Main: Jbw Restructuring Agreement

JBW RESTRUCTURING AGREEMENT


This JBW RESTRUCTURING AGREEMENT (this "AGREEMENT"), dated as of June 30, 1997, is among CONCORD GENERAL CORPORATION, a California corporation ("CONCORD"), JBW & CO., INC., a California corporation ("JBW"), CLASSIC FIRE & MARINE INSURANCE COMPANY, an Indiana insurance corporation ("CLASSIC") (Concord, JBW and Classic sometimes hereinafter are referred to collectively as the "JBW PARTIES" and individually as a "JBW PARTY"), ALPINE INSURANCE COMPANY, an Illinois insurance corporation and successor to Transco Syndicate #1 Ltd., an Illinois corporation ("ALPINE"), and TCO HOLDINGS, INC., a Delaware corporation ("TCO").


R E C I T A L S


A. Concord, JBW and Classic are affiliated through common controlling ownership by Jeffery W. Beresford- Wood ("BERESFORD-WOOD").


B. Beresford-Wood, Concord, First Horizon Insurance Company, a Minnesota corporation ("FHIC"), Peter J. O'Shaughnessy ("O'SHAUGHNESSY"), Exstar Financial Corporation, a Delaware corporation ("OLD EXSTAR"), and Alpine entered into that certain Stock Purchase Agreement dated as of December 28, 1989, as amended and supplemented by that certain Amendment No. 1 To Stock Purchase Agreement dated as of June 22, 1990 among Beresford-Wood, Concord, FHIC, O'Shaughnessy, Old Exstar, Alpine, Horizon Insurance Company, Ltd., a Bermuda company ("HICL"), and Classic Syndicate, Inc., an Illinois corporation ("CS"), that certain Amendment No. 2 To Stock Purchase Agreement dated as of December 3, 1990 among Beresford-Wood, Concord, FHIC, O'Shaughnessy, Old Exstar, Alpine, HICL and CS, that certain Amendment No. 3 To Stock Purchase Agreement dated as of April 22, 1991 among Beresford-Wood, Concord, FHIC, O'Shaughnessy, Old Exstar, Alpine, HICL, CS, Classic, Classic Indemnity Company, a Minnesota corporation ("CIC"), and Transco Holdings, Inc., a Delaware corporation ("THI"), that certain Amendment No. 4 To Stock Purchase Agreement dated as of June 6, 1991 among Beresford-Wood, Concord, FHIC, O'Shaughnessy, Old Exstar, Alpine, HICL, CS, Classic, CIC and THI, a related letter agreement dated August 26, 1992, and that certain Agreement dated May 31, 1993 among Concord, O'Shaughnessy and TCO, as amended by that certain Amendment No. 1 To Agreement dated January 17, 1994 among Concord, O'Shaughnessy and TCO (such Stock Purchase Agreement, as so amended and supplemented, hereinafter is referred to as the "STOCK PURCHASE AGREEMENT"), pursuant to which, among other things (i) Alpine acquired certain shares of the Series A Preferred Stock of Concord (the "CONCORD PREFERRED") and (ii) Concord and/or its affiliates acquired certain shares of the Series A Preferred Stock of Old Exstar (the "OLD EXSTAR PREFERRED").


C. On or prior to December 31, 1992, Concord exchanged the Old Exstar Preferred for 1,075 shares of the Series A Preferred Stock of TCO (the "TCO PREFERRED"), with a stated value of $10,000 per share and having an annual dividend rate of 11.3%, payable quarterly.


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D. The TCO Preferred is presently held by Classic in a trust, known as the "Geneva Trust" (the "GENEVA TRUST"), pursuant to an Asset/Liability Transfer Reinsurance Agreement dated June 30, 1995 between Classic and Geneva Assurance Syndicate Inc., an Illinois corporation in liquidation ("GENEVA").


E. Pursuant to that certain Exchange Agreement dated as of December 31, 1993 (the "EXCHANGE AGREEMENT") among Concord, Alpine and JBW, Alpine exchanged the Concord Preferred for 1,100 shares of the Series A Preferred Stock of JBW (the "JBW PREFERRED"), with a stated value of $10,000 per share and having an annual dividend rate of 11.3%, payable quarterly.


F. Subject to the terms and conditions of that certain Secured Debt Conversion Agreement dated March 25, 1994 with an effective date of December 31, 1993 (the "CONVERSION AGREEMENT") among Alpine and the JBW Parties, Alpine was granted the option (the "CONVERSION OPTION") to convert all or any portion of the JBW Preferred into indebtedness of JBW in a principal amount equal to the stated value of the JBW Preferred so converted, such indebtedness to be secured by a pledge of the common stock of Concord or Classic.


G. Alpine exercised the Conversion Option on or prior to December 31, 1995. As a result, JBW is indebted to Alpine in an aggregate amount of approximately $13,600,000, which indebtedness is evidenced by that certain Secured Promissory Note dated December 31, 1995 (the "JBW NOTE") in the original principal amount of $12,313,625 made by JBW in favor of Alpine.


H. The JBW Note is secured by a pledge of 4,085,000 shares of the issued and outstanding capital stock of Classic, representing approximately 81% of such capital stock, pursuant to the terms and conditions of that certain Pledge Agreement dated as of December 31, 1995 (the "CLASSIC STOCK PLEDGE AGREEMENT") among Alpine and the JBW Parties.


I. TCO intends to enter into a Restructuring Agreement with the liquidator of Geneva (the "TCO RESTRUCTURING AGREEMENT"), pursuant to which TCO, in exchange for the return of the TCO Preferred to TCO, will execute and deliver to Geneva a $2,500,000 Promissory Note made by TCO in favor of Geneva.


J. The consummation of the transactions described in the TCO Restructuring Agreement is subject to the approval of the court overseeing the liquidation of Geneva, which approval would be granted through an order issued by such court (the "FINAL ORDER").


K. The JBW Parties have (i) informed Alpine that JBW is not currently willing to meet its obligations under the JBW Note and (ii) requested that Alpine accept, in exchange for the JBW Note, an assignment by Concord of its rights under that certain Promissory Note dated October 19, 1994 in the outstanding principal amount of $1,820,000 made by Par Mee Development Corporation, an Ohio corporation ("PAR MEE"), held by Concord, as amended by


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that certain Amendment to Note Secured by Deed of Trust dated December 5, 1996 between Par Mee and Concord (such Promissory Note, as amended through the date hereof, hereinafter is referred to as the "PAR MEE NOTE"). The Par Mee Note is secured by that certain Deed of Trust and Rent Assignment dated October 19, 1994 (as amended through the date hereof, the "PAR MEE DEED OF TRUST") made by Par Mee and recorded in the Recorder's Office of Napa County, California on October 27, 1994 as Document No. 1994 032227, encumbering certain real estate located in Napa County, California.


L. In order to induce Alpine to accept the assignment by Concord of its rights under the Par Mee Note in exchange for the JBW Note, Concord has agreed to pledge 990,000 shares of the issued and outstanding capital stock of Classic, representing approximately 19.8% of such capital stock, as security for the repayment of the Par Mee Note.


M. Alpine is willing to exchange the JBW Note for an assignment by Concord of its rights under the Par Mee Note and the pledge of the capital stock of Classic described in Recital L above, subject to the terms and conditions of this Agreement.


N. TCO is willing to enter into the TCO Restructuring Agreement and this Agreement in reliance upon the representations and warranties made by the JBW Parties herein.


NOW, THEREFORE, in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:


1. INCORPORATION OF RECITALS. The Recitals set forth above are acknowledged by the parties hereto to be true and accurate and by this reference are incorporated into this Agreement.


2. DEFINITIONS. All capitalized terms used but not elsewhere defined in this Agreement shall have the following meanings:


AMENDED PLEDGE AGREEMENT shall mean an amendment and
restatement of the Classic Stock Pledge Agreement executed by Concord
in favor of Alpine substantially in the form of EXHIBIT 1 attached
hereto.


CENTRAL NATIONAL RESTRUCTURING shall mean the execution of an
agreement by TCO with Central National Insurance Company, a Nebraska
insurance company in rehabilitation ("Central National"), modifying
the terms of a November 9, 1995 Settlement Agreement between Central
National and TCO (as amended).


EFFECTIVE DATE shall mean the date all conditions set forth in
Paragraph 4 of this Amendment have been satisfied.


ESCROW AGENT shall mean the law firm of Katten Muchin & Zavis of Chicago, Illinois.


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PAR MEE ASSIGNMENT shall mean an assignment by Concord in
favor of Alpine of all of Concord's right, title and interest in and
to the Par Mee Note and the Par Mee Deed of Trust substantially in the
form of EXHIBIT 2 attached hereto.


PRIOR AGREEMENTS shall mean the Stock Purchase Agreement, the
Exchange Agreement, the Conversion Agreement, the JBW Note, the
Classic Stock Pledge Agreement and all other agreements, documents and
instruments executed and delivered pursuant to the terms thereof or
otherwise in connection therewith or related thereto, other than the
Restructuring Documents.


RESTRUCTURING DOCUMENTS shall mean this Agreement, the Amended
Pledge Agreement, the Par Mee Assignment, the Par Mee Note, the Par
Mee Deed of Trust, and all other agreements, documents and instruments
executed and delivered pursuant to the terms of this Agreement or the
Par Mee Assignment.


TERMINATION DATE shall mean September 30, 1997.


3. RESTRUCTURING TRANSACTIONS. Subject to the terms and conditions of this Agreement, on or before the fifth business day following the Effective Date:


(a) Concord shall execute and deliver to Alpine the Par
Mee Assignment, thereby assigning to Alpine all of Concord's right,
title and interest in and to the Par Mee Note and the Par Mee Deed of
Trust;


(b) Concord shall execute and deliver to Alpine the Amended Pledge Agreement;


(c) Concord shall deliver to Alpine the original Par Mee
Note and the original recorded Par Mee Deed of Trust;


(d) Concord shall deliver to Alpine an ALTA mortgagee's
policy of title insurance (ALTA Revised 1987 Form) in favor of Alpine
with respect to the real estate covered by the Par Mee Deed of Trust,
issued by a title company and in an amount satisfactory to Alpine,
showing that Par Mee has good and marketable title to such real
estate, insuring that the Par Mee Deed of Trust constitutes a valid
first priority mortgage lien on such real estate subject to no other
liens of equal or greater priority (other than certain liens in the
aggregate amount of not more than $180,000 recorded in favor of John
A. Lisanti and Timothy Starkweather), insuring over all survey and
other general exceptions contained therein and including such
affirmative endorsements as reasonably may be requested by Alpine;


(e) Concord shall deliver to Alpine original stock
certificates for 990,000 shares of the issued and outstanding common
stock of Classic (representing no less than


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19.8% of the issued and outstanding capital stock of Classic),
accompanied by assignments separate from certificate duly executed in
blank by Concord;


(F) Alpine shall deliver the original JBW Note to
Concord;


(G) Alpine shall deliver to Concord the original stock
certificates representing the shares of common stock of Classic
pledged to Alpine pursuant to the Classic Stock Pledge Agreement;


(H) Each JBW party shall deliver a certificate to Alpine
confirming the satisfaction of the conditions set forth in Paragraph 4
hereof applicable to such JBW Party;


(I) Each of Alpine and TCO shall deliver a certificate to
Concord confirming the satisfaction of the conditions set forth in
Paragraph 4 hereof applicable to Alpine or TCO;


(J) Each JBW Party shall deliver to Alpine such evidence
of such JBW Party's authority to execute and deliver the Restructuring
Documents to be executed and delivered by it as Alpine reasonably may
require, including but not limited to resolutions of the respective
boards of directors of Concord and JBW, certified as true, complete
and correct by the respective secretaries of Concord and JBW; and


(K) Alpine and TCO shall deliver to Concord such
evidence of Alpine's and TCO's authority to execute and deliver the
Restructuring Documents to be executed and delivered by it as Concord
reasonably may require, including but not limited to resolutions of
the respective boards of directors of Alpine and TCO, certified as
true, complete and correct by the respective secretaries of Alpine and
TCO.


The transactions described in this Paragraph 3 hereinafter are referred to as the "RESTRUCTURING TRANSACTIONS." Each party hereto acknowledges that the consummation of the Restructuring Transactions will have substantial direct and indirect benefits to such party and that the commitments of such party under the Restructuring Documents are made and given at arm's length and in exchange for fair and reasonable consideration.


Upon the delivery of the documents described above, the party receiving each such document shall deliver it to the Escrow Agent, to be held in escrow (the "ESCROW") in accordance with the terms of an escrow agreement (the "ESCROW AGREEMENT") in a form mutually agreed by the parties and the Escrow Agent. During the term of the Escrow Agreement, payments required to be made pursuant to the Par Mee Note shall be made to the Escrow Agent, to be held pursuant to the terms of the Escrow Agreement. Each document held by the Escrow Agent shall be delivered to the party entitled to receive it (as described above) and all payments made pursuant to the Par Mee Note (and any interest thereon) shall be transferred to Alpine, upon the later of (i) the expiration of the period during which the Final


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Order may be appealed pursuant to applicable law, if no appeal of such Final Order is filed during such period, or (ii) if such an appeal is filed, on the second business day following the date on which the Final Order is upheld by the court of appeals. If an appeal of the Final Order is filed, and the Final Order is overturned on appeal, this Agreement shall be deemed null and void ab initio, the Escrow Agent shall return each document to the party which delivered it as described above, all payments made pursuant to the Par Mee Note (and any interest thereon) shall be returned to Concord, and the parties shall have no further rights or obligations hereunder.


4. CONDITIONS TO EFFECTIVENESS. The obligations of the parties hereto to consummate the Restructuring Transactions shall be subject to the satisfaction of all of the following conditions:


(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the JBW Parties, Alpine and TCO set forth in the
Restructuring Documents shall be true and correct in all material
respects.


(b) ILLINOIS DEPARTMENT OF INSURANCE APPROVAL. The
approval and/or consent of the Illinois Department of Insurance with
respect to the Restructuring Transactions and the TCO Restructuring
Agreement shall have been obtained.


(c) TCO RESTRUCTURING AGREEMENT. The transactions
contemplated by the TCO Restructuring Agreement shall have been
consummated, or shall be consummated concurrently with the
Restructuring Transactions, in accordance with the terms and
conditions set forth in the TCO Restructuring Agreement.


(d) PAR MEE DUE DILIGENCE. The (i) Par Mee Note and Par
Mee Deed of Trust shall be reasonably satisfactory in form and content
to Alpine and its counsel, (ii) the sum of the outstanding principal
balance of the Par Mee Note and all payments of principal under the
Par Mee Note received by Concord and transferred to the Escrow Agent
pursuant to Section 7 hereof shall not be less than $1,820,000 and no
event of default shall exist thereunder and (iii) real estate
encumbered by the Par Mee Deed of Trust shall be valued at not less
than $3,500,000, as evidenced by an appraisal in form and content and
prepared by an appraiser satisfactory to Alpine.


(e) CLASSIC DUE DILIGENCE. The issued and outstanding
capital stock of Classic subject to the Amended Pledge Agreement shall
have a book value of not less than $2,200,000 based on the most recent
annual or quarterly statutory financial statements of Classic filed
with the Indiana Department of Insurance.


(f) CENTRAL NATIONAL RESTRUCTURING. The Central National
Restructuring shall have been consummated, or shall be consummated
concurrently with the Restructuring Transactions, on terms mutually
acceptable to the parties thereto.


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(g) CONCORD COVENANTS. Concord shall have complied in
all material respects with the covenants set forth in Section 7
hereof.


In the event the court overseeing the liquidator of Geneva disapproves the petition of the liquidator of Geneva seeking issuance of the Final Order, or if the Illinois Department of Insurance disapproves the Restructuring Transactions or any component of the TCO Restructuring Agreement, this Agreement shall be deemed null and void ab initio, and the parties shall have no further rights or obligations hereunder.


Notwithstanding anything herein to the contrary, in the event the conditions to effectiveness described in Section 4 hereof have not been satisfied or the Escrow described in Section 3 hereof has not been released on or before the Termination Date, this Agreement shall be deemed null and void ab initio on the Termination Date, and all payments made and documents delivered shall be returned to the party which delivered the same, and the parties shall have no further rights or obligations hereunder.


5. REPRESENTATIONS AND WARRANTIES OF THE JBW PARTIES. The JBW Parties jointly and severally represent and warrant to Alpine and TCO that each JBW Party (i) has full power and authority to execute, deliver and perform its obligations under this Agreement and the other Restructuring Documents, (ii) upon the execution and delivery hereof and thereof, this Agreement and the other Restructuring Documents will be valid, binding and enforceable upon each JBW Party, to the extent such JBW Party is a party thereto, in accordance with their respective terms, (iii) the execution and delivery of this Agreement and, subject to the satisfaction of the conditions set forth in Paragraph 4, the other Restructuring Documents by the JBW Party, and the performance of its obligations hereunder and thereunder does not and will not conflict with, violate or constitute a default under any applicable law, rule, regulation, judgment, decree or order or any agreement, indenture or instrument to which such JBW Party is a party or is bound or which is binding upon or applicable to all or any portion of such JBW Party's property, or require notice to, or approval or consent by, any regulatory agency, court or other governmental body which has not been given or obtained, (iv) assuming the satisfaction of the conditions set forth in Paragraph 4, there is no condition, event or circumstance existing, or any litigation, arbitration, governmental or administrative proceeding, action, examination, claim or demand pending or, to the best of such JBW Party's knowledge, threatened, affecting any JBW Party which could prevent such JBW Party from performing its obligations hereunder or under any other Restructuring Document within the time limits set forth herein or therein for such compliance or performance, and no basis for any such matter exists, (v) no JBW Party or any affiliate thereof, or any person or entity other than the Geneva Trust and the trustee and beneficiaries thereof, has any right, title or interest in or to the TCO Preferred, (vi) any and all required regulatory or court notices and approvals were given and obtained in connection with all prior transfers of all or any portion of the TCO Preferred, and (vii) the Indiana Department of Insurance has been informed of the transactions contemplated by this Agreement, including the pledge by Concord of stock of Classic, and no other notice to or approval by the Indiana Department of Insurance is required in connection with such transactions.


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6. REPRESENTATIONS AND WARRANTIES OF ALPINE AND TCO. Alpine and TCO jointly and severally represent and warrant to the JBW Parties that each of them (i) has full power and authority to execute, deliver and perform its obligations under this Agreement and, subject to the satisfaction of the conditions set forth in Paragraph 4, the other Restructuring Documents, (ii) upon the execution and delivery hereof and thereof, this Agreement and the other Restructuring Documents will be valid, binding and enforceable upon Alpine and TCO, to the extent it is a party thereto, in accordance with their respective terms, (iii) the execution and delivery of this Agreement and, subject to the satisfaction of the conditions set forth in Paragraph 4, the other Restructuring Documents, by Alpine and TCO, and the performance of their obligations hereunder and thereunder, does not and will not conflict with, violate or constitute a default under any applicable law, rule, regulation, judgment, decree or order or any agreement, indenture or instrument to which Alpine or TCO is a party or is bound or which is binding upon or applicable to all or any portion of Alpine's property, or require notice to, or approval or consent by, any regulatory agency, court or other governmental body, except as referenced in Paragraph 4 hereof, and (iv) assuming the satisfaction of the conditions set forth in Paragraph 4, there is no condition, event or circumstance existing, or any litigation, arbitration, governmental or administrative proceeding, action, examination, claim or demand pending or, to the best of Alpine's or TCO's knowledge, threatened, affecting Alpine or TCO which could prevent Alpine or TCO from performing its obligations hereunder or under any other Restructuring Document within the time limits set forth herein or therein for such compliance or performance, and no basis for any such matter exists.


7. COVENANTS OF CONCORD. From and after the execution of this Agreement, Concord shall not cause or permit the Par Mee Note or the Par Mee Deed of Trust, or any rights relating thereto, to be transferred, cancelled or modified in any manner without the prior written consent of Alpine. Any funds received by Concord or any of its affiliates pursuant to the Par Mee Note after the execution of this Agreement shall be held by Concord or any such affiliate as a fiduciary for the benefit of Alpine, and Concord shall cause any and all such funds to be delivered to the Escrow Agent within two business days following receipt of the funds by Concord or any of its affiliates, to be held in accordance with an Escrow Agreement in a form agreed by the parties and the Escrow Agent. Any such funds shall be released to the party entitled to receive payments under the Par Mee Note on the terms described in Section 3 hereof.


8. GENERAL RELEASES.


(a) BERESFORD-WOOD AND JBW PARTIES. In consideration of
the consummation of the Restructuring Transactions, from and after the
Effective Date, each JBW Party, Beresford-Wood and their affiliates,
and its, his and their respective successors and assigns, irrevocably
shall be deemed to have released and forever discharged Alpine,
O'Shaughnessy, TCO and their respective affiliates, subsidiaries,
predecessors, successors, assigns, employees, directors, officers,
agents, servants and attorneys (each, for purposes of this CLAUSE (A),
a "RELEASED PERSON") of and from all damages, losses, claims, demands,
liabilities, obligations, actions and causes of action whatsoever
which Beresford-Wood or any such JBW Party or any of its affiliates
may


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now have or claim to have against any Released Person on account of or
in any way touching, concerning, arising out of or founded upon the
Prior Agreements, whether presently known or unknown, and of every
nature and extent whatsoever. This agreement and covenant on the part
of Beresford-Wood and the JBW Parties (i) is contractual, and not a
mere recital, and the parties hereto acknowledge and agree that no
liability is admitted on the part of any party in connection with the
Prior Agreements and (ii) shall inure to the benefit of and be
enforceable by each Released Person.


(b) ALPINE, TCO AND O'SHAUGHNESSY. In consideration of
the consummation of the Restructuring Transactions, from and after the
Effective Date, Alpine, TCO and O'Shaughnessy and their affiliates,
and its, his and their respective successors and assigns, each
irrevocably shall be deemed to have released and forever discharged
Beresford-Wood and the JBW Parties and their respective affiliates,
predecessors, subsidiaries, successors, assigns, employees, directors,
officers, agents, servants and attorneys (each, for purposes of this
CLAUSE (B), a "RELEASED PERSON") of and from all damages, losses,
claims, demands, liabilities, obligations, actions and causes of
action whatsoever which Alpine, TCO, O'Shaughnessy or any of their
affiliates may now have or claim to have against any Released Person
on account of or in any way touching, concerning, arising out of or
founded upon the Prior Agreements, whether presently known or unknown,
of every nature and extent whatsoever. This agreement and covenant on
the part of Alpine, TCO and O'Shaughnessy (i) is contractual, and not
a mere recital, and the parties hereto acknowledge and agree that no
liability is admitted on the part of any party in connection with the
Prior Agreements and (ii) shall inure to the benefit of and be
enforceable by each Released Person.


9. COSTS AND EXPENSES. Each party hereto shall bear all of its own fees and expenses in connection with the preparation, negotiation and execution of this Agreement and the consummation of the Restructuring Transactions.


10. FURTHER ASSURANCES; COOPERATION. Prior to the Termination Date, each party hereto will do, execute, acknowledge and deliver, or will cause to be done, ...