RENEWAL RIGHTS AND ASSET PURCHASE AGREEMENT
This RENEWAL RIGHTS AND ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of May __, 2006 (the “Effective Date”), is entered into by and between Muirfield Underwriters, Ltd., a Delaware corporation (the “Seller”) and AmTrust North America, Inc., a Delaware corporation (the “Purchaser”).
WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser desires to acquire from the Seller, the Subject Business, including the right to renew the Insurance Contracts and all assets required to conduct the Subject Business; and
WHEREAS, since the Purchaser has required Aon Group, Inc., the corporate parent of the Seller, to execute a certain Guaranty, which is attached to this Agreement as Exhibit B, Aon Group will be required to receive certain notifications of events bearing on the status of the transaction provided for in this Agreement, as more fully set forth herein; and
NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises and covenants set forth herein, and in reliance upon the representations, warranties, conditions and covenants contained herein, and intending to be legally bound hereby and thereby, the parties hereto do hereby agree as follows:
1.1. Definitions. The following terms, when used in this Agreement, have the meanings set forth in this Section 1.1.
“Affiliate” of any Person means another Person that directly or indirectly controls, is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise.
“Ancillary Agreements” means the (i) the Bill of Sale and General Assignment Agreement, (ii) the Guaranty Agreement and (iii) the Sublease Agreement(s) for the offices in Des Moines, Iowa, Milwaukee, Wisconsin and Peoria, Illinois.
“Applicable Law” means any applicable order, law, statute, regulation, rule, pronouncement, ordinance, bulletin, writ, injunction, directive, judgment, decree, principle of common law, constitution or treaty enacted, promulgated, issued, enforced or entered by any Governmental Authority applicable to the parties hereto, or any of their respective businesses, properties or assets.
“Base Compensation” means a Transferred Employee’s annual salary, exclusive of any “Success Bonus”, “Stay Bonus” or other bonuses, as of April 1, 2006.
“Bill of Sale and General Assignment Agreement” means the Bill of Sale and General Assignment Agreement in the form annexed as Exhibit A.
“Books and Records” means originals or copies of all the Seller’s administrative records, claim records, policy forms and files owned by the Seller, sales records and files, customer lists, Producer lists, policy information and underwriting records (in whatever form maintained, including computer generated, recording or stored) owned by Seller relating to the Subject Business.
“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in the State of New York are permitted or obligated by Applicable Law to be closed for regular banking business.
“Closing” and “Closing Date” have the respective meanings set forth in Section 2.1.
“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
“Covered Insurance Policies” has the meaning ascribed to it in Section 2.5.
“Covered Premium” means all Gross Written Premium collected by or on behalf of the Purchaser, any of the Purchaser’s Affiliates, on or with respect to the Covered Insurance Policies, including any premium developed by audits for policies written during the Renewal Period or retro or Variable Ratio Plan (“VRP”) adjustments, no matter when such audits or adjustments occur.
“Damages” has the meaning ascribed to it in Section 12.2(a).
“Employee Group” has the meaning ascribed to it in Section 7.1
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“Governmental Authority” means any foreign, domestic, federal, territorial, state or local U.S. or non-U.S. governmental authority, quasi-governmental authority, instrumentality, court or government, self-regulatory organization, commission, tribunal or organization or any political or other subdivision, department, branch or representative of any of the foregoing.
“Gross Written Premium” means any and all amounts charged to a Policyholder or other Person on or with respect to a Covered Insurance Policy that are required to be reported as premium on the statutory financial statement of the Purchaser or its Insurer Affiliates, as the case may be, in accordance with Applicable Law, exclusive of any surcharges, however described, that are billed on behalf of, and the extent remitted to, any Governmental Authority, less any such amounts returned for cancellation of any such Covered Insurance Policy.
“Guaranty” means the Guaranty in the form annexed as Exhibit B by which Seller’s parent, Aon Group, Inc., guarantees all of Seller’s obligations under this Agreement.
“Indemnified Party” has the meaning ascribed to it in Section 12.3(a).
“Indemnifying Party” has the meaning ascribed to it in Section 12.3(a).
“Insurance Contracts” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions produced by the Seller in connection with the Subject Business, including those identified on Schedule 1.1, that are in-force as of the Closing Date.
“Insurer Affiliate” as to the Seller or the Purchaser, means an Affiliate of such Person that is a duly licensed, eligible or otherwise authorized insurance company.
“Knowledge of the Seller” means the actual knowledge or the knowledge that a director or officer of the Seller should reasonably be expected to discover or otherwise become aware of in the course of his or her responsibilities as a director or officer of the Seller.
“Liability” or “Liabilities” means a liability, obligation, commitment, expense, claim or cause of action (of any kind or nature whatsoever, whether absolute, accrued, contingent or other, and whether known or unknown).
“Lien” shall mean any mortgage, pledge, hypothecation, assignment, lien (statutory or otherwise), preference, priority, charge or other encumbrance, charge, adverse claim (whether pending or, to the knowledge of the Person against whom the adverse claim is being asserted, threatened) or restriction of any kind affecting title or resulting in an encumbrance against property, real or personal, tangible or intangible, or a security interest of any kind, including, without limitation, any conditional sale or other title retention agreement, any right of first refusal, any lease in the nature thereof, and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statute) of any jurisdiction (other than a financing statement which is filed or given solely to protect the interest of a lessor).
“Litigation” means any action, cause of action (whether at law or in equity), arbitration, claim or complaint by any Person alleging potential liability, wrongdoing or misdeed of another Person, or any administrative or other similar proceeding, criminal prosecution or investigation by any Governmental Authority alleging potential liability, wrongdoing or misdeed of another Person.
“Material Adverse Effect” means a material adverse effect on the ability of the Purchaser to renew, or write new insurance policies with respect to, the Subject Business, taken as a whole; provided, however, that the following shall be excluded from the definition of “Material Adverse Effect” and from any determination as to whether a Material Adverse Effect has occurred or may occur: (i) the effects of changes affecting the economy and securities markets generally; (ii) the effects of changes affecting the insurance, reinsurance and financial services industries generally; (iii) any changes in laws, regulations, accounting or actuarial principles, or regulations or policies of general applicability; (iv) any changes in general economic, regulatory, or political conditions; (v) any changes resulting from actions or omissions of a party hereto taken with the prior written consent of the other parties with respect to this Agreement or the Ancillary Agreements or the transactions contemplated hereby or thereby; and (vi) any change that is brought about by compliance by either party with applicable local law.