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EXHIBIT 2.1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
AMONG
AMERICAN BANKERS INSURANCE GROUP, INC.,
FORTIS, INC.
AND
GREENLAND ACQUISITION CORP.
DATED AS OF MARCH 5, 1999
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 5, 1999 (this
"Agreement"), among AMERICAN BANKERS INSURANCE GROUP, INC., a Florida
corporation (the "Company"), FORTIS, INC., a Nevada corporation ("Parent"), and
GREENLAND ACQUISITION CORP., a Florida corporation and a wholly owned subsidiary
of Parent ("Merger Subsidiary") (the Company and Merger Subsidiary sometimes
being hereinafter collectively referred to as the "Constituent Corporations").
Annex II to this Agreement sets forth an index of the defined terms used herein.
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger
Subsidiary and the Company have determined that the merger of Merger Subsidiary
with and into the Company (the "Merger") upon the terms and subject to the
conditions set forth in this Agreement is advisable and have approved the
Merger;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's willingness to enter into this
Agreement, the Company and Parent have entered into that certain Stock Option
Agreement dated as of the date of this Agreement and attached hereto as Exhibit
A (the "Stock Option Agreement"), pursuant to which the Company has granted
Parent an option to purchase shares of common stock of the Company under certain
circumstances;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's willingness to enter into this
Agreement, Parent and certain stockholders of the Company have entered into a
Voting Agreement, dated as of the date of this Agreement and attached hereto as
Exhibit B (the "Voting Agreement"), pursuant to which such stockholders have
agreed, among other things, to vote their shares of common stock of the Company
in favor of the Merger; and
WHEREAS, the Company, Parent and Merger Subsidiary desire to make
certain representations, warranties, covenants and agreements as set forth in
this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
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ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME; OPTIONAL TENDER OFFER
1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time Merger Subsidiary shall be merged
with and into the Company and the separate corporate existence of Merger
Subsidiary shall thereupon cease. The Company shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article III. The Merger shall have the
effects specified in the Florida Business Corporation Act, as amended (the
"FBCA").
1.2. CLOSING. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Xxxxxx & Bird LLP, 0000 Xxxx Xxxxxxxxx Xx., Xxxxxxx,
Xxxxxxx at 9:00 A.M. on the business day designated by Parent, which shall not
be earlier than the first business day on which, and not later than the fifth
business day following the first business day on which, the last to be fulfilled
or waived of the conditions set forth in Article VII (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to the fulfillment or waiver of those conditions) shall be satisfied or waived
in accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the Company and Parent may agree in writing (the "Closing
Date").
1.3. EFFECTIVE TIME. As soon as practicable following the Closing,
the Company and Parent will cause Articles of Merger (the "Articles of Merger")
to be filed with the Secretary of State of the State of Florida (the
"Secretary") as provided in Section 607.1105 of the FBCA. The Merger shall
become effective at the time the Secretary accepts for record the Articles of
Merger or at such later time agreed by the parties and established under the
Articles of Merger (the "Effective Time").
1.4. OPTIONAL TENDER OFFER. Parent shall be entitled at any time
after the date hereof, at its sole option, to cause Merger Subsidiary to
commence a tender offer (the "Tender Offer") to acquire up to 100% (or such
lesser percentage not less than a majority of the outstanding Common Shares as
Parent shall specify in the Tender Offer) of the outstanding Common Shares
(excluding for all purposes in calculating such applicable percentage any
outstanding Common Shares owned by Parent or Merger Subsidiary pursuant to the
exercise of Parent's rights under the Stock Option Agreement), together with all
associated Rights issued pursuant to the Rights Agreement, and up to 100% (or
such lesser percentage as Parent shall specify in the Tender Offer) of the
outstanding Preferred Shares. If Parent determines to commence such Tender Offer
after the date hereof, Parent shall notify the Company of its intention to do so
in accordance with the notice requirements of Section 9.6.
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1.5. THE TENDER OFFER.
(a) Conditions; Consideration; Schedule 14D-1. Parent and Merger
Subsidiary shall within five business days of delivery of the notice described
in Section 1.4 (i) commence (within the meaning of Rule 14d-2(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Tender
Offer for (A) up to 100% (or such lesser percentage not less than a majority of
the outstanding Common Shares as Parent shall specify in the Tender Offer) of
the outstanding Common Shares (excluding for all purposes in calculating such
applicable majority any outstanding Shares owned by Parent or Merger Subsidiary
pursuant to the exercise of Parent's rights under the Stock Option Agreement),
together with the associated Rights issued pursuant to the Rights Agreement, at
a purchase price of not less than the Per Share Purchase Price per Common Share
net to the seller in cash, without interest thereon, and (B) at Parent's
election, up to 100% (or such lesser percentage as Parent shall specify in the
Tender Offer) of the outstanding Preferred Shares at a purchase price equal to
the Per Share Purchase Price multiplied by 1.9974 per Preferred Share, net to
the seller in cash without interest thereon, with such Tender Offer being upon
the terms and subject to the conditions set forth in Annex I to this Agreement
and such further customary terms as may be set forth in an Offer to Purchase and
Letter of Transmittal (the "Offer Documents") to be mailed by Merger Subsidiary
in connection with the Tender Offer; and (ii) file with the SEC a Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D- 1") with respect to the Tender
Offer which will contain the Offer Documents as exhibits. The Company shall have
the opportunity to review and comment on the Schedule 14D-1 prior to its being
filed with the SEC. Without the prior written consent of the Company, Merger
Subsidiary shall not decrease the price per Share or change the form of
consideration payable in the Tender Offer, decrease the number of Common Shares
sought, impose additional conditions to the Tender Offer or amend any other term
of the Tender Offer in any manner adverse to the holders of Common Shares; it
being understood that Parent can reduce the Minimum Tender Condition (as defined
in Annex I) to a percentage not less than 35% of the outstanding Common Shares
on a fully diluted basis (excluding for all purposes of such dilution
calculation Common Shares purchased or subject to purchase by Parent pursuant to
the exercise of Parent's rights under the Stock Option Agreement). Upon the
terms and subject to the conditions of the Tender Offer, Merger Subsidiary will
accept for payment and will purchase, as soon as permitted under the terms of
the Tender Offer, all Shares validly tendered and not withdrawn prior to the
expiration of the Tender Offer.
(b) Expiration Date. Parent and Merger Subsidiary agree that,
except as provided thereby, Merger Subsidiary shall not terminate or withdraw
the Tender Offer prior to the expiration date thereof, which shall be a date at
least 20 business days from the date of commencement thereof (the "Expiration
Date"). If, at the Expiration Date, the conditions to the Tender Offer described
in Annex I hereto shall not have been satisfied or earlier waived, Merger
Subsidiary, at its sole option, may extend the Expiration Date on one or more
occasions for an additional period or periods of time and, unless this Agreement
has been terminated in accordance with its terms, shall extend it until the
Termination Date (the "Extended Expiration Date"), if requested to do so by the
Company, and Parent is otherwise going to let the Tender Offer expire without
the purchase of Shares thereunder. Parent and Merger Subsidiary shall use their
reasonable
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efforts to consummate the Tender Offer in accordance with the terms of this
Agreement and the conditions to the Tender Offer set forth in Annex I.
(c) Schedule 14D-9; Meetings of Stockholders. The Company agrees
that it shall, on the same day that Merger Subsidiary and Parent file with the
SEC the Schedule 14D-1, file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Tender Offer (including
exhibits, and as amended from time to time, the "Schedule 14D-9"), which shall
contain, subject to applicable Law regarding fiduciary duties, the
recommendation of the Company's board of directors that the holders of Shares
accept the Tender Offer. Parent and Merger Subsidiary shall have the opportunity
to review and comment on the Schedule 14D-9 prior to its being filed with the
SEC. Upon the filing of the Schedule l4D-1 and at the written request of Parent,
the Company shall cancel the meetings of stockholders referred to in Section
6.4(a), unless such meetings shall have already occurred.
(d) Mailing and Content of Offer Documents and Schedule 14D-9. The
Company agrees that copies of the Schedule 14D-9 (excluding exhibits) shall be
enclosed with the Offer Documents to be mailed by Merger Subsidiary to the
stockholders of the Company in connection with the Tender Offer. In connection
with the Tender Offer, the Company will furnish Parent and Merger Subsidiary
with such information, including lists of the stockholders of the Company,
mailing labels and lists of security positions, and such assistance as Parent or
Merger Subsidiary or their agents may request in communicating the Tender Offer
to the record and beneficial holders of the Shares.
(e) Directors. (i) Promptly upon the purchase by Merger Subsidiary
of Shares pursuant to the Tender Offer, and from time to time thereafter, Merger
Subsidiary shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the board of directors of the Company as
shall give Merger Subsidiary representation on such board of directors equal to
the product of the total number of directors on such board (giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
the aggregate number of Shares beneficially owned by Parent, Merger Subsidiary
and any other Subsidiary of Parent bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all action
necessary to cause Merger Subsidiary's designees to be so elected, including
either increasing the size of the board of directors or securing the
resignations of incumbent directors or both. The Company will use its best
efforts to cause directors designated by Merger Subsidiary to constitute the
same percentage as is on the board of (i) each committee of the board of
directors, (ii) each board of directors of each Subsidiary of the Company and
(iii) each committee of each such Subsidiary board, in each case only to the
extent permitted by Law.
(ii) The Company shall promptly (subject to the prompt
provision of information by Parent and Merger Subsidiary) take all actions
required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder
in order to fulfill its obligations under this Section 1.5(e) and shall include
in the Schedule 14D-9 or a separate Rule 14f-1 information statement provided to
stockholders such information
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with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section
1.5(e). Parent or Merger Subsidiary will promptly supply to the Company and be
solely responsible for any information with respect to either of them and their
nominees, officers and directors required by Section 14(f) and Rule 14f-1.
(iii) Following the election or appointment of Merger
Subsidiary's designees pursuant to this Section 1.5(e) and prior to the
Effective Time, any amendment of this Agreement or the Governing Documents of
the Company, any termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or other
acts of Parent or Merger Subsidiary, or any waiver of any of the Company's
rights hereunder, will require the concurrence of a majority of the directors of
the Company then in office who are not designated by Merger Subsidiary.
ARTICLE II
CHARTER AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. THE CHARTER. The Articles of Incorporation of the Company as
in effect immediately prior to the Effective Time shall be the charter of the
Surviving Corporation (the "Charter"), until duly amended or repealed as
provided therein or by applicable Law.
2.2. THE BY-LAWS. The by-laws of the Company in effect at the
Effective Time shall be the by-laws of the Surviving Corporation (the
"By-Laws"), until duly amended or repealed as provided therein or by applicable
Law.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1. DIRECTORS. The directors of Merger Subsidiary at the Effective
Time shall, from and after the Effective Time, be the directors of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Charter and the By-Laws.
3.2. OFFICERS. The officers of the Company at the Effective Time
shall, from and after the Closing, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and the By-Laws.
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ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES
4.1. CONVERSION OF SHARES; CONSIDERATION. Subject to the provisions
of this Article 4, at the Effective Time, by virtue of the Merger and without
any action on the part of Parent, the Company, Merger Subsidiary or the
stockholders of any of the foregoing, the shares of the Constituent Corporations
shall be converted as follows:
(a) Each share of Merger Subsidiary Common Stock issued
and outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into one share of common stock of the
Surviving Corporation.
(b) Each share of Company common stock, par value $1.00
per share (a "Common Share" or, collectively, the "Common Shares") (including
any associated Rights, but excluding shares held by the Company or any
Subsidiary thereof or by Parent or any Subsidiary thereof (Parent and each of
its Subsidiaries being referred to as "Parent Companies") and in each case not
held on behalf of third parties ("Excluded Common Shares"), issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to receive
from Parent a cash payment in the amount of Fifty-Five Dollars ($55.00) (the
"Per Share Purchase Price"; the aggregate cash paid for all Common Shares being
the "Common Merger Consideration").
(c) Each share of $3.125 Series B Convertible Preferred
Stock, no par value, of the Company (a "Preferred Share" or, collectively, the
"Preferred Shares" and, together with the Common Shares, the "Shares") issued
and outstanding immediately prior to the Effective Time (other than Preferred
Shares owned by Parent Companies or Preferred Shares that are owned by the
Company or any Subsidiary thereof and in each case not held on behalf of third
parties (collectively, "Excluded Preferred Shares" and, together with the
Excluded Common Shares, the "Excluded Shares")) shall cease to be outstanding
and shall be converted into and exchanged for the right to receive from Parent a
cash payment equal to 1.9974 times the Per Share Purchase Price (the aggregate
cash paid for all Preferred Shares being "Preferred Merger Consideration" and,
together with the Common Merger Consideration, the "Merger Consideration").
(d) Each share of capital stock of Parent issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
4.2. SHARES HELD BY THE COMPANY OR PARENT. Each Share held by the
Company or its Subsidiaries or by any Parent Entity shall be canceled and
retired at the Effective Time and no consideration shall be issued in exchange
therefor.
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4.3. DISSENTING STOCKHOLDERS. In accordance with Section
607.1302(4) of the FBCA, no appraisal rights shall be available to holders of
Shares in connection with the Merger.
4.4. CONVERSION OF COMPANY OPTIONS AND RESTRICTED SHARES.
(a) Conversion of Company Options. At the Effective Time,
each Company Option shall no longer represent the right to purchase or receive
Common Shares, but in lieu thereof shall represent the right to receive the
following applicable consideration:
(i) Each 1998 Company Option (as defined below)
that is outstanding and fully exercisable by its terms at the Effective Time
(each an "Exercisable Option"), (A) shall be canceled at the Effective Time and
(B) in consideration of such cancellation, Parent shall (or shall cause a
Constituent Corporation to), at the Effective Time:
(1) as to the "Primary Shares" (as defined in the 1998 Company
Option) that would be acquirable upon exercise of the
Exercisable Option (each a "Primary Share" and collectively
"Primary Shares"), pay to the holder of such Exercisable
Option an amount in cash equal to (x) the difference (if
positive) between $55.00 and the price per Primary Share
specified in the 1998 Company Option pursuant to which the
holder of such Exercisable Option may purchase the Primary
Shares to which such Exercisable Option relates, multiplied by
(y) the number of Primary Shares subject to such Exercisable
Option, less (z) any withholding of Taxes as may be required
by applicable Law, provided, however, that as to the 1998
Company Option granted to Xxxx Xxxxxxxxx, no amount shall be
payable by or to Xxxx Xxxxxxxxx in respect of any such Primary
Share, and
(2) as to the "Restricted Shares" (as defined in the 1998 Company
Option) that would be acquirable upon exercise of the
Exercisable Option (each a "Restricted Option Share" and
collectively "Restricted Option Shares"), pay to the Company,
to be held on behalf of the person or entity that held the
Exercisable Option immediately prior to the Effective Time
(the "Exercisable Option Holder"), an amount (the "Restricted
Option Shares Amount") equal to (x) the difference (if
positive) between $55.00 and the price, if any, per Restricted
Option Share specified in the 1998 Company Option pursuant to
which the holder of such Exercisable Option may acquire the
Restricted Option Shares to which such Exercisable Option
relates, multiplied by (y) the number of Restricted Option
Shares subject to such Exercisable Option, provided, however,
that the Restricted Option Shares Amount shall
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be subject to the same terms and conditions as are applicable,
immediately prior to the Effective Time, to such Restricted
Option Shares under the 1998 Company Option, and the
Restricted Option Shares Amount shall be held by the Company
and delivered to the Exercisable Option Holder upon the same
terms and conditions as would have applied to the Restricted
Option Shares under the 1998 Company Option.
For purposes of this Agreement, "1998 Company Option" shall mean any Company
Option issued pursuant to the 1997 Equity Incentive Plan that by its terms does
not require the termination of the restrictions on transferability applicable to
any shares of Common Stock issued pursuant to any "Award" (as defined in the
1997 Equity Incentive Plan) upon a "Change in Control" (as defined in the 1997
Equity Incentive Plan).
(ii) Each 1998 Company Option that is outstanding
but not fully exercisable by its terms at the Effective Time shall, at the
Effective Time, (A) be deemed to be an Exercisable Option and (B) be canceled in
accordance with, and in exchange for the consideration specified in, Section
4.4(a)(i) hereof.
(iii) Each Company Option other than a 1998
Company Option (a "Pre-1998 Company Option") that is outstanding and fully
exercisable by its terms at the Effective Time (each a "Pre-1998 Exercisable
Option"), (A) shall be canceled at the Effective Time and (B) in consideration
of such cancellation, Parent shall (or shall cause a Constituent Corporation
to), at the Effective Time:
(1) as to the "Primary Shares" (as defined in the Pre-1998 Company
Option or applicable Company Stock Plan) that would be
acquirable upon exercise of the Pre-1998 Exercisable Option
(each a "Pre-1998 Primary Share" and collectively "Pre-1998
Primary Shares"), pay to the holder of such Pre-1998
Exercisable Option an amount in cash equal to (x) the
difference (if positive) between $55.00 and the price per
Pre-1998 Primary Share specified in the Pre-1998 Company
Option pursuant to which the holder of such Pre-1998
Exercisable Option may purchase the Pre-1998 Primary Shares to
which such Pre-1998 Exercisable Option relates, multiplied by
(y) the number of Pre-1998 Primary Shares subject to such
Pre-1998 Exercisable Option, less (z) any withholding of Taxes
as may be required by applicable Law, and
(2) as to each "Restricted Share" (as defined in the Pre-1998
Company Option or applicable Company Stock Plan) that would be
acquirable upon exercise of the Pre-1998 Exercisable Option
(each a "Pre-1998 Restricted Option Share" and collectively
"Pre-1998
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Restricted Option Shares"), pay to the holder of such Pre-1998
Exercisable Option an amount in cash equal to (x) $55.00, less
(y) any withholding of Taxes as may be required by applicable
Law.
(b) Conversion of Restricted Shares.
(i) Each Common Share that was issued pursuant to a 1998
Company Option or that was otherwise issued pursuant to the 1997 Equity
Incentive Plan and that is subject to restrictions pursuant to such 1998 Company
Option or other applicable agreement that do not lapse on a "Change in Control"
(as defined in the 1997 Equity Incentive Plan) (each a "1998 Restricted Share"),
(A) shall be canceled at the Effective Time and (B) in consideration of such
cancellation, Parent shall (or shall cause a Constituent Corporation to), at the
Effective Time:
(1) pay to the holder of such 1998 Restricted Share (the
"Restricted Share Holder"), if the holder of the 1998
Restricted Share paid any consideration upon the initial
issuance of the 1998 Restricted Share (the amount so paid, the
"Exercise Price"), in cash at the Effective Time the lesser of
the Exercise Price or $55.00, provided, however, that if a
portion of the Exercise Price was financed by a loan that was
guaranteed by the Company, Parent shall (or shall cause a
Constituent Corporation to) pay (x) to the lender the lesser
of the amount of any outstanding obligation on such loan or
the Exercise Price, and (y) to Restricted Share Holder the
remainder of the Exercise Price, if any, reduced by any
withholding of Taxes as may be required by applicable Law, and
(2) pay to the Company, to be held on behalf of the Restricted
Share Holder, an amount equal to the difference between $55.00
and any monies paid pursuant to clause (1) of this Section
4.4(b)(i)(B) (such difference, the "Remainder"), provided,
however, that the Remainder shall be subject to the same terms
and conditions as are applicable, immediately prior to the
Effective Time, to such 1998 Restricted Share under the 1998
Company Option or other applicable agreement, and the
Remainder shall be held by the Company and delivered to the
Restricted Share Holder upon the same terms and conditions as
would have applied to the 1998 Restricted Share under the 1998
Company Option or other applicable agreement.
(ii) Each Common Share that was issued pursuant to a
Company Stock Plan and that is subject to restrictions pursuant to such Company
Stock Plan which lapse, pursuant to the requirements of such Company Stock Plan,
as of the Effective Time (each a "Pre-1998 Restricted Share"), (A) shall be
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canceled at the Effective Time and (B) in consideration of such cancellation,
Parent shall (or shall cause a Constituent Corporation to), at the Effective
Time, pay to the holder of such Pre-1998 Restricted Share an amount in cash
equal to (x) $55.00, less (y) any withholding of Taxes as may be required by
applicable Law, provided, however, that if a portion of the purchase price for
the Pre-1998 Restricted Share was financed by a loan that was guaranteed by the
Company, Parent shall (or shall cause a Constituent Corporation to) pay to the
lender the lesser of $55.00 or the amount of any outstanding obligation on such
loan and to the holder of such Pre-1998 Restricted Share the remainder, if any,
reduced by any withholding of Taxes as may be required by applicable Law.
(c) Payment upon Certain Terminations of Employment. In the event
that, within 36 months after the Effective Time, the Company (or any Subsidiary)
terminates the employment of any employee of the Company (or any Subsidiary) as
to whom a Restricted Option Shares Amount is held under Section 4.4(a)(i)(B)(2)
or a Remainder is held under Section 4.4(b)(i)(B)(2), and such employment
termination is due solely to a reduction in work force resulting from the
Merger, Parent shall cause the Company to pay to the Exercisable Option Holder
or the Restricted Share Holder (as the case may be) the full amount of the
Restricted Option Shares Amount or the Remainder, in cash, promptly after such
termination of employment, subject to withholding for Taxes as may be required
by applicable Law.
(d) Notices. Parent may, in its discretion, provide to and require
each holder of Company Options and Restricted Shares to execute and deliver to
Parent a written receipt confirming such holder's number of Company Options and
Restricted Shares and the dollar amounts that such holder is entitled to receive
pursuant to this Section 4.4. At or prior to the Effective Time, the Company
shall take all actions necessary to provide notice of the provisions of this
Section 4.4 to all holders of Company Options and Restricted Shares, with
Parent's prior review and consent (not to be unreasonably withheld or delayed)
to the form of such notice.
4.5. EXCHANGE PROCEDURES.
(a) Exchange Agent. Promptly after the Effective Time, Parent
shall deposit, or shall cause to be deposited, the Merger Consideration with an
exchange agent selected by Parent with the Company's prior approval, which shall
not be unreasonably withheld (the "Exchange Agent"), for the benefit of the
holders of Shares (the "Exchange Fund").
(b) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder of
record of a certificate which represented Shares immediately prior to the
Effective Time (the "Certificates") (i) a letter of transmittal specifying that
delivery shall be effected, and risk of loss and title to such Certificates
shall pass, only upon proper delivery of such Certificates (or affidavits of
loss in lieu thereof) to the Exchange Agent, such letter of
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transmittal to be in such form and have such other provisions as Parent shall
reasonably determine, and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for the consideration described in Section 4.1.
The Certificates so delivered shall be duly endorsed as the Exchange Agent may
require. In the event of a transfer of ownership of Shares represented by
Certificates that are not registered in the transfer records of the Company, the
consideration provided in Section 4.1 may be issued to a transferee if the
Certificates representing such Shares are delivered to the Exchange Agent,
accompanied by all documents required to evidence such transfer and by evidence
reasonably satisfactory to the Exchange Agent and Parent that any applicable
stock transfer Taxes have been paid. If any Certificate shall have been lost,
stolen, mislaid or destroyed, upon receipt of (a) an affidavit of that fact from
the holder claiming such Certificate to be lost, mislaid, stolen or destroyed,
(b) such bond, security or indemnity as Parent and the Exchange Agent may
reasonably require, and (c) any other documents reasonably necessary to evidence
and effect the bona fide exchange thereof, the Exchange Agent shall issue to
such holder the consideration into which the Shares represented by such lost,
stolen, mislaid or destroyed Certificate shall have been converted. The Exchange
Agent may establish such other reasonable and customary rules and procedures in
connection with its duties as it may deem appropriate. After the Effective Time,
each holder of Shares (other than shares to be canceled pursuant to Section 4.2)
issued and outstanding at the Effective Time shall surrender the Certificates
representing such Shares to the Exchange Agent and shall promptly upon surrender
thereof receive in exchange therefor the consideration provided in Section 4.1,
together with all undelivered dividends or distributions in respect of such
Shares (without interest thereon) pursuant to Section 4.6, less any withholding
of Taxes as may be required by applicable Law. Parent shall not be obligated to
deliver the consideration to which any former holder of Shares is entitled as a
result of the Merger until such holder surrenders such holder's Certificates for
exchange as provided in this Section 4.5. Any other provision of this Agreement
notwithstanding, neither Parent, the Surviving Corporation nor the Exchange
Agent shall be liable to a holder of Shares for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar Law. Adoption of this Agreement by the
stockholders of the Company shall constitute ratification of the appointment of
the Exchange Agent.
4.6. RIGHTS OF FORMER COMPANY STOCKHOLDERS. At the Effective Time,
the stock transfer books of the Company shall be closed as to holders of Shares
immediately prior to the Effective Time and no transfer of Shares by any such
holder shall thereafter be made or recognized. Until surrendered for exchange in
accordance with the provisions of Section 4.5, each Certificate theretofore
representing Shares (other than shares to be canceled pursuant to Section 4.2)
shall from and after the Effective Time represent for all purposes only the
right to receive the consideration provided in Section 4.1 in exchange therefor,
subject, however, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which have been declared or made by the Company in respect of such Shares in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time. Upon surrender of such Certificate, any undelivered dividends
and cash payments payable hereunder
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(without interest) shall be delivered and paid with respect to each Share
represented by such Certificate.
4.7. ADJUSTMENTS TO PREVENT DILUTION. In the event that prior to
the Effective Time the Company changes the number of Shares or securities
convertible or exchangeable into or exercisable for Shares as a result of a
reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, merger, subdivision or other similar
transaction, the Merger Consideration shall be equitably adjusted.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to Parent by the Company on or prior to entering into this Agreement
(the "Company Disclosure Letter") or in any Company Report filed prior to the
date hereof, the Company hereby represents and warrants to Parent and Merger
Subsidiary that:
(a) Organization, Good Standing and Qualification. The Company is
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Florida and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the Laws of its
respective jurisdiction of organization, and each of the Company and its
Subsidiaries has all requisite corporate or similar power and authority to own
and operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing, when taken together with all
other such failures, is not reasonably likely to have a Company Material Adverse
Effect. The Company has made available to Parent a complete and correct copy of
the articles or certificate of incorporation and by-laws or other similar
governing documents as amended to date (collectively, "Governing Documents") of
the Company and each of its Subsidiaries. The Company's and its Subsidiaries'
Governing Documents so delivered are in full force and effect.
As used in this Agreement, the term (i) "Subsidiary" means,
with respect to the Company, Parent or Merger Subsidiary, as the case may be,
any entity, whether incorporated or unincorporated, of which at least a majority
of the securities or ownership interests having by their terms ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions is directly or indirectly owned or controlled by such party or
by one or more of its respective Subsidiaries or by such party and any one or
more of its respective Subsidiaries, and (ii) "Company Material Adverse
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Effect" means a material adverse effect on the financial condition, properties,
business or results of operations of the Company and its Subsidiaries taken as a
whole.
The Company conducts its insurance operations through the
Subsidiaries set forth on Section 5.1(a) of the Company Disclosure Letter
(collectively, the "Company Insurance Subsidiaries"). Each of the Company
Insurance Subsidiaries is (i) duly licensed or authorized as an insurance
company and, where applicable, a reinsurer in its jurisdiction of incorporation,
(ii) duly licensed or authorized as an insurance company and, where applicable,
a reinsurer in each other jurisdiction where it is required to be so licensed or
authorized, and (iii) duly authorized in its jurisdiction of incorporation and
each other applicable jurisdiction to write each line of business reported as
being written in the Company SAP Statements, except, in any such case, where the
failure to be so licensed or authorized is not reasonably likely to have a
Company Material Adverse Effect. The Company has made all required filings under
applicable insurance holding company statutes except where the failure to file
is not reasonably likely to have a Company Material Adverse Effect.
(b) Capital Structure. The authorized stock of the Company
consists of 100,000,000 Common Shares, of which 42,243,082 Common Shares were
issued and outstanding and 836,120 Common Shares were held by the Company in
treasury as of the close of business on March 1, 1999, and 10,000,000 shares of
Preferred Stock, no par value, of which (i) 350,000 shares have been authorized
as Series A Participating Preferred Stock, none of which are outstanding, (ii)
1,000,000 shares have been authorized as Series C Participating Preferred Stock,
none of which are outstanding and (ii) 2,300,000 shares have been authorized as
Preferred Shares, of which 1,983,205 Preferred Shares were outstanding as of
March 1, 1999. All of the outstanding Common Shares and Preferred Shares have
been duly authorized and are validly issued, fully paid and nonassessable. The
Company has no commitments to issue or deliver Common Shares, except that, as of
March 1, 1999, there were approximately 609,000 (but no more than 610,000)
Common Shares subject to issuance (i) pursuant to the Company's 1999
Non-Employee Director One-Time Award Plan, 1997 Equity Incentive Plan, 1994
Amended and Restated Directors' Deferred Compensation Plan, 1994 Non-Employee
Directors' Stock Option Plan, 1994 Senior Management Stock Option Plan, 1991
Stock Option/Restricted Stock Plan, and 1991 Stock Incentive Plan (collectively,
the "Company Stock Plans") and (ii) upon conversion of the Preferred Shares. The
Company has no commitments to issue or deliver preferred shares, except that as
of the date hereof, there were shares of Series C Participating Preferred Stock
subject to issuance pursuant to the Rights Agreement, dated as of February 19,
1998, between the Company and ChaseMellon Shareholder Services, LLC, as Rights
Agent (the "Rights Agreement"). The Company Disclosure Letter contains a correct
and complete list, as of the date hereof, of each outstanding option to purchase
or acquire Common Shares under each of the Company Stock Plans (each a "Company
Option"), including the plan, the holder, date of grant, exercise price and
number of Shares subject thereto. The Company Disclosure Letter also contains a
correct and complete list, as of the date hereof, of each Common Share that is
presently subject to restrictions pursuant to any of the Company Stock Plans
(each a "Restricted Share"), including the plan, the holder, date of grant,
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number of Shares subject thereto, and date that the restrictions lapse. Each of
the outstanding shares of capital stock or other securities of each of the
Company's Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and owned by the Company or a wholly owned Subsidiary of the
Company, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above and in the Stock Option Agreement, there
are no preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or sell any shares of capital
stock or other securities of the Company or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of the
Company or any of its Subsidiaries, and no securities or obligations evidencing
such rights are authorized, issued or outstanding. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
For purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind or
nature.
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and the Stock Option
Agreement and to consummate the Merger, subject only to approval of the Merger
by the holders of at least a majority of the outstanding Common Shares voting
separately as a class (the "Company Common Stock Requisite Vote") and two-thirds
of the outstanding Preferred Shares voting separately as a class (the "Company
Preferred Stock Requisite Vote" and, together with the Company Common Stock
Requisite Vote, the "Company Requisite Vote"). This Agreement and the Stock
Option Agreement are the valid and binding agreements of the Company enforceable
against the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").
(ii) The board of directors of the Company (A) has
declared that the Agreement, the Stock Option Agreement, the Tender Offer, the
Merger and the other transactions contemplated hereby and thereby are advisable
and in the best interests of the Company, (B) has authorized, approved and
adopted in all respects the Agreement, the Stock Option Agreement, the Tender
Offer, the Merger and the other transactions contemplated hereby and thereby,
and (C) has received the opinion of its financial advisors, Xxxxxxx Xxxxx Xxxxxx
Inc., to the effect that the consideration to be received
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by the holders of the Shares in the Tender Offer and the Merger, taken together,
is fair from a financial point of view to such holders.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to
Section 1.3, (B) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the Exchange Act and the Securities Act of 1933, as
amended (the "Securities Act"), (C) to obtain an advance ruling certificate
under The Competition Act of Canada, (D) required to be made with the New York
Stock Exchange ("NYSE"), and (E) the filing of appropriate documents with, and
approval of, the respective Commissioners of Insurance or similar regulatory
authorities of Arizona, Florida, Georgia, Mississippi, New York, South Carolina,
Texas, Puerto Rico, Cayman Islands, Denmark, Turks & Caicos, Netherlands
Antilles and the United Kingdom and such notices and consents as may be required
under the antitrust notification insurance Laws of any state in which the
Company, Parent or any of their respective subsidiaries is domiciled or does
business, no notices, reports or other filings are required to be made by the
Company with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any governmental or
regulatory authority, agency, commission, legislature, body or other
governmental entity ("Governmental Entity"), in connection with the execution
and delivery of this Agreement and the Stock Option Agreement by the Company and
the consummation by the Company of the Merger and the other transactions
contemplated hereby and thereby, except those that the failure to make or obtain
are not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect or prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement or the Stock Option Agreement.
(ii) The execution, delivery and performance of this
Agreement and the Stock Option Agreement by the Company do not, and the
consummation by the Company of the Merger and the other transactions
contemplated hereby and thereby will not, constitute or result in (A) a breach
or violation of, or a default under, any Governing Document of the Company or
any of its Subsidiaries, (B) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contract") binding upon the Company or any of its Subsidiaries or
(provided, as to consummation, the filings and notices are made, and approvals
are obtained, as referred to in Section 5.1(d)(i)), any Law (as defined in
Section 5.1(i)) or governmental or non-governmental permit or license to which
the Company or any of its Subsidiaries is subject or (C) any change in the
rights or obligations of any party under any of the Contracts, except, in the
case of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement or the Stock
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Option Agreement. Section 5.1(d) of the Company Disclosure Letter sets forth, to
the knowledge of the Company, a correct and complete list of material Contracts
of the Company and its Subsidiaries pursuant to which consents or waivers are or
may be required prior to consummation of the transactions contemplated by this
Agreement and the Stock Option Agreement (whether or not subject to the
exception set forth with respect to clauses (B) and (C) above), except those the
failure to obtain, individually or in the aggregate, is not reasonably likely to
give rise to damage claims or other losses of $5,000,000 or more.
(e) Company Reports; Financial Statements.
(i) The Company has made available to Parent each
registration statement, report, proxy statement or information statement
prepared by it since December 31, 1996 including (A) the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 (the "Audit Date"), and (B)
the Company's Quarterly Reports on Form 10-Q for the periods ended March 31,
1998, June 30, 1998 and September 30, 1998, each in the form (including
exhibits, annexes and any amendments thereto) filed with the Securities and
Exchange Commission (the "SEC") (collectively, including any such reports filed
subsequent to the date hereof, the "Company Reports"). As of their respective
dates, the Company Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents, or will fairly present, the
consolidated financial position of the Company and its Subsidiaries as of its
date and each of the consolidated statements of income and of changes in
financial position included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents, or will
fairly present, the results of operations, retained earnings and changes in
financial position, as the case may be, of the Company and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements, to
the failure to include all required notes thereto and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except as may be noted therein.
(ii) The Company has made available to Parent true and
complete copies of the annual statements of each of the Company Insurance
Subsidiaries as filed with the applicable insurance regulatory authorities for
the years ended December 31, 1996, 1997 and 1998, including all exhibits,
interrogatories, notes, schedules and any actuarial opinions, affirmations or
certifications or other supporting documents filed in connection therewith
(collectively, including any such annual or quarterly statements filed
subsequent to the date hereof, the "Company SAP Statements"). The Company SAP
Statements were (or will be) prepared in conformity with statutory accounting
practices prescribed or permitted by the applicable insurance regulatory
authority ("SAP") consistently applied for the periods covered thereby and
present (or will present)
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fairly the statutory financial position of such Company Insurance Subsidiaries
as at the respective dates thereof and the results of operations of such
Subsidiaries for the respective periods then ended. The Company SAP Statements
complied (or will comply) in all material respects with all applicable Laws,
rules and regulations when filed, and, to the knowledge of the Company, no
material deficiency has been asserted with respect to any Company SAP Statements
by the applicable insurance regulatory body or any other governmental agency or
body. The statutory balance sheets and income statements included in the Company
SAP Statements have been audited by PriceWaterhouseCoopers LLP, and the Company
has made available to Parent true and complete copies of all audit opinions
related thereto. The Company has made available to Parent true and complete
copies of all examination reports of insurance departments and any insurance
regulatory agencies since January 1, 1995 relating to the Company Insurance
Subsidiaries. The term "knowledge" when used in this Agreement with respect to
the Company shall mean the actual knowledge, after reasonable inquiry, of the
following employees of the Company: Xxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxx,
Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Israel, Xxxxxxx Xxxxxxxx
and Xxxxx Xxxxxxx.
(f) Absence of Certain Changes. Except as disclosed in the Company
Reports filed prior to the date hereof, since the Audit Date the Company and its
Subsidiaries have conducted the businesses of the Company and its Subsidiaries,
taken as a whole, only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of such businesses and
there has not been (i) any material adverse change in the financial condition,
management, properties, prospects, business or results of operations of the
Company and its Subsidiaries or, to the knowledge of the Company, any
development or combination of developments which, individually or in the
aggregate, has had or is reasonably likely to have a Company Material Adverse
Effect; (ii) any material damage, destruction or other casualty loss with
respect to any material asset or property owned, leased or otherwise used by the
Company or any of its Subsidiaries, whether or not covered by insurance; (iii)
any declaration, setting aside or payment of any dividend or other distribution
in respect of the stock of the Company, except for regular quarterly cash
dividends on its Common Shares publicly announced prior to the date hereof and
regular quarterly cash dividends on its Preferred Shares paid in accordance with
the Company's Governing Documents prior to the date hereof; (iv) any change by
the Company in accounting principles, practices or methods other than those
required by GAAP or SAP; (v) any material addition, or any development involving
a prospective material addition, to the Company's consolidated reserves for
future policy benefits or other policy claims and benefits; or (vi) any material
change in the accounting, actuarial, investment, reserving, underwriting or
claims administration policies, practices, procedures, methods, assumptions or
principles of any Company Insurance Subsidiary. Since the Audit Date, except as
provided for herein or as disclosed in the Company Reports filed prior to the
date hereof, there has not been any increase in the compensation payable or that
could become payable by the Company or any of its Subsidiaries to officers or
key employees or any amendment of any of the Compensation and Benefit Plans (as
hereinafter defined) other than increases or amendments in the ordinary course
and increases or amendments approved by Parent.
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(g) Litigation and Liabilities. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries, directors or officers or (ii) obligations or
liabilities of any nature, whether or not accrued, contingent or otherwise and
whether or not required to be disclosed, including those relating to
environmental and occupational safety and health matters, or any other facts or
circumstances of which the Company has knowledge that could result in any claims
against, or obligations or liabilities of, the Company or any of its affiliates,
except for those that are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect or prevent or materially burden
or materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement or by the Stock Option Agreement.
(h) Employee Benefits.
(i) A copy of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, change of control, compensation, medical, health or other plan,
agreement, policy or arrangement that covers any employees, directors, former
employees or former directors of the Company and its Subsidiaries (the
"Compensation and Benefit Plans") and any trust agreement or insurance contract
forming a part of such Compensation and Benefit Plans has been made available to
Parent prior to the date hereof. The Compensation and Benefit Plans are listed
in Section 5.1(h) of the Company Disclosure Letter and any "change of control"
or similar provisions therein are specifically identified in Section 5.1(h) of
the Company Disclosure Letter.
(ii) All Compensation and Benefit Plans are in substantial
compliance with all applicable Law, including the Internal Revenue Code of 1986,
as amended (together with all regulations promulgated thereunder, the "Code"),
and the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Each Compensation and Benefit Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (the "IRS"),
and the Company has no knowledge of any circumstances reasonably likely to
result in revocation of any such favorable determination letter. There is no
pending or, to the knowledge of the Company, threatened material litigation
relating to the Compensation and Benefit Plans. Neither the Company nor any of
its Subsidiaries has engaged in a transaction with respect to any Compensation
and Benefit Plan that, assuming the taxable period of such transaction expired
as of the date hereof, would subject the Company or any of its Subsidiaries to a
material tax or penalty imposed by either Section 4975 of the Code or Section
502 of ERISA.
(iii) No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the Company or any Subsidiary
with respect to any
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ongoing, frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). The Company and its Subsidiaries have not contributed, or been
obligated to contribute, to a multi-employer plan under Subtitle E of Title IV
of ERISA at any time since September 26, 1980. No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the 12-month period ending on the
date hereof.
(iv) All contributions required to be made under the terms
of any Compensation and Benefit Plan as of the date hereof have been timely made
or have been reflected on the most recent consolidated balance sheet included or
incorporated by reference in the Company Reports filed prior to the date hereof.
Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has
an "accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA. Neither the Company nor its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer
plan, as of the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit liabilities,"
within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis
of the actuarial assumptions contained in the Pension Plan's most recent
actuarial valuation), did not exceed the then current value of the assets of
such Pension Plan, and there has been no material change in the financial
condition of such Pension Plan since the last day of the most recent plan year.
(vi) Neither the Company nor its Subsidiaries have any
obligations for retiree health or life benefits under any Compensation and
Benefit Plan, except as set forth in the Company Disclosure Letter.
(vii) Except as described in Section 5.1(h)(vii) of the
Company Disclosure Letter, the consummation of the Merger and the other
transactions contemplated by this Agreement, either alone or in connection with
a subsequent termination of employment, will not (x) entitle any employees of
the Company or its Subsidiaries to severance pay, (y) accelerate the time of
payment or vesting or trigger any payment of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Compensation and Benefit Plans or (z) result in any breach or
violation of, or a default under, any of the Compensation and Benefit Plans.
(viii) All Compensation and Benefit Plans covering current
or former non-U.S. employees or former employees of the Company and its
Subsidiaries comply in all material respects with applicable Law. The Company
and its Subsidiaries have no
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material unfunded liabilities with respect to any employee benefit plan that
covers such non-U.S. employees.
(ix) Except as described in Section 5.1(h)(ix) of the
Company Disclosure Letter, no amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer, director or independent
contractor of the Company who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.28OG-1) under any employment
arrangement would be treated as an "excess parachute payment" (as such term is
defined in Section 28OG(b)(l) of the Code). Section 5.1(h)(ix) of the Company
Disclosure Letter contains a true and complete list of each Person with whom the
Company has an executive severance agreement.
(i) Compliance with Laws; Permits. The business and operations of
the Company, and the Company Insurance Subsidiaries, have been conducted in
compliance with all applicable statutes, regulations and rules regulating the
business of insurance and all applicable orders and directives of insurance
regulatory authorities and market conduct recommendations resulting from market
conduct examinations of insurance regulatory authorities (collectively,
"Insurance Laws"), except where the failure to so conduct such business and
operations is not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect. Notwithstanding the generality of the
foregoing, except where the failure to do so would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect, each
Company Insurance Subsidiary and, to the knowledge of the Company, its agents
have marketed, sold and issued insurance products in compliance, in all material
respects, with Insurance Laws applicable to the business of such Company
Insurance Subsidiary and in the respective jurisdictions in which such products
have been sold, including, without limitation, in compliance with (i) all
applicable prohibitions against "redlining" or withdrawal of business lines,
(ii) all applicable requirements relating to the disclosure of the nature of
insurance products as policies of insurance and (iii) all applicable
requirements relating to insurance product projections and illustrations. In
addition, (i) to the knowledge of the Company, there is no pending or threatened
charge by any insurance regulatory authority that any of the Company Insurance
Subsidiaries has violated, nor any pending or threatened investigation by any
insurance regulatory authority with respect to possible violations of, any
applicable Insurance Laws; (ii) to the knowledge of the Company, none of the
Company Insurance Subsidiaries is subject to any order or decree of any
insurance regulatory authority relating specifically to such Company Insurance
Subsidiary (as opposed to insurance companies generally); and (iii) each of the
Company Insurance Subsidiaries have filed all reports required to be filed with
any insurance regulatory authority on or before the date hereof as to which the
failure to file such reports is, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect.
In addition to Insurance Laws, except as set forth in the
Company Reports filed prior to the date hereof, the businesses of each of the
Company and its Subsidiaries have not been, and are not being, conducted in
violation of any federal, state, local or
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foreign law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (collectively with Insurance Laws, "Laws"), except for
violations or possible violations that are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent or materially burden or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement or the Stock Option
Agreement. Except as set forth in the Company Reports filed prior to the date
hereof, no investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries is pending or, to the knowledge of the
Company, threatened, nor, to the knowledge of the Company, has any Governmental
Entity indicated an intention to conduct the same, except for those the outcome
of which are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent or materially burden or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement or the Stock Option Agreement. To the knowledge of the Company,
no material change is required in the Company's or any of its Subsidiaries'
processes, properties or procedures in connection with any applicable Laws, and
the Company has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof.
The Company and its Subsidiaries each has all permits, licenses, trademarks,
patents, trade names, copyrights, service marks, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct its business as presently conducted except those the
absence of which are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate the Merger and the
other transactions contemplated by this Agreement or the Stock Option Agreement.
(j) Takeover Statutes. The Company has taken all actions necessary
such that no restrictive provision of any "fair price," "moratorium," "control
share acquisition," "interested shareholder" or other similar anti-takeover
statute or regulation (including, without limitation, Sections 607.0901 and
607.0902 of the FBCA) (each a "Takeover Statute") or restrictive provision of
any applicable anti-takeover provision in the Governing Documents of the Company
(including Article VIII of the Company's Third Amended and Restated Articles of
Incorporation) is, or at the Effective Time will be, applicable to the Company,
Parent, the Shares, the Tender Offer, the Merger or any other transaction
contemplated by this Agreement, the Stock Option Agreement or the Voting
Agreement.
(k) Environmental Matters. Except as disclosed in the Company
Reports filed prior to the date hereof and except for such matters as are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect: (i) the Company and its Subsidiaries have complied with all
applicable Environmental Laws; (ii) the properties currently owned or operated
by the Company (including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances; (iii) the
properties formerly owned or operated by the Company or any of its Subsidiaries
were not contaminated with Hazardous Substances during the
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period of ownership or operation by the Company or any of its Subsidiaries; (iv)
neither the Company nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party property; (v)
neither the Company nor any of its Subsidiaries has been associated with any
release or threat of release of any Hazardous Substance; (vi) neither the
Company nor any of its Subsidiaries has received any notice, demand, letter,
claim or request for information alleging that the Company or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vii)
neither the Company nor any of its Subsidiaries is subject to any orders,
decrees, injunctions or other arrangements with any Governmental Entity (all of
which to the knowledge of the Company are set out in Section 5.1(k) of the
Company Disclosure Letter) or is subject to any indemnity or other agreement
with any third party relating to liability under any Environmental Law or
relating to Hazardous Substances; and (viii) there are no circumstances or
conditions involving the Company or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability, investigations, costs
or restrictions on the ownership, use, or transfer of any property of the
Company or any of its Subsidiaries pursuant to any Environmental Law.
As used herein, the term "Environmental Law" means any federal, state,
local or foreign law, statute, ordinance, regulation, judgment, order, decree,
arbitration award, agency requirement, license, permit, authorization or
opinion, relating to: (A) the protection, investigation or restoration of the
environment, health and safety, wildlife or natural resources, (B) the handling,
use, presence, disposal, release or threatened release of any Hazardous
Substance or (C) noise, odor, wetlands, pollution, contamination or any injury
or threat of injury to persons or property.
As used herein, the term "Hazardous Substance" means any substance that
is: (A) listed, classified or regulated pursuant to any Environmental Law; (B)
any petroleum product or by-product, asbestos-containing material,
lead-containing paint, polychlorinated biphenyls, radioactive materials or
radon; or (C) any other substance which may be the subject of regulatory action
by any Government Entity pursuant to any Environmental Law.
(l) Taxes. Except as provided in Section 5.1(l) of the Company
Disclosure Letter and except for such matters as are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect:
(i) the Company and each of its Subsidiaries have filed
completely and correctly all Tax Returns (as defined below) that are required by
all applicable Laws to be filed by them, and (x) have paid, or made adequate
provision for the payment of, all Taxes (as defined below) which have or may
become due and payable pursuant to those Tax Returns, have paid all estimated
Taxes due and (y) have paid all other charges, claims and assessments received
to date other than those charges, claims and assessments for Taxes being
contested in good faith for which adequate provision has been made on the most
recent balance sheet included in the Company Reports;
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(ii) all Taxes which the Company and its Subsidiaries are
required by Law to withhold and collect have been duly withheld and collected,
and have been paid over, in a timely manner, to the proper Taxing Authorities
(as defined below) to the extent due and payable;
(iii) neither the Company nor any of its Subsidiaries have
executed any waiver to extend, or otherwise taken or failed to take any action
that would have the effect of extending, the applicable statute of limitations
in respect of any Tax liabilities of the Company or its Subsidiaries for the
fiscal years prior to and including the most recent fiscal year;
(iv) the Company and its Subsidiaries have never been
members of any consolidated group for income tax purposes other than the
consolidated group of which the Company is the common parent; and the Company
and its Subsidiaries are not parties to any tax sharing agreement or
arrangement, other than with each other;
(v) no liens for Taxes exist with respect to any of the
assets or properties of the Company or its Subsidiaries, except for statutory
liens for Taxes not yet due or payable or that are being contested in good
faith;
(vi) all of the income Tax Returns filed by or on behalf
of each of the Company and its Subsidiaries have been examined by and settled
with the IRS or the statute of limitations with respect to the relevant Tax
liability has expired, for all taxable periods through and including the period
ending on December 31, 1994;
(vii) all Taxes due with respect to any completed and
settled audit, examination or deficiency litigation with any Taxing Authority
have been paid in full;
(viii) there is no audit, examination, deficiency, or refund
litigation pending with respect to any Taxes and during the past three years no
Taxing Authority has given written notice of the commencement of any audit,
examination, deficiency or refund litigation, with respect to any Taxes;
(ix) the Company is not bound by any currently effective
private ruling, closing agreement or similar agreement with any Taxing Authority
relating to a material amount of Taxes;
(x) the Company shall not be required to include in a
taxable period ending after the Effective Time, any taxable income attributable
to income that economically accrued in a prior taxable period as a result of
Section 481 of the Code, the installment method of accounting or any comparable
provision of state or local Tax Law;
(xi) (A) no material amount of property of the Company is
"tax exempt property" within the meaning of Section 168(h) of the Code, (B) no
material amount of assets of the Company is subject to a lease under Section
7701(h) of the Code, and (C) the Company is not a party to any material lease
made pursuant to Section 168(f)(8) of
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the Internal Revenue Code of 1954, as amended and in effect prior to the date of
enactment of the Tax Equity and Fiscal Responsibility Act of 1982;
(xii) immediately following the Merger, the Company will
not have any material amount of income or gain that has been deferred under
Treasury Regulation Section 1.1502-13, or any material excess loss account in a
Subsidiary under Treasury Regulation Section 1.1502-19; and
(xiii) the Company is not a "consenting corporation" within
the meaning of Section 341(f) of the Code.
As used in this Agreement, (A) the term "Tax" (including, with
correlative meaning, the terms "Taxes" and "Taxable") shall mean, with respect
to any Person, (a) all taxes, domestic or foreign, including without limitation
any income (net, gross or other, including recapture of any tax items such as
investment tax credits), alternative or add-on minimum tax, gross income, gross
receipts, premium, gains, sales, use, ad valorem, transfer, recording,
franchise, profits, property (real or personal, tangible or intangible), fuel,
license, withholding (whether on amounts paid to or by such Person), payroll,
employment, unemployment, social security, excise, severance, stamp, occupation,
or environmental tax, customs, duties, or other like assessments or governmental
charges of any kind whatsoever, together with any interest, penalties, additions
or additional amounts imposed with respect thereto (including, without
limitation, penalties for failure to file Tax Returns), (b) any joint or several
liability of such Person with any other Person for the payment of any amounts of
the type described in clause (a) hereof, and (c) any liability of such Person
for the payment of any amounts of the type described in (a) as a result of any
express or implied obligation to indemnify any other Person; (B) the term "Tax
Return(s)" shall mean all returns, consolidated or otherwise (including without
limitation information returns), required to be filed with any Taxing Authority;
and (C) the term "Taxing Authority" shall mean any authority responsible for the
imposition, collection or administration of any Tax.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization.
(n) Intellectual Property.
(i) The Company and/or each of its Subsidiaries owns, or
is licensed or otherwise possesses legally enforceable rights to use, all
patents, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or materials
that are used in the business of the Company and its Subsidiaries as currently
conducted, except for any such failures to own, be licensed or possess that are
not, individually or in the aggregate, reasonably likely to have a Company
Material Adverse Effect, and to the knowledge of the Company all patents,
trademarks, trade
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names, service marks and copyrights held by the Company and/or its Subsidiaries
are valid and subsisting.
(ii) Except as disclosed in Company Reports filed prior to
the date hereof or as are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect:
(A) neither the Company nor its Subsidiaries is,
nor will it be as a result of the execution and delivery of this Agreement or
the performance of its obligations hereunder, in violation of any licenses,
sublicenses or other agreements as to which the Company is a party and pursuant
to which the Company or any of its Subsidiaries is authorized to use any
third-party patents, trademarks, service marks, and copyrights ("Third-Party
Intellectual Property Rights");
(B) no claims with respect to (I) the patents,
registered and material unregistered trademarks and service marks, registered
copyrights, trade names, and any applications therefor owned by the Company or
any of its Subsidiaries (the "Company Intellectual Property Rights"); (II) any
trade secret material to the Company; or (III) Third-Party Intellectual Property
Rights are currently pending or, to the knowledge of the Company, are threatened
by any Person;
(C) the Company has no knowledge of any valid
grounds for any bona fide claims (I) to the effect that the sale, licensing or
use of any product as now used, sold or licensed or proposed for use, sale or
license by the Company or any of its Subsidiaries, infringes on any copyright,
patent, trademark, service xxxx or trade secret; (II) against the use by the
Company or any of its Subsidiaries, of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the business of the Company or any of its Subsidiaries
as currently conducted or as proposed to be conducted; (III) challenging the
ownership, validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company; or (IV) challenging the
license or legally enforceable right to use of the Third-Party Intellectual
Rights by the Company or any of its Subsidiaries; and
(D) to the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of the Company or any of its Subsidiaries.
(o) Material Contracts. All of the material Contracts of the
Company and its Subsidiaries that are required to be described in the Company
Reports or to be filed as exhibits thereto are described in the Company Reports
or filed as exhibits thereto and such Contracts are in full force and effect.
True and complete copies of all such material Contracts have been delivered or
have been made available by the Company to Parent. Neither the Company nor any
of its Subsidiaries nor any other party is in breach of or in default under any
such Contract except for such breaches and defaults as are not,
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individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is party to any
agreement containing any provision or covenant limiting in any material respect
the ability of the Company or any of its Subsidiaries or, except as specifically
identified on Section 5.1(o) of the Company Disclosure Letter, assuming the
consummation of the transactions contemplated by this Agreement, Parent or any
of its Subsidiaries to (i) sell any products or services of or to any other
person, (ii) engage in any line of business or (iii) compete with or to obtain
products or services from any Person or limiting the ability of any Person to
provide products or services to the Company or any of its Subsidiaries.
(p) Rights Plan.
(i) The Company has taken all actions necessary such
that, for all purposes under the Rights Agreement, Parent shall not be deemed an
Acquiring Person (as defined in the Rights Agreement), the Distribution Date (as
defined in the Rights Agreement) shall not be deemed to occur, and the rights
issuable pursuant to the Rights Agreement (the "Rights") will not separate from
the Common Shares, as a result of Parent's entering into this Agreement, the
Voting Agreement or the Stock Option Agreement or consummating the Tender Offer,
the Merger and/or the other transactions contemplated hereby or thereby.
(ii) The Company has taken all necessary action with
respect to all of the outstanding Rights so that, as of immediately prior to the
Effective Time and immediately prior to the consummation of the Tender Offer,
(A) neither the Company nor Parent will have any obligations under the Rights or
the Rights Agreement and (B) the holders of Rights will have no rights under the
Rights or the Rights Agreement.
(q) Brokers and Finders. Neither the Company nor any of its
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finders fees in connection
with the Merger or the other transactions contemplated in this Agreement except
that the Company has employed Xxxxxxx Xxxxx Barney Inc. as its financial
advisor, the arrangements with which have been disclosed to Parent prior to the
date hereof.
(r) Insurance Matters.
(i) Except as otherwise are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect, all
policies, binders, slips, certificates, annuity contracts and participation
agreements and other agreements of insurance, whether individual or group, in
effect as of the date hereof (including all applications, supplements,
endorsements, riders and ancillary agreements in connection therewith) that are
issued by the Company Insurance Subsidiaries (the "Company Insurance Contracts")
and any and all marketing materials, are, to the extent required under
applicable Law, on forms approved by applicable insurance regulatory authorities
or which have been filed and not objected to by such authorities within the
period provided for objection, and such forms comply in all material respects
with all Insurance
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Laws applicable thereto and, as to premium rates established by the Company or
any Company Insurance Subsidiary which are required to be filed with or approved
by insurance regulatory authorities, the rates have been so filed or approved,
the premiums charged conform thereto in all material respects, and such premiums
comply in all material respects with all Insurance Laws applicable thereto.
(ii) All reinsurance and coinsurance treaties or
agreements, including retrocessional agreements, to which the Company or any
Company Insurance Subsidiary is a party or under which the Company or any
Company Insurance Subsidiary has any existing rights, obligations or liabilities
are in full force and effect, except for such treaties or agreements the failure
to be in full force and effect of which are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect. Neither
the Company nor any Company Insurance Subsidiary, nor, to the knowledge of the
Company, any other party to a reinsurance or coinsurance treaty or agreement to
which the Company or any Company Insurance Subsidiary is a party, is in default
in any material respect as to any provision thereof, and no such agreement
contains any provision providing that the other party thereto may terminate such
agreement by reason of the transactions contemplated by this Agreement. The
Company has not received any notice to the effect that the financial condition
of any other party to any such agreement is impaired with the result that a
default thereunder may reasonably be anticipated, whether or not such default
may be cured by the operation of any offset clause in such agreement. No insurer
or reinsurer or group of affiliated insurers or reinsurers accounted for the
direction to the Company and the Company Insurance Subsidiaries or the ceding by
the Company and the Company Insurance Subsidiaries of insurance or reinsurance
business in an aggregate amount equal to two percent or more of the consolidated
gross premium income of the Company and the Company Insurance Subsidiaries for
the year ended December 31, 1998.
(iii) Prior to the date hereof, the Company has delivered
or made available to Parent a true and complete copy of any actuarial reports
prepared by actuaries, independent or otherwise, with respect to the Company of
any Company Insurance Subsidiary since December 31, 1995, and all attachments,
addenda, supplements and modifications thereto (the "Company Actuarial
Analyses"). The information and data furnished by the Company or any Company
Insurance Subsidiary to its independent actuaries in connection with the
preparation of the Company Actuarial Analyses were accurate and complete in all
material respects. Furthermore, to the knowledge of the Company, each Company
Actuarial Analysis was based upon an accurate inventory of policies in force for
the Company and the Company Insurance Subsidiaries, as the case may be, at the
relevant time of preparation, was prepared using appropriate modeling procedures
accurately applied and in conformity with generally accepted actuarial standards
consistently applied, and the projections contained therein were properly
prepared in accordance with the assumptions stated therein.
(iv) None of Standard & Poor's Corporation, Xxxxx'x
Investors Service, Inc. or A.M. Best Company has announced that it has under
surveillance or review its rating of the financial strength or claims-paying
ability of any Company
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Insurance Subsidiary, and the Company has no reason to believe that any rating
presently held by the Company Insurance Subsidiaries is likely to be modified,
qualified, lowered or placed under such surveillance for any reason, including
as a result of the transactions contemplated hereby.
(v) Except as would not reasonably be expected to have a
Company Material Adverse Effect, all annuity contracts and life insurance
policies issued by each Company Insurance Subsidiary to an annuityholder
domiciled in the United States meet all definitional or other requirements for
qualification under the Code section applicable (or intended to be applicable)
to such annuity contracts or life insurance policies, including, without
limitation, the following: (A) each life insurance policy meets the requirements
of sections 101(f), 817(h) or 7702 of the Code, as applicable; (B) no life
insurance contract issued by any Company Insurance Subsidiary is a "modified
endowment contract" within the meaning of section 7702A of the Code unless and
to the extent that the holders of the policies have been notified of their
classification; (C) each annuity contract issued, entered into or sold by any
Company Insurance Subsidiary qualifies as an annuity under federal Tax Law; (D)
each annuity contract meets the requirements of, and has been administered
consistent with section 817(h) and 72 of the Code including but not limited to
section 72(s) of the Code (except for those contracts specifically excluded from
such requirement pursuant to section 72(s)(5) of the Code); (E) each annuity
contract intended to qualify under sections 130, 403(a), 403(b) or 408(b) of the
Code contains all provisions required for qualification under such sections of
the Code; (F) each annuity contract marketed as, or in connection with, plans
that are intended to qualify under section 401, 403, 408 or 457 of the Code
complies with the requirements of such section; and (G) none of the Company
Insurance Subsidiaries have entered into any agreement or are involved in any
discussions or negotiations and there are no audits, examinations,
investigations or other proceedings with the IRS with respect to the failure of
any life insurance policy under section 7702 or 817(h) of the Code or the
failure of any annuity contract to meet the requirements of section 72(s) of the
Code. There are no "hold harmless" indemnification agreements respecting the tax
qualification or treatment of any product or plan sold, issued, entered into or
administered by the Company Insurance Subsidiaries, and there have been no
claims asserted by any Person under such "hold harmless" indemnification
agreements so set forth.
(s) Liabilities and Reserves.
(i) The reserves carried on the Company SAP Statements of
each Company Insurance Subsidiary for future insurance policy benefits, losses,
claims and similar purposes were, as of the respective dates of such Company SAP
Statements, in compliance in all material respects with the requirements for
reserves established by the insurance departments of the state of domicile of
such Company Insurance Subsidiary, were determined in all material respects in
accordance with generally accepted actuarial standards and principles
consistently applied, and were fairly stated in all material respects in
accordance with sound actuarial and statutory accounting principles. Such
reserves were adequate in the aggregate to cover the total amount of all
reasonably anticipated liabilities of the Company and each Company Insurance
Subsidiary under all
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outstanding insurance, reinsurance and other applicable agreements as of the
respective dates of such Company SAP Statements. The admitted assets of each
Company Insurance Subsidiary as determined under applicable Laws are in an
amount at least equal to the minimum amounts required by applicable Laws. In
addition, the Company has delivered or made available to Parent copies of all
work papers used as the basis for establishing the reserves for the Company and
the Company Insurance Subsidiaries at December 31, 1997 and December 31, 1998,
respectively.
(ii) Except for regular periodic assessments in the
ordinary course of business or assessments based on developments which are
publicly known within the insurance industry, to the knowledge of the Company,
no claim or assessment is pending or threatened against any Company Insurance
Subsidiary which is peculiar or unique to such Company Insurance Subsidiary by
any state insurance guaranty association in connection with such association's
fund relating to insolvent insurers which if determined adversely, would,
individually or in the aggregate, be reasonably likely to have a Company
Material Adverse Effect.
(t) Investment Company. None of the Company Insurance Subsidiaries
maintains any separate accounts. Neither the Company nor any of its Subsidiaries
conducts activities of or is otherwise deemed under applicable Law to control an
"investment advisor" as such term is defined in Section 2(a)(20) of the
Investment Company Act of 1940, as amended (the "1940 Act"), whether or not
registered under the Investment Advisers Act of 1940, as amended. Neither the
Company nor any of its Subsidiaries is an "investment company" as defined under
the 1940 Act, and neither the Company nor any of its Subsidiaries sponsors any
Person that is such an investment company.
5.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUBSIDIARY. Parent and Merger Subsidiary each hereby represent and warrant to
the Company that:
(a) Capitalization of Merger Subsidiary. The authorized stock of
Merger Subsidiary consists of 50,000,000 shares of common Stock, par value $.01
per share ("Merger Subsidiary Common Stock"), 100 of which are duly authorized,
validly issued and outstanding, fully paid and non-assessable. All of the issued
and outstanding stock of Merger Subsidiary is, and at the Effective Time will
be, owned by Parent or a wholly owned Subsidiary of Parent, and there are (i) no
other shares of stock or voting securities of Merger Subsidiary, (ii) no
securities of Merger Subsidiary convertible into or exchangeable for shares of
stock or voting securities of Merger Subsidiary and (iii) no options or other
rights to acquire from Merger Subsidiary, and no obligations of Merger
Subsidiary to issue or deliver, any stock, voting securities or securities
convertible into or exchangeable for stock or voting securities of Merger
Subsidiary, except securities that may be delivered to Parent. Merger Subsidiary
has not conducted any business prior to the date hereof and has no, and prior to
the Effective Time will have no, assets, liabilities or obligations of any
nature other than those incident to its formation and pursuant to this Agreement
and the Merger and the other transactions contemplated by this Agreement.
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(b) Organization, Good Standing and Qualification. Each of Parent
and Merger Subsidiary is a corporation duly organized, validly existing and in
good standing under the Laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as presently conducted and is qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the ownership or operation of its properties or conduct of
its business requires such qualification, except where the failure to be so
qualified or in such good standing, is not reasonably likely, individually or in
the aggregate, to have a Parent Material Adverse Effect. Parent has made
available to the Company a complete and correct copy of Parent's and Merger
Subsidiary's Governing Documents, each as amended to the date hereof. Parent's
and Merger Subsidiary's Governing Documents so delivered are in full force and
effect. As used in this Agreement, the term "Parent Material Adverse Effect"
means a material adverse effect that is reasonably likely to prevent, materially
delay or materially impair the ability of Parent or Merger Subsidiary to
consummate the transactions contemplated by this Agreement.
(c) Corporate Authority. Each of the Parent and Merger Subsidiary
has all requisite corporate power and authority and has taken all corporate
action necessary in order to execute, deliver and perform its obligations under
this Agreement and to consummate the Tender Offer and the Merger. This Agreement
is a valid and binding agreement of Parent and Merger Subsidiary, enforceable
against each of Parent and Merger Subsidiary in accordance with its terms,
subject to the Bankruptcy and Equity Exception.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to
Section 1.3, (B) under the HSR Act, the Securities Act and the Exchange Act, (C)
to obtain an advance ruling certificate under The Competition Act of Canada, (D)
required to be made with the NYSE, and (E) the filing of appropriate documents
with, and approval of, the respective Commissioners of Insurance or similar
regulatory authorities of Arizona, Florida, Georgia, Mississippi, New York,
South Carolina, Texas, Puerto Rico, Cayman Islands, Denmark, Turks & Caicos,
Netherlands Antilles and the United Kingdom, and such notices and consents as
may be required under the antitrust notification insurance Laws of any state in
which the Company, Parent or any of their respective subsidiaries is domiciled
or does business, no notices, reports or other filings are required to be made
by Parent or Merger Subsidiary with, nor are any consents, registrations,
approvals, permits or authorizations required to be obtained by Parent or Merger
Subsidiary from, any Governmental Entity, in connection with the execution and
delivery of this Agreement by Parent and Merger Subsidiary and the consummation
by Parent and Merger Subsidiary of the Merger and the other transactions
contemplated hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect.
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(ii) The execution, delivery and performance of this
Agreement by Parent and Merger Subsidiary do not, and the consummation by Parent
and Merger Subsidiary of the Merger and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of, or a
default under, the Governing Documents of Parent and Merger Subsidiary or the
comparable governing instruments of any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of Parent or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any Contracts binding upon Parent or any of its Subsidiaries
or (provided, as to consummation, the filings and notices are made, and
approvals are obtained, as referred to in Section 5.2(d)(i)) or any Law or
governmental or non-governmental permit or license to which Parent or any of its
Subsidiaries is subject or (C) any change in the rights or obligations of any
party under any of the Contracts, except, in the case of clause (B) or (C)
above, for breach, violation, default, acceleration, creation or change that is
not, individually or in the aggregate, reasonably likely to have a Parent
Material Adverse Effect.
(e) Financing. Parent has, or will have prior to the Closing Date,
sufficient cash, available lines of credit or other sources of immediately
available funds to enable it to make the aggregate cash payments required to be
paid pursuant to Section 4.1 and any other amounts to be paid by it hereunder.
ARTICLE VI
COVENANTS
6.1. INTERIM OPERATIONS. The Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless Parent shall otherwise approve in writing, and except as
otherwise expressly contemplated by this Agreement or the Stock Option Agreement
or set forth in Section 6.1 of the Company Disclosure Letter):
(a) its and its Subsidiaries' businesses shall be conducted only
in the ordinary and usual course (it being understood and agreed that nothing
contained herein shall permit the Company to enter into or engage in (through
acquisition, product extension or otherwise) the business of selling any
products or services materially different from existing products or services of
the Company and its Subsidiaries or to enter into or engage in new lines of
business without Parent's prior written approval);
(b) to the extent consistent with (a) above, it and each of its
Subsidiaries shall use its respective reasonable best efforts to preserve its
business organization intact and maintain its existing relations and goodwill
with customers, suppliers, reinsurers, distributors, creditors, lessors,
employees and business associates;
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(c) it shall not (i) issue, sell, pledge, dispose of or encumber
any capital stock owned by it in any of its Subsidiaries; (ii) amend any
Governing Document or amend, modify or terminate the Rights Agreement; (iii)
split, combine or reclassify its outstanding shares of capital stock; (iv)
authorize, declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock other than dividends from its wholly
owned Subsidiaries and other than regular quarterly dividends paid by the
Company on its Common Shares not in excess of $0.12 per share and regular
quarterly dividends paid by the Company on its Preferred Shares in accordance
with the Company's Governing Documents; or (v) repurchase, redeem or otherwise
acquire, except in connection with any of the Company Stock Plans or pursuant to
the American Bankers Insurance Group, Inc. 401(k) and Employee Stock Ownership
Plan, or permit any of its Subsidiaries to purchase or otherwise acquire, any
shares of its stock or any securities convertible into or exchangeable or
exercisable for any shares of its stock;
(d) neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire any shares, of its capital stock of any class or
any other property or assets (other than exercise of the Rights and the Shares
issuable pursuant to options outstanding on the date hereof under any of the
Company Stock Plans or upon conversion of the Preferred Shares); (ii) other than
in the ordinary and usual course of business, transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of or encumber any other property or
assets (including capital stock of any of its Subsidiaries) or incur or modify
any material indebtedness or other liability; or (iii) make or authorize or
commit for any capital expenditures, including entering into capital lease
obligations, other than in amounts not exceeding $5,000,000 in the aggregate or,
by any means, make any acquisition of, or investment in, assets or stock of any
other Person or entity, including by way of assumption reinsurance, in excess of
$2,000,000 individually or $5,000,000 in the aggregate (other than in connection
with ordinary course investment activities);
(e) neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any Compensation and Benefit Plans, or increase the salary,
wage, bonus or other compensation of any employees except increases occurring in
the ordinary and usual course of business (which shall include normal periodic
performance reviews and related compensation and benefit increases); provided,
however, that the Company shall be entitled to (i) pay cash bonuses to sales
personnel and the cash bonuses owed to employees pursuant to the Company's
Management Incentive Plan for 1998 in an aggregate amount not to exceed
$6,100,000, and (ii) extend for up to 12 months the expiration date of any
Company Stock Options held by non-employee directors of the Company;
(f) neither it nor any of its Subsidiaries shall pay, discharge,
settle or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction of claims, liabilities or obligations legally due and
payable and arising in the ordinary and usual course of
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business, claims arising under the terms of products, contracts or policies
issued by the Company Insurance Subsidiaries in the ordinary and usual course of
business and such other claims, liabilities or obligations as shall not exceed
$5,000,000 in the aggregate;
(g) neither it nor any of its Subsidiaries shall make or change
any Tax election, settle any material audit, file any amended Tax Returns or
permit any insurance policy naming it as a beneficiary or loss-payable payee to
be canceled or terminated except in the ordinary and usual course of business;
(h) neither it nor any of its Subsidiaries shall enter into any
agreement containing any provision or covenant limiting in any material respect
the ability of the Company or any Subsidiary or affiliate to (i) sell any
products or services of or to any other Person, (ii) engage in any line of
business or (iii) compete with or to obtain products or services from any Person
or limiting the ability of any Person to provide products or services to the
Company or any of its Subsidiaries or Affiliates;
(i) neither it nor any of its Subsidiaries shall enter into any
new quota share or other reinsurance transaction (i) which does not contain
standard cancellation and termination provisions, (ii) which, except in the
ordinary course of business, materially increases or reduces the Company
Insurance Subsidiaries' consolidated ratio of net written premiums to gross
written premiums or (iii) pursuant to which $10,000,000 or more in gross written
premiums are ceded by the Company Insurance Subsidiaries to any Person other
than the Company or any of its Subsidiaries;
(j) neither it nor any of the Company Insurance Subsidiaries will
alter or amend in any material respect their existing investment guidelines or
policies;
(k) neither it nor any of its Subsidiaries shall take any action
or omit to take any action that would cause any of its representations and
warranties herein to become untrue in any material respect;
(l) neither it nor its Subsidiaries shall permit a material change
in any of its underwriting, investment, actuarial, financial reporting or
accounting practices or policies or in any material assumption underlying an
actuarial practice or policy, except as may be required by any change in GAAP,
statutory accounting principles or applicable Law; and
(m) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
6.2. ACQUISITION PROPOSALS. The Company will not, and will not
permit or cause any of its Subsidiaries or any of the officers and directors of
it or its Subsidiaries to, and shall direct its and its Subsidiaries'
Representatives not to, directly or indirectly, initiate, solicit, encourage or
otherwise facilitate any inquiries or the making of any proposal or offer with
respect to a merger, reorganization, share exchange, consolidation or similar
transaction involving, or any purchase of 15% or more of the assets or any
equity securities of, the Company or any of its Subsidiaries (any such proposal
or offer
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being hereinafter referred to as an "Acquisition Proposal"). The Company will
not, and will not permit or cause any of its Subsidiaries or any of the officers
and directors of it or its Subsidiaries to and shall direct its and its
Subsidiaries' Representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal, whether made before or after the date of this Agreement,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal (including, without limitation, by means of an amendment to
the Rights Agreement); provided, however, that nothing contained in this
Agreement shall prevent the Company or its board of directors from (i) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal or (ii) at any time prior to the approval of the Merger by the Company
Common Stock Requisite Vote (A) providing information in response to a request
therefor by a Person who has made an unsolicited bona fide written Acquisition
Proposal if the board of directors receives from the Person so requesting such
information an executed confidentiality agreement on terms substantially
equivalent to those contained in the Confidentiality Agreement; (B) engaging in
any negotiations or discussions with any Person who has made an unsolicited bona
fide written Acquisition Proposal; or (C) recommending such an Acquisition
Proposal to the stockholders of the Company, if and only to the extent that, (i)
in each such case referred to in clause (A), (B) or (C) above, the board of
directors of the Company determines in good faith after consultation with
outside legal counsel that such action is necessary in order for its directors
to comply with their respective fiduciary duties under applicable Law and (ii)
in each case referred to in clause (B) or (C) above, the board of directors of
the Company determines in good faith (after consultation with its financial
advisor) that such Acquisition Proposal, if accepted, is reasonably likely to be
consummated, taking into account all legal, financial and regulatory aspects of
the proposal and the Person making the proposal, and would, if consummated,
result in a more favorable transaction than the transaction contemplated by this
Agreement, taking into account the long-term prospects and interests of the
Company and its stockholders (any such more favorable Acquisition Proposal being
referred to in this Agreement as a "Superior Proposal"). The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company agrees that it will take the necessary
steps to promptly inform the individuals or entities referred to in the first
sentence hereof of the obligations undertaken in this Section 6.2 and in the
Confidentiality Agreement. The Company will notify Parent immediately if any
such inquiries, proposals or offers are received by, any such information is
requested from, or any such discussions or negotiations are sought to be
initiated or continued with, any of its Representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any proposals or offers and thereafter shall keep Parent informed,
on a current basis, of the status and terms of any such proposals or offers and
the status of any such negotiations or discussions. The Company also will
promptly request each Person that has heretofore executed a confidentiality
agreement in connection with its consideration of an Acquisition Proposal to
return all confidential information heretofore furnished to such Person by or on
behalf of it or any of its Subsidiaries.
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6.3. INFORMATION SUPPLIED. The Company and Parent each agrees, as
to itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in (i) the Offer Documents, the Schedule 14D-1 and the Schedule 14D-9 will, at
the time of filing thereof and at the time of distribution thereof, contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to stockholders and at the times of the Stockholders Meetings, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
6.4. STOCKHOLDERS MEETINGS.
(a) The Company will take, in accordance with its Governing
Documents, all action necessary to convene a meeting of holders of Common Shares
(the "Common Stockholders Meeting") as promptly as practicable after the
definitive Proxy Statement has been filed with the SEC, and a meeting of holders
of Preferred Shares (the "Preferred Stockholders Meeting" and, together with the
Common Stockholders Meeting, the "Stockholders Meetings") as promptly as
practicable after the definitive Proxy Statement has been filed with the SEC to
consider and vote upon the approval of the Merger. It is agreed that, except as
provided in Section 1.5(c), the Company will not cancel, adjourn or postpone the
Stockholders Meetings without the prior written consent of Parent. Subject to
fiduciary obligations under applicable Law, the Company's board of directors
shall recommend approval, shall not withdraw or modify such recommendation and
shall take all lawful action to solicit such approval. Without limiting the
generality of the foregoing, in the event that the Company's board of directors
withdraws or modifies its recommendation, the Company nonetheless shall cause
the Stockholders Meetings to be convened and votes taken with respect to the
Merger and the board of directors shall communicate to the Company's
stockholders its basis for such withdrawal or modification as contemplated by
Section 607.1103(2)(a) of the FBCA.
(b) In the event that the Stockholders Meetings contemplated by
Section 6.4(a) are cancelled pursuant to Section 1.5(c) in connection with the
commencement of the Tender Offer, the Company will take, in accordance with its
Governing Documents, all action necessary to convene meetings of holders of
Shares as promptly as practicable upon the written request of Parent. Subject to
fiduciary obligations under applicable Law, the Company's board of directors
shall recommend approval, shall not withdraw or modify such recommendation and
shall take all lawful action to solicit such approval. Without limiting the
generality of the foregoing, in the event that the Company's board of directors
withdraws or modifies its recommendation, the Company nonetheless shall cause
the Stockholders Meetings to be convened and a vote taken with respect to the
Merger, and the board of directors shall communicate to the Company's
stockholders its
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basis for such withdrawal or modification as contemplated by Section
607.1103(2)(a) of the FBCA.
6.5. FILINGS; OTHER ACTIONS; NOTIFICATION.
(a) In connection with the Stockholders Meetings, the Company
shall prepare and deliver to Parent as promptly as practicable after the date
hereof a draft of a proxy statement (the "Proxy Statement"). Thereafter, the
Company and Parent shall use their reasonable best efforts to cooperate fully to
make such changes to the Proxy Statement as may be reasonably requested by
Parent or otherwise may be appropriate, file the Proxy Statement with the SEC as
soon as practicable, and respond promptly to any SEC comments. Upon filing the
final, definitive Proxy Statement with the SEC, the Company shall mail such
Proxy Statement to its stockholders. Notwithstanding the foregoing, if Merger
Subsidiary obtains 80% or more of the Common Shares and 80% or more of the
Preferred Shares through the Tender Offer, Merger Subsidiary may, at its
election, use the short form merger provisions of Section 607.1104 of the FBCA.
(b) The Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) all reasonable efforts
(i) to cause to be done all things, necessary, proper or advisable on its part
under this Agreement and applicable Laws to consummate and make effective the
Tender Offer (if applicable, per Section 1.4), the Merger and the other
transactions contemplated by this Agreement and the Stock Option Agreement as
soon as practicable, including preparing and filing as promptly as practicable
all documentation to effect all necessary notices, reports and other filings,
and (ii) to obtain as promptly as practicable all consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and/or any Governmental Entity in connection with, as a result
of or in order to consummate the Tender Offer, the Merger or any of the other
transactions contemplated by this Agreement or the Stock Option Agreement,
including, without limitation, upon request of Parent, all material consents
required in connection with the consummation of the Tender Offer and the Merger;
provided, however, that nothing in this Section 6.5 shall require, or be
construed to require, Parent, in connection with the receipt of any regulatory
approval, to proffer to, or agree to (i) sell or hold separate and agree to sell
or to discontinue to use or limit, before or after the Effective Time, any
assets, businesses, or interest in any assets or businesses of Parent, the
Company or any of their respective Subsidiaries (or to consent to any sale, or
agreement to sell, or discontinuance or limitation by the Company of any of its
assets or businesses) or (ii) any conditions relating to, or changes or
restriction in, the operations of any such assets or businesses which, in either
case, could, in the reasonable judgment of the board of directors of Parent,
materially and adversely impact the economic or business benefits to Parent of
the transactions contemplated by this Agreement. Subject to applicable Laws
relating to the exchange of information, Parent and the Company shall have the
right to review in advance, and to the extent practicable each will consult the
other on, all the information relating to Parent or the Company, as the case may
be, and any of their respective Subsidiaries, that appear in any filing made
with, or written materials submitted to, any third party and/or any Governmental
Entity in connection with the
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Tender Offer, the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and Parent
shall act reasonably and as promptly as practicable.
(c) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Offer Documents, the Schedule
14D-1, the Schedule 14D-9, the Proxy Statement, or any other statement, filing,
notice or application made by or on behalf of Parent, the Company or any of
their respective Subsidiaries to any third party and/or any Governmental Entity
in connection with the Tender Offer, the Merger and the other transactions
contemplated by this Agreement.
(d) The Company and Parent each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Tender Offer, the Merger and the other transactions contemplated
by this Agreement. The Company and Parent each shall give prompt notice to the
other of any change that is reasonably likely to result in a Company Material
Adverse Effect or Parent Material Adverse Effect, respectively.
(e) The Company shall use its best efforts to cause the Company
and each of the individuals listed in Section 6.5(e) of the Company Disclosure
Letter to enter into prior to the earlier of the consummation of the Tender
Offer and the Effective Time an Amendment of Severance Agreement in the form
attached hereto as Exhibit C.
6.6. ACCESS; TECHNOLOGY CONVERSIONS.
(a) Upon reasonable notice, and except as may otherwise be
required by applicable Law, the Company shall (and shall cause its Subsidiaries
to) afford Parent's directors, officers, employees, counsel, accountants,
financial advisors and other authorized agents and representatives
("Representatives") access, during normal business hours throughout the period
prior to the earlier of the termination of this Agreement or the Effective Time,
to the Company's and its Subsidiaries' management, properties, books, contracts,
records and personnel (and will use commercially reasonable efforts to provide
access to its auditors (including such auditors' work papers)) and, during such
period, shall (and shall cause its Subsidiaries to) furnish promptly to Parent
all information concerning the Company's and its Subsidiaries' business,
properties and personnel as may reasonably be requested; provided that Parent
and its Subsidiaries shall not be entitled to make copies of, or remove from the
Company's premises the originals of, the Company's and its Subsidiaries' profit
and loss statements by account and account contracts; and provided, further,
that no investigation pursuant to this Section shall affect or be deemed to
modify any representation or warranty made by the Company; and provided,
further, that the foregoing shall not require the Company to permit any
inspection, or to disclose any information, that in the reasonable judgment of
the board of
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directors of the Company would result in the disclosure of any trade secrets of
third parties or violate any of its obligations with respect to confidentiality
if the Company shall have used all reasonable efforts to obtain the consent of
such third party to such inspection or disclosure. All requests for information
made pursuant to this Section 6.6(a) shall be directed to an executive officer
of the Company or such Person as may be designated by the Company's officers.
All such information shall be governed by the terms of the Confidentiality
Agreement.
The Company will provide, and will cause its Subsidiaries to provide,
to Parent all information relating to financial and market conduct examinations
or other investigations by any Governmental Entity of the Company and/or its
Subsidiaries, including copies of all correspondence with any Governmental
Entity. The Company and its Subsidiaries will notify Parent of any meetings or
communications with any Governmental Entity relating to any material matter in
connection with any market conduct, financial or similar examination or
investigation and will permit Representatives of Parent to participate in all
conference calls or meetings relating to such matters. In addition, the Company
and its Subsidiaries will take all actions, including waiving any
confidentiality restrictions, that may be necessary or required to allow any
Governmental Entity to discuss all aspects of their examinations and/or
investigations with Parent; provided, that a Representative of the Company shall
be given the opportunity to be present during any such discussions. Prior to the
Effective Time, the Company will use its best efforts to resolve in a manner
reasonably acceptable to Parent any material regulatory compliance issues,
including issues arising out of market conduct examinations.
(b) From the date hereof through the earlier of termination of
this Agreement or the Effective Time, to the extent not prohibited by applicable
Law, the Company shall permit Parent to use an office within the Company's
corporate headquarters offices to afford Parent's internal auditors and other
Representatives reasonable access (without causing undue disruption of the
conduct of the Company's business) to monitor the operations and financial
activities of the Company and its Subsidiaries. In addition, the Company shall,
and shall cause its Subsidiaries to, to the extent not prohibited by applicable
Law, cooperate with Parent, upon Parent's reasonable request (without causing
undue disruption of the conduct of the Company's business), to develop plans for
the integration of the business of the Company and its Subsidiaries with that of
the Parent and to permit Parent to discuss all such plans with employees of the
Company and its Subsidiaries, including negotiating and confirming post-Closing
employment terms with such employees. Parent shall coordinate all activities
contemplated by this Section 6.6(b) through the Company's Chief Executive
Officer, Chief Financial Officer or their designees.
(c) From the date hereof through the earlier of termination of
this Agreement or the Effective Time, the Company and its Subsidiaries shall
provide Parent with the opportunity to conduct reasonable further due diligence
about the Company's and its Subsidiaries' year 2000 compliance, including
performing selected compliance audits and receiving from the Company reasonably
detailed information about the year 2000
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compliance of the Company and its Subsidiaries. In addition, from the date
hereof through the earlier of termination of this Agreement or the Effective
Time, the Company shall, and shall cause its Subsidiaries to, (i) permit
Parent's Representatives to review and comment on the Company's and its
Subsidiaries' plans to complete their efforts to become fully year 2000
compliant, and (ii) consider all reasonable requests of Parent made in writing
to the Company's Chief Executive Officer or his designee concerning the year
2000 compliance of the Company and its Subsidiaries, and (iii) use reasonable
efforts, as determined in the reasonable judgment of the Company's Chief
Executive Officer, to correct any material aspect in which the Company or any of
its Subsidiaries is not year 2000 compliant. Notwithstanding the foregoing, all
final decisions with respect to such conversion design and implementation shall
be made by the appropriate Company or Subsidiary. In the event that this
Agreement is terminated and the Merger is not consummated for any reason,
neither party shall have any liability to the other with respect to the
involvement of Parent's Representatives in such conversion project.
6.7. CERTAIN REPLACEMENT BENEFITS. Promptly after the Effective
Time, Parent shall use its reasonable best efforts to offer each Exercisable
Option Holder and Restricted Share Holder, in exchange for their rights to the
Restricted Option Shares Amount and the Remainder, alternative benefits that may
include favorable adjustments to such Restricted Option Shares Amount and
Remainder, options to acquire stock of Parent or an affiliate of Parent, stock
appreciation rights or other contractual obligations of Parent or the Company
that, in the reasonable judgment of Parent, will provide economic benefits for
such Exercisable Option Holder and Restricted Share Holder that are, as of the
Effective Time, comparable with (or, at the sole discretion of Parent, more
favorable than) the economic benefits of such Restricted Option Shares Amount
and Remainder, and that will contain comparable vesting arrangements, provided
that Parent shall not be obligated to offer any benefits that may have to be
registered under any securities Laws. Each Exercisable Option Holder and
Restricted Share Holder shall be entitled, in his or his discretion, to accept
any such alternative offer by Parent or retain the cash payment rights to the
Restricted Option Shares Amount and the Remainder pursuant to Section 4.4
hereof.
6.8. PUBLICITY. The initial press release shall be a joint press
release and thereafter the Company and Parent shall consult with each other
prior to issuing any press releases or otherwise making public announcements
with respect to the Tender Offer, the Merger and the other transactions
contemplated by this Agreement and prior to making any filings with any third
party and/or any Governmental Entity (including any national securities
exchange) with respect thereto, except as may be required by Law or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange.
6.9. BENEFITS; FACILITIES; FOUNDATION.
(a) Benefits. Parent agrees that, during the period commencing at
the Effective Time and ending on the first anniversary thereof, the employees of
the Company and its Subsidiaries will continue to be provided with employee
benefits (other
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than plans involving the issuance or award of Shares or rights to acquire
Shares) that are no less favorable in the aggregate than those currently
provided by the Company and its Subsidiaries to such employees. It is Parent's
intent that the employees of the Company and its Subsidiaries will become
participants in Parent's or its Subsidiaries' employee benefit plans as soon as
practicable following the Effective Time. Such employees will receive credit
under any plans of Parent or any of its Subsidiaries for service with the
Company or any of its Subsidiaries or predecessors (to the extent service with
such predecessors was credited under the Compensation and Benefit Plans
disclosed in the Company Disclosure Letter) prior to the Effective Time for the
purpose of determining eligibility, vesting and benefit accrual (except that no
employee of the Company or any of its Subsidiaries shall be entitled to any
benefit accrual under any pension or other defined benefit plan of Parent or any
of its Subsidiaries other than the Company). In addition, Parent shall cause any
and all pre-existing condition limitations (to the extent such limitations did
not apply to a pre-existing condition under the Compensation and Benefit Plans)
and eligibility waiting periods under group health plans of the Parent or any of
its Subsidiaries to be waived with respect to the employees of the Company or
its Subsidiaries and their eligible dependents. All discretionary awards and
benefits under any employee benefit plans of Parent or any of its Subsidiaries
shall be subject to the discretion of the Persons or committee administering
such plans.
(b) Facilities; Foundation. Parent intends to maintain, after the
Effective Time, the office, day care and public school facilities at the
Company's current Miami location, and Parent shall cause the Company to honor
all of the Company's legal commitments regarding such facilities. In connection
with The ABIG Foundation, Inc. (the "Foundation"), Parent agrees that after the
Effective Time it will (i) cause the Company, together with its Subsidiaries, to
make an annual contribution to the Foundation for each of calendar years 2000
and 2001 in an aggregate amount of not less than $1,200,000 per year, subject to
the reasonable determination of the board of directors of the Company that such
amount is reasonable at the time in light of the Company's then general economic
performance and condition and budgetary constraints; (ii) cause the Company to
continue providing to the Foundation the office space, that the Foundation is
presently using in Coral Gables, Florida, pursuant to the lease presently in
force for such office space, for the remaining initial term of 5 years, subject
to the Company's being permitted to allow Xxxxxx X. Xxxxxx to also use some of
such office space pursuant to a consulting agreement between Xx. Xxxxxx and the
Company; provided, however, that (A) the cost of the obligations set forth in
item (ii) above shall not exceed $175,000 in any calendar year, (B) at all times
that any of the obligations in items (i) or (ii) are in effect with respect to
Parent or the Company, the Company shall be entitled to have at least one
designee, initially Xxxxx X. Xxxxxxxx, serving as a director of the Foundation,
(C) such contributed funds shall be used by the Foundation for charitable
purposes on behalf of the Company in a manner similar to the charitable purposes
for which contributed funds were used in calendar year 1998, and (D) if at any
time during the initial term of the lease Messrs. Xxxxxx and Xxxxxx are not
using the above office space on behalf of the Foundation, the Company shall be
entitled to use the office space for its corporate purposes. After calendar year
2001, Parent will cause the Company to
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continue supporting the community through charitable donations consistent with
the Company's prior practices and with Parent's general guidelines for
charitable donations.
6.10. EXPENSES. If the Merger or the Tender Offer is consummated,
the Surviving Corporation shall pay all charges and expenses, including those of
the Exchange Agent, in connection with the transactions contemplated in Article
IV. Except as otherwise provided in Section 8.5(b), whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the Tender Offer, the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such expense, except that
expenses incurred in connection with the printing and mailing of the Offer
Documents, the Schedule 14D-1, the Schedule 14D-9, and the Proxy Statement shall
be shared equally by Parent and the Company.
6.11. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) From and after the Effective Time, Parent agrees that it will
cause the Company to continue to indemnify and hold harmless each present and
former director and officer of the Company, (when acting in such capacity)
determined as of the Effective Time (each, an "Indemnified Party" and,
collectively, the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time to the fullest extent that the Company was permitted
under Florida Law and its Governing Documents in effect on the date hereof to
indemnify such Person (and Company shall also advance expenses as incurred to
the fullest extent permitted under applicable Law provided the Person to whom
expenses are advanced provides a written affirmation of his or her good faith
belief that the standard of conduct necessary for indemnification has been met),
and an undertaking to repay such advances if it is ultimately determined that
such Person is not entitled to indemnification). Parent agrees to guarantee
Company's performance pursuant to this Section 6.11. Notwithstanding anything to
the contrary contained in this Agreement, Parent and the Company shall be
obligated to provide indemnification only to the extent that any directors' and
officers' liability insurance policy of the Company or its Subsidiaries does not
provide coverage and actual payment thereunder with respect to the matters that
would otherwise be subject to indemnification hereunder.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.11, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Company and Parent
thereof, but the failure to so notify shall not relieve Company of any liability
it may have to such Indemnified Party if such failure does not materially
prejudice the indemnifying party. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) the Company shall have the right to assume the defense thereof and
Company shall not be liable to such Indemnified Parties for any legal expenses
of other
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counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Company elects not to
assume such defense, or if counsel for the Indemnified Parties advises that
there are issues that raise conflicts of interest between Parent or Company and
the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory
to them, and the Company shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that Company shall be obligated pursuant to this
paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest, (ii) the Indemnified
Parties will cooperate in the defense of any such matter, and (iii) Company
shall not be liable for any settlement effected without its prior written
consent; and provided, further, that Company shall not have any obligation
hereunder to any Indemnified Party if and when a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable Law.
(c) The Company shall continue to maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") or D&O Insurance
that is substantially comparable to the Company's existing D&O Insurance for a
period of two years after the Effective Time so long as the annual premium
therefor is not in excess of 200% of the last annual premium paid prior to the
date hereof (such last annual premium being hereinafter referred to as the
"Current Premium"); provided, however, that if the existing D&O Insurance or
substantially comparable D&O Insurance cannot be acquired during the two-year
period for not in excess of 200% of the Current Premium, then the Company will
obtain as much D&O Insurance as can be obtained for the remainder of such period
for a premium not in excess (on an annualized basis) of 200% of the Current
Premium. If the D&O Insurance is terminated prior to the end of the sixth
anniversary of the Effective Time, the Company will purchase extended reporting
coverage under D&O Insurance covering claims made during the remainder of such
period with respect to acts which occurred prior to the Effective Time.
(d) The provisions of this Section 6.11 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
6.12. OTHER ACTIONS BY THE COMPANY AND PARENT.
(a) Rights. If requested by Parent at least three business days
prior to the Expiration Date or the Effective Time, as the case may be, the
board of directors of the Company shall take all necessary action to terminate
or redeem all of the outstanding Rights and to terminate the Rights Agreement,
effective immediately prior to the Expiration Date or the Effective Time, as the
case may be.
Notwithstanding anything in this Agreement (including, without
limitation, Section 6.1(c)) to the contrary, if Merger Subsidiary shall commence
the Tender Offer,
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prior to the expiration of any other tender offer which (i) is made by any
person to acquire not less than a majority of the outstanding Common Shares
(including for all purposes of such calculation Common Shares purchased by
Parent pursuant to the Stock Option Agreement) for not less than $55.00 in cash
per Common Share and (ii) is proposed by such Person to be followed by a merger
in which such Person will acquire all of the remaining outstanding Common Shares
for cash or other consideration with a value per Common Share equal to not less
than the value per Common Share paid by such Person pursuant to such tender
offer (the value of such other consideration to be determined in the good faith
judgment of the Company's board of directors after receipt of advice from its
financial advisors), the Company shall be entitled, at its option, to amend or
modify the Rights Agreement to provide, in a manner consistent with the
amendments to the Rights Agreement made with respect to Parent and the Tender
Offer, that the Person making such tender offer shall not be deemed an Acquiring
Person (as defined in the Rights Agreement), the Distribution Date (as defined
in the Rights Agreement) shall not be deemed to occur and the Rights will not
separate from the Common Shares, as a result of such Person's consummating the
tender offer.
(b) Takeover Statute. If any Takeover Statute is or may become
applicable to the Tender Offer, the Merger or the other transactions
contemplated by this Agreement, the Stock Option Agreement or the Voting
Agreement, each of Parent and the Company and its board of directors shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement, the Stock Option Agreement or the Voting Agreement, as the case may
be, or by the Tender Offer or the Merger and otherwise act to eliminate or
minimize the effects of such statute or regulation on such transactions.
The Company and its board of directors shall be entitled, at their
election, to grant such approvals and take such actions as are necessary to
eliminate or minimize the effects of any Takeover Statute on any tender offer
with respect to which the Company has amended or modified the Rights Agreement
in accordance with the second paragraph of Section 6.12(a).
ARTICLE VII
CONDITIONS
7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
Except as provided in Section 7.4, the respective obligation of each party to
effect the Merger is subject to the satisfaction or waiver (except that a waiver
of a condition in Section 7.1(b) by Parent shall constitute a waiver by Company
as well) at or prior to the Effective Time of each of the following conditions:
(a) Stockholder Approval. The Merger shall have been duly approved
by holders of Shares constituting the Company Common Stock Requisite Vote and
shall
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have been duly approved by the sole stockholder of Merger Subsidiary in
accordance with applicable Law.
(b) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the applicable filing provided for in Section 1.3,
all notices, reports and other filings required to be made prior to the
Effective Time by the Company or Parent or any of their respective Subsidiaries
with, and all consents, registrations, approvals, permits and authorizations
required to be obtained prior to the Effective Time by the Company or Parent or
any of their respective Subsidiaries from, any Governmental Entity
(collectively, "Governmental Consents"), in connection with the execution and
delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby shall have been made or obtained (as the case
may be).
(c) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law, statute, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the Merger
(collectively, an "Order").
7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY.
Except as provided in Section 7.4, the obligations of Parent and Merger
Subsidiary to effect the Merger are also subject to the satisfaction or waiver
by Parent at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement; and the
representations and warranties of the Company set forth in this Agreement shall
be true and correct as of the Closing Date as though made on and as of the
Closing Date (except to the extent any such representation or warranty expressly
speaks as of an earlier date) except where the failure of such representations
and warranties to be so true and correct (without giving effect to any
qualifications in the representations and warranties as to "Company Material
Adverse Effect," "material" or similar qualifications) are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect,
and Parent shall have received a certificate signed on behalf of the Company by
an executive officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and Parent shall
have received a certificate signed on behalf of the Company by an executive
officer of the Company to such effect.
(c) Consents. The Company shall have obtained the consent or
approval of each Person whose consent or approval shall be required under any
Contract to which the Company or any of its Subsidiaries is a party, except
those for which the failure to obtain such consents or approvals is not,
individually or in the aggregate, reasonably likely to
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have a Company Material Adverse Effect or is not, individually or in the
aggregate, reasonably likely to prevent or to materially burden or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement; and no such consent or approval, and no Governmental Consent,
shall impose any condition or conditions relating to, or requiring changes or
restrictions in, the operations of any asset or businesses of the Company,
Parent or their respective Subsidiaries which could, in the reasonable judgment
of the board of directors of Parent, individually or in the aggregate,
materially and adversely impact the economic or business benefits to Parent and
its Subsidiaries of the transactions contemplated by this Agreement.
(d) Consulting Agreement. The Consulting Agreement entered into as
of the date hereof between the Company and Xxxxxx X. Xxxxxx shall be in full
force and effect.
7.3. CONDITIONS TO OBLIGATION OF THE COMPANY. Except as provided in
Section 7.4, the obligation of the Company to effect the Merger is also subject
to the satisfaction or waiver by the Company at or prior to the Effective Time
of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Subsidiary set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement, and
the representations and warranties of Parent and Merger Subsidiary set forth in
this Agreement shall be true and correct as of the Closing Date as though made
on and as of the Closing Date (except to the extent any such representation or
warranty expressly speaks as of an earlier date) except where the failure of
such representations and warranties to be so true and correct (without giving
effect to any qualifications in the representations and warranties as to "Parent
Material Adverse Effect," "material" or similar qualifications) are not,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect, and the Company shall have received a certificate signed on
behalf of Parent by an executive officer of Parent and on behalf of Merger
Subsidiary by an executive officer of Merger Subsidiary to such effect.
(b) Performance of Obligations of Parent and Merger Subsidiary.
Each of Parent and Merger Subsidiary shall have performed in all material
respects all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and the Company shall have received a certificate
signed on behalf of Parent by an executive officer of Parent and on behalf of
Merger Subsidiary by an executive officer of Merger Subsidiary to such effect.
(c) Consents. Parent shall have obtained the consent or approval
of each Person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any Contract to
which Parent or any of its Subsidiaries is a party, except those for which
failure to obtain such consents or approvals is not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse.
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7.4. WAIVER OF CONDITIONS FOLLOWING CONSUMMATION OF TENDER OFFER.
Parent, Merger Subsidiary and the Company acknowledge and agree that if the
Tender Offer shall be commenced and consummated, (i) the conditions to their
respective obligations to effect the Merger contained in Section 7.1(a) and (b),
Section 7.2(a), (c) and (d), and Section 7.3(a), (b), and (c) shall be deemed to
be waived in all respects, and (ii) if at least a majority of the members of the
board of directors of the Company are nominees or designees of Parent, the
condition to Parent's and Merger Subsidiary's obligations to effect the Merger
contained in Section 7.2(b) shall be deemed to be waived in all respects.
ARTICLE VIII
TERMINATION
8.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval by stockholders of the Company
referred to in Section 7.1(a), by mutual written consent of the Company and
Parent by action of their respective boards of directors.
8.2. TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement
may be terminated and the Merger may be abandoned (i) by action of the board of
directors of either Parent or the Company if the Merger shall not have been
consummated by September 30, 1999, whether such date is before or after the date
of approval by the stockholders of the Company (provided, however, that if all
conditions to Closing have been satisfied or waived on or before September 30,
1999, other than obtaining all Governmental Consents, such date shall be
extended past September 30, 1999 for up to three additional one-month periods at
the request of either Parent or the Company) (the "Termination Date"), (ii) by
action of the board of directors of Parent if the Company Common Stock Requisite
Vote shall not have been obtained at a meeting duly convened therefor or at any
adjournment or postponement thereof, (iii) by action of the board of directors
of the Company at any time if, at a meeting duly convened therefor or at any
adjournment or postponement thereof, the Company Common Stock Requisite Vote
shall not have been obtained and Section 8.3(a) is not applicable, or (iv) by
action of the board of directors of either Parent or the Company if any Order
permanently restraining, enjoining or otherwise prohibiting consummation of the
Tender Offer or the Merger shall become final and non-appealable (whether before
or after the approval by the stockholders of the Company); provided, that the
right to terminate this Agreement pursuant to clause (i) above shall not be
available to any party that has breached in any material respect its obligations
under this Agreement in any manner that shall have proximately contributed to
the occurrence of the failure of the Tender Offer or the Merger to be
consummated.
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8.3. TERMINATION BY THE COMPANY. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, by
action of the board of directors of the Company:
(a) if (i) the Company is not in material breach of any of the
terms of this Agreement, (ii) the Merger shall not have been approved by the
Company Common Stock Requisite Vote, (iii) the board of directors of the Company
authorizes the Company, subject to complying with the terms of this Agreement,
to enter into a binding written agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Parent in writing that
it intends to enter into such an agreement, attaching the most current version
of such agreement to such notice, (iv) Parent does not make, prior to five
business days after receipt of the Company's written notification of its
intention to enter into a binding agreement for a Superior Proposal (the
"Alternative Transaction Notice") an offer that the board of directors of the
Company determines, in good faith after consultation with its financial
advisors, is at least as favorable, as the Superior Proposal, taking into
account the long term prospects and interests of the Company and its
stockholders, and (v) Parent receives in immediately available funds all amounts
required to be paid pursuant to Section 8.5. Without limiting the generality of
the foregoing the Company agrees and acknowledges (x) that it cannot terminate
this Agreement pursuant to this Section 8.3(a) in order to enter into a binding
agreement referred to in clause (iii) above until five business days after
Parent's receipt of the Alternative Transaction Notice and until the payment
required by Section 8.5 has been received by Parent, and (y) to notify Parent
promptly if its intention to enter into a written agreement referred to in its
Alternative Transaction Notice shall change at any time after giving such
notification; or
(b) if there has been a material breach by Parent or Merger
Subsidiary of any representation, warranty, covenant or agreement contained in
this Agreement that is not curable or, if curable, is not cured within 20 days
after written notice of such breach is given by the Company to the party
committing such breach.
8.4 TERMINATION BY PARENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by action of
the board of directors of Parent if (a) the Company enters into a binding
agreement for, or recommends, a Superior Proposal or the board of directors of
the Company shall have withdrawn or adversely modified its approval or
recommendation of this Agreement or, after the mailing of the Proxy Statement or
the Offer Documents, failed to reconfirm its recommendation of this Agreement
within ten business days after a reasonable written request by Parent to do so,
or (b) there has been a material breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement that is not curable
or, if curable, is not cured within 20 days after written notice of such breach
is given by Parent to the party committing such breach.
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8.5. EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Agreement (other
than as set forth in Section 9.1) shall become void and of no effect with no
liability (other than the liabilities arising under the provisions, including
this Section 8.5, set forth in Section 9.1) on the part of any party hereto (or
of any of its Representatives); provided, however, except as otherwise provided
herein, no such termination shall relieve any party hereto of any liability or
damages resulting from any breach of this Agreement.
(b) In the event that this Agreement is terminated (i) by the
Company pursuant to Section 8.2(iii) or 8.3(a), or (ii) by Parent pursuant to
Section 8.2(ii) or Section 8.4(a), or (iii) by either Parent or the Company
pursuant to Section 8.2(i) (and at the time of such termination pursuant to
Section 8.2(i) any Person shall then be making or proposing an Acquisition
Proposal to the Company or any of its Subsidiaries or any of its stockholders),
then the Company shall, not later than immediately prior to the time of such
termination or not later than immediately prior to the time of entering into an
agreement concerning a transaction that constitutes an Acquisition Proposal, use
reasonable efforts to cause the Person making the Acquisition Proposal to pay
Parent a termination fee of $85,000,000 plus an amount equal to Parent's charges
and expenses incurred in connection with the transactions contemplated by this
Agreement ("Expenses"), up to a maximum of $5,000,000, except if Parent
terminates this Agreement pursuant to Section 8.2(ii) or if Company terminates
this Agreement pursuant to Section 8.2(iii), in which case the Company shall
make the foregoing payments. In every case, such payments shall be made by wire
transfer of same day funds. In order to facilitate the timely making of the
foregoing payments, in the event that Parent elects to terminate this Agreement,
Parent shall notify the Company thereof not later than 10:00 A.M. (New York City
time) on the business day immediately preceding the date of such termination. In
the event that Parent fails to provide such advance notice of its election to
terminate this Agreement, the foregoing payments shall be made not later than
12:00 P.M. (New York City time) on the business day immediately following the
date of such termination. The Company acknowledges that the agreements contained
in this Section 8.5(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent and Merger Subsidiary
would not have entered into this Agreement; accordingly, if the Company fails to
cause the Person making the Acquisition Proposal to pay to Parent promptly all
amounts due pursuant to this Section 8.5(b) or Section 8.5(c), then the Company
shall be obligated to pay such amounts to Parent and, if in order to obtain such
payments, Parent or Merger Subsidiary commences a suit that results in a
judgment against the Company for the amounts set forth in this paragraph (b) or
paragraph 8.5(c), the Company shall pay to Parent or Merger Subsidiary its costs
and expenses (including attorneys' fees) in connection with such suit, together
with interest from the date of termination of this Agreement on the amounts owed
at the prime rate of The Chase Manhattan Bank, in effect from time to time
during such period plus two percent.
(c) In the event this Agreement is terminated by the Company or
Parent pursuant to Section 8.2(i) and at the time of such termination no Person
is then making or proposing an Acquisition Proposal to the Company or any of its
Subsidiaries or any of its
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stockholders, then the Company shall promptly, but in no event later than two
business days after Parent shall have requested payment of its Expenses, pay to
Parent the amount of such Expenses up to a maximum of $5,000,000 and, if within
18 months of such termination, the Company enters into an agreement concerning a
transaction that constitutes an Acquisition Proposal, the Company at the time of
entering into such agreement, shall cause the Person making the Acquisition
Proposal to pay to Parent the termination fee of $85,000,000, in each case
payable by wire transfer of same day funds.
(d) Parent will not, and will not permit or cause any of its
Subsidiaries or any of its or any such Subsidiary's officers or directors to,
and shall direct its and its Subsidiaries' Representatives not to, directly or
indirectly, initiate, solicit, encourage, participate in or otherwise facilitate
any discussion or negotiation with any Person that has made, or to Parent's
knowledge is contemplating making, an Acquisition Proposal, with respect to any
matter pertaining to the Company or its Subsidiaries or such Acquisition
Proposal or any termination or other similar fee or payment referenced in this
Agreement.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1. SURVIVAL. This Article IX and the agreements of the Company,
Parent and Merger Subsidiary contained in Sections 6.9 (Benefits) and 6.11
(Indemnification; Directors' and Officers' Insurance) shall survive the
consummation of the Merger. This Article IX, the agreements of the Company,
Parent and Merger Subsidiary contained in Section 6.6 (Access; Technology
Conversion), insofar as it relates to the Company's and Parent's respective
confidentiality obligations, Section 6.10 (Expenses) and Section 8.5 (Effect of
Termination and Abandonment) shall survive the termination of this Agreement.
All other representations, warranties, covenants and agreements in this
Agreement shall not survive the consummation of the Merger or the termination of
this Agreement.
9.2. MODIFICATION OR AMENDMENT. Subject to the provisions of
applicable Law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable Law.
9.4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
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9.5. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED EXPRESSLY OR OTHERWISE THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
9.6. NOTICES. Any notice, request, instruction or other document to
be given hereunder by any party to the others shall be in writing and shall be
deemed delivered (i) on the date personally delivered, (ii) one business day
after the date delivered by facsimile transmission with a confirmation copy sent
by overnight courier or first-class mail, or (iii) three business days after the
date sent by registered or certified mail, postage prepaid:
if to Parent or Merger Subsidiary:
Fortis, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Senior Vice President
and General Counsel
fax: (000) 000-0000
phone: (000) 000-0000
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with a copy to (which shall not constitute notice):
B. Xxxxxx Xxxx, Xx., Esq.
Xxxxxx & Bird LLP
0000 X. Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
fax: (000) 000-0000
phone: (000) 000-0000
if to the Company:
American Bankers Insurance Group, Inc.
00000 Xxxxx Xxxxx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: Chief Executive Officer
fax: (000) 000-0000
phone: (000) 000-0000
with a copy to (which shall not constitute notice):
Xxxxxxxxx Xxxxxxxxx, Esq.
Jordan Xxxx Xxxxx Xxxxxxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
fax: (000) 000-0000
phone: (000) 000-0000
and
Xxxxxxxx X. Xxxxxxxx, Esq.
Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
fax: (000) 000-0000
phone: (000) 000-0000
or to such other persons or addresses as may be designated in
writing by the party to receive such notice as provided above.
9.7. ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. This Agreement
(including any exhibits and annexes hereto), the Company Disclosure Letter, the
Parent Disclosure Letter, and the Stock Option Agreement, and the
Confidentiality Agreement between Parent and the Company dated October 23, 1998,
as amended February 11, 1999 (the "Confidentiality Agreement"), constitute the
entire agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof.
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9.8. NO THIRD PARTY BENEFICIARIES. Except as provided in Section
6.11 (Indemnification; Directors' and Officers' Insurance),
this Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
9.9 OBLIGATIONS OF PARENT AND OF THE COMPANY. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
the Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
9.10. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. INTERPRETATION. The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section, Exhibit or Annex, such
reference shall be to a Section of or Exhibit or Annex to this Agreement unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." No uncertainty or ambiguity herein shall be construed or
resolved against any party, whether under any rule of construction or otherwise.
No party to this Agreement shall be considered the draftsman. The parties
acknowledge and agree that this Agreement has been reviewed, negotiated, and
accepted by all parties and their attorneys and shall be construed and
interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.
9.12. ASSIGNMENT. This Agreement shall not be assignable by any
party hereto by operation of Law or otherwise, without the prior written consent
of the other parties; provided, however, that Parent may designate, by written
notice to the Company, another wholly owned direct or indirect Subsidiary to be
a Constituent Corporation in lieu of Merger Subsidiary, in which event all
references herein to Merger Subsidiary shall be deemed references to such other
Subsidiary. Subject to the preceding sentence, this
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Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
9.13. ALTERNATIVE PREFERRED STOCK ARRANGEMENT. Notwithstanding
anything to the contrary in this Agreement, if the Company Preferred Stock
Requisite Vote is not obtained at the Preferred Stockholders Meeting, or Parent
reasonably determines that the Company Preferred Stock Requisite Vote is not
likely to be obtained as contemplated by this Agreement, Parent shall, subject
to the Company Common Stock Requisite Vote and the other terms and conditions of
this Agreement, merge Merger Subsidiary with and into the Company as provided
hereinbefore but the Preferred Shares shall remain outstanding after the Merger.
In connection with the alternative for the Preferred Shares contemplated by the
prior sentence, the Company shall take all actions reasonably requested by
Parent and shall promptly amend this Agreement, as Parent may reasonably deem
necessary or appropriate to provide, among other matters, that the Preferred
Shares shall remain outstanding after the Merger pursuant to the same terms and
conditions as are in effect on the date hereof (except that each Preferred Share
shall be convertible as provided in the terms of the Preferred Shares set forth
in the Company's Governing Documents).
[Signatures on Next Page]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
AMERICAN BANKERS INSURANCE GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------------
Title: President, Chief Executive Officer
--------------------------------------
and Vice Chairman of the Board
FORTIS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: Secretary / Senior VP
--------------------------------------
GREENLAND ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
---------------------------------------
Title: Secretary / Senior VP
--------------------------------------
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ANNEX I
CERTAIN CONDITIONS OF THE TENDER OFFER. The capitalized terms used in
this Annex I have the meanings set forth in the attached Agreement.
Notwithstanding any other provision of the Tender Offer, Merger Subsidiary shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Merger Subsidiary's obligation to pay for or return tendered Shares promptly
after termination or withdrawal of the Tender Offer), pay for, or may delay the
acceptance for payment of or payment for, any tendered Shares, or may, in its
sole discretion, terminate or amend the Tender Offer as to any Shares not then
paid for if (a) prior to the Expiration Date (i) there shall not have been
tendered and not withdrawn at least that number of Common Shares that would
represent at least a majority of all outstanding Common Shares on the date of
purchase (excluding for all purposes in calculating such majority any
outstanding Common Shares owned by Parent or Merger Subsidiary pursuant to the
exercise of Parent's rights under the Stock Option Agreement) (the "Minimum
Tender Condition"), (ii) any waiting period applicable to the consummation of
the Tender Offer and the Merger under the HSR Act shall not have expired or been
terminated, (iii) other than the filing provided for in Section 1.3 of the
Agreement, any notices, reports and other filings required to be made prior to
the Effective Time by the Company or Parent or any of their respective
Subsidiaries with, and any consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries from, any Governmental
Entity, in connection with the execution and delivery of the Agreement and the
consummation of the Tender Offer and the Merger and the other transactions
contemplated by the Agreement shall not have been made or obtained (as the case
may be), or (iv) the Company shall not have obtained the consent or approval of
any Person whose consent or approval shall be required under any Contract to
which the Company or any of its Subsidiaries is a party, except those for which
the failure to obtain such consents or approvals is not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or is
not, individually or in the aggregate, reasonably likely to prevent or to
materially burden or materially impair the ability of the Company to consummate
the transactions contemplated by the Agreement; or any such consent or approval,
or any Governmental Consent, imposes any condition or conditions relating to, or
requires changes or restrictions in, the operations of any asset or businesses
of the Company, Parent or their respective Subsidiaries which could, in the
reasonable judgment of the board of directors of Parent, individually or in the
aggregate, materially and adversely impact the economic or business benefits to
Parent and its Subsidiaries of the transactions contemplated by the Agreement;
or (b) at or before the time of payment for any of such Shares (whether or not
any Shares have theretofore been accepted for payment), any of the following
events shall occur:
(i) any court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law, statute, ordinance, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and restrains, enjoins or
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otherwise prohibits consummation of the Tender Offer or the Merger, or
which makes the acceptance for payment of, or payment for, any Shares
in the Tender Offer illegal;
(ii) the representations and warranties of the Company set
forth in the Agreement shall not be true and correct in all material
respects as of the date of the Agreement; or such representations and
warranties shall not be true and correct as of the Expiration Date as
though made on and as of the Expiration Date (except to the extent any
such representation or warranty expressly speaks as of an earlier date)
except where the failure of such representations and warranties to be
so true and correct (without giving effect to any qualifications in the
representations and warranties as to "Company Material Adverse Effect,"
"material" or similar qualifications set forth in the Agreement) are
not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect, or Parent shall not have received a
certificate on the Expiration Date signed on behalf of the Company by
an executive officer of the Company to such effect;
(iii) the Company shall not have performed in all material
respects all obligations required to be performed by it under the
Agreement at or prior to the Expiration Date; or
(iv) the Agreement shall have been terminated in
accordance with its terms prior to the Expiration Date; or Parent,
Merger Subsidiary and the Company shall have otherwise agreed that
Merger Subsidiary may amend, terminate or withdraw the Tender Offer;
which, in the reasonable judgment of Parent and Merger Subsidiary, in any such
case, and regardless of the circumstances (including any action or inaction by
Parent or Merger Subsidiary) giving rise to any such conditions, makes it
inadvisable to proceed with the Tender Offer and/or with such acceptance for
payment of or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may be asserted by Parent or Merger Subsidiary regardless of the
circumstances (including any action or inaction by Parent or Merger Subsidiary)
giving rise to such condition or may be waived by Parent or Merger Subsidiary,
by express and specific action to that effect, in whole or in part at any time
and from time to time in their sole discretion. Any determination by Parent and
Merger Subsidiary concerning any event described in this Annex I shall be final
and binding upon all holders of Shares. The failure by Merger Subsidiary at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
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ANNEX II
INDEX OF DEFINED TERMS
Section
Term Containing Definition
---- ---------------------
Acquisition Proposal...................................................6.2
Agreement..............................................................1st Paragraph
Alternative Transaction Notice.........................................8.3(a)
Articles of Merger.....................................................1.3
Audit Date.............................................................5.1(e)(i)
Bankruptcy and Equity Exception........................................5.1(c)(i)
By-Laws................................................................2.2
Certificate............................................................4.5(b)
Charter................................................................2.1
Closing................................................................1.2
Closing Date...........................................................1.2
Code...................................................................5.1(h)(ii)
Common Share...........................................................4.1(b)
Common Merger Consideration............................................4.1(b)
Common Stockholders Meeting............................................6.4(a)
Company................................................................1st Paragraph
Company Actuarial Analyses.............................................5.1(r)(iii)
Company Common Stock Requisite Vote....................................5.1(c)(i)
Company Disclosure Letter..............................................5.1
Company Insurance Contracts............................................5.1(r)(i)
Company Insurance Subsidiaries.........................................5.1(a)
Company Intellectual Property Rights...................................5.1(n)(ii)(B)
Company Material Adverse Effect........................................5.1(a)
Company Option.........................................................5.1(b)
Company Preferred Stock Requisite Vote.................................5.1(c)(i)
Company Reports........................................................5.1(e)(i)
Company Requisite Vote.................................................5.1(c)(i)
Company SAP Statements.................................................5.1(e)(ii)
Company Stock Plans....................................................5.1(b)
Compensation and Benefit Plans.........................................5.1(h)(i)
Confidentiality Agreement..............................................9.7
Constituent Corporations...............................................1st Paragraph
Contract...............................................................5.1(d)(ii)
Costs..................................................................6.11(a)
Current Premium........................................................6.11(c)
D&O Insurance..........................................................6.11(c)
Effective Time.........................................................1.3
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Section
Term Containing Definition
---- ---------------------
Environmental Law......................................................5.1(k)
ERISA..................................................................5.1(h)(ii)
ERISA Affiliate........................................................5.1(h)(iii)
Exchange Act...........................................................1.5(a)
Exchange Agent.........................................................4.5(a)
Exchange Fund..........................................................4.5(a)
Excluded Common Shares.................................................4.1(b)
Excluded Preferred Shares..............................................4.1(c)
Excluded Shares........................................................4.1(c)
Exercisable Option.....................................................4.4(a)(i)
Exercisable Option Holder..............................................4.4(a)(i)(2)
Exercise Price.........................................................4.4(b)(i)(1)
Expenses...............................................................8.5(b)
Expiration Date........................................................1.5(b)
Extended Expiration Date...............................................1.5(b)
FBCA...................................................................1.1
Foundation.............................................................6.9(b)
GAAP...................................................................5.1(e)(i)
Governing Documents....................................................5.1(a)
Governmental Consents..................................................7.1(b)
Governmental Entity....................................................5.1(d)(i)
Hazardous Substance....................................................5.1(k)
HSR Act................................................................5.1(d)(i)
Indemnified Parties....................................................6.11(a)
Insurance Laws.........................................................5.1(i)
IRS....................................................................5.1(h)(ii)
knowledge..............................................................5.1(e)(ii)
Laws...................................................................5.1(i)
Merger.................................................................1st Recital
Merger Consideration...................................................4.1(c)
Merger Subsidiary......................................................1st Paragraph
Merger Subsidiary Common Stock.........................................5.2(a)
Minimum Tender Condition...............................................Annex I
NYSE...................................................................5.1(d)
1940 Act...............................................................5.1(t)
1998 Company Option....................................................4.4(a)(i)
1998 Restricted Share..................................................4.4(b)(i)
Offer Documents........................................................1.5(a)
Order..................................................................7.1(c)
Parent.................................................................1st Paragraph
Parent Companies.......................................................4.1(b)
Parent Material Adverse Effect.........................................5.2(b)
Pension Plan...........................................................5.1(h)(ii)
Per Share Purchase Price...............................................4.1(b)
Person.................................................................5.1(b)
Pre-1998 Company Option................................................4.4(a)(iii)
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Section
Term Containing Definition
---- ---------------------
Pre-1998 Exercisable Option............................................4.4(a)(iii)
Pre-1998 Primary Share.................................................4.4(a)(iii)(1)
Pre-1998 Restricted Option Share.......................................4.4(a)(iii)(2)
Pre-1998 Restricted Share..............................................4.4(b)(ii)
Preferred Share........................................................4.1(c)
Preferred Merger Consideration.........................................4.1(c)
Preferred Stockholders Meeting.........................................6.4(a)
Primary Share..........................................................4.4(a)(i)(1)
Proxy Statement........................................................6.3
Remainder..............................................................4.4(b)(i)(2)
Representatives........................................................6.6(a)
Restricted Option Share................................................4.4(a)(i)(2)
Restricted Option Shares Amount........................................4.4(a)(i)(2)
Restricted Share.......................................................5.1(b)
Restricted Share Holder................................................4.4(b)(i)(1)
Rights.................................................................5.1(p)
Rights Agreement.......................................................5.1(b)
SAP....................................................................5.1(e)(ii)
Schedule 14D-1.........................................................1.5(a)
Schedule 14D-9.........................................................1.5(c)
SEC....................................................................5.1(e)(i)
Secretary..............................................................1.3
Securities Act.........................................................5.1(d)
Senior Management Option...............................................4.4(a)(ii)
Shares.................................................................4.1(c)
Stock Option Agreement.................................................2nd Recital
Subsidiary.............................................................5.1(a)
Stockholders Meetings..................................................6.4(a)
Superior Proposal......................................................6.2
Surviving Corporation..................................................1.1
Takeover Statute.......................................................5.1(j)
Tax....................................................................5.1(l)
Tax Return.............................................................5.1(l)
Taxing Authority.......................................................5.1(l)
Tender Offer...........................................................1.4
Termination Date.......................................................8.2
Third-Party Intellectual Property Rights...............................5.1(n)(ii)(A)
Voting Agreement.......................................................3rd Recital
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[EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED]
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