STOCK PURCHASE AND SALE AGREEMENT
STOCK PURCHASE AND SALE AGREEMENT ("AGREEMENT") dated as of June 6, 1994,
between ALEXANDER & ALEXANDER SERVICES INC., a Maryland corporation ("A&A"),
and AMERICAN INTERNATIONAL GROUP, INC., a Delaware corporation ("AIG").
WHEREAS, A&A desires to sell to one or more of AIG and its wholly-owned subsidiaries as
designated by AIG (the "Purchasers" and each a "Purchaser"), and the Purchaser or Purchasers
desire to purchase, an aggregate of 4,000,000 shares (the "Shares") of 8% Series B Cumulative
Convertible Preferred Stock, par value $1.00 per share, of A&A (the "Series B Stock") for the
consideration and upon the terms and subject to the conditions set forth herein.
Now, THEREFORE, in consideration of the premises and of the respective representations,
warranties, covenants, agreements and conditions contained herein, each of A&A and AIG agree
as follows:
1. Definitions; Certain References .
a. Definitions. The terms defined in this Section 1, whenever used in this Agreement, shall have
the following meanings for all purposes of this Agreement:
"A&A" has the meaning set forth in the first paragraph of this Agreement.
"Act" means the Securities Act of 1933, as amended.
"Affiliate" has the meaning set forth in Rule 12b-2 under the Exchange Act.
"AIG" has the meaning set forth in the first paragraph of this Agreement.
"AIG Group" has the meaning set forth in Section Ta.
"Annual Report" has the meaning set forth in Section 3.a.9(A)(i).
"Articles of Amendment" means the Articles of Amendment of the Charter of A&A, to be filed
for record by A&A, subject to the approval thereof by the stockholders of A&A as contemplated
by Section 3.a.3, with the State Department of Assessments and Taxation of Maryland on or
prior to the date and time of the Closing, a true and correct copy of which is attached as Exhibit I
hereto.
"Articles Supplementary" means the Articles Supplementary classifying 6,200,000 shares of
A&A's preferred stock as Series B Stock, to be filed for record by A&A with the State
Department of Assessments and Taxation of Maryland on or prior to the date and time of the
Closing, a true and correct copy of which is attached as Exhibit 2 hereto.
"Charter" means the Articles of Restatement of the charter of A&A as filed for record with the
State Department of Assessments and Taxation of Maryland, as amended to date and as it is to be
amended by the Articles of Amendment.
"Class A Common Stock" means the Class A Common Stock, par value $.00001 per share, of
A&A.
"Class C Common Stock" means the Class C Common Stock, par value $1.00 per share, of
A&A.
"Class D Common Stock" means the Class D Common Stock, par value $1.00 per share, of
A&A, to be created by A&A as described in the Articles of Amendment.
"Closing" has the meaning set forth in Section 2.a of this Agreement.
"Closing Date" has the meaning set forth in Section 2.a of this Agreement.
"Common Stock" means the common stock, par value $1.00 per share, of A&A.
“Conversion Shares" means the shares of Class D Common Stock issuable or issued upon
conversion of the Shares pursuant to the terms of this Agreement and the Articles
Supplementary.
"Encumbrances" has the meaning set forth in Section 4.g of this Agreement.
"Environmental Laws" has the meaning set forth in Section 4.k of this Agreement.
"ERISA" has the meaning set forth in Section 4.u of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Shares" means the shares of Common Stock issuable or issued in exchange for the
Conversion Shares (or, in the case of a registered public offering of Series B Stock, upon
conversion of Series B Stock) pursuant to the terms of this Agreement and the Charter.
"Incorporated Document" has the meaning set forth in Section 3.a.9(A)(v) of this Agreement.
"Licenses" has the meaning set forth in Section 4.1 of this Agreement.
"Material Adverse Effect" has the meaning set forth in Section 4.f of this Agreement.
"Proxy Statement" means the proxy statement with respect to the transactions contemplated by
this Agreement sent to the holders of Common Stock, Class A Common Stock and Class C
Common Stock in compliance with the Exchange Act, as the same may be amended or
supplemented.
"Purchase Price" means, in the case of each Purchaser, $50 multiplied by the number of Shares
to be purchased by such Purchaser and $200,000,000 in the aggregate.
"Purchaser" has the meaning set forth in the first recital of this Agreement.
"Purchasers" has the meaning set forth in the first recital of this Agreement.
"Registrable Securities" means the Series B Stock, the Conversion Shares, the Exchange Shares
and any other securities issued or issuable with respect to the Series B Stock, the Conversion
Shares or the Exchange Shares by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other reorganization; provided,
however, that a security ceases to be a Registrable Security when it is no longer a Transfer
Restricted Security.
"Registration Rights Agreement" means the Registration Rights Agreement to be dated as of the
date of the Closing among A&A and the Purchasers party thereto, in the form attached as Exhibit
3 hereto, as amended, supplemented and modified from time to time in accordance with the
terms thereof.
"Restricted Securities" has the meaning set forth in Section 7.a(i) of this Agreement.
"Rights Agreement" means the Rights Agreement between A&A and First Chicago Trust
Company of New York, dated as of June 11, 1987, as amended and restated on March 22, 1990,
as amended on April 21, 1992 and as it is to be amended pursuant to Section 3.a.6 hereof.
"Rights Agreement Amendment" has the meaning set forth in Section 3.a.6 of this Agreement.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means all documents filed by A&A with the SEC since January 1, 1993.
"Series B Stock" has the meaning set forth in the first recital of this Agreement.
"Shares" has the meaning set forth in the first recital of this Agreement.
"Significant Subsidiary" means each of Alexander & Alexander Services UK p1c, Reed
Stenhouse Companies Limited and each other Subsidiary of A&A that had consolidated assets at
December 31, 1993 with a book value, net of intercompany accounts, in excess of 10% of the
consolidated assets of A&A at such date or that, net of intercompany items, contributed more
than 10% to the consolidated revenues or consolidated operating income of A&A for the year
ended December 31, 1993.
"Special Event" has the meaning specified in the Articles Supplementary.
"Standstill Period" has the meaning set forth in Section Tc of this Agreement.
"Subsidiary" means, with respect to any person, any corporation, limited or general partnership,
joint venture, association, joint stock company, trust, unincorporated organization, or other entity
analogous to any of the foregoing of which a majority of the equity ownership (whether voting
stock or comparable interest) is, at the time, owned, directly or indirectly by such person.
"Transaction Documents" means the Articles of Amendment, the Articles Supplementary, the
Rights Agreement Amendment and the Registration Rights Agreement.
"Transfer Restricted Security" means a share of Series B Stock, a Conversion Share, an
Exchange Share and any other security which is a Registrable Security until such share of Series
B Stock, Conversion Share, Exchange Share or other security (i) has been effectively registered
under the Act and disposed of in accordance with a registration statement filed under the Act
covering it or (ii) is distributed to the public pursuant to Rule 144 under the Act.
2. Closing.
a. Time and Place of the Closing. The Closing (the "Closing") shall take place at the offices of
Cahill Gordon & Reindel, 80 Pine Street, New York, New York, at 10:00 A.M., New York time,
on the third business day following the first date on which the conditions to Closing set forth in
Section 3 hereof have first been satisfied or waived. A&A shall give AIG two business days
prior written notice of the date the Closing is scheduled to occur. The "Closing Date" shall be the
date the Closing occurs.
b. Transactions at the Closing. At the Closing, subject to the terms and conditions of this
Agreement, A&A shall issue and sell to AIG and the other Purchasers and AIG shall purchase, or
shall cause the other Purchasers to purchase, the Shares. At the Closing, A&A shall deliver to
each Purchaser a certificate or certificates representing the number of Shares to be purchased by
such Purchaser as reflected in a schedule delivered to A&A one business day prior to the Closing
registered in the name of such Purchaser or its nominee against payment of the Purchase Price
with respect thereto by wire transfer of immediately available funds to an account or accounts
previously designated by A&A.
3. Conditions to the Closing.
a. Conditions Precedent to the Obligations of the Purchasers. The obligations of the Purchasers to
be discharged under this Agreement on or prior to the Closing are subject to satisfaction of the
following conditions at or prior to the Closing (unless expressly waived in writing by AIG at or
prior to the Closing):
1. Compliance by A &A. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by A&A at or prior to the Closing shall
have been complied with and performed by it in all material respects, and the
representations and warranties made by A&A in this Agreement shall be true and correct
in all material respects at and as of the Closing, with the same force and effect as though
such representations and warranties had been made at and as of the Closing, except for
changes expressly contemplated by this Agreement and except for representations and
warranties that are made as of a specific time which shall be true and correct in all
material respects only as of such time.2. No Legal Action. No action, suit, investigation or other proceeding relating to
the transactions contemplated hereby shall have been instituted or threatened before any
court or by any governmental body which presents a substantial risk of the restraint or
prohibition of the transactions contemplated hereby or the obtaining of material damages
or other material relief in connection therewith.
3. Amendment of Charter. The Articles of Amendment shall have been duly
approved by the required holders of A&A's stock, shall have been filed with the State
Department of Assessments and Taxation of Maryland and shall have become effective.
4. Shareholder Approval. The transactions contemplated by this Agreement,
including the issuance of the Series B Stock, the Conversion Shares and the Exchange
Shares, shall have been duly approved by the holders of A&A's stock as required by the
rules of the New York Stock Exchange, Inc. and any other securities exchange on which
the Common Stock is listed.
5. Stock Exchange Listing. The Exchange Shares shall have been approved for
listing, subject to notice of issuance, by the New York Stock Exchange, Inc. and any
other securities exchange on which the Common Stock is listed.
6. Rights Agreement. The Rights Agreement shall have been amended by an
amendment in the form of Exhibit 4 hereto (the "Rights Agreement Amendment") and
shall otherwise be in full force and effect and not have been otherwise amended,
modified or supplemented on or after the date of this Agreement.
7. Regulatory Matters. AIG shall be satisfied in its sole discretion as to the non-
applicability of the insurance holding company and broker-controlled insurer statutes of
each jurisdiction (x) in the United States of America or any state, territory or possession
thereof and (y) each other jurisdiction wherever located which is material to the conduct
of the business conducted by it and its Subsidiaries, in each case with respect to the
purchase and holding by the Purchasers of the Series B Stock, the Conversion Shares and
the Exchange Shares (including the receipt of such approvals or advice from regulatory
authorities with respect thereto as AIG may determine). AIG shall be satisfied as to the
applicability of foreign investment and other similar laws or regulations of each
jurisdiction outside the United States of America where AIG or its subsidiaries or A&A
or its Subsidiaries conduct business with respect to the purchase and holding by the
Purchasers of the Series B Stock, the Conversion Shares and the Exchange Shares such
that the application of such laws or regulations would not in its reasonable discretion
have, individually or in the aggregate, a material adverse effect on AIG and its
subsidiaries taken as a whole or A&A and its Subsidiaries taken as a whole.
8. Insurance Arrangement. On or before July 5, 1994, A&A shall have entered
into an insurance or reinsurance arrangement with respect to its discontinued operations
that is reasonably satisfactory to AIG with an insurer reasonably satisfactory to AIG.
9. Legal Opinions.
(A) A&A shall have furnished to the Purchasers on the Closing Date the
opinion of Ronald J. Roessler, Senior Vice President and General Counsel of
A&A, dated the Closing Date, in form reasonably satisfactory to the Purchasers,
to the effect that:
(i) each of A&A and the Significant Subsidiaries has been duly
incorporated and, where applicable, is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its properties
and conduct its business as described in A&A's Annual Report on Form
10-K for the year ended December 31, 1993 as filed with the SEC
("Annual Report"); A&A is duly qualified to do business as a foreign
corporation and is in good standing under the laws of New York;
Alexander Reinsurance Intermediaries Inc. is duly qualified to do business
as a foreign corporation and is in good standing under the laws of
Connecticut;
(ii) all the outstanding shares of stock of each Significant
Subsidiary have been duly and validly authorized and issued and are full
paid and nonassessable (or, with respect to foreign subsidiaries, have
similar status), and all outstanding shares (except for directors' qualifying
shares) of stock of the Significant Subsidiaries are owned by A&A either
directly or through wholly-owned subsidiaries (except as set forth in
Exhibit 21 to A&A's Annual Report and as disclosed in a single writing
from A&A to AIG specifically identified as such and dated the date
hereof) free and clear of any perfected security interest and, to the best
knowledge of such counsel, any other security interests, claims, liens or
encumbrances, except where the failure to so own the stock of a
Significant Subsidiary would not have a Material Adverse Effect;
(iii) to the actual knowledge of such counsel, neither A&A nor any
of the Significant Subsidiaries incorporated under the laws of New York
or Maryland is in violation of any term or provision of (A) its charter or
bylaws or (B) any judgment, decree or order specifically applicable to
A&A or such Significant Subsidiary, or any applicable United States
federal, New York or Maryland statute, rule or regulation, except with
respect to clause (B) of this paragraph (iii) such violations which would
not individually or in the aggregate have a Material Adverse Effect;
(iv) except as set forth in the Annual Report or in A&A's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994 (the
"Quarterly Report"), to the actual knowledge of such counsel no default
exists, and no event has occurred which with notice, lapse of time, or both,
would constitute a default, in the due performance and observance of any
term, covenant or condition of any debt agreement to which A&A or any
of the Significant Subsidiaries is a party or by which it or any of them is
bound, except such defaults which would not individually or in the
aggregate have a Material Adverse Effect;
(v) to the actual knowledge of such counsel, there is no pending or
threatened action or suit or proceeding before any court or governmental
agency or body or any arbitrator involving A&A or any of the Subsidiaries
which is reasonably likely to have a Material Adverse Effect and which is
not adequately disclosed in the Annual Report, the Quarterly Report,
another SEC Document filed after the date of this Agreement or a
document filed with the SEC and incorporated by reference therein
("Incorporated Document") after the date of this Agreement;
(vi) to the actual knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency or body or any arbitrator to which A&A is a party that questions
the validity of this Agreement or the Registration Rights Agreement or
any action to be taken pursuant hereto or thereto, with only such
exceptions as shall have been disclosed in reasonable detail to AIG;
(vii) A&A's authorized equity capitalization is as set forth in
Section 4.b of this Agreement; the outstanding shares of stock of A&A
have been duly and validly authorized and issued and are full paid and
nonassessable; and the holders of outstanding shares of stock of A&A are
not entitled pursuant to A&A's Charter or bylaws or any agreement known
to such counsel to preemptive or other rights to subscribe for the Shares,
the Conversion Shares or the Exchange Shares:
(viii) A&A has all requisite corporate power and authority, and has
taken all requisite corporate action, necessary to enter into this Agreement,
the Rights Agreement Amendment and the Registration Rights
Agreement, to carry out the provisions and conditions of this Agreement,
the Rights Agreement Amendment and the Registration Rights Agreement
and the transactions contemplated in this Agreement, the Rights
Agreement Amendment and the Registration Rights Agreement, to issue
and sell the Shares in the manner contemplated by this Agreement, to
issue shares of Series B Stock as dividends on the Shares (subject only to
declaration by the Board of Directors of A&A), to issue the Conversion
Shares issuable upon conversion of the Series B Stock, to issue Exchange
Shares upon the exchange of shares of Class D Common Stock or (in the
case of a registered public offering of the Series B Stock) conversion of
the shares of Series B Stock as provided for in the Charter and Articles
Supplementary and to otherwise perform its obligations hereunder;(ix) the issuance and sale of the Shares in the manner contemplated
herein, the issuance of the Conversion Shares issuable upon conversion of
shares of the Series B Stock in accordance with the terms of the Charter
and the Articles Supplementary, the issuance of the Exchange Shares upon
exchange of the Class D Common Stock or (in the case of a registered
public offering of the Series B Stock) conversion of shares of the Series B
Stock in accordance with the terms of the Charter and the Articles
Supplementary, the execution, delivery and performance by A&A of this
Agreement, the Rights Agreement Amendment and the Registration
Rights Agreement and the consummation of any other transaction
contemplated in this Agreement, the Rights Agreement Amendment and
the Registration Rights Agreement, and the performance, as of the Closing
Date if performed on such date, by A&A of the obligations under the
Charter and the Articles Supplementary will not conflict with, result in a
breach or violation of, or constitute a default under (A) the charter or
bylaws of A&A or any of its Subsidiaries or (B) the terms of any indenture
or other agreement or instrument known to such counsel and to which
A&A or any of its Subsidiaries is a party or by which it or any of them is
bound, or (C) any judgment, order or decree known to such counsel to be
specifically applicable to A&A or any of its Subsidiaries of any court,
regulatory body, administrative agency, governmental body or arbitrator,
except with respect to clauses (B) and (C) of this paragraph (ix), such
conflicts, breaches, violations or defaults which would not, individually or
in the aggregate, have a Material Adverse Effect; and
(x) those provisions of any contract or agreement that are described
in the Annual Report conform in all material respects to the description
thereof contained in the Annual Report.
Such counsel shall state that, without independent check or verification of the
factual accuracy or completeness of the Annual Report or the Quarterly Report (except to
the limited extent set forth in paragraphs (iv), (v), (vii) and (x) above) or the Proxy
Statement, no facts have come to the attention of such counsel which causes such counsel
to believe that the statements in the Annual Report and the Quarterly Report at their
respective filing dates with the SEC or the Proxy Statement at its mailing date and the
date of the meeting of shareholders to which it relates (other than the financial statements
and other financial and statistical information contained therein, as to which such counsel
need express no belief) contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws other than the laws of the States of Maryland and New York or the
federal laws of the United States, to the extent such counsel deems proper and specifies in
such opinion, upon the opinion of other counsel of good standing believed by such
counsel to be reliable and which opinion and counsel are satisfactory to the Purchasers
(provided that such counsel states that the Purchasers are justified in relying on such
specified opinion or opinions), and (B) as to matters of fact, to the extent such counsel
deems proper, on certificates of responsible officers of A&A and public officials.
(B) A&A shall have furnished to the Purchasers on the Closing Date the
opinion of Debevoise & Plimpton, special counsel for A&A, dated the Closing
Date, in form reasonably satisfactory to the Purchasers, to the effect that:
(i) to the actual knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court, or governmental
agency or body or any arbitrator to which A&A is or is threatened to be
made a party that questions the validity of this Agreement, the Rights
Agreement Amendment or the Registration Rights Agreement or any
action to be taken pursuant hereto or thereto;
(ii) the certificates representing the Shares are in valid and
sufficient form; and the holders of outstanding shares of stock of A&A are
not entitled pursuant to A&A's Charter or the Articles Supplementary or
bylaws to preemptive or other rights as shareholders to subscribe for the
Series B Stock or the Conversion Shares issuable upon conversion of the
Series B Stock or the shares of Common Stock issuable upon exchange for
Class D Stock or (in the case of a registered public offering of Series B
Stock) conversion of Series B Stock;
(iii) the Series B Stock and the Articles of Amendment and the
Articles Supplementary have been duly authorized, and, when issued and
delivered in accordance with the terms of this Agreement and as a
dividend on shares of Series B Stock, the Series B Stock will be validly
issued, full paid and nonassessable;
(iv) upon due execution, issuance and delivery in accordance with
this Agreement, the Charter and the Articles Supplementary, the Shares
will be convertible into the Conversion Shares or (in the case of a
registered public offering of the Series B Stock) into the Exchange Shares
in accordance with the terms of the Charter and the Articles
Supplementary; the Conversion Shares issuable upon such conversion
have been duly authorized and validly reserved for issuance upon
conversion and, when so issued upon conversion in accordance with the
terms of the Charter and the Articles Supplementary, will be validly
issued, full paid, and nonassessable; the shares of Common Stock issuable
upon exchange of the Class D Common Stock or (in the case of a
registered public offering of the Shares) upon conversion of the Series B
Stock have been duly authorized and validly reserved for issuance upon
exchange of the Class D Common Stock or conversion of the Series B
Stock, and when so issued upon exchange or conversion in accordance
with the terms of the Charter and the Articles Supplementary will be
validly issued, full paid and nonassessable; the holders of shares of the
Series B Stock, Conversion Shares, or Exchange Shares of A&A will not
be subject to personal liability for obligations of A&A by reason of being
such holders; all consents, approvals, authorizations, orders, registration
and qualifications of or with any New York, Maryland or Federal court or
governmental agency or body, if any, and all corporate approvals and
authorizations, required to be obtained or taken by A&A for or in
connection with the authorization, issuance and delivery of the Series B
Stock and for the consummation of the transactions contemplated hereby
have been validly and sufficiently obtained or taken (other than the
declaration of dividends on Series B Stock in Series B Stock) and are in
full force and effect, except such as may be required under the securities
or blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Series B Stock by the Purchasers and such other
approvals (specified in such opinion) as have been obtained;(v) each of this Agreement, the Rights Agreement Amendment and
the Registration Rights Agreement has been duly authorized, executed and
delivered by A&A and, assuming due authorization, execution and
delivery thereof by the other parties hereto and thereto, is the valid and
binding obligation of A&A, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(vi) the issuance and sale of the Series B Stock in the manner
contemplated herein, the issuance of the Conversion Shares issuable upon
conversion of shares of the Series B Stock in accordance with the terms of
the Charter and the Articles Supplementary, the issuance of the Exchange
Shares upon exchange of the Class D Common Stock or (in the case of a
registered public offering of Series B Stock) upon conversion of the Series
B Stock in accordance with the terms of the Charter and the Articles
Supplementary, the execution, delivery and performance by A&A of this
Agreement, the Rights Agreement Amendment and the Registration
Rights Agreement and the consummation of any other of the transactions
contemplated in this Agreement, the Rights Agreement Amendment and
the Registration Rights Agreement, and the performance, as of the Closing
Date if performed on such date, by A&A of the obligations under the
Charter and the Articles Supplementary will not conflict with, result in a
violation or breach of, or constitute a default under (A) the charter or
bylaws of A&A or (B) any United States federal, Maryland or New York
statute, rule or regulation applicable to A&A or any of the Significant
Subsidiaries, except with respect to clause (B) of this paragraph (vi), such
conflicts, breaches, violations or defaults which would not have a Material
Adverse Effect;(vii) A&A is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended; and
(viii) in connection with the offer and sale of the Shares and the
delivery of the certificates representing the Shares delivered on such
Closing Date by A&A to the Purchasers pursuant to this Agreement, and
assuming the correctness of all representations and warranties made by the
Purchasers in Section 5.c and by A&A in Section 4.y, it is not necessary to
register such Shares under the Act.
Such counsel shall state that (x) such counsel have not themselves checked the
accuracy and completeness of, or otherwise verified, and are not passing upon and
assume no responsibility for the accuracy or completeness of, he statements contained in
the Proxy Statement, and (y) in the course of such counsel's review and discussion of the
contents of the Proxy Statement with certain officers and employees of A&A, including
its general counsel and his staff, the Purchasers and their counsel and A&A's independent
accountants, but without independent check or verification, no facts have come to the
attention of such counsel which causes such counsel to believe that the statements in the
Proxy Statement at its mailing date and the date of the meeting of shareholders to which
it relates contained an untrue statement of a material fact or omitted to state a materi al
fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that such counsel need not express any
view with respect to the adequacy or accuracy of, or the application of generally accepted
accounting principles to, the financial statements or other financial or numerical data
included in the Proxy Statement.
In rendering such opinion, such counsel may (A) rely as to matters involving the
application of laws other than the State of New York or the federal laws of the United
States, to the extent such counsel deems proper and specifies in such opinion, upon the
opinion of other counsel of good standing believed by such counsel to be reliable and
which counsel and opinion are satisfactory to the Purchasers (provided that such counsel
states that the Purchasers are justified in relying upon such specified opinion or opinions),
and (B) rely as to matters of fact, to the extent such counsel deems proper, on certificates
of responsible officers of A&A and public officials.
(C) The Purchasers shall have received from Cahill Gordon & Reindel, counsel
for the Purchasers, such opinion or opinions, dated such Closing Date, with respect to the
exemption from registration under the Act for the offer and sale of such Shares and
delivery of the Shares by A&A to the Purchasers pursuant to this Agreement, and other
related matters as they may reasonably require, and A&A shall have furnished to such
counsel such documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
10. Registration Rights Agreement. A&A shall have executed and delivered at the Closing for
the benefit of the Purchasers and their successors and assigns the Registration Rights Agreement.
11. Other. A&A shall have furnished to the Purchasers such executed and conformed copies of
such other opinions and such certificates, letters and documents as the Purchasers may
reasonably request and as are customary for transactions such as those contemplated by this
Agreement.
12. Hart-Scott-Rodino. The waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 shall have expired or been terminated, to the extent applicable.
13. Articles Supplementary; Articles of Amendment. The Articles Supplementary and the
Articles of Amendment shall each have been filed for record with the State Department of
Assessments and Taxation of Maryland and shall have become effective.
14. Exemption from Special Voting Requirements. The Board of Directors of A&A shall have
irrevocably taken all action necessary under Section 3-603(c) of the Maryland General
Corporation Law to exempt future transactions between A&A and its Subsidiaries, on the one
hand, and AIG and its subsidiaries, on the other hand, from the provisions of Subtitle 6 of the
Maryland General Corporation Law, provided that such exemption shall be applicable only if
AIG or its Subsidiaries shall have become "interested stockholders" as a result of the acquisition
of securities of A&A in a manner and to an extent permitted by this Agreement.
15. Special Events. No Special Event shall have occurred on or after the date of this Agreement
and on or prior to the Closing, other than the execution and delivery of the Rights Agreement
Amendment.
b. Conditions Precedent to Obligations of A&A. The obligations of A&A to be discharged under
this Agreement on or prior to the Closing are subject to satisfaction of the following conditions at
or prior to the Closing (unless waived by A&A at or prior to the Closing):
1. Compliance by AIG. All of the terms, covenants and conditions of this
Agreement to be complied with and performed by AIG at or prior to the Closing shall
have been complied with and performed by AIG in all material respects, and the
representations and warranties made by the Purchasers in this Agreement shall be true
and correct in all material respects at and as of the Closing, with the same force and effect
as though such representations and warranties had been made at and as of the Closing,
except for changes contemplated by this Agreement.
2. No Legal Action. No action, suit, investigation or other proceeding relating to
the transactions contemplated hereby shall have been instituted before any court or
instituted or threatened by any governmental body which presents a substantial risk of the
restraint or prohibition of the transactions contemplated hereby or the obtaining of
material damages or other material relief in connection therewith.3. Amendment of Charter. The Articles of Amendment shall have been approved
by the required holders of A&A's stock, shall have been filed with the State Department
of Assessments and Taxation of the State of Maryland and shall have become effective.
4. Shareholder Approval. The transactions contemplated by this Agreement,
including the issuance of the Series B Stock, the Conversion Shares and the Exchange
Shares, shall have been approved by the holders of A&A's capital stock as required by
the rules of the New York Stock Exchange, Inc. and any other securities exchange on
which the Common Stock is listed.
5. Regulatory Matters. A&A shall be satisfied in its sole discretion as to the non-
applicability of the insurance holding company and broker-controlled insurer statutes of
each jurisdiction (x) in the United States of America or any state, territory or possession
thereof and (y) each other jurisdiction wherever located which is material to the conduct
of the business conducted by it and its Subsidiaries, in each case with respect to the
purchase and holding by the Purchasers of the Series B Stock, the Conversion Shares and
the Exchange Shares (including the receipt of such approvals or advice from regulatory
authorities with respect thereto as A&A may determine). A&A shall be satisfied as to the
applicability of foreign investment and other similar laws or regulations of each
jurisdiction outside the United States of America where A&A or its Subsidiaries or AIG
or its Subsidiaries conduct business with respect to the purchase and holding by the
Purchasers of the Series B Stock, the Conversion Shares and the Exchange Shares such
that the application of such laws or regulations would not in its reasonable discretion
have, individually or in the aggregate, a material adverse effect on A&A and its
Subsidiaries taken as a whole.
4. Representations and Warranties of A&A.
A&A hereby represents and warrants to each of the Purchasers that, except as specifically
disclosed in a single writing from A&A to AIG specifically identified as such and dated the date
hereof:
a. Organization, Good Standing, Power, Authority, Etc. A&A is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland. A&A has the full
corporate power and authority to execute and deliver this Agreement and each Transaction
Document and to perform its obligations under this Agreement and each Transaction Document.
A&A has taken all action required by law, its Charter, its by-laws or otherwise required to be
taken by it to authorize the execution, delivery and performance by it of this Agreement and each
Transaction Document. This Agreement is, and after the Closing each Transaction Document
will be, a valid and binding obligation of A&A, enforceable in accordance with their respective
terms, except that such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to creditors' rights and
general principles of equity and except that rights to indemnity and contribution may be limited
by federal or state securities laws or policies underlying such laws. True and complete copies of
the Charter and bylaws of A&A as in effect on the date hereof are attached as Exhibits 5 and 6
hereto.b. Capitalization of A&A. After giving effect to the Articles of Amendment and the Articles
Supplementary the authorized stock of A&A will at the Closing consist of: 200,000,000 shares of
Common Stock, of which at May 1, 1994, 40,766,215 shares were outstanding; 26,000,000
shares of Class A Common Stock, of which at May 1, 1994, 2,366,690 shares were outstanding;
11,000,000 shares of Class C Common Stock, of which at June 2, 1994, 385,594 shares were
outstanding; 40,000,000 shares of Class D Common Stock, none of which will be issued and
outstanding at the Closing; and 15,000,000 shares of preferred stock, of which (w) 2,300,000
shares have been designated as $3.625 Series A Convertible Preferred Stock and at June 2, 1994,
2,300,000 shares were outstanding, (x) 600,000 shares have been designated as Series A Junior
Participating Preferred Stock, and at June 2, 1994 none of which were outstanding, and (y)
6,200,000 shares will be designated as Series B Stock, of which 4,000,000 shares will be issued
and outstanding at the Closing and 2,200,000 shares will be reserved for issuance to holders of
Series B Stock as dividends pursuant to the Charter and the Articles Supplementary. Since May
1, 1994, the Company has only issued shares of Common Stock and Class A Common Stock in
accordance with the terms of its employee benefit plans as in existence on May 1, 1994, in all
cases in the ordinary course of business and in a manner and in amounts consistent with past
practice. All of the shares of Series B Stock issued at the Closing or issued as dividends pursuant
to the Charter and the Articles Supplementary will be duly authorized, validly issued, full paid
and nonassessable and entitled to the benefits of, and have the terms and conditions set forth in,
the Charter and the Articles Supplementary. The Conversion Shares will be duly authorized and
will be reserved for such issuance and, when issued in accordance with the Charter and the
Articles Supplementary, will be duly and validly issued, full paid and nonassessable. The
Exchange Shares are duly authorized and, when issued in accordance with the Charter and the
Articles Supplementary, will be duly and validly issued, full paid and nonassessable. All
outstanding shares of stock of A&A have been duly authorized, are validly issued, full paid and
nonassessable and have been issued in compliance with applicable federal and state securities
laws. The shareholders of A&A have no preemptive or similar rights with respect to the
securities of A&A. No further approval or authority of the shareholders or of the Board of
Directors of A&A will be required for the consummation by A&A of the transactions
contemplated by this Agreement and each of the Transaction Documents, except for the
declaration of dividends on Series B Stock in Series B Stock and such as have been obtained or
made and are in full force and effect.
c. Registration Rights. Each Purchaser shall, by virtue of its purchase of Shares hereunder, be a
holder of Registrable Securities, as defined in the Registration Rights Agreement, and be entitled
to the rights of such a holder under the Registration Rights Agreement.
d. SEC Documents. Each of the SEC Documents, as of the date of its filing with the SEC, did not
include any untrue statement of a material fact or omit to state any material fact necessary t o
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
e. Proxy Statement. The Proxy Statement will not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
f. Authority and Qualification of A&A. A&A has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the SEC Documents
and as currently owned or leased and conducted. A&A is duly qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the conduct of its
business or its ownership, leasing or operation of property requires such qualification, other than
any failure to be so qualified or in good standing as would not singly or in the aggregate with all
such other failures reasonably be expected to have a material adverse effect on the assets,
liabilities, results of operations, prospects or condition (financial or otherwise) of A&A and the
Subsidiaries taken as a whole (each a "Material Adverse Effect").
g. Subsidiaries. Exhibit 21 to the Annual Report is a true, accurate and correct statement of all of
the information required to be set forth therein by the regulations of the SEC. Each Subsidiary
has been duly incorporated or organized and is validly existing as a corporation or other legal
entity in good standing under the laws of the jurisdiction of its incorporation or formation, has
the corporate or other power and authority to own, lease and operate its properties and to conduct
its business as described in the SEC Documents and as currently owned or leased and conducted
and is duly qualified to transact business as a foreign corporation or other legal entity and is in
good standing (if applicable) in each jurisdiction in which the conduct of its business or its
ownership, leasing or operation of property requires such qualification, other than any failure to
be so qualified or in good standing as would not singly or in the aggregate with all such other
failures reasonably be expected to have a Material Adverse Effect. Except as disclosed in the
SEC Documents filed with the SEC prior to the date of this Agreement, all of the outstanding
capital stock of each Subsidiary has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by A&A, directly or through Subsidiaries (other than directors'
qualifying shares), free and clear of any mortgage, pledge, lien, security interest, restriction upon
voting or transfer, claim or encumbrance of any kind ("Encumbrance") (other than such transfer
restrictions as may exist under federal and state securities laws), and there are no rights granted
to or in favor of any third party (whether acting in an individual, fiduciary or other capacity)
other than A&A to acquire any such capital stock, any additional capital stock or any other
securities of any Subsidiary.
h. Outstanding Securities. Except as set forth in the SEC Documents filed with the SEC prior to
the date of this Agreement and except as contemplated by this Agreement, there are no
outstanding (A) securities or obligations of A&A convertible into or exchangeable for any
capital stock of A&A, (13) warrants, rights or options to subscribe for or purchase from A&A
any such capital stock or any such convertible or exchangeable securities or obligations or (C)
obligations of A&A to issue such shares, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
i. No Contravention, Conflict, Breach, Etc. The execution, delivery and performance of each of
this Agreement and each of the Transaction Documents by A&A and the consummation of the
transactions herein and therein contemplated will not (A) contravene any provision of the
charter, bylaws or other organization documents of it or of any of the Subsidiaries, or (B) conflict
with or result in a breach or violation of any of the terms and provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or encumbrance upon any
assets or properties of it or of any of the Subsidiaries under, any statute, rule, regulation, order or
decree of any governmental agency or body or any court having jurisdiction over it or the
Subsidiaries or any of its or their respective properties, assets or operations, or any indenture,
mortgage, loan agreement, note or other agreement or instrument for borrowed money, any
guarantee of any agreement or instrument for borrowed money or any lease, permit, license or
other agreement or instrument to which it or any of the Subsidiaries is a party or by which it or
any such Subsidiary is bound or to which any of the properties, assets or operations of it or any
such Subsidiary is subject which conflict, breach, violation, default, creation or imposition has,
or will have, individually or in the aggregate, a Material Adverse Effect.j. Consents. No consent, approval, authorization, order, registration, filing or qualification of or
with any (A) court or (B) government agency or body or (C) other third party (whether acting in
an individual, fiduciary or other capacity) is required for the consummation of the transactions
contemplated by this Agreement or by any of the Transaction Documents to be performed by
A&A, except (1) such as will have been obtained and made and will be in full force and effect as
of the Closing and (2) such as may be required under the Act and state securities laws in
connection with the performance by A&A of its obligations under the Registration Rights
Agreement.
k. No Existing Violation, Default, Etc. Neither A&A nor any of the Subsidiaries is in violation of
(A) its charter, by-laws or other organization documents or (B) any applicable law, ordinance,
administrative or governmental rule or regulation or (C) any order, decree or judgment of any
court of governmental agency or body having jurisdiction over A&A or any Subsidiary. The
properties, assets and operations of A&A and the Subsidiaries are in compliance in all material
respects with all applicable federal, state, local and foreign laws, rules and regulations, orders,
decrees, judgments, permits and licenses relating to public and worker health and safety and to
the protection and clean-up of the natural environment and activities or conditions related
thereto, including, without limitation, those relating to the generation, handling, disposal,
transportation or release of hazardous materials (collectively, "Environmental Laws"), other than
any such failure to be in compliance as would not singly or in the aggregate with all such other
failures reasonably be expected to have a Material Adverse Effect. With respect to such
properties, assets and operations, including any previously owned, leased or operated properties,
assets or operations, to the best knowledge of A&A, after due inquiry, there are no past, present
or reasonably anticipated future events, conditions, circumstances, activities, practices, incident s,
actions or plans of A&A or any of the Subsidiaries that may interfere with or prevent compliance
or continued compliance in all material respects with applicable Environmental Laws, other than
any such interference or prevention as would not singly or in the aggregate with any such other
interference or prevention reasonably be expected to have a Material Adverse Effect. The term
"hazardous materials" shall mean those substances that are regulated by or form the basis for
liability under any applicable Environmental Laws.
Except as set forth in SEC Documents filed with the SEC prior to the date of this Agreement, no
event of default or event that, but for the giving of notice or the lapse of time or both, would
constitute an event of default exists or, upon the consummation by A&A of the transactions
contemplated by this Agreement or any of the Transaction Documents, will exist under any
indenture, mortgage, loan agreement, note or other agreement or instrument for borrowed
money, any guarantee of any agreement or instrument for borrowed money or any lease, permit,
license or other agreement or instrument to which A&A or any of the Subsidiaries is a party or
by which A&A or any such Subsidiary is bound or to which any of the properties, assets or
operations of A&A or any such Subsidiary is subject.l. Licenses and Permits. A&A and the Subsidiaries have such certificates, permits, licenses,
franchises, consents, approvals, orders, authorizations and clearances from appropriate
governmental agencies and bodies ("Licenses") as are necessary to own, lease or operate their
properties and to conduct their businesses in the manner described in the SEC Documents and as
currently owned or leased and conducted and all such Licenses are valid and in full force and
effect except such licenses which the failure to have or to be in full force and effect individually
or in the aggregate do not have a Material Adverse Effect. To the best of A&A's knowledge,
after due inquiry, A&A and the Subsidiaries are in compliance in all material respects with their
respective obligations under such Licenses, with such exceptions as individually or in the
aggregate do not have a Material Adverse Effect, and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination of such Licenses.
m. Title to Properties. A&A and the Subsidiaries have sufficient title to all material properties
(real and personal) owned by A&A and the Subsidiaries which are necessary for the conduct of
the business of A&A and the Subsidiaries as described in the SEC Documents and as currently
conducted, free and clear of any Encumbrance that may materially interfere with the conduct of
the business of A&A and the Subsidiaries, taken as a whole, and to the best of A&A's
knowledge, after due inquiry, all material properties held under lease by A&A or the Subsidiaries
are held under valid, subsisting and enforceable leases.
n. Environmental Matters. Neither A&A nor any of the Subsidiaries is the subject of any federal,
state, local or foreign investigation, and neither A&A nor any of the Subsidiaries has received
any notice or claim (or is aware of any facts that would form a reasonable basis for any claim),
nor entered into any negotiations or agreements with any third party, relating to any material
liability or remedial action or potential material liability or remedial action under Environmental
Laws, nor are there any pending, reasonably anticipated or, to the best knowledge of A&A,
threatened actions, suits or proceedings against or affecting A&A, any of the Subsidiaries or their
properties, assets or operations in connection with any such Environmental Laws.
o. Taxes. A&A and the Subsidiaries have filed all federal, and all material state, local and
foreign, tax returns which, to the best knowledge of A&A's officers, are required to be filed, and
each has paid all taxes as shown on such returns and on assessments received by it to the extent
that such taxes and assessments have become due. United States Federal income tax returns of
A&A and its Subsidiaries have been examined and closed through the fiscal year ended
December 31, 1978. The charges, accruals and reserves on the books of A&A and its
Subsidiaries in respect of taxes or other governmental charges are, in the opinion of A&A,
adequate.
p. Litigation. Except as set forth in SEC Documents filed with the SEC prior to the date of this
Agreement, there are no pending actions, suits, proceedings, arbitrations or investigations against
or affecting A&A or any of the Subsidiaries or any of their respective properties, assets or
operations, or with respect to which A&A or any of the Subsidiaries is responsible by way of
indemnity or otherwise, that are required under the Exchange Act to be described in such SEC
Documents, that questions the validity of this Agreement or any of the Transaction Documents
or any action to be taken pursuant to this Agreement or any of the Transaction Documents, or
that would singly or in the aggregate, with all such other actions, suits, investigations or
proceedings, reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, or could reasonably be expected to have a material adverse effect on the ability
of A&A to perform its obligations under this Agreement or any of the Transaction Documents;
and, to the best knowledge of A&A, after due inquiry, except as set forth in SEC Documents
filed with the SEC prior to the date of this Agreement, no such actions, suits, proceedings or
investigations are threatened or contemplated and there is no basis for any such action, suit,
proceeding or investigation.
q. Labor Matters. No labor disturbance by the employees of A&A or any of the Subsidiaries that
has had or that is reasonably likely to have a Material Adverse Effect exists or, to the best
knowledge of A&A, after due inquiry, is threatened.
r. Contracts. All of A&A's material contracts that are required to be described in the SEC
Documents or to be filed as exhibits thereto are described in the SEC Documents or filed as
exhibits thereto and are in full force and effect. Neither A&A nor any of the Subsidiaries nor, to
the best knowledge of A&A, any other party is in breach of or default under any such contracts
except for such breaches and defaults as in the aggregate have not had and would not have a
Material Adverse Effect.
s. Finder's Fees. No broker, finder or other party is entitled to receive from A&A, any of the
Subsidiaries or any other person any brokerage or finder's fee or any other fee, commission or
payment as a result of the transactions contemplated by this Agreement for which any Purchaser
would have any liability or responsibility.
t. Financial Statements. The audited consolidated financial statements and related schedule s and
notes included in the SEC Documents comply in all material respects with the requirements of
the Exchange Act and the Act and the rules and regulations of the SEC thereunder, were
prepared in accordance with generally accepted accounting principles consistently applied
throughout the period involved and fairly present the financial condition, results of operations,
cash flows and changes in stockholders' equity of the A&A and the Subsidiaries at the dates and
for the periods presented. The unaudited quarterly consolidated financial statements and the
related notes included in the SEC Documents present fairly the financial condition, results of
operations and cash flows of A&A and the Subsidiaries at the dates and for the periods to which
they relate, subject to year-end audit adjustments (consisting only of normal recurring accruals),
have been prepared in accordance with generally accepted accounting principles applied on a
consistent basis except as otherwise stated therein and have been prepared on a basis
substantially consistent with that of the audited financial statements referred to above except as
otherwise stated therein.
u. ERISA. Each Plan complies in all material respects with the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the Internal Revenue Code of 1986, as amended
(the "Code") and all other applicable statutes and governmental rules and regulations, and (i) no
"reportable event" (within the meaning of Section 4043 of ERISA) has occurred with respect to
any Plan, (ii) neither A&A nor any of its ERISA Affiliates has withdrawn from any Plan or
Multiemployer Plan or instituted steps to do so, and (iii) no steps have been instituted to
terminate any Plan. No condition exists or event or transaction has occurred in connection with
any Plan which could result in the incurrence by A&A or any of its ERISA Affiliates of a
material liability. No Plan, or any trust created thereunder, has incurred any "accumulated
funding deficiency" as defined in Section 302 of ERISA, whether or not waived. To the best
knowledge of A&A, there are no actions, suits or claims pending or threatened (other than
routine claims for benefits) with respect to any Plan. Neither A&A nor any of its ERISA
Affiliates has incurred or reasonably expects to incur any material liability under or pursuant to
Title IV of ERISA. No prohibited transactions described in Section 406 of ERISA or Section
4975 of the Code have occurred which could result in material liability to A&A or its
Subsidiaries. Neither A&A nor any of its ERISA Affiliates has incurred or expects to incur any
"withdrawal liability" (within the meaning of Part I of Subtitle E of Title IV of ERISA). Neither
A&A nor any of its ERISA Affiliates has been notified by any Multiemployer Plan that such
Multiemployer Plan is currently in reorganization or insolvency under and within the meaning of
Section 4241 or 4245 of ERISA or that such Multiemployer Plan intends to terminate or has been
terminated under Section 4041 A of ERISA. As used herein the term "Plan" means a "pension
plan", as such term is defined in Section 3(2) of ERISA (other than a Multiemployer Plan)
established or maintained by A&A or any of its ERISA Affiliates or as to which A&A or any of
its ERISA Affiliates has contributed or otherwise may have any liability. "Multiemployer Plan"
shall mean a "multiemployer plan", as such term is defined in Section 4001(a)(3) of ERISA, to
which A&A or any of its ERISA Affiliates is obligated to contribute or otherwise may have any
liability. "ERISA Affiliate" means and trade or business (whether or not incorporated) which is
under common control or would be considered a single employer with A&A within the meaning
of Section 414(b), (c), (m) or (o) of the Code and the regulations promulgated under those
sections or within the meaning of Section 4001(b) of ERISA and the regulations promulgated
thereunder.
v. Contingent Liabilities. Except as fully reflected or reserved against in the financial statements
included in the Annual Report or the Quarterly Report, or disclosed in the footnotes contained in
such financial statements, A&A and its Subsidiaries had no liabilities (including tax liabilities) at
the date of such financial statements, absolute or contingent, that were material either
individually or in the aggregate to A&A and its Subsidiaries taken as a whole. Except as so
reflected, reserved, or disclosed, A&A and its Subsidiaries have no commitments which are
materially adverse either individually or in the aggregate to A&A and its Subsidiaries taken as a
whole. Contingent liabilities arising from the Share Purchase Agreement dated as of October 9,
1987 between Sphere Drake Acquisition (U.K.) Limited and Alexander Stenhouse & Partners
Ltd., other than (a) such liabilities arising out of sections 10.4, 10.5, or 10.6(b) of said
Agreement or (b) such liabilities as to which recourse under said Agreement is directly or
indirectly limited to a purchase price adjustment, are not material relative to the total a mount of
contingent liabilities arising from said Agreement.
w. No Material Adverse Change. Since the latest date as of which information is given in the
SEC Documents filed prior to June 5, 1994, (A) A&A and the Subsidiaries have not incurred any
material liability or obligation (indirect, direct or contingent), or entered into any material oral or
written agreement or other transaction, that is not in the ordinary course of business or that could
reasonably be expected to result in a Material Adverse Effect; (B) A&A and the Subsidiaries
have not sustained any loss or interference with its business or properties from fire, flood,
windstorm, accident or other calamity (whether or not covered by insurance) that has had or that
could reasonably be expected to have a Material Adverse Effect; (C) there has been no material
change in the indebtedness of A&A and the Subsidiaries, no change in the stock of A&A except
for the issuance of shares of Common Stock pursuant to options or conversion rights in existence
at the date of this Agreement, and no dividend or distribution of any kind declared, paid or made
by A&A on any class of its stock, except for regular quarterly dividends of not more than
$0.90625 per share of $3.625 Series A Convertible Preferred Stock and of not more than $0.025
per share of Common Stock, Class A Common Stock and Class C Common Stock (or the
equivalent in foreign currency); and (D) there has been no event causing a Material Adverse
Effect, nor any development that could, singly or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.
x. Investment Company. A&A is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
y. Exemption from Registration, Restrictions on Offer and Sale of Same or Similar Securities.
Assuming the representations and warranties of the Purchasers set forth in Section 5.c hereof are
true and correct in all material respects, the offer and sale of the Shares made pursuant to this
Agreement will be exempt from the registration requirements of the Act. Neither A&A nor any
person acting on its behalf has, in connection with the offering of the Shares, engaged in (A) any
form of general solicitation or general advertising (as those terms are used within the meaning of
Rule 502(c) under the Act), (B) any action involving a public offering within the meaning of
Section 4(2) of the Act, or (C) any action which would require the registration of the offering and
sale of the Shares pursuant to this Agreement under the Act or which would violate applicable
state securities or "blue sky" laws. A&A has not made and will not make, directly or indirectly,
any offer or sale of Shares or of securities of the same or a similar class as the Shares if as a
result the offer and sale of Shares contemplated hereby could fail to be entitled to exemption
from the registration requirements of the Act. As used herein, the terms "offer" and "sale" have
the meanings specified in Section 2(3) of the Act.
z. Use of Proceeds. The net proceeds of the sale of the Shares will be used by A&A and its
Subsidiaries for general corporate purposes. A&A intends that such net proceeds will be used for
investment in the continuing businesses of A&A and the Subsidiaries and to fund the insurance
or reinsurance arrangement referred to in Section 3.a.8.
5. Representations and Warranties of the Purchasers.
Each Purchaser hereby represents and warrants to A&A that:
a. Organization, Good Standing, Power, Authority, Etc. Such Purchaser has the full power and
authority to execute and deliver this Agreement and the Registration Rights Agreement (to the
extent that it is a party thereto), and to perform its obligations under this Agreement and the
Registration Rights Agreement. Such Purchaser has taken all action required by law, its charter,
its by-laws or otherwise required to be taken by it to authorize the execution and delivery of this
Agreement and the Registration Rights Agreement (to the extent that it is a party thereto) and the
consummation of the transactions contemplated to be performed by it hereby and thereby. Each
of this Agreement and the Registration Rights Agreement (to the extent that it is a party thereto)
is a valid and binding agreement of such Purchaser, enforceable in accordance with their
respective terms, except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors'
rights and general principles of equity and except to the extent that rights to indemnity and
contribution may be limited by federal or state securities laws or policies underlying such laws.
b. No Conflicts; No Consents. Neither the execution and delivery of this Agreement and the
Registration Rights Agreement (to the extent that it is a party thereto) nor the consummation by
such Purchaser of the purchase contemplated hereby will (i) conflict with, or result in a breach
of, any provision of its charter or by-laws or (ii) violate any statute or law or any judgment,
order, writ, injunction, decree, rule or regulation applicable to the Purchaser and/or any of its
subsidiaries. No consent, authorization or approval of, or declaration, filing or registration with,
or exemption by, any governmental or regulatory authority is required in connection with the
execution and delivery of, and the performance by such Purchaser of its obl
