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EXHIBIT D
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXX XXXXX FINANCIAL CORPORATION,
FORTIS, INC.
AND
JAFCO ACQUISITION CORP.
DATED AS OF MARCH 9, 1998
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TABLE OF CONTENTS
Page
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PARTIES ......................................................1
RECITALS ......................................................1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER.....................................1
1.1 Merger................................................1
1.2 Time and Place of Closing.............................1
1.3 Effective Time........................................1
1.4 Execution of Stock Option Agreement...................2
ARTICLE 2 - TERMS OF MERGER......................................................2
2.1 Charter...............................................2
2.2 Bylaws................................................2
2.3 Directors and Officers................................2
ARTICLE 3 - MANNER OF CONVERTING SHARES..........................................2
3.1 Conversion of Shares..................................2
3.2 Shares Held by the Company or Parent..................3
3.3 Dissenting Stockholders...............................3
3.4 Conversion of Stock Options; Restricted Stock.........3
ARTICLE 4 - EXCHANGE OF SHARES...................................................4
4.1 Exchange Procedures...................................4
4.2 Rights of Former Company Stockholders.................5
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.......................................................5
5.1 Organization, Good Standing and Qualification.........5
5.2 Capital Structure.....................................6
5.3 Corporate Authority; Approval and Fairness............7
5.4 Governmental Filings; No Violations...................7
5.5 Company Reports; Financial Statements.................8
5.6 Absence of Certain Changes............................9
5.7 Litigation...........................................10
5.8 Employee Benefits....................................10
5.9 Compliance With Laws, Orders and Permits.............12
5.10 Taxes................................................13
5.11 Labor Matters........................................15
5.12 Intellectual Property................................15
5.13 Material Contracts...................................16
5.14 Real Property........................................16
5.15 Other Assets.........................................18
5.16 Insurance Matters....................................18
5.17 Liabilities and Reserves.............................20
5.18 Investment Company...................................20
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5.19 Rights Plan...........................................21
5.20 State Takeover Statutes...............................22
5.21 Charter Provisions....................................22
5.22 [Intentionally Omitted]...............................22
5.23 Brokers and Finders...................................22
5.24 Statements True and Correct...........................22
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PARENT.............................22
6.1 Organization, Good Standing and Qualification.........22
6.2 Corporate Authority; Approval.........................22
6.3 Governmental Filings; No Violations...................23
6.4 Compliance With Laws, Orders and Permits..............24
6.5 Litigation............................................24
6.6 Statements True and Correct...........................25
6.7 Authority of Merger Sub...............................24
6.8 Financing.............................................25
ARTICLE 7 - COVENANTS ...........................................................25
7.1 Interim Operations....................................25
7.2 Acquisition Proposals.................................28
7.3 Stockholders' Meeting.................................29
7.4 Filings; Other Actions; Notification..................29
7.5 Access; Technology Conversions........................30
7.6 Miami Property........................................31
7.7 Publicity.............................................32
7.8 Employee Benefits.....................................32
7.9 Expenses..............................................33
7.10 Indemnification; Directors' and Officer's Insurance...33
7.11 Other Actions by the Company and Parent...............35
ARTICLE 8 - CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE...........................................................35
8.1 Conditions to Obligations of Each Party...............35
8.2 Conditions to Obligations of Parent...................36
8.3 Conditions to Obligations of the Company..............37
ARTICLE 9 - TERMINATION .........................................................37
9.1 Termination by Mutual Consent.........................37
9.2 Termination by Either Parent or the Company...........38
9.3 Termination by the Company............................38
9.4 Termination by Parent.................................39
9.5 Effect of Termination and Abandonment.................39
ARTICLE 10 - MISCELLANEOUS.......................................................39
10.1 Definitions...........................................39
10.2 Non-Survival of Representations and Covenants.........48
10.3 Entire Agreement......................................48
10.4 Amendments............................................48
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10.5 Waivers...............................................48
10.6 Assignment............................................49
10.7 Notices...............................................49
10.8 Governing Law.........................................50
10.9 Counterparts..........................................50
10.10 Captions; Articles and Sections.......................50
10.11 Interpretations.......................................50
10.12 Enforcement of Agreement..............................51
10.13 Severability..........................................51
Signatures ......................................................52
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of March 9, 1998, by and among XXXX XXXXX FINANCIAL CORPORATION,
a Delaware corporation (the "Company"), FORTIS, INC., a Nevada corporation
("Parent"), and JAFCO ACQUISITION CORP., a Delaware corporation ("Merger Sub")
(the Company and Merger Sub are sometimes referred to herein collectively as the
"Constituent Corporations"). Certain terms used in this Agreement are defined in
Section 10.1 of this Agreement.
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger
Sub and the Company have determined that the merger of Merger Sub with and into
the Company upon the terms and subject to the conditions set forth in this
Agreement is advisable and have approved the Merger;
WHEREAS, as a condition to, and simultaneous with, execution of this
Agreement, the Company and Parent are entering into a stock option agreement
(the "Stock Option Agreement") in the form attached hereto as EXHIBIT 1; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time, Merger Sub shall be merged with and into the Company in
accordance with the provisions of, and having the effects specified in, the DGCL
(the "Merger"). The Company shall be the Surviving Corporation resulting from
the Merger and shall become a wholly owned Subsidiary of Parent and shall
continue to be governed by the Laws of the State of Delaware. The separate
corporate existence of Merger Sub shall cease upon the effectiveness of the
Merger.
1.2 TIME AND PLACE OF CLOSING. The consummation of the
transactions contemplated hereby (the "Closing") will take place at 9:00 a.m.
local time at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx at such other place and time as the Parties shall
mutually agree, on the last business day of the month in which all of the
conditions set forth in Article 8 are satisfied or waived (the "Closing Date").
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1.3 EFFECTIVE TIME. On the Closing Date and as soon as practicable
following the Closing, the Company and Parent will cause a Certificate of Merger
(the "Certificate of Merger") to be executed, acknowledged and filed with the
Secretary of State of the State of Delaware (the "Secretary") as provided in the
DGCL. The Merger shall become effective at the time the Secretary accepts for
record the Certificate of Merger or at such later time agreed by the Parties and
established under the Certificate of Merger (the "Effective Time").
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Simultaneously with the
execution of this Agreement by the Parties and as a condition thereto, the
Company is executing and delivering to Parent the Stock Option Agreement,
pursuant to which the Company is granting to Parent an option to purchase shares
of the Company Common Stock.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Certificate of Incorporation of the Company in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until duly amended or repealed.
2.2 BYLAWS. The Bylaws of Merger Sub in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
duly amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Merger Sub in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the Bylaws of
the Surviving Corporation. The officers of the Company in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the officers of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of Parent, the Company, Merger Sub or the stockholders of any of the
foregoing, the shares of the Constituent Corporations shall be converted as
follows:
(a) Each share of Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into one share of Company Common
Stock.
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(b) Each share of Company Common Stock (including any
associated Rights, but excluding shares held by any Company Entity or
any Parent Entity, and excluding shares held by stockholders who
perfect their statutory appraisal rights as provided in Section 3.3)
issued and outstanding immediately prior to the Effective Time shall
cease to be outstanding and shall be converted into and exchanged for
the right to receive from Parent a cash payment in the amount of
twenty-two dollars and fifty cents ($22.50) (the "Per Share Purchase
Price").
(c) Each share of Company 9% Preferred Stock issued and
outstanding immediately prior to the Effective Time shall be redeemed
for cash at the Effective Time in accordance with the terms of such
Company 9% Preferred Stock as set forth in the Company's Certificate of
Incorporation.
(d) Each share of capital stock of Parent issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding from and after the Effective Time.
3.2 SHARES HELD BY THE COMPANY OR PARENT. Each of the shares of
Company Common Stock held by any Company Entity or by any Parent Entity shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
3.3 DISSENTING STOCKHOLDERS. Any holder of shares of Company
Common Stock who perfects his appraisal rights in accordance with and as
contemplated by Section 262 of the DGCL shall be entitled to receive the value
of such shares in cash as determined pursuant to such provision of Law;
provided, that no such payment shall be made to any dissenting stockholder
unless and until such dissenting stockholder has complied with the applicable
provisions of the DGCL and surrendered to the Company the certificate or
certificates representing the shares for which payment is being made. In the
event that after the Effective Time a dissenting stockholder of the Company
fails to perfect, or effectively withdraws or loses, his right to appraisal and
of payment for his shares, Parent shall issue and deliver the consideration to
which such holder of shares of Company Common Stock is entitled under this
Article 3 (without interest) upon surrender by such holder of the certificate or
certificates representing shares of Company Common Stock held by him. If and to
the extent required by applicable Law, the Company will establish (or cause to
be established) an escrow account with an amount sufficient to satisfy the
maximum aggregate payment that may be required to be paid to dissenting
stockholders. Upon satisfaction of all claims of dissenting stockholders, the
remaining escrowed amount, reduced by payment of the fees and expenses of the
escrow agent, will be returned to the Surviving Corporation.
3.4 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK. At the
Effective Time, (i) each option or other Equity Right to purchase or receive
shares of Company Common Stock pursuant to stock options, stock appreciation
rights, restricted stock awards or performance share awards granted by the
Company under the Company Stock Plans and outstanding at the Effective Time,
whether or not then exercisable or vested (collectively, the "Company Options"),
shall become fully exercisable and vested, (ii) each such Company Option shall
be canceled and (iii) in
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consideration of such cancellation, Parent shall pay to each such holder of
Company Options an amount in cash equal to the product of (1) the difference (if
positive) between the Per Share Purchase Price and the price, if any, per share
of Company Common Stock pursuant to which the holder of such Company Option may
purchase the shares of Company Common Stock to which such Company Option relates
(and less any withholding of Taxes as may be required by applicable Law) and (2)
the number of shares of Company Common Stock subject thereto. At the Effective
Time, each such Company Option shall no longer represent the right to purchase
or receive shares of Company Common Stock, but in lieu thereof shall represent
the right to receive the cash payment referred to above. At or prior to the
Effective Time, the Company shall take all actions necessary to provide notice
of the provisions of this Section 3.4 to all holders of Company Options and to
cause the cancellation of the Company Options in accordance herewith at the
Effective Time.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Parent
and the Company shall cause the exchange agent selected by Parent (the "Exchange
Agent") to mail to each holder of record of a certificate which represented
shares of Company Common Stock immediately prior to the Effective Time (the
"Certificates") appropriate transmittal materials and instructions (which shall
specify that delivery shall be effected, and risk of loss and title to such
Certificates shall pass, only upon proper delivery of such Certificates to the
Exchange Agent). The Certificates of Company Common Stock so delivered shall be
duly endorsed as the Exchange Agent may require. In the event of a transfer of
ownership of shares of Company Common Stock represented by Certificates that are
not registered in the transfer records of the Company, the consideration
provided in Section 3.1 may be issued to a transferee if the Certificates
representing such shares are delivered to the Exchange Agent, accompanied by all
documents required to evidence such transfer and by evidence satisfactory to the
Exchange Agent that any applicable stock transfer taxes have been paid. If any
Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of
(a) an affidavit of that fact from the holder claiming such Certificate to be
lost, mislaid, stolen or destroyed, (b) such bond, security or indemnity as
Parent and the Exchange Agent may reasonably require and (c) any other documents
reasonably necessary to evidence and effect the bona fide exchange thereof, the
Exchange Agent shall issue to such holder the consideration into which the
shares represented by such lost, stolen, mislaid or destroyed Certificate shall
have been converted. The Exchange Agent may establish such other reasonable and
customary rules and procedures in connection with its duties as it may deem
appropriate. After the Effective Time, each holder of shares of Company Common
Stock (other than shares to be canceled pursuant to Section 3.2 or as to which
statutory appraisal rights have been perfected, and not withdrawn or lost, as
provided in Section 3.3) issued and outstanding at the Effective Time shall
surrender the Certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1, together with all undelivered dividends
or distributions in respect of such shares (without interest thereon) pursuant
to Section 4.2, less any withholding of Taxes as may be required by applicable
Law. Parent shall not be obligated to deliver the consideration to which
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any former holder of Company Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's Certificates for exchange as provided
in this Section 4.1. Any other provision of this Agreement notwithstanding,
neither Parent, the Surviving Corporation nor the Exchange Agent shall be liable
to a holder of Company Common Stock for any amounts paid or property delivered
in good faith to a public official pursuant to any applicable abandoned
property, escheat or similar Law. Adoption of this Agreement by the stockholders
of the Company shall constitute ratification of the appointment of the Exchange
Agent.
4.2 RIGHTS OF FORMER COMPANY STOCKHOLDERS. At the Effective Time,
the stock transfer books of the Company shall be closed as to holders of Company
Common Stock immediately prior to the Effective Time and no transfer of Company
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1, each
Certificate theretofore representing shares of Company Common Stock (other than
shares to be canceled pursuant to Sections 3.2 and 3.3) shall from and after the
Effective Time represent for all purposes only the right to receive the
consideration provided in Section 3.1 in exchange therefor, subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which have been
declared or made by the Company in respect of such shares of Company Common
Stock in accordance with the terms of this Agreement and which remain unpaid at
the Effective Time. However, upon surrender of such Certificate, any undelivered
dividends and cash payments payable hereunder (without interest) shall be
delivered and paid with respect to each share represented by such Certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding sections or subsections of the
Company Disclosure Letter or in any Company Report filed prior to January 1,
1998, the Company hereby represents and warrants to Parent and Merger Sub as
follows:
5.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware.
Section 5.1(a) of the Company Disclosure Letter contains a list of all
of the Company Subsidiaries. Each Company Subsidiary is a corporation
duly organized, validly existing and in good standing under the Laws of
its respective jurisdiction of organization. Each Company Entity has
all requisite corporate or similar power and authority to own and
operate its Assets and to carry on its business as presently conducted
and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of
its Assets or conduct of its business requires such qualification,
except where the failure to be so qualified or in good standing, when
taken together with all other such failures, is not reasonably likely
to have a Company Material Adverse Effect. The Company has made
available to Parent a complete and correct copy of each Company
Entity's charter and
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bylaws, each as amended to date. Each Company Entity's charter and
bylaws so delivered are in full force and effect.
(b) The Company conducts its insurance operations through
the Subsidiaries set forth in Section 5.1(b) of the Company Disclosure
Letter (collectively, the "Company Insurance Subsidiaries"). Each of
the Company Insurance Subsidiaries is (i) duly licensed or authorized
as an insurance company and, where applicable, a reinsurer in its
jurisdiction of incorporation, (ii) duly licensed or authorized as an
insurance company and, where applicable, a reinsurer 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, except, in any such
case, where the failure to be so licensed or authorized is not
reasonably likely to have a Company Material Adverse Effect. The
Company has made all required filings under applicable insurance
holding company statutes except where the failure to file is not
reasonably likely to have a Company Material Adverse Effect.
5.2 CAPITAL STRUCTURE.
(a) The authorized stock of the Company consists of
75,000,000 shares of Company Common Stock, of which 24,523,156 shares
were outstanding as of the close of business on March 9, 1998; and
432,000 shares of preferred stock, $.01 par value ("Preferred Stock"),
of which (i) 270,000 shares have been authorized as 9% Cumulative
Preferred Stock ("Company 9% Preferred Stock"), of which 150,000 shares
were outstanding as of March 9, 1998, and (ii) 162,000 shares have been
authorized as Series B Participating Preferred Stock, of which no
shares were outstanding as of March 9, 1998. All of the outstanding
shares of Company Common Stock and Company 9% Preferred Stock have been
duly authorized and are validly issued, fully paid and nonassessable.
The Company has no commitments to issue or deliver Company Common
Stock, except that, as of March 9, 1998, there were 2,506,366 shares of
Company Common Stock subject to issuance pursuant to the Company Stock
Plans. The Company has no commitments to issue or deliver any shares of
preferred stock, except that as of March 9, 1998, there were 245,231.56
shares of Series A Junior Participating Preferred Stock subject to
issuance pursuant to the Rights Agreement, the terms of which shares of
Series A Junior Participating Preferred Stock are set forth in a
designation that has been approved by the board of directors of the
Company as part of the Rights Agreement but not filed with the
Secretary. Section 5.2(a) of the Company Disclosure Letter contains a
correct and complete list of each outstanding Company Option, including
the applicable Company Stock Plan, the holder of such Company Option,
date of grant, exercise price and number of shares subject thereto.
(b) Each of the outstanding shares of capital stock or
other securities of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and owned by
the Company or a direct or indirect wholly owned Subsidiary of the
Company, free and clear of any and all Liens.
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(c) Except as set forth in this Section 5.2 above, and except
with respect to the Stock Option Agreement and the Rights Agreement,
there are no preemptive or other outstanding Equity Rights with respect
to any shares of capital stock or other securities of the Company or
any of its Subsidiaries, and no securities or obligations evidencing
such rights are authorized, issued or outstanding. The Company does not
have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or
exercisable for securities having the right to vote) with the
stockholders of the Company on any matter.
5.3 CORPORATE AUTHORITY; APPROVAL AND FAIRNESS.
(a) The Company has all requisite corporate power and
authority, and has taken all corporate action necessary in order, to
execute, deliver and perform its obligations under this Agreement and
the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby, subject only to approval of the Merger
by the holders of at least a majority of the outstanding Company Common
Stock (the "Company Requisite Vote") and to the receipt of the
approvals referred to in Section 5.4. This Agreement and the Stock
Option Agreement are the valid and binding agreements of the Company
enforceable against the Company in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception").
(b) The board of directors of the Company at a meeting
duly called and held, has by unanimous vote of those directors present
(who constituted all of the directors then in office), (i) determined
that the Agreement and the Stock Option Agreement, and the Merger and
the other transactions contemplated hereby and thereby, are fair to and
in the best interests of the Company and its stockholders, (ii)
authorized, approved and adopted in all respects the Agreement and the
Stock Option Agreement, and the Merger and the other transactions
contemplated hereby and thereby, and (iii) subject to Section 7.2,
resolved to recommend that the holders of the Company Common Stock
adopt this Agreement. The board of directors of the Company has
received the opinion of Credit Suisse First Boston Corporation, dated
the date of this Agreement, to the effect that the consideration to be
received in the Merger by the holders of the Company Common Stock is
fair, from a financial point of view, to such holders, a signed copy of
which has been delivered to Parent.
5.4 GOVERNMENTAL FILINGS; NO VIOLATIONS.
(a) Other than the filings, notices and Consents (i)
pursuant to Section 1.3, (ii) under the HSR Act and the Exchange Act,
(iii) required to be made with the NYSE, and (iv) the filing of
appropriate documents with, and approval of, the respective
Commissioners of Insurance or similar Regulatory Authorities of
Bermuda, Florida, Minnesota, Nevada, Ohio and Texas, and such filings,
notices or Consents as may be
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required under the antitrust notification insurance Laws of any state
in which the Company, Parent or any of their respective Subsidiaries is
domiciled or does business, no notices, reports or other filings are
required to be made by any Company Entity with, nor are any Consents,
registrations or Permits required to be obtained by any Company Entity
from, any Regulatory Authority, in connection with the execution and
delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby and thereby, except those that the
failure to make or obtain are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement and the
Stock Option Agreement.
(b The execution, delivery and performance of this
Agreement and the Stock Option Agreement by the Company do not, and the
consummation by the Company of the Merger and the other transactions
contemplated hereby and thereby will not, constitute or result in (i) a
Default under the Certificate of Incorporation or bylaws of the Company
or the comparable governing instruments of any of its Subsidiaries,
(ii) a Default under, or the creation of a Lien on the Assets of the
Company or any of its Subsidiaries (with or without notice, lapse of
time or both) pursuant to, any Contract binding upon the Company or any
of its Subsidiaries or (provided, as to consummation, the filings and
notices are made, and approvals are obtained, as referred to in Section
5.4(a)), any Law, Order or Permit to which the Company or any of its
Subsidiaries is subject, or (iii) any change in the rights or
obligations of any party under any of the foregoing Contracts, except,
in the case of clause (ii) or (iii) immediately above, for any Default,
creation of Lien or change that, individually or in the aggregate, is
not reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement
or the Stock Option Agreement. Section 5.4 of the Company Disclosure
Letter sets forth, to the Knowledge of the Company, a correct and
complete list of Contracts of the Company and its Subsidiaries pursuant
to which Consents are or may be required prior to consummation of the
transactions contemplated by this Agreement and the Stock Option
Agreement (whether or not subject to the exception set forth with
respect to clauses (ii) and (iii) immediately above), except those the
failure to obtain, individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect.
5.5 COMPANY REPORTS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent each
registration statement, report, proxy statement or information
statement prepared by it since December 31, 1994, including (i) the
Company's Annual Report on Form 10-K for the year ended December 31,
1996, and (ii) the Company's Quarterly Reports on Form 10-Q for the
periods ended March 31, 1997, June 30, 1997 and September 30, 1997,
each in the form (including exhibits, annexes and any amendments
thereto), and filed with the SEC (collectively, including any such
reports filed subsequent to the date hereof, the "Company Reports"). As
of their respective dates, the Company Reports did not, and any Company
Reports
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filed with the SEC after January 1, 1998 will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and
schedules) fairly presents, or will fairly present, the consolidated
financial position of the Company and its Subsidiaries as of its date
and each of the consolidated statements of income, cash flows and
changes in stockholders equity included in or incorporated by reference
into the Company Reports (including any related notes and schedules)
fairly presents, or will fairly present, the results of operations,
cash flows and changes in stockholders equity, as the case may be, of
the Company and its Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that will not be material in amount or
effect), in each case in accordance with GAAP, except as may be noted
therein.
(b) The Company has made available to Parent true and
complete copies of the annual and quarterly statements of each of the
Company Insurance Subsidiaries as filed with the applicable insurance
Regulatory Authorities for the years ended December 31, 1995, 1996 and
1997, including all exhibits, interrogatories, notes, schedules and any
actuarial opinions, affirmations or certifications or other supporting
documents filed in connection therewith (collectively, the "Company SAP
Statements"). The Company SAP Statements were prepared in conformity
with statutory accounting practices prescribed or permitted by the
applicable insurance Regulatory Authority consistently applied for the
periods covered thereby and present fairly the statutory financial
position of such Company Insurance Subsidiaries as at the respective
dates thereof and the results of operations of such Subsidiaries for
the respective periods then ended. The Company SAP Statements complied
in all material respects with all applicable Laws when filed and, to
the Knowledge of the Company, no material deficiency has been asserted
with respect to any Company SAP Statements by the applicable insurance
Regulatory Authority or any other governmental agency or body. The
statutory balance sheets and income statements included in the Company
SAP Statements as of and for the years ended December 31, 1995 and 1996
have been audited by Price Waterhouse LLP, and the Company has made
available to Parent true and complete copies of all audit opinions
related thereto. The Company has made available to Parent true and
complete copies of all examination reports of insurance departments and
any insurance Regulatory Authorities since January 1, 1994 relating to
the Company Insurance Subsidiaries.
(c) Since January 1, 1993, or the date of organization if
later, each Company Entity has timely filed all reports and statements,
together with any amendments required to be made with respect thereto,
that it was required to file with Regulatory Authorities (except
failures to file which are not reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect).
5.6 ABSENCE OF CERTAIN CHANGES. Since September 30, 1997, the
Company and its Subsidiaries have conducted the businesses of the Company and
its Subsidiaries, taken as a whole,
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only in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such businesses and there has not been (i)
any change in the financial condition, management, Assets, Liabilities, business
or results of operations of the Company and its Subsidiaries which or, to the
Knowledge of the Company, any development or combination of developments which,
individually or in the aggregate, has had or is reasonably likely to have a
Company Material Adverse Effect; (ii) any material damage, destruction or other
casualty loss with respect to any material Asset owned, leased or otherwise used
by the Company or any of its Subsidiaries, whether or not covered by insurance;
(iii) any declaration, setting aside or payment of any dividend or other
distribution in respect of the stock of the Company, except for (A) regular
quarterly cash dividends on the Company Common Stock not in excess of $.12 per
share per quarter, and (B) regular semi-annual cash dividends on the Company 9%
Preferred Stock paid in accordance with the Company's Certificate of
Incorporation; (iv) any material change by the Company in accounting principles,
practices or methods other than those required by GAAP or applicable statutory
accounting principles; (v) any material change in the Company's consolidated
reserves for future policy benefits or other policy claims and benefits; or (vi)
any material change in the accounting, actuarial, investment, reserving,
underwriting or claims administration policies, practices, procedures, methods,
assumptions or principles of any Company Insurance Subsidiary. Since September
30, 1997, there has not been any increase in the compensation payable or that
could become payable by the Company or any of its Subsidiaries to officers or
key employees or any amendment of any of the Compensation and Benefit Plans
other than increases or amendments in the ordinary course.
5.7 LITIGATION. There is no Litigation instituted or pending or,
to the Knowledge of the Company, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Company Entity, or against
any director, officer or Compensation and Benefit Plan, or against any Asset,
interest or right of any of them, nor are there any Orders of any Regulatory
Authorities, other governmental authorities or arbitrators outstanding against
any Company Entity, in each case, except for those that are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent or materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement or the Stock Option
Agreement. Section 5.7 of the Company Disclosure Letter contains a summary of
all Litigation pending as of the date of this Agreement to which any Company
Entity is a party and which names a Company Entity as a defendant, co-defendant
or third-party defendant or for which any Company Entity has any potential
Liability.
5.8 EMPLOYEE BENEFITS.
(a) A copy of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option,
employment, termination, severance, change of control, compensation,
medical, health or other plan, agreement, policy or arrangement that
covers employees, directors, agents, former employees, former directors
or former consultants of any Company Entity (the "Compensation and
Benefit Plans") and any trust agreement or insurance contract forming a
part of such Compensation and Benefit Plans has been made
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available to Parent prior to the date hereof. The Compensation and
Benefit Plans are listed in Section 5.8(a) of the Company Disclosure
Letter and any "change of control" or similar provisions therein are
specifically identified in Section 5.8(a) of the Company Disclosure
Letter.
(b) All Compensation and Benefit Plans are in substantial
compliance with all applicable Law, including the Code and ERISA. Each
Compensation and Benefit Plan that is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan")
and that is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS with respect
to "TRA" (as defined in Section 1 of Rev. Proc. 93-39), and the Company
has no Knowledge of any circumstances reasonably likely to result in
revocation of any such favorable determination letter. There is no
pending or, to the Knowledge of the Company, threatened litigation
relating to the Compensation and Benefit Plans. To the Knowledge of the
Company, no Company Entity has engaged in a transaction with respect to
any Compensation and Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject any
Company Entity to a material tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA.
(c) No liability under Subtitle C or D of Title IV of
ERISA has been or is reasonably expected to be incurred by any Company
Entity with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any Company Entity, or the
single-employer plan of any entity which is considered one employer
with the Company under Section 4001 of ERISA or Section 414 of the Code
(an "ERISA Affiliate"). No Company Entity has contributed, or has been
obligated to contribute, to a multiemployer plan as defined in Section
3(37) of ERISA at any time during the last six years. No notice of a
"reportable event," within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been
required to be filed for any Pension Plan or by any ERISA Affiliate
within the 12-month period ending on the date hereof.
(d) All contributions required to be made under the terms
of any Compensation and Benefit Plan as of the date hereof have been
timely made or have been reflected on the most recent consolidated
balance sheet filed or incorporated by reference in the Company Reports
prior to the date hereof. Neither any Pension Plan nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412
of the Code or Section 302 of ERISA. Neither the Company nor its
Subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer
plan, as of the date of the most recent actuarial valuation, the
actuarially determined present value of all "benefit liabilities,"
within the meaning of Section 4001(a)(16) of ERISA (as determined on
the basis of the actuarial assumptions contained in the Pension Plan's
most recent actuarial
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valuation), did not exceed the then current value of the assets of such
Pension Plan, and there has been no material change in the financial
condition of such Pension Plan since the date of the most recent
actuarial valuation.
(f) No Company entity has any obligations for retiree
health and life benefits under any Compensation and Benefit Plan,
except as specifically described in Section 5.8(f) of the Company
Disclosure Letter. Subject to the restrictions set forth in Section 7.1
hereof, the Company or its Subsidiaries may amend or terminate any such
plan under the terms of such plan at any time without incurring any
material Liability thereunder.
(g) The consummation of the Merger and the other
transactions contemplated by this Agreement, either alone or in
connection with a subsequent termination of employment, will not (i)
entitle any employees of any Company Entity to severance pay, (ii)
accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger
any other material obligation pursuant to, any of the Compensation and
Benefit Plans, or (iii) result in any Default under any of the
Compensation and Benefit Plans.
(h) All Compensation and Benefit Plans covering current
or former non-U.S. employees or former employees of the Company and its
Subsidiaries comply in all material respects with applicable Law. No
Company Entity has any material unfunded Liabilities with respect to
any Pension Plan that covers such non-U.S. employees.
(i) No amount that will be received (whether in cash or
property or the vesting of property) as a direct result of the
transactions contemplated by this Agreement by any employee, officer,
director, agent or independent contractor of the Company who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment arrangement is
reasonably likely to be treated as an "excess parachute payment" (as
such term is defined in Section 280G(b)(1) of the Code).
5.9 COMPLIANCE WITH LAWS, ORDERS AND PERMITS.
(a) The business and operations of the Company and the
Company Insurance Subsidiaries have been conducted in compliance in all
material respects with all applicable Laws regulating the business of
insurance, including all applicable orders and directives of insurance
Regulatory Authorities and market conduct recommendations resulting
from market conduct examinations of insurance Regulatory Authorities
(collectively, "Insurance Laws"). Notwithstanding the generality of the
foregoing, except where the failure to do so would not, individually or
in the aggregate, be reasonably likely to have a Company Material
Adverse Effect, each Company Insurance Subsidiary and, to the Knowledge
of the Company, its agents have marketed, sold and issued insurance
products in compliance, in all material respects, with Insurance Laws
applicable to the business of such Company Insurance Subsidiary and in
the respective jurisdictions in which such products have been sold,
including in compliance with (i) all applicable prohibitions against
"redlining" or withdrawal of business lines, (ii) all applicable
requirements relating to the disclosure of
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the nature of insurance products as policies of insurance, and (iii)
all applicable requirements relating to insurance product projections
and illustrations.
(b) There is no pending or, to the Knowledge of the
Company, threatened charge by any insurance Regulatory Authority that
any of the Company Insurance Subsidiaries has violated, nor any pending
or, to the Knowledge of the Company, threatened investigation by any
insurance Regulatory Authority with respect to possible violations of,
any applicable Insurance Laws where such violations are, individually
or in the aggregate, reasonably likely to have a Company Material
Adverse Effect. None of the Company Insurance Subsidiaries is subject
to any Order of any insurance Regulatory Authority relating
specifically to such Company Insurance Subsidiary (as opposed to
insurance companies generally). The Company Insurance Subsidiaries have
filed all reports required to be filed with any insurance Regulatory
Authority on or before the date hereof as to which the failure to file
such reports is, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect.
(c) In addition to Insurance Laws, the business of each
Company Entity has been, and is being, conducted in compliance in all
material respects with all applicable Laws, Orders and Permits, and
with such Company Entity's charter and bylaws or other similar
governing documents. No investigation or review by any Regulatory
Authority with respect to any Company Entity is pending or, to the
Knowledge of the Company, threatened, nor, to the Knowledge of the
Company, has any Regulatory Authority indicated an intention to conduct
the same, except for those the outcome of which are not, individually
or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or prevent or materially burden, delay or impair the
ability of the Company to consummate the transactions contemplated by
this Agreement. To the Knowledge of the Company, no material change is
required in any Company Entity's processes, properties or procedures in
connection with any applicable Laws, Orders or Permits, and the Company
has not received any written notice or communication of any material
noncompliance with any such Laws, Orders or Permits that has not been
cured as of the date hereof. Each Company Entity has all Permits,
Orders, Consents, trademarks, patents, trade names, copyrights, service
marks and franchises necessary to conduct its business as presently
conducted except those the absence of which are not, individually or in
the aggregate, reasonably likely to have a Company Material Adverse
Effect or prevent or materially burden, delay or impair the ability of
the Company to consummate the Merger and the other transactions
contemplated by this Agreement or the Stock Option Agreement.
(d) Copies of all material written reports,
correspondence, notices and other documents relating to any inspection,
audit, monitoring or other form of review or enforcement action by a
Regulatory Authority have been made available to Parent.
5.10 TAXES.
(a) Each Company Entity has filed, completely and
correctly in all material respects, all Tax Returns that are required
by all applicable Laws to be filed by such
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Company Entity, and (i) has paid, or made adequate provision for the
payment of, all Taxes which have or may become due and payable pursuant
to those Tax Returns, has paid all estimated Taxes due and (ii) has
paid all other charges, claims and assessments for Taxes received to
date other than those charges, claims and assessments for Taxes being
contested in good faith for which provision has been made in accordance
with GAAP on the books of such Company Entity.
(b) All Taxes which the Company Entities are required by
Law to withhold and collect have been duly withheld and collected, and
have been paid over, in a timely manner, to the proper Taxing
Authorities to the extent due and payable.
(c) No Company Entity has executed any currently
effective waiver to extend the applicable statute of limitations in
respect of any Tax Liabilities of any Company Entity for the fiscal
years prior to and including the most recent fiscal year.
(d) No Company Entity has been a member of any
consolidated group for federal income tax purposes other than the
consolidated group of which the Company is the common parent; and no
Company Entity is a party to any tax sharing agreement or arrangement,
other than with each other.
(e) No Liens for Taxes exist with respect to any of the
Assets of any Company Entity, except for statutory Liens for Taxes not
yet due or payable or that are being contested in good faith.
(f) All of the income Tax Returns filed by or on behalf
of each Company Entity have been examined by and settled with the IRS
or appropriate Taxing Authority, or the statute of limitations with
respect to the relevant Tax liability expired, for all taxable periods
through and including the period ending on December 31, 1993.
(g) All Taxes due with respect to any completed and
settled audit, examination or deficiency litigation with any Taxing
Authority have been, or prior to the Effective Time will be, paid in
full.
(h) There is no audit, examination, deficiency, or refund
litigation pending with respect to any Taxes and during the past three
years no Taxing Authority has given written notice of the commencement
of any audit, examination, deficiency or refund litigation, with
respect to any Taxes.
(i) No Company Entity is bound by any currently effective
private ruling, closing agreement or similar agreement with any Taxing
Authority relating to a material amount of Taxes.
(j) The Company is not a "consenting corporation" within
the meaning of Section 341(f) of the Code.
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5.11 LABOR MATTERS. No Company Entity is a party to or otherwise
bound by any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. No Company Entity is the
subject of any Litigation asserting that any such Company Entity has committed
an unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel any such Company Entity to bargain
with any labor organization as to wages or conditions of employment, nor is any
Company Entity party to any collective bargaining agreement, nor is there any
strike or other labor dispute involving any Company Entity, pending or, to the
Knowledge of the Company, threatened, or, to the Knowledge of the Company, is
there any activity involving any Company Entity's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.12 INTELLECTUAL PROPERTY.
(a) The Company Entities own, or are licensed or
otherwise possess legally enforceable rights to use, all Intellectual
Property that is used in their businesses as currently conducted,
except for any such failures to own, be licensed or possess that are
not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect, and to the Knowledge of the Company
all patents, trademarks, tradenames, service marks and copyrights held
by any Company Entity are valid and subsisting.
(b) Except as are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect:
(i) The Company is not, nor will it be as a
result of the execution and delivery of this Agreement or the
performance of its obligations hereunder, in violation of any
licenses, sublicenses and other Contracts as to which the
Company is a party and pursuant to which the Company is
authorized to use any third-party patents, trademarks,
tradenames, service marks, and copyrights ("Third-Party
Intellectual Property Rights").
(ii) No claims with respect to (A) the patents,
registered and material unregistered trademarks and service
marks, registered copyrights, tradenames, and any applications
therefor owned by any Company Entity (the "Company
Intellectual Property Rights"); (B) any trade secret material
to the Company; or (C) Third-Party Intellectual Property
Rights are currently pending or, to the Knowledge of the
Company, are threatened by any Person.
(iii) The Company has no Knowledge of any valid
grounds for any bona fide claims (A) to the effect that the
sale, licensing or use of any product as now used, sold or
licensed or proposed for use, sale or license by any Company
Entity infringes on any copyright, patent, trademark, service
xxxx or trade secret; (B) against the use by any Company
Entity of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software
programs and applications used in the business of any Company
Entity as currently
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conducted or as proposed to be conducted; (C) challenging the
ownership, validity or effectiveness of any of the Company
Intellectual Property Rights or other trade secret material to
the Company; or (D) challenging the license or legally
enforceable right to use of the Third-Party Intellectual
Rights by any Company Entity.
(iv) To the Knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of
the Company Intellectual Property Rights by any third party,
including any employee or former employee of any Company
Entity.
5.13 MATERIAL CONTRACTS. All of the material Contracts of the
Company Entities that are required to be described in the Company Reports or to
be filed as exhibits thereto (the "Material Contracts") are described in the
Company Reports or filed as exhibits thereto and are in full force and effect.
True and complete copies of all such Material Contracts have been delivered or
have been made available by the Company to Parent. Neither any Company Entity
nor any other party is in Default under any such Material Contract except for
such Defaults as are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect. No Company Entity is party to any
Contract containing any provision or covenant limiting in any manner the ability
of any Company Entity to (a) sell any products or services of or to any other
person, (b) engage in any line of business, or (c) compete with or to obtain
products or services from any Person or limiting the ability of any Person to
provide products or services to any Company Entity.
5.14 REAL PROPERTY.
(a) Section 5.14(a) of the Company Disclosure Letter
contains a list of all parcels of real property owned by the Company
Entities, including the Miami Property (collectively, the "Owned Real
Property"). The Company has good, marketable and insurable fee simple
title to all of the Owned Real Property, including the Improvements
thereon, free and clear of all Liens and other imperfections of title,
except Permitted Title Exceptions. The Company is the lessor or
landlord or the successor lessor or landlord under the Space Leases
free and clear of all Liens except for the Commission Agreements and
the Permitted Title Exceptions and is entitled to receive the rents,
issues and profits from the Space Leases. Without limiting the
foregoing, the Space Leases are free and clear of any and all Liens,
and the Company has made no assignment of any of the rights of the
Company under any of the Space Leases or with respect to any of said
rents, issues or profits, except as set forth in the Commission
Agreements and the Permitted Title Exceptions, and except as to any
holders of any Liens to be released and canceled at as of the Effective
Time. The Company has delivered to Parent a true and complete copy of
the Rent Roll for the Miami Property, and the Company has no Knowledge
that any tenant listed thereon who currently leases a material portion
of the Miami Property has (i) plans to terminate such tenant's Space
Lease, (ii) has commenced a voluntary case, or had entered against it a
petition, for relief under any Law relating to bankruptcy or
insolvency, or (iii) has asserted a right to off-set rent by reason of
the Company's failure to perform its
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obligations under a Space Lease. The Miami Property contains not less
than 1 million rentable square feet within the current Improvements
thereon.
(b) The Owned Real Property and all Improvements thereon,
in all material respects, conform to and comply with all applicable
Laws, including those relating to zoning, fire, health, building,
handicapped persons, sanitation, use and occupancy. The Company has
obtained all material Permits required for the Owned Real Property, all
of which are currently in full force and effect. The Improvements on
the Owned Real Property (i) are properly located within the boundaries
of the Owned Real Property and in accordance with all applicable
set-back restrictions, (ii) are free from all material engineering and
structural defects, (iii) are free from all termites or other
wood-destroying insects, and (iv) do not contain any asbestos or
asbestos-containing materials. No portion of the Improvements located
on the Owned Real Property has been damaged or destroyed by fire or
other casualty.
(c) To the Company's Knowledge, no portion of the Owned
Real Property is currently subject to any Condemnation Proceeding and
no Condemnation Proceeding has been commenced or instituted against any
portion of the Owned Real Property.
(d) The Acreage (i) contains approximately four acres of
vacant land, and (ii) has all necessary and appropriate zoning
designations, ingress and egress, and utility access, and is otherwise
suitable in all material respects, for commercial development in a
manner consistent with the development that exists on the remainder of
the Miami Property.
(e) Section 5.14(e) of the Company Disclosure Letter
contains a list of all parcels of real property leased by any of the
Company Entities as lessee (collectively, the "Leased Real Property").
Each of such leases is in full force and effect, no Company Entity is
in material Default under any material provisions of such lease, and no
lessor has asserted that any Company Entity is in material Default of
any material provision under any such lease.
(f) Each Company Entity has complied in all material
respects with all applicable Environmental Laws; (ii) the properties
currently owned or operated by the Company (including soils,
groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances; (iii) the properties
formerly owned or operated by any Company Entity were not contaminated
with Hazardous Substances during the period of ownership or operation
by such Company Entity; (iv) no Company Entity is subject to Liability
for any Hazardous Substance disposal or contamination on any third
party property; (v) no Company Entity has been associated with any
release or threat of release of any Hazardous Substance; (vi) no
Company Entity has received any notice, demand, letter, claim or
request for information alleging that any Company Entity may be in
violation of or liable under any Environmental Law; (vii) no Company
Entity is subject to any Orders or other arrangements with any
Regulatory Authority or is subject to any indemnity or other agreement
with any third party relating to Liability under any
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Environmental Law or relating to Hazardous Substances; and (viii) there
are no circumstances or conditions involving any Company Entity that
could reasonably be expected to result in any Liability, investigations
or restrictions on the ownership, use or transfer of any property of
the Company pursuant to any Environmental Law, except in each of
clauses (i) through (viii) as are not, individually or in the
aggregate, reasonably likely to have a material adverse effect on the
fair market value of the Owned Real Property.
5.15 OTHER ASSETS.
(a) With respect to all Assets other than the Real
Property, the Company Entities have good and marketable title, free and
clear of all Liens, except as would not be reasonably likely to have,
individually or in the aggregate, a Company Material Adverse Effect. To
the Company's Knowledge, all tangible properties used in the businesses
of the Company Entities are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent
with the Company's past practices.
(b) All Assets (other than the Real Property) that are
material to the Company's business on a consolidated basis, and that
are held under leases or subleases by any of the Company Entities, are
held under valid Contracts enforceable in accordance with their
respective terms (except as enforceability may be limited by the
Bankruptcy and Equity Exception), and each such Contract is in full
force and effect.
(c) The Company Entities currently maintain insurance
similar in amounts, scope, and coverage to that maintained by other
peer organizations. None of the Company Entities has received written
notice from any insurance carrier that (i) any policy of insurance will
be canceled or that coverage thereunder will be reduced or eliminated,
or (ii) premium costs with respect to such policies of insurance will
be substantially increased. There are presently no claims for amounts
exceeding in any individual case $1 million pending under such policies
of insurance and no notices of claims in excess of such amounts have
been given by any Company Entity under such policies.
(d) The Assets (including the Real Property) of the
Company Entities include all Assets required to operate the business of
the Company Entities as presently conducted, except as would not be
reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect.
5.16 INSURANCE MATTERS.
(a) All policies, binders, slips, certificates, annuity
contracts and participation agreements and other agreements of
insurance, whether individual or group, in effect as of the date hereof
(including all applications, supplements, endorsements, riders and
ancillary agreements in connection therewith) that are issued by the
Company Insurance Subsidiaries (the "Company Insurance Contracts"), and
any and all marketing materials, are, to the extent required under
applicable Law, on forms approved by applicable
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insurance Regulatory Authorities or which have been filed and not
objected to by such authorities within the period provided for
objection, and such forms comply in all material respects with the
Insurance Laws applicable thereto and, as to premium rates established
by any Company Insurance Subsidiary that are required to be filed with
or approved by insurance Regulatory Authorities, the rates have been so
filed or approved, the premiums charged conform thereto in all material
respects, and such premiums comply in all material respects with the
Insurance Laws applicable thereto.
(b) Section 5.16(b) lists all of the reinsurance and
coinsurance treaties or agreements, including retrocessional
agreements, to which the Company or any Company Insurance Subsidiary is
a party or under which the Company or any Company Insurance Subsidiary
has any existing rights, obligations or Liabilities (collectively, the
"Reinsurance Contracts"). All of the Reinsurance Contracts are in full
force and effect, and neither the Company nor any Company Insurance
Subsidiary, nor, to the Knowledge of the Company, any other party to a
Reinsurance Contract, is in Default in any material respect as to any
provision thereof. No Reinsurance Contract contains any provision
providing that the other party thereto may terminate such Reinsurance
Contract by reason of the transactions contemplated by this Agreement.
Neither the Company nor any Company Insurance Subsidiary has received
any notice to the effect that the financial condition of any other
party to any such Reinsurance Contract is impaired with the result that
a Default thereunder may reasonably be anticipated, whether or not such
Default may be cured by the operation of any offset clause in such
Reinsurance Contract.
(c) Prior to the date hereof, the Company has delivered
or made available to Parent a true and complete copy of any material
actuarial reports prepared by actuaries, independent or otherwise, with
respect to any Company Insurance Subsidiary since December 31, 1994,
and all attachments, addenda, supplements and modifications thereto
(the "Company Actuarial Analyses"). The information and data furnished
by the Company or any Company Insurance Subsidiary to its independent
actuaries in connection with the preparation of the Company Actuarial
Analyses were accurate in all material respects. Furthermore, to the
Knowledge of the Company, each Company Actuarial Analysis was based
upon an accurate inventory of policies in force for the Company
Insurance Subsidiaries at the relevant time of preparation, was
prepared using appropriate modeling procedures accurately applied and
in conformity with generally accepted actuarial standards consistently
applied, and the projections contained therein were properly prepared
in accordance with the assumptions stated therein.
(d) None of Standard & Poor's Corporation, Xxxxx'x
Investors Service, Inc. or A.M. Best Company has announced that it has
under surveillance or review its rating of the financial strength or
claims-paying ability of any Company Insurance Subsidiary, and the
Company has no reason to believe that any rating presently held by the
Company Insurance Subsidiaries is likely to be modified, qualified,
lowered or placed under such surveillance for any reason, including as
a result of the transactions contemplated hereby.
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(e) All annuity contracts and life insurance policies
issued by each Company Insurance Subsidiary to an annuity holder
domiciled in the United States satisfy in all material respects all
definitional or other requirements for qualification under the Code
section applicable (or intended to be applicable) to such annuity
contracts or life insurance policies, and none of the Company Insurance
Subsidiaries have entered into any Contract or are involved in any
discussions or negotiations and there are no audits, examinations,
investigations or other proceedings with the IRS with respect to the
failure of any life insurance policy under section 7702 or 817(h) of
the Code or the failure of any annuity contract to meet the
requirements of section 72(s) of the Code. There are no "hold harmless"
indemnification agreements respecting the tax qualification or
treatment of any product or plan sold, issued, entered into or
administered by the Company Insurance Subsidiaries, and there have been
no claims asserted by any Person under such "hold harmless"
indemnification agreements so set forth.
5.17 LIABILITIES AND RESERVES.
(a) The reserves carried on the Company SAP Statements of
each Company Insurance Subsidiary for future insurance policy benefits,
losses, claims and similar purposes were, as of the respective dates of
such Company SAP Statements, in compliance in all material respects
with the requirements for reserves established by the insurance
Regulatory Authority of the state of domicile of such Company Insurance
Subsidiary, were determined in all material respects in accordance with
generally accepted actuarial standards and principles consistently
applied, and were fairly stated in all material respects in accordance
with sound actuarial and statutory accounting principles. Such reserves
were adequate in the aggregate to cover the total amount of all
reasonably anticipated Liabilities of the Company and each Company
Insurance Subsidiary under all outstanding insurance, reinsurance and
other applicable agreements as of the respective dates of such Company
SAP Statements. The admitted assets of each Company Insurance
Subsidiary as determined under applicable Laws are in an amount at
least equal to the minimum amounts required by applicable Laws. In
addition, the Company has delivered or made available to Parent copies
of all material work papers used as the basis for establishing the
reserves for the Company and the Company Insurance Subsidiaries at
December 31, 1995, December 31, 1996 and September 30, 1997,
respectively.
(b) Except for regular periodic assessments in the
ordinary course of business or assessments based on developments which
are publicly known within the insurance industry, to the Knowledge of
the Company, no claim or assessment is pending or threatened against
any Company Insurance Subsidiary which is peculiar or unique to such
Company Insurance Subsidiary by any state insurance guaranty
associations in connection with such association's fund relating to
insolvent insurers (or similar state assessment authority) which, if
determined adversely, would, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect.
5.18 INVESTMENT COMPANY. None of the Company Insurance Subsidiaries
maintains any separate accounts. No Company Entity conducts activities of or is
otherwise deemed under
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applicable Law to control an "investment advisor" as such term is defined in
Section 2(a)(20) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), whether or not registered under the Investment
Advisers Act of 1940, as amended. No Company Entity is an "investment company"
as defined under the Investment Company Act, and no Company Entity sponsors any
Person that is such an investment company.
5.19 RIGHTS PLAN.
(a) Prior to Parent entering into this Agreement and the
Stock Option Agreement, the Company has taken all actions necessary
such that, for all purposes under the Rights Agreement, Parent shall
not be deemed an Acquiring Person (as defined in the Rights Agreement),
the Distribution Date (as defined in the Rights Agreement) shall not be
deemed to occur and the rights issuable pursuant to the Rights
Agreement will not separate from the Company Common Stock, as a result
of Parent's entering into this Agreement or the Stock Option Agreement,
or consummating the Merger or the other transactions contemplated
hereby or thereby.
(b) The Company has taken all necessary action with
respect to all of the outstanding Rights so that, as of immediately
prior to the Effective Time, (i) neither the Company nor Parent will
have any obligations under the Rights or the Rights Agreement and (ii)
the holders of the Rights will have no rights under the Rights or the
Rights Agreement.
5.20 STATE TAKEOVER STATUTES. Each Company Entity has taken all
necessary action to exempt the transactions contemplated by this Agreement and
the Stock Option Agreement from, or if necessary to challenge the validity or
applicability of, any applicable "moratorium," "fair price," "business
combination," "control share," or other anti-takeover Laws (collectively,
"Takeover Laws").
5.21 CHARTER PROVISIONS. Each Company Entity has taken all action
so that the entering into of this Agreement and the Stock Option Agreement, and
the consummation of the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreement, do not and will not result in the
grant of any rights to any Person under the Certificate of Incorporation, Bylaws
or other governing instruments of any Company Entity or restrict or impair the
ability of Parent or any of its Subsidiaries to vote, or otherwise to exercise
the rights of a stockholder with respect to, shares of any Company Entity that
may be directly or indirectly acquired or controlled by them.
5.22 [INTENTIONALLY OMITTED]
5.23 BROKERS AND FINDERS. No Company Entity nor any of their
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders, fees in connection
with the Merger or the other transactions contemplated in this Agreement, except
that the Company has employed Credit Suisse First Boston Corporation
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as its financial advisor, the arrangements with which have been disclosed to
Parent prior to the date hereof.
5.24 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Company Entity
or any Affiliate thereof to Parent pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Company Entity or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to the Company's stockholders in connection with
the Stockholders' Meeting, and any other documents to be filed by a Company
Entity or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the stockholders of the Company, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Stockholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Stockholders' Meeting. All
documents that any Company Entity or any Affiliate thereof is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable Law.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Company as follows:
6.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. Parent has all requisite corporate or similar power and
authority to own and operate its Assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
Assets or conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing, when taken together with all
other such failures, is not reasonably likely to have a Parent Material Adverse
Effect. Parent has made available to the Company a complete and correct copy of
Parent's Articles of Incorporation and Bylaws, each as amended to date. Parent's
Articles of Incorporation and Bylaws so delivered are in full force and effect.
6.2 CORPORATE AUTHORITY; APPROVAL.
(a) Parent has all requisite corporate power and
authority, and has taken all corporate action necessary in order, to
execute, deliver and perform its obligations under
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this Agreement and the Stock Option Agreement and to consummate the
transactions contemplated hereby and thereby, subject only to receipt
of the approvals referred to in Section 6.3. This Agreement and the
Stock Option Agreement are the valid and binding agreements of Parent
enforceable against Parent in accordance with their terms, subject to
the Bankruptcy and Equity Exception.
(b) The board of directors of Parent (i) has declared
that the Agreement and the Stock Option Agreement, and the Merger and
the other transactions contemplated hereby and thereby, are advisable
and in the best interests of Parent, and (ii) has authorized, approved
and adopted in all respects the Agreement and the Stock Option
Agreement, and the Merger and the other transactions contemplated
hereby and thereby.
6.3 GOVERNMENTAL FILINGS; NO VIOLATIONS.
(a) Other than the filings, notices and Consents (i)
pursuant to Section 1.3, (ii) under the HSR Act, and (iii) the filing
of appropriate documents with, and approval of, the respective
Commissioners of Insurance or similar Regulatory Authorities of
Bermuda, Florida, Minnesota, Nevada, Ohio and Texas, and such filings,
notices or Consents as may be required under the antitrust notification
insurance laws of any state in which the Company, Parent or any of
their respective Subsidiaries is domiciled or does business, no
notices, reports or other filings are required to be made by any Parent
Entity with, nor are any Consents, registrations or Permits required to
be obtained by any Parent Entity from, any Regulatory Authority, in
connection with the execution and delivery of this Agreement and the
Stock Option Agreement by Parent and the consummation by Parent of the
Merger and the other transactions contemplated hereby and thereby,
except those that the failure to make or obtain are not, individually
or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect or prevent, materially delay or materially impair the
ability of Parent to consummate the transactions contemplated by this
Agreement and the Stock Option Agreement.
(b) The execution, delivery and performance of this
Agreement and the Stock Option Agreement by Parent do not, and the
consummation by Parent of the Merger and the other transactions
contemplated hereby and thereby will not, constitute or result in (i) a
Default under the Articles of Incorporation or Bylaws of Parent, (ii) a
Default under, or the creation of a Lien on the Assets of Parent (with
or without notice, lapse of time or both) pursuant to, any Contract
binding upon Parent or (provided, as to consummation, the filings and
notices are made, and approvals are obtained, as referred to in Section
6.3(a)), any Law, Order or Permit to which Parent is subject, or (iii)
any change in the rights or obligations of any party under any of the
foregoing Contracts, except, in the case of clause (ii) or (iii)
immediately above, for any Default, creation of Lien or change that,
individually or in the aggregate, is not reasonably likely to have a
Parent Material Adverse Effect or prevent, materially delay or
materially impair the ability of Parent to consummate the transactions
contemplated by this Agreement or the Stock Option Agreement. To the
Knowledge of Parent, there are no Contracts of Parent pursuant to which
Consents are or may be required prior to consummation of the
transactions contemplated by this
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Agreement and the Stock Option Agreement (whether or not subject to the
exception set forth with respect to clauses (ii) and (iii) immediately
above), except those the failure to obtain, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse
Effect.
6.4 COMPLIANCE WITH LAWS, ORDERS AND PERMITS. The business and
operations of Parent have not been, and are not being, conducted in violation of
any applicable Law, Order or Permit, except for violations or possible
violations that are not, individually or in the aggregate, reasonably likely to
have a Parent Material Adverse Effect or prevent or materially burden or
materially impair the ability of Parent to consummate the transactions
contemplated by this Agreement. No investigation or review by any Regulatory
Authority with respect to Parent is pending or, to the Knowledge of Parent,
threatened, nor, to the Knowledge of Parent, has any Regulatory Authority
indicated an intention to conduct the same, except for those the outcome of
which are not, individually or in the aggregate, reasonably likely to have a
Parent Material Adverse Effect or prevent or materially burden or materially
impair the ability of Parent to consummate the transactions contemplated by this
Agreement.
6.5 LITIGATION. There is no Litigation instituted or pending or,
to the Knowledge of Parent, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any Parent Entity, or against any director or
officer of any Parent Entity, or against any Asset, interest or right of any of
them, nor are there any Orders of any Regulatory Authorities, other governmental
authorities or arbitrators outstanding against any Parent Entity, in each case,
except for those that are not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect or prevent or materially delay
or materially impair the ability of Parent to consummate the transactions
contemplated by this Agreement or by the Stock Option Agreement.
6.6 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any Parent Entity or
any Affiliate thereof to the Company pursuant to this Agreement or any other
document, agreement or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Parent Entity or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to the Company's stockholders in connection with
the Stockholders' Meeting, and any other documents to be filed by any Parent
Entity or any Affiliate thereof with any Regulatory Authority in connection with
the transactions contemplated hereby, will, at the respective time such
documents are filed, and with respect to the Proxy Statement, when first mailed
to the stockholders of the Company, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meeting. All documents that
any Parent Entity or any Affiliate thereof is responsible for filing with any
Regulatory Authority in
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connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.7 AUTHORITY OF MERGER SUB. Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware as a wholly owned Subsidiary of Parent. The authorized capital stock of
Merger Sub consists of 1,000 shares of Merger Sub Common Stock, all of which is
validly issued and outstanding, fully paid and nonassessable and is owned by
Parent free and clear of any Lien. Merger Sub has the corporate power and
authority necessary to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Merger Sub. This Agreement represents a legal, valid, and binding
obligation of Merger Sub, enforceable against Merger Sub in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought).
Parent, as the sole stockholder of Merger Sub, will vote prior to the Effective
Time the shares of Merger Sub Common Stock in favor of adoption of this
Agreement, as and to the extent required by applicable Law.
6.8 FINANCING. Parent has, or will have prior to the Closing Date,
sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to make the aggregate cash payments required to be
paid pursuant to Section 3.1(b) and any other amounts to be paid by it
hereunder.
ARTICLE 7
COVENANTS
7.1 INTERIM OPERATIONS. The Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless Parent shall otherwise approve in writing, and except as
otherwise expressly contemplated by this Agreement or the Stock Option Agreement
or set forth in Section 7.1 of the Company Disclosure Letter):
(a) The business of all Company Entities shall be
conducted in the ordinary and usual course (it being understood and
agreed that nothing contained herein shall permit the Company to enter
into or engage in (through acquisition, product extension or otherwise)
the business of selling any products or services materially different
from existing products or services of the Company Entities or to enter
into or engage in new lines of business without Parent's prior written
approval), and it shall be conducted in compliance in all material
respects with all applicable Laws.
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(b) To the extent consistent with (a) above, each Company
Entity shall use all commercially reasonable efforts to preserve its
business organization intact and maintain its existing relations and
goodwill with customers, suppliers, reinsurers, distributors,
creditors, lessors, employees and business associates, and maintain all
Permits necessary for the Company Entities to conduct business in the
jurisdictions in which they currently conduct business.
(c) No Company Entity shall permit a material change in
any of its underwriting, investment, actuarial, financial reporting or
accounting practices or policies or in any material assumption
underlying an actuarial practice or policy, except as may be required
by any change in GAAP, statutory accounting principles or applicable
Law.
(d) The Company shall not (i) issue, sell, pledge,
dispose of or encumber any capital stock owned by it in any of its
Subsidiaries; (ii) amend its Certificate of Incorporation or Bylaws or
amend, modify or terminate the Rights Agreement; (iii) split, combine
or reclassify its outstanding shares of capital stock; (iv) authorize,
declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock other than (A) dividends from
its direct or indirect wholly owned Subsidiaries, (B) regular quarterly
cash dividends on the Company Common Stock not to exceed $.12 per share
per quarter, and (C) regular semi-annual cash dividends required to be
paid by the Company on the Company 9% Preferred Stock in accordance
with the Company's Certificate of Incorporation; or (v) repurchase,
redeem or otherwise acquire or permit any of its Subsidiaries to
purchase or otherwise acquire, any shares of its stock or any
securities convertible into or exchangeable or exercisable for any
shares of its stock, other than as may be required pursuant to the
terms of the Company Stock Plans.
(e) No Company Entity shall (i) issue, sell, pledge,
dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital
stock of any class or any other property or assets (other than shares
of Company Common Stock issuable pursuant to Company Options
outstanding on the date hereof under any of the Company Stock Plans);
(ii) other than in the ordinary and usual course of business, transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other Assets (including capital stock of any of Company
Subsidiary) or incur or modify any material indebtedness or other
material Liability; (iii) make or authorize or commit for any capital
expenditures other than in amounts not exceeding $1 million in the
aggregate; (iv) by any means, make any acquisition of, or investment
in, assets or stock of any other Person or entity, including by way of
assumption reinsurance, in excess of $100,000 individually or $1
million in the aggregate (other than in connection with ordinary course
investment activities); or (v) make any capital investment in or loan
to NHP Holding Company, Inc. or any entity controlled by it.
(f) No Company Entity shall terminate, establish, adopt,
enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plans, or increase the salary,
wage, bonus or other compensation of any employees, except
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annual base salary (and corresponding benefit) increases occurring in
the ordinary and usual course of business (which shall not exceed on an
annual basis the lesser of 10% or $5,000 for any individual employee)
or as required by applicable Law or under existing Contracts.
(g) Each Company Entity shall use all commercially
reasonable efforts to ensure that no payments are paid or become due
under the change of control employment agreements listed in Section 5.6
of the Company Disclosure Letter.
(h) No Company Entity shall pay, discharge, settle or
satisfy any claims, Liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction of (A) claims arising under the
terms of products, contracts or policies issued by the Company
Insurance Subsidiaries in the ordinary and usual course of business,
and (B) such other claims, Liabilities or obligations (including
Litigation) as shall not exceed $250,000 per claim.
(i) No Company Entity shall make or change any material
Tax election, settle any material audit, file any material amended Tax
Returns or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be canceled or terminated except in the ordinary
and usual course of business.
(j) No Company Entity shall enter into any Contract
containing any provision or covenant limiting in any material respect
the ability of any Company Entity to (A) sell any products or services
of or to any other Person, (B) engage in any line of business, or (C)
compete with or to obtain products or services from any Person or
limiting the ability of any Person to provide products or services to
any Company Entity.
(k) No Company Entity shall enter into any new quota
share or other reinsurance transaction (A) that does not contain
standard cancellation and termination provisions, (B) that, except in
the ordinary course of business, materially increases or reduces the
Company Insurance Subsidiaries' consolidated ratio of net written
premiums to gross written premiums, or (C) pursuant to which $5 million
or more in gross written premiums are ceded by the Company Insurance
Subsidiaries to any Person other than a Company Entity.
(l) No Company Entity shall enter into, amend or
terminate any Material Contract (including for this purpose the Amended
Shareholders Agreement, dated May 23, 1994, by and among JA Services,
Inc., Dimension Holding Company, Inc. and NHP Holding Company, Inc.).
(m) The Company Entities shall make new investments only
in Qualified Investments.
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(n) The Company shall use all commercially reasonable
efforts to ensure that there will be no downgrade in any Company
Insurance Subsidiary's rating relating to its financial strength or
claims-paying ability as published by A.M. Best Company.
(o) No Company Entity shall take any action or omit to
take any action that would cause any of the conditions set forth in
Sections 8.2(a) or (b) not being satisfied (other than by waiver).
(p) No Company Entity shall authorize or enter into a
Contract to do any of the foregoing.
7.2 ACQUISITION PROPOSALS. The Company will not, and will not
permit or cause any of its Subsidiaries or any of the officers and directors of
it or its Subsidiaries to, and shall direct its and its Subsidiaries' employees
and Representatives not to, directly or indirectly, initiate, solicit, encourage
or otherwise facilitate any inquiries or the making of any proposal or offer
with respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of 15% or more of the Assets or
any equity securities of, the Company or any of its Subsidiaries (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal").
The Company will not, and will not permit or cause any of its Subsidiaries or
any of the officers and directors of it or its Subsidiaries to and shall direct
its and its Subsidiaries' employees and Representatives not to, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal, whether made before or after the date of this Agreement,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal (including, without limitation, by means of an amendment to
the Rights Agreement); provided, however, that nothing contained in this
Agreement shall prevent the Company or its Board of Directors from (i) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal, or (ii) at any time after the date hereof, if the Merger shall not
have been approved by the Company Requisite Vote as of such time, (A) providing
information in response to a request therefor by a Person who has made an
unsolicited bona fide written Acquisition Proposal if the Board of Directors
receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially equivalent to those contained
in the Parent Confidentiality Agreement; (B) engaging in any negotiations or
discussions with any Person who has made an unsolicited bona fide written
Acquisition Proposal; or (C) recommending such an Acquisition Proposal to the
stockholders of the Company, if and only to the extent that, (i) in each such
case referred to in clause (A), (B) or (C) above, the Board of Directors of the
Company determines in good faith after consultation with outside legal counsel
that such action is necessary in order for its directors to comply with their
respective fiduciary duties under applicable Law and (ii) in each case referred
to in clause (B) or (C) above, the Board of Directors of the Company determines
in good faith (after consultation with its financial advisor) that such
Acquisition Proposal, if accepted, is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the Person making the proposal and would, if consummated, result in a more
favorable transaction than the transaction contemplated by this Agreement,
taking into account, to the extent relevant, the long-term prospects and
interests of the Company and its stockholders (any such more favorable
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Acquisition Proposal being referred to in this Agreement as a "Superior
Proposal"). The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. The Company agrees that it will
take the necessary steps to inform promptly the individuals or entities referred
to in the first sentence hereof of the obligations undertaken in this Section
7.2 and in the Confidentiality Agreement. The Company will notify Parent
immediately if any such inquiries, proposals or offers are received by, any such
information is requested from, or any such discussions or negotiations are
sought to be initiated or continued with, any of its or its Subsidiaries'
directors, employees or Representatives indicating, in connection with such
notice, the name of such Person and the material terms and conditions of any
proposals or offers and thereafter shall keep Parent informed, on a current
basis, on the status and terms of any such proposals or offers and the status of
any such negotiations or discussions. The Company also will promptly request
each Person that has heretofore executed a confidentiality agreement in
connection with its consideration of an Acquisition Proposal to return or
destroy all confidential information heretofore furnished to such Person by or
on behalf of it or any of its Subsidiaries.
7.3 STOCKHOLDERS' MEETING. The Company will take, in accordance
with its Certificate of Incorporation and Bylaws and the DGCL, all action
necessary to convene a meeting of holders of the Company Common Stock (the
"Stockholders' Meeting") as promptly as practicable, but in no event more than
45 days, after the definitive Proxy Statement has been filed with the SEC, to
consider and vote upon the adoption of this Agreement. Subject to fiduciary
obligations under applicable Law, the Company's board of directors shall
recommend such adoption, shall not withdraw or modify such recommendation and
shall take all lawful action to solicit such adoption. Without limiting the
generality of the foregoing, in the event that the Company's board of directors
withdraws or modifies its recommendation, the Company nonetheless shall cause
the Stockholders Meeting to be convened and a vote taken with respect to the
adoption of this Agreement.
7.4 FILINGS; OTHER ACTIONS; NOTIFICATION.
(a) In connection with the Stockholders' Meeting, the
Company shall prepare and deliver to Parent within 30 days after the
date hereof a draft of the Proxy Statement. Thereafter, the Company and
Parent shall cooperate fully to make such changes to the Proxy
Statement as may be appropriate, file the Proxy Statement with the SEC
as soon as practicable, and respond promptly to any SEC comments. Upon
filing the final, definitive Proxy Statement with the SEC, the Company
shall mail such Proxy Statement to its stockholders.
(b) The Company and Parent shall cooperate with each
other and use (and shall cause their respective Subsidiaries to use)
all commercially reasonable efforts (i) to do or cause to be done all
things necessary, proper or advisable on its part under this Agreement
and applicable Laws to consummate and make effective the Merger and the
other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable
all documentation to effect all necessary notices, reports and other
filings; and (ii) to obtain as promptly as practicable all Consents
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and Permits necessary or advisable to be obtained from any third party
or any Regulatory Authority in connection with, as a result of, or in
order to consummate, the Merger or any of the other transactions
contemplated by this Agreement; provided, however, that nothing in this
Section 7.4 shall require, or be construed to require, Parent, in
connection with the receipt of any regulatory approval or Consent, to
proffer to, or agree to (i) sell or hold separate and agree to sell or
to discontinue or to limit, before or after the Effective Time, any
Assets, businesses or interest in any Assets or businesses of Parent,
the Company or any of their respective Affiliates (or to consent to any
sale, or agreement to sell, or discontinuance or limitation by Parent
or the Company of any of its Assets or businesses), or (ii) agree to
any conditions relating to, or changes or restriction in, the
operations of any such Asset or businesses which, in either case,
could, in the reasonable judgment of the board of directors of Parent,
materially and adversely impact the economic or business benefits to
Parent of the transactions contemplated by this Agreement. Subject to
applicable Laws relating to the exchange of information, Parent and the
Company shall have the right to review in advance, and to the extent
practicable each will consult the other on, all the information
relating to Parent or the Company, as the case may be, and any of their
respective Subsidiaries, that appear in any filing made with, or
written materials submitted to, any third party or Regulatory Authority
in connection with the Merger and the other transactions contemplated
by this Agreement. In exercising the foregoing right, each of the
Company and Parent shall act reasonably and as promptly as practicable.
(c) The Company and Parent each shall, upon request by
the other, furnish the other with all information concerning itself,
its Subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably necessary or advisable in connection with
the Proxy Statement or any other statement, filing, notice or
application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party or Regulatory Authority in
connection with the Merger and the transactions contemplated by this
Agreement.
(d) The Company and Parent each shall keep the other
apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the
other with copies of notices or other communications received by Parent
or the Company, as the case may be, or any of its Subsidiaries, from
any third party or Regulatory Authority with respect to the Merger and
the other transactions contemplated by this Agreement. The Company and
Parent each shall give prompt notice to the other of any change that is
reasonably likely to result in a Company Material Adverse Effect or
Parent Material Adverse Effect, respectively.
7.5 ACCESS; TECHNOLOGY CONVERSIONS.
(a) Upon reasonable notice, and except as may otherwise
be required by applicable Law, all of the Company Entities shall afford
Parent's officers, employees and Representatives access, during normal
business hours throughout the period from the date hereof to the
earlier of the termination of this Agreement or the Effective Time, to
the
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personnel, properties, Contracts, books and records of the Company
Entities and, during such period the Company Entities shall furnish
promptly to Parent all information concerning the Company Entities'
business and financial condition as may reasonably be requested,
provided that no investigation pursuant to this Section shall affect or
be deemed to modify any representation or warranty made by the Company
and, provided, further, that the foregoing shall not require the
Company to permit any inspection, or to disclose any information, that
in the reasonable judgment of the Company would result in the
disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if the Company shall have
used all reasonable efforts to obtain the Consent of such third party
to such inspection or disclosure. All such information shall be
governed by the terms of the Confidentiality Agreement.
(b) From the date hereof through the earlier of
termination of this Agreement or the Effective Time, the Company shall
permit Parent to use an office within the Company's offices at the
Miami Property to afford Parent's internal auditors reasonable access
to monitor the operations and financial activities of the Company
Entities. In addition, the Company Entities shall cooperate with
Parent, upon Parent's reasonable request, to develop plans for the
integration of the business of the Company Entities with that of the
Parent Entities.
(c) From the date hereof through the earlier of
termination of this Agreement or the Effective Time, the Company
Entities shall promptly take all commercially reasonable actions as may
be necessary to assure that the Company Entities' computer software
systems are able to become Year 2000 compliant on a timely basis acting
in the ordinary course of business. In addition, from the date hereof
through the earlier of termination of this Agreement or the Effective
Time, the Company Entities shall permit Parent's officers, employees
and Representatives to be involved to the extent reasonably requested
by Parent, in the conversion of the Company Entities' computer software
systems to systems that are Year 2000 compliant, and the Company shall
use all commercially reasonable efforts to comply with all reasonable
requests of Parent in respect of the design and implementation of such
conversion in anticipation of consummation of the Merger.
Notwithstanding the foregoing, all final decisions with respect to such
conversion design and implementation shall be made by the appropriate
Company Entity. In the event that this Agreement is terminated and the
Merger is not consummated for any reason, neither Party shall have any
Liability to the other with respect to the involvement of Parent's
officers, employees and Representatives in such conversion project.
7.6 MIAMI PROPERTY. Without limiting the generality of Section 7.1
or 7.5:
(a) Access Rights for Inspections. From the date hereof
until the earlier of the Effective Time or the termination of this
Agreement, the Company shall provide Parent and its employees and
Representatives with access to the Miami Property at all reasonable
times during normal business hours (and during evenings, weekends and
holidays, provided that Parent has a reasonable need for such off-hours
access and has given the
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Company not less than 24 hours prior notice of such need for access) to
inspect the Miami Property and make such studies, audits, tests,
appraisals, surveys and verifications as Parent reasonably considers
necessary with respect to the Miami Property, including, investigations
of the legal and physical status of the Miami Property, tests and
assessments with respect to environmental matters, soil tests, asbestos
analysis, structural review, examination of title, preparation of a
survey and interviews of tenants.
(b) Title and Survey Update. At Parent's reasonable
request, the Company shall cooperate to assist Parent in obtaining, at
or prior to the Effective Time, a title insurance policy with respect
to the Miami Property, or an update or endorsement to an existing such
title insurance policy
(c) Permits and Zoning. The Company shall use
commercially reasonable efforts to preserve in force all existing
Permits with respect to the Miami Property and to renew all such
Permits expiring prior to the Effective Time on terms reasonably
acceptable to Parent. If any such Permit shall be suspended or revoked,
the Company shall promptly notify Parent and shall diligently take all
measures reasonably necessary to cause the reinstatement of such Permit
without any additional limitation or condition. The Company shall not
seek or voluntarily allow any amendment to any Permit with respect to
the Miami Property that would alter the existing permissible uses of
the Miami Property or any part thereof. Without the prior written
consent of Parent, the Company shall not apply for, consent to or
promote any modification of any zoning restrictions or other
restrictions or regulations of Regulatory Authorities with respect to
the Miami Property.
(d) Estoppels. At Parent's request, the Company shall use
commercially reasonable efforts to obtain and deliver to Parent, at or
prior to the Effective time, with respect to the Miami Property (i)
estoppel certificates executed by each party (other than the Company)
to a Service Contract that is not cancelable upon thirty days after
written notice from the owner of the Miami Property, which estoppel
certificates shall in form and substance reasonably approved by Parent,
(ii) estoppel certificates executed by each warrantor or guarantor
under a Warranty, which estoppel certificates shall be in form and
substance reasonably approved by Parent, and (iii) such other estoppel
certificates reasonably requested by Parent, in form and substance
reasonably approved by Parent, in connection with covenants, conditions
and restrictions, reciprocal easement agreements encumbering the Miami
Property.
7.7 PUBLICITY. The initial press release with respect to the
Merger and the transactions contemplated hereby shall be a joint press release,
and thereafter the Company and Parent each shall consult with each other prior
to issuing any press releases or otherwise making public announcements with
respect to the Merger and the other transactions contemplated by this Agreement,
except as may be required by Law or the rules of the NYSE.
7.8 EMPLOYEE BENEFITS. From and after the Effective Time, all
employees of the Company Entities (the "Employees") shall be eligible to
participate in Parent's employee benefit plans, programs, policies and
arrangements on the same basis as similarly situated
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employees of Parent; provided, however, that, in lieu of Parent's severance pay
plan, Parent shall cause the Company's severance pay plan as described in
Section 5.8(a) of the Company Disclosure Letter to remain in effect with respect
to the Employees for the 12 months immediately following the Effective Time.
Parent shall, and shall cause the Company and its Subsidiaries to, honor,
pursuant to their terms, all employee benefit obligations to current and former
directors, officers, consultants and employees under the Compensation and
Benefits Plans, including, without limitation, all employment, severance and
compensation agreements of the Company and its Subsidiaries. For purposes of all
employee benefit plans, programs or arrangements maintained or contributed to by
Parent or any of its Subsidiaries, in which the Employees shall be eligible to
participate, Parent shall cause each such plan, program or arrangement to treat
the prior service with the Company or its Subsidiaries of each Employee as
service rendered to Parent and its Subsidiaries for purposes of all eligibility
periods, vesting and benefit accruals thereunder (but not for purposes of
benefit accruals under any defined benefit pension plan maintained by Parent or
its Subsidiaries (other than the Company Entities)). No Employee (or eligible
spouse or dependent) who elects to be covered under a Parent medical insurance
plan shall be excluded from coverage under such plan on the basis of a
pre-existing condition that was not also excluded under the Company's or any of
its Subsidiaries' medical insurance plans. To the extent any such Employee has
satisfied in whole or in part any annual deductible or paid any out-of-pocket or
co-payment expenses under a medical insurance plan of the Company or any of its
Subsidiaries for a plan year, such individual shall be credited therefor under
the corresponding provisions of the corresponding plan of Parent and its
Subsidiaries in which such individual participates after the conversion date.
Parent agrees that the consummation of the Merger shall constitute a "Change in
Control" of the Company Entities for all purposes within the meaning of all
Compensation and Benefit Plans.
7.9 EXPENSES. Except as otherwise provided in Section 9.5, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the Merger and the other transactions contemplated by
this Agreement shall be paid by the party incurring such expense; provided,
however, that if the Merger is consummated, the Surviving Corporation shall pay
all charges and expenses, including those of the Exchange Agent, in connection
with the transactions contemplated in Article 4.
7.10 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent agrees that
it will indemnify and hold harmless each present and former director
and officer of the Company (when acting in such capacity), determined
as of the Effective Time (each, an "Indemnified Party" and,
collectively, the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out
of matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time,
to the fullest extent that the Company would have been permitted under
Delaware Law and its Certificate of Incorporation or Bylaws in effect
on the date hereof to indemnify such Person (and Parent shall also
advance expenses as
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incurred to the fullest extent permitted under applicable Law provided
the Person to whom expenses are advanced provides a written affirmation
of his or her good faith belief that the standard of conduct necessary
for indemnification has been met, and an undertaking to repay such
advances if it is ultimately determined that such Person is not
entitled to indemnification).
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 7.10, upon learning
of any such claim, action, suit, proceeding or investigation, shall
promptly notify Parent thereof, but the failure to so notify shall not
relieve Parent of any Liability it may have to such Indemnified Party
if such failure does not materially prejudice Parent as the
indemnifying party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the
Effective Time), (i) Parent or the Surviving Corporation shall have the
right to assume the defense thereof and Parent shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if Parent or the
Surviving Corporation elects not to assume such defense, or if counsel
for the Indemnified Parties advises that there are issues that raise
conflicts of interest between Parent or the Surviving Corporation and
the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Parent or the Surviving Corporation shall pay
all reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as detailed statements therefor are received;
provided, however, that Parent shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction unless the use of one counsel for such
Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense of
any such matter, and (iii) Parent shall not be liable for any
settlement effected without its prior written consent, which consent
shall not be unreasonably withheld; and provided, further, that Parent
shall not have any obligation hereunder to any Indemnified Party if and
when a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and non-appealable, that the
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
(c) Parent shall, or shall cause the Surviving
Corporation to, maintain in effect for a period of six years after the
Effective Time the Company's existing directors' and officers'
liability insurance policy (provided that Parent may substitute
therefor (i) policies of at least the same coverage and amounts,
containing terms and conditions that are no less advantageous, which
policies are issued by an issuer with a claims-paying rating at least
equal to that of the issuer of the existing policies of the Company, or
(ii) with the consent of the Company given prior to the Effective Time,
any other policy with respect to claims arising from facts or events
that occurred at or prior to the Effective Time and covering persons
who are currently covered by such insurance (and the Company shall
cooperate prior to the Effective Time in these efforts); provided, that
neither Parent nor the Surviving Corporation shall be obligated to make
premium payments in each year of such six-year period in respect of
such policy (or coverage replacing such policy) exceeding, for the
portion related to the Company's directors and officers, 200% of the
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annual premium payments on the Company's current policy in effect as of
the date of this Agreement (the "Maximum D&O Premium"). If the amount
of the premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum D&O Premium, Parent shall use all
commercially reasonable efforts to maintain the most advantageous
policies of directors' and officers' liability insurance obtainable for
a premium equal to the Maximum D&O Premium.
(d) The provisions of this Section are intended to be for
the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their legal representatives.
7.11 OTHER ACTIONS BY THE COMPANY AND PARENT.
(a) If any Takeover Statute is or may become applicable
to the Merger or the other transactions contemplated by this Agreement
or the Stock Option Agreement, each of Parent and the Company and its
board of directors shall grant such approvals and take such actions as
are necessary so that such transactions may be consummated as promptly
as practicable on the terms contemplated by this Agreement or the Stock
Option Agreement, as the case may be, or by the Merger and otherwise
act to eliminate or minimize the effects of such statute or regulation
on such transactions.
(b) Subject to Section 7.2, the Company shall use its
reasonable efforts to exercise its rights under all confidentiality,
lock-up, standstill and similar agreements entered into with Persons
that were considering an Acquisition Proposal with respect to the
Company, to preserve the confidentiality of the information relating to
the Company Entities provided to such Persons and their Affiliates and
Representatives and to ensure compliance with the terms of this
Agreement.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to consummate the Merger are subject to the
satisfaction of the following conditions, unless waived by both Parties pursuant
to Section 10.5:
(a) Stockholder Approval. The stockholders of the Company
shall have adopted this Agreement, and the consummation of the
transactions contemplated hereby, including the Merger, as and to the
extent required by Law, by the provisions of any governing instruments,
or by the rules of the NYSE.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods
required by Law shall have expired.
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(c) Legal Proceedings. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) or taken any other action which
prohibits, restricts or makes illegal consummation of the transactions
contemplated by this Agreement.
8.2 CONDITIONS TO OBLIGATIONS OF PARENT. The obligations of Parent
to consummate the Merger are subject to the satisfaction of the following
conditions, unless waived by Parent pursuant to Section 10.5(a):
(a) Representations and Warranties. For purposes of this
Section 8.2(a), the accuracy of the representations and warranties of
the Company set forth in this Agreement shall be assessed as of the
date of this Agreement and as of the Effective Time with the same
effect as though all such representations and warranties had been made
on and as of the Effective Time (provided that representations and
warranties that are confined to a specified date shall speak only as of
such date). The representations and warranties set forth in Section 5.2
shall be true and correct (except for inaccuracies which are de minimis
in amount). The representations and warranties set forth in Sections
5.3, 5.4, 5.14, 5.19, 5.20 and 5.21 shall be true and correct in all
material respects. There shall not exist inaccuracies in the
representations and warranties of the Company set forth in this
Agreement (including the representations and warranties set forth in
Sections 5.2, 5.3, 5.4, 5.14, 5.19, 5.20 and 5.21) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to
have, a Company Material Adverse Effect; provided that, for purposes of
this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" of
any Person shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. The Company
shall have performed in all material respects all of its agreements and
covenants hereunder required to be performed by it on or prior to the
Effective Time .
(c) Certificates. The Company shall have delivered to
Parent (i) a certificate, dated as of the Effective Time and signed on
its behalf by its chief executive officer and its chief financial
officer, to the effect that the conditions set forth in Section 8.1 as
relates to the Company and in Section 8.2(a) and 8.2(b) have been
satisfied, and (ii) certified copies of resolutions duly adopted by the
Company's board of directors and stockholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Parent and its
counsel shall request.
(d) Rights Agreement. No Distribution Date (as defined in
the Rights Agreement) shall have occurred, and the Rights shall not
have become non-redeemable or exercisable upon consummation of the
Merger.
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8.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of
the Company to consummate the Merger are subject to the satisfaction of the
following conditions, unless waived by the Company pursuant to Section 10.5(b):
(a) Representations and Warranties. For purposes of this
Section 8.3(a), the accuracy of the representations and warranties of
Parent set forth in this Agreement shall be assessed as of the date of
this Agreement and as of the Effective Time with the same effect as
though all such representations and warranties had been made on and as
of the Effective Time (provided that representations and warranties
which are confined to a specified date shall speak only as of such
date). The representations and warranties set forth in Sections 6.2 and
6.7 shall be true and correct in all material respects. There shall not
exist inaccuracies in the representations and warranties of the Company
set forth in this Agreement (including the representations and
warranties set forth in Sections 6.2 and 6.7) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Parent Material Adverse Effect; provided that, for purposes of this
sentence only, those representations and warranties which are qualified
by references to "material" or "Material Adverse Effect" of any Person
shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Parent shall
have performed in all material respects all of its agreements and
covenants hereunder required to be performed by it on or prior to the
Effective Time.
(c) Certificates. Parent shall have delivered to the
Company (i) a certificate, dated as of the Effective Time and signed on
its behalf by its chief executive officer and its chief financial
officer, to the effect that the conditions set forth in Section 8.1 as
relates to Parent and in Section 8.3(a) and 8.3(b) have been satisfied,
and (ii) certified copies of resolutions duly adopted by Parent's board
of directors and Merger Sub's board of directors and sole stockholder
evidencing the taking of all corporate action necessary to authorize
the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, all in such
reasonable detail as the Company and its counsel shall request.
(d) Exchange Agent Certification. The Exchange Agent
shall have delivered to the Company a certificate, dated as of the
Effective Time, to the effect that Parent has deposited with the
Exchange Agent sufficient funds to pay the aggregate cash payments
required to be paid pursuant to Section 3.1(b).
ARTICLE 9
TERMINATION
9.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the adoption hereof by stockholders of the Company
referred to in Section 8.1(a), by mutual written consent of the Company and
Parent by action of their respective boards of directors.
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9.2 TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement
may be terminated and the Merger may be abandoned (a) by action of the board of
directors of either Parent or the Company if the Merger shall not have been
consummated by September 30, 1998, whether such date is before or after the date
of adoption hereof by the stockholders of the Company (provided, however, that
if all conditions to Closing have been satisfied or waived on or before
September 30, 1998, other than obtaining the required Consents from Regulatory
Authorities, such date shall be extended past September 30, 1998 for up to three
additional one-month periods at the request of either Parent or the Company)
(the "Termination Date"), or (b) by action of the board of directors of either
Parent or the Company if any Order permanently restraining, enjoining or
otherwise prohibiting consummation of the Merger shall become final and
non-appealable (whether before or after the adoption hereof by the stockholders
of the Company); provided, that the right to terminate this Agreement or request
an extension pursuant to clause (a) above shall not be available to any Party
that has breached in any material respect its obligations under this Agreement
in any manner that shall have proximately contributed to the occurrence of the
failure of the Merger to be consummated on or before the Termination Date.
9.3 TERMINATION BY THE COMPANY. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, by
action of the board of directors of the Company:
(a) If (i) the Company is not in material breach of any
of its agreements or covenants under this Agreement, (ii) the Merger
shall not have been approved by the Company Requisite Vote, (iii) the
board of directors of the Company authorizes the Company, subject to
complying with the terms of this Agreement, to enter into a binding
written agreement concerning a transaction that constitutes a Superior
Proposal and the Company notifies Parent in writing that it intends to
enter into such an agreement, attaching the most current version of
such agreement to such notice, (iv) Parent does not make, within five
business days after receipt of the Company's written notification of
its intention to enter into a binding agreement for a Superior
Proposal, a bona fide offer that the board of directors of the Company
determines, in good faith after consultation with its financial
advisors, is at least as favorable as the Superior Proposal, taking
into account, to the extent relevant, the long term prospects and
interests of the Company and its stockholders, and (v) the Company has
paid Parent any amounts then due to Parent pursuant to the Stock Option
Agreement; or
(b) If there has been a material breach by Parent of any
representation, warranty, covenant or agreement contained in this
Agreement that, together with all such breaches, would prevent any of
the conditions set forth in Article 8 from being satisfied (other than
by waiver) prior to the Termination Date and that is not curable or, if
curable, is not cured within 20 days after written notice of such
breach is given by the Company to Parent; or
(c) If the Company Requisite Vote shall not have been
obtained at a meeting duly convened therefor or at any adjournment or
postponement thereof and the Company has paid Parent any amounts then
due to Parent pursuant to the Stock Option Agreement.
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9.4 TERMINATION BY PARENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the adoption hereof by the stockholders of the Company referred
to in Section 8.1(a), by action of the board of directors of Parent (a) if the
Company Requisite Vote shall not have been obtained at a meeting duly convened
therefor or at any adjournment or postponement thereof, (b) if the Company
enters into a binding agreement for a Superior Proposal, (c) if there has been a
material breach by the Company of any representation, warranty, covenant or
agreement contained in this Agreement that, together with all such breaches,
would prevent any of the conditions set forth in Article 8 from being satisfied
(other than by waiver) prior to the Termination Date and that is not curable or,
if curable, is not cured within 20 days after written notice of such breach is
given by Parent to the Company, or (d) if the Company shall not have delivered
to Parent, on or before March 31, 1998, a copy of an unqualified opinion of
Price Waterhouse LLP with respect to the Company's consolidated GAAP financial
statements for the year ended December 31, 1997, provided that in such event
Parent must terminate this Agreement pursuant to this Section 9.4(d) prior to
the close of business on the later of April 3, 1998 or 3 business days following
the date of delivery to Parent of such consolidated financial statements with an
opinion of such accountant thereon.
9.5 EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article 9, this Agreement (other than as set forth in Section 7.9) shall become
void and of no effect with no Liability on the part of any Party hereto (or of
any of its directors, officers, employees, agents, legal and financial advisors
or other representatives); provided, however, except as otherwise provided
herein, no such termination shall relieve any Party hereto of any Liability
resulting from any willful breach of this Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"AFFILIATE" of a Person means any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled
by or under common control with such Person.
"AGREEMENT" means this Agreement and Plan of Merger, including
the Exhibits (other than the Stock Option Agreement) delivered pursuant
hereto and incorporated herein by reference.
"ASSETS" of a Person means all of the assets, properties,
businesses and rights of such Person of every kind, nature, character
and description, whether real, personal or
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mixed, tangible or intangible, accrued or contingent, or otherwise
relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of
such Person or any Affiliate of such Person and wherever located.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"COMMISSIONS" means all leasing commissions, referral fees,
payments and obligations to make payments to agents, leasing agents,
leasing brokers or other parties with respect to the Space Leases,
whether such agreements are contained in a Space Lease or in any
separate commission agreement.
"COMMISSION AGREEMENTS" means all obligations to pay
Commissions, whether such agreements are contained in a Space Lease or
in any separate commission agreement, together with all amendments
thereto or modifications thereof, and all correspondence, notices,
files and other records pertaining to Commissions.
"COMPANY" means Xxxx Xxxxx Financial Corporation, a Delaware
corporation.
"COMPANY COMMON STOCK" means the $.01 par value common stock
of the Company.
"COMPANY DISCLOSURE LETTER" means the written information
entitled "Xxxx Xxxxx Financial Corporation Disclosure Letter" delivered
prior to the date of this Agreement to Parent describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made.
"COMPANY ENTITIES" means, collectively, the Company and all
Company Subsidiaries.
"COMPANY MATERIAL ADVERSE EFFECT" means an event, change or
occurrence which, individually or together with any other event, change
or occurrence, has a material adverse impact on (i) the financial
condition, business or results of operations of the Company and its
Subsidiaries, taken as a whole, or (ii) the ability of the Company to
perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement.
"COMPANY STOCK PLANS" means the existing stock option and
other stock-based compensation plans of the Company designated as
follows: 1992 JAFCO Long-Term Incentive Plan; 1997 JAFCO Long-Term
Incentive Plan; North Star Marketing Long-Term Incentive Plan;
Non-employee Directors Stock Option Plan; Amended and Restated
Management Stockholders Agreement, dated February 17, 1993, as amended
July 24, 1994; and Employee Stock Purchase Plan.
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"COMPANY SUBSIDIARIES" means the Subsidiaries of the Company,
which shall include all such Subsidiaries as of the date hereof and any
corporation or other organization acquired as a Subsidiary of the
Company in the future and held as a Subsidiary by the Company at the
Effective Time.
"CONDEMNATION PROCEEDING" means any proceeding in
condemnation, eminent domain or any written request for a conveyance in
lieu thereof, or any notice that such proceedings have been or will be
commenced against any portion of the Owned Real Property.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement, dated September 15, 1997, between the Company and Parent.
"CONSENT" means any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONSTITUENT CORPORATIONS" means, collectively, the Company
and Merger Sub.
"CONTRACT" means any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking
of any kind or character, or other document, in each case, that is
binding on any Person or its capital stock, Assets or business.
"DEFAULT" means (i) any breach or violation of, default under,
contravention of, or conflict with, any Contract, Law, Order or Permit,
(ii) any occurrence of any event that with the passage of time or the
giving of notice or both would constitute a breach or violation of,
default under, contravention of or conflict with, any Contract, Law,
Order or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right of any Person to exercise any remedy or obtain any relief
under, terminate or revoke, suspend, cancel or modify or change the
current terms of, or renegotiate, or to accelerate the maturity or
performance of, or to increase or impose any Liability under, any
Contract, Law, Order or Permit.
"DGCL" means the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" means all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and
which are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive
Environmental Response Compensation and Liability Act, as amended, 42
U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation and Recovery
Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of
any
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Hazardous Material, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of any Hazardous Material.
"EQUITY RIGHTS" means all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to the issuance of, or securities or rights convertible into
or exchangeable for, shares of the capital stock of a Person or by
which a Person is or may be bound to issue additional shares of its
capital stock or other Equity Rights.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXHIBITS" 1 and 2, inclusive, means the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may
be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"GAAP" means United States generally accepted accounting
principles, consistently applied during the periods involved.
"HAZARDOUS MATERIAL" means (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls), in each case other than common cleaning and office products
in reasonable amounts.
"HSR ACT" means Section 7A of the Xxxxxxx Act, as added by
Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"IMPROVEMENTS" means the buildings, structures (surface and
subsurface) and other improvements and fixtures now or hereafter
situated on or attached to any parcel of the Owned Real Property.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" with respect to the Company means those facts that
are known or should reasonably have been known after due inquiry by the
chairman, president, chief financial officer, chief accounting officer,
chief actuary, chief operating officer, general counsel, any assistant
or deputy general counsel, or any senior, executive or other vice
president of any Company Entity; and with respect to Parent means those
facts that are known or should reasonably have been known after due
inquiry by the chairman,
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president, chief financial officer, general counsel, corporate counsel
or any executive vice president of Parent.
"LAW" means any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute of any
Regulatory Authority applicable to a Person or its Assets, Liabilities
or business.
"LIABILITY" means any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or
expense (including costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"LIEN" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable and (ii) Liens which do
not materially impair the use of or title to the Assets subject to such
Lien.
"LITIGATION" means any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other
examination or investigation, hearing, administrative or other
proceeding of a Regulatory Authority relating to or affecting a Party,
its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement and the Stock Option
Agreement .
"MERGER SUB" means JAFCO Acquisition Corp., a Delaware
corporation.
"MERGER SUB COMMON STOCK" means the $.01 par value common
stock of Merger Sub.
"MIAMI PROPERTY" means that parcel of real property known as
Airport Corporate Center in Miami, Florida, containing 11 buildings,
including one building presently used by the Company as its corporate
headquarters and ten buildings that are leased by the Company to third
parties, and including approximately four acres (the "Acreage") of
contiguous undeveloped land located in Lot B-1 of the West Replat.
"NYSE" means the New York Stock Exchange, Inc.
"ORDER" means any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any Regulatory Authority.
"PARENT" means Fortis, Inc., a Nevada corporation.
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"PARENT ENTITIES" means, collectively, Parent and all Parent
Subsidiaries.
"PARENT MATERIAL ADVERSE EFFECT" means an event, change or
occurrence which, individually or together with any other event, change
or occurrence, has a material adverse impact on the ability of Parent
to perform its obligations under this Agreement or to consummate the
Merger or the other transactions contemplated by this Agreement.
"PARENT SUBSIDIARIES" means the Subsidiaries of Parent, which
shall include all such Subsidiaries as of the date hereof and any
corporation or other organization acquired as a Subsidiary of Parent in
the future and held as a Subsidiary by Parent at the Effective Time.
"PARTY" means either the Company or Parent, and "PARTIES"
shall mean both the Company and Parent.
"PERMIT" means any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"PERMITTED TITLE EXCEPTIONS" means:
(i) the Space Leases and any new leases entered
into between the date hereof and the Effective Time in accordance with
the terms of this Agreement;
(ii) all real estate Taxes not yet due and
payable as of the Effective Time;
(iii) local, state and federal (if applicable)
zoning and building Laws, provided that neither the Improvements nor
the existing use of the Owned Real Property violates any of such Laws
or results in any unpermitted "non-conforming" use thereunder; and
(iv) any existing utility easements serving only
the Owned Real Property and no other land.
"PERSON" means a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"PROXY STATEMENT" means the proxy statement used by the
Company to solicit the approval of its stockholders of the transactions
contemplated by this Agreement.
"QUALIFIED INVESTMENTS" means (i) publicly traded corporate
bonds with a rating of A or better from a rating agency generally
accepted by the insurance industry, (ii) U.S.
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government securities, (iii) cash equivalents, and (iv) other
investments approved specifically or as a category by Parent in writing
from time to time.
"REAL PROPERTY" means, collectively, the Owned Real Property
and the Leased Real Property.
"REGULATORY AUTHORITIES" means, collectively, the SEC, the
NYSE, the Federal Trade Commission, the United States Department of
Justice, the Minnesota Department of Commerce, the Texas Department of
Insurance, the Florida Department of Insurance, the Nevada Department
of Insurance, the Ohio Department of Insurance, and all other federal,
state, county, local or other judicial, legislative, governmental or
regulatory agencies, authorities (including self-regulatory
authorities), instrumentalities, courts, commissions, boards or bodies
having jurisdiction over the Parties and their respective Subsidiaries.
"RENT ROLL" means the rent roll for the Miami Property as of a
date not more than 30 days prior to the date hereof, which shall show
(a) the names of all Space Tenants and a description of their
respective Space Leases, (b) the portion of the Improvements and total
number of square feet covered by each Space Lease (including any
options to expand), (c) the date of the Space Lease and the
commencement date and expiration date (including option periods) of
each Space Lease, (d) the current monthly rental payable under each
Space Lease and other charges payable by such Space Tenant (including
base rent and any percentage rent and operating expense reimbursement),
(e) the base year (and, if applicable, the amount of expenses incurred
during such base year) used for calculating each Space Tenant's
operating expense reimbursement under such Space Tenant's Space Lease,
(f) the amount of all tenant deposits with respect to each Space Lease,
less amounts previously applied or returned to such tenant, if any, (g)
whether such tenant is entitled to any assigned storage or parking
space, (h) whether any rents or other charges are in arrears and the
period to which such arrearages relate (including the Company's current
"delinquency report"), (i) any incentives, concessions, abatements, due
and unpaid allowances or inducements granted to such tenant, (j) the
amounts of any due and unpaid Commission with respect to such Space
Lease, if any, and (k) whether the Space Lease is subject to
cancellation or termination by the tenant thereunder and the
circumstances which would give rise to such termination or cancellation
(or a reference to the Space Lease provision giving rise to such
right).
"REPRESENTATIVE" means any investment banker, financial
advisor, attorney, accountant, consultant, or other representative
engaged by a Person.
"RIGHTS" means the preferred stock purchase rights issued
pursuant to the Rights Agreement.
"RIGHTS AGREEMENT" means that certain Rights Agreement, dated
December 16, 1996, as amended March 9, 1998, between the Company and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent.
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"SEC" means the Securities and Exchange Commission.
"SERVICE CONTRACTS" means all service, maintenance, and other
Contracts respecting leasing, management, maintenance or operation of
the Miami Property or the Improvements thereon, including all leases by
which equipment is leased to the Company and is used or usable in
connection with any present or future occupation or operation of the
Miami Property.
"SPACE LEASES" means all leases, subleases, rental agreements
and other occupancy agreements, whether oral or written and whether or
not of record, for the use or occupancy of any portion of the Miami
Property, together with all amendments to, modifications of, renewals
and extensions of said leases, subleases, rental agreements and other
occupancy agreements, all guaranties with respect thereto, all work
letter agreements, improvement agreements and other agreements with
tenants of the Miami Property, all Default letters or notices, estoppel
letters, rental adjustment notices, escalation notices and other
correspondence in regard thereto, and all credit reports and accounting
records in regard thereto.
"SUBSIDIARIES" means all those corporations, associations, or
other business entities of which the entity in question either (i) owns
or controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent (provided, there shall not be included any
such entity the equity securities of which are owned or controlled in a
fiduciary capacity), (ii) in the case of partnerships, serves as a
general partner, (iii) in the case of a limited liability company,
serves as a managing member, or (iv) otherwise has the ability to elect
a majority of the directors, trustees or managing members thereof.
"SURVIVING CORPORATION" means the Company as the surviving
corporation resulting from the Merger.
"TAX RETURN" means any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or
combined or unitary group that includes any Company Entity.
"TAX" or "TAXES" means any federal, state, county, local, or
foreign taxes, charges, fees, levies, imposts, duties, or other
assessments, including income (net, gross or other, including recapture
of any tax items such as investment tax credits), gross receipts,
excise, employment, sales, use, transfer, premium, gains, license,
payroll, franchise, severance, stamp, occupation, environmental,
federal highway use, commercial rent, customs duties, capital stock,
paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, imposes or required to
be withheld by the United States or any state, county, local or foreign
government or subdivision or agency thereof, including any interest,
penalties, and additions imposed thereon or with respect thereto.
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"TAXING AUTHORITY" means any authority responsible for the
imposition, collection or administration of any Tax.
"WARRANTIES" means each and every now existing and outstanding
bond and warranty concerning the Miami Property or the Improvements
located thereon, including any and all bonds and warranties in
conjunction with any construction, maintenance or operation Contracts.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
TERM SECTION
---- -------
Acquisition Proposal 7.2
Alternative Transaction Notice 9.3(a)
Bankruptcy and Equity Exception 5.3(a)
Certificate of Merger 1.3
Certificates 4.1
Closing 1.2
Closing Date 1.2
Company Actuarial Analyses 5.16(c)
Compensation and Benefit Plans 5.8(a)
Company Insurance Contracts 5.16(a)
Company Insurance Subsidiaries 5.1(b)
Company Intellectual Property Rights 5.12(b)(ii)
Company 9% Preferred Stock 5.2(a)
Company Options 3.4
Company SAP Statements 5.5(b)
Company Reports 5.5(a)
Company Requisite Vote 5.3(a)
Compensation and Benefit Plans 5.8(a)
Costs 7.9(a)
Effective Time 1.3
ERISA Affiliate 5.8(c)
Exchange Agent 4.1
Expenses 9.5(c)
Indemnified Parties 7.9(a)
Insurance Laws 5.9(a)
Investment Company Act 5.18
Leased Real Property 5.14(e)
Material Contracts 5.13
Maximum D&O Premium 7.9(c)
Merger 1.1
Option Settlement Payment 3.4
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Owned Real Property 5.14(a)
Pension Plan 5.8(b)
Per Share Purchase Price 3.1(b)
Preferred Stock 5.2(a)
Reinsurance Contracts 5.16(b)
Secretary 1.3
Stock Option Agreement 1.4
Stockholders' Meeting 7.3
Superior Proposal 7.2
Takeover Laws 5.20
Termination Date 9.2
Third Party Intellectual Property Rights 5.12(b)(i)
(c) Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
10.2 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants and agreements of the
Parties shall not survive the Effective Time except Articles 1, 2, 3, 4 and 10
and Sections 7.7, 7.8, 7.9 and 7.10.
10.3 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except, as to Section 7.5,
for the Confidentiality Agreement). Other than Section 7.10 which shall be
enforceable by the parties intended to receive the benefits thereof, nothing in
this Agreement expressed or implied, is intended to confer upon any Person,
other than the Parties or their respective successors, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
10.4 AMENDMENTS. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the Parties upon the
approval of each of the Parties, whether before or after the Company's
stockholders have adopted this Agreement; provided, that after any such adoption
hereof by the holders of Company Common Stock, there shall be made no amendment
that, pursuant to Section 251 of the DGCL, requires further approval by such
stockholders without the further approval of such stockholders.
10.5 WAIVERS.
(a) Prior to or at the Effective Time, Parent, acting
through its board of directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by the Company, to waive or
extend the time for the compliance or fulfillment by the Company of any
and all of its obligations under this Agreement, and to waive any or
all of the conditions precedent to
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53
the obligations of Parent under this Agreement, except any condition
which, if not satisfied, would result in the violation of any Law. No
such waiver shall be effective unless in writing signed by a duly
authorized officer of Parent.
(b) Prior to or at the Effective Time, the Company,
acting through its board of directors, chief executive officer or other
authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by Parent, to waive or extend
the time for the compliance or fulfillment by Parent of any and all of
its obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of the Company under this
Agreement, except any condition which, if not satisfied, would result
in the violation of any Law. No such waiver shall be effective unless
in writing signed by a duly authorized officer of the Company.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect
the right of such Party at a later time to enforce the same or any
other provision of this Agreement. No waiver of any condition or of the
breach of any term contained in this Agreement in one or more instances
shall be deemed to be or construed as a further or continuing waiver of
such condition or breach or a waiver of any other condition or of the
breach of any other term of this Agreement.
10.6 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party; provided, however, that
Parent may transfer the Merger Sub Common Stock to any wholly owned Parent
Subsidiary prior to the Effective Time, so that upon the Merger the Company will
become a wholly owned Subsidiary of such Parent Subsidiary, without the need to
obtain any consent of the Company. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the Parties and their respective successors and assigns.
10.7 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by certified mail, postage pre-paid, or by
courier or overnight carrier, to each person at the address set forth below (or
at such other address as may be provided hereunder), and shall be deemed to have
been delivered as of the date so delivered:
If to the Company:
Xxxx Xxxxx Financial Corporation
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: General Counsel
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Copy (which shall not constitute notice) to Counsel:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxx III
If to Parent:
Fortis, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (212-859-7034)
Attention: Xxxxxx Xxxxxxxx, General Counsel
Copy (which shall not constitute notice) to Counsel:
Xxxxxx & Bird LLP
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Attention: B. Xxxxxx Xxxx, Xx.
10.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without regard
to any applicable conflicts of Laws.
10.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.10 CAPTIONS; ARTICLES AND SECTIONS. The captions contained in
this Agreement are for reference purposes only and are not part of this
Agreement. Unless otherwise indicated, all references to particular Articles or
Sections shall mean and refer to the referenced Articles and Sections of this
Agreement.
10.11 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary
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55
meaning of the words used so as fairly to accomplish the purposes and intentions
of all Parties hereto. Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
10.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at Law or in equity.
10.13 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
first above written.
XXXX XXXXX FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
--------------------------------------------
Title: Chairman of the Board and Chief
--------------------------------------------
Executive Officer
--------------------------------------------
FORTIS, INC.
By: /s/ J. Xxxxx Xxxxxxx
------------------------------------------------
Name: J. Xxxxx Xxxxxxx
--------------------------------------------
Title: Executive Vice President
--------------------------------------------
JAFCO ACQUISITION CORP.
By: /s/ J. Xxxxx Xxxxxxx
------------------------------------------------
Name: J. Xxxxx Xxxxxxx
--------------------------------------------
Title: President
--------------------------------------------
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