the Court ("the date of the required deposit"), no interest shall
accrue. If the full $2.5 million is not deposited by such date as set forth in
PARA2, interest shall accrue at the rate of 9% beginning at such date.
Plaintiffs may terminate the Settlement if the full $2.5 million is not
deposited within 60 days from the date of the required deposit.
4. In consideration of the payment set forth in paragraph 2, plaintiffs
agree to dismiss with prejudice all claims in the Action, and to execute
releases as to each of the Defendants as to all claims that were or could have
been alleged in the Action.
5. While retaining their right to deny liability, defendants will agree
that, based upon the publicly available information at the time, the Action was
filed in good faith and with an adequate basis in fact, was not frivolous, and
is being settled voluntarily by Defendants after consultation with competent
legal counsel. The releases between the parties will include releases of all
counsel in the Action. The settling parties shall agree that the litigation was
resolved in good faith following substantial discovery and arms-length
bargaining, and is in the best interest of Crop Growers and its shareholders.
<PAGE>
6. The Settlement is conditional upon receiving final judicial approval
of all settlement terms.
7. The Settlement will not be conditioned upon the obtaining of or any
judicial approval of any releases between or among the settling Defendants
and/or any third parties. No such releases will be contained in the Stipulation
of Settlement or referred to in the Final Judgement approving the settlement.
8. Any attorney's fees and expenses awarded plaintiffs' counsel by the
Court shall be paid to plaintiffs' counsel, out of the escrowed funds,
immediately upon final award by the Court, notwithstanding the potential for
appeal or appeal by any objector or any other person, or collateral attack on
the Settlement or any part thereof, subject to plaintiffs' counsel's several
obligation to make appropriate refunds or repayments to the Settlement Fund plus
interest at the same rate as earned on the escrow account if, and when, as a
result of any appeal and/or further proceedings on remand, or successful
collateral attack, the fee award or expense reimbursement is reduced or the
Settlement is overturned/set aside.
9. The Settlement will be non-recapture, i.e., it is not a claims made
settlement. Defendants will have no ability to get back any of the settlement
monies. The settlement claims process will be administered by Gilardi & Co. and
Defendants will have no involvement in reviewing or challenging claims. All
fees and expenses incurred by Gilardi & Co. in the administration of the
Settlement shall be paid out of the settlement fund.
10. If shareholders representing 10% or more of the total outstanding
shares that were purchased by class members during the class period request
exclusion from the class (i.e., "opt-out"), then Defendants shall have the
option of terminating this agreement within 7 business days following receipt of
by counsel to Defendants written notification from Gilardi & Co. of the total
number of requests for exclusion. If Defendants so terminate the settlement,
all monies paid, and any other consideration tendered by Defendants pursuant to
the settlement, shall be returned to Defendants within 10 days of such notice
being sent to Milberg Weiss together with the actual interest thereon less the
cost of notice to the class. If such funds are not returned within such 10 day
period, interest will accrue thereon at 5% for the first thirty days and 9% for
any time period thereafter until the date the money is returned to Defendants.
These provisions shall apply whether or not a distribution of the case proceeds
has already been made to plaintiffs' counsel.
11. If the Settlement is terminated, or not judicially approved, the
Settlement Fund, plus interest, less the cost of notice to the class, shall be
returned to the respective payors of those funds.
<PAGE>
12. This MOU may be executed in separate counterparts.
AGREED TO ON THIS 28th DAY OF FEBRUARY, 1997.
DATED: 2-28-97 MILBERG WEISS BERSHAD
HYNES & LERACH LLP
PATRICK J. COUGHLIN
SALLIE A. BLACKMAN
JAMES I. JACONETTE
/s/ Patrick J. Coughlin
PATRICK J. COUGHLIN
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
Lead Counsel for Plaintiffs
LEAPHART LAW FIRM
C. W. LEAPHART, JR.
1 N. Last Chance Gulch
Suite 6
Helena, MT 59601
Telephone: 406/442-4930
LAW OFFICES OF ALFRED G.
YATES, JR.
ALFRED G. YATES, JR.
519 Allegheny Building
429 Forbes Avenue
Pittsburgh, PA 15219
Telephone: 412/391-5164
Attorneys for Plaintiffs
DATED: 2-28-97 DORSEY & WHITNEY LLP
J DAVID JACKSON
/s/J David Jackson
J DAVID JACKSON
Pillsbury Center South
220 South Sixth Street
Minneapolis, MN 55402-1498
Telephone: 612/340-2600
Attorney for Defendants
