AGREEMENT AND PLAN OF MERGER by
EXHIBIT
2.1
AGREEMENT
AND PLAN OF MERGER
by
and
among
AMCOMP
INCORPORATED,
and
SAPPHIRE
ACQUISITION CORP.
Dated
as of January 10, 2008
Table of Contents
ARTICLE
I
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TERMS
OF THE MERGER
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|||
1.1
|
The
Merger.
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2
|
|
1.2
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The
Closing; Effective Time; Effect.
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2
|
|
1.3
|
Conversion
of Securities.
|
3
|
|
1.4
|
Tender
of and Payment for Certificates.
|
3
|
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1.5
|
Options.
|
5
|
|
1.6
|
Dissenting
Shares.
|
6
|
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1.7
|
Certificate
of Incorporation and Bylaws.
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7
|
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1.8
|
Directors
and Officers.
|
7
|
|
1.9
|
Other
Effects of the Merger.
|
7
|
|
1.10
|
Additional
Actions.
|
7
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|
ARTICLE
II
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REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
|||
2.1
|
Due
Organization and Good Standing.
|
8
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|
2.2
|
Capitalization.
|
9
|
|
2.3
|
Subsidiaries.
|
11
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|
2.4
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Authorization;
Binding Agreement.
|
12
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2.5
|
Governmental
Approvals.
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12
|
|
2.6
|
No
Violations.
|
13
|
|
2.7
|
SEC
Filings; Company Financial Statements.
|
13
|
|
2.8
|
Absence
of Certain Changes.
|
16
|
|
2.9
|
Absence
of Undisclosed Liabilities.
|
16
|
|
2.10
|
Compliance
with Laws.
|
16
|
|
2.11
|
Regulatory
Agreements; Permits.
|
17
|
|
2.12
|
Litigation.
|
18
|
|
2.13
|
Restrictions
on Business Activities.
|
19
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|
2.14
|
Material
Contracts.
|
19
|
|
2.15
|
Intellectual
Property.
|
21
|
|
2.16
|
Employee
Benefit Plans.
|
22
|
|
2.17
|
Taxes
and Returns.
|
24
|
|
2.18
|
Finders
and Investment Bankers.
|
25
|
|
2.19
|
Fairness
Opinion.
|
25
|
|
2.20
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Vote
Required; Board Action.
|
26
|
|
2.21
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Title
to Properties; Assets.
|
26
|
|
2.22
|
Employee
Matters.
|
27
|
|
2.23
|
Environmental
Matters.
|
28
|
|
2.24
|
Proxy
Statement.
|
29
|
|
2.25 |
Transactions
with Affiliates.
|
29 |
|
|
|
i
2.26
|
Insurance
Matters.
|
29
|
|
2.27
|
Insurance.
|
32
|
|
2.28
|
Books
and Records.
|
32
|
|
ARTICLE
III
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|||
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
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|||
3.1
|
Due
Organization and Good Standing.
|
32
|
|
3.2
|
Authorization;
Binding Agreement.
|
33
|
|
3.3
|
Governmental
Approvals.
|
33
|
|
3.4
|
No
Violations.
|
33
|
|
3.5
|
Finders
and Investment Bankers.
|
34
|
|
3.6
|
Disclosures.
|
34
|
|
3.7
|
Sufficient
Funds.
|
34
|
|
3.8
|
Litigation.
|
34
|
|
3.9
|
Ownership
of Shares.
|
34
|
|
3.10
|
Management
Arrangements.
|
35
|
|
3.11
|
Investigation
by Parent and Merger Sub.
|
35
|
|
ARTICLE
IV
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ADDITIONAL
COVENANTS OF THE COMPANY
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|||
4.1
|
Conduct
of Business of the Company.
|
35
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4.2
|
Access
and Information; Confidentiality.
|
38
|
|
4.3
|
Special
Meeting; Proxy Statement.
|
39
|
|
4.4
|
No
Solicitation.
|
40
|
|
4.5
|
Takeover
Laws.
|
44
|
|
4.6
|
Stockholder
Litigation.
|
44
|
|
4.7
|
SEC
Reports.
|
44
|
|
ARTICLE
V
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ADDITIONAL
COVENANTS OF THE PARTIES
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|||
5.1
|
Notification
of Certain Matters.
|
44
|
|
5.2
|
Reasonable
Best Efforts.
|
45
|
|
5.3
|
Indemnification
and Insurance.
|
47
|
|
5.4
|
Benefit
Plans and Employee Matters.
|
48
|
|
5.5
|
Public
Announcements.
|
50
|
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5.6
|
Company
Producers.
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50
|
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5.7
|
Financing.
|
50
|
ii
ARTICLE
VI
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CONDITIONS
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6.1
|
Conditions
to Each Party's Obligations.
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51
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6.2
|
Conditions
to Obligations of Parent and Merger Sub.
|
51
|
|
6.3
|
Conditions
to Obligations of the Company.
|
52
|
|
6.4
|
Frustration
of Conditions.
|
53
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|
ARTICLE
VII
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TERMINATION
AND ABANDONMENT
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7.1
|
Termination.
|
53
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7.2
|
Effect
of Termination.
|
55
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7.3
|
Fees
and Expenses.
|
55
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7.4
|
Amendment.
|
57
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7.5
|
Waiver.
|
57
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ARTICLE
VIII
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MISCELLANEOUS
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8.1
|
Survival.
|
58
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8.2
|
Notices.
|
58
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8.3
|
Binding
Effect; Assignment.
|
59
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8.4
|
Governing
Law; Jurisdiction.
|
59
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8.5
|
Waiver
of Jury Trial.
|
59
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8.6
|
Counterparts.
|
60
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8.7
|
Interpretation.
|
60
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8.8
|
Entire
Agreement.
|
61
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8.9
|
Severability.
|
61
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8.10
|
Specific
Performance.
|
61
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8.11
|
Third
Parties.
|
61
|
iii
Index
|
|
Defined
Terms
|
Page
|
Action
|
18
|
affiliate
|
60
|
Affiliate
Transaction
|
29
|
Aggregate
Consideration
|
3
|
Agreement
|
1
|
Antitrust
Laws
|
45
|
Balance
Sheet Date
|
14
|
Board
|
1
|
Burdensome
Condition
|
47
|
Business
Day
|
60
|
Bylaws
|
8
|
Cash
Amount
|
6
|
Certificate
of Incorporation
|
8
|
Certificate
of Merger
|
2
|
Certificates
|
4
|
Change
of Recommendation
|
42
|
Closing
|
2
|
Closing
Date
|
2
|
Code
|
5
|
Common
Stock
|
1
|
Company
|
1
|
Company
401(k) Plan
|
49
|
Company
Actuarial Analyses
|
31
|
Company
Balance Sheet
|
14
|
Company
Capital Stock
|
9
|
Company
Damages
|
56
|
Company
Disclosure Schedule
|
8
|
Company
Employee Plans
|
22
|
Company
Financials
|
14
|
Company
Intellectual Property
|
21
|
Company
Material Adverse Effect
|
8
|
Company
Material Contract
|
19
|
Company
Option Plans
|
5
|
Company
Options
|
5
|
Company
Permits
|
18
|
Company
Producers
|
30
|
Company
Real Property
|
26
|
Company
Reinsurance Agreements
|
30
|
Company
Representatives
|
41
|
Company
SAP Statements
|
15
|
Company
SEC Reports
|
13
|
Company
Stockholder Approval
|
26
|
Company
Subsidiaries
|
8
|
Company
Subsidiary
|
8
|
Company
Superior Offer
|
40
|
iv
Index
|
|
(continued)
|
|
Defined
Terms
|
Page
|
Company
Takeover Proposal
|
40
|
Confidentiality
Agreement
|
39
|
Consent
|
12
|
Covered
Proceeding
|
47
|
DGCL
|
1
|
Dissenting
Shares
|
6
|
DOJ
|
45
|
DOL
|
23
|
Effective
Time
|
2
|
Employee
|
48
|
Encumbrances
|
13
|
Enforceability
Exceptions
|
12
|
Environmental
Laws
|
28
|
ERISA
|
22
|
ERISA
Affiliate
|
22
|
Exchange
Act
|
6
|
Exchange
Fund
|
3
|
Expenses
|
55
|
Financing
|
50
|
FTC
|
45
|
GAAP
|
8
|
Governmental
Authority
|
12
|
Hazardous
Substance
|
29
|
HSR
Act
|
13
|
Indebtedness
|
10
|
Indemnified
Parties
|
47
|
Intellectual
Property
|
21
|
IRS
|
22
|
knowledge
|
60
|
Law
|
13
|
Laws
|
13
|
Licensed
Intellectual Property
|
21
|
Merger
|
1
|
Merger
Consideration
|
3
|
Merger
Sub
|
1
|
Notice
of Superior Offer
|
43
|
Off-the-Shelf
Software Agreements
|
20
|
Order
|
18
|
Outside
Date
|
53
|
Parent
|
1
|
Parent
Disclosure Schedule
|
32
|
Parent
Material Adverse Effect
|
33
|
Parent
Representatives
|
38
|
Parent
Termination Fee
|
56
|
Parent
Welfare Benefit Plans
|
49
|
v
Index
|
|
(continued)
|
|
Defined
Terms
|
Page
|
Parties
|
1
|
Party
|
1
|
Paying
Agent
|
3
|
Permitted
Encumbrances
|
27
|
Person
|
60
|
Preferred
Stock
|
9
|
Proxy
Statement
|
40
|
Qualifying
Transaction
|
56
|
Xxxxxxx
Xxxxx
|
25
|
Requisite
Regulatory Approvals
|
51
|
SAP
|
8
|
SEC
|
12
|
Secretary
of State
|
2
|
Securities
Act
|
13
|
Shares
|
1
|
Special
Meeting
|
39
|
SSAP
No. 62
|
31
|
subsidiary
|
60
|
Surviving
Corporation
|
2
|
Takeover
Laws
|
26
|
Tax
|
25
|
Tax
Returns
|
24
|
Taxes
|
25
|
Tenant
Leases
|
26
|
Terminating
Company Breach
|
54
|
Terminating
Parent Breach
|
54
|
Termination
Date
|
53
|
Termination
Fee
|
56
|
Total
Cash Amount
|
6
|
Total
Merger Consideration
|
3
|
Voting
Agreement
|
1
|
Voting
Debt
|
9
|
Withdrawal
of Recommendation
|
43
|
vi
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger (this "Agreement") is made and
entered into as of January 10, 2008 by and among AmCOMP Incorporated, a Delaware
corporation (the "Company"), Employers Holdings,
Inc., a Nevada corporation ("Parent"), and Sapphire
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of
Parent
("Merger
Sub"). Parent, Merger Sub and the Company are sometimes
referred to herein as a "Party" and collectively
as the
"Parties."
WITNESSETH:
A. The
Boards of Directors of Parent, Merger Sub and the Company each deem it advisable
that Parent acquire the Company upon the terms and subject to the conditions
provided for in this Agreement.
B. In
furtherance thereof, it is proposed that the acquisition be accomplished
by
means of the merger of Merger Sub with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation in the Merger, as a result of which
each
issued and outstanding share of common stock, par value $0.01 per share (the
"Common Stock"), of the
Company (the shares of Common Stock being hereinafter referred to as the
"Shares") will automatically
be
converted into the right to receive $12.50 per Share in cash, without interest,
upon the terms and subject to the conditions set forth in this
Agreement.
C.
The Board of Directors of the Company (the "Board") has unanimously
approved (with any interested directors abstaining from voting) this Agreement
and the Merger, and such approval is sufficient to render inapplicable to
this
Agreement, the Merger and the other transactions and agreements contemplated
by
this Agreement (including the Voting Agreements) the restriction against
the
parties hereto and thereto engaging in any business combination as set forth
in
Section 203 of the General Corporation Law of the State of Delaware (the
"DGCL") and the Board
has
determined that this Agreement, the Merger and the other transactions
contemplated hereby are advisable and in the best interests of the Company
and
its stockholders, and has resolved to recommend that its stockholders adopt
this
Agreement.
D.
The Board of Directors of Parent (on its own behalf and as the sole stockholder
of Merger Sub) and the respective Boards of Directors of Merger Sub and the
Company have each approved this Agreement and the Merger.
E. Concurrently
with the execution and delivery of this Agreement, as a condition and inducement
to Parent's and Merger Sub's willingness to enter into this Agreement, Parent
and Merger Sub are entering into Voting Agreements with certain stockholders
of
the Company (each, a "Voting
Agreement") pursuant to which each of those stockholders has agreed, upon
the terms and subject to the conditions set forth therein, to vote all Shares
beneficially owned by such stockholders in accordance with the terms of such
Voting Agreements.
NOW,
THEREFORE, in consideration of the representations, warranties, covenants
and
agreements contained in this Agreement and intending to be legally bound
hereby,
the Parties hereto agree as follows:
1
ARTICLE
I
TERMS
OF THE
MERGER
|
1.1
|
The
Merger.
|
Upon
the terms and subject to the conditions of this Agreement, the Merger shall
be
consummated in accordance with the DGCL. At the Effective Time, upon
the terms and subject to the conditions of this Agreement, Merger Sub shall
be
merged with and into the Company in accordance with the DGCL and the separate
existence of Merger Sub shall thereupon cease, and the Company, as the surviving
corporation in the Merger (the "Surviving Corporation"), shall
continue its corporate existence under the laws of the State of Delaware
as a
wholly owned subsidiary of Parent. It is intended that the Merger
shall constitute a taxable purchase of the Shares by Parent for foreign,
federal, state and local tax purposes.
|
1.2
|
The
Closing; Effective
Time; Effect.
|
(a)
Subject to the satisfaction or, if permissible, waiver by the Party entitled
to
the benefit thereof, of the conditions set forth in Article VI hereof (other
than those conditions that by their nature are to be satisfied at the Closing,
but subject to the fulfillment or waiver of those conditions at the Closing),
the closing of the Merger (the "Closing") shall take place
at
the offices of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP, Park Avenue
Tower, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. local
time
on a date to be specified by the Parties, which shall be no later than the
third
Business Day after the date that all of the closing conditions set forth
in
Article VI have been satisfied or waived (if waivable) , unless another time,
date or place is agreed upon in writing by the Parties hereto. The
date on which the Closing occurs is herein referred to as the "Closing Date."
(b)
Subject to the terms and conditions hereof, concurrently with the Closing,
the
Parties shall file with the Secretary of State of the State of Delaware (the
"Secretary of State") a
certificate of merger in accordance with the DGCL (the "Certificate of Merger")
executed in accordance with the relevant provisions of the DGCL and shall
make
all other filings or recordings required under the DGCL in order to effect
the
Merger. The Merger shall become effective upon the filing of the
Certificate of Merger or at such other time as is agreed by the Parties hereto
and specified in the Certificate of Merger. The time when the Merger
shall become effective is herein referred to as the "Effective Time."
(c)
From and after the Effective Time, the Merger shall have the effects set
forth
in Section 259 of the DGCL and, except as otherwise expressly set forth herein,
the Surviving Corporation shall possess all properties, rights, privileges,
powers and franchises of the Company and Merger Sub, and all of the claims,
obligations, liabilities, debts and duties of the Company and Merger Sub
shall
become the claims, obligations, liabilities, debts and duties of the Surviving
Corporation.
2
|
1.3
|
Conversion
of
Securities.
|
At
the Effective Time, by virtue of the Merger and without any action on the
part
of the Company, Merger Sub or the holders of any securities of Merger Sub
or the
Company:
(a)
Each Share that is owned by Parent, Merger Sub or any direct or indirect
wholly
owned subsidiary of Parent, or that is owned by the Company as treasury stock,
in each case immediately before the Effective Time, shall automatically be
canceled and retired and shall cease to exist, and no consideration or payment
shall be delivered in exchange therefor.
(A)
Each Share issued and outstanding immediately prior to the Effective Time
(other
than Shares to be canceled in accordance with Section 1.3(a) hereof and
Dissenting Shares (as defined in Section 1.6)) shall automatically be converted
into the right to receive $12.50 in cash (the "Merger Consideration"),
payable, without interest, to the holder of such Share upon surrender, in
the
manner provided in Section 1.4 hereof, of the certificate that formerly
evidenced such Share. All such Shares shall, by virtue of the Merger
and without any action on the part of the holders thereof, be automatically
cancelled and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration, without interest
thereon, upon the surrender of such certificate in accordance with Section
1.4
hereof.
(b)
Each issued and outstanding share of common stock, par value $0.01 per share,
of
Merger Sub shall be converted into one validly issued, fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation, and all such shares shall constitute the only outstanding
shares of capital stock of the Surviving Corporation following the Effective
Time. From and after the Effective Time, any certificate representing the
common
stock of Merger Sub shall be deemed for all purposes to represent that number
of
shares of common stock of the Surviving Corporation into which such shares
of
common stock of Merger Sub represented thereby were converted in accordance
with
the immediately preceding sentence.
|
1.4
|
Tender
of and Payment
for Certificates.
|
(a)
Paying Agent;
Deposit
of Exchange Fund. Prior to the Effective Time, Parent shall
designate a paying agent (the "Paying Agent") reasonably
acceptable to the Company for the payment of the Merger
Consideration. No later than the Effective Time, Parent shall
deposit, or cause to be deposited with the Paying Agent for the benefit of
holders of Shares and Company Options, cash constituting an amount equal
to (i)
the sum of the Total Merger Consideration plus (ii) the Total Cash Amount
(as
defined in Section 1.5) (such sum, the "Aggregate Consideration," and
such Aggregate Consideration as deposited with the Paying Agent, the "Exchange
Fund"). The Paying Agent shall cause the Exchange Fund to be
(i) held for the benefit of the holders of Shares and Company Options and
(ii)
applied promptly to making the payments pursuant to Section 1.3(b)
hereof. Such aggregate Merger Consideration shall be invested by the
Paying Agent as directed by Parent. For purposes of this Agreement,
"Total Merger
Consideration" means the product of (x) the number of Shares issued and
outstanding (other than those shares retired pursuant to Section 1.3(a) hereof
and Dissenting Shares) immediately prior to the Effective Time multiplied
by (y)
the Merger Consideration.
3
(b)
Exchange
Procedures. Promptly after the Effective Time, Parent and the
Surviving Corporation shall cause the Paying Agent to mail (i) to each holder
of
record, as of the Effective Time, of a certificate or certificates, which
immediately prior to the Effective Time represented outstanding Shares (the
"Certificates"), which
Shares were converted pursuant to Section 1.3(b) hereof into the right to
receive the Merger Consideration, (x) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Shares shall pass, only upon proper delivery of the Certificates (or affidavits
of loss in lieu thereof) to the Paying Agent and shall be in such form and
have
such other provisions as Parent may reasonably specify) and (y) instructions
for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration and (ii) to each holder of a Company Option, a check in an
amount
due and payable to such holder pursuant to Section 1.5 hereof in respect
of such
Company Option. Upon surrender of a Certificate (or affidavit of loss
in lieu thereof) for cancellation to the Paying Agent, together with a letter
of
transmittal, properly completed and duly executed in accordance with the
instructions thereto, and such other documents as may be reasonably required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate, to be mailed promptly following the Paying
Agent's receipt of such Certificate (or affidavit of loss in lieu thereof),
and
the Certificate so surrendered shall forthwith be canceled. No
interest shall be paid or accrued for the benefit of holders of the Certificates
on the Merger Consideration payable upon the surrender of the Certificates,
or
in respect of Company Options. If payment of the Merger Consideration
is to be made to a Person (as defined in Section 8.7) other than the Person
in
whose name the surrendered Certificate is registered, it shall be a condition
of
payment that the Certificate so surrendered shall be properly endorsed or
shall
be otherwise in proper form for transfer and that the Person requesting such
payment shall have paid all transfer and other Taxes (as defined in Section
2.17) required by reason of the issuance to a Person other than the registered
holder of the Certificate surrendered or such Person shall have established
to
the satisfaction of the Surviving Corporation that such Tax either has been
paid
or is not applicable. Until surrendered as contemplated by this Section 1.4,
each Certificate shall be deemed at all times after the Effective Time to
represent only the right to receive the Merger Consideration for each Share
in
cash as contemplated by Section 1.3(b) hereof, without interest
thereon. The Paying Agent shall accept such Certificates (or
affidavits of loss in lieu thereof) upon compliance with such reasonable
terms
and conditions as the Paying Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices.
(c)
Transfer Books;
No
Further Ownership Rights in the Shares. At the Effective Time,
the stock transfer books of the Company shall be closed, and thereafter there
shall be no further registration of transfers of Shares on the records of
the
Company or the Surviving Corporation. From and after the Effective
Time, the holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by applicable
Law (as defined in Section 2.6). If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled against delivery of the Merger Consideration, as provided
for
in Section 1.3(b) hereof, for each Share formerly represented by such
Certificates.
(d)
Termination of
Exchange Fund; No Liability. Any portion of the Exchange Fund
(including any interest received with respect thereto) that remains
undistributed
4
to
the holders of Shares or Company Options following the six-month anniversary
of
the Effective Time shall be delivered to the Surviving Corporation upon demand,
and any holders who have not theretofore complied with this Article I shall
thereafter be entitled to look only to the Surviving Corporation (subject
to
abandoned property, escheat or other similar Laws) only as general creditors
thereof with respect to the Merger Consideration, payable upon due surrender
of
their Certificates without any interest thereon. Notwithstanding the
foregoing, none of Parent, Merger Sub, the Company, the Surviving Corporation
or
the Paying Agent shall be liable to any Person in respect of any cash held
in
the Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar Law. If any Certificates or
Company Options shall not have been surrendered prior to one year after the
Effective Time (or immediately prior to such earlier date on which any cash
in
respect of such Certificate or Company Option would otherwise escheat to
or
become the property of any Governmental Authority), any such cash in respect
of
such Certificate or Company Option shall, to the extent permitted by applicable
Law, become the property of Parent, free and clear of all claims or interest
of
any Person previously entitled thereto.
(e)
Lost, Stolen or
Destroyed Certificates. In the event any Certificate(s) shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate(s) to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond in such
sum as
Parent may reasonably direct as indemnity against any claim that may be made
against any Party hereto or the Surviving Corporation with respect to such
Certificate(s), the Paying Agent will disburse the Merger Consideration pursuant
to Section 1.3(b) payable in respect of the Shares represented by such lost,
stolen or destroyed Certificate(s).
(f)
Withholding
Taxes. Parent and the Surviving Corporation shall be entitled
to deduct and withhold, or cause the Paying Agent to deduct and withhold,
from
the Merger Consideration payable to a holder of Shares pursuant to the Merger
any such amounts as are required under the Internal Revenue Code of 1986,
as
amended (the "Code"), or
any applicable provision of state, local or foreign Tax Law. To the
extent that amounts are so withheld by Parent or the Surviving Corporation,
or
caused to be withheld by the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder
of
the Shares in respect of which such deduction and withholding was made by
Parent, the Surviving Corporation or the Paying Agent, as the case may
be.
|
1.5
|
Options.
|
(a)
As of the Effective Time, all outstanding options to purchase Shares (the
"Company Options") granted
under the Company's 1996 Stock Option Plan, Amended and Restated Directors'
Stock Option Plan, 2005 Stock Option Plan or those certain stock option
agreements between the Company and those individuals listed on Section 1.5(a) of the
Company Disclosure Schedule (collectively, the "Company Option Plans"),
whether or not then vested, subject to the terms and conditions set forth
below
in this Section 1.5(a), shall, by virtue of the Merger and without any action
on
the part of any holder of any Company Option, become fully vested and converted
into the right to receive, as promptly as reasonably practicable following
the
Effective Time, the net amount of (A) the product of (i) the excess,
if any, of the Merger Consideration over the exercise price per share of
such
Company Option at the Effective Time, multiplied by (ii) the number of shares
subject to such Company Option, less (B) any applicable
5
withholdings
for Taxes (such net amount, the "Cash Amount," and the
aggregate of all such Cash Amounts, the "Total Cash
Amount"). If the exercise price per share of any Company
Option equals or exceeds the Merger Consideration, the Cash Amount therefor
shall be zero. Notwithstanding the foregoing, with respect to any
Person subject to Section 16(a) of the Securities Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder,
the
"Exchange Act"), the
Cash Amount, if any, to be paid to such Person in accordance with this Section
1.5(a) shall be paid as soon as practicable after the payment can be made
without liability to such Person under Section 16(b) of the Exchange
Act.
(b)
As of the Effective Time, except as provided in this Section 1.5, all rights
under any Company Option and any provision of the Company Option Plans and
any
other plan, program or arrangement providing for the issuance or grant of
any
other interest in respect of the capital stock of the Company shall be canceled,
shall no longer be outstanding and shall automatically cease to exist, and
each
holder of a Company Option shall cease to have any rights with respect thereto,
except the right to receive a Cash Payment, if applicable. The Company shall
take all such actions as are necessary to ensure that, as of and after the
Effective Time, except as provided in this Section 1.5, no Person shall have
any
right under the Company Option Plans or any other plan, program, agreement
or
arrangement with respect to securities of the Company, the Surviving Corporation
or any subsidiary thereof.
(c)
At or before the Effective Time, the Company shall cause to be effected any
necessary amendments to the Company Option Plans and any other resolutions,
consents or notices, in such form reasonably acceptable to Parent, required
under the Company Option Plans or any Company Options to give effect to the
foregoing provisions of this Section 1.5.
|
1.6
|
Dissenting
Shares.
|
Notwithstanding
any provision of this Agreement to the contrary, to the extent that holders
of
Shares are entitled to appraisal rights under Section 262 of the DGCL, Shares
issued and outstanding immediately prior to the Effective Time with respect
to
which the holder thereof has properly exercised and perfected the right to
dissent from the Merger and to be paid fair value in accordance with Section
262
of the DGCL and as to which, as of the Effective Time, the holder thereof
has
not failed to timely perfect or shall have not effectively withdrawn or lost
dissenters' rights under Section 262 of the DGCL (the "Dissenting Shares"), shall not
be converted into or represent a right to receive the Merger Consideration
into
which Shares are converted pursuant to Section 1.3(b) hereof, but the holder
thereof shall be entitled only to such rights as are granted by the
DGCL. Notwithstanding the immediately preceding sentence, if any
holder of Shares who demands dissenters' rights with respect to its Shares
under
the DGCL effectively withdraws or loses (through failure to perfect or
otherwise) its dissenters' rights, then as of the Effective Time or the
occurrence of such event, whichever later occurs, such holder's Shares shall
thereupon be deemed to have been converted as of the Effective Time into
the
right to receive the Merger Consideration as provided in Section 1.3(b) hereof,
without interest thereon, upon surrender of the Certificate or Certificates
formerly representing such Shares, and such Shares shall no longer be Dissenting
Shares. At the Effective Time, any holder of Dissenting Shares shall
cease to have any rights with respect thereto, except the rights provided
in
Section 262 of Delaware Law and as provided in this Section 1.6. The
Company shall give Parent (i) prompt written notice of any notice of intent
to
demand fair value for any Shares,
6
withdrawals
of such notices, and any other instruments served pursuant to the DGCL and
received by the Company, and (ii) the opportunity to direct all negotiations
and
proceedings with respect to demands for fair value of Shares under the
DGCL. The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any demands for fair
value
of Shares or offer to settle or settle any such demands.
|
1.7
|
Certificate
of
Incorporation and Bylaws.
|
Subject
to Section 5.3 hereof, at and after the Effective Time and by virtue of the
Merger, and until the same have been duly amended, (i) the Certificate of
Incorporation (as defined in Section 2.1) shall be amended and restated in
its
entirety to read as the certificate of incorporation of Merger Sub in effect
immediately prior to the Effective Time, except in each case that references
to
Merger Sub's name shall be replaced by references to "AmCOMP Incorporated",
and,
as so amended, shall be the certificate of incorporation of the Surviving
Corporation and (ii) the bylaws of Merger Sub, as in effect immediately prior
to
the Effective Time, shall be the bylaws of the Surviving
Corporation.
|
1.8
|
Directors
and
Officers.
|
At
and after the Effective Time, the directors of Merger Sub immediately prior
to
the Effective Time shall be the directors of the Surviving Corporation, and
the
individuals set forth on Schedule 1.8 of the Parent Disclosure Schedule (as
defined in Article III hereof) shall be the officers of the Surviving
Corporation, in each case until their respective successors are duly elected
or
appointed and qualify. Each of the Parties hereto shall take all
necessary action to effectuate the forgoing sentence. If, at the
Effective Time, a vacancy shall exist on the Board of Directors or in any
office
of the Surviving Corporation, such vacancy may thereafter be filled in the
manner provided by Law.
|
1.9
|
Other
Effects of the
Merger.
|
The
Merger shall have all further effects as specified in the applicable provisions
of the DGCL.
|
1.10
|
Additional
Actions.
|
If,
at any time after the Effective Time, the Surviving Corporation shall consider
or be advised that any deeds, bills of sale, assignments, assurances or any
other actions or things are necessary or desirable to vest, perfect or confirm
of record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of Merger Sub or
the
Company or otherwise carry out this Agreement, the officers and directors
of the
Surviving Corporation shall be authorized to execute and deliver, in the
name
and on behalf of Merger Sub or the Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf
of
Merger Sub or the Company, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out this Agreement.
7
ARTICLE
II
REPRESENTATIONS
AND
WARRANTIES OF THE COMPANY
The
following representations and warranties by the Company to Parent and Merger
Sub
are qualified by the Company Disclosure Schedule, which sets forth certain
disclosures concerning the Company, its subsidiaries (each a "Company Subsidiary" and
collectively, the "Company
Subsidiaries") and its business (the "Company Disclosure
Schedule")
(provided that
any fact or item disclosed with respect to one representation or warranty
shall
be deemed to be disclosed with respect to each other representation or warranty,
but only to the extent that the applicability of such fact or item with respect
to such other representation or warranty can reasonably be inferred from
the
disclosure with respect to such fact or item contained in the Company Disclosure
Schedule). The Company hereby represents and warrants to Parent and
Merger Sub as follows:
|
2.1
|
Due
Organization and
Good Standing.
|
Each
of the Company and the Company Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction
of its
organization and has all requisite corporate power and authority to own,
lease
and operate its properties and to carry on its business as now being
conducted. Each of the Company and the Company Subsidiaries is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the character of the property owned, leased or operated by it or
the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and
in
good standing would not reasonably be expected to have, individually or in
the
aggregate, a Company Material Adverse Effect. The Company has
heretofore made available to Parent accurate and complete copies of the
Company's Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation")
and its Amended and Restated Bylaws (the "Bylaws") and the equivalent
organizational documents of each of the Company Subsidiaries, each as currently
in effect. None of the Company or any Company Subsidiary is in
violation of any provision of the Certificate of Incorporation, the Bylaws
or
its equivalent organizational documents.
For
purposes of this Agreement, the term "Company Material Adverse
Effect" shall mean any occurrence, state of facts, change, event, effect
or circumstance that, individually or in the aggregate, (a) has, or would
reasonably be expected to have, a material adverse effect on the assets,
liabilities, business, results of operations or financial condition of the
Company and the Company Subsidiaries taken as a whole, other than any
occurrence, state of facts, change, event, effect or circumstance to the
extent
resulting from (i) changes in general economic conditions or financial, banking
or securities markets in general; (ii) changes in the workers' compensation
insurance industry generally; (iii) any changes in statutes, rules, or
regulations applicable to the Company or any Company Subsidiary or any of
their
respective properties or assets; (iv) any outbreak or escalation of hostilities
or war (whether declared or not declared) or any act of terrorism whether
or not
pursuant to the declaration of a national emergency or war; (v) the announcement
of this Agreement and the transactions contemplated hereby (including the
Merger); (vi) changes in United States of America generally accepted accounting
principles ("GAAP") or
statutory accounting principles ("SAP") or any authoritative
interpretation thereof
8
promulgated
after the date hereof by the Financial Accounting Standards Board or the
National Association of Insurance Commissioners, respectively; (vii) the
availability or cost of financing to Parent or Merger Sub (for the avoidance
of
doubt, the exception in this clause (vii) shall not prevent or otherwise
affect
a determination that the underlying cause of such unavailability or cost
constitutes a Company Material Adverse Effect); or (ix) changes in loss reserves
occasioned by the report of the Company's independent actuary as at December
31,
2007, if such changes, when aggregated with other changes in loss reserves
for
the fiscal year 2007, are not less favorable than changes in loss reserves
for
the fiscal year 2006, in the aggregate; provided, however,
that the
exceptions set forth in clauses (i), (ii), (iii) and (vi) shall not be given
effect to the extent that such occurrence, state of facts, change, event,
effect
or circumstance has a disproportionate adverse effect on the Company and
the
Company Subsidiaries taken as a whole as compared to the effect on other
Persons
operating in the industry generally, or (b) would, or would reasonably be
expected to, prevent or materially delay or impair the ability of the Company
or
the Company Subsidiaries to consummate the Merger and the other transactions
contemplated by this Agreement.
|
2.2
|
Capitalization.
|
(a)
The authorized capital stock of the Company consists of 45,000,000 shares
of
Common Stock and 5,000,000 shares of preferred stock, par value $.01 per
share
(the "Preferred Stock"
and, together with the Common Stock, the "Company Capital
Stock"). As of the date hereof, (i) 15,290,181 shares of
Common Stock were issued and outstanding, (ii) 613,895 shares of Common
Stock were held in treasury, (iii) no shares of Common Stock were held by
any
Company Subsidiary and (iv) no shares of Preferred Stock are issued or
outstanding. As of the date hereof, there were 386,010 shares of
Common Stock authorized and reserved for issuance pursuant to outstanding
Company Options. All of the outstanding shares of Company Capital
Stock are, and all shares of Company Capital Stock that may be issued pursuant
to the exercise of outstanding Company Options will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and non-assessable and not subject to any preemptive or similar
rights. None of the outstanding securities of the Company has been
issued in violation of any foreign, federal or state securities
Laws. Except as set forth above and in Section 2.2(f) below, no
shares of Company Capital Stock, or other equity or voting interests in the
Company, or options, warrants or other rights to acquire any such stock or
securities were issued, reserved for issuance or outstanding. Since
February 9, 2006, the Company has not issued any Common Stock other than
pursuant to the exercise of Company Options outstanding on such date, has
not
granted any restricted stock, warrants or other rights to purchase Company
Capital Stock or entered into any other agreements or commitments to issue
any
Common Stock and has not split, combined or reclassified any shares of Company
Capital Stock.
(b)
Except as set forth above or as set forth in Section 2.2(b) of the
Company Disclosure Schedule, (i) the Company directly or indirectly owns
all of
the capital stock of, or other equity interests in, the Company Subsidiaries,
(ii) there are no (x) outstanding options, warrants, puts, calls, convertible
securities, preemptive or similar rights, (y) bonds, debentures,
notes or other indebtedness having general voting rights or that are convertible
or exchangeable into securities having such rights (collectively, "Voting Debt") or (z)
subscriptions or other rights, agreements, arrangements, contracts or
commitments of any character, relating to the
9
issued
or unissued capital stock of, or other equity interests in, the Company or
any
of the Company Subsidiaries or obligating the Company or any of the Company
Subsidiaries to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered, sold or repurchased any options or shares of capital
stock or Voting Debt of, or other equity interest in, the Company or any
of the
Company Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of the Company
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment and (iii)
there are no outstanding obligations of the Company or any of the Company
Subsidiaries to repurchase, redeem or otherwise acquire any Company Capital
Stock, or other capital stock of, or equity interests in, the Company or
any of
the Company Subsidiaries or to provide funds to make any investment (in the
form
of a loan, capital contribution or otherwise) in any other entity.
(c)
There are no stockholders agreements, voting trusts or other agreements or
understandings to which the Company or any Company Subsidiary is a party
with
respect to the voting of the Company Capital Stock or the capital stock or
equity interests of any Company Subsidiary.
(d)
Following the Effective Time, no holder of Company Options will have any
right
to receive shares of common stock of the Surviving Corporation upon exercise
of
Company Options.
(e)
Except as disclosed in Section 2.2(e) of the
Company Disclosure Schedule, no Indebtedness of the Company or any of the
Company Subsidiaries contains any restriction upon (i) the prepayment of
any of
such Indebtedness, (ii) the incurrence of Indebtedness by the Company or
any of
the Company Subsidiaries, or (iii) the ability of the Company or any of the
Company Subsidiaries to grant any Encumbrance (as defined in Section 2.6)
on its
properties or assets. As used in this Agreement, "Indebtedness" means (A) all
indebtedness for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (B)
any
other indebtedness that is evidenced by a note, bond, debenture, credit
agreement or similar instrument, (C) all obligations under financing leases,
(D)
all obligations in respect of acceptances issued or created, (E) all liabilities
secured by an Encumbrance on any property and (F) all guarantee
obligations.
(f)
Section 2.2(f)
of the Company Disclosure Schedule lists (i) all Company Options outstanding
as
of the date hereof, (ii) the name of the holder of each Company Option, (iii)
the number of shares of Common Stock subject to such Company Options, (iv)
the
date of grant of such Company Options, (v) the exercise price of such Company
Options, (vi) the expiration date of such Company Options and the vesting
schedule of such Company Options, (vii) whether the holder is an employee
of the
Company, (viii) the Company Stock Plan under which such Company Option was
granted, (ix) whether such Company Option is an "incentive stock
option" (as defined in Section 422 of the Code) or a non-qualified stock
option,
(x) the extent to which such Company Option was vested and exercisable as
of the
date hereof, and (xi) whether such Company Option was granted with a per
share
exercise price lower than the fair market value of one Share on the date
of
grant as determined in good faith by the administrator of the applicable
Company
Stock Plan (as determined pursuant to the terms of each such
plan).
10
(g)
No agreement or arrangement requires consent or approval from the holder
of any
Company Option to effectuate the terms of this Agreement.
(h)
Since February 9, 2006, the Company has not declared or paid any dividend
or
distribution in respect of the Company Capital Stock and, other than as set
forth on Section
2.2(h) of the Company Disclosure Schedule, has not repurchased, redeemed
or otherwise acquired any Company Capital Stock, and the Board has not
authorized any of the foregoing.
|
2.3
|
Subsidiaries.
|
(a)
Section 2.3(a)
of the Company Disclosure Schedule contains a true, complete and correct
list of
all Company Subsidiaries and their respective jurisdictions of
organization. Each Company Subsidiary is wholly owned, directly or
indirectly, by the Company, except as set forth in Section 2.3(a) of the
Company Disclosure Schedule. All of the capital stock and other
equity interests of the Company Subsidiaries are owned, directly or indirectly,
by the Company free and clear of any Encumbrance with respect thereto, except
as
set forth in Section
2.3(a) of the Company Disclosure Schedule. All of the
outstanding shares of capital stock or other equity interests in each of
the
Company Subsidiaries are duly authorized, validly issued, fully paid and
non-assessable and were issued free of preemptive rights and in compliance
with
applicable Laws. No equity securities or other equity interests of
any of the Company Subsidiaries are or may become required to be issued or
purchased by reason of any options, warrants, rights to subscribe to, puts,
calls or commitments of any character whatsoever relating to, or securities
or
rights convertible into or exchangeable for, shares of any capital stock
of, or
other equity interests in, any Company Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Company Subsidiary
is
bound to issue additional shares of its capital stock or other equity interests,
or options, warrants or rights to purchase or acquire any additional shares
of
its capital stock or other equity interests or securities convertible into
or
exchangeable for such shares or interests. Neither the Company nor
any Company Subsidiary owns any shares of capital stock or other equity or
voting interests in (including any securities exercisable or exchangeable
for or
convertible into capital stock or other equity or voting interests in) any
other
Person, other than capital stock of the Company Subsidiaries owned by the
Company or another Company Subsidiary.
(b)
The Company conducts all of its insurance operations through certain of the
Company Subsidiaries. Section 2.3(b) of the
Company Disclosure Schedule lists the jurisdiction of domicile of each Company
Subsidiary conducting insurance operations and all jurisdictions in which
each
such Company Subsidiary is licensed to write insurance
business. Neither the Company nor any Company Subsidiary is or has
been since January 1, 2005 "commercially domiciled" in any
jurisdiction other than its jurisdiction of organization or is or since January
1, 2005 otherwise has been treated as domiciled in a jurisdiction other than
its
jurisdiction of organization. Except as set forth in Section 2.3(b) of the
Company Disclosure Schedule, each of the Company Subsidiaries conducting
insurance operations is (i) duly licensed or authorized as an insurance company
in its state of organization, (ii) duly licensed or authorized as an insurance
company in each other jurisdiction where it is required to be so licensed
or
authorized and (iii) duly authorized in its jurisdiction of incorporation
and
each other applicable jurisdiction to write each line of business reported
as
being written in the Company SAP Statements (as defined in Section
2.7). All of the Company Permits of such Company
11
Subsidiaries
conducting insurance operations are in full force and effect and there is
no
proceeding or, to the knowledge of the Company, investigation to which the
Company or any Company Subsidiary is subject before a Governmental Authority
that is pending or, to the knowledge of the Company, threatened that would
reasonably be expected to lead to the revocation, amendment, failure to renew,
limitation, suspension or restriction of any such Company Permits.
|
2.4
|
Authorization;
Binding
Agreement.
|
The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger,
have
been duly and validly authorized and approved by the Board. The Board
has taken all action necessary to render inapplicable to this Agreement,
the
Merger, the Voting Agreements and the other transactions contemplated by
this
Agreement the provisions of Section 203 of the DGCL such that said provisions
will not apply to this Agreement, the Merger, the Voting Agreements and the
other transactions contemplated by this Agreement and such action is effective
and in force, and no other corporate proceedings on the part of the Company
are
necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby, other than receipt of the
Company Stockholder Approval (as defined in Section 2.20). This
Agreement has been duly and validly executed and delivered by the Company
and
(assuming the due authorization, execution and delivery hereof by Parent
and
Merger Sub) constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting the enforcement of creditors' rights generally, and
the
fact that equitable remedies or relief (including, but not limited to, the
remedy of specific performance) are subject to the discretion of the court
from
which such relief may be sought (collectively, the "Enforceability
Exceptions").
|
2.5
|
Governmental
Approvals.
|
No
consent, approval, waiver, authorization or permit of, or notice to or
declaration or filing with (each, a "Consent"), any nation or
government, any state or other political subdivision thereof, any entity,
authority or body exercising executive, legislative, judicial, regulatory
or
administrative functions of or pertaining to government, including any
governmental or regulatory authority, agency, department, board, commission,
administration or instrumentality, any court, tribunal or arbitrator or any
self-regulatory organization (each, a "Governmental Authority") on
the part of the Company or any of the Company Subsidiaries is required to
be
obtained or made in connection with the execution, delivery or performance
by
the Company of this Agreement or the consummation by the Company of the
transactions contemplated hereby (including the Merger), other than (i) the
filing of the Certificate of Merger with the Secretary of State in accordance
with the DGCL, (ii) such filings as may be required with the Securities and
Exchange Commission (the "SEC"), foreign and
state
securities Laws administrators and The Nasdaq Stock Market, (iii) such filings
as may be required in any jurisdiction where the Company or any of its
subsidiaries is qualified or authorized to do business as a foreign corporation
in order to maintain such qualification or authorization, (iv)
12
pursuant
to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and other
Antitrust Laws, (v) those consents, approvals, authorizations, waivers, permits,
filings or notices set forth in Section 2.5 of the
Company Disclosure Schedule, and (vi) those Consents that, if not obtained
or
given, would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
|
2.6
|
No
Violations.
|
The
execution and delivery by the Company of this Agreement, the consummation
by the
Company of the Merger and the other transactions contemplated hereby, and
compliance by the Company with any of the provisions hereof, will not (i)
conflict with or violate any provision of the Certificate of Incorporation
or
Bylaws or equivalent organizational documents of the Company or any of the
Company Subsidiaries, (ii) except as set forth in Section 2.6 of the
Company Disclosure Schedule, require any Consent under or result in a violation
or breach of, or constitute (with or without due notice or lapse of time
or
both) a default (or give rise to any right of termination, cancellation,
amendment or acceleration) under, any Company Material Contract (as defined
in
Section 2.14) to which the Company or any of the Company Subsidiaries is
a party
or by which the Company's or any of the Company Subsidiaries' assets are
bound,
(iii) result (immediately or with the passage of time or otherwise) in the
creation or imposition of any liens, claims, mortgages, pledges, security
interests, equities, options, assignments, hypothecations, preferences,
priorities, deposit arrangements, easements, proxies, voting trusts or charges
of any kind or restrictions (whether on voting, sale, transfer, disposition
or
otherwise) or other encumbrances or restrictions of any nature whatsoever,
whether imposed by agreement, Law or equity, or any conditional sale contract,
title retention contract or other contract to give or refrain from giving
any of
the foregoing (the "Encumbrances") upon any of the
properties, rights or assets of the Company or any of the Company Subsidiaries
or (iv) subject to obtaining the Consents from Governmental Authorities referred
to in Section 2.5 hereof, conflict with, contravene or violate in any respect
any foreign, federal, state or local Order, statute, law, rule, regulation,
ordinance, writ, injunction, arbitration award, directive, judgment, decree,
principle of common law, constitution, treaty or any interpretation thereof
enacted, promulgated, issued, enforced or entered by any Governmental Authority
(each, a "Law" and
collectively, the "Laws") to which the
Company or
any of the Company Subsidiaries or any of their respective assets or properties
is subject.
|
2.7
|
SEC
Filings; Company
Financial Statements.
|
(a)
The Company has filed all forms, reports, schedules, statements and other
documents required to be filed or furnished by the Company with the SEC since
February 1, 2006 under the Exchange Act or the Securities Act of 1933, as
amended (the "Securities
Act"), together with any amendments, restatements or supplements thereto,
and will file all such forms, reports, schedules, statements and other documents
required to be filed subsequent to the date of this Agreement. All
such required forms, reports and documents (including those that the Company
may
file subsequent to the date hereof) are referred to herein as the "Company SEC
Reports." At the time when filed (or if amended or superseded
by a subsequent filing prior to the date hereof then on the date of such
later
filing), the Company SEC Reports, as amended to date, (i) complied, and each
of
the Company SEC Reports to be filed subsequent to the date hereof will comply,
in all material respects with the requirements of the Securities Act or
the
13
Exchange
Act, as the case may be, the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations of the SEC thereunder applicable to such Company SEC Reports
and
(ii) did not at the time they were filed, and will not at the time they will
be
filed, as the case may be, contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
in
order to make the statements therein, in the light of the circumstances under
which they were made, or will be made, as the case may be, not
misleading.
(b)
The consolidated financial statements (including, in each case, any related
notes thereto) contained in the Company SEC Reports as amended to date (the
"Company Financials")
and in each Company SEC Report filed after the date hereof until the Effective
Time, (i) was or will be prepared from, in accordance with, and in all material
respects accurately reflects or will reflect the Company's books and records
as
of the times and for the periods referred to therein, (ii) complied or will
comply in all material respects with the published rules and regulations
of the
SEC with respect thereto, (iii) was or will be prepared in accordance with
GAAP
applied on a consistent basis throughout the periods involved (except as
may be
indicated in the notes thereto or, in the case of unaudited interim financial
statements, as may be permitted by the SEC with respect to Quarterly Reports
on
Form 10-Q under the Exchange Act), and (iv) fairly present or will fairly
present in all material respects the consolidated financial position of the
Company as of the respective dates thereof and the consolidated results of
the
Company's operations and cash flows for the periods indicated, except that
the
unaudited interim financial statements may not contain footnotes and were,
are
or will be subject to normal and recurring year-end adjustments. The
consolidated balance sheet of the Company contained in the Company SEC Report
as
of September 30, 2007 (the "Balance Sheet Date") as filed
with the SEC before the date hereof is hereinafter referred to as the "Company Balance
Sheet."
(c)
The Company has established and maintains disclosure controls and procedures
and
internal controls over financial reporting (as such terms are defined in
paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act)
as
required by Rule 13a-15 under the Exchange Act. The Company's disclosure
controls and procedures are designed to ensure that information required
to be
disclosed in the Company's periodic reports filed or furnished under the
Exchange Act are recorded, processed, summarized and reported within the
required time periods and that all such information is accumulated and
communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure and to make the certifications required
pursuant to Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002. To the
Company's knowledge (as defined in Section 8.7), the Company has disclosed,
based on its most recent evaluation of internal controls over financial
reporting, to the Company's outside auditors and the audit committee of the
Board (i) all significant deficiencies or material weaknesses in the design
or
operation of the Company's internal controls over financial reporting that
are
reasonably likely to adversely affect the Company's ability to record, process,
summarize and report financial information and (ii) any fraud, whether or
not
material, that involves management or other employees who have a significant
role in the Company's internal controls over financial reporting.
(d)
Except as set forth in Section 2.7(d) of the
Company Disclosure Schedule, since February 9, 2006, (i) none of the Company,
any Company Subsidiary, or any director, officer, auditor or accountant of
the
Company or any Company Subsidiary or any employee of
14
the
Company or Company Subsidiary whose position includes monitoring the Company's
audit committee complaint reporting procedures has received any complaint,
allegation, assertion or claim, whether or not in writing, regarding the
accounting or auditing practices, procedures, methodologies or methods of
the
Company or any Company Subsidiary or their respective internal accounting
controls, including any complaint, allegation, assertion or claim that the
Company or any Company Subsidiary has engaged in questionable accounting
or
auditing practices, and (ii) no attorney representing the Company or any
Company
Subsidiary, whether or not employed by the Company or any Company Subsidiary,
has reported evidence of any violation of securities Laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors,
employees or agents to the Board or any committee thereof or to any director
or
executive officer of the Company.
(e)
As used herein, the term "Company SAP Statements" means
the statutory statements of each of the Company Subsidiaries as filed with
the
Florida Office of Insurance Regulation for the years ended December 31, 2005
and
December 31, 2006 and the quarterly period ended September 30, 2007 and any
such
annual and quarterly statutory statements filed subsequent to the date
hereof. The Company has made available to Parent true and complete
copies of the Company SAP Statements filed as of the date of this Agreement
with
respect to the Company Subsidiaries required to file such Company SAP
Statements. Each of the Company Subsidiaries has filed or submitted,
or will file or submit, all Company SAP Statements required to be filed with
or
submitted to the Florida Office of Insurance Regulation on forms prescribed
or
permitted by the Florida Office of Insurance Regulation. The Company
SAP Statements were, and any Company SAP Statements filed after the date
hereof
will be, prepared in all material respects in conformity with SAP consistently
applied for the periods covered thereby (except as may be indicated in the
notes
thereto), and the Company SAP Statements present, and any Company SAP Statements
filed after the date hereof will present, in all material respects the statutory
financial position of such Company Subsidiaries as at the respective dates
thereof and the results of operations of such Company Subsidiaries for the
respective periods then ended. The Company SAP Statements complied,
and the Company SAP Statements filed after the date hereof will comply, in
all
material respects with all applicable Laws when filed, and no deficiency
has
been asserted with respect to any Company SAP Statements filed prior to the
date
hereof by the Florida Office of Insurance Regulation or any other Governmental
Authority. The annual statutory balance sheets and income statements
included in the Company SAP Statements as of the date hereof have been, where
required by applicable Law, audited by an independent accounting firm of
recognized national or international reputation, and the Company has made
available to Parent true and complete copies of all audit opinions related
thereto. Except as indicated therein, all assets that are reflected
as admitted assets on the Company SAP Statements comply in all material respects
with all applicable Laws. There are no permitted practices utilized
by the Company or any Company Subsidiary in the preparation of the Company
SAP
Statements.
(f)
The policy reserves and other actuarial amounts carried on the Company SAP
Statements of each Company Subsidiary, as of the respective dates of such
Company SAP Statements, (i) were in compliance in all material respects with
the
requirements for reserves established by the Florida Office of Insurance
Regulation, (ii) have been computed in all material respects in accordance
with
the requirements for reserves established by the Florida Office of Insurance
Regulation, (iii) were determined in all material respects in accordance
with
generally
15
accepted
actuarial principles in effect at such time, consistently applied and prepared
in accordance with applicable SAP, (iv) were computed on the basis of
methodologies consistent in all material respects with those used in computing
the corresponding reserves in prior fiscal years, except as otherwise noted
in
the Company SAP Statements, (v) have been computed on the basis of assumptions
consistent with those used to compute the corresponding items in such financial
statements, (vi) were fairly stated in all material respects in accordance
with
sound actuarial principles, and (vii) include provisions for all actuarial
reserves and related items which ought to be established in accordance with
applicable Laws and in accordance, in all material respects, with prudent
insurance practices generally followed in the insurance industry. To
the knowledge of the Company, there are no facts or circumstances that could
reasonably necessitate any material change in such reserves above those
reflected in the Company SAP Statements (other than increases consistent
with
past experience resulting from the ordinary course of business).
(g)
Except (i) as disclosed in Section 2.7(g)
of the Company Disclosure Schedule, (ii) for assessments of residual or
state mandated funds and associations and (iii) workers compensation claims
made
in the ordinary course of business under insurance policies issued by the
Company, no claim or assessment is pending or, to the knowledge of the Company,
threatened against any Company Subsidiary.
|
2.8
|
Absence
of Certain
Changes.
|
(a)
Except as disclosed in Section 2.8 of the
Company Disclosure Schedule, since the Balance Sheet Date, the Company and
the
Company Subsidiaries have conducted their respective businesses in the ordinary
course of business consistent with past practice and there has not occurred
any
action that would constitute a breach of Section 4.1 if such action were
to
occur or be taken after the date of this Agreement.
(b)
Since the Balance Sheet Date, there has not been any fact, change, effect,
occurrence, event, development or state of circumstances that has had or
would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
|
2.9
|
Absence
of Undisclosed
Liabilities.
|
Except
(a) as adequately reflected or reserved against in the Company Balance Sheet,
(b) for liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date or (c) as set
forth
on Section 2.9
of the Company Disclosure Schedule, neither the Company nor any of the Company
Subsidiaries has incurred any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, and whether or not required by GAAP
to
be recognized, reflected or disclosed on a consolidated balance sheet of
the
Company or in the notes thereto.
|
2.10
|
Compliance
with
Laws.
|
Neither
the Company nor any of the Company Subsidiaries is in conflict with, or in
default or violation of, nor since January 1, 2005 has it received any written
notice of any conflict with, or default or violation of, (A) any applicable
Law
by which it or any property or asset of the Company or any Company Subsidiary
is
bound or affected, or (B) any contract (including any Company Material
Contract), agreement, lease, license, permit, franchise or
other
16
instrument
or obligation to which the Company or any Company Subsidiary is a party or
by
which the Company or any Company Subsidiary or any property, asset or right
of
the Company or any Company Subsidiary is bound or affected, except, in each
case, for any such conflicts, defaults or violations that would not reasonably
be expected to be material to the Company or any of its
Subsidiaries. Notwithstanding the generality of the foregoing, (x)
each Company Subsidiary and, to the knowledge of the Company, its agents,
have
marketed, sold and issued insurance products in compliance in all material
respects with all Laws applicable to the business of such Company Subsidiary
and
in the respective jurisdictions in which such products have been sold, (y)
since
January 1, 2005, the Company and each Company Subsidiary have given or made
all
required notices, submissions, reports or other filings under applicable
Law,
including insurance holding company statutes, and (z) all contracts, agreements,
arrangements and transactions in effect between any Company Subsidiary and
any
affiliate are in compliance in all material respects with the requirements
of
all applicable insurance holding company statutes. In addition,
except as disclosed in Section 2.10 of the
Company Disclosure Schedule, (i) there is no pending or, to the knowledge
of the
Company, threatened proceeding or investigation to which the Company or a
Company Subsidiary is subject before any Governmental Authority regarding
whether any of the Company Subsidiaries has violated, and none of the Company
or
any Company Subsidiary has received written or, to the knowledge (without
the
need for due inquiry) of the Company, oral (or otherwise has any knowledge
of
any) notice since January 1, 2005, of any material violation of or noncompliance
with, any Law applicable to the Company or any Company Subsidiary, or directing
the Company or any Company Subsidiary to take any remedial action with respect
to such applicable Law or otherwise, and no material deficiencies of the
Company
or any Company Subsidiary have been asserted to the Company or any Company
Subsidiary in writing or, to the knowledge (without the need for due inquiry)
of
the Company, orally, by any Governmental Authority with respect to possible
violations of, any applicable Laws; and (ii) since January 1, 2005, the Company
and the Company Subsidiaries have filed all material reports, statements,
documents, registrations, filings or submissions required to be filed with
any
insurance regulatory authority or Governmental Authority, and all such reports,
registrations, filings and submissions are in compliance (and complied at
the
relevant time) with applicable Law and no material deficiencies have been
asserted by any such Governmental Authority since January 1, 2005 with respect
to any reports, statements, documents, registrations, filings or submissions
required to be filed with respect to the Company or the Company Subsidiaries
with any Governmental Authority that have not been remedied. Since
January 1, 2005, the businesses of the Company and each Company Subsidiary
are
and have been conducted in compliance in all material respects with any
applicable Laws.
|
2.11
|
Regulatory
Agreements;
Permits.
|
(a)
Except as disclosed in Section 2.11 of the
Company Disclosure Schedule, there are no (1) written agreements, consent
agreements, memoranda of understanding, commitment letters, cease and desist
orders, or similar undertakings binding on the Company Subsidiaries to which
the
Company or any Company Subsidiary is a party, on the one hand, and any
Governmental Authority is a party or addressee, on the other hand, (2) Orders
or
directives of or supervisory letters from a Governmental Authority specifically
with respect to the Company or any Company Subsidiary, or (3) resolutions
or
policies or procedures adopted by the Company or a Company Subsidiary at
the
request of a Governmental Authority, that (A) limit in any respect the
ability of the Company or any of the Company Subsidiaries to
issue
17
insurance
policies, (B) in any manner impose any requirements on the Company or any
of the
Company Subsidiaries in respect of risk-based capital requirements that add
to
or otherwise modify in any respect the risk-based capital requirements imposed
under applicable Laws, (C) require the Company or any of its affiliates to
make capital contributions, purchase surplus notes or make loans to a Company
Subsidiary, or (D) in any manner relate to the ability of the Company or
any of
the Company Subsidiaries to pay dividends or otherwise restrict the conduct
of
business of the Company or any of the Company Subsidiaries in any
respect.
(b)
The Company and the Company Subsidiaries hold all permits, licenses, franchises,
grants, authorizations, consents, exceptions, variances, exemptions, orders
and
other governmental authorizations, certificates, consents and approvals
necessary to lawfully conduct their businesses as presently conducted and
contemplated to be conducted, and to own, lease and operate their assets
and
properties (collectively, the "Company Permits"), all of
which are in full force and effect, and no suspension or cancellation of
any of
the Company Permits is pending or, to the knowledge of the Company, threatened,
except where the failure of any Company Permits to have been in full force
and
effect, or the suspension or cancellation of any of the Company Permits,
would
not reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. The Company and the Company Subsidiaries are
not in violation in any material respect of the terms of any Company
Permit.
(c)
Except as disclosed in Section 2.11(c) of
the Company Disclosure Schedule, no investigation, review or market conduct
examination by any Governmental Authority with respect to the Company or
any
Company Subsidiary is pending or, to the knowledge of the Company, threatened,
nor has any Governmental Authority indicated an intention to conduct any
such
investigation or review.
|
2.12
|
Litigation.
|
Except
as disclosed in Section 2.12 of the Company Disclosure Schedule, there is
no
private or governmental action, suit, proceeding, litigation, claim, arbitration
or investigation (each, an "Action") pending before
any
arbitrator, agency, court or tribunal, foreign or domestic, or, to the knowledge
of the Company, threatened against the Company, any of the Company Subsidiaries
or any of their respective properties, rights or assets or any of their
respective officers or directors (in their capacities as such) that would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. There is no decree, directive, order, writ,
judgment, stipulation, determination, decision, award, injunction, temporary
restraining order, cease and desist order or other order by, or any capital
plan, supervisory agreement or memorandum of understanding with any Governmental
Authority (each, an "Order") binding against
the
Company, any of the Company Subsidiaries or any of their respective properties,
rights or assets or any of their respective officers or directors (in their
capacities as such) that would prohibit, prevent, enjoin, restrict or materially
alter or delay any of the transactions contemplated by this Agreement (including
the Merger), or that would reasonably be expected to have, individually or
in
the aggregate, a Company Material Adverse Effect. The Company and the
Company Subsidiaries are in material compliance with all Orders, if any,
set
forth in Section 2.12 of the Company Disclosure Schedule. Except as
disclosed in Section 2.12 of the Company Disclosure Schedule, there is no
material Action that the Company or any of the Company Subsidiaries has pending
against other parties.
18
|
2.13
|
Restrictions
on
Business Activities.
|
There
is no agreement or Order binding upon the Company or any of the Company
Subsidiaries that has or could reasonably be expected to have the effect
of
prohibiting, preventing, restricting or impairing in any respect any business
practice of the Company or any of the Company Subsidiaries, any acquisition
of
property by the Company or any of the Company Subsidiaries, the conduct of
business by the Company or any of the Company Subsidiaries, or restricting
in
any respect the ability of the Company or any of the Company Subsidiaries
from
engaging in business or from competing with other parties.
|
2.14
|
Material
Contracts.
|
(a)
Section 2.14 of
the Company Disclosure Schedule sets forth a list of, and the Company has
made
available to Parent true, correct and complete copies of, each written contract,
agreement, commitment, arrangement, lease or plan and each other instrument
to
which the Company or any Company Subsidiary is a party or by which the Company
or any Company Subsidiary is bound as of the date hereof (each, a "Company Material Contract")
that:
(ii)
contains covenants that materially limit the ability of the Company (or which,
following the consummation of the Merger, could materially restrict the ability
of the Surviving Corporation or any of its affiliates) (A) to compete in
any
line of business or with any Person or in any geographic area or to sell,
supply, price, develop or distribute any service, product or asset, including
any non-competition covenants, exclusivity restrictions, rights of first
refusal
or most-favored pricing clauses or (B) to purchase or acquire an interest
in any
other entity, except, in each case, for any such contract that may be canceled
without any penalty or other liability to the Company or any Company Subsidiary
upon notice of 60 days or less;
(iii)
with respect to a joint venture, partnership, limited liability or other
similar
agreement or arrangement relating to the formation, creation, operation,
management or control of any partnership or joint venture that is material
to
the business of the Company and the Company Subsidiaries, taken as a
whole;
(iv)
involves any exchange traded, over-the-counter or other swap, cap, floor,
collar, futures contract, forward contract, option or other derivative financial
instrument or contract, based on any commodity, security, instrument, asset,
rate or index of any kind or nature whatsoever, whether tangible or intangible,
including currencies, interest rates, foreign currency and indices;
(v)
relates to indebtedness (whether incurred, assumed, guaranteed or secured
by any
asset) having an outstanding principal amount in excess of $1.0
million;
19
(vi)
was entered into after January 1, 2005 or has not yet been consummated, and
involves the acquisition or disposition, directly or indirectly (by merger
or
otherwise), of assets or capital stock or other equity interests of another
Person;
(vii)
by its terms calls for aggregate payments by the Company and the Company
Subsidiaries under such contract of more than $250,000 per year;
(viii) with
respect to any material acquisition, pursuant to which the Company or any
Company Subsidiary has (A) any continuing indemnification obligations or
(B) any
"earn-out" or other contingent payment
obligations;
(ix)
involves any directors or executive officers of the Company that cannot be
cancelled by the Company (or the applicable Company Subsidiary) within 60
days'
notice without liability, penalty or premium;
(x)
obligates the Company or any of its subsidiaries to provide indemnification
or a
guarantee in excess of $100,000;
(xi)
obligates the Company to make any capital commitment or expenditure (including
pursuant to any joint venture);
(xii)
relates to the development, ownership, licensing or use of any Intellectual
Property material to the business of the Company or any of its subsidiaries,
other than "shrink wrap," "click
wrap," and
"off the shelf" software agreements and
other agreements for
software commercially available on reasonable terms to the public generally
with
license, maintenance, support and other fees of less than $50,000 per year
(collectively, "Off-the-Shelf
Software Agreements"); or
(xiii) provides
for any confidentiality or standstill arrangements.
(b)
With respect to each Company Material Contract, except as set forth in Section 2.14 of the
Company Disclosure Schedule: (i) the Company Material Contract is
legal, valid, binding and enforceable against the Company or the Company
Subsidiary party thereto and, to the Company's knowledge, the other party
thereto, and in full force and effect; (ii) the Company Material Contract
will
continue to be legal, valid, binding and enforceable against the Surviving
Corporation or such Company Subsidiary and, to the Company's knowledge, the
other party thereto, and in full force and effect on identical terms following
the Effective Time; (iii) neither the Company nor any of the Company
Subsidiaries is in breach or default in any material respect, and no event
has
occurred that with the passage of time or giving of notice or both would
constitute such a breach or default by the Company or any of the Company
Subsidiaries, or permit termination or acceleration by the other party, under
the Company Material Contract; and (iv) to the Company's knowledge, no other
party to the Company Material Contract is in breach or default in any material
respect, and no event has occurred that with the passage of time or giving
of
notice or both would constitute such a breach or default by such other party,
or
permit termination or acceleration by the Company or any of the Company
Subsidiaries, under such Company Material Contract.
20
|
2.15
|
Intellectual
Property.
|
(a)
Section 2.15(a)
of the Company Disclosure Schedule contains a list of (A) all registered
Intellectual Property, Intellectual Property that is the subject of a pending
application for registration, and material unregistered Intellectual Property,
in each case that is, owned by the Company or any of the Company Subsidiaries
and (B) all material Intellectual Property, other than Off-the-Shelf Software
Agreements, licensed, used or held for use by the Company or any of the Company
Subsidiaries in the conduct of its business ("Licensed Intellectual
Property"). Each of the Company and the Company Subsidiaries
has (i) all right, title and interest in and to all Company Intellectual
Property owned by it, (the "Company Intellectual
Property") free and clear of all Encumbrances, other than Permitted
Encumbrances (as defined in Section 2.21) and (ii) all necessary proprietary
rights in and to all of its Licensed Intellectual Property, free and clear
of
all Encumbrances, other than Permitted Encumbrances. Neither the
Company nor any of the Company Subsidiaries has received any written
communication alleging that it has infringed, diluted or misappropriated,
or, by
conducting its business as proposed, would infringe, dilute or misappropriate,
the Intellectual Property rights of any Person and there is no valid basis
for
any such allegation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
impair or materially alter the Company's or any Company Subsidiary's rights
to
any Company Intellectual Property or Licensed Intellectual
Property. To the knowledge of the Company, there is no unauthorized
use, infringement or misappropriation of the Company Intellectual Property
or
Licensed Intellectual Property by any third party. All of the rights
within the Company Intellectual Property and Licensed Intellectual Property
are
valid, enforceable and subsisting, and there is no Action that is pending
or, to
the Company's knowledge, threatened that challenges the rights of the Company
or
any of the Company Subsidiaries in respect of any Company Intellectual Property
or Licensed Intellectual Property or the validity, enforceability or
effectiveness thereof. The Company Intellectual Property and the
Licensed Intellectual Property constitute all material Intellectual Property
used in or necessary for the operation by the Company and the Company
Subsidiaries of their respective businesses as currently
conducted. Neither the Company nor any of the Company Subsidiaries is
in breach or default in any material respect (or would with the giving of
notice
or lapse of time or both be in such breach or default) under any license
to use
any of the Licensed Intellectual Property.
(b)
For purposes of this Agreement, "Intellectual Property" means
(A) United States, international and foreign patents and patent applications,
including divisionals, continuations, continuations-in-part, reissues,
reexaminations and extensions thereof and counterparts claiming priority
therefrom; utility models; invention disclosures; and statutory invention
registrations and certificates; (B) United States and foreign registered,
pending and unregistered trademarks, service marks, trade dress, logos, trade
names, corporate names and other source identifiers, domain names, Internet
sites and web pages; and registrations and applications for registration
for any
of the foregoing, together with all of the goodwill associated therewith;
(C)
United States and foreign registered and unregistered copyrights, and
registrations and applications for registration thereof; rights of publicity;
and copyrightable works; (D) all inventions and design rights (whether
patentable or unpatentable) and all categories of trade secrets as defined
in
the Uniform Trade Secrets Act, including business, technical and financial
information; and (E) confidential and proprietary information, including
know-how.
21
|
2.16
|
Employee
Benefit
Plans.
|
(a)
Section 2.16(a)
of the Company Disclosure Schedule lists, with respect to the Company and
the
Company Subsidiaries and any trade or business (whether or not incorporated)
that is treated as a single employer with the Company and the Company
Subsidiaries within the meaning of Section 414(b), (c), (m) or (o) of the
Code
(an "ERISA Affiliate"),
(i) all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), (ii) loans
to
officers and directors other than advances for expense reimbursements incurred
in the ordinary course of business and any stock option, stock purchase,
phantom
stock, stock appreciation right, equity-related, supplemental retirement,
severance, sabbatical, medical, dental, vision care, disability, employee
relocation, cafeteria benefit (Code Section 125) or dependent care (Code
Section
129), life insurance or accident insurance plans, programs, agreements or
arrangements, (iii) all bonus, pension, retirement, profit sharing, savings,
deferred compensation or incentive plans, programs, policies, agreements
or
arrangements, (iv) other fringe, perquisite, or employee benefit plans,
programs, policies, agreements or arrangements of the Company and the Company
Subsidiaries and (v) any current or former employment, consulting, change
of
control, retention or executive compensation, termination or severance plans,
programs, policies, agreements or arrangements, written or otherwise, as
to
which unsatisfied liabilities or obligations (contingent or otherwise) of
the
Company or any of the Company Subsidiaries remain for the benefit of, or
relating to, any present or former employee, consultant or director of the
Company or any of the Company Subsidiaries, or with respect to which the
Company
or any of the Company Subsidiaries could reasonably be expected to have any
liabilities or obligations (together, the "Company Employee
Plans").
(b)
Any Company Employee Plan intended to be qualified under Section 401(a) of
the
Code has either obtained from the Internal Revenue Service ("IRS") a current favorable
determination letter as to its qualified status under the Code, including
all
amendments to the Code effected by the Tax Reform Act of 1986, or has applied
to
the IRS for such a determination letter prior to the expiration of the requisite
period under applicable Treasury Regulations or IRS pronouncements in which
to
apply for such determination letter and to make any amendments necessary
to
obtain a favorable determination or has been established under a standardized
prototype plan for which an IRS opinion letter has been obtained by the plan
sponsor and is valid as to the adopting employer.
22
threatened,
against or with respect to any such Company Employee Plan, including any
audit
or inquiry by the IRS, United States Department of Labor (the "DOL"), the SEC or other
Governmental Authority, other than routine claims for benefits. To
the knowledge of the Company, each Company Employee Plan that is a "nonqualified deferred compensation plan"
within the meaning of
Section 409A of the Code and any awards thereunder, in each case that is
subject
to Section 409A of the Code, has been operated in good faith compliance,
in all
material respects, with Section 409A of the Code since January 1,
2005.
(d)
Except as disclosed in Section 2.16(d) of
the Company Disclosure Schedule or as otherwise provided in this Agreement,
the
consummation of the transactions contemplated by this Agreement will not,
either
alone or in combination with any other event or events, (i) entitle any current
or former employee, director or consultant of the Company or any of the Company
Subsidiaries to any payment (whether of severance pay, unemployment
compensation, golden parachute, bonus or otherwise), (ii) accelerate, forgive
indebtedness, vest, distribute, or increase benefits or obligation to fund
benefits with respect to any employee or director of the Company or any of
the
Company Subsidiaries, or (iii) accelerate the time of payment or vesting
of
Company Options, or increase the amount of compensation due any such employee,
director or consultant.
(e)
No amounts payable under any of the Company Employee Plans or any other
contract, agreement or arrangement with respect to which the Company or any
of
the Company Subsidiaries may have any liability will not be deductible for
federal income tax purposes by virtue of Section 162(m) or Section 280G of
the
Code. None of the Company Employee Plans contains any provision requiring
a
gross-up pursuant to Section 280G or 409A of the Code or similar tax
provisions.
(f)
No Company Employee Plan maintained by the Company or any of the Company
Subsidiaries provides benefits, including death or medical benefits (whether
or
not insured), with respect to current or former employees of the Company
or any
of the Company Subsidiaries after retirement or other termination of service
(other than (i) coverage mandated by applicable Laws, (ii) death benefits
or
retirement benefits under any "employee pension benefit plan,"
as that term is defined in Section 3(2) of ERISA, or (iii) benefits, the
full
direct cost of which is borne by the current or former employee (or beneficiary
thereof)).
(g)
Neither the Company nor any ERISA Affiliate has any liability with respect
to
any (i) employee pension benefit plan (within the meaning of Section 3(2)
of
ERISA) which is subject to Part 3 of Subtitle B of Title I of ERISA, Title
IV of
ERISA or Section 412 of the Code , (ii) "multiemployer plan" as
defined in Section 3(37) of ERISA or (iii) "multiple
employer plan" within the meaning of Sections 4063 and 4064 of ERISA or Section
413(c) of the Code.
(h)
To the knowledge of the Company, all Company Options have been properly approved
by the Company's Board of Directors (or a duly authorized committee or
subcommittee thereof) in compliance with all applicable Law, and otherwise
granted in compliance with the terms of the applicable Company Employee Plan,
with applicable Law, and with the applicable provisions of the Certificate
of
Incorporation and Bylaws as in effect at the applicable time. All such Company
Options have been appropriately accounted for in
23
accordance
with GAAP and disclosed in accordance with applicable Law, accounting rules
and
stock exchange requirements, and no such grants involved any "back dating," "forward
dating" or similar
practices with respect to such grants.
(i)
Neither the Company nor any of its ERISA Affiliates has (i) used the services
or
workers provided by third party contract labor suppliers, temporary employees,
"leased employees" (as that term is defined
in Section 414(n)
of the Code), or individuals who have provided services as independent
contractors to an extent that would reasonably be expected to result in the
disqualification of any of the Company Employee Plans or the imposition of
penalties or excise taxes with respect to the Company Employee Plans by the
IRS
or the DOL.
|
2.17
|
Taxes
and
Returns.
|
(a)
The Company has timely filed, or caused to be timely filed, all material
federal, state, local and foreign Tax returns and reports required to be
filed
by it or the Company Subsidiaries (collectively, "Tax Returns"), and has paid,
collected or withheld, or caused to be paid, collected or withheld, all material
Taxes required to be paid, collected or withheld, other than such Taxes for
which adequate reserves in the Company Financials have been established in
accordance with GAAP. There are no claims, assessments, audits,
examinations, investigations or other proceedings pending against the Company
or
any of the Company Subsidiaries in respect of any Tax, and neither the Company
nor any of the Company Subsidiaries has been notified in writing of any proposed
Tax claims or assessments against the Company or any of the Company Subsidiaries
(other than, in each case, claims or assessments for which adequate reserves
in
the Company Financials have been established in accordance with GAAP or are
immaterial in amount). Neither the Company nor any of the Company
Subsidiaries has any outstanding waivers or extensions of any applicable
statute
of limitations to assess any material amount of Taxes. There are no
outstanding requests by the Company or any of the Company Subsidiaries for
any
extension of time within which to file any Tax Return or within which to
pay any
Taxes shown to be due on any Tax Return. There are no Encumbrances
for material amounts of Taxes on the assets of the Company or any of the
Company
Subsidiaries, except for statutory liens for current Taxes not yet due and
payable or that are being contested in good faith and for which adequate
reserves in the Company Financials have been established in accordance with
GAAP.
(b)
Neither the Company nor any of the Company Subsidiaries has constituted either
a
"distributing corporation" or a "controlled
corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock (to any Person or entity
that is not a member of the consolidated group of which the Company is the
common parent corporation) qualifying for, or intended to qualify for, tax-free
treatment under Section 355 of the Code (i) within the two-year period ending
on
the date hereof or (ii) in a distribution which could otherwise constitute
part
of a "plan" or "series
of related
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with the Merger.
(c)
Neither the Company nor any of the Company Subsidiaries is or (i) has been
at
any time within the five-year period ending on the date hereof a United States
real property holding corporation within the meaning of Section 897(c)(2)
of the
Code and (ii) has
24
ever
been a member of any consolidated, combined, unitary or affiliated group
of
corporations for any Tax purposes other than a group of which the Company
is or
was the common parent corporation.
(d)
Neither the Company nor any of the Company Subsidiaries has made any change
in
accounting method or received a ruling from, or signed an agreement with,
any
taxing authority that would reasonably be expected to have a Company Material
Adverse Effect following the Closing.
(e)
As of the date hereof, neither the Company nor any of the Company Subsidiaries
is being audited by any taxing authority or has been notified by any tax
authority that any such audit is contemplated or pending.
(f)
Neither the Company nor any of the Company Subsidiaries participated in,
or
sold, distributed or otherwise promoted, any "reportable
transaction," as defined in Treasury Regulation section
1.6011-4.
(g)
Neither the Company nor any of the Company Subsidiaries has taken any action
that would reasonably be expected to give rise to (i) a "deferred intercompany transaction" within
the meaning of Treasury
Regulation section 1.1502-13 or an "excess loss account"
within the meaning of Treasury Regulation section 1.1502-19, or (ii) the
recognition of a deferred intercompany transaction.
(h)
Except as set forth in Section 2.17(h)
of the Company Disclosure Schedule, since December 31, 2006, neither the
Company
nor any of the Company Subsidiaries have (i) changed any Tax accounting methods,
policies or procedures except as required by a change in Law, (ii) made,
revoked, or amended any material Tax election, (iii) filed any amended Tax
Returns or claim for refund, or (iv) entered into any closing agreement
affecting or otherwise settled or compromised any material Tax liability
or
refund.
(i)
For purposes of this Agreement, the term "Tax" or "Taxes"
shall mean any tax,
custom, duty, governmental fee or other like assessment or charge of any
kind
whatsoever, imposed by any Governmental Authority (including any federal,
state,
local, foreign or provincial income, gross receipts, property, sales, use,
net
worth, premium, license, excise, franchise, employment, payroll, alternative
or
added minimum, ad valorem, transfer or excise tax) together with any interest,
addition or penalty imposed thereon.
|
2.18
|
Finders
and Investment
Bankers.
|
Except
for Xxxxxxx Xxxxx & Associates, Inc. ("Xxxxxxx Xxxxx"), the fees of
which will be borne by the Company, no broker, finder or investment banker
is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated hereby based upon arrangements made by
or on
behalf of the Company.
|
2.19
|
Fairness
Opinion.
|
On
or prior to the date hereof, the Board has received from Xxxxxxx Xxxxx, its
financial advisor, a written opinion addressed to it for inclusion in the
Proxy
Statement (as
25
defined
in Section 4.3) to the effect that the consideration to be received in the
Merger by the Company's stockholders is fair to the Company's stockholders
(other than Parent, Merger Sub and their respective affiliates) from a financial
point of view.
|
2.20
|
Vote
Required; Board
Action.
|
(a)
No "fair price," "business
combination,"
"moratorium," "control
share
acquisition" or other similar anti-takeover Law or regulation (collectively,
"Takeover Laws") of any
jurisdiction is applicable or purports to be applicable to the transactions
contemplated by this Agreement. The affirmative vote of the holders
of a majority of the outstanding Shares (the "Company Stockholder Approval")
is the only vote or consent of the holders of any class or series of the
Company
Capital Stock that is necessary to approve and adopt this Agreement and to
consummate the transaction contemplated hereby (including the
Merger).
(b)
The Board, by resolutions duly adopted by unanimous vote at a meeting duly
called and held, has duly (i) determined that this Agreement and the Merger
are
advisable and in the best interests of the Company and its stockholders,
(ii)
approved the execution, delivery and performance of this Agreement and the
Merger, (iii) recommended that the stockholders of the Company adopt this
Agreement and directed that this Agreement and the Merger be submitted for
adoption by the Company's stockholders in accordance with Section 251 of
the
DGCL and this Agreement, and (iv) has taken all action necessary to cause
dispositions of Shares and Company Options pursuant to the transactions
contemplated by this Agreement (including the Merger) by each individual
who is
a director or officer of the Company to be exempt under Rule 16b-3 promulgated
under the Exchange Act in accordance with that certain No-Action Letter dated
January 12, 1999 issued by the SEC regarding such matters.
|
2.21
|
Title
to Properties;
Assets.
|
(a)
Section 2.21(a)
of the Company Disclosure Schedule contains a correct and complete list of
all
real property and interests in real property leased or subleased by the Company
or any of the Company Subsidiaries from or to any Person (collectively, the
"Company Real
Property"). The list set forth in Section
2.21(a) of
the Company Disclosure Schedule contains, with respect to each of the Company
Real Properties, all existing leases, subleases, licenses or other occupancy
contracts to which the Company or any of the Company Subsidiaries is a party
or
by which the Company or any of the Company Subsidiaries is bound, and all
amendments, modifications, extensions and supplements thereto (collectively,
the
"Tenant Leases"), the
terms of which have been complied with by the Company and any Company Subsidiary
in all material respects. The Company Real Property set forth in
Section 2.21(a)
of the Company Disclosure Schedule comprises all of the real property necessary
and/or currently used in the operations of the business of the Company and
the
Company Subsidiaries. The Company does not own any real
property. Except as would not have a Company Material Adverse Effect,
the Company or a Company Subsidiary has good and valid title to all of its
personal property, assets and rights, free and clear of all Encumbrances
other
than Permitted Encumbrances.
26
(b)
A correct and complete copy of each Tenant Lease has been furnished to Parent
prior to the date hereof. The Company or the Company Subsidiary party thereto
has a valid, binding and enforceable leasehold interest under each of the
Tenant
Leases, free and clear of all Encumbrances other than Permitted Encumbrances,
and each of the Tenant Leases is in full force and effect. Neither the Company
or any of the Company Subsidiaries nor, to the knowledge of the Company,
any
other party to any Tenant Lease is in breach of or in default under, in any
material respect, any of the Tenant Leases. The Company and the Company
Subsidiaries enjoy peaceful and undisturbed possession under all such Tenant
Leases, have not received notice of any material default, delinquency or
breach
on the part of the Company or any Company Subsidiary, and there are no existing
material defaults (with or without notice or lapse of time or both) by the
Company or any Company Subsidiary or, to the knowledge of the Company, any
other
party thereto. For purposes of this Agreement, the term "Permitted Encumbrances" means
(i) Encumbrances with respect to Taxes either not yet due or being contested
in
good faith in appropriate proceedings (and for which adequate reserves in
the
Company Financials have been established in accordance with GAAP); (ii)
mechanics', materialmen's or similar statutory Encumbrances for amounts not
yet
due or being contested in good faith in appropriate proceedings; (iii) the
terms
and conditions of the lease creating the leaseholds; and (iv) other exceptions
with respect to the Company Real Property (including easements of public
record)
that do not and would not materially interfere with the current and currently
intended use of such Company Real Property.
|
2.22
|
Employee
Matters.
|
(a)
Except as set forth in Schedule 2.22(a) of
the Company Disclosure Schedule, there are no Actions pending or, to the
knowledge of the Company, threatened involving the Company or any of the
Company
Subsidiaries and any of their employees or former employees, including any
harassment, discrimination, retaliatory act or similar claim. There
has been: (i) to the knowledge of the Company, no labor union organizing
or
attempting to organize any employee of the Company or any of the Company
Subsidiaries into one or more collective bargaining units; and (ii) no labor
dispute, strike, work slowdown, work stoppage or lock out or other collective
labor action by or with respect to any employees of the Company or any of
the
Company Subsidiaries pending or, to the Company's knowledge, threatened against
the Company or any of the Company Subsidiaries. Neither the Company
nor any of the Company Subsidiaries is a party to, or bound by, any collective
bargaining agreement or other agreement with any labor organization applicable
to the employees of the Company or any of the Company Subsidiaries and no
such
agreement is currently being negotiated.
(b)
The Company and the Company Subsidiaries (i) are in compliance in all material
respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, health and safety and wages
and
hours, including Laws relating to discrimination, disability, labor relations,
hours of work, payment of wages and overtime wages, pay equity, immigration,
workers compensation, working conditions, employee scheduling, occupational
safety and health, family and medical leave, and employee terminations, (ii)
are
not engaged in any unfair labor practice, (ii) are not liable for any material
arrears of wages or any material penalty for failure to comply with any of
the
foregoing, and (iii) are not liable for any material payment to any trust
or
other fund or to any Governmental Authority, with respect to unemployment
compensation benefits, social security or other benefits or
obligations
27
for
employees (other than routine payments to be made in the ordinary course
of
business and consistent with past practice). Except as would not
result in any material liability to the Company or any Company Subsidiary,
there
are no complaints, lawsuits, arbitrations, administrative proceedings, or
other
Actions pending or, to the knowledge of the Company, threatened against the
Company or any Company Subsidiary brought by or on behalf of any applicant
for
employment, any current or former employee, any Person alleging to be a current
or former employee, any class of the foregoing, or any Governmental Authority,
relating to any such Law or regulation, or alleging breach of any express
or
implied contract of employment, wrongful termination of employment, or alleging
any other discriminatory, wrongful or tortious conduct in connection with
the
employment relationship.
|
2.23
|
Environmental
Matters.
|
Except
as set forth in Section 2.23 of the
Company Disclosure Schedule or as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect:
(a)
Neither the Company nor any of the Company Subsidiaries is the subject of
any
federal, state, local or foreign Order, judgment or claim, and neither the
Company nor any of the Company Subsidiaries has received any written notice
or
claim, or entered into any negotiations or agreements with any Person, relating
to any liability or remedial action under any applicable Environmental Laws
or
alleging that the Company or any of its subsidiaries is in violation of,
or
liable under, any Environmental Law;
(b)
The Company and the Company Subsidiaries are in compliance with all applicable
Environmental Laws;
(c)
Neither the Company nor any of the Company Subsidiaries has manufactured,
treated, stored, disposed of, arranged for or knowingly permitted the disposal
of, generated, handled or released any Hazardous Substance, or owned or operated
any property or facility, in a manner that has given or would reasonably
be
expected to give rise to any liability under all applicable Environmental
Laws;
and
(d)
Each of the Company and the Company Subsidiaries holds and is in compliance
with
all Company Permits required to conduct its business and operations under
all
applicable Environmental Laws.
(e)
Neither the Company, any Company Subsidiary nor any of their respective
properties are subject to any Order, judgment or written claim asserted or
arising under any Environmental Law.
"Environmental
Laws" means any
Law relating to (a) the protection, preservation or restoration of the
environment (including air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any
other
natural resource), or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as
in
effect at the date hereof.
28
"Hazardous
Substance" means any
substance listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous or as a pollutant or contaminant under any
Environmental Law. Hazardous Substances include any substance to
which exposure is regulated by any Governmental Authority or any Environmental
Law, including (a) petroleum or any derivative or byproduct thereof, toxic
mold,
asbestos or asbestos containing material or polychlorinated biphenyls and
(b)
all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants
in the National and Hazardous Substances Contingency Plan, 40 C.F.R. Section
300.5.
|
2.24
|
Proxy
Statement.
|
The
Proxy Statement will not, on the date it (or any amendment or supplement
thereto) is first mailed to stockholders of the Company, and at the time
of the
Special Meeting (as defined in Section 4.3(a)), contain any untrue statement
of
a material fact or omit to state any material fact required to be stated
therein
or necessary in order to make the statements made therein, in the light of
the
circumstances under which they are made, not misleading. The Proxy
Statement will, when filed by the Company with the SEC, comply as to form
in all
material respects with the applicable provisions of the Exchange Act and
the
rules and regulations thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to information supplied
in writing or electronically by or on behalf of Parent or Merger Sub expressly
for inclusion in the Proxy Statement.
|
2.25
|
Transactions
with
Affiliates.
|
Section
2.25 of the
Company Disclosure Schedule sets forth a true, correct and complete list
of the
contracts or arrangements that are in existence as of the date of this Agreement
under which there are any existing or future liabilities or obligations between
the Company or any of the Company Subsidiaries, on the one hand, and, on
the
other hand, any (a) present officer or director of either the Company or
any of
its subsidiaries, or (b) record or beneficial owner of more than 5% of the
outstanding Company Capital Stock as of the date hereof (each, an "Affiliate
Transaction").
|
2.26
|
Insurance
Matters.
|
(a)
Examinations. The
Company has made available to Parent copies of all draft and final financial
examination reports and market conduct examination reports of state insurance
departments with respect to any Company Subsidiary that have been issued
since
June 1, 2004.
(b)
Policy
Materials. To the extent required under applicable Laws, all
policies, binders, slips or other agreements of insurance and other agreements
and materials that are issued or used in connection with the Company
Subsidiaries' business, including applications, brochures and marketing
materials, premium rates and reinsurance agreements, are, in all material
respects, on forms approved by applicable insurance regulatory authorities
or
filed and not objected to by such authorities within the period provided
for
objection, and, in either case, not subsequently disapproved or required
to be
withdrawn or retired from issuance or use which have not been so withdrawn
or
retired. Any rates or rating plans of the Company
Subsidiaries
29
required
to be filed with or approved by any applicable Governmental Authority have
in
all material respects been so filed or approved and the rates applied by
each of
the Company or the Company Subsidiaries to the contracts of insurance conform
in
all material respects to the relevant filed or approved rates.
(c)
Agents and
Producers. To the knowledge of the Company, no Person
performing the duties of insurance producer, reinsurance intermediary, agency,
agent, managing general agent, wholesaler or broker with respect to the Company
or any of the Company Subsidiaries (collectively, "Company Producers")
individually accounting for 2% or more of the total gross premiums of all
Company Subsidiaries for the year ended December 31, 2006, has indicated
to the
Company or any Company Subsidiary that such Company Producer will be unable
or
unwilling to continue its relationship as a Company Producer with the Company
or
any Company Subsidiary within 12 months after the date hereof. To the
knowledge of the Company, at the time any Company Producer wrote, sold, or
produced business, or performed such other act for or on behalf of the Company
or any Company Subsidiary that may require a license under applicable Insurance
Laws, such Company Producer was duly licensed and appointed as required by
applicable Insurance Law, in the particular jurisdiction in which such Company
Producer wrote, sold, produced, solicited, or serviced such business, and
each
of the agency agreements and appointments between the Company Producers,
including as subagents under the Company's affiliated insurance agency, and
the
Company and any Company Subsidiary, is valid, binding and in full force and
effect in accordance with its terms. To the knowledge of the Company,
no Company Producer has been since January 1, 2006, or is currently, in
violation (or with or without notice or lapse of time or both, would be in
violation) of any term or provision of any Law applicable to the writing,
sale
or production of insurance or other business of the Company or any Company
Subsidiary. The contracts and other agreements pursuant to which
Company Producers act on behalf of the Company or any Company Subsidiary
are
valid, binding and in full force and effect in accordance with their terms,
and
none of the parties to such contracts and agreements are in default thereunder
in any material respect. The Company has made available to Parent a
true and complete copy of each standard form agency agreement used by the
Company or any Company Subsidiary.
(d)
Reinsurance. Section
2.26(d) of
the Company Disclosure Schedule sets forth a list of all ceded reinsurance
treaties and agreements, including retrocessional agreements, to which the
Company or any Company Subsidiary is a party or under which the Company or
any
Company Subsidiary has any material existing rights, obligations or liabilities
(the "Company Reinsurance
Agreements"). Copies of all Company Reinsurance Agreements
that are in effect on the date of this Agreement have been made available
to
Parent. Neither the Company nor any Company Subsidiary, nor, to the
knowledge of the Company, any other party to a reinsurance treaty, binder
or
other agreement to which the Company or any Company Subsidiary is a party,
is in
default in any material respect as to any provision thereof. The
Company has no knowledge that the financial condition of any party to any
Company Reinsurance Agreement is impaired to the extent that a default
thereunder may be reasonably anticipated. Except as disclosed in
Section 2.26(d)
of the Company Disclosure Schedule, the Company Subsidiaries are entitled
under
applicable Law to take full credit on the applicable Company SAP Statement
with
respect to any Company Reinsurance Agreement pursuant to which such subsidiary
has ceded reinsurance. Except as set forth in Section 2.26(d) of
the Company Disclosure Schedule, neither the Company nor any Company Subsidiary
have received
30
any
notice from any party to any reinsurance agreement or treaty of any dispute
or
default with respect to such reinsurance agreement or
treaty. Assuming no default by any party other than any subsidiary of
the Company, all such Company Reinsurance Agreements are in full force and
effect to the respective dates noted thereon. There are no entities,
other than the Company and the Company Subsidiaries, that have rights to
access
coverage under any such Company Reinsurance Agreements.
(e)
Finite Risk Insurance
or Reinsurance. Except as disclosed in Section
2.26(e) of
the Company Disclosure Schedule, with respect to any Company Reinsurance
Agreement for which the Company or any Company Subsidiary is taking credit
on
its most recent statutory financial statements or has taken credit on any
statutory financial statements from and after January 1, 2005, (i) there
has
been no separate written or oral agreement between the Company or any Company
Subsidiary and the assuming reinsurer that would under any circumstances
reduce,
limit, mitigate or otherwise affect any actual or potential loss to the parties
under any such Company Reinsurance Agreement, other than inuring contracts
that
are explicitly defined in any such Company Reinsurance Agreement, (ii) for
each
such Company Reinsurance Agreement under which the Company or any Company
Subsidiary has or may have recoverables, and for which risk transfer is not
reasonably considered to be self-evident, documentation concerning the economic
intent of the transaction and the risk transfer analysis evidencing the proper
accounting treatment, as required by Statement of Statutory Accounting
Principles No. 62 ("SSAP No.
62"), is available for review by the domiciliary state insurance
departments for the Company and the Company Subsidiaries, (iii) each of the
Company and the Company Subsidiaries complies and has complied from and after
January 1, 2005 with all of the requirements set forth in SSAP No. 62 and
(iv)
each of the Company and the Company Subsidiaries has and has had from and
after
January 1, 2001 appropriate controls in place to monitor the use of reinsurance
and comply with the provisions of SSAP No. 62.
(f)
Actuarial
Reports. Prior to the date of this Agreement, the Company has
made available to Parent a true and complete copy of all actuarial reports
prepared by independent actuaries, with respect to the Company or any Company
Subsidiary since January 1, 2005, and all attachments, addenda, supplements
and
modifications thereto (the "Company Actuarial
Analyses"). There have been no actuarial reports of a similar
nature covering any of the entities referred to in those reports in respect
of
any period subsequent to the latest period covered in such actuarial
reports. To the knowledge of the Company, the information and data
furnished by the Company or any Company Subsidiary to its independent actuaries
in connection with the preparation of any Company Actuarial Analysis was
accurate in all material respects for the periods covered in such
reports. Each Company Actuarial Analysis was based upon an accurate
inventory of policies in force for the Company and the Company Subsidiaries,
as
the case may be, at the relevant time of preparation and was prepared in
conformity with generally accepted actuarial principles in effect at such
time,
consistently applied (except as may be noted therein).
(g)
Policy
Dividends. Except as set forth in Section
2.26(g) of
the Company Disclosure Schedule, there are no insurance policies issued,
reinsured or assumed by the Company or any of the Company Subsidiaries that
are
currently in force under which the Company or any of the Company Subsidiaries
may be required to pay dividends to the holders thereof.
31
|
2.27
|
Insurance.
|
The
Company and each Company Subsidiary is covered by valid and currently effective
insurance policies issued in favor of the Company or one or more of the Company
Subsidiaries that are customary for companies of similar size in the industry
and locales in which the Company and the Company Subsidiaries
operate. Section 2.27 of the
Company Disclosure Schedule sets forth a true, correct and complete list
of all
material insurance policies issued in favor of the Company or any Company
Subsidiary, or pursuant to which the Company or any Company Subsidiary is
a
named insured or otherwise a beneficiary, as well as any historic
incurrence-based policies still in force. With respect to each such
insurance policy, (i) the policy is in full force and effect and all premiums
due thereon have been paid, (ii) neither the Company nor any Company Subsidiary
is in any material respect, in breach of or default under, and neither the
Company nor any Company Subsidiary have taken any action or failed to take
any
action which, with notice or the lapse of time or both, would constitute
such a
breach or default, or permit termination or modification of, any such policy,
and (iii) to the knowledge of the Company, no insurer on any such policy
has
been declared insolvent or placed in receivership, conservatorship or
liquidation, and no notice of cancellation or termination has been received
with
respect to any such policy.
|
2.28
|
Books
and
Records.
|
All
of the books and records of the Company and the Company Subsidiaries are
complete and accurate in all material respects and have been maintained in
the
ordinary course and in accordance with applicable Laws and standard industry
practices with regard to the maintenance of such books and records.
ARTICLE
III
REPRESENTATIONS
AND
WARRANTIES OF PARENT AND MERGER SUB
The
following representations and warranties by Parent and Merger Sub to the
Company
are qualified by the Parent Disclosure Schedule, which sets forth certain
disclosures concerning Parent and Merger Sub (the "Parent Disclosure Schedule")
(provided that
any fact or item disclosed with respect to one representation or warranty
shall
be deemed to be disclosed with respect to each other representation or warranty,
but only to the extent that the applicability of such fact or item with respect
to such other representation or warranty can reasonably be inferred from
the
disclosure with respect to such fact or item contained in the Parent Disclosure
Schedule). Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company as follows:
|
3.1
|
Due
Organization and
Good Standing.
|
Each
of Parent and Merger Sub is a corporation duly organized, validly existing
and
in good standing under the Laws of the jurisdiction of its organization and
has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
32
|
3.2
|
Authorization;
Binding
Agreement.
|
Parent
and Merger Sub have all requisite corporate power and authority to execute
and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger,
(a)
have been duly and validly authorized by the Board of Directors of Parent
and
Merger Sub, and (b) no other corporate proceedings on the part of Parent
or
Merger Sub are necessary to authorize the execution and delivery of this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent
and
Merger Sub and (assuming the due authorization, execution and delivery hereof
by
the Company) constitutes the legal, valid and binding obligation of each
of
Parent and Merger Sub, enforceable against each of Parent and Merger Sub
in
accordance with its terms, subject to the Enforceability
Exceptions.
|
3.3
|
Governmental
Approvals.
|
No
Consent of or with any Governmental Authority on the part of Parent or Merger
Sub is required to be obtained or made in connection with the execution,
delivery or performance by Parent or Merger Sub of this Agreement or the
consummation by Parent or Merger Sub of the transactions contemplated hereby
(including the Merger) other than (i) the filing of the Certificate of Merger
with the Secretary of State in accordance with the DGCL, (ii) such filings
as
may be required with the SEC and foreign and state securities Laws
administrators, (iii) pursuant to the HSR Act and other Antitrust Laws (iv)
those consents, approvals, authorizations, waivers, permits, filings or notices
set forth in Section
3.3 of the Parent Disclosure Schedule, which schedule includes all such
consents, approvals, authorizations, waivers, permits, filings or notices
with
the Florida Office of Insurance Regulation, and (v) those Consents that,
if they
were not obtained or made, would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse
Effect. For purposes of this Agreement, "Parent Material Adverse
Effect" means any change, effect or circumstance that, individually or in
the aggregate, would reasonably be expected to prevent the ability of Parent
or
Merger Sub to consummate the transactions contemplated by this Agreement
(including the Merger).
|
3.4
|
No
Violations.
|
The
execution and delivery by Parent and Merger Sub of this Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
(including the Merger) and compliance by Parent and Merger Sub with any of
the
provisions hereof will not (i) conflict with or violate any provision of
the
certificate of incorporation or bylaws or other governing instruments of
Parent
or Merger Sub, (ii) require any Consent under or result in a violation or
breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any note, bond, mortgage, indenture, contract, lease, license, agreement
or instrument to which Parent or Merger Sub is a party or by which its assets
are bound, (iii) result in the creation or imposition of any Encumbrance
upon
any of the properties, rights or assets of Parent or Merger Sub or (iv) subject
to obtaining the Consents from Governmental Authorities referred to in Section
3.3 hereof, and the waiting periods referred to therein have expired, and
any
condition precedent to such consent,
33
approval,
authorization or waiver has been satisfied, conflict with, contravene or
violate
in any respect any Law to which Parent or Merger Sub or any of their respective
assets or properties is subject, except, in the case of clauses (ii), (iii)
and
(iv) above, for any deviations from the foregoing that would not reasonably
be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
|
3.5
|
Finders
and Investment
Bankers.
|
Except
for Xxxxxx Xxxxxxx & Co. Incorporated, the fees of which will be borne by
Parent, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of Parent
or
Merger Sub.
|
3.6
|
Disclosures.
|
The
information supplied by Parent or Merger Sub for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, contain
any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein,
in
the light of the circumstances under which they are made, not
misleading.
|
3.7
|
Sufficient
Funds.
|
At
the Effective Time, Parent and Merger Sub will have sufficient cash and cash
equivalent resources available to pay the aggregate Merger
Consideration.
|
3.8
|
Litigation.
|
There
is no Action pending before any arbitrator, agency, court or tribunal, foreign
or domestic, or, to the knowledge of Parent, threatened against Parent, Merger
Sub, any of their respective subsidiaries or any of their respective properties,
rights or assets or, any of their respective officers, directors, partners,
managers or members (in their capacities as such) that would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. There is no Order against Parent, Merger Sub, any of their
respective subsidiaries or any of their respective properties, rights or
assets
or any of their respective officers, directors, partners, managers or members
(in their capacities as such) that would prohibit, prevent, enjoin, restrict
or
materially alter or delay any of the transactions contemplated by this Agreement
(including the Merger).
|
3.9
|
Ownership
of
Shares.
|
As
of the date hereof, neither Parent nor Merger Sub is the record or beneficial
owner of any Shares (except to the extent that Parent may be deemed to be
the
beneficial owner of any Shares that are the subject of any Voting
Agreement).
34
|
3.10
|
Management
Arrangements.
|
As
of the date hereof, none of Parent or Merger Sub, or any of their respective
affiliates, has entered into any contract, agreement, arrangement or
understanding with any of the officers or directors of the Company, or any
of
their respective affiliates, that is currently in effect or that would become
effective in the future (upon consummation of the Merger or otherwise) and
that
has not been disclosed to the Company.
|
3.11
|
Investigation
by
Parent and Merger Sub.
|
Each
of Parent and Merger Sub acknowledges and agrees that, other than as set
forth
in this Agreement, none of the Company, the Company Subsidiaries or any of their
respective directors, officers, employees, stockholders, affiliates, agents
or
other representatives makes any representation or warranty, either express
or
implied, as to the accuracy or completeness of any of the information provided
or made available to Parent or Merger Sub or its agents or other representatives
prior to the execution of this Agreement.
ARTICLE
IV
ADDITIONAL
COVENANTS OF THE
COMPANY
|
4.1
|
Conduct
of Business of
the Company.
|
(a)
Unless Parent shall otherwise agree in writing or except as otherwise expressly
provided for in this Agreement or as set forth in Section 4.1 of the
Company Disclosure Schedule, during the period from the date of this Agreement
to the Effective Time, (i) the Company and the Company Subsidiaries shall
conduct their business in, and shall not take any action other than in, the
ordinary course of business consistent with past practice and (ii) the Company
shall use its reasonable best efforts to preserve intact its business
organization, to keep available the services of its and the Company
Subsidiaries' officers, employees, Company Producers and consultants, to
maintain existing relationships with all Persons with whom it and the Company
Subsidiaries do business, and to preserve the possession, control and condition
of its and the Company Subsidiaries' assets.
(b)
Without limiting the generality of the foregoing clause (a) and except as
otherwise expressly provided for in this Agreement or as set forth in Section 4.1 of the
Company Disclosure Schedule, during the period from the date of this Agreement
to the Effective Time, neither the Company nor any of the Company Subsidiaries
will, without the prior written consent of Parent:
(A)
amend, waive or otherwise change, in any respect, its Certificate of
Incorporation or Bylaws (or comparable governing instruments);
(B)
authorize for issuance, issue, grant, sell, pledge, dispose of or propose
to
issue, grant, sell, pledge or dispose of any shares of, or any options,
warrants, commitments, subscriptions or rights of any kind to acquire or
sell
any shares of, its capital stock or other securities or equity interests
or any
Voting Debt, including any securities convertible into or exchangeable for
shares of stock of any class and any other equity-based awards,
except
35
for
the issuance of Shares pursuant to the exercise of Company Options outstanding
on the date of this Agreement and set forth on Section 2.2(f) of the
Company Disclosure Schedule in accordance with their present terms;
(C)
split, combine, recapitalize or reclassify any shares of its capital stock
or
equity interests or issue any other securities in respect thereof, or declare,
pay or set aside any dividend or other distribution (whether in cash, stock
or
property or any combination thereof) in respect of its capital stock or equity
interests, or directly or indirectly redeem, purchase or otherwise acquire
or
offer to acquire any shares of its capital stock or other securities or equity
interests, other than dividends and distributions paid by a Company Subsidiary
to the Company or to another Company Subsidiary;
(D)
incur, create, assume, prepay or otherwise become liable for any indebtedness
(directly, contingently or otherwise), make a loan or advance to or investment
in any third party, or guarantee or endorse any indebtedness, liability or
obligation of any Person, except for indebtedness incurred under the Company's
existing credit facilities described on Section 4.1(d) of the
Company Disclosure Schedule in the ordinary course of business consistent
with
past practice in an aggregate principal amount not to exceed
$250,000;
(E)
increase the wages, salaries, bonus, compensation or other benefits of any
of
its current or former consultants, officers, directors or employees, or enter
into, establish, amend or terminate any Company Employee Plan or any other
employment, consulting, retention, change in control, collective bargaining,
bonus or other incentive compensation, profit sharing, health or other welfare,
stock option or other equity or equity-related, pension, retirement, consulting,
vacation, severance, separation, termination, deferred compensation, fringe,
perquisite, or other compensation or benefit plan, policy, program, agreement,
trust, fund or other arrangement with, for or in respect of any current or
former consultant, officer, director or employee, in each case other than
as
required by applicable Law or pursuant to the terms of any Company Employee
Plan
in effect on the date of this Agreement, or, solely with respect to increases
in
wages or salaries of employees who are not officers or directors, in the
ordinary course of business consistent with past practice;
(F)
make or rescind any material election relating to Taxes, settle any claim,
action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, file any amended Tax Return or claim for refund,
or make any change in its accounting or Tax policies or procedures, in each
case
except as required by applicable Law or GAAP;
(G)
transfer or license to any Person or otherwise extend, materially amend or
modify, permit to lapse or fail to preserve any of the Company Intellectual
Property or Licensed Intellectual Property, other than nonexclusive licenses
in
the ordinary course of business consistent with past practice, or disclose
to
any Person who has not entered into a confidentiality agreement any trade
secrets;
(H)
modify or amend in any material manner, terminate or waive or assign any
material right under any Company Material Contract or enter into any contract
that would be a Company Material Contract with a term longer than one year
that
cannot be
36
terminated
without payment of a material penalty and upon notice of 60 days or less,
in
each case other than in the ordinary course of business consistent with past
practice;
(I)
fail to maintain its books, accounts and records in all material respects
in the
ordinary course of business consistent with past practice;
(J)
establish any subsidiary or enter into any new line of business;
(K) fail
to keep in force insurance policies or replacement or revised policies providing
insurance coverage with respect to the assets, operations and activities
of the
Company and the Company Subsidiaries as are currently in effect;
(L) revalue
any of its material assets or make any change in accounting methods, principles
or practices, except as required by GAAP and approved by the Company's outside
auditors;
(M) other
than in connection with the adjustment, negotiation or settlement of workers'
compensation insurance claims in the ordinary course of business consistent
with
past practice, waive, release, assign, settle or compromise any claim, action
or
proceeding (including any suit, action, claim, proceeding or investigation
relating to this Agreement or the transactions contemplated hereby, including
the Merger), other than waivers, releases, assignments, settlements or
compromises that involve only the payment of monetary damages (and not the
imposition of equitable relief on, or the admission of wrongdoing by, the
Company or any of the Company Subsidiaries) not in excess of $100,000
individually or in the aggregate, or otherwise pay, discharge or satisfy
any
claims, liabilities or obligations other than in the ordinary course of business
consistent with past practice;
(N) close
or materially reduce the Company's or any Company Subsidiary's activities,
or
effect any layoff or other Company-initiated personnel reduction or change,
at
any of the Company's or any Company Subsidiary's facilities;
(O) acquire,
including by merger, consolidation, acquisition of stock or assets, or any
other
form of business combination, any corporation, partnership, limited liability
company, other business organization or any division thereof, or any material
amount of assets;
(P) make
any capital expenditures;
(Q) adopt
a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
(R) voluntarily
incur any material liability or obligation (whether absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice;
(S) sell,
lease, license, transfer, exchange or swap, mortgage or otherwise pledge
or
encumber (including securitizations), or otherwise dispose of any material
portion of its properties, assets or rights;
37
(T)
enter into any agreement, understanding or arrangement with respect to the
voting or registration of the Company Capital Stock or the capital stock
of any
Company Subsidiary;
(U)
take any action that would reasonably be expected to delay or impair the
obtaining of any consents or approvals of any Governmental Authority to be
obtained in connection with this Agreement;
(V)
enter into, amend, waive or terminate (other than terminations in accordance
with their terms) any Affiliate Transaction; or
(W)
enter into any new reinsurance transaction as assuming or ceding insurer
(i)
which does not contain market cancellation, termination and commutation
provisions or (ii) which adversely changes the existing reinsurance profile
of
the Company and the Company Subsidiaries on a consolidated basis outside
of the
ordinary course of business consistent with past practice;
(X)
alter or amend in any material respect any existing underwriting, claims
handling, loss control, investment, actuarial, financial reporting or accounting
practices, guidelines or policies (including compliance policies) or any
material assumption underlying an actuarial practice or policy, except as
may be
required by GAAP, applicable SAP, any Governmental Authority or applicable
Law,
or
(Y)
authorize or agree to do any of the foregoing actions.
|
4.2
|
Access
and
Information; Confidentiality.
|
(a)
Between the date of this Agreement and the Effective Time, the Company will
give, and shall direct its accountants and legal counsel to give, Parent
(and
its officers, directors, employees, accountants, actuaries, legal counsel,
financial advisors, financing sources, agents and other representatives,
collectively, "Parent
Representatives"), at reasonable times and upon reasonable intervals and
notice and following advance consultation with the Company's Chief Executive
Officer or Chief Operating Officer, access to all offices and other facilities
and to all employees, properties, contracts, agreements, commitments, books
and
records of or pertaining to the Company and the Company Subsidiaries (including
Tax Returns, internal work papers, client files, client contracts and director
service agreements) and such financial and operating data and other information,
all of the foregoing as Parent or the Parent Representatives may reasonably
request regarding the business, assets, liabilities, employees and other
aspects
of the Company and the Company Subsidiaries (including providing Parent and
the
Parent Representatives with unaudited quarterly financial statements, including
a consolidated quarterly balance sheet and income statement, in the form
such
financial statements have been delivered to Parent prior to the date hereof,
of
the Company and providing Parent and the Parent Representatives with the
financial results of the Company in advance of any filing by the Company
with
the SEC containing such financial results) and instruct the officers, directors,
employees, accountants, consultants, legal counsel and financial advisors
of the
Company and the Company Subsidiaries to cooperate with Parent and the Parent
Representatives in their investigation of the Company and the Company
Subsidiaries (including by reading available
38
independent
public accountant's work papers), and a copy of each material report, schedule
and other document filed or received by the Company pursuant to the requirements
of applicable securities Laws; provided that Parent
and the Parent Representatives shall conduct any such activities in such
a
manner as not to interfere unreasonably with the business or operations of
the
Company. No such access, inspections or furnishing of information
shall have any adverse effect on Parent or Merger Sub's ability to assert
that
conditions to Closing or to the consummation of the Merger have not been
satisfied.
(b)
All information obtained by Parent or Merger Sub pursuant to this Section
4.2
shall be kept confidential in accordance with the confidentiality agreement,
dated October 8, 2007 (the "Confidentiality Agreement"),
between Parent and the Company.
(c)
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall not take any action to waive or release, or to exempt any third
party from, any standstill arrangements to which it is a party or the provisions
of any Takeover Laws; provided, however,
that with
respect to such standstill arrangements, the Company may waive appropriate
provisions of such arrangements if requested to do so by the other party
or
parties thereto, but solely to the extent (i) necessary to permit such party
or
parties to submit a Company Takeover Proposal to the Company or the Company's
stockholders, (ii) that following consultation with outside legal counsel
and
its financial advisors, the Board determines in good faith that the failure
to
grant such waiver would violate the fiduciary duties of the Board to the
stockholders of the Company under all applicable Law and (iii) the Company
simultaneously, irrevocably and permanently waives compliance by Parent with
paragraph 10 of the Confidentiality Agreement.
|
4.3
|
Special
Meeting; Proxy
Statement.
|
As
promptly as practicable following the execution of this Agreement, the Company,
acting through its Board, shall, in accordance with applicable Law:
(a)
duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Special
Meeting") for the purposes of considering and taking action upon the
approval and adoption of this Agreement and the Merger, including adjourning
such meeting for up to 30 Business Days to obtain such
approval. Except to the extent that the Board shall have withdrawn or
modified its approval or recommendation of this Agreement as permitted by
Section 4.4, the Company shall (i) use reasonable best efforts to solicit
the
approval of this Agreement by the stockholders of the Company and (ii) include
in the Proxy Statement the Board's declaration of the advisability of this
Agreement and its recommendation to the stockholders of the Company that
they
adopt this Agreement and approve the Merger. Notwithstanding the
foregoing, the Company may adjourn or postpone the Special Meeting as and
to the
extent required by applicable Law. Unless this Agreement shall have
been terminated in accordance with Section 7.1, the Company shall submit
this
Agreement to its stockholders at the Special Meeting even if the Board shall
have effected a Change of Recommendation or a Withdrawal of
Recommendation;
(b)
prepare and, within 45 days after the date hereof, file with the SEC a
preliminary proxy statement relating to the Merger and this Agreement and,
after
consultation with Parent, respond as promptly as reasonably practicable to
any
comments made by the SEC
39
with
respect to the preliminary proxy statement (including filing as promptly
as
reasonably practicable any amendments or supplements thereto necessary to
be
filed in response to any such comments or as required by applicable Law),
use
reasonable best efforts to have the SEC confirm that it has no further comments
and cause a definitive proxy statement, including any amendments or supplements
thereto (the "Proxy
Statement"), to be mailed to its stockholders at the earliest practicable
date after the date that the SEC confirms it has no further comments; provided, however,
that no
amendments or supplements to the Proxy Statement will be made by the Company
without prior consultation with Parent and its counsel and after providing
Parent a reasonable opportunity to review and comment on such amendments
or
supplements; and
(c)
notify Parent promptly of the receipt of any comments from the SEC or its
staff
and of any request by the SEC or its staff for amendments or supplements
to the
proxy statement or for additional information and supply Parent with copies
of
all correspondence between the Company or any of the Company Representatives
(as
defined in Section 4.4(b)), on the one hand, and the SEC or its staff, on
the
other hand, with respect to the proxy statement. The Company shall give Parent
a
reasonable opportunity to review and comment on the Proxy Statement (including
each amendment or supplement thereto), any correspondence with the SEC or
its
staff or any other materials proposed to be submitted to the SEC or its staff
prior to transmission to the SEC or its staff and shall not, unless required
by
Law, transmit any such material to which Parent reasonably objects. If at
any
time prior to the Special Meeting there shall be discovered any information
that
should be set forth in an amendment or supplement to the Proxy Statement,
after
obtaining the consent of Parent to such amendment or supplement (which consent
shall not be unreasonably withheld or delayed), the Company shall promptly
transmit such amendment or supplement to its stockholders.
|
4.4
|
No
Solicitation.
|
(a)
For purposes of this Agreement, "Company Takeover Proposal"
means (other than the Merger) any inquiry, proposal or offer, or any indication
of interest in making an offer or proposal, from any Person or group at any
time
relating to (1) any direct or indirect acquisition or purchase of assets
of the
Company and the Company Subsidiaries representing 15% or more of the assets
or
business of the Company and the Company Subsidiaries, including by way of
the
purchase of stock of the Company Subsidiaries, (2) any issuance, sale or
other
disposition of (including by way of merger, recapitalization, consolidation,
business combination, share exchange, joint venture or any similar transaction)
securities (or options, rights or warrants to purchase, or securities
convertible into or exchangeable for, such securities), including any single
or
multi-step transaction or series of related transactions, representing 15%
or
more of the voting power of the Company or any Company Subsidiary, (3) any
tender offer, exchange offer or other transaction that, if consummated, would
result in any Person or "group" (as such term is defined under
the Exchange Act) having beneficial ownership (as such term is defined in
Rule
13d-3 under the Exchange Act), or the right to acquire beneficial ownership,
of
15% or more of the voting power or the capital stock of the Company or any
Company Subsidiary, or (4) any merger, consolidation, share exchange, business
combination, recapitalization, liquidation or dissolution, including any
single
or multi-step transaction or series of related transactions, involving the
Company or any Company Subsidiary. For purposes of this Agreement, a
"Company Superior Offer"
means an unsolicited, bona fide written Company Takeover Proposal (except
that
the references to "15%" shall be replaced by "50%")
on terms that the
40
Board
determines, in good faith, based upon consultations with its outside legal
counsel and its financial advisors, (i) are more favorable to the Company's
stockholders, from a financial point of view, than this Agreement and the
Merger, taken as a whole, after giving effect to any adjustments to the terms
and conditions of this Agreement proposed in writing by Parent in response
to
such Company Takeover Proposal pursuant to Section 4.4(e) or otherwise, and
(ii)
is reasonably likely to be consummated on the terms so proposed, in each
case
with respect to clauses (i) and (ii), taking into account, among other things,
all legal, financial, regulatory, timing and other aspects of, and conditions
to, the Company Superior Offer and the Person or group making the Company
Superior Offer (including any financing required by such Person or
group).
(b)
From and after the date hereof, neither the Company nor any Company Subsidiary
shall, directly or indirectly, and shall not, directly or indirectly, authorize
or permit any officer, director, employee, accountant, consultant, legal
counsel, financial advisor, agent or other representative of the Company
or any
Company Subsidiary (collectively, the "Company Representatives") to,
(i) solicit, encourage, assist, initiate or facilitate the making, submission
or
announcement of any Company Takeover Proposal, (ii) furnish any non-public
information regarding the Company or any Company Subsidiary or the Merger
to any
Person or group (other than Parent, Merger Sub or their representatives)
in
connection with or in response to a Company Takeover Proposal, (iii) engage
or
participate in discussions or negotiations with any Person or group with
respect
to, or that could be expected to lead to, any Company Takeover Proposal,
(iv)
withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify,
in a manner adverse to Parent, the approval of this Agreement or the Merger
or
the Board's recommendation that holders of Shares adopt this Agreement, (v)
approve, endorse or recommend, or publicly propose to approve, endorse or
recommend, any Company Takeover Proposal, (vi) cause the Company or any Company
Subsidiary to discuss, negotiate or enter into any letter of intent, agreement
in principle, acquisition agreement or other similar agreement related to
any
Company Takeover Proposal, or (vii) release any third party from, or waive
any
provision of, any confidentiality or standstill agreement to which the Company
or any Company Subsidiary is a party (except as permitted pursuant to Section
4.2(c) hereof). The Company shall request the prompt return or
destruction of any confidential information provided to any Person or group
prior to the date hereof in connection with a possible Company Takeover
Proposal, including in accordance with any confidentiality agreement entered
into with such Person or group, and shall deny access to any data room (virtual
or actual) containing any such information to any such Person or
group. Without limiting the foregoing, it is agreed that any action
by any Company Representatives that would constitute a violation of the
restrictions set forth in this Section 4.4 if done by the Company, whether
or
not such Company Representative is purporting to act on behalf of the Company
or
any Company Subsidiary, shall constitute a breach of this Section 4.4 by
the
Company. The Company shall promptly inform the Company
Representatives of the obligations undertaken in this Section 4.4.
(c)
Notwithstanding the provisions of Section 4.4(b), nothing in this Agreement
shall prohibit or limit the Company, or the Board, at any time prior to
obtaining the Company Stockholder Approval, and so long as the Company is
in
compliance in all material respects with this Section 4.4, from (i) furnishing
non-public information regarding the Company to, or (ii) entering into
discussions or negotiations with, any Person or group in response to an
unsolicited, bona fide written Company Takeover Proposal received after the
date
of this
41
Agreement
that did not result from a violation of this Section 4.4, if (A) the Board
determines in good faith, after consultation with its outside legal and
financial advisors, that (1) such Company Takeover Proposal constitutes or
could be expected to result in, after the taking of any of the actions referred
to in clauses (i) or (ii) above, a Company Superior Offer, and (2) such
action with respect to such Company Takeover Proposal is necessary for the
Board
to comply with its fiduciary duties to the Company's stockholders under all
applicable Law; (B) the Company receives from such Person or group an
executed confidentiality agreement with provisions no less favorable, in
the
aggregate, to the Company than, and with terms at least as restrictive of
such
Person or group (including with respect to the standstill provisions thereof),
those contained in the Confidentiality Agreement; and (C) contemporaneously
with
furnishing any such information to such Person or group, the Company furnishes
such information to Parent to the extent that such information has not been
previously furnished to Parent; provided, however,
that prior
to the taking of any such actions by the Company or the Board as described
in
clauses (i) or (ii) above, the Company shall provide written notice to Parent
of
such determination of the Board.
(d)
The Company shall notify Parent as promptly as practicable (and in any event
within 48 hours) orally and in writing of the receipt by the Company or any
of
the Company Representatives of (i) any bona fide inquiries, proposals or
offers,
requests for information or requests for discussions or negotiations regarding
or constituting any Company Takeover Proposal or any bona fide inquiries,
proposals or offers, requests for information or requests for discussions
or
negotiations that could be expected to result in a Company Takeover Proposal,
and (ii) any request for non-public information relating to the Company or
the
Company Subsidiaries, specifying in each case the material terms and conditions
thereof (including a copy thereof if in writing) and the identity of the
party
making such inquiry, proposal, offer or request for information. The Company
shall keep Parent promptly informed of the status of any such discussions
or
negotiations and of any modifications to such inquiries, proposals, offers
or
requests for information. From and after the date of this Agreement, the
Company
shall, and shall cause each Company Subsidiary to, immediately cease and
cause
to be terminated any solicitations, discussions or negotiations with any
parties
with respect to any Company Takeover Proposal and shall direct, and use its
reasonable best efforts to cause, the Company Representatives to cease and
terminate any such solicitations, discussions or negotiations.
(e)
Notwithstanding anything in this Agreement to the contrary, including Section
4.4(b), the Board may, at any time prior to obtaining the Company Stockholder
Approval: (A) withdraw or modify its recommendation that holders of Shares
adopt
this Agreement and approve the Merger in connection with a Company Takeover
Proposal or (B) approve or recommend a Company Superior Offer (each, a "Change of Recommendation") if,
in the case of both clause (A) and (B) above (w) an unsolicited, bona fide
written offer is made to the Company by a third party representing a Company
Takeover Proposal, (x) the Company is in compliance in all material respects
with its obligations under this Section 4.4, (y) the Board determines in
good
faith after consultation with the Company's outside legal and financial advisors
that such Company Takeover Proposal constitutes a Company Superior Offer
(after
giving effect to all adjustments to the terms of this Agreement which may
be
proposed by Parent, including pursuant to clause (ii) below), and (z) following
consultation with outside legal counsel and its financial advisors, the Board
determines in good faith that the withdrawal or modification of its
recommendation that holders of Shares adopt this Agreement and approve the
Merger is
42
required
to comply with the fiduciary duties of the Board to the stockholders of the
Company under applicable Law, but only, in the case of both clause (A) and
(B)
above, if prior to taking any such action (i) the Company provides written
notice to Parent (a "Notice of
Superior Offer") advising Parent (1) that the Board has received a
Company Superior Offer and intends to make a Change of Recommendation in
accordance with this Section 4.4(e), (2) specifying the material terms and
conditions of such Company Superior Offer(including a copy thereof if in
writing) and identifying the Person or group making such Company Superior
Offer,
and (3) providing to Parent all materials and information delivered or made
available to the Person or group making such proposed Company Superior Offer
(it
being understood and agreed that any amendment to the financial or other
material terms of any such proposed Company Superior Offer shall require
a new
Notice of Superior Offer and a new five Business Day period), and (ii) during
the five Business Days following Parent's receipt of the Notice of Superior
Offer, the Company shall, and shall direct the Company Representatives to,
cooperate and negotiate in good faith with Parent (to the extent that Parent
requests the same) to enable Parent to propose in writing such adjustments
to
the terms of this Agreement so that any Company Takeover Proposal ceases
to
constitute a Company Superior Offer. Any Change of Recommendation
shall not change the approval of this Agreement or any other approval of
the
Board in any respect that would have the effect of causing any Takeover Law
to
be applicable to the transactions contemplated hereby, including the
Merger.
(f)
Notwithstanding anything to the contrary contained in this Section 4.4, the
Board may, prior to obtaining the Company Stockholder Approval and other
than as
a result of the receipt of a Company Takeover Proposal, withdraw or modify
its
approval of this Agreement or its recommendation that the Company's stockholders
adopt this Agreement and approve the Merger (a "Withdrawal of
Recommendation"), if the Board determines in good faith (after
consultation with its outside legal and financial advisors) that the failure
to
take such action would violate its fiduciary duties under applicable
Law. Any Withdrawal of Recommendation shall not change the approval
of this Agreement or any other approval of the Board in any respect that
would
have the effect of causing any Takeover Law to be applicable to the transactions
contemplated hereby, including the Merger.
(g)
Nothing contained in this Section 4.4 shall prohibit the Board from taking
and
disclosing to the stockholders of the Company a position contemplated by
Rule
14d-9 and Rule 14e-2(a) promulgated under the Exchange Act; provided, that
any
such disclosure other than (i) a "stop-look-and-listen"
communication to the stockholders of the Company pursuant to Rule 14d-9(f)
promulgated under the Exchange Act (or any similar communications to the
stockholders of the Company), (ii) an express rejection of any applicable
Company Takeover Proposal or (iii) an express reaffirmation of its
recommendation to the stockholders of the Company in favor of the Merger
shall
be deemed to be a Change of Recommendation; provided further
that
the
Board
shall
not be
permitted to recommend that the Company's stockholders tender any securities
in
connection with any tender or exchange offer (or otherwise approve, endorse
or
recommend any Company Takeover Proposal or withhold, withdraw or modify the
recommendation that holders of Shares adopt this Agreement and approve the
Merger), unless in each case, in connection therewith, the Board effects
a
Change of Recommendation in accordance with the terms of Section
4.4(e).
43
|
4.5
|
Takeover
Laws.
|
Notwithstanding
any other provision in this Agreement, if any Takeover Law may become, or
may
purport to be, applicable to the transactions contemplated by this Agreement,
the Company and the members of its Board will grant such approvals and take
such
actions as are necessary so that the transactions contemplated by this Agreement
may be consummated as promptly as practicable on the terms and conditions
contemplated hereby and otherwise act to eliminate the effect of any Takeover
Law on any of the transactions contemplated by this Agreement.
|
4.6
|
Stockholder
Litigation.
|
The
Company shall give Parent the opportunity to participate in, subject to a
customary joint defense agreement, of any stockholder litigation against
the
Company or its directors or officers relating to the Merger or any other
transactions contemplated hereby; provided, however,
that no
settlement of any such litigation shall be agreed to without Parent's
consent.
|
4.7
|
SEC
Reports.
|
Between
the date of this Agreement and the Effective Time, the Company will timely
file
with the SEC all Company SEC Reports required to be filed by it under the
Exchange Act.
ARTICLE
V
ADDITIONAL
COVENANTS OF THE PARTIES
|
5.1
|
Notification
of
Certain Matters.
|
Each
of Parent and the Company shall give prompt notice to the other (and, if
in
writing, furnish copies of) if any of the following occurs after the date
of
this Agreement: (i) there has been a material failure on the part of the
Party
providing the notice to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; (ii) receipt
of any
notice or other communication in writing from any third party alleging that
the
Consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, (including the Merger); (iii)
receipt of any notice or other communication from any Governmental Authority
in
connection with the transactions contemplated by this Agreement (including
the
Merger); (iv) the discovery of any fact or circumstance that, or the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which,
would
reasonably be expected to cause or result in any of the conditions to the
Merger
set forth in Article VI not being satisfied or the satisfaction of those
conditions being materially delayed; or (v) the commencement or threat, in
writing, of any Action against any Party or any of its affiliates, or any
of
their respective properties or assets, or, to the knowledge of the Company
or
Parent, as applicable, any officer, director, partner, member or manager,
in his
or her capacity as such, of the Company or Parent, as applicable, or any
of
their affiliates with respect to the consummation of the Merger. No
such notice to any Party shall constitute an acknowledgement or admission
by the
Party providing notice regarding whether or not any of the
44
conditions
to Closing or to the consummation of the Merger have been satisfied or in
determining whether or not any of the representations, warranties or covenants
contained in this Agreement have been breached.
|
5.2
|
Reasonable
Best
Efforts.
|
(a)
Subject to the terms and conditions of this Agreement, prior to the Effective
Time, each Party shall use its reasonable best efforts, and shall cooperate
fully with the other Parties, to take, or cause to be taken, all actions
and to
do, or cause to be done, all things necessary, proper or advisable under
applicable Laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement, including the receipt of all
Requisite Regulatory Approvals (as defined in Section 6.1(c)), and to comply
as
promptly as practicable with all requirements of Governmental Authorities
applicable to the transactions contemplated by this Agreement. In furtherance
and not in limitation of the foregoing, to the extent required under the
HSR Act
or any other Laws that are designed to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade ("Antitrust Laws"), each Party
hereto agrees to make an appropriate filing of a Notification and Report
Form
pursuant to the HSR Act or other required filing or application under Antitrust
Laws, as applicable, with respect to the transactions contemplated hereby
as
promptly as practicable, to supply as promptly as reasonably practicable
any
additional information and documentary material that may be requested pursuant
to the HSR Act or such Antitrust Laws, as applicable, and to take all other
actions necessary, proper or advisable to cause the expiration or termination
of
the applicable waiting periods under the HSR Act or to obtain consent, approvals
or authorizations under Antitrust Laws as soon as practicable, including
by
requesting early termination of the waiting period provided for in the HSR
Act.
(b)
Each of Parent and Merger Sub, on the one hand, and the Company, on the other
hand, shall, in connection with the efforts referenced in Section 5.2(a)
to
obtain all requisite approvals and authorizations for the transactions
contemplated by this Agreement under the HSR Act or any Antitrust Law, use
its
reasonable best efforts to: (i) cooperate in all respects with each other
in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party; (ii) keep the other Party reasonably informed of any communication
received by such Party from, or given by such Party to, the Federal Trade
Commission (the "FTC"),
the Antitrust Division of the Department of Justice (the "DOJ") or any other
U.S. or
foreign Governmental Authority and of any communication received or given
in
connection with any proceeding by a private party, in each case regarding
any of
the transactions contemplated hereby; and (iii) permit the other Party and
its
outside counsel to review any communication given by it to, and consult with
each other in advance of any meeting or conference with, the FTC, the DOJ
or any
other Governmental Authority or, in connection with any proceeding by a private
party, with any other Person, and to the extent permitted by the FTC, the
DOJ or
such other applicable Governmental Authority or other Person, give the other
Party the opportunity to attend and participate in such meetings and
conferences.
(c)
In furtherance and not in limitation of the covenants of the Parties contained
in Section 5.2(a) and Section 5.2(b), (i) as soon as reasonably practicable
following the date of this Agreement, the Company and Parent shall cooperate
in
all respects with each other
45
and
use (and shall cause their respective subsidiaries to use) their respective
reasonable best efforts to prepare and file with the relevant insurance
regulators requests for approval of the transactions contemplated by this
Agreement (including the Merger) and shall use all reasonable efforts to
have
such insurance regulators approve the transactions contemplated by this
Agreement, and (ii) each of Parent and Merger Sub, on the one hand, and the
Company, on the other hand, shall give prompt written notice if such Party
receives any notice from any insurance regulator in connection with the
transactions contemplated by this Agreement, and, in the case of any such
written notice, shall promptly furnish the other Party with a copy
thereof. If an insurance regulator requires that a hearing be held in
connection with its approval of the transactions contemplated hereby, each
Party
shall use its reasonable best efforts to arrange for such hearing to be held
promptly. At Parent's request, the Company shall obtain from applicable
regulatory authorities written assurances in form reasonably satisfactory
to
Parent with respect to the applicability to the Company and/or any of the
Company Subsidiaries of orders, decrees or pronouncements of such regulatory
authorities.
(d)
In furtherance and not in limitation of the covenants of the Parties contained
in Section 5.2(a), Section 5.2(b) and Section 5.2(c), if any objections are
asserted with respect to the transactions contemplated hereby under the HSR
Act,
any Antitrust Law or any other applicable Law or if any suit is instituted
(or
threatened to be instituted) by the FTC, the DOJ or any other applicable
Governmental Authority or any private party challenging any of the transactions
contemplated hereby as violative of the HSR Act, any Antitrust Law or any
other
applicable Law or which would otherwise prevent, materially impede or materially
delay the consummation of the transactions contemplated hereby, each of Parent,
Merger Sub and the Company shall use its reasonable best efforts to resolve
any
such objections or suits so as to permit consummation of the transactions
contemplated by this Agreement, including in order to resolve such objections
or
suits which, in any case if not resolved, could reasonably be expected to
prevent, materially impede or materially delay the consummation of the
transactions contemplated hereby (including the Merger).
(e)
In the event that any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) by a Governmental Authority or
private party challenging the Merger or any other transaction contemplated
by
this Agreement, or any other agreement contemplated hereby, each of Parent,
Merger Sub and the Company shall cooperate in all respects with each other
and
use its respective reasonable best efforts to contest and resist any such
action
or proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
(f)
Prior to the Effective Time, the Company shall use its commercially reasonable
efforts to obtain any Consents of third parties with respect to any Contracts
to
which the Company or any Company Subsidiary is a party as may be necessary
or
appropriate for the consummation of the transactions contemplated hereby
or
required by the terms of any Contract as a result of the execution, performance
or consummation of the transactions contemplated hereby (including the
Merger).
(g)
Notwithstanding anything to the contrary contained in this Agreement, nothing
in
this Agreement shall obligate Parent, Merger Sub or any of their respective
affiliates to take any action or commit to take any action, or consent or
agree
to any condition, restriction or undertaking requested or imposed by any
Governmental Authority, whether in connection
46
with
obtaining any Requisite Regulatory Approval or otherwise, if, in the good
faith
determination of Parent, such action, condition, restriction or undertaking,
individually or in the aggregate, with all other such actions, conditions,
restrictions or undertakings, would materially adversely affect the benefits,
taken as a whole, that Parent reasonably expects to derive from the transactions
contemplated by this Agreement (a "Burdensome
Condition"); provided,
however,
that any
requirement that Parent, the Surviving Corporation or any of its or their
subsidiaries (i) provide or commit to provide additional capital to the Company,
(ii) maintain operations or employees in the State of Florida, or (iii) provide
any surplus maintenance, guarantee, keep-well or similar agreements or
commitments shall each be deemed to be a Burdensome Condition.
|
5.3
|
Indemnification
and
Insurance.
|
(a)
The Certificate of Incorporation and Bylaws of the Surviving Corporation
shall
contain provisions no less favorable with respect to indemnification than
are
set forth in the Certificate of Incorporation and Bylaws, respectively, of
the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
affect adversely the rights thereunder of individuals who, at or prior to
the
Effective Time, were directors, officers, or employees, of the Company or
any of
the Company Subsidiaries. During the period ending on the sixth anniversary
of
the Effective Time, Parent and the Surviving Corporation shall, jointly and
severally, to the fullest extent that the Company would have been permitted
to
do so under applicable Law, indemnify and hold harmless each present and
former
director and officer of the Company and each of the Company Subsidiaries
(collectively, the "Indemnified
Parties") against all costs and expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission, in his or her capacity as an officer, director,
or
employee of the Company, occurring on or before the Effective Time (a "Covered
Proceeding"). In the event of any such claim, action, suit,
proceeding or investigation, Parent or the Surviving Corporation shall pay
the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Surviving Corporation,
promptly after statements therefor are received (provided the
applicable Indemnified Party provides an undertaking to repay all advanced
expenses if it is finally judicially determined that such Indemnified Party
is
not entitled to indemnification); provided, however,
that neither
Parent nor the Surviving Corporation shall be liable for any settlement effected
without Parent's or the Surviving Corporation's written consent (which consent
shall not be unreasonably withheld or delayed); provided, further,
that Parent
and the Surviving Corporation shall not be required to agree to the entry
of any
judgment or settlement that provides for injunctive or other non-monetary
relief
affecting the Parent, the Surviving Corporation or any of their respective
subsidiaries. Neither Parent nor the Surviving Corporation shall be
obligated pursuant to this Section 5.3(a) to pay the fees and expenses of
more
than one counsel (selected by a plurality of the applicable Indemnified Parties)
for all Indemnified Parties with respect to such Covered Proceeding unless
there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case Parent shall pay the fees of such additional counsel required
by
such conflict; provided, that,
in
the event that any claim for indemnification is asserted or made within such
six-year period, all rights to indemnification in respect of such
47
claim
shall continue until the disposition of such claim. Any Indemnified
Party that desires to claim indemnification under this Section 5.3(a) upon
becoming aware of any such Covered Proceeding shall promptly notify Parent
and
the Surviving Corporation.
(b)
Immediately after the Effective Time, Parent shall have obtained and paid
for,
and there shall be in effect, a tail policy of (i) directors' and officers'
liability insurance and (ii) corporate counsel liability insurance covering
the
Company's Senior Vice President, General Counsel and Secretary, in respect
of
acts or omissions occurring prior to the Effective Time covering each of
those
Persons who are covered by (x) the Company's and any Company Subsidiary's
directors' and officers' liability insurance policy and (y) corporate counsel
liability insurance, as of the date hereof for a period of six years commencing
as of the Effective Time, it being understood that, if requested in writing
by
Parent, the Company shall, prior to the Effective Time, obtain such extended
reporting period coverage under its existing insurance programs (to be effective
as of the Effective Time).
(c)
In the event Parent or the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges into any other Person
and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall succeed to the obligations
set
forth in this Section 5.3.
(d)
Parent shall cause the Surviving Corporation to perform all of the obligations
of the Surviving Corporation under this Section 5.3.
(e)
The provisions of this Section 5.3 (i) are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs
and
representatives and (ii) are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such Person
may
have by contract or otherwise.
|
5.4
|
Benefit
Plans and
Employee Matters.
|
(a)
Parent hereby agrees that, for a period commencing on the Effective Time
and
ending on the last day of the calendar year that includes the first anniversary
of the Effective Time, it shall, or it shall cause the Surviving Corporation
or
its subsidiaries to, (i) provide each employee of the Company or the Company
Subsidiaries as of the Effective Time (each, an "Employee"), while such
Employee remains employed with the Surviving Corporation or any of its
subsidiaries, with at least the same level of base salary or wages, that
was
provided to each such Employee immediately prior to the Effective Time, and
(ii)
provide the Employees with base salary, wages, cash incentive compensation,
other cash variable compensation and other employee benefits (other than
equity-based compensation) that are, in the aggregate, no less favorable
than,
at Parent's election, (A) those provided to such Employees immediately prior
to
the Effective Time or (B) those provided to similarly situated employees
of
Parent, or at Parent's election, any subsidiary of Parent.
(b)
Each Employee shall receive credit for purposes of eligibility to participate,
vesting, and, solely with respect to vacation, other paid time off and
severance,
48
benefit
accrual (but excluding benefit accruals under any defined benefit pension
plan
or for any other purpose) under any employee benefit plan, program or
arrangement (including vacation plans, programs and arrangements) established
or
maintained by Parent, the Surviving Corporation or any of their respective
subsidiaries under which such Employee is eligible to participate on or after
the Effective Time for service with the Company and the Company Subsidiaries
through the Effective Time to the same extent recognized for such purpose
by the
Company or any of the Company Subsidiaries under comparable Company Employee
Plans immediately prior to the Effective Time; provided, however,
that such
crediting of service shall not operate to duplicate any benefit or the funding
of any such benefit.
(c)
With respect to the welfare benefit plans, programs and arrangements maintained,
sponsored or contributed to by Parent or the Surviving Corporation ("Parent Welfare Benefit
Plans")
in which an Employee is or becomes eligible to participate on or after the
Effective Time, Parent shall (a) waive, or cause its insurance carrier to
waive,
all limitations as to preexisting and at-work conditions, if any, with respect
to participation and coverage requirements applicable to each Employee under
any
Parent Welfare Benefit Plan to the same extent waived under a comparable
Company
Employee Plan (to the extent permitted by the applicable Parent Welfare Benefit
Plan), and (b) provide credit to each Employee for any co-payments, deductibles
and out-of-pocket expenses paid by such Employee under the Company Employee
Plans during the plan year that includes the Effective Time for the plan
year
under the applicable Parent Welfare Benefit Plan that includes the Effective
Time.
(d)
From and after the Effective Time, the Surviving Corporation shall honor,
in
accordance with their terms, all employment and severance agreements listed
in
Section 5.4(d)
of the Company Disclosure Schedule in effect immediately prior to the Effective
Time that are applicable to any current or former employees or directors
of the
Company or any of the Company Subsidiaries.
(e)
Nothing in this Section 5.4 shall amend, or be deemed to amend, any Company
Employee Plan, shall prevent the amendment or termination of any Company
Employee Plans by Parent, the Surviving Corporation or their respective
subsidiaries, or shall limit the right of Parent, the Surviving Corporation
or
any of their respective subsidiaries to terminate the employment of any Employee
at any time.
(f)
Unless otherwise directed in writing by Parent at least one Business Day
prior
to the Effective Time, the Company will terminate the Company's 401(k) (the
"Company 401(k) Plan"),
effective as of the day immediately preceding the Effective Time. The
Company shall provide Parent evidence that such resolutions to terminate
the
Company 401(k) Plan have been adopted by the Board. The form and
substance of such resolutions shall be subject to the reasonable approval
of
Parent. The Company shall also take such other actions in furtherance
of terminating the Company 401(k) Plan as Parent may reasonably
request. Immediately prior to such termination, the Company will make
(or cause to be made) all necessary payments to fund the contributions (i)
necessary or required to maintain the tax-qualified status of the Company
401(k)
Plan, (ii) for elective deferrals made pursuant to Company 401(k) Plan for
the
period prior to termination, and (iii) for employer matching contributions
(if
any) for the period prior to termination.
49
|
5.5
|
Public
Announcements.
|
Parent
and the Company agree that no public release or announcement concerning this
Agreement or the Merger shall be issued by either Party or any of their
affiliates without the prior consent of the other Party (which consent shall
not
be unreasonably withheld or delayed), except as such release or announcement
may
be required by applicable Law or the rules or regulations of any securities
exchange, in which case the applicable Party shall use reasonable best efforts
to allow the other Party reasonable time to comment on such release or
announcement in advance of such issuance; provided, however,
that either
Parent or the Company may make any public statement in response to specific
questions by the press, analysts, investors or those attending industry
conferences or financial analyst conference calls, so long as any such
statements are not inconsistent with previous public releases or announcements
made by Parent or the Company in compliance with this Agreement.
|
5.6
|
Company
Producers.
|
As
promptly as practical following the date of this Agreement, and in any event
within 10 Business Days, and in compliance with applicable Law, Parent and
the
Company shall develop a joint plan for the communication by the Company
regarding the transactions contemplated by this Agreement (including the
Merger)
with the Company Producers. The Company shall obtain the written
consent of Parent (such consent not to be unreasonably withheld, conditioned
or
delayed) prior to initiating any communication with any Company Producers
regarding the transactions contemplated by this Agreement (including the
Merger). Without the prior written consent of the Company (such
consent not to be unreasonably withheld, delayed or conditioned), Parent
shall
not orally or in writing initiate any communication with any Company Producer,
provided, however,
that the
foregoing shall not prohibit Parent from responding to inquiries initiated
by
Company Producers. For purposes of this Section 5.6, "Company Producers" shall not mean any insurance
producer,
reinsurance intermediary, agency, agent, managing general agent, wholesaler,
broker or other Person with whom Parent or any subsidiary of Parent has an
existing relationship as of the date hereof.
|
5.7
|
Financing.
|
The
Company shall, and shall cause the Company Subsidiaries to, reasonably cooperate
in connection with the arrangement of any financing by Parent or any of its
subsidiaries in connection with the transactions contemplated by this Agreement
(the "Financing") as may
be reasonably requested by Parent (provided that such requested cooperation
does
not unreasonably interfere with the ongoing operations of the Company and
the
Company Subsidiaries and; provided, further,
that Parent
reimburses the Company for any reasonable costs or expenses incurred in
connection with such cooperation). Such cooperation by the Company
shall include (a) providing to the parties providing Financing all
financial
50
statements
and other information relating to the Company and the Company Subsidiaries
that
are reasonably required for financings similar to the Financing and using
reasonable best efforts to provide such other financial information as Parent
shall reasonably request in order to consummate the Financing, (b) review
for
accuracy (i) one or more offering documents or confidential information
memoranda for the Financing and (ii) materials for rating agency presentations,
(c) executing and delivering and causing the Company Subsidiaries to execute
and
deliver, customary certificates and similar items ancillary to the Financing
as
may be reasonably requested by Parent in connection with the Financing, and
(d)
assisting Parent in requesting accounting comfort letters from the Company's
independent auditors. Notwithstanding anything in this Agreement to
the contrary, neither the Company nor any Company Subsidiary shall be required
to pay any commitment or other fee or incur any other liability or obligation
in
connection with the Financing (or any replacements thereof) prior to the
Effective Time.
ARTICLE
VI
CONDITIONS
|
6.1
|
Conditions
to Each
Party's Obligations.
|
The
obligations of each Party to consummate the Merger shall be subject to the
satisfaction or waiver (where permissible), at or prior to the Effective
Time,
of the following conditions:
(a)
Stockholder
Approval. The Company Stockholder Approval shall have been
obtained in accordance with the DGCL.
(b)
HSR
Act. The applicable waiting period (and any extension thereof)
under the HSR Act shall have expired or been terminated.
(c)
Requisite Regulatory
Approvals. All authorizations, approvals and permits required
to be obtained from or made with any Governmental Authority in order to
consummate the transactions contemplated by this Agreement (the "Requisite Regulatory
Approvals") shall have been obtained or made.
(d)
No
Law. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary
or
permanent) or Order that is then in effect and has the effect of making the
Merger illegal or otherwise preventing or prohibiting consummation of the
Merger.
|
6.2
|
Conditions
to
Obligations of Parent and Merger Sub.
|
The
obligations of Parent and Merger Sub to consummate the Merger are subject
to the
satisfaction or waiver by Parent, at or prior to the Effective Time, of the
following additional conditions:
51
(a) Representations
and
Warranties.
(i)
Each of the representations and warranties of the Company contained in Section
2.1, Section 2.2 (other than subsections (e) and (h)), Section 2.3(a), Section
2.4, Section 2.7(c), Section 2.8(b), Section 2.18 and Section 2.20 shall
be true
and correct in all respects as of the date of this Agreement and as of the
Effective Time as though made as of the Effective Time (except to the extent
that any of such representations and warranties expressly speaks only as
of an
earlier date, in which case such representation and warranty shall be true
and
correct as of such earlier date); and
(ii)
each of the other representations and warranties of the Company set forth
in
this Agreement shall be true and correct (disregarding all qualifications
or
limitations as to "materiality", "Company
Material Adverse Effect" and words of similar import set forth therein) as
of
the date of this Agreement and as of the Effective Time as though made at
and as
of the Effective Time (except to the extent that any of such representations
and
warranties expressly speaks only as of an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier
date),
except where the failure of such representations and warranties to be so
true
and correct has not had and would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
(b)
Agreements and
Covenants. The Company shall have performed, in all material
respects, all of its obligations and complied with, in all material respects,
all of its agreements and covenants to be performed or complied with by it
under
this Agreement at or prior to the Effective Time.
(c)
Officer
Certificate. The Company shall have delivered to Parent a
certificate, dated the Closing Date, signed by the chief executive officer
or
chief financial officer of the Company, certifying in such capacity as to
the
satisfaction of the conditions specified in Sections 6.2(a), 6.2(b) and
6.2(d).
(d)
Company Material
Adverse Effect. No Company Material Adverse Effect shall have
occurred since the date of this Agreement.
(e)
Burdensome
Condition. The Requisite Regulatory Approvals shall not have
included or contained, or resulted in the imposition of, any Burdensome
Condition.
(f)
Dissenting
Shares. No more than 15% of the outstanding Shares shall
constitute Dissenting Shares.
|
6.3
|
Conditions
to
Obligations of the Company.
|
The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver by the Company, at or prior to the Effective Time,
of the
following additional conditions:
(a)
Representations
and
Warranties. Each of the representations and warranties of
Parent and Merger Sub set forth in this Agreement shall be true and correct
as
of
52
the
date of this Agreement and as of the Effective Time as though made at and
as of
the Effective Time (except to the extent such representations and warranties
expressly relate to an earlier date, in which case as of such earlier date),
except where the failure of such representations and warranties to be so
true
and correct has not had and would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b)
Agreements and
Covenants. Each of Parent and Merger Sub shall have performed,
in all material respects, its obligations and complied with, in all material
respects, its agreements and covenants to be performed or complied with by
it
under this Agreement at or prior to the Effective Time.
(c)
Officer
Certificate. Parent shall have delivered to the Company a
certificate, dated the Closing Date, signed by the chief executive officer
or
chief financial officer of Parent, certifying in such capacity as to the
satisfaction of the conditions specified in Sections 6.3(a) and
6.3(b).
|
6.4
|
Frustration
of
Conditions.
|
Neither
Parent nor the Company may rely on the failure of any condition set forth
in
this Article VI to be satisfied if such failure was caused by such Party's
failure to comply with or perform any of its covenants or obligations set
forth
in this Agreement.
ARTICLE
VII
TERMINATION
AND
ABANDONMENT
|
7.1
|
Termination.
|
This
Agreement may be terminated and the Merger and the other transactions
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding any approval of the matters presented in connection with
the
Merger by the stockholders of the Company (the date of any such termination,
the
"Termination Date"), as
follows:
(a)
by mutual written consent of each of the Company and Parent, as duly authorized
by the Board of Directors of each of Parent the Company;
(b)
by written notice by either Parent or the Company, if the Effective Time
shall
not have occurred on or before October 31, 2008 (the "Outside Date"); provided,
however,
that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger
to be
consummated on or before the Outside Date;
(c)
by written notice by either Parent or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any Order or
Law
that is, in each case, then in effect and is final and nonappealable and
has the
effect of permanently restraining, enjoining or otherwise preventing or
prohibiting the transactions contemplated by this Agreement (including the
Merger); provided, however,
that the
right to terminate this Agreement under this Section 7.1(c) shall not be
available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, any
such
Order or Law to have been enacted, issued, promulgated, enforced or
entered;
53
(d)
by written notice by Parent (if Parent is not in material breach of any of
its
representations, warranties, covenants or agreements under this Agreement),
if
there has been a breach by the Company of any of its representations,
warranties, covenants or agreements contained in this Agreement, or if any
representation or warranty of the Company shall have become untrue or
inaccurate, in either case that would result in a failure of a condition
set
forth in Section 6.2(a) or 6.2(b) (a "Terminating Company Breach");
provided,
that
if such Terminating Company Breach is reasonably curable by the Company,
within
20 days after the Company has received written notice from Parent of such
Terminating Company Breach, through the exercise of commercially reasonable
efforts and for as long as the Company continues to exercise such commercially
reasonable efforts, Parent may not terminate this Agreement under this Section
7.1(d) until the earlier of the expiration of such 20-day period and the
Outside
Date;
(e)
by written notice by the Company (if the Company is not in material breach
of
any of its representations, warranties, covenants or agreements under this
Agreement), if there has been a breach by Parent or Merger Sub of any of
its
representations, warranties, covenants or agreements contained in this
Agreement, or if any representation or warranty of Parent or Merger Sub shall
have become untrue or inaccurate, in either case that would result in a failure
of a condition set forth in Section 6.3(a) or 6.3(b) (a "Terminating Parent Breach");
provided,
that
if such Terminating Parent Breach is reasonably curable by Parent or Merger
Sub,
within 20 days after Parent has received written notice from the Company
of such
Terminating Parent Breach, through the exercise of commercially reasonable
efforts and for as long as Parent or Merger Sub, as the case may be, continues
to exercise such commercially reasonable efforts, the Company may not terminate
this Agreement under this Section 7.1(e) until the earlier of the expiration
of
such 20-day period and the Outside Date;
(f)
by written notice by Parent, if the Board (i) withdraws, modifies or qualifies
in a manner adverse to Parent or Merger Sub, or publicly proposes to withdraw,
modify or qualify in a manner adverse to parent or Merger Sub, its
recommendation that the holders of Shares adopt this Agreement; (ii) fails
to
include in the Proxy Statement its recommendation to the holders of Shares
that
they give the Company Stockholder Approval; (iii) approves, endorses or
recommends, or publicly proposes to approve, endorse or recommend, any Company
Takeover Proposal, (iv) makes a Change of Recommendation or a Withdrawal
of
Recommendation, or (v) in the case of a Company Takeover Proposal made by
way of
a tender offer or exchange offer, fails to recommend that the Company's
stockholders reject such tender offer or exchange offer within the ten Business
Day period specified in Section 14e-2(a) under the Exchange Act or (if later
than the end of such ten Business Day period) fails to reconfirm its
recommendation that the holders of Shares adopt this Agreement and approve
the
Merger within five Business Days after a request by Parent to do so;
or
(g)
by written notice by either Parent or the Company, if, at the Special Meeting
(including any adjournment or postponement thereof at which this Agreement
is
voted upon), the Company Stockholder Approval is not obtained; provided, however,
that the
right to terminate this Agreement under this Section 7.1(g) shall not be
available to the Company where the
failure to obtain the Company Stockholder Approval shall have resulted from
the
Company's breach of this Agreement.
54
|
7.2
|
Effect
of
Termination.
|
In
the event of the termination of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void, and there shall be no liability on
the
part of any Party hereto or any of their respective affiliates or the directors,
officers, partners, members, managers, employees, agents or other
representatives of any of them, and all rights and obligations of each Party
hereto shall cease, except (i) as set forth in this Section 7.2 and in Section
7.3 and Article VIII and (ii) subject to Section 7.3(c), nothing herein shall
relieve any Party from liability for any fraud or willful breach of this
Agreement. Without limiting the foregoing, Section 4.2(b), this
Section 7.2, Section 7.3 and Article VIII shall survive the termination of
this
Agreement. Prior to the Effective Time, the liability of Parent and
Merger Sub to the Company under the Agreement is specifically limited to
the
amount of the Parent Termination Fee, if and as payable in accordance with
Section 7.3(c).
|
7.3
|
Fees
and
Expenses.
|
(a)
Except as otherwise set forth in this Section 7.3, all Expenses incurred
in
connection with this Agreement and the transactions contemplated hereby shall
be
paid by the Party incurring such expenses, whether or not the Merger or any
other related transaction is consummated; provided, however,
that the
filing fee under the HSR Act shall be borne equally by the Company and
Parent. As used in this Agreement, "Expenses" shall include
all
out-of-pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, financing sources, experts and consultants to a Party
hereto
and its affiliates) incurred by a Party or on its behalf in connection with
or
related to the authorization, preparation, negotiation, execution or performance
of this Agreement, the preparation, printing, filing or mailing of the Proxy
Statement, the solicitation of stockholder approvals and all other matters
related to the consummation of the Merger and the other transactions
contemplated hereby
(b)
If
(i) (x) at any
time on or after the date of this Agreement, a Company Takeover Proposal
is made
to the Board or the Company or is publicly proposed or publicly disclosed
or any
Person or group shall have publicly announced or disclosed an intention to
make
a Company Takeover Proposal, (y) thereafter, this Agreement is terminated
by
Parent or the Company pursuant to Section 7.1(b) or Section 7.1(g), or by
Parent
pursuant to Section 7.1(d), and (z) on or within 12 months after the date
of
such termination, any definitive agreement providing for a Qualifying
Transaction shall have been executed or a Qualifying Transaction shall have
been
consummated with any Person;
(ii) this
Agreement is terminated by Parent pursuant to Section 7.1(f); or,
(iii) this
Agreement is terminated by the Company or Parent pursuant to Section 7.1(g)
and
prior to such termination, the Company shall have made a Change of
Recommendation or a Withdrawal of Recommendation,
55
then
in any such event the Company shall pay to Parent a fee of $8,000,000 in
cash
(the "Termination Fee"),
such payment to be made (1) in the case of termination described in Section
7.3(b)(i), upon the earlier to occur of execution of an agreement providing
for
a Qualifying Transaction or consummation of such Qualifying Transaction,
and (2)
in the case of a termination described in Section 7.3(b)(ii) or Section
7.3(b)(iii), within two Business Days after such termination. In
addition, in the case of any termination of this Agreement pursuant to Section
7.1(g), (1) the Expenses of Parent shall be paid by the Company to Parent
in
cash (A) concurrently with and as a condition to any such termination effected
by the Company and (B) on the second Business Day following any such termination
effected by Parent, and (2) the amount of such Expenses so paid shall not
be in
excess of $2,000,000 and shall be credited against the Termination Fee that
is
or becomes payable in connection with such termination pursuant to this Section
7.3(b). For the avoidance of doubt, the Company shall not be required
to pay the Termination Fee or the Expenses pursuant to more than one clause
of
this Section 7.3(b). For the purposes of this Agreement, a "Qualifying Transaction" means
any Company Takeover Proposal (substituting "50%" for "15%"
in the definition of "Company Takeover
Proposal").
(c)
Parent agrees that (i) if this Agreement shall be terminated by the Company
pursuant to Section 7.1(e) as a result of a breach by Parent of (x) Section
3.7
or (y) its covenants and agreements contained in this Agreement and (ii)
the
notice of termination includes a demand, which demand shall be irrevocable,
to
receive the Parent Termination Fee, Parent shall pay $8,000,000 (the "Parent Termination Fee") to
the Company no later than two (2) Business Days after such termination, provided that the
Company's right to receive the Parent Termination Fee shall terminate and
be of
no further force or effect (1) if the Company makes any demand or claim for
Company Damages (as defined below) in any Action, other than for the payment
of
the Parent Termination Fee, or (2) if any condition to the obligation of
Parent
or Merger Sub to consummate the Merger set forth in Section 6.2 becomes
incapable of being satisfied. Notwithstanding anything in this
Agreement to the contrary, the right to receive the Parent Termination Fee
in accordance with this Section 7.3(c) shall be the sole and exclusive remedy
(whether at law, in equity, in contract, in tort or otherwise) of the Company,
the Company Subsidiaries, and its and their affiliates against Parent, Merger
Sub and any of their respective current, former or future directors, officers,
employees, agents, partners, managers, members, affiliates, stockholders,
assignees or representatives for any loss, claim, damage, liability or expense
(x) suffered in connection with this Agreement or the transactions contemplated
hereby (including any breach of this Agreement by Parent or Merger Sub) or
(y)
as a result of the failure of the Merger or any of the other transactions
contemplated hereby to be consummated in circumstances giving rise to the
right
to receive the Parent Termination Fee ("Company Damages"), and upon
payment of the Parent Termination Fee, none of Parent, Merger Sub and any
of
their respective current, former or future directors, officers, employees,
agents, partners, managers, members, affiliates, stockholders, assignees
or
representatives shall have any further liability or obligation relating to
or
arising out of this Agreement or the transactions contemplated
hereby. For the avoidance of doubt, in no event shall Parent or
Merger Sub have any liability under or in respect of this Agreement or the
transactions related hereto (including the Merger) in excess of an aggregate
amount equal to the Parent Termination Fee and the Parent Termination Fee
shall
not be payable on more than one instance.
56
(d)
In the event that the Company shall fail to pay the Termination Fee when
due or
Parent shall fail to pay the Parent Termination Fee when due, the Company
shall
reimburse Parent or Parent shall reimburse the Company, as the case may be,
for
all reasonable costs and expenses actually incurred or accrued by Parent
or the
Company, as the case may be(including reasonable fees and expenses of counsel),
in connection with the collection under and enforcement of this Section 7.3
and
such Termination Fee or Parent Termination Fee, as the case may be, shall
accrue
interest for the period commencing on the date such Termination Fee or Parent
Termination Fee, as the case may be, first became due, at a rate of interest
published from time to time in The Wall Street Journal,
Eastern Edition (or any successor publication thereto), designated therein
as
the prime rate on the date such Termination Fee or Parent Termination Fee,
as
the case may be, was due.
(e)
Each of the Parties hereto acknowledges that the Termination Fee, the Parent
Termination Fee and the other provisions of this Section 7.3 are an integral
part of the transactions contemplated by this Agreement, that the Termination
Fee, the Parent Termination Fee and the other provisions of this Section
7.3 are
not subject to the requirement that the Company Stockholder Approval be obtained
and that these provisions shall be effective without regard to whether the
Company Stockholder Approval is obtained. Each of the Parties hereto further
acknowledges that, without the Termination Fee, the Parent Termination Fee
and
the other provisions of this Section 7.3, neither Parent nor the Company
would
not enter into this Agreement, and that neither the Termination Fee nor the
Parent Termination Fee is a penalty, but rather is liquidated damages in
a
reasonable amount that will compensate Parent or the Company, as the case
may
be, for the efforts and resources expended and opportunities foregone while
negotiating this Agreement and in reliance on this Agreement and on the
expectation of the consummation of the transactions contemplated hereby,
which
amount would otherwise be impossible to calculate with precision.
|
7.4
|
Amendment.
|
This
Agreement may be amended by the Parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective
Time;
provided, that,
after the adoption of this Agreement and approval of the Merger by the
stockholders of the Company, no amendment may be made that would reduce the
amount or change the type of consideration into which each Share shall be
converted upon consummation of the Merger or that would otherwise by Law
require
approval of the stockholders of the Company, without approval of such
stockholders. This Agreement may only be amended pursuant to a
written agreement signed by each of the Parties hereto.
|
7.5
|
Waiver.
|
At
any time prior to the Effective Time, subject to applicable Law, any Party
hereto may in its sole discretion (i) extend the time for the performance
of any
obligation or other act of any other Party hereto, (ii) waive any inaccuracy
in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by the Party or Parties to be
bound
thereby. Notwithstanding the foregoing, no failure or delay by the
Company, Parent or
57
Merger
Sub in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise of any other right hereunder.
ARTICLE
VIII
MISCELLANEOUS
|
8.1
|
Survival.
|
The
respective representations and warranties of the Company and Parent contained
herein or in any certificates or other documents delivered prior to or at
the
Closing shall terminate at the Effective Time.
|
8.2
|
Notices.
|
All
notices and other communications hereunder shall be in writing and shall
be
deemed to have been duly given when delivered in person, by facsimile, receipt
confirmed, or on the next business day when sent by reliable overnight courier
to the respective Parties at the following addresses (or at such other address
for a Party as shall be specified by like notice):
(i) if
to the Company, to:
AmCOMP
Incorporated
000
X.X. Xxxxxxx Xxx
Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention:
Xxxx X. Xxxx, Chairman and Chief Executive Officer
Facsimile:
000-000-0000
with
a copy to (but which shall not constitute notice to the Company):
Xxxxxx
Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park
Avenue Tower
00
Xxxx 00xx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxx, Esq.
Facsimile:
(000) 000-0000
(ii) if
to Parent or Merger Sub, to:
0000
Xxxxxxx Xxxxx
Xxxx,
Xxxxxx 00000
Attention:
Xxxxxx X. Xxxxxx, Esq., General Counsel
Facsimile:
(000) 000-0000
58
with
a copy to (but which shall not constitute notice to Parent or Merger
Sub):
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
|
||
Xxxx
Xxxxx Xxxxxx
|
||
Xxx
Xxxx, Xxx Xxxx 00000
|
||
Attention:
|
Xxxxxx
X. Xxxxxxxx, Esq.
|
|
Xxxxx
X. Xxxxxx, Esq.
|
||
Facsimile:
|
(000)
000-0000
|
|
8.3
|
Binding
Effect;
Assignment.
|
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the Parties hereto and their respective successors and permitted
assigns. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the other Parties, and any
assignment without such consent shall be null and void, except that Parent
and
Merger Sub may assign any or all of their rights and obligations hereunder
to
any direct or indirect wholly owned subsidiary of Parent, provided that no
such
assignment shall relieve the assigning Party of its obligations
hereunder.
|
8.4
|
Governing
Law;
Jurisdiction.
|
This
Agreement shall be governed by, construed and enforced in accordance with
the
Laws of the State of Delaware without regard to the conflict of laws principles
thereof. All Actions arising out of or relating to this Agreement
shall be heard and determined exclusively in any Delaware state or federal
court. The Parties hereto hereby (A) submit to the exclusive
jurisdiction of any Delaware state or federal court for the purpose of any
Action arising out of or relating to this Agreement brought by any Party
hereto
and (B) irrevocably waive, and agree not to assert by way of motion, defense
or
otherwise, in any such Action, any claim that it is not subject personally
to
the jurisdiction of the above-named courts, that its property is exempt or
immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated hereby may not be enforced in
or by
any of the above-named courts; provided, however,
that such
consent to jurisdiction is solely for the purpose referred to in this Section
8.4 and shall not be deemed to be a general submission to the jurisdiction
of
such court or in the State of Delaware other than for such
purposes. Each of Parent, Merger Sub and the Company agrees that a
final judgment in any action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by Law. Each of Parent, Merger Sub and the Company
irrevocably consents to the service of the summons and complaint and any
other
process in any other action or proceeding relating to the transactions
contemplated by this Agreement, on behalf of itself or its property, by personal
delivery of copies of such process to such Party. Nothing in this
Section 8.4 shall affect the right of any Party to serve legal process in
any
other manner permitted by Law.
|
8.5
|
Waiver
of Jury
Trial.
|
Each
of the Parties hereto hereby waives to the fullest extent permitted by
applicable Law any right it may have to a trial by jury with respect to any
Action directly or
59
indirectly
arising out of, under or in connection with this Agreement or the transactions
contemplated hereby. Each of the Parties hereto (A) certifies that no
representative, agent or attorney of any other party has represented, expressly
or otherwise, that such other party would not, in the event of any Action,
seek
to enforce that foregoing waiver and (B) acknowledges that it and the other
Parties hereto have been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section 8.5.
|
8.6
|
Counterparts.
|
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different Parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but
all of which taken together shall constitute one and the same
agreement.
|
8.7
|
Interpretation.
|
The
article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the Parties and shall
not
in any way affect the meaning or interpretation of this Agreement. As
used in this Agreement, (i) the term "Person" shall mean and
include
an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an association, an unincorporated organization,
a
Governmental Authority and any other entity, (ii) unless otherwise specified
herein, the term "affiliate," with respect
to
any Person, shall mean and include any Person, directly or indirectly, through
one or more intermediaries controlling, controlled by or under common control
with such Person, (iii) the term "subsidiary" of any specified
Person shall mean any corporation a majority of the outstanding voting power
of
which, or any partnership, joint venture, limited liability company or other
entity a majority of the total equity interests of which, is directly or
indirectly (either alone or through or together with any other subsidiary)
owned
by such specified Person, (iv) the term "knowledge," when used with
respect to the Company, shall mean the knowledge of the executive officers
and
other employees of the Company after due inquiry set forth on Section 8.7 of the
Company Disclosure Schedule and, when used with respect to Parent, shall
mean
the knowledge of the executive officers of Parent after due inquiry set forth
on
Section 8.7 of
the Parent Disclosure Schedule, and (v) the term "Business Day" means any day
on
which the principal offices of the SEC in Washington, D.C. are open to accept
filings, or, in the case of determining a date when any payment is due, any
day
on which banks are not required or authorized to close in the City of New
York. Whenever the words "include," "includes"
or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without limitation." The words "hereof,"
"herein," "hereby"
and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and
not to any particular provision of this Agreement. The Parties have
participated jointly in the negotiation and drafting of this
Agreement. Consequently, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted
jointly by the Parties hereto, and no presumption or burden of proof shall
arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
60
|
8.8
|
Entire
Agreement.
|
This
Agreement and the documents or instruments referred to herein, including
any
exhibits attached hereto and the Company Disclosure Schedule referred to
herein,
which exhibits and Company Disclosure Schedule are incorporated herein by
reference, any Voting Agreement and the Confidentiality Agreement embody
the
entire agreement and understanding of the Parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
expressly set forth or referred to herein. This Agreement and such
other agreements supersede all prior agreements and the understandings among
the
Parties with respect to such subject matter.
|
8.9
|
Severability.
|
In
case any provision in this Agreement shall be held invalid, illegal or
unenforceable in a jurisdiction, such provision shall be modified or deleted,
as
to the jurisdiction involved, only to the extent necessary to render the
same
valid, legal and enforceable, and the validity, legality and enforceability
of
the remaining provisions hereof shall not in any way be affected or impaired
thereby nor shall the validity, legality or enforceability of such provision
be
affected thereby in any other jurisdiction. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the Parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in a mutually acceptable manner in order that the Merger be consummated
as originally contemplated to the fullest extent possible.
|
8.10
|
Specific
Performance.
|
The
Parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed by the Company in
accordance with their specific terms or were otherwise
breached. Accordingly, the Parties further agree that prior to the
termination of this Agreement pursuant to Article VI, Parent and Merger Sub
shall be entitled to seek an injunction or restraining order to prevent breaches
of this Agreement and to seek to enforce specifically the terms and provisions
hereof, this being in addition to any other right or remedy to which Parent
and
Merger Sub may be entitled under this Agreement, at law or in
equity. Notwithstanding anything to the contrary in this Agreement,
each of the Parties hereto agrees that the Company shall not be entitled
to an
injunction, restraining order or any other equitable remedies to prevent
breaches of this Agreement by Parent or Merger Sub or to enforce specifically
any term or provision of this Agreement and that the sole and exclusive remedy
available to the Company with respect to any such breach shall be the remedy
available to the Company in accordance with Section 7.3(c).
|
8.11
|
Third
Parties.
|
Nothing
contained in this Agreement or in any instrument or document executed by
any
party in connection with the transactions contemplated hereby shall create
any
rights in, or be deemed to have been executed for the benefit of, any Person
that is not a party hereto or thereto or a successor or permitted assign
of such
a party other than Section 5.3 hereof (which is intended to be for the benefit
of the Persons covered thereby and may be enforced by such
61
Persons). Without
limiting the foregoing, the provisions of Section 5.4 hereof are for the
sole
benefit of the Parties to this Agreement and nothing herein, expressed or
implied, is intended, or shall be construed, to confer upon or give to any
Person (including for the avoidance of doubt, any Employee), other than the
Parties hereto and their respective permitted successors and assigns, any
legal
or equitable or other rights or remedies (with respect to the matters provided
for in Section 5.4) under or by reason of any provision of this
Agreement.
[SIGNATURE
PAGE FOLLOWS]
62
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement and Plan of
Merger to be signed and delivered by their respective duly authorized officers
as of the date first above written.
AMCOMP
INCORPORATED
|
|||
By:
|
/s/ Xxxx X. Xxxx | ||
Name:
|
Xxxx X. Xxxx | ||
Title:
|
Chairman, President and Chief Executive Officer |
By:
|
/s/ Xxxxxxx X. Xxxxx | ||
Name:
|
Xxxxxxx
X. Xxxxx
|
||
Title:
|
Chief
Executive Officer
|
SAPPHIRE
ACQUISITION CORP.
|
|||
By:
|
/s/ Xxxxxxx X. Xxxxx | ||
Name:
|
Xxxxxxx
X. Xxxxx
|
||
Title:
|
Chief
Executive Officer
|
[SIGNATURE
PAGE TO AGREEMENT AND PLAN OF MERGER]