Main: Restructuring Agreement

RESTRUCTURING AGREEMENT


This Restructuring Agreement ("AGREEMENT") is made and entered into as of the 30th day of June, 1997, by and between MARK BOOZELL, DIRECTOR OF INSURANCE OF THE STATE OF ILLINOIS (the "DIRECTOR"), in his capacity as liquidator of the estate of GENEVA ASSURANCE SYNDICATE, INC. in Liquidation, an Illinois corporation ("GENEVA"), and TCO HOLDINGS, INC., a Delaware corporation ("TCO").


R E C I T A L S


A. Geneva formerly operated as a syndicate on the Illinois Insurance Exchange.


B. On July 11, 1996, an Agreed Order of Liquidation with a Finding of Insolvency was entered by the court (the "Liquidation Court") in the action titled In the matter of the Liquidation of Geneva Assurance Syndicate, Inc., Case No. 96 CH 5093 (the "Liquidation Order").


C. The Liquidation Order vested the Director, as Liquidator, with title to all property, assets, contracts and rights of action owned by Geneva, and authorized the Director, as Liquidator, to deal with the property, assets, business and affairs of Geneva, and to sue and defend for Geneva, or for the benefit of Geneva's policyholders and creditors, in his name as Director, or in the name of Geneva.


D. The Liquidation Order also vested the Director, as Liquidator, with all rights, title and interest in all funds recoverable under treaties and agreements of reinsurance previously entered into by Geneva.


E. Subject to the approval of the Liquidation Court, the Director, as Liquidator, may sell or otherwise dispose of the real and personal property of Geneva.


F. The Director and TCO believe that, prior to the entry of the Liquidation Order, certain assets formerly held by Geneva were transferred to a trust, known as the "Geneva Trust," in connection with the Asset/Liability Transfer Reinsurance Agreement dated June 30, 1995 (the "June 30, 1995 Agreement).


G. The Director and TCO believe that the assets transferred to the Geneva Trust include 10,750 shares of Series A Preferred Stock of TCO, with a stated value of $10,000 per share and an annual dividend rate of 11.3% (the "TCO Preferred").


H. Within five (5) business days of the approval by the Liquidation Court of the commutation of the June 30, 1995 Agreement, the Director and TCO anticipate that the TCO Preferred will be returned to Geneva from the Geneva Trust.


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I. The Director wishes to transfer the TCO Preferred to TCO in return for a $2,500,000 Promissory Note of TCO in favor of Geneva, in the form of Exhibit 1 hereto (the "TCO Note"), a guaranty of Peter J. O'Shaughnessy, the sole shareholder of TCO ("O'Shaughnessy"), in the form of Exhibit 2 hereto (the "PJO Guaranty"), and the Assignment and Payment Direction, in the form of Exhibit 3 hereto (the "Assignment and Payment Direction").


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:


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


JBW RESTRUCTURING shall mean a transaction whereby Alpine
Insurance Company, an Illinois insurance corporation ("Alpine"),
relinquishes its rights under a certain promissory note of JBW & Co.,
Inc., a California corporation, in return for the transfer to Alpine
of a certain mortgage note of Par Mee Development Corporation by
Concord General Corporation, a California corporation ("Concord"), on
terms and conditions mutually acceptable to Alpine and Concord.


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).


RESTRUCTURING DOCUMENTS shall mean this Agreement, the TCO
Note and the PJO Guaranty.


KNOWLEDGE shall be deemed to include the knowledge of the
Director in his capacity as liquidator of Geneva and the knowledge of
the personnel at the Office of the Special Deputy Receiver responsible
for overseeing the liquidation of Geneva.


ESCROW AGENT shall mean the law firm of Shefsky & Froelich
Ltd., of Chicago, Illinois.


PREFERRED STOCK AGREEMENTS shall mean the Stock Purchase
Agreement dated as of December 28, 1989 among Jeffery W.
Beresford-Wood ("Beresford-Wood"), Concord,


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First Horizon Insurance Company ("FHIC"), Exstar Financial Corporation
("Old Exstar"), Alpine and O'Shaughnessy, Amendment No. 1 to Stock
Purchase Agreement dated as of June 22, 1990 among Beresford-Wood,
Concord, FHIC, O'Shaughnessy, Alpine, Horizon Insurance Company, Ltd
("HICL"), and Classic Syndicate, Inc. ("CS"), 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, 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 Fire & Marine Insurance Company
("Classic"), Classic Indemnity Company ("CIC"), and Transco Holdings,
Inc. ("THI"), 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.


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


(a) TCO shall execute and deliver the TCO Note to Geneva;


(b) TCO shall deliver the PJO Guaranty to Geneva, duly executed by O'Shaughnessy;


(c) TCO shall execute and deliver the Assignment and Payment Direction to Geneva;


(d) The Director shall deliver to TCO, duly endorsed for
transfer to TCO, the original certificates evidencing the TCO
Preferred;


(e) Each party to this Agreement shall be deemed to have
released the other party from all liabilities described in Paragraph 7
of this Agreement; and


(f) Each party shall deliver to the other a certificate
confirming the satisfaction of the conditions set forth in Paragraph 4
applicable to such party, and such evidence of such party's authority
to execute and deliver the Restructuring Documents to be executed and
delivered by such party as the other party may reasonably require.


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.


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Upon the delivery of the documents described in clauses (a), (b), (c), (d) and (f) above, the party receiving each such document shall deliver it to the Escrow Agent, to be held in accordance with the terms of an 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 TCO 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 TCO Note (and any interest thereon) shall be transferred to Geneva, upon the later of (i) the expiration of the period during which the final order described in Section 4(d)(i) may be appealed pursuant to applicable law, if no appeal 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 of the Liquidation Court is upheld by the court of appeals. If an appeal is filed, and the final order of the Liquidation Court 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 the document pursuant to clauses (a), (b), (c), (d) and (f) above, all payments made pursuant to the TCO Note (and any interest thereon) shall be returned to TCO, 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 TCO and the Director set forth in the Restructuring
Documents shall be true and correct in all material respects.


(B) JBW RESTRUCTURING. The JBW Restructuring shall have
been consummated, or shall be consummated concurrently with the
Restructuring Transactions, on terms mutually acceptable to the
parties thereto.


(C) 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.


(D) APPROVALS. The following approvals or consents shall
have been obtained:


(i) the Liquidation Court shall have entered a final
order approving the commutation of the June 30, 1995 Agreement
and approving this Agreement; and


(ii) the Illinois Department of Insurance shall not
have disapproved the Service Agreement between TCO and Alpine
referenced in the TCO Note, on or before the date of entry of
the final order referenced in clause (i) above.


In the event that the Liquidation Court disapproves the petition of the Director seeking approval of the commutation of the June 30, 1995 Agreement and of this Agreement, or if the


4 5 Illinois Department of Insurance disapproves the Service Agreement between TCO and Alpine, this Agreement shall be deemed null and void ab initio, and the parties shall have no rights or obligations hereunder.


5. REPRESENTATIONS AND WARRANTIES OF THE DIRECTOR. The Director represents and warrants to TCO on behalf of Geneva that (i) to his knowledge, the Geneva Trust is the current beneficial and record owner and holder of the TCO Preferred, (ii) to his knowledge, immediately prior to the transfer by Geneva of the TCO Preferred to TCO, Geneva will own the TCO Preferred, free and clear of any liens, charges or encumbrances whatsoever, (iii) subject to the approval of the Liquidation Court, the Director has full power and authority to execute, deliver and perform his obligations under this Agreement, and this Agreement will be valid, binding and enforceable upon the Director, in accordance with its terms, and (iv) to his knowledge, 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 threatened, affecting Geneva or the Director, which could prevent the Director from performing his obligations hereunder within the time limits set forth herein for compliance or performance, and no basis for any such matter exists.


6. REPRESENTATIONS AND WARRANTIES OF TCO. TCO represents and warrants to Geneva that (i) TCO has full power and authority to execute and deliver this Agreement and, subject to the satisfaction of the conditions set forth in Paragraph 4, to perform its obligations under this Agreement, (ii) upon the execution and delivery of this Agreement, and, subject to the satisfaction of the conditions set forth in Paragraph 4, this Agreement is and the other Restructuring Documents to which TCO is a party will be valid, binding and enforceable upon TCO, in accordance with their respective terms, (iv) the execution and delivery of this Agreement and, subject to the satisfaction of the conditions set forth in Paragraph 4, th ...