Exhibit 99.1
Atlantic Holdings Corporation
0 Xxxxxxx Xxx, Xxxxxxxx, Xxx Xxxxxx 00000 (732) 665-1100
Facsimile: (000) 000-0000 NASDAQ: NAHC
CONFIDENTIALITY AND STANDSTILL AGREEMENT
September 22, 2006
The Commerce Group, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxx, Chief Executive Officer
Ladies and Gentlemen:
Each of National Atlantic Holdings Corp., a New
Jersey corporation ("NAHC") and The Commerce Group, Inc., a
Massachusetts corporation ("CGI"), may furnish certain
confidential nonpublic information to the other party
hereto in order to assist such other party in making an
evaluation of a possible strategic transaction (a "Proposed
Transaction") involving NAHC and CGI.
Each party hereto, in consideration of the other
party's agreement to furnish information to it (each party
furnishing such information shall be hereinafter referred
to, with respect to such information, as the "Disclosing
Party" and each party receiving such information shall be
hereinafter referred to, with respect to such information,
as the "Receiving Party"), agrees, as set forth below, to
treat any information so provided in connection with a
possible transaction, whether written or oral or otherwise
recorded, whether provided before or after the date of this
Confidentiality and Standstill Agreement (the "Agreement"),
whether specifically identified as "confidential," or
whether prepared by a Disclosing Party or its agents or
advisors or otherwise, that is furnished to a Receiving
Party by or on behalf of a Disclosing Party (herein
collectively referred to as the "Evaluation Material") in
accordance with the provisions of this Agreement and to
take or abstain from taking certain other actions herein
set forth.
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The term "Evaluation Material" shall also include all
analyses, compilations, forecasts, studies or other
material prepared by a Receiving Party or any of its
directors, officers, employees, agents, advisors or other
representatives (collectively, the "Representatives")
containing, based on or reflecting any confidential non-
public information furnished by a Disclosing Party or any
of its Representatives.
The term "Evaluation Material" shall not include
information which (i) is or becomes generally available to
the public, other than as a result of a disclosure by a
Receiving Party or any of its Representatives in violation
of this Agreement, or (ii) is already available or becomes
available to a Receiving Party from a source other than the
Disclosing Party or its Representatives, provided that such
source is not known by such Receiving Party to be in breach
of a confidentiality agreement with or other obligation of
secrecy to the Disclosing Party or a third party.
Each Receiving Party hereby agrees to use the Evaluation Material
solely for the purpose of evaluating the Proposed Transaction and
agrees to keep such information confidential, to treat it with the
same degree of care it uses in protecting its own confidential and
proprietary data, [not to use it in any way detrimental to the
Disclosing Party] and not to disclose it, directly or indirectly, in
any manner whatsoever; provided, however, that (i) any of such
information may be disclosed by a Receiving Party to those of its
Representatives who need to know such information for the purpose of
evaluating the Proposed Transaction (it being understood that such
Representatives shall be informed of the confidential nature of such
information and shall be directed to treat such information
confidentially), (ii) any disclosure of such information may be made
if a Disclosing Party consents in writing, and (iii) any disclosure of
such information may be made as otherwise required by law based upon
written advice of counsel to the Receiving Party (including, without
limitation, pursuant to any federal or state securities laws or
pursuant to any legal, regulatory or legislative proceeding) or as
contemplated by the following sentence (the "Legal Exception"). In the
event that a Receiving Party or any of its Representatives receives a
request to disclose all or any part of the information contained in
such Evaluation Material under the terms of a valid and effective
subpoena, order, civil investigative demand or similar process or
other written request issued by a court of competent jurisdiction or
by a federal, state or local, foreign or domestic, governmental or
regulatory body or agency, such Receiving Party agrees to the extent
practicable to (A) promptly notify the Disclosing Party of the
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existence, terms and circumstances surrounding such request, (B)
consult with the Disclosing Party on the advisability of taking
legally available steps to resist or narrow such request, and (C) only
disclose the information requested after complying with clauses (A)
and (B) and exercising reasonable effort (if so requested by the
Disclosing Party and at the Disclosing Party's sole expense) to
obtain, to the extent practicable, an order or other reliable
assurance that confidential treatment will be accorded to such portion
of any disclosed information as the Disclosing Party may designate.
Each Receiving Party hereby assumes responsibility for all
damages resulting from any breach of this Agreement by any of its
Representatives or former Representatives. Each Receiving Party
hereby acknowledges that it is aware, and that it will advise its
Representatives who are informed as to the matters that are the
subject of this Agreement, that the United States securities laws
prohibit any person who has received from an issuer material, non-
public information concerning the matters which are the subject of
this Agreement from purchasing or selling securities of such issuer or
from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person
is likely to purchase or sell such securities.
In addition, except (i) with the prior written consent of the
other party hereto or (ii) pursuant to the Legal Exception, each party
hereto will not, and will direct its Representatives not to, disclose
to any person either (A) the existence of this Agreement or that the
Evaluation Material has been made available to it, or (B) in the event
that the parties hereto engage in discussions or negotiations with
each other or their Representatives, the fact that discussions or
negotiations are taking place concerning the Proposed Transaction or
any of the terms, conditions or other facts with respect to any such
transaction, including the status thereof. For the avoidance of
doubt, NAHC acknowledges and agrees that CGI will be required to
comply with the disclosure requirements of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), in
connection with any evaluation of a Proposed Transaction and that this
Agreement or other material facts and circumstances pertaining to the
Proposed Transaction may be disclosed by CGI as and to the extent
required by Schedule 13D.
If and to the extent it is in the written opinion of counsel to a
Receiving Party necessary or advisable in litigation to support or
defend actions taken by such Receiving Party which are being reviewed
or challenged in such proceedings, such Receiving Party may disclose
in such proceedings the matters described in the preceding paragraph
and its analyses, compilations, forecasts, studies and other materials
relating to the Proposed Transaction that were prepared by such
Receiving Party and its Representatives. In the event that counsel to
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a Receiving Party determines that it is necessary or advisable to make
the disclosures contemplated by the immediately preceding sentence,
Receiving Party agrees to (A) promptly notify the Disclosing Party, in
advance of any such disclosure, of the existence, terms and
circumstances surrounding such a determination, (B) disclose only such
information as is reasonably necessary to support or defend actions
taken by the Receiving Party, and (C) cooperate with the Disclosing
Party in any reasonable requests to narrow or limit any disclosures
or, to obtain, to the extent practicable, an order or other reliable
assurance that confidential treatment will be accorded to such portion
of any disclosed information as the Disclosing Party may designate.
In consideration of being furnished the Evaluation Material and
in view of the fact that the Evaluation Material consists of
confidential and non-public information, each party hereto agrees
that, for the period set forth in the last sentence of this paragraph,
it and its affiliates (as defined in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) shall not directly or
indirectly without the prior consent of the Board of Directors of the
other party hereto (i) in any manner acquire, agree to acquire or make
any proposal to acquire any additional securities or property of such
other party or any of its subsidiaries, (ii) make, or in any way
participate, directly or indirectly, in any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities
and Exchange Commission) to vote, or seek to advise or influence any
person with respect to the voting of, any voting securities of such
other party or any of its subsidiaries, (iii) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) with respect to any voting securities of such other
party or any of its subsidiaries, except for any "group" comprised
solely of affiliates of such party, (iv) otherwise act, alone or in
concert with others, to seek to control or influence the management,
Board of Directors or policies of such other party, (v) disclose any
intention, plan or arrangement inconsistent with the foregoing (other
than in accordance with the Legal Exception), or (vi) advise, assist
or encourage any other persons in connection with any of the
foregoing. Each party hereto also agrees, for the period set forth in
the last sentence of this paragraph, not to (a) request the other
party hereto or any of its Representatives, directly or indirectly,
that it be released from any provision of this paragraph (including
this sentence) or (b) without the prior consent of the Board of
Directors of the other party hereto, take any action which might
require such other party to make a public announcement regarding the
possibility of a business combination or merger. If at any time
during the period set forth in the last sentence of this paragraph,
either party is approached by any third party concerning such party's
or the third party's participation in any of the activities described
in clauses (i), (ii), (iii) or (iv) above, such party shall promptly
inform the other party of the nature of such contact and the parties
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thereto. The agreements set forth in this paragraph shall terminate
on September 22, 2008.
For a two-year period commencing on the date hereof, each party
hereto agrees not to (i) solicit to employ any person who is, at the
time of such solicitation, an employee of the other xxxxx hereto or
(ii) initiate or maintain any contact (other than in the ordinary
course of business) with any court, administrative agency, commission
or other governmental authority or instrumentality regarding the
operations of the other party hereto or any of its subsidiaries.
Although each Disclosing Party has endeavored to include in the
Evaluation Material information known to it which it believes to be
relevant for the purpose of the Receiving Party's investigation, each
Receiving Party understands that neither the Disclosing Party nor any
of its Representatives has made or makes any representation or
warranty as to the accuracy or completeness of the Evaluation
Material. Each Receiving Party agrees that neither the Disclosing
Party nor any of its Representatives shall have any liability to the
Receiving Party or any of its Representatives resulting from the use
of the Evaluation Material.
Each Receiving Party agrees to destroy promptly upon request of
the Disclosing Party (and in no event later than ten business days
after such request) all written or otherwise tangible Evaluation
Material provided to it by the Disclosing Party or its Representatives
and not to retain any copies, extracts or other reproductions, in
whole or in part, of such written or otherwise tangible material,
including all other documents, memoranda, notes, other writings and
otherwise tangible materials whatsoever prepared by a Receiving Party
or its Representatives based, in whole or in part, on the information
in the Evaluation Material which were not provided to the Receiving
Party or its Representatives. Such destruction shall be certified in
writing to the Disclosing Party by an authorized officer of the
Receiving Party who shall have supervised such destruction; provided
that counsel to a Receiving Party may, if requested by such Receiving
Party, retain one copy of any documents, memoranda, notes, other
writings and otherwise tangible materials prepared by such Receiving
Party or its Representatives, in whole or in part, based upon the
Evaluation Material (and such Receiving Party shall notify the
Disclosing Party of its retention of any such materials); and
provided, further, that any such materials so retained shall be held
subject to the terms of this Agreement.
Each party hereto acknowledges and agrees that money damages
would not be a sufficient remedy for any breach by it of this
Agreement, that the other party hereto shall be entitled to equitable
relief (including, without limitation, injunction and specific
performance) as a remedy for any such breach or threatened breach, and
that it shall not oppose the granting of any such relief to such other
party. Such remedy shall not be deemed to be the exclusive remedy for
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a breach of this Agreement but shall be in addition to all other
remedies available to a party hereto for all damages, costs and
expenses (including reasonable attorneys' fees) incurred by it in this
regard.
Each party hereto agrees that unless and until a definitive
agreement with respect to a Proposed Transaction has been executed and
delivered, neither it nor the other party hereto will be under any
legal obligation of any kind whatsoever with respect to such a
transaction by virtue of this Agreement or any written or oral
expression with respect to such a transaction by any of its
Representatives or by any Representatives thereof except, in the case
of this Agreement, for the matters specifically agreed to herein.
This Agreement (except for the standstill paragraph above, which
is not subject to modification, waiver or release) may be modified,
waived or released only by a separate writing by the parties hereto
expressly so modifying, waiving or releasing this Agreement. Each
party hereto acknowledges and agrees that no failure or delay by the
other party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other further exercise thereof
or the exercise of any right, power or privilege hereunder.
This Agreement shall be binding upon the respective successors in
interest and assigns of the parties hereto and shall inure to the
benefit of, and be enforceable by, the respective successors in
interest and assigns of the parties hereto.
Any notice, request, demand, or other communication required or
permitted to be made under this Agreement shall be in writing and
shall be delivered personally or shall be sent by facsimile
transmission. Any such notice shall be deemed given when so delivered
personally or sent by facsimile transmission (and confirmed to have
been received) to the address set forth below (or to any other address
subsequently furnished in writing by any party hereto, as the case may
be, in accordance with this paragraph):
if to NAHC to:
National Atlantic Holdings Corp. Four Xxxxxxx Xxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Chairman and Chief Executive Officer.
if to CGI to:
The Commerce Group, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxx, Chief Executive Officer
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If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, the
remainder of the provisions of this Agreement shall remain in full
force and effect. The parties hereto shall endeavor in good faith
negotiations to replace any invalid, illegal or unenforceable
provision with a valid, legal and enforceable provision, the effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provision.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which shall
constitute the same agreement.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York applicable to contracts made,
executed, delivered and performed wholly within the State of New York
without regard to the conflicts of laws principles thereof. Each
party hereto hereby (i) submits to the jurisdiction of any state or
federal court sitting in New York with respect to matters arising out
of or relating hereto, (ii) agrees that all claims with respect to
such matters may be heard and determined in an action or proceeding in
such New York state or federal court and in no other court, (iii)
waives the defense of an inconvenient forum, and (iv) agrees that a
final judgment in any such action or proceeding will be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
Very truly yours,
NATIONAL ATLANTIC HOLDINGS CORP.
By Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Executive Vice President and Treasurer Corporate Finance
Confirmed and Agreed to:
THE COMMERCE GROUP, INC.
By Xxxxxx Xxxx
Xxxxxx Xxxx
President and Chief Executive Officer
Date: September 22, 2006
