RENEWAL RIGHTS AND ASSET PURCHASE AGREEMENT By and Among AMTRUST FINANCIAL SERVICES, INC. and ALEA NORTH AMERICA COMPANY and ALEA NORTH AMERICA INSURANCE COMPANY Dated as of November 21, 2005
Confidential
Treatment Requested
Under
17 C.F.R. Sections 200.80(B)(4),
200.83
and 200.406
|
By
and Among
and
ALEA
NORTH AMERICA COMPANY
and
ALEA
NORTH AMERICA INSURANCE COMPANY
Dated
as of November 21, 2005
TABLE
OF CONTENTS
ARTICLE
I
|
DEFINITIONS
|
1
|
|
1.1.
|
Definitions
|
1
|
|
1.2.
|
Interpretation.
|
7
|
|
ARTICLE
II
|
TRANSFER
OF ASSETS
|
8
|
|
2.1.
|
The
Closing
|
8
|
|
2.2.
|
The
Closing Transactions
|
8
|
|
2.3.
|
Non-Assumption
of Liabilities
|
8
|
|
2.4.
|
Closing
Deliveries.
|
9
|
|
2.5.
|
Writing
of Covered Insurance Contracts
|
9
|
|
2.6.
|
Consideration.
|
9
|
|
2.7.
|
Tax
Allocation of Payments
|
9
|
|
ARTICLE
III
|
REPRESENTATIONS
AND WARRANTIES OF SELLER PARTIES
|
10
|
|
3.1.
|
Corporate
Existence and Power
|
10
|
|
3.2.
|
Corporate
Authority
|
10
|
|
3.3.
|
Non-Contravention
|
11
|
|
3.4.
|
Compliance
with Laws
|
11
|
|
3.5.
|
Liens
and Encumbrances on Transferred Assets
|
11
|
|
3.6.
|
Litigation
|
11
|
|
3.7.
|
Consents
and Approvals
|
11
|
|
3.8.
|
Producers
and Producer Agreements
|
11
|
|
3.9.
|
Rates,
Rules and Forms
|
12
|
|
3.10.
|
Payment
of Commissions
|
12
|
|
3.11.
|
Employees
|
12
|
|
3.12.
|
Territorial
Restrictions
|
12
|
|
3.13.
|
Brokers
|
12
|
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
|
12
|
|
4.1.
|
Corporate
Existence and Power
|
12
|
|
4.2.
|
Corporate
Authority
|
13
|
|
4.3.
|
Non-Contravention
|
13
|
|
4.4.
|
Licenses
|
13
|
|
4.5.
|
Due
Investigation
|
13
|
|
4.6.
|
Consents
and Approvals
|
14
|
|
4.7.
|
Brokers
|
14
|
|
ARTICLE
V
|
INSURANCE
CONTRACTS AND PRODUCERS
|
14
|
|
5.1.
|
No
Representations On Market Reaction
|
14
|
|
5.2.
|
No
Infringement on Producer Rights
|
14
|
|
5.3.
|
Authority
of the Seller Parties to Nonrenew and Withdraw
|
15
|
|
5.4.
|
No
Limitations on the Seller Parties Operations
|
15
|
-
i
-
ARTICLE
VI
|
COVENANTS
OF EACH OF THE PARTIES
|
15
|
|
6.1.
|
Covenants
of the Seller Parties.
|
15
|
|
6.2.
|
Covenants
of the Purchaser.
|
16
|
|
ARTICLE
VII
|
COVENANTS
OF SELLER PARTIES AND PURCHASER
|
17
|
|
7.1.
|
Governmental
Authority Approvals
|
17
|
|
7.2.
|
Compliance
With Law
|
18
|
|
7.3.
|
Expenses
|
18
|
|
7.4.
|
Use
of Names.
|
18
|
|
7.5.
|
Public
Announcements and Disclosure
|
18
|
|
7.6.
|
Confidentiality
|
18
|
|
7.7.
|
Further
Assurances
|
19
|
|
ARTICLE
VIII
|
EMPLOYEE
MATTERS
|
19
|
|
8.1.
|
Offers
of Employment
|
19
|
|
8.2.
|
Employee
Benefits
|
20
|
|
8.3.
|
Non-Transferred
Employees
|
20
|
|
8.4.
|
Transferred
Employees Cooperation
|
20
|
|
8.5.
|
No
Solicitation of Transferred Employees
|
21
|
|
8.6.
|
No
Solicitation of Non-Transferred Employees
|
21
|
|
ARTICLE
IX
|
NON-SOLICITATION
OF PRODUCERS
|
21
|
|
9.1.
|
Non-Solicitation
|
21
|
|
ARTICLE
X
|
CONDITIONS
PRECEDENT TO THE OBLIGATION OF PURCHASER TO CLOSE
|
22
|
|
10.1.
|
Representations,
Warranties and Covenants
|
22
|
|
10.2.
|
Approvals
|
22
|
|
10.3.
|
Closing
Deliveries
|
22
|
|
10.4.
|
Injunction
and Litigation
|
23
|
|
10.5.
|
Purchaser
Primary Insurer
|
23
|
|
10.6.
|
Release
of Transferred Employees From Non-Compete
|
23
|
|
10.7.
|
Other
Documents
|
23
|
|
ARTICLE
XI
|
CONDITIONS
PRECEDENT TO THE OBLIGATION OF SELLER PARTIES TO CLOSE
|
23
|
|
11.1.
|
Representations,
Warranties and Covenants
|
23
|
|
11.2.
|
Approvals
|
24
|
|
11.3.
|
Closing
Deliveries
|
24
|
|
11.4.
|
Payment
to the Seller Parties
|
24
|
|
11.5.
|
Injunction
and Litigation
|
24
|
|
11.6.
|
Purchaser
Primary Insurer
|
24
|
|
11.7.
|
Insurer
Rating
|
24
|
|
11.8.
|
Maintenance
of Rating
|
|
|
11.9.
|
Other
Documents
|
24
|
-
ii
-
ARTICLE
XII
|
TERMINATION
PRIOR TO CLOSING
|
24
|
|
12.1.
|
Termination
of Agreement
|
24
|
|
12.2.
|
Survival
Upon Termination
|
25
|
|
12.3.
|
No
Interference With Renewal Rights
|
|
|
ARTICLE
XIII
|
SURVIVAL;
INDEMNIFICATION
|
26
|
|
13.1.
|
Survival
|
26
|
|
13.2.
|
Indemnification.
|
26
|
|
13.3.
|
Procedures
for Third Party Claims.
|
29
|
|
13.4.
|
Procedures
for Direct Claims
|
30
|
|
13.5.
|
Exclusive
Remedy
|
30
|
|
13.6.
|
Specific
Performance
|
31
|
|
ARTICLE
XIV
|
TRANSITION
PERIOD
|
31
|
|
14.1.
|
Sublease.
|
31
|
|
14.2.
|
Embedded
IP Rights
|
32
|
|
14.3.
|
Temporary
Access to Seller Parties’ Systems
|
33
|
|
14.4.
|
Disclaimer
|
33
|
|
14.5.
|
Transition
Team
|
34
|
|
ARTICLE
XV
|
MISCELLANEOUS
PROVISIONS
|
34
|
|
15.1.
|
Entire
Agreement
|
34
|
|
15.2.
|
Assignment;
Binding Effect
|
34
|
|
15.3.
|
No
Third-Party Beneficiaries
|
34
|
|
15.4.
|
Invalidity
|
35
|
|
15.5.
|
Governing
Law
|
35
|
|
15.6.
|
Jurisdiction
|
35
|
|
15.7.
|
Waiver
of Jury Trial
|
35
|
|
15.8.
|
Counterparts
|
36
|
|
15.9.
|
Headings
|
36
|
|
15.10.
|
Communications
|
36
|
|
15.11.
|
Notices
|
36
|
|
15.12.
|
Waiver
of Compliance
|
37
|
-
iii
-
INDEX
OF EXHIBITS
Exhibit A — Bordereau
Exhibit
B — Transferred
Assets
Exhibit
C — Form
of
Purchaser Officer’s Certificate
Exhibit
D — Purchaser
Rating Certificate
Exhibit
E — Sublease
Agreement
Exhibit
F — Xxxx
of
Sale and General Assignment Agreement
INDEX
OF SCHEDULES
Schedule 1.1(a)
|
—
|
Insurance
Contracts
|
Schedule
1.1(b)
|
—
|
Terminated
Programs
|
Schedule 2.5
|
—
|
Purchaser
Producers and Agents
|
Schedule
2.6(a)
|
—
|
Allocation
of Initial Payment
|
Schedule 3.7
|
—
|
Seller
Parties Regulatory Approvals and/or Other
Consents
|
Schedule 3.8(a)
|
—
|
Producers
|
Schedule 3.8(b)
|
—
|
Producer
Agreements
|
Schedule
3.8(c)
|
—
|
Producer
Statistics
|
Schedule
3.8(d)
|
—
|
Notice
of Producer Termination
|
Schedule 4.4
|
—
|
Jurisdictions
Where Purchaser Is Not Licensed
|
Schedule 4.6
|
—
|
Purchaser
Regulatory Approvals and/or Other Consents
|
Schedule
6.1(b)
|
—
|
Certain
Books and Records
|
Schedule 8.1
|
—
|
Employee
Group
|
Schedule
14.2
|
—
|
Delivered
Software and Documentation
|
Schedule
14.5
|
—
|
Transition
Team
|
This
RENEWAL RIGHTS AND ASSET PURCHASE AGREEMENT (this “Agreement”),
dated
as of November 21, 2005 (the “Effective
Date”),
is
entered into by and among Alea North America Company, a Delaware business
corporation, and Alea North America Insurance Company, a New York property
and
casualty insurance company (individually and collectively, as applicable, the
“Seller
Parties”)
and
AmTrust
Financial Services, Inc., a Delaware corporation
(the
“Purchaser”).
RECITALS:
WHEREAS,
the Seller Parties desire to sell to the Purchaser, and the Purchaser desires
to
acquire from the Seller Parties, the right to renew and/or replace the Insurance
Contracts; and
WHEREAS,
in connection therewith, (i) the Seller Parties desire to transfer to the
Purchaser, and the Purchaser desires to acquire from the Seller Parties, certain
assets of the Seller Parties, (ii) the Purchaser desires to make offers of
employment to all the employees of the Seller Parties in the Employee Group,
and
(iii) the Seller Parties and the Purchaser desire to enter into certain
other agreements with respect to the transactions contemplated hereby, in each
case, subject to the terms, conditions and limitations set forth in this
Agreement and the Ancillary Agreements.
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual promises
and covenants set forth herein, and in reliance upon the representations,
warranties, conditions and covenants contained herein, and intending to be
legally bound hereby and thereby, the parties hereto do hereby agree as
follows:
ARTICLE
I
DEFINITIONS
1.1. Definitions.
The
following terms, when used in this Agreement, have the meanings set forth in
this Section 1.1.
“Accessed
Software”
has
the
meaning ascribed to it in Section 14.3.
“Affiliate”
of
any
Person means another Person that directly or indirectly controls, is controlled
by, or is under common control with, such first Person, where “control”
means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor, or
otherwise.
“ANAIC”
has
the
meaning ascribed to it in Section 9.1
“Ancillary
Agreements”
means
(i) the Xxxx of Sale and General Assignment Agreement, and (ii) the
Sublease Agreement.
“Applicable
Law”
means
any applicable order, law, statute, regulation, rule, pronouncement, ordinance,
bulletin, writ, injunction, directive, judgment, decree, principle of common
law, constitution or treaty enacted, promulgated, issued, enforced or entered
by
any Governmental Authority applicable to the parties hereto, or any of their
respective businesses, properties or assets.
“Available
Systems”
has
the
meaning ascribed to it in Section 14.3.
“Base
Compensation”
means
a
Transferred Employee’s annual salary.
“Xxxx
of Sale and General Assignment Agreement”
means
the Xxxx of Sale and General Assignment Agreement in form attached hereto as
Exhibit
F.
“Bordereau”
means
the form and information to be contained therein set forth in Exhibit
A.
“Business
Day”
means
any day other than a Saturday, Sunday or a day on which banking institutions
in
the State of New York are permitted or obligated by Applicable Law to be closed
for regular banking business.
“Closing”
and
“Closing
Date”
have
the respective meanings set forth in Section 2.1.
“Code”
means
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
“Covered
Insurance Contracts”
has
the
meaning ascribed to it in Section 2.5.
“Covered
Premium”
means
all Gross Written Premium billed by or on behalf of the Purchaser, any of the
Purchaser’s Affiliates, or the Purchaser Primary Insurer, on or with respect to
the Covered Insurance Contracts.
“Damages”
has
the
meaning ascribed to it in Section 13.2(a).
“Embedded
IP Rights”
has
the
meaning ascribed to it in Section 14.2.
“Employee
Group”
has
the
meaning ascribed to it in Section 8.1.
“ERISA”
means
the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder.
“Governmental
Authority”
means
any foreign, domestic, federal, territorial, state or local U.S. or non-U.S.
governmental authority, quasi-governmental authority, instrumentality, court
or
government, self-regulatory organization, commission, tribunal or organization
or any political or other subdivision, department, branch or representative
of
any of the foregoing.
-
2
-
“Gross
Written Premium”
means
any and all amounts charged to a Policyholder or other Person on or with respect
to a Covered Insurance Contract that are required to be reported as premium
on
the statutory financial statements of the Purchaser, the Purchaser Insurer
Affiliate or the Purchaser Primary Insurer, as applicable with respect to such
premium, in accordance with Applicable Law, exclusive of any surcharges, however
described, that are billed on behalf of, and to the extent remitted to, any
Governmental Authority, less any such amounts returned for cancellation of
any
such Covered Insurance Contract.
“Indemnified
Party”
has
the
meaning ascribed to it in Section 13.3(a).
“Indemnifying
Party”
has
the
meaning ascribed to it in Section 13.3(a).
“Insurance
Contracts”
means
all insurance contracts, policies, certificates, binders, slips, covers or
other
agreements of insurance, including all supplements, riders and endorsements
issued or written in connection therewith and extensions thereto, issued,
renewed, or written by the Alea Alternative Risk division of Alea North America
Insurance Company, including those identified on Schedule 1.1(a)
(which
Schedule
1.1(a)
shall be
delivered by the Seller Parties to the Purchaser on the Closing Date using
information reasonably available to the Seller Parties prior to the Closing
Date), that are in-force as of the Closing Date, and all renewals or
reinstatements thereof, whether on or after the Closing Date, that are required
by Applicable Law or the terms of the Insurance Contracts; provided,
however,
that
Insurance Contracts will not include any (i) Insurance Contracts issued in
California, North Carolina or Colorado, (ii) insurance or reinsurance contracts,
policies, certificates, binders, slips, covers or other agreements of insurance
or reinsurance assumed by Alea North America Insurance Company as reinsurer,
and
(iii) Insurance Contracts issued with respect to the terminated programs
identified on Schedule
1.1(b).
“Insurer
Affiliate”
as
to
any of the Seller Parties or the Purchaser, means an Affiliate of such Person
that is a duly licensed, eligible or otherwise authorized insurance
company.
“Knowledge
of the Seller Parties”
means
the actual knowledge, after due inquiry, of the chief executive officer, chief
financial officer, chief operating officer, president and general counsel of
the
Seller Parties.
“Knowledge
of the Purchaser”
means
the actual knowledge, after due inquiry, of the chief executive officer, chief
financial officer, chief operating officer, president and general counsel of
the
Purchaser.
“Liability”
or
“Liabilities”
means
a
liability, obligation, commitment, expense, claim or cause of action (of any
kind or nature whatsoever, whether absolute, accrued, contingent or other,
and
whether known or unknown).
“Lien”
shall
mean any mortgage, pledge, hypothecation, assignment, lien (statutory or
otherwise), preference, priority, charge or other encumbrance, charge, adverse
claim (whether pending or, to the knowledge of the Person against whom the
adverse claim is being asserted, threatened) or restriction of any kind
affecting title or resulting in an encumbrance against property, real or
personal, tangible or intangible, or a security interest of any kind, including
any conditional sale or other title retention agreement, any right of first
refusal, any lease in the nature thereof, and any filing of or agreement to
give
any financing statement under the Uniform Commercial Code (or equivalent
statute) of any jurisdiction (other than a financing statement which is filed
or
given solely to protect the interest of a lessor).
-
3
-
“Litigation”
means
any action, cause of action (whether at law or in equity), arbitration, claim
or
complaint by any Person alleging potential liability, wrongdoing or misdeed
of
another Person, or any administrative or other similar proceeding, criminal
prosecution or investigation by any Governmental Authority alleging potential
liability, wrongdoing or misdeed of another Person.
“Main
Landlord”
shall
have the meaning ascribed to it in Section 14.1(a).
“Material
Adverse Effect”
means
a
material adverse effect on the ability of the Purchaser to renew, or write
new
insurance policies with respect to, the Insurance Contracts, taken as a whole;
provided,
however,
that
the following shall be excluded from the definition of “Material Adverse Effect”
and from any determination as to whether a Material Adverse Effect has occurred
or may occur: (i) the effects of changes affecting the economy and
securities markets generally; (ii) the effects of changes affecting the
insurance, reinsurance and financial services industries generally, including
the general competitive forces in the insurance and reinsurance markets;
(iii) any downgrade or potential downgrade of the financial strength,
claims paying ability, insurance or other ratings of any of the Seller Parties,
the Purchaser or any of their respective Affiliates; (iv) any changes in
the financial condition or business plans of any of the Seller Parties, the
Purchaser or any of their respective Affiliates; (v) any changes in laws,
regulations, accounting or actuarial principles, or regulations or policies
of
general applicability; (vi) any changes in general economic, regulatory, or
political conditions; (vii) any changes in the customer, client, vendor,
Policyholder, or Producer relationships of the Seller Parties or their
Affiliates as a result of or related to, the transactions contemplated by this
Agreement; (viii) any changes resulting from actions or omissions of a
party hereto taken with the prior written consent of the other parties with
respect to this Agreement or the Ancillary Agreements or the transactions
contemplated hereby or thereby, and (ix) any adverse changes resulting from
this Agreement or the Ancillary Agreements or the transactions contemplated
hereby or thereby or from the announcement of the transactions contemplated
by
this Agreement or the Ancillary Agreements or the identity of the parties hereto
as parties to such transactions.
“Non-Transferred
Employees”
has
the
meaning ascribed to it in Section 8.1.
-
4
-
“Offer
of Employment”
has
the
meaning ascribed to it in Section 8.1.
“Override
Payments”
has
the
meaning ascribed to it in Section 2.6(d).
“Override
Payments Offset”
has
the
meaning ascribed to it in Section 2.6(e).
“Permitted
Liens”
mean
(i) Liens securing the payment of Taxes, either not yet due and payable or
the validity of which is being contested in good faith by appropriate
proceedings; (ii) reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting real property which do not materially
affect the property, or the intended use of the property, secured thereby;
and
(iii) Liens of carriers, warehousemen, mechanics, materialmen, and
landlords incurred in the ordinary course of business for sums not overdue
or
being contested in good faith by appropriate proceedings.
“Person”
means
an individual, corporation, partnership, association, joint stock company,
limited liability company, Governmental Authority, trust joint venture, labor
union, estate, unincorporated organization or other entity.
“Policyholders”
means
policyholders and named insureds of the Insurance Contracts.
“Producers”
means
the agents, brokers, managing general agents, third party administrators,
managing agents, managing general underwriters or intermediaries, whether
appointed by any of the Seller Parties or not, through whom or which any
Policyholder has or may have secured any Insurance Contract with any of the
Seller Parties and which are identified on Schedule 3.8(a).
“Purchaser”
has
the
meaning ascribed to it in the introduction to this Agreement.
“Purchaser
Brand New Policies”
has
the
meaning ascribed to it in Section 2.5.
“Purchaser
Primary Insurer”
means
a
duly licensed, eligible or authorized insurance company, reasonably acceptable
to the Seller Parties, with which the Purchaser and/or any of its Insurer
Affiliates may, during the Renewal Period, enter into a reinsurance relationship
whereby the Purchaser Primary Insurer will offer, quote, solicit, issue, write
and/or bind the Covered Insurance Contracts in the place of the Purchaser and/or
the Purchaser’s Insurer Affiliates in all jurisdictions in which neither the
Purchaser nor any of its Insurer Affiliates is authorized to write the Covered
Insurance Contracts and in any other jurisdictions reasonably necessary to
effect the transfer of the Renewal Rights to the Purchaser, as contemplated
herein, which Covered Insurance Contracts written by the Purchaser Primary
Insurer will be reinsured by the Purchaser and/or any of its Insurer Affiliates;
provided,
however,
that
the Purchaser Primary Insurer must in all cases have and maintain during the
Renewal Period an A. M. Best insurer financial strength rating of at least
“A-”
or a Standard & Poor’s insurer financial strength rating of at least
“A-”.
“Purchaser
Indemnity Cap”
has
the
meaning ascribed to it in Section 13.2(b).
-
5
-
“Purchaser
Indemnity Deductible”
has
the
meaning ascribed to it in Section 13.2(b).
“Purchaser
New Policies”
has
the
meaning ascribed to it in Section 2.5.
“Purchaser
Renewal Policies”
has
the
meaning ascribed to it in Section 2.5.
“Renewal
Period”
has
the
meaning ascribed to it in Section 2.6(d).
“Renewal
Rights”
means
all of the Seller Parties’ existing rights to offer, quote and/or solicit the
renewals of any of the Insurance Contracts, including the right to offer to
cancel and rewrite any of the Insurance Contracts and to solicit replacement
insurance coverage, and the relationships that the Seller Parties enjoy with
each of the Producers, subject in each case to all rights of Producers and
Policyholders and Applicable Law.
“Representative”
means,
with respect to any Person, such Person’s officers, directors, employees,
Affiliates, agents and representatives (including any investment banker,
financial advisor, accountant, actuary, appraiser, analyst, consultant, legal
counsel, agent, representative or expert retained by or acting on behalf of
such
Person or its subsidiaries).
“Seller
Parties”
has
the
meaning ascribed to it in the introduction.
“Seller
Parties Indemnity Cap”
has
the
meaning ascribed to it in Section 13.2(a).
“Seller
Parties Indemnity Deductible”
has
the
meaning ascribed to it in Section 13.2(a).
“Software
License”
has
the
meaning ascribed to it in Section 2.4(a)(iii).
“Sublease
Agreement”
means
the Sublease Agreement in form attached hereto as Exhibit
E.
“Sub-Leased
Premises”
has
the
meaning ascribed to it in Section 14.1(b).
“Taxes”
means
all taxes, charges, duties, fees, levies, or other similar assessments or
liabilities, including all net and gross income, gross receipts, ad valorem,
premium, excise, real property, personal property, windfall profit, sales,
use,
transfer, license, withholding, employment, payroll, profit, estimated,
severance, stamp, occupation, value added, registration, environmental, workers’
compensation, social security and franchise taxes imposed by the United States
Internal Revenue Service or any taxing authority (whether domestic or foreign
including, any state, county, local or foreign government or any subdivision
or
taxing agency thereof (including a United States possession)); and such term
shall include any interest, fines, penalties, assessments, or additions to
tax
relating to, resulting from, attributable to, or incurred in connection with
any
such tax or any contest or dispute thereof.
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“Termination
Date”
means
December 30, 2005.
“Third
Party Claims”
has
the
meaning ascribed to it in Section 13.3.
“Total
Consideration Payable”
means
the Initial Payment plus
all
Override Payments less
the
Override Payments Offset.
“Transferred
Assets”
means
those physical assets of the Seller Parties specifically identified on
Exhibit
B.
“Transferred
Employees”
has
the
meaning ascribed to it in Section 8.1.
“Transition
Period”
has
the
meaning ascribed to it in Section 14.1(b).
1.2. Interpretation.
(a) The
parties hereto have participated jointly in the negotiation and drafting of
this
Agreement. Consequently, in the event that an ambiguity or question of intent
or
interpretation arises, this Agreement will be construed as if drafted jointly
by
the parties hereto, and no presumption or burden of proof will arise favoring
or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
(b) When
a
reference is made in this Agreement to a section or article, such reference
will
be to a section or article of this Agreement unless otherwise clearly
indicated to the contrary. Whenever the words “include”,
“includes”
or
“including”
are
used in this Agreement they will be deemed to be followed by the words
“without limitation.”
The
words “hereof,”
“herein”
and
“herewith”
and
words of similar import will, unless otherwise stated, be construed to refer
to
this Agreement (including the schedules and exhibits) as a whole and not to
any
particular provision of this Agreement. The meaning assigned to each term used
in this Agreement will be equally applicable to both the singular and the plural
forms of such term, and words denoting any gender will include all genders.
Where a word or phrase is defined herein, each of its other grammatical forms
will have a corresponding meaning.
(c) The
schedules and exhibits attached hereto are incorporated into this Agreement
and
will be deemed a part hereof as if set forth herein in full. In the event of
any
conflict between the provisions of this Agreement and any schedule or
exhibit, the provisions of this Agreement will control. Capitalized terms used
in the schedules have the meanings assigned to them in this Agreement. The
section references referred to in the schedules are to sections of this
Agreement, unless otherwise expressly indicated
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ARTICLE
II
TRANSFER
OF ASSETS
2.1. The
Closing.
The
closing of the transactions contemplated by this Agreement (the “Closing”)
will
take place at the offices of Lord, Bissell & Brook, 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, two (2) Business Days following the satisfaction
or
waiver of all conditions to closing described in Article X and Article XI or
at
such other time and place as the parties mutually agree (the “Closing
Date”),
but
in no event later than the Termination Date. The transactions contemplated
by
this Agreement shall be deemed to be effective as of 12:01 a.m. on the date
thereof.
2.2. The
Closing Transactions.
Upon
the terms, conditions, and limitations of this Agreement, and for the
consideration stated herein, on the Closing Date the Seller Parties will sell,
assign and transfer to the Purchaser, and the Purchaser will accept and acquire,
all of the Seller Parties’ respective rights, title and interest in the Renewal
Rights and the Transferred Assets. All sales, assignments and transfers of
the
Transferred Assets to the Purchaser hereunder will be evidenced by the Xxxx
of
Sale and General Assignment Agreement which will be executed and delivered
on
the Closing Date by the Seller Parties. The Transferred Assets shall not
include, or otherwise be deemed to include, any other assets or properties
of
any of the Seller Parties, other than those physical assets of the Seller
Parties identified on Exhibit
B.
On or
before the Closing Date, in accordance with Article VIII, the Purchaser shall
extend offers of employment to all the employees of the Seller Parties in the
Employee Group.
2.3. Non-Assumption
of Liabilities.
Other
than pursuant to the Ancillary Agreements, as applicable, neither the Purchaser
nor any of its Affiliates will, directly or indirectly, assume any Liability
of
the Seller Parties or their Affiliates of any kind, character or description
attributable to the conduct of the business of the Seller Parties or the
ownership or use of the Transferred Assets, in each case, prior to the Closing
Date, regardless of when discovered or reported, including, but not limited
to,
the following Liabilities which shall remain Liabilities of the Seller Parties
and/or their Affiliates, to the extent such Liabilities do not arise from any
acts, errors or omissions of the Purchaser, its Affiliates or their respective
Representatives:
(a) any
Liability relating to any failure or alleged failure to comply with, or any
violation or alleged violation of, any Applicable Law, which failure or
violation occurred or was alleged to have occurred prior to the Closing
Date;
(b) any
Liability relating to any breach of any contract included in the Transferred
Assets occurring prior to the Closing Date;
(c) any
Liability occurring prior to the Closing Date with respect to (i) any
employee benefit plan or employee benefits maintained by the Seller Parties,
(ii) the termination of any such employee benefits or employee benefit plan
by the Seller Parties, (iii) payroll and employee benefits accrued by any
employee of the Seller Parties, or (iv) the termination of employment of
any officer or employee by the Seller Parties prior to the Closing Date
(including, but not limited to, any such termination deemed to have occurred
upon the consummation of the Closing);
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(d) any
Liability arising under the express terms and conditions of the Insurance
Contracts issued, renewed or written by the Seller Parties prior to the Closing
Date; and
(e) any
Liability for Taxes arising prior to the Closing Date.
2.4. Closing
Deliveries.
(a) On
or
before the Closing, the Purchaser
will
deliver to the Seller Parties the following:
(i) Payment
of the Initial Payment in accordance with Section 2.6; and
(ii) any
other
deliveries contemplated by Article XI or the other provisions
hereof.
(b) On
or
before the Closing, the Seller
Parties
will
deliver to the Purchaser the following:
(i) The
Xxxx
of Sale and General Assignment Agreement, duly executed by the Seller Parties;
(ii) Schedule
1.1(a);
and
(iii)
any
other
deliveries contemplated by Article X or the other provisions
hereof.
2.5. *
2.6. *
2.7. Tax
Allocation of Payments. To the extent permitted or required by Applicable
Law, the payments set forth in Section 2.6 will be allocated among the
Transferred Assets in accordance with Section 1060 of the Code and Treasury
Regulation Section 1.1060-1T, which allocation will be prepared by the
Seller Parties and delivered to the Purchaser within ninety (90) calendar days
after the Closing. The Seller Parties and the Purchaser shall mutually agree
(such agreement not to be unreasonably withheld) as to the allocation of such
consideration among the Transferred Assets in accordance with Section 1060
of the Code and Temp. Treas. Reg. Section 1.1060-1 (and any successors
thereto). The Seller Parties and the Purchaser shall cooperate in the timely
preparation of all the Seller Parties’ and the Purchaser’s Forms 8594, Asset
Acquisition Statement, under Section 1060 of the Code, reflecting the
Purchaser’s acquisition of the
*
Confidential Treatment Requested
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Transferred
Assets. If the Purchaser disputes the allocation, the Purchaser and the Seller
Parties will cooperate in good faith to resolve any such dispute. Should the
parties fail to reach agreement within thirty (30) calendar days after the
Seller Parties’ delivery of such allocation to the Purchaser, the determination
of the allocation will be made by an accountant selected under the same criteria
and procedure set forth in Section 2.6(h) above, whose decision will be in
writing and will have the same binding effect upon the parties for all purposes
as if such determination had been embodied in a final judgment, no longer
subject to appeal, entered by a court of competent jurisdiction, and either
party may petition a court having jurisdiction over the parties and the subject
matter to reduce such determination to final judgment. The Purchaser and the
Seller Parties will each prepare and file, with respect to the transactions
contemplated by this Agreement, all necessary forms or reports required or
permitted to be filed under federal, state or local Tax law in accordance with
such allocation. The Seller Parties and the Purchaser each agree (i) to
reflect the Transferred Assets on their respective books for Tax reporting
purposes in accordance with the allocation, (ii) to file all Tax returns
and determine all Taxes in accordance with and based upon the allocation, and
(iii) not to take any position inconsistent with such allocation in any
audit or judicial or administrative proceeding or otherwise, in each case unless
otherwise provided by Applicable Law; provided, however, that the
amount allocated by the Seller Parties may differ due to capitalization of
costs
incurred in connection with the transactions contemplated by this Agreement
and
the Ancillary Agreements.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF SELLER PARTIES
The
Seller Parties jointly and severally represent and warrant to the Purchaser
that
as of the Effective Date (or, if made as of a specified date, as of such
date):
3.1. Corporate
Existence and Power.
Each of
the Seller Parties (i) has been duly organized, is validly existing and is
in good standing under the laws of its state of incorporation or domicile,
(ii) has all corporate powers required to carry on its business as now
conducted, (iii) has all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted as
it
relates to the Insurance Contracts, and (iv) is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, or is duly licensed to do business and
is
in good standing in each jurisdiction where such licensing is necessary to
conduct its business as it relates to the Insurance Contracts, as the case
may
be, except, in the case of each of clauses (ii) through (iv), as would not
have a Material Adverse Effect. No Seller Party is in violation of any of the
provisions of its charter or by-laws with respect to the conduct of its business
as it relates to the Insurance Contracts.
3.2. Corporate
Authority.
The
execution, delivery and performance by each of the Seller Parties of this
Agreement and the Ancillary Agreements are within its powers and have been
duly
authorized by all necessary corporate action on the part of the Seller Parties.
This Agreement constitutes, and when executed and delivered the Ancillary
Agreements will constitute, valid and legally binding agreements, enforceable
against each party thereto in accordance with its terms, subject to
(i) bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors’ rights generally and the rights of creditors of insurance companies
generally, and (ii) general principles of equity (regardless of whether
considered in a proceeding at law or in equity).
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3.3. Non-Contravention.
The
execution and delivery of, and performance by the Seller Parties of their
obligations under, this Agreement and the Ancillary Agreements shall
not:
(a) result
in
a breach of any provision of the articles of incorporation or by-laws of the
Seller Parties; or
(b) result
in
a breach of any order, judgment or decree of any Governmental Authority to
which
any Seller Party is a party or by which any Seller Party is bound.
3.4. Compliance
with Laws.
The
Seller Parties’ business as it relates to the Insurance Contracts has been
conducted in all material respects in accordance with Applicable Law and there
is no investigation, inquiry, order, decree or judgment of any Governmental
Authority outstanding or, to the Knowledge of the Seller Parties, threatened
against the Seller Parties which could have a Material Adverse
Effect.
3.5. Liens
and Encumbrances on Transferred Assets.
The
Seller Parties have good and marketable title to the Transferred Assets, free
and clear of all Liens other than Permitted Liens, and at the Closing the
Purchaser will acquire good title thereto, free and clear of all Liens other
than Permitted Liens.
3.6. Litigation.
Except
for Litigation arising out of the Seller Parties’ business in the ordinary
course of business, there are no Litigation proceedings pending or, to the
Knowledge of the Seller Parties, threatened against the Seller Parties with
respect to the Seller Parties’ business as it relates to the Insurance
Contracts, except as would not reasonably be expected to have a Material Adverse
Effect.
3.7. Consents
and Approvals.
Except
as set forth in Schedule 3.7,
the
execution, delivery and performance by the Seller Parties of this Agreement
and
the Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby in accordance with their terms do not require the Seller
Parties to obtain any permit or any consent, approval or action of, make any
filing with, or give any notice to, any Governmental Authority or any other
Person.
3.8. *
*
Confidential Treatment Requested
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3.9. Rates,
Rules and Forms.
To the
Knowledge of the Seller Parties, each of their Insurer Affiliates have filed
all
insurance forms and rates with the applicable regulatory authorities, as
required by Applicable Law, and all such forms and rates have been approved
by
applicable regulatory authorities or have been not objected to by such
authorities within the period provided for objection, as applicable, to enable
them to issue the Insurance Contracts in all applicable jurisdictions of the
United States, except where the failure to make such filings or to obtain such
approvals or non-objection would not have a materially adverse effect on the
relevant Insurance Contract.
3.10. Payment
of Commissions.
To the
Knowledge of the Seller Parties, there are no pending material disputes with
Producers relating to commissions payable with respect to the Insurance
Contracts.
3.11. Employees.
The
Seller Parties have disclosed to the Purchaser the salaries, cost of benefits,
and target bonuses for all of the employees in the Employee Group, as of the
Effective Date.
3.12. Territorial
Restrictions.
The
Seller Parties are not restricted by any contract with another Person from
carrying on their business as it relates to the Insurance Contracts in any
territory where their business as it relates to the Insurance Contracts is
being
carried on as of the date of this Agreement.
3.13. Brokers.
There
is no investment banker, non-insurance broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of the Seller
Parties who might be entitled to any fee or commission upon consummation of
the
transactions contemplated by this Agreement, other than Xxxxxxx, Xxxxxxx &
Co., the fees of whom will be paid entirely by the Seller Parties.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
The
Purchaser represents and warrants to the Seller Parties that as of the Effective
Date (or, if made as of a specified date, as of such date):
4.1. Corporate
Existence and Power.
The
Purchaser (i) has been duly organized, is validly existing and is in good
standing under the laws of its state of incorporation or domicile, (ii) has
all corporate powers required to carry on its business as now conducted,
(iii) has all governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted, and (iv) is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, or is duly licensed
to do business and is in good standing in each jurisdiction where such licensing
is necessary to conduct its business as now conducted, except, in the case
of
each of clauses (ii) through (iv), as would not have a material adverse effect
on the ability of the Purchaser to perform any of its obligations under this
Agreement or any Ancillary Agreement.
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4.2. Corporate
Authority.
The
execution, delivery and performance by the Purchaser of this Agreement and
the
Ancillary Agreements are within its powers and have been duly authorized by
all
necessary corporate action on the part of the Purchaser. This Agreement
constitutes, and when executed and delivered the Ancillary Agreements will
constitute, valid and legally binding agreements, enforceable against each
party
thereto in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors’ rights
generally and the rights of creditors of insurance companies generally and
(ii) general principles of equity (regardless of whether considered in a
proceeding at law or in equity).
4.3. Non-Contravention.
The
execution and delivery of, and performance by the Purchaser of its obligations
under this Agreement and the Ancillary Agreements, shall not:
(a) result
in
a breach of any provision of the articles of incorporation or by-laws of the
Purchaser; or
(b) result
in
a breach of any order, judgment or decree of any Governmental Authority to
which
the Purchaser is a party or by which the Purchaser is bound.
4.4. Licenses.
Except
as set forth in Schedule 4.4,
the
Purchaser and its Insurer Affiliates have all material licenses, authorizations
and permits necessary to enable them to write and issue the Covered Insurance
Contracts in all jurisdictions of the United States, as contemplated by this
Agreement, and to perform their obligations under this Agreement and the
Ancillary Agreements. All such licenses, authorizations and permits are valid
and in full force and effect and there is no proceeding or investigation pending
or, to the Knowledge of the Purchaser, threatened, which would reasonably be
expected to result in the revocation, amendment, failure to renew, limitation,
modification, suspension or revocation of any such license, authorization or
permit and, to the Knowledge of the Purchaser, there is no reasonable basis
for
the assertion of any such violation or the institution of any such proceeding
or
investigation.
4.5. Due
Investigation.
The
Purchaser (i) has performed its own independent investigation, analysis and
assessment of the Renewal Rights and the Transferred Assets, and that during
the
course of conducting such investigation, analysis and assessment, the Purchaser
has asked such questions, examined such documents, materials, and information,
and performed such other investigations, as it deemed appropriate in its own
discretion, (ii) acknowledges that the Sellers Parties have made no
representation or warranty (express or implied) as to the accuracy or
completeness of any information (whether
written or oral) transmitted or made available to the Purchaser
or any of its Representatives, except those expressly set forth in this
Agreement, (iii) acknowledges that it has not relied on the Seller Parties’
or their Representatives’ opinions or underwriting and actuarial criteria and
analyses, and (iv) has reached its own independent judgments to enter into
and close this Agreement and the Ancillary Agreements based upon its own
independent judgments and underwriting and actuarial criteria and analyses.
Nothing in the foregoing shall be deemed to operate as a waiver or release
by
the Purchaser of the Seller Parties from any representation, warranty, covenant
or agreement expressly contained in this Agreement.
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4.6. Consents
and Approvals.
Except
as set forth in Schedule 4.6,
the
execution, delivery and performance by the Purchaser of this Agreement and
the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby in accordance with their terms do not require the Purchaser
to obtain any permit or any consent, approval or action of, make any filing
with, or give any notice to, any Governmental Authority or any other
Person.
4.7. Brokers.
There
is no investment banker, non-insurance broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of the Purchaser
who might be entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement.
ARTICLE
V
INSURANCE
CONTRACTS AND PRODUCERS
5.1. No
Representations On Market Reaction.
Notwithstanding anything contained herein to the contrary, the Purchaser
acknowledges and agrees that, except as expressly set forth in Article III
hereof, no representation or warranty (express or implied) or covenant, or
except as expressly set forth in Article XIII hereof, no indemnity, is made
herein, or has been made, by any of the Seller Parties, their Affiliates, or
their respective Representatives, that:
(a) any
Producer, Policyholder, customer, client, or vendor relationships of the Seller
Parties or any of their Affiliates, or any other business relationships of
the
Seller Parties or any of their Affiliates or other service providers, will
or
are likely to continue to do business with the Purchaser, its Affiliates and/or
the Purchaser Primary Insurer in the same manner as such business has been
conducted historically with the Seller Parties and their Affiliates, whether
as
a result of the transactions contemplated by this Agreement or
otherwise;
(b) the
general reaction in the marketplace of third parties (including Producers,
Policyholders, customers, clients and business prospects) to the sale of the
Renewal Rights and the Transferred Assets to the Purchaser hereunder will be
favorable; and
(c) any
employee in the Employee Group will become a Transferred Employee.
5.2. No
Infringement on Producer Rights.
Notwithstanding anything contained herein to the contrary, the Purchaser
acknowledges and agrees that none of the Seller Parties or any of their
Affiliates has the power or ability to require any Policyholder or Producer
to
renew, cancel or rewrite any Insurance Contract(s) with the Purchaser, its
Affiliates or the Purchaser Primary Insurer upon expiration or otherwise.
Nothing contained in this Agreement shall impair any rights that the Producers
have to renewal rights or expirations with respect to the Insurance Contracts
by
Applicable Law or contract.
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5.3. Authority
of the Seller Parties to Nonrenew and Withdraw.
Nothing
in this Agreement or in any Ancillary Agreement shall be deemed to prohibit
or
otherwise restrict the Seller Parties or any of their Affiliates from issuing
any notice of non-renewal or cancellation required or permitted under Applicable
Law and the terms of the Insurance Contracts with respect to any Insurance
Contract, making any filings with Governmental Authorities with respect to
the
Insurance Contracts, including filings to withdraw, in whole or in part, from
any line, type or class of business represented by the Insurance Contracts,
or
ceding any risk under the Insurance Contracts to any Person(s); provided,
however,
unless
required by Applicable Law or any Governmental Authority, the Seller Parties
agree that during the period from the Effective Date through the end of the
Transition Period they will not, without the prior written consent of the
Purchaser, effectuate a partial or complete withdrawal from any lines, types
or
classes of business represented by the Insurance Contracts in any jurisdiction
in which an Insurance Contract was issued (for the avoidance of any doubt,
such
jurisdiction shall not include California, North Carolina or
Colorado).
5.4. No
Limitations on the Seller Parties Operations.
Nothing
in this Agreement shall limit in any way the Seller Parties’ and their
respective Affiliates’ ability to reinsure, merge, sell, acquire, consolidate,
restructure, or reorganize, or take any actions similar to or in furtherance
of
the foregoing.
ARTICLE
VI
COVENANTS
OF EACH OF THE PARTIES
6.1. Covenants
of the Seller Parties.
(a) Cooperation
to Effect Transfer of the Renewal Rights.
During
the period from the Effective Date through the Closing Date, the Seller Parties
shall:
(i) as
reasonably requested by the Purchaser, make available key employees in the
Employee Group for meetings and conference calls among the Seller Parties,
the
Purchaser and Producers to make introductions and encourage Producers to enter
into contractual arrangements (from and after the Closing Date) with the
Purchaser, the Purchaser’s Insurer Affiliates and/or the Purchaser Primary
Insurer; provided,
however,
that
such meetings and conference calls shall not be unreasonably disruptive to
the
Seller Parties’ business; and
(ii) make
available employees in the Employee Group reasonably requested by the Purchaser,
to assist the Purchaser, the Purchaser’s Insurer Affiliates, and the Purchaser
Primary Insurer in preparing and making form and rate filings in all
jurisdictions of the United States required for the Purchaser, the Purchaser
Insurer Affiliates and/or the Purchaser Primary Insurer to issue Covered
Insurance Contracts from and after the Closing Date, as provided herein and
not
unreasonably disruptive to the Seller Parties’ business.
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Purchaser
agrees to pay the actual costs incurred by Seller Parties in accordance with
the
foregoing.
(b) Access
to Books and Records For Replacement of Insurance Contracts.
In
connection with the transfer hereunder of the Renewal Rights to the Purchaser,
and for the purpose of identifying which of the Insurance Contracts the
Purchaser anticipates it will be offering renewal quotes prior to or upon the
expiration, cancellation or anniversary thereof, the Seller Parties covenant
and
agree, from and after the Closing and through the Renewal Period, upon
reasonable prior notice, during regular business hours, and at the offices
of
the Seller Parties or their designees, to provide, to the extent permitted
by
Applicable Law and contractual obligations with third parties, to the Purchaser
reasonable access to the originals or copies of all books and records relating
to the Insurance Contracts, including the items identified on Schedule
6.1(b),
in each
case to the extent relating to the Insurance Contracts; provided,
however,
that
the Purchaser shall not, and will not permit any of its Affiliates or the
Purchaser Primary Insurer or any of their respective Representatives, to use
any
of the items referred to in this Section 6.1(b), including any information
relating to Policyholders, Producers, and/or the Insurance Contracts, in a
manner that would (i) cause the Seller Parties or their Affiliates to be in
breach of any contract with any Person or Applicable Law, and (ii) be in
violation of any Applicable Law including any applicable state or federal
privacy laws. Notwithstanding anything contained herein to the contrary, the
Seller Parties are not required to, and will not, provide access to, or
otherwise deliver, any e-mail files of the Seller Parties and/or of their
respective Affiliates to the Purchaser and/or its Affiliates. The Seller Parties
shall have no liability for the data provided to the Purchaser under this
Section 6.1(b). For the avoidance of any doubt, the Purchaser shall be
given access to the books and records relating to the Insurance Contracts,
as
provided herein, but all such books and records shall at all times be under
the
control of, and be solely owned by, the Seller Parties.
6.2. Covenants
of the Purchaser.
(a) Transfer
of the Renewal Rights.
In
connection with the transfer hereunder of the Renewal Rights to the Purchaser,
the Purchaser covenants and agrees, from and after the Closing Date,
that:
(i) Subject
to the Purchaser’s, its Insurer Affiliates’ and/or the Purchaser Primary
Insurer’s underwriting guidelines, the Purchaser shall use commercially
reasonable efforts to quote, write and issue, and/or cause to be quoted, written
or issued, the Covered Insurance Contracts, as provided herein, and effect
the
orderly transition of the Insurance Contracts that become Covered Insurance
Contracts to approved or authorized policy forms and rates of the Purchaser,
the
Purchaser’s Insurer Affiliates and/or the Purchaser Primary Insurer in
accordance with Applicable Law and the terms of the Insurance Contracts, this
Agreement and the Ancillary Agreements. In so quoting, writing, issuing and
servicing the Covered Insurance Contracts, the Purchaser shall, and shall cause
its Affiliates and the Purchaser Primary Insurer, to use commercially reasonable
efforts to preserve and promote the present relationships with all Producers
and
Policyholders;
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(ii) The
Purchaser shall use commercially reasonable efforts to possess, secure, and
maintain, and cause its Insurer Affiliates and the Purchaser Primary Insurer
to
possess, secure, and maintain, in full force and effect, (x) all material
licenses, authorizations and permits, and (y) all approved insurance forms
and rates, necessary for the Purchaser, its Insurer Affiliates, and the
Purchaser Primary Insurer to write, issue, renew and service the Covered
Insurance Contracts, as contemplated herein, in each jurisdiction in which
the
Purchaser, its Insurer Affiliates, and the Purchaser Primary Insurer are
required by Applicable Law to possess such license, authorization, permit,
forms
and rates in order to write, issue, renew and service the Covered Insurance
Contracts, as provided herein;
(iii)
The
Purchaser agrees that it may not change or add any Purchaser Primary Insurer
without the prior written approval of the Seller Parties, which approval shall
not be unreasonably withheld. Should any Purchaser Primary Insurer no longer
(i)
possess, in full force and effect, all material licenses, authorizations and
permits and/or all approved insurance forms and rates necessary for it to write,
issue, renew and service the Covered Insurance Contracts, as contemplated
herein, or (ii) have an A. M. Best insurer financial strength rating of at
least
“A-” or a Standard & Poor’s insurer financial strength rating of at least
“A-”, the Purchaser shall use its commercially reasonable efforts to replace as
expeditiously as possible the Purchaser Primary Insurer with a Purchaser Primary
Insurer, reasonably acceptable to the Seller Parties, which has such ratings
and
such necessary licenses, authorizations, permits, forms and rates;
and
(iv) The
Purchaser, during the Renewal Period, shall use commercially reasonable efforts,
directly or indirectly, to collect all Covered Premium in accordance with the
collection policies and procedures of the Seller Parties existing as of the
Closing Date or as otherwise agreed to by the parties.
ARTICLE
VII
COVENANTS
OF SELLER PARTIES AND PURCHASER
7.1. Governmental
Authority Approvals.
From
and after the Effective Date, the Seller Parties and the Purchaser will
cooperate and use commercially reasonable efforts to promptly give and make
all
notices and filings with any Governmental Authorities, or any other Person,
required in connection with the consummation of the transactions contemplated
by
this Agreement and the Ancillary Agreements, including those set forth in
Schedule 3.7
and
Schedule 4.6.
The
Seller Parties and the Purchaser will each furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with the preparation of such filings or submissions to any Governmental
Authority. The Seller Parties and the Purchaser will each keep the other
apprised of the status of matters relating to the completion of the transactions
contemplated by this Agreement and the Ancillary Agreements, including promptly
furnishing the other with copies of notices or other communications received
by
the Seller Parties, on the one hand, and the Purchaser, on the other, as
applicable, from any Governmental Authority with respect to the approval or
consent required in connection with the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.
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7.2. Compliance
With Law.
Following the Closing, the Seller Parties, the Purchaser and their respective
Affiliates will each comply with all Applicable Laws relating to their conduct
in performing their respective obligations under this Agreement and under the
Ancillary Agreements.
7.3. Expenses.
Except
as otherwise specifically provided in this Agreement or any Ancillary Agreement,
the parties to this Agreement will bear their respective expenses incurred
in
connection with the preparation, execution and performance of this Agreement
and
any Ancillary Agreement and the consummation of the transactions contemplated
hereby and thereby.
7.4. Use
of
Names.
(a) Except
as
contemplated by this Agreement or any of the Ancillary Agreements, neither
party
to this Agreement shall have any right to use, nor shall any such party use,
any
corporate name or acronym of the other party hereto or any of its Affiliates
in
any jurisdiction, or any other name, term or identification that suggests,
simulates or is otherwise confusing due to its similarity to the
foregoing.
(b) The
parties hereto acknowledge and agree that any damage caused to a party hereto
or
any of its Affiliates by reason of a material breach by the other party or
any
of its Affiliates of this Section 7.4 would cause irreparable harm that
could not be adequately compensated for in monetary damages alone; therefore,
each party agrees that, in addition to any other remedies, at law or otherwise,
the non-breaching party and any of its Affiliates shall be entitled to an
injunction issued by a court of competent jurisdiction restraining and enjoining
any violation by the other party or any of its Affiliates of this
Section 7.4.
7.5. Public
Announcements and Disclosure.
Except
with the prior written approval of the other party, which consent shall not
be
unreasonably withheld, none of the Seller Parties nor the Purchaser shall,
directly or indirectly, disclose to the public or to any third party any
information concerning this Agreement and/or the transactions contemplated
hereby, other than disclosures to financial, legal and other advisors and to
Governmental Authorities or, in the reasonable opinion of legal counsel,
otherwise required by Applicable Law.
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7.6. Confidentiality.
Each
party hereto will not disclose to any Person (other than its Affiliates and
Representatives in furtherance of this Agreement), and will not use for any
purpose not contemplated by this Agreement, and will use commercially reasonable
efforts to cause its Affiliates and Representatives (the Purchaser Primary
Insurer is hereby deemed a Representative of the Purchaser) to do the same,
except with the prior written consent of the other party or unless
(i) compelled to disclose by judicial or administrative process (including
in connection with obtaining the necessary approvals of this Agreement or the
Ancillary Agreements and the transactions contemplated hereby or thereby of
Governmental Authorities) or by other requirements of Applicable Law, or
(ii) disclosed in an action or proceeding brought by a party hereto in
pursuit of its rights or in the exercise of its remedies hereunder, all
documents and information concerning the other party or any of its Affiliates,
including all information relating to Producers and Policyholders, furnished
to
it by the other party or such other party’s Representatives in connection with
this Agreement or any Ancillary Agreement or the transactions contemplated
hereby or thereby, except to the extent that such documents or information
can
be shown to have been (a) previously known by the party receiving such
documents or information, (b) in the public domain (either prior to or
after the furnishing of such documents or information hereunder) through no
fault of such receiving party, or (c) later acquired by the receiving party
from another source if the receiving party is not aware that such source is
under an obligation or duty to another party hereto to keep such documents
and
information confidential; provided that following the Closing the foregoing
restrictions will not apply to the Purchaser’s use of documents and information
relating exclusively to the Renewal Rights or Transferred Assets furnished
by
the Seller Parties hereunder.
7.7. Further
Assurances.
The
Seller
Parties and the Purchaser shall use commercially reasonable efforts to take,
or
cause to be taken, all actions or do, or cause to be done, all things or execute
any documents necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement and the Ancillary Agreements,
subject to their respective terms; provided,
however,
that any such additional documents must be reasonably satisfactory to each
of
the parties and not impose upon either party any material liability, risk or
obligation not contemplated by this Agreement or the Ancillary
Agreements.
ARTICLE
VIII
EMPLOYEE
MATTERS
8.1. Offers
of Employment.
On or
before the Closing Date, the Purchaser shall extend an offer of employment
to be
effective as of the Closing Date to all employees of the Seller Parties that
are
identified in Schedule 8.1
(collectively, the “Employee
Group”).
The
Purchaser shall co-ordinate with the Seller Parties as to the timing of making
such offers of employment so as not to unreasonably disrupt the Seller Parties’
business prior to the Closing Date. Each offer of employment by the Purchaser
will be no less than the Base Compensation each such employee receives from
the
Seller Parties (an “Offer
of Employment”).
Those
Seller Party employees who accept the Purchaser’s Offer of Employment on or
before the Closing Date, are referred to, as of the date of such acceptance,
as
“Transferred
Employees.”
Employment of Transferred Employees with the Purchaser or an Affiliate of the
Purchaser will be effective as of the Closing Date. The employees, whether
or
not in the Employee Group, of the Seller Parties and/or any of their Affiliates
who are not Transferred Employees will be referred to as “Non-Transferred
Employees.”
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8.2. Employee
Benefits.
The
Purchaser will provide, or will cause to be provided, to Transferred Employees
employee benefits determined by the Purchaser. Without limiting the foregoing,
the Purchaser agrees that any pre-existing condition or waiting periods in
its
applicable welfare plans shall be waived with respect to the Transferred
Employees. No assets of any employee benefit plan maintained by the Seller
Parties will be transferred to the Purchaser or any Affiliate of the Purchaser,
and any liabilities related to or arising out of such plans will remain with
the
Seller Parties. The Purchaser’s qualified and non-qualified retirement savings
plans, health and welfare benefit plans, including but not limited to vacation
plans, will recognize the Transferred Employees’ service with the Seller Parties
for purposes of eligibility and vesting.
8.3. Non-Transferred
Employees.
The
Seller Parties will retain and be responsible for all compensation, benefit,
severance and employment related obligations and liabilities relating to each
Non-Transferred Employee. The Seller Parties will retain and be responsible
for
all compensation, benefit and employment related obligations and liabilities
relating to each Transferred Employee in respect of any period prior to such
Transferred Employee’s Transfer Date. The Purchaser or an Affiliate of the
Purchaser will be solely liable for all compensation, benefit, severance, and
employment related obligations and liabilities relating to the employment of
each Transferred Employee by the Purchaser or such Affiliate arising after
the
Transfer Date.
8.4. Transferred
Employees Cooperation.
From
and after the Closing Date, the Purchaser shall use commercially reasonable
efforts to cause the Transferred Employees, including Transferred Employees
that
are specifically identified by the Seller Parties or that the Seller Parties,
in
light of the functions previously performed by such employees, reasonably
believe may have knowledge of the specific matter(s) in question, to cooperate
with and provide assistance to the Seller Parties and/or any of its Affiliates,
at the expense of the Seller Parties, at times and locations as reasonably
requested by the Seller Parties, (i) in the defense of any Litigation,
arbitration, claim, complaint, audit, proceeding, or investigation (whether
threatened existing, initiated or contemplated prior to, on or after the Closing
Date) arising out of any event that occurred on or prior to the Closing Date,
including matters involving the Seller Parties and/or any of their Affiliates
or
to which they are or may become a party, or are or may become otherwise bound
or
directly or indirectly affected or as to which the Seller Parties and/or any
of
their Affiliates have or may come to have a direct or indirect interest
(including any indirect economic interest derived by virtue of contractual
relationships), in each case which involved or could reasonably be expected
to
involve facts or circumstances with which any such Transferred Employees were
involved or acquainted as a director, officer or employee or advisor of the
Seller Parties and/or any of their Affiliates, or as to which they have or
could
reasonably be expected to have any knowledge and/or otherwise relating to or
arising out of the business of the Seller Parties, (ii) in connection with
any other transaction or matter that involved or involves or may involve facts
or circumstances with which any such Transferred Employees were involved or
acquainted with as a director, officer or employee or advisor of any of the
Seller Parties and/or any of their Affiliates, or as to which such Transferred
Employee has or could reasonably be expected to have knowledge, including any
Tax matter relating to the business of the Seller Parties, and (iii) in
fulfilling such other reasonable requests as may be made by the Seller Parties
in connection with the business of the Seller Parties.
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8.5. No
Solicitation of Transferred Employees.
The
Seller Parties covenant and agree that until the expiration of the Renewal
Period, neither they nor any of their Affiliates shall, and the Seller Parties
shall cause their respective Affiliates not to, directly or indirectly, solicit
or hire any Transferred Employees at any time during their employment by the
Purchaser without the written consent of the Purchaser; provided,
however,
the
Seller Parties shall not be precluded from hiring any Purchaser employee who
(i) responds to any public advertisement; (ii) contacts the Seller
Parties on his or her own initiative regarding employment; (iii) has been
terminated by the Purchaser or its Affiliates prior to commencement of
employment discussions; or (iv) is presented by an employee search firm,
provided that such firm was not directed to target employees of the
Purchaser.
8.6. No
Solicitation of Non-Transferred Employees.
The
Purchaser covenants and agrees that until the expiration of the Renewal Period,
without the prior written consent of the Seller Parties, neither Purchaser
nor
any of its Affiliates shall, and the Purchaser shall cause its Affiliates not
to, directly or indirectly, solicit or hire any Non-Transferred Employees at
any
time during their employment by the Seller Parties or an Affiliate of the Seller
Parties; provided,
however,
neither
the Purchaser nor its Affiliates shall be precluded from hiring any Seller
Parties employee who (i) responds to any public advertisement; (ii) contacts
the
Purchaser on his or her own initiative regarding employment; (iii) has been
terminated by the Seller Parties or its Affiliates prior to commencement of
employment discussions; or (iv) is presented by an employee search firm,
provided that such firm was not directed to target employees of the Seller
Parties.
ARTICLE
IX
NON-SOLICITATION
OF PRODUCERS
9.1. Non-Solicitation.
The
Seller Parties hereby covenant and agree that from and after the Closing Date
and through the Renewal Period, none of the Seller Parties or their Affiliates
shall, directly or indirectly, solicit, enter into any new business relationship
with, or write any new insurance business through any (i) Producer, or (ii)
agent, broker or other producer through which a Covered Insurance Contract
was
written and for which the Seller Parties received an Override Payment, except
to
the extent required by Applicable Law or a policyholder, the terms of the
Insurance Contracts or of any existing agreement with a Producer, or as
contemplated by this Agreement; provided,
however,
that
the foregoing shall not prevent:
(i) the
Seller Parties and/or any of their respective Affiliates from the ongoing
administration and run-off of the Insurance Contracts; or
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(ii) the
Seller Parties and/or any of their respective Affiliates from engaging in any
other business as exists on or after the Closing Date, other than through the
Producers;
provided however,
that
nothing in this Section 9.1 shall be applicable to any purchaser or its
Affiliates (other than the Seller Parties and their respective Affiliates
existing immediately prior to such purchase) of any of the assets, securities
or
business of the Seller Parties or any of their respective Affiliates; and
provided further,
however,
that
notwithstanding anything contained herein to the contrary, upon a change in
control of Alea North America Insurance Company (“ANAIC”)
(as
defined under the New York Insurance Code and regulations), (x) if the change
in
control of ANAIC occurs within two (2) years immediately following the Closing
Date, this Section 9.1 shall only be applicable to ANAIC until the end of such
two (2) year period, and (y) if the change in control of ANAIC occurs after
such
two (2) year period, this Section 9.1 shall no longer apply to
ANAIC.
ARTICLE
X
CONDITIONS
PRECEDENT TO THE OBLIGATION OF
PURCHASER
TO CLOSE
The
obligations of the Purchaser under this Agreement are subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
one or more of which may be waived by the Purchaser in writing:
10.1. Representations,
Warranties and Covenants.
(a) the Seller Parties shall have performed in all material respects all of
their obligations under this Agreement required to be performed by them on
or
prior to the Closing Date; (b) the representations and warranties of the
Seller Parties contained in this Agreement shall be true, complete and correct
on the Effective Date and as of the Closing Date as if made at and as of the
Closing Date, except that any such representations and warranties that are
given
as of a particular date and relate solely to a particular date or period shall
be true and correct as of such date or period, and except where the failure
to
be true and correct (without regard to any materiality qualifiers or exceptions
therein) would not reasonably be expected to be, individually or in the
aggregate, a Material Adverse Effect; and (c) the Purchaser shall have
received a certificate signed by an appropriate executive officer of the Seller
Parties to the effect that the foregoing conditions have been
satisfied.
10.2. Approvals.
All
filings with Governmental Authorities and other Persons required to consummate
the transactions contemplated in this Agreement and the Ancillary Agreements
shall have been made and all required approvals shall have been obtained and
shall be in full force and effect and without conditions or limitations that
are
unacceptable to the Purchaser in the Purchaser’s reasonable judgment. All
waiting periods under any federal or state statute or regulation shall have
expired or been terminated.
10.3. Closing
Deliveries.
All of
the closing deliveries of the Seller Parties under Section 2.4(b) shall
have been delivered to the Purchaser.
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10.4. Injunction
and Litigation.
There
shall be no effective injunction, writ, preliminary restraining order or any
other order of any nature issued by a Governmental Authority or any pending
Litigation that seeks to prohibit or enjoin, the consummation of the
transactions contemplated in this Agreement or the Ancillary
Agreements.
10.5. Purchaser
Primary Insurer.
The
Seller Parties shall have indicated their acceptance of the Purchaser Primary
Insurer presented by the Purchaser.
10.6. Release
of Transferred Employees From Non-Compete.
The
Seller Parties shall have released the Transferred Employees from all
non-compete restrictions by and between the Seller Parties or its Affiliates
and
each of the Transferred Employees.
10.7. Other
Documents.
The
Seller Parties shall have delivered to the Purchaser (a) a copy of the
resolutions (in form and substance reasonably satisfactory to the Purchaser)
duly adopted by the board of directors of each of the Seller Parties authorizing
the execution, delivery and performance of this Agreement or the Ancillary
Agreements by the Seller Parties, certified (in form and substance reasonably
satisfactory to the Purchaser) by the Secretary or an Assistant Secretary of
the
Seller Parties; (b) certificates (in form and substance reasonably
satisfactory to the Purchaser) of the Secretary or an Assistant Secretary of
the
Seller Parties as to the incumbency and signatures of the officers of the Seller
Parties executing this Agreement and the Ancillary Agreements, and (c) such
other documents, certificates or records as the Purchaser or its counsel may
reasonably request.
ARTICLE
XI
CONDITIONS
PRECEDENT TO THE OBLIGATION OF
SELLER
PARTIES TO CLOSE
The
obligations of the Seller Parties under this Agreement are subject to the
satisfaction on or prior to the Closing Date of the following conditions, any
one or more of which may be waived by the Seller Parties in
writing:
11.1. Representations,
Warranties and Covenants.
(a) The Purchaser shall have performed in all material respects all of its
obligations under this Agreement required to be performed by it on or prior
to
the Closing Date; (b) the representations and warranties of the Purchaser
contained in this Agreement shall be true, complete and correct on the Effective
Date and as of the Closing Date as if made at and as of the Closing Date, except
that any such representations and warranties that are given as of a particular
date and relate solely to a particular date or period shall be true and correct
as of such date or period, and except where the failure to be true and correct
(without regard to any materiality qualifiers or exceptions therein) would
not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the ability of the Purchaser to perform any of its obligations
under this Agreement or the Ancillary Agreements or to consummate the
transactions contemplated hereby or thereby; and (c) the Seller Parties
shall have received a certificate signed by an appropriate executive officer
of
the Purchaser to the effect that the foregoing conditions have been
satisfied.
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11.2. Approvals.
All
filings with Governmental Authorities and other Persons required to consummate
the transactions contemplated in this Agreement and the Ancillary Agreements
shall have been made and all required approvals shall have been obtained and
shall be in full force and effect and without conditions or limitations that
are
unacceptable to the Seller Parties in the Seller Parties’ reasonable judgment.
All waiting periods under any federal or state statute or regulation shall
have
expired or been terminated.
11.3. Closing
Deliveries.
All of
the closing deliveries of the Purchaser under Section 2.4(a) shall have
been delivered to the Seller Parties.
11.4. Payment
to the Seller Parties.
The
Purchaser shall have paid the Seller Parties the Initial Payment in accordance
with Section 2.6.
11.5. Injunction
and Litigation.
There
shall be no effective injunction, writ, preliminary restraining order or any
other order of any nature issued by a Governmental Authority or any pending
Litigation that seeks to prohibit or enjoin, the consummation of the
transactions contemplated in this Agreement or the Related
Agreements.
11.6. Purchaser
Primary Insurer.
The
Purchaser shall have presented a Purchaser Primary Insurer, reasonably
acceptable to the Seller Parties.
11.7. Insurer
Rating.
Purchaser, its Insurer Affiliates and the Purchaser Primary Insurer shall have
an A. M. Best insurer financial strength rating of at least “A-” or a Standard
& Poor’s insurer financial strength rating of at least “A-”.
11.8. *
11.9. Other
Documents.
The
Purchaser shall have delivered to the Seller Parties: (a) a copy of the
resolution (in form and substance reasonably satisfactory to the Seller Parties)
duly adopted by the board of directors of the Purchaser authorizing the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Purchaser, certified (in form and substance reasonably
satisfactory to the Seller Parties) by the Secretary or an Assistant Secretary
of the Purchaser; (b) certificates (in form and substance reasonably
satisfactory to the Seller Parties) of the Secretary or an Assistant Secretary
of the Purchaser as to the incumbency and signatures of the officers of the
Purchaser executing this Agreement and the Ancillary Agreements, and
(c) such other documents, certificates or records as the Seller Parties or
their counsel may reasonably request.
ARTICLE
XII
TERMINATION
PRIOR TO CLOSING
12.1. Termination
of Agreement.
This
Agreement may be terminated at any time prior to the Closing as
follows:
*
Confidential Treatment Requested
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(a) by
the
Seller Parties or the Purchaser, by written notice to the other party, if there
shall be any order, writ, injunction or decree of any Governmental Authority
binding on the Seller Parties or the Purchaser which prohibits or restrains
the
Seller Parties or the Purchaser from consummating the transactions contemplated
in this Agreement or the Ancillary Agreements; provided,
however,
that
the Seller Parties and the Purchaser, as the case may be, shall have used
commercially reasonable efforts to have any such order, writ, injunction or
decree lifted and the order, writ, injunction or decree is not lifted by the
Termination Date;
(b) by
the
Seller Parties or the Purchaser, by written notice to the other party, if the
Closing has not been consummated on or prior to the Termination Date, unless
the
absence of such occurrence is or will be due to the failure of the party seeking
to terminate this Agreement to materially perform each of its obligations under
this Agreement required to be performed by it at or prior to the
Closing;
(c) by
the
Purchaser, by written notice to the Seller Parties, if a breach of any
representation, warranty, covenant or agreement on the part of the Seller
Parties set forth in this Agreement shall have occurred which would cause any
of
the conditions set forth in Article X not to be satisfied, and such breach
is
incapable of being cured or, if capable of being cured, shall not have been
cured within thirty (30) calendar days following receipt by the Seller Parties
of notice of such breach from the Purchaser;
(d) by
the
Seller Parties, by written notice to the Purchaser, if a breach of any
representation, warranty, covenant or agreement on the part of the Purchaser
set
forth in this Agreement shall have occurred which would cause any of the
conditions set forth in Article XI not to be satisfied, and such breach is
incapable of being cured or, if capable of being cured, shall not have been
cured within thirty (30) calendar days following receipt by the Purchaser of
notice of such breach from the Seller Parties; or
(e) at
any
time prior to the Closing by mutual written consent of the Seller Parties and
the Purchaser.
12.2. Survival
Upon Termination.
If this
Agreement is terminated pursuant to Section 12.1 hereof, this Agreement
will become null and void and of no force and effect (other than with respect
to
Section 7.6 and Section 12.3 which shall survive any termination of this
Agreement), provided that, in the event of such a termination because of any
breach, the breaching party will be liable to the other party for all actual
damages (determined and calculated on a direct, dollar-for-dollar basis) arising
directly from such breach. In no event will any party be entitled to
consequential, indirect, punitive or treble damages, including damages for
lost
profits, following a termination of this Agreement pursuant to Section 12.1
hereof.
12.3. *
*
Confidential Treatment Requested
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ARTICLE
XIII
SURVIVAL;
INDEMNIFICATION
13.1. Survival.
All
representations and warranties made by the Seller Parties and the Purchaser
in
Articles III and IV of this Agreement, respectively, and in any document,
certificate, schedule or instrument delivered or executed in connection
herewith shall survive for a period of eighteen (18) months after the Closing
Date, whereupon they shall expire, and all claims for breach of said
representations and warranties will be deemed waived unless the non-breaching
party notifies the breaching party of the matters constituting the breach prior
to the expiration of said eighteen (18) month period. All covenants,
undertakings and agreements contained in this Agreement or any document,
certificate, schedule or instrument delivered or executed in connection
herewith to be performed or complied with after the Closing Date shall survive
for the period expressly stated in this Agreement for such covenant, undertaking
or agreement or, if none, the period of the applicable statute of
limitations.
13.2. Indemnification.
(a) Subject
to Section 13.1, the Seller Parties shall jointly and severally, indemnify
the Purchaser and its Affiliates, and its and their respective shareholders,
subsidiaries, officers, directors, employees, successors and permitted assigns,
against and agree to hold each of them harmless from any and all damage, loss,
liability and expense (including reasonable attorneys’ fees and reasonable
expenses of investigation in connection with any action, suit or proceeding)
(collectively, “Damages”),
incurred or suffered by the Purchaser or any of its Affiliates, arising out
of:
(i) any
breach of any representation or warranty, or any breach, nonfulfillment or
default in the performance of any covenant or agreement, made by the Seller
Parties in this Agreement;
(ii) any
claim
by any present or former employee of a Seller Party or an Affiliate thereof,
including the Transferred Employees, which arises under federal, state or local
statute (including Title VII of the Civil Rights Act of 1964, the Civil Rights
Act of 1991, the Age Discrimination in Employment Act of 1990, the Equal Pay
Act, the Americans with Disabilities Act of 1990, ERISA and all other statutes
regulating the terms and conditions of employment), regulation or ordinance,
under the common law or in equity (including any claims for wrongful discharge
or otherwise), or under any employee benefit plan or program of the Seller
Parties or any of their respective Affiliates, or under any policy, agreement,
understanding or promise, written or oral, formal or informal, between a Seller
Party or an Affiliate thereof and such present or former employee, which, in
all
cases, arose solely out of any action, event or omission that occurred (or,
in
the case of omissions, failed to occur) prior to the Closing;
(iii) the
operation of the business of the Seller Parties by the Seller Parties or their
respective Affiliates prior to the Closing; and
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(iv) the
enforcement of their rights under this Section 13.2(a).
Notwithstanding
the foregoing, the Seller Parties shall not be liable under the foregoing
clauses (i), (ii) or (iii) of this Section 13.2(a) unless the total
aggregate amount of Damages with respect to all such claims or matters relating
to said clauses referred to in this Section 13.2(a) exceeds $100,000, and,
in such case, only to the extent of such excess (the “Seller
Parties Indemnity Deductible”).
The
maximum amount of the Seller Parties’ collective and aggregate liability under
the foregoing clauses (i), (ii), (iii), and (iv) of this Section 13.2(a)
shall in no event exceed the Total Consideration Payable (the “Seller
Parties Indemnity Cap”).
Notwithstanding the foregoing, if the Seller Parties’ liability under clauses
(i), (ii), (iii), and (iv) of this Section 13.2(a) exceeds the aggregate
payments received by the Seller Parties pursuant to Section 2.6 at the time
the indemnification claim is payable (the difference between the undisputed
indemnification obligation and the aggregate payments received by the Seller
Parties being the “Excess
Amount”),
then
the Seller Parties shall only have to pay at such time an indemnification amount
up to the aggregate payments received by the Seller Parties pursuant to
Section 2.6 and the Purchaser shall be solely and exclusively entitled to
prospectively offset amounts due the Seller Parties pursuant to Sections 2.6,
if
any, against the Excess Amount.
(b) Subject
to Section 13.1, the Purchaser shall indemnify the Seller Parties and their
Affiliates, and their respective shareholders, subsidiaries, officers,
directors, employees, successors and permitted assigns, against and agrees
to
hold each of them harmless from any and all Damages, incurred or suffered by
the
Seller Parties or any of their respective Affiliates, arising out of:
(i) any
breach of any representation, warranty or certification, or any breach,
nonfulfillment or default in the performance of any covenant or agreement,
made
by the Purchaser in this Agreement;
(ii) any
Liability under or relating to any Covered Insurance Contract;
(iii) any
action (or failure to act) by the Purchaser or its Affiliates in violation
of
Applicable Law with respect to the hiring or terms of employment of any person
who is in the Employee Group;
(iv) any
claim
by any person in the Employee Group, including Transferred Employees which
arises under federal, state or local statute (including Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1990, the Equal Pay Act, the Americans with Disabilities
Act
of 1990, ERISA and all other statutes regulating the terms and conditions of
employment), regulation or ordinance, under the common law or in equity
(including any claims for wrongful discharge or otherwise), or under any
employee benefit plan or program of the Purchaser or any Affiliate of the
Purchaser, or under any policy, agreement, understanding or promise, written
or
oral, formal or informal, between the Purchaser or an Affiliate thereof and
such
Transferred Employee, which, in all cases, arose out of any action, event or
omission that occurred (or, in the case of omissions, failed to occur) following
the Closing, or the failure of the Purchaser or any Affiliate of the Purchaser
to offer employment to such person in accordance with Section 8.1;
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(v) any
act,
error or omission of the Purchaser, any Purchaser Insurer Affiliate or the
Purchaser Primary Insurer, or any of their respective Affiliates or
Representatives, relating to, or arising under, this Agreement or any of the
Covered Insurance Contracts; and
(vi) the
enforcement of its rights under this Section 13.2(b).
Notwithstanding
the foregoing, the Purchaser shall not be liable under the foregoing clauses
(i)
(ii), (iii), (iv) or (v) of this Section 13.2(b) for any breach of a
representation or warranty unless the total aggregate amount of Damages with
respect to all breaches of representations and warranties referred to in this
Section 13.2(b) exceeds $100,000, and, in such case, only to the extent of
such excess (the “Purchaser
Indemnity Deductible”).
The
maximum amount of the Purchaser’s collective and aggregate liability under the
foregoing clauses (i), (ii), (iii), (iv), (v), and (vi) of this
Section 13.2(b) shall in no event exceed the total aggregate payments
received by, plus
any
payments otherwise due and payable to, the Seller Parties pursuant to
Section 2.6 (the “Purchaser
Indemnity Cap”).
Notwithstanding the foregoing, should any claim, or portion thereof, for Damages
made by the Seller Parties hereunder remain unpaid as a result of the
immediately preceding sentence, such unpaid portion of the claim may
nevertheless be resubmitted to the Purchaser at any time, notwithstanding
Section 13.1, for payment upon receipt by the Seller Parties of additional
payments pursuant to Section 2.6 or at any time such additional payments
pursuant to Section 2.6 are past due and payable to the Seller Parties, and
the
Purchaser shall pay such claim upon demand.
(c) For
the
avoidance of doubt and notwithstanding anything contained herein to the
contrary, the Seller Parties Indemnity Deductible, the Seller Parties Indemnity
Cap, the Purchaser Indemnity Deductible, and the Purchaser Indemnity Cap shall
not apply to any indemnification payments made for Damages under the terms
of
any of the Ancillary Agreements, should they contain any indemnification
obligations between the parties thereto, it being the intention and agreement
of
the parties that all indemnification claims with respect to, or arising under,
the Ancillary Agreements shall be governed solely and exclusively by the terms
of the Ancillary Agreements, to the extent applicable.
(d) All
indemnification payments payable hereunder shall be reduced by the amount of
insurance proceeds received by, or any Tax benefits inuring to the benefit
of,
the Indemnified Party (as defined below) as a result of the loss for which
the
Indemnified Party is seeking reimbursement.
(e) The
parties hereto shall make mutually available to each other all relevant
information in their possession relating to any Damages claimed hereunder
(except to the extent that such action would result in loss of attorney-client
privilege as to any material matter) and shall cooperate with each other in
the
defense thereof.
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13.3. Procedures
for Third Party Claims.
(a) The
party
seeking indemnification under Section 13.2 (the “Indemnified
Party”)
agrees
to give prompt notice (in accordance with Section 14.11) to the party
against whom indemnity is sought (the “Indemnifying
Party”)
of the
assertion of any third party claim, or the commencement of any suit, action
or
proceeding in respect of which indemnity may be sought under Section 13.2
(the “Third
Party Claims”).
Such
notice referred to in the preceding sentence shall state the relevant facts
and
include therewith relevant documents and a statement in reasonable detail as
to
the basis for the indemnification sought. The failure by any Indemnified Party
so to notify the Indemnifying Party shall not relieve any Indemnifying Party
from any Liability which it may have to such Indemnified Party with respect
to
any claim made pursuant to this Section 13.3, except to the extent such
failure shall actually prejudice an Indemnifying Party. In the event of the
assertion of any claim or the commencement of any suit, action or proceeding
in
respect of which indemnity would be sought by the Indemnified Party but for
the
fact that the notice of such claim, suit, action or proceeding was sent to
the
Indemnifying Party, the Indemnifying Party shall give prompt notice to the
Indemnified Party of such claim, suit, action or proceeding.
(b) Upon
receipt of notice from the Indemnified Party pursuant to Section 13.3(a),
the Indemnifying Party will have the right to, subject to the provisions of
Section 13.3, assume the defense and control of such Third Party Claims. In
the event the Indemnifying Party assumes the defense of a Third Party Claim,
the
Indemnified Party shall have the right but not the obligation to participate
in
the defense of such Third Party Claim with its own counsel and at its own
expense (provided that the Indemnifying Party shall pay the reasonable
attorneys’ fees of the Indemnified Party if (i) the employment of separate
counsel shall have been authorized in writing by such Indemnifying Party in
connection with the defense of such Third Party Claim, (ii) the
Indemnifying Party shall not have employed counsel reasonably satisfactory
to
the Indemnified Party to defend such Third Party Claim, (iii) the
Indemnified Party shall have reasonably concluded, upon advice of the
Indemnified Party’s counsel, that there may be material defenses available to
such Indemnified Party that are different from or additional to those available
to the Indemnifying Party, (iv) the Indemnifying Party’s counsel shall have
advised the Indemnifying Party in writing, with a copy delivered to the
Indemnified Party, that there is a conflict of interest that could make it
inappropriate under applicable standards of professional conduct to have common
counsel, or (v) such Third Party Claim shall seek injunctive or equitable
relief that if granted would materially interfere with the conduct of the
business of the Indemnified Party) and the Indemnifying Party will cooperate
with the Indemnified Party. Any election by an Indemnifying Party not to assume
the defense of a Third Party Claim must be received by the Indemnified Party
reasonably promptly following its receipt of the Indemnified Party’s notice
delivered pursuant to Section 13.3(a). If the Indemnifying Party elects to
assume the defense of a Third Party Claim, the Indemnifying Party shall select
counsel reasonably acceptable to the Indemnified Party; shall take all steps
necessary in the defense or settlement of such Third Party Claim; and shall
at
all times diligently and promptly pursue the resolution of such Third Party
Claim. The Indemnified Party shall, and shall cause each of its Affiliates
and
Representatives to, cooperate fully with the Indemnifying Party in the defense
of any Third Party Claim defended by the Indemnifying Party.
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(c) The
Indemnifying Party shall be authorized to consent to a settlement of, or the
entry of any judgment arising from, any Third Party Claim as to which the
Indemnifying Party has assumed the defense in accordance with the terms of
Section 13.3, without the consent of any Indemnified Party, but only to the
extent that such settlement or entry of judgment (i) provides solely for
the payment of money by the Indemnifying Party or imposes an obligation of
confidentiality, and (ii) provides a complete release of any Indemnified
Party potentially affected by such Third Party Claim from all matters that
were
or could have been asserted in connection with such claims. Except as provided
in the foregoing sentence, settlement or consent to entry of judgment shall
require the prior approval of the Indemnified Party, such approval not to be
unreasonably withheld, delayed or conditioned.
13.4. Procedures
for Direct Claims.
In the
event any Indemnified Party shall have a claim for indemnity against any
Indemnifying Party that does not involve a Third Party Claim, the Indemnified
Party shall deliver written notice of such claim to the Indemnifying Party.
Such
notice referred to in the preceding sentence shall state the relevant facts
and
include therewith relevant documents and a statement in reasonable detail as
to
the basis for the indemnification sought. The failure by any Indemnified Party
so to notify the Indemnifying Party shall not relieve the Indemnifying Party
from any liability that it may have to such Indemnified Party with respect
to
any claim made pursuant to Section 13.2, it being understood that notices
for claims in respect of a breach of a representation or warranty must be
delivered prior to the expiration of the survival period for such representation
or warranty.
13.5. Exclusive
Remedy.
The
parties hereto expressly acknowledge and agree that (i) except as otherwise
expressly provided in this Agreement, the provisions of this Article XIII shall
be the sole and exclusive remedy for Damages caused as a result of any breach
of
any representation or warranty, or any breach, nonfulfillment or default in
the
performance of any covenant or agreement, contained in this Agreement, other
than claims based on fraud, and the parties shall not be entitled to a
rescission of this Agreement or any Ancillary Agreement or to any further
indemnification or other rights or claims, all of which the parties hereby
waive, and (ii) except as otherwise expressly provided in this Agreement,
no Indemnifying Party shall be liable under this Agreement for consequential,
indirect, punitive or treble Damages in connection with any action, suit or
proceeding brought by the Purchaser against one or more Seller Parties or by
one
or more Seller Parties against the Purchaser, or for any Damages based on either
the reduced current or future profitability or earnings of the Renewal Rights
or
Damages based on a multiple of such profitability, earnings or other factor,
or
reduction therein (it being understood that all Damages will for purposes of
this Article XIII be determined and calculated on a direct, dollar-for-dollar
basis), or for other Damages not provided for in this Article XIII. Any
liability for indemnification under this Agreement will be determined without
duplication of recovery by reason of the state of facts giving rise to such
liability constituting a breach of more than one representation, warranty,
covenant or agreement.
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13.6. Specific
Performance.
It is
agreed that any party hereto shall be entitled to an injunction or injunctions
to prevent breaches of this Agreement and to enforce specifically the terms
and
provisions hereof, this being in addition to any other remedy to which they
are
entitled hereunder or otherwise.
ARTICLE
XIV
TRANSITION
PERIOD
14.1. Sublease.
(a) From
and
after the Effective Date and at the Purchaser’s sole option, the parties shall
use their commercially reasonable efforts to (i) obtain any required written
consent of the landlord (the
“Main
Landlord”)
of
the
Sub-Leased Premises (as defined below) to the Sublease Agreement; and (ii)
execute and deliver the Sublease Agreement, in each case as of the Closing
Date
or no later than ninety (90) calendar days following the Closing Date.
(b) In
the
event that the parties are unable to execute and deliver the Sublease Agreement,
with the Main Landlord’s written consent, as of the Closing Date, the Seller
Parties shall, for a period not exceeding ninety (90) calendar days from the
Closing Date (the “Transition
Period”),
permit the Transferred Employees to use and occupy a portion of the Seller
Parties’ facilities, as identified in the Sublease Agreement, including all
fixtures and improvements of the Seller Parties thereat (the “Sub-Leased
Premises”).
The
Purchaser shall use the Sub-Leased Premises for office use only in accordance
with business decorum as per prior practice and with all applicable leases
and
Applicable Law.
(c) The
Seller Parties and the Purchaser agree that during the Transition Period, the
Purchaser shall reimburse the Seller Parties on a pro rata basis (based on
the
square footage of the Sub-Leased Premises), for each full or partial month
the
Purchaser utilizes or otherwise occupies the Sub-Leased Premises, for all
applicable rent, charges, fees and other overhead costs for use and occupancy
of
the Sub-Leased Premises incurred by the Seller Parties and/or its Affiliates,
such amount to be paid to the Seller Parties within ten (10) Business Days
of
receipt by the Purchaser of an invoice therefor. The Purchaser shall maintain
insurance coverage on the Sub-Leased Premises during the Transition Period,
with
terms and amounts of coverage to be commercially reasonable or as otherwise
required in the Sublease Agreement and naming the Seller Parties as an
additional named insured or loss payee, as applicable. If the parties have
not
executed and delivered the Sublease Agreement, with the Main Landlord’s written
consent, prior to the expiration of the Transition Period, the Purchaser must
vacate the Sub-Leased Premises no later than the end of the Transition Period.
Upon vacating the Sub-Leased Premises, the Purchaser shall not be entitled
to
remove any fixtures or property and shall leave the Sub-Leased Premises in
as
good a condition as it was prior to the Transition Period.
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(d) The
Purchaser shall indemnify and hold the Main Landlord of the Sub-Leased Premises
and the Seller Parties and their Affiliates, and their respective shareholders,
subsidiaries, officers, directors, employees, successors and permitted assigns,
harmless from any and all Damages arising from (i)
the
actions
of the Purchaser or its Affiliates, or any of their respective guests or
Representatives (including the Transferred Employees), with regard to
their
conduct
of business in, or use or occupancy of, the Sub-Leased Premises; (ii) any
accidents, damages or injuries to persons or property occurring in, on or about
the Sub-Leased Premises, other than accidents, damages or injuries caused by
the
Seller Parties or Main Landlord or their respective officers, employees, agents
or contractors; or (iii) any breach or default under the Seller Parties’ lease
agreement with Main Landlord resulting from the Transferred
Employees use and occupancy of the Sub-Leased Premises.
14.2. Embedded
IP Rights.
The
Purchaser acknowledges that various items of computer hardware, telephone
systems, storage media and other systems, equipment and goods included in the
Transferred Assets may be delivered by the Seller Parties to the Purchaser
with
software, scripts, or other programming loaded on, embedded in or otherwise
associated therewith (“Embedded
IP Rights”).
The
Embedded IP Rights shall include physical copies of the data, source code,
development documentation, and software listed on Schedule 14.2. The Purchaser
acknowledges that the Seller Parties may delete any data not relating to the
operation of the Seller Parties’ business as it relates to the Insurance
Contracts (and any e-mail files of the Seller Parties and/or of their respective
Affiliates, whether or not related to the Insurance Contracts) from the
Transferred Assets prior to delivery thereof. The parties agree that solely
to
the extent that the Seller Parties own or otherwise have the right to grant
rights in any Embedded IP Rights, the Seller Parties grant effective as of
the
Closing Date and upon delivery of the same to Purchaser, a nonexclusive,
perpetual, royalty-free, worldwide license to Purchaser to use such Embedded
IP
Rights. Notwithstanding the foregoing, Purchaser acknowledges that the Seller
Parties do not own or otherwise hold the right to grant the foregoing license
with respect to all of the Embedded IP Rights and the Purchaser accordingly
agrees that (i) the Purchaser is solely responsible, at Purchaser’s sole cost,
for determining what licenses, permissions or consents that are required to
be
obtained from third parties to permit the Purchaser to utilize any Embedded
IP
Rights delivered with or in connection with any Transferred Assets, (ii) the
Purchaser shall, prior to copying, operating or otherwise utilizing any Embedded
IP Rights, secure, at Purchaser’s sole cost, all licenses, permissions or
consents required from any third party in order to take such actions without
infringing upon any third party’s intellectual property rights, and (iii) the
Purchaser shall indemnify the Seller Parties and their Affiliates, and their
respective shareholders, subsidiaries, officers, directors, employees,
successors and permitted assigns, against and agrees to hold each of them
harmless from any and all Damages, incurred or suffered by the Seller Parties
or
any of their respective Affiliates, arising out of the Purchaser’s failure to
comply with the requirements of this Section 14.2 or its use of any Embedded
IP
Rights. To the extent that the Purchaser advises the Seller Parties that the
Purchaser needs to communicate with third party licensors of Embedded IP Rights
associated with any Transferred Assets, the Seller Parties shall authorize
such
third party vendors to communicate directly with the Purchaser concerning the
licenses held by the Seller Parties solely with respect to such Embedded IP
Rights associated with such Transferred Assets.
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14.3. Temporary
Access to Seller Parties’ Systems.
For a
period of ninety (90) calendar days following the Closing Date, the Seller
Parties will make available to the Purchaser and its employees access to the
computer and software systems reasonably relating to the Insurance Contracts
and/or the Embedded IP Rights (the “Available
Systems”)
solely
on a transitional basis. The Purchaser acknowledges that the Seller Parties
are
not required to, and will not, provide access hereunder to the Purchaser to
any
systems or data that are (i) not part of the Available Systems, and (ii) e-mail
files or archives. The Seller Parties shall have the sole right to determine
the
method and manner by which access to the Available Systems is granted to the
Purchaser, provided that it shall act in good faith in making such
determinations. The Purchaser agrees to comply with, and cause its employees
to
comply with, all security measures that the Seller Parties may in their sole
discretion determine to be appropriate to prevent unauthorized access to or
use
of the Available Systems or any data stored or processed on such Available
Systems. The Purchaser acknowledges that the Seller Parties do not own or
otherwise hold the right to grant the foregoing access with respect to all
of
the operating systems, software, scripts, or other programming to which the
Purchaser will be given access pursuant to this Section 14.3 (the “Accessed
Software”)
and
the Purchaser accordingly agrees that (i) the Purchaser is solely responsible,
at Purchaser’s sole cost, for determining what permissions or consents that are
required to be obtained from third parties to permit the Purchaser to utilize
the Accessed Software, (ii) the Purchaser shall, prior to accessing, operating
or otherwise utilizing any Accessed Software, secure, at Purchaser’s sole cost,
all permissions or consents required from any third party in order to take
such
actions without infringing upon any third party’s intellectual property rights,
and (iii) the Purchaser shall indemnify the Seller Parties and their Affiliates,
and their respective shareholders, subsidiaries, officers, directors, employees,
successors and permitted assigns, against and agrees to hold each of them
harmless from any and all Damages, incurred or suffered by the Seller Parties
or
any of their respective Affiliates, arising out of the Purchaser’s failure to
comply with the requirements of this Section 14.3 or its use of any Accessed
Software. To the extent that the Purchaser advises the Seller Parties that
the
Purchaser needs to communicate with third party licensors of Accessed Software,
the Seller Parties shall authorize such third party vendors to communicate
directly with the Purchaser concerning the licenses held by the Seller Parties
solely with respect to such Accessed Software in the context of this Section
14.3.
14.4. Disclaimer.
The
parties agree that any computer software or other intellectual property included
in the Transferred Assets or otherwise transferred or made available hereunder
(including any Embedded IP Rights or Accessed Software) to the Purchaser is
provided with all fault, and the entire risk as to satisfactory quality,
results, performance, reliability, functionality, accuracy, and effort is
assumed by the Purchaser. The Purchaser acknowledges that it is responsible
for
evaluating the interoperability of the hardware and software included in the
Transferred Assets or otherwise transferred or made available
hereunder to
the
Purchaser with the Purchaser’s systems (including the evaluation of the
interoperability of the Available Systems with the Purchaser's systems) or
with
any modifications made by the Purchaser. The configuration of any computer
software and other intellectual property included in the Transferred Assets
or
otherwise transferred or made available hereunder
to the Purchaser, and completion of any work in progress with respect thereto,
is solely the risk and liability of the Purchaser, and the Seller Parties make
no representation, warranty, or covenant with respect thereto.
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14.5. Transition
Team.
The
Purchaser and the Seller Parties shall each appoint a two-person transition
team
which shall regularly communicate with the other party for purposes of
diligently carrying out the provisions of this Article XIV, and which shall
be
authorized to act on behalf of their respective party as to matters pertaining
to this Article XIV. Effective upon the Closing Date, such transition team
shall
be as set forth in Schedule
14.5
hereto,
to be delivered at or prior to the Closing Date. Each party shall notify the
other in writing as to the name, address and telephone number of any replacement
for its designated transition team.
ARTICLE
XV
MISCELLANEOUS
PROVISIONS
15.1. Entire
Agreement.
This
Agreement, including all Schedules and Exhibits attached hereto, constitute
the
entire contract between the parties and there are no understandings other than
as expressed in this Agreement or any Ancillary Agreement. All Schedules and
Exhibits attached hereto are expressly incorporated into and made a part of
this
Agreement as fully as though completely set forth herein in full. In the event
of any conflict between the provisions of this Agreement and any
Schedule or Exhibit, the provisions of this Agreement will control.
Capitalized terms used in the Schedules and Exhibits shall have the meanings
assigned to them in this Agreement. The Section references referred to in
the Schedules are to sections of this Agreement, unless otherwise expressly
indicated. Any amendment or modification hereto shall be null and void unless
made by amendment to this Agreement, and signed by the parties affected by
such
amendment.
15.2. Assignment;
Binding Effect.
No
party hereto shall transfer, delegate, subcontract, or assign any of its rights
or obligations under this Agreement without first obtaining the written consent
of the other parties; provided,
however,
that
(i) the Purchaser may assign its rights to offer, quote, solicit, issue, write
and/or bind the Covered Insurance Contracts to its Insurer Affiliates or the
Purchaser Primary Insurer, as expressly provided herein (no such assignment
shall relieve, in whole or in part, the Purchaser from any liabilities or
obligations that it has assumed hereunder or under any of the Ancillary
Agreements), and (ii) the Seller Parties may assign their rights to receive
Override Payments under Section 2.6 to any Person with prior notice to, but
without obtaining the consent of, the Purchaser. Any purported assignment,
delegation, subcontracting, or transfer in violation of this Section 15.2
shall be void.
15.3. No
Third-Party Beneficiaries.
Nothing
in this Agreement, except as expressly set forth in Article XIII with respect
to
the indemnification of the parties’ Affiliates and their respective
shareholders, subsidiaries, officers, directors and employees, and in any of
the
Ancillary Agreements is intended or shall be construed to give any Person
(including the Purchaser Primary Insurer), other than the signatory parties
hereto, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any Ancillary Agreement or any provision contained
herein.
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15.4. Invalidity.
Unless
the invalidity or unenforceability of any provision or portion thereof
frustrates the intent of the parties or the purpose of this Agreement or the
Ancillary Agreements, such invalidity or unenforceability shall not affect
the
validity or enforceability of the other provisions or portions thereof and where
possible, the provisions of this Agreement shall be interpreted so as to sustain
their legality and enforceability and for that purpose the provisions of this
Agreement shall be read as if they cover only the specific situation to which
they are being applied. The invalidity or unenforceability of any provision
of
this Agreement in a specific situation shall not affect the validity or
enforceability of that provision in other situations or of other provisions
of
this Agreement. In the event that such provision shall be declared unenforceable
by a court of competent jurisdiction, such provision or portion thereof, to
the
extent declared unenforceable, shall be stricken. However, in the event any
such
provision or portion thereof shall be declared unenforceable due to its scope,
breadth or duration, then it shall be modified to the scope, breadth or duration
permitted by Applicable Law and shall continue to the be fully enforceable
as so
modified.
15.5. Governing
Law.
This
Agreement shall be deemed to have been made under and governed by the laws
of
New York, without regard to conflicts or choice of law rules.
15.6. Jurisdiction.
Each of
the parties hereto irrevocably and unconditionally submits to the exclusive
jurisdiction of The United States District Court for the Southern District
of
New York or, if such court does not have jurisdiction, the State Courts of
the
State of New York for purposes of enforcing this Agreement. In any such action,
suit or other proceeding, each of the parties hereto irrevocably and
unconditionally waives and agrees not to assert by way of motion, as a defense
or otherwise any claims that it is not subject to the jurisdiction of the above
court, that such action or suit is brought in an inconvenient forum or that
the
venue of such action, suit or other proceeding is improper. Each of the parties
hereto also agrees that any final and unappealable judgment against a party
hereto in connection with any action, suit or other proceeding shall be
conclusive and binding on such party and that such award or judgment may be
enforced in any court of competent jurisdiction, either within or outside of
the
United States. A certified or exemplified copy of such award or judgment shall
be conclusive evidence of the fact and amount of such award or judgment. Without
limiting the foregoing, each party agrees that service of process on such party
by written notice as provided in Section 14.11 shall be deemed effective
service of process on such party.
15.7. Waiver
of Jury Trial.
Each of
the Parties hereto hereby irrevocably waives any and all right to trial by
jury
in any legal proceeding arising out of or related to this Agreement, the
Ancillary Agreements or the transactions contemplated hereby or thereby. The
waivers in this Section 15.7 and in Section 15.6 have been made with
the advice of counsel and with a full understanding of the legal consequences
thereof and shall survive the termination of this Agreement.
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15.8. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties
hereto.
15.9. Headings.
The
headings in this Agreement are for the convenience of reference only and shall
not affect its interpretations.
15.10. Communications.
The
parties shall jointly agree upon press releases and agent communications to
be
distributed with respect to the transactions contemplated under this Agreement,
except as may be required by Applicable Law or by obligations pursuant to any
listing agreement with the New York Stock Exchange.
15.11. Notices.
All
notices and other communications under this Agreement shall be in writing and
shall be delivered personally, sent by facsimile transmission or sent by
overnight courier or certified, registered or express mail, postage prepaid.
Any
such notice or other communication shall be deemed given: (i) upon actual
delivery if presented personally or sent by facsimile transmission,
(ii) one (1) Business Day following delivery to an overnight courier, or
(iii) three (3) Business Days following deposit in the United States mail,
if sent by certified, registered or express mail, postage prepaid, in each
case
to the following addresses:
(i)
|
If to the Purchaser:
00
Xxxxxx Xxxx, 0xx
xx
Xxx
Xxxx, XX 00000
Attn: Xxxxxxx
Xxxxx, Esq.
Facsimile
No.: (000) 000-0000
E-mail:
xxxxxx@xxxxxxxxxxxx.xxx
|
||
With
concurrent copies, which shall not constitute notice,
to:
|
|||
Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxxx Xxxxxxxxxxx, Esq.
Facsimile
No.: (000) 000-0000
|
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(ii)
|
If
to the Seller Parties:
Xxxxx
X. Xxxxxxxxxx
Senior
Vice President & Group General Counsel
Alea
Group
00
Xxxxxxx Xxxxxxxxx
Xxxxxxxxx
Xxxxx
Xxxxx
Xxxx, XX 00000
Facsimile
No.: (000) 000-0000
E-mail:
xxxxx.xxxxxxxxxx@xxxxxxxxx.xxx
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With
concurrent copies, which shall not constitute notice,
to:
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Xxx
Xxxxxxxx, Esq.
Lord,
Bissell & Brook LLP
000
X. XxXxxxx Xxxxxx
Xxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
E-mail:
xxxxxxxxx@xxxxxxxxxxx.xxx
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15.12. Waiver
of Compliance.
Any
waiver of any failure to comply with any obligation, covenant, agreement or
condition under this Agreement must be in writing and signed by the parties.
Any
waiver or failure to insist upon strict compliance with any obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
INTENTIONALLY
LEFT BLANK
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37
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IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly
authorized officers of the Purchaser and the Seller Parties as of the Effective
Date.
By:
________________________________
Name:
Title:
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ALEA
NORTH AMERICA COMPANY
By:_________________________________
Name:
Title:
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ALEA
NORTH AMERICA INSURANCE COMPANY
By:_________________________________
Name:
Title:
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38
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EXHIBIT
A
*
*
Confidential Treatment Requested
EXHIBIT
B
TRANSFERRED
ASSETS
1.
Laptops/Desktops
Those
laptops and desktops being used by the Transferred Employees as of
the
Closing Date.
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2.
SAP
License
EXHIBIT
C
*
*
Confidential Treatment Requested
EXHIBIT
D
*
*
Confidential Treatment Requested
EXHIBIT
E
SUBLEASE
AGREEMENT
EXHIBIT
F
XXXX
OF SALE AND GENERAL ASSIGNMENT AGREEMENT
XXXX
OF SALE
By
and
Between
ALEA
NORTH AMERICA COMPANY
and
ALEA
NORTH AMERICA INSURANCE COMPANY
in
favor
of
Dated
as
of ________, 2005
XXXX
OF SALE
THIS
XXXX
OF SALE (this “Xxxx
of Sale”)
is
dated as of _______, 2005, by and between Alea North America Company, a Delaware
business corporation, and Alea North America Insurance Company, a New York
property and casualty insurance company (individually and collectively, as
applicable, the “Seller
Parties”)
in
favor of AmTrust
Financial Services, Inc.,
a
Delaware corporation (“Purchaser”).
WITNESSETH:
WHEREAS,
the Seller Parties and the Purchaser are parties to a Renewal Rights and Asset
Purchase Agreement dated as of [____________], 2005 (the “Agreement”),
pursuant to which, among other things, the Seller Parties will sell, and the
Purchaser will purchase, the Renewal Rights and the Transferred Assets, upon
the
terms and subject to the conditions set forth in the Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises and the mutual promises,
covenants and agreements contained herein and in the Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section
1. Definitions.
Capitalized terms used herein and not defined herein have the respective
meanings assigned to them in the Agreement.
Section
2. Sale
of Transferred Assets to Purchaser.
The
Seller Parties hereby sell, assign, transfer and deliver to the Purchaser and
its successors and assigns forever all of the Seller Parties’ right, title and
interest in and to the Transferred Assets listed on Schedule
A
hereto.
TO
HAVE
AND TO HOLD such Transferred Assets unto Purchaser and its successors and
assigns forever.
Section
3. Additional
Actions.
The
Seller Parties and the Purchaser shall promptly execute, deliver, record or
file
any and all other releases, affidavits, waivers or other documents, and take
any
and all additional actions, which the Purchaser may reasonably request in order
to implement the provisions of this Xxxx of Sale.
Section
4. Representations
and Warranties.
Neither
the Seller Parties nor the Purchaser make any representation or warranty
hereunder with respect to the Transferred Assets other than those expressly
set
forth in the Agreement. This Xxxx of Sale is not intended to create any
obligation of the Seller Parties or the Purchaser other than the obligations
expressly stated in the Agreement.
Section
5. No
Third Party Beneficiaries.
This
Xxxx of Sale is for the sole and exclusive benefit of the Purchaser, the Seller
Parties and their respective successors and assigns and nothing herein is
intended or shall be construed to confer upon any Person other than the
Purchaser, the Seller Parties or their respective successors and assigns any
right, remedy or claim under or by reason of this Xxxx of Sale or any term,
covenant or condition hereof.
Section
6. Amendment.
This
Xxxx of Sale may only be amended or modified by a written instrument executed
by
all of the parties hereto. This Xxxx of Sale shall inure to the benefit of
and
be binding upon the Purchaser, Seller Parties and their respective successors
and assigns.
Section
7. Governing
Law.
THIS
XXXX OF SALE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS
OF
LAWS THEREOF.
IN
WITNESS WHEREOF, the undersigned have caused this Xxxx of Sale to be duly
executed on its behalf as of the date first written above.
Alea
North America Company
By:
Name:
Title:
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Alea
North America Insurance Company
By:
Name:
Title:
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SCHEDULE
A
1.
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Laptops/Desktops
Those
laptops and desktops used by the Transferred Employees as of the
Closing
Date.
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2.
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SAP
License
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SCHEDULE 1.1(a)
*
*
Confidential Treatment Requested
SCHEDULE
1.1(b)
*
*
Confidential Treatment Requested
SCHEDULE 2.5
*
*
Confidential Treatment Requested
SCHEDULE 3.7
SELLER
PARTIES REGULATORY APPROVALS
AND/OR
OTHER CONSENTS
1. The
sale
and transfer of the Transferred Assets and Renewal Rights and certain Ancillary
Agreements require review and “non-objection” of the New York Insurance
Department.
2. The
transaction contemplated by this Agreement requires the prior approval of the
Board of Directors of each of the Seller Parties and of Alea Group Holdings
(Bermuda) Ltd.
SCHEDULE 3.8(a)
*
*
Confidential Treatment Requested
SCHEDULE 3.8(b)
*
*
Confidential Treatment Requested
SCHEDULE 3.8(c)
*
*
Confidential Treatment Requested
SCHEDULE
3.8(d)
*
*
Confidential Treatment Requested
SCHEDULE 4.4
JURISDICTIONS
WHERE PURCHASER IS NOT LICENSED
SCHEDULE 4.6
PURCHASER
REGULATORY APPROVALS AND/OR OTHER CONSENTS
SCHEDULE 6.1(b)
CERTAIN
BOOKS AND RECORDS
1.
underwriting and actuarial pricing models (hard paper copies and copies of
any
software).
2.
active underwriting account files (not including e-mail files) and corresponding
loss run/claims data.
3.
rate, rule and form filings.
4.
template form of agency, MAA, TPA, broker, producer, reinsurance and any other
core operating contracts.
SCHEDULE 8.1
*
*
Confidential Treatment Requested
SCHEDULE 14.2
DELIVERED
SOFTWARE AND DOCUMENTATION
The
source code, development documentation, and software:
o
Operational
Data Store
o
Underwriting
Workstation - (partially implemented)
o
Electronic
Data Exchange - (partially implemented)
o Collateral
Management System
(monitoring and reporting database)
o
The
AAR Client Portal SharePoint site
(partially implemented)
o
Account
Management System “AMS”
(Underwriting)
o
Claim
Management and Audit
Databases
SCHEDULE 14.5
TRANSITION
TEAM