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EXHIBIT 10.1
CONFORMED COPY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 5, 1999 (the "Agreement"),
between FORTIS, INC., a Nevada corporation (the "Grantee"), and AMERICAN
BANKERS INSURANCE GROUP, INC., a Florida corporation (the "Grantor").
WHEREAS, the Grantee, Greenland Acquisition Corp., a Florida
corporation and a wholly owned subsidiary of the Grantee ("Merger Subsidiary"),
and the Grantor are entering into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), which provides, among other things,
for the merger of Merger Subsidiary with and into the Grantor (the "Merger");
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, the Grantee and Merger Subsidiary have requested that the Grantor
grant to the Grantee an option to purchase up to 8,406,559 shares of Common
Stock, par value $1.00 per share, of the Grantor (the "Common Stock"), upon the
terms and subject to the conditions hereof; and
WHEREAS, in order to induce the Grantee and Merger Subsidiary to enter
into the Merger Agreement, the Grantor is willing to grant the Grantee the
requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments; Payment of Spread.
(a) Contemporaneously herewith the Grantee, Merger
Subsidiary and the Grantor are entering into the Merger Agreement. Subject to
the other terms and conditions set forth herein, the Grantor hereby grants to
the Grantee an irrevocable option (the "Option") to purchase up to 8,406,559
shares of Common Stock (the "Shares") at a cash purchase price equal to $55.00
per share (the "Purchase Price"). The Option may be exercised by the Grantee,
in whole or in part, at any time, or from time to time, following the
occurrence of one of the events set forth in Section 2(d) hereof, and prior to
the termination of the Option in accordance with the terms of this Agreement.
(b) In the event the Grantee wishes to exercise the
Option, the Grantee shall send a written notice to the Grantor (the "Stock
Exercise Notice") specifying a date (subject to the HSR Act (as defined below)
and applicable insurance regulatory approvals) not later than 10 business days
and not earlier than three business days following the date such notice is
given for the closing of such purchase. In the event of any change in the
number of issued and outstanding shares of Common Stock by reason of any stock
dividend, stock split, split-up, recapitalization, merger or other change in
the corporate or capital structure of the Grantor, the number of Shares subject
to this Option
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and the purchase price per Share shall be appropriately adjusted to restore the
Grantee to its rights hereunder, including its right to purchase Shares
representing 19.9% of the capital stock of the Grantor entitled to vote
generally for the election of the directors of the Grantor which is issued and
outstanding immediately prior to the exercise of the Option at an aggregate
purchase price equal to the Purchase Price multiplied by 8,406,559.
(c) If at any time the Option is then exercisable
pursuant to the terms of Section l(a) hereof, the Grantee may elect, in lieu of
exercising the option to purchase Shares provided in Section l(a) hereof, to
send a written notice to the Grantor (the "Cash Exercise Notice") specifying a
date not later than 20 business days and not earlier than 10 business days
following the date such notice is given on which date the Grantor shall pay to
the Grantee an amount in cash equal to the Spread (as hereinafter defined)
multiplied by all or such portion of the Shares subject to the Option as
Grantee shall specify. As used herein "Spread" shall mean the excess, if any,
over the Purchase Price of the higher of (x) if applicable, the highest price
per share of Common Stock (including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid or proposed to be paid by any person
pursuant to one of the transactions enumerated in Section 2(d) hereof (the
"Alternative Purchase Price") or (y) the closing price of the shares of Common
Stock on the NYSE Composite Tape on the last trading day immediately prior to
the date of the Cash Exercise Notice (the "Closing Price") or, if Section l(d)
is applicable, on the last trading day immediately prior to termination of the
Merger Agreement. If, in the case of clause (x) above, the Alternative Purchase
Price can be calculated by reference to an all cash amount paid or proposed to
be paid for any shares of Common Stock outstanding, such cash amount shall be
deemed to be the Alternative Purchase Price; if, in the case of clause (x)
above, no shares of Common Stock will be purchased for all cash, the
Alternative Purchase Price shall be the sum of (i) the fixed cash amount, if
any, included in the Alternative Purchase Price plus (ii) the fair market value
of such property other than cash included in the Alternative Purchase Price. If
such other property consists of securities with an existing public trading
market, the average of the closing prices (or the average of the closing bid
and asked prices if closing prices are unavailable) for such securities in
their principal public trading market on the five trading days ending five days
prior to the date of the Cash Exercise Notice or, if Section l(d) is
applicable, ending on the last trading day immediately prior to termination of
the Merger Agreement, shall be used to calculate the fair market value of such
property. If such other property consists of something other than cash or
securities with an existing public trading market and, as of the payment date
for the Spread, agreement on the value of such other property has not been
reached, the Alternative Purchase Price shall be deemed to equal the Closing
Price. Upon exercise of its right to receive cash pursuant to this Section
1(c), the obligations of the Grantor to deliver Shares pursuant to Section 3
shall be terminated with respect to such number of Shares for which the Grantee
shall have elected to be paid the Spread.
(d) Notwithstanding anything in the foregoing to the
contrary, it is agreed that if after the delivery by Grantee of the Stock
Exercise Notice but prior to the receipt of all regulatory approvals required
for the consummation of the purchase of the Shares subject to such Stock
Exercise Notice, Grantor or Grantee intends to terminate the
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Merger Agreement pursuant to the terms thereof, the party intending to so
terminate the Merger Agreement shall provide at least one full business days'
notice of such intention to the other party and, if requested to do so by
Grantee, Grantor shall take such steps as may be necessary so as to pay to
Grantee, not later than immediately prior to such termination, cash by wire
transfer in immediately available funds in an aggregate amount equal to the
Spread (as defined in Section l(c) above) multiplied by the number of Shares
subject to the Stock Exercise Notice (subject to Section 20 hereof).
2. Conditions to Delivery of Shares. The Grantor's
obligation to deliver Shares upon exercise of the Option is subject only to the
conditions that:
(a) No preliminary or permanent injunction or other
order issued by any federal or state court of competent jurisdiction in the
United States prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act") shall have expired or been terminated; and
(c) Any approval required to be obtained prior to the
delivery of the Shares under the insurance laws of any state or foreign
jurisdiction shall have been obtained and be in full force and effect; and
(d) (i) any person (other than Grantee or any of its
subsidiaries) shall have commenced (as such term is defined in Rule 14d-2 under
the Securities Exchange Act of 1934 (the "Exchange Act")) a tender offer, or
shall have filed a registration statement under the Securities Act of 1933 (the
"Securities Act") with respect to an exchange offer, to purchase any shares of
Common Stock such that, upon consummation of such offer, such person or a
"group" (as such term is defined under the Exchange Act) of which such person
is a member shall have acquired beneficial ownership (as such term is defined
in rule 13d-3 of the Exchange Act), or the right to acquire beneficial
ownership, of 15 percent or more of the then outstanding Common Stock; (ii) any
person (other than Grantee or any of its subsidiaries) shall have publicly
announced or delivered to Grantor a proposal, or disclosed publicly or to
Grantor an intention to make a proposal, to purchase 15 percent or more of the
assets or any equity securities of, or to engage in a merger, reorganization,
tender offer, share exchange, consolidation or similar transaction involving
the Grantor or any of its subsidiaries (an "Acquisition Transaction"); (iii)
Grantor or any of its subsidiaries shall have authorized, recommended, proposed
or publicly announced an intention to authorize, recommend or propose, or
entered into, an agreement, including without limitation, an agreement in
principle, with any person (other than Grantee or any of its subsidiaries) to
effect or provide for an Acquisition Transaction; (iv) any person shall solicit
proxies or consents or announce a bona fide intention to solicit proxies or
consents from Grantor's stockholders (x) relating to directors, (y) in
opposition to the Merger, the Merger Agreement or any related transactions or
(z) relating to an Acquisition Transaction (other than solicitations of
stockholders seeking approval of the Merger, the Merger Agreement or any
related transactions); or (v) any person (other than Grantee or any of its
subsidiaries) shall have
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acquired beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act) or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, shares
of Common Stock (other than trust account shares) aggregating 15 percent or
more of the then outstanding Common Stock. As used in this Agreement, "person"
shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
3. The Closing.
(a) Except as otherwise provided in Section l(d), any
closing hereunder shall take place on the date specified by the Grantee in its
Stock Exercise Notice or Cash Exercise Notice, as the case may be, at 9:00
A.M., local time, at the offices of Xxxxxx & Bird LLP, 0000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx, or if the conditions set forth in Section 2(a), (b)
or (c) have not then been satisfied, on the second business day following the
satisfaction of such conditions, or at such other time and place as the parties
hereto may agree (the "Closing Date"). On the Closing Date, (i) in the event of
a closing pursuant to Section l(b) hereof, the Grantor will deliver to the
Grantee a certificate or certificates, representing the Shares in the
denominations designated by the Grantee in its Stock Exercise Notice and the
Grantee will purchase such Shares from the Grantor at the price per Share equal
to the Purchase Price, or (ii) in the event of a closing pursuant to Section
l(c) or Section l(d) hereof, as the case may be, the Grantor will deliver to
the Grantee cash in an amount determined pursuant to Section l(c) or Section
l(d) hereof, as the case may be. Except as otherwise provided in Section l(d),
any payment made by the Grantee to the Grantor, or by the Grantor to the
Grantee, pursuant to this Agreement shall be made by certified or official bank
check or by wire transfer of federal funds to a bank designated by the party
receiving such funds.
(b) The certificates representing the Shares shall bear
an appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
4. Representations and Warranties of the Grantor. The Grantor
represents and warrants to the Grantee that:
(a) Grantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and has
the requisite corporate power and authority to enter into and perform this
Agreement;
(b) the execution and delivery of this Agreement by the
Grantor and the consummation by it of the transactions contemplated hereby have
been duly authorized by the Board of Directors of the Grantor and this
Agreement has been duly executed and delivered by a duly authorized officer of
the Grantor and constitutes a valid and binding obligation of the Grantor,
enforceable in accordance with its 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;
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(c) the Grantor has taken all necessary corporate action
to authorize and reserve the Shares issuable upon exercise of the Option and
the Shares, when issued and delivered by the Grantor upon exercise of the
Option and paid for by Grantee as contemplated hereby will be duly authorized,
validly issued, fully paid and non-assessable and free of preemptive rights;
(d) except as otherwise required by the HSR Act and
applicable insurance laws, the execution and delivery of this Agreement by the
Grantor and the consummation by it of the transactions contemplated hereby do
not require the consent, waiver, approval or authorization of or any filing
with any person or public authority and will not violate, result in a breach of
or the acceleration of any obligation under, or constitute a default under, any
provision of Grantor's charter or by-laws, or any material indenture, mortgage,
lien, lease, agreement, contract, instrument, order, law, rule, regulation,
judgment, ordinance, or decree, or restriction by which the Grantor or any of
its subsidiaries or any of their respective properties or assets is bound;
(e) no "fair price", "moratorium", "control share
acquisition," "interested shareholder" or other form of antitakeover statute or
regulation, including without limitation, Sections 607.0901 or 607.0902 of the
Florida Business Corporation Act, or similar provision contained in the charter
or by-laws of Grantor, including without limitation, Article VIII of Grantor's
Third Amended and Restated Articles of Incorporation, is or shall be applicable
to the acquisition of Shares pursuant to this Agreement; and
(f) the Grantor has taken all corporate action necessary
so that any Shares acquired pursuant to this Agreement shall not be counted for
purposes of determining the number of shares of Common Stock beneficially owned
by the Grantee or any of its Affiliates or Associates (as defined in the Rights
Agreement) pursuant to the Rights Agreement, dated as of February 19, 1998,
between the Grantor and ChaseMellon Shareholder Services, LLC, as Rights Agent
(the "Rights Agreement").
5. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that:
(a) the execution and delivery of this Agreement by the
Grantee and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and constitutes
a valid and binding obligation of Grantee; and
(b) the Grantee is acquiring the Option and, if and when
it exercises the Option, will be acquiring the Shares issuable upon
the exercise thereof for its own account and not with a view to
distribution or resale in any manner which would be in violation of
the Securities Act.
6. Listing of Shares; Filings; Governmental Consents. Subject to
applicable law and the rules and regulations of the New York Stock Exchange,
Inc. (the "NYSE"),
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the Grantor will promptly file an application to list the Shares on the NYSE
and will use its reasonable best efforts to obtain approval of such listing and
to effect all necessary filings by the Grantor under the HSR Act and the
applicable insurance laws of each state and foreign jurisdiction; provided,
however, that if the Grantor is unable to effect such listing on the NYSE by
the Closing Date, the Grantor will nevertheless be obligated to deliver the
Shares on the Closing Date. Each of the parties hereto will use its reasonable
best efforts to obtain consents of all third parties and governmental
authorities, if any, necessary for the consummation of the transactions
contemplated.
7. Repurchase of Shares. If by the first anniversary of the date
the Merger Agreement was terminated (the "Merger Termination Date") pursuant to
the terms thereof, neither the Grantee nor any other Person has acquired more
than fifty percent (excluding the Shares) of the shares of outstanding Common
Stock, then the Grantor has the right to purchase (the "Repurchase Right") all,
but not less than all, of the Shares at the greater of (i) the Purchase Price
or (ii) the average of the last sales prices for shares of Common Stock on the
five trading days ending five days prior to the date the Grantor gives written
notice of its intention to exercise the Repurchase Right. If the Grantor does
not exercise the Repurchase Right within thirty days following the end of the
one year period after the Merger Termination Date, the Repurchase Right lapses.
In the event the Grantor wishes to exercise the Repurchase Right, the Grantor
shall send a written notice to the Grantee specifying a date (not later than 20
business days and not earlier than 10 business days following the date such
notice is given) for the closing of such purchase.
8. Sale of Shares. At any time prior to the first anniversary of
the Merger Termination Date, the Grantee shall have the right to sell (the
"Sale Right") to the Grantor all, but not less than all, of the Shares at the
greater of (i) the Purchase Price, or (ii) the average of the last sales prices
for shares of Common Stock on the five trading days ending five days prior to
the date the Grantee gives written notice of its intention to exercise the Sale
Right. If the Grantee does not exercise the Sale Right prior to the first
anniversary of the Merger Termination Date, the Sale Right terminates. In the
event the Grantee wishes to exercise the Sale Right, the Grantee shall send a
written notice to the Grantor specifying a date (not later than 20 business
days and not earlier than 10 business days following the date such notice is
given) for the closing of such sale.
9. Registration Rights.
(a) In the event that the Grantee shall desire to sell any of the
Shares within three years after the purchase of such Shares pursuant hereto,
and such sale requires, in the opinion of counsel to the Grantee, which opinion
shall be reasonably satisfactory to the Grantor and its counsel, registration
of such Shares under the Securities Act, the Grantor will cooperate with the
Grantee and any underwriters in registering such Shares for resale, including,
without limitation, promptly filing a registration statement which complies
with the requirements of applicable federal and state securities laws, and
entering into an underwriting agreement with such underwriters upon such terms
and conditions as are customarily contained in underwriting agreements with
respect to secondary distributions; provided that the Grantor shall not be
required to have declared effective more than two registration statements
hereunder and shall be entitled to delay
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the filing or effectiveness of any registration statement for up to 60 days if
the offering would, in the judgment of the Board of Directors of the Grantor,
require premature disclosure of any material corporate development or material
transaction involving the Grantor or interfere with any previously planned
securities offering by the Company.
(b) If the Common Stock is registered pursuant to the provisions
of this Section 9, the Grantor agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Shares covered thereby in such
numbers as the Grantee may from time to time reasonably request, and (ii) if
any event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may be
necessary to keep available for at least 45 days a prospectus covering the
Common Stock meeting the requirements of such securities laws, and to furnish
the Grantee such numbers of copies of the registration statement and prospectus
as amended or supplemented as may reasonably be requested. The Grantor shall
bear the cost of the registration, including, but not limited to, all
registration and filing fees, printing expenses, and fees and disbursements of
counsel and accountants for the Grantor, except that the Grantee shall pay the
fees and disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by the Grantee. The
Grantor shall indemnify and hold harmless (i) Grantee, its affiliates and its
officers and directors, and (ii) each underwriter and each person who controls
any underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (collectively, the "Underwriters") ((i) and
(ii) being referred to as "Indemnified Parties") against any losses, claims,
damages, liabilities or expenses, to which the Indemnified Parties may become
subject, insofar as such losses, claims, damages, liabilities (or actions in
respect thereof) and expenses arise out of or are based upon any untrue
statement or alleged untrue statement, of any material fact contained or
incorporated by reference in any registration statement filed pursuant to this
paragraph, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that the Grantor
will not be liable in any such case to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any such documents in reliance upon and in conformity with written information
furnished to the Grantor by the Indemnified Parties expressly for use or
incorporation by reference therein.
(c) The Grantee and the Underwriters shall indemnify and hold
harmless the Grantor, its affiliates and its officers and directors against any
losses, claims, damages, liabilities or expenses to which the Grantor, its
affiliates and its officers and directors may become subject, insofar as such
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement of any material
fact contained or incorporated by reference in any registration statement filed
pursuant to this paragraph, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission
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was made in reliance upon and in conformity with written information furnished
to the Grantor by the Grantee or the Underwriters, as applicable, specifically
for use or incorporation by reference therein.
10. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise specifically
provided herein.
11. Specific Performance. The Grantor acknowledges that if the
Grantor fails to perform any of its obligations under this Agreement immediate
and irreparable harm or injury will be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees that
the Grantee shall have the right, in addition to any other rights it may have,
to specific performance of this Agreement. Accordingly, if the Grantee should
institute an action or proceeding seeking specific enforcement of the
provisions hereof, the Grantor hereby waives the claim or defense that the
Grantee has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law
exists. The Grantor further agrees to waive any requirements for the securing
or posting of any bond in connection with obtaining any such equitable relief.
12. Notice. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given and made if in
writing and if served by personal delivery upon the party for whom it is
intended or delivered by registered or certified mail, return receipt
requested, or if sent by facsimile transmission, upon receipt of oral
confirmation that such transmission has been received, to the person at the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
If to the Grantee:
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
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
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If to the Grantor:
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
13. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties named herein and their respective
successors and assigns; provided, however, that such successor in interest or
assigns shall agree to be bound by the provisions of this Agreement. Nothing in
this Agreement, express or implied, is intended to confer upon any person,
other than the Grantor or the Grantee or their successors or assigns, any
rights or remedies under or by reason of this Agreement.
14. Entire Agreement; Amendments. This Agreement, together with
the Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
15. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Grantee may assign its rights and
obligations hereunder to any of its direct or indirect wholly owned
subsidiaries (including Merger Subsidiary) or direct or
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indirect parent companies, but no such transfer shall relieve the Grantee of
its obligations hereunder if such transferee does not perform such obligations.
16. Headings. The section headings herein are for convenience
only and shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida (regardless of
the laws that might otherwise govern under applicable Florida principles of
conflicts of law).
19. Termination. The right to exercise the Option granted
pursuant to this Agreement shall terminate at the earlier of (i) the Effective
Time (as defined in the Merger Agreement); (ii) 90 days after the Merger
Termination Date (the date referred to in clause (ii) being hereinafter
referred to as the "Option Termination Date"), or (iii) 18 months after the
date hereof; provided that, if the Option cannot be exercised or the Shares
cannot be delivered to Grantee upon such exercise because the conditions set
forth in Section 2(a), (b) or (c) hereof have not yet been satisfied, the
Option Termination Date shall be extended until thirty days after such
impediment to exercise or delivery has been removed.
All representations and warranties contained in this Agreement shall
survive delivery of and payment for the Shares.
20. Profit Limitation. Notwithstanding any other provision of
this Agreement, in no event shall the Grantee's Total Profit (as hereinafter
defined) exceed $100 million and, if it otherwise would exceed such amount, the
Grantee, at its sole election, shall either (a) reduce the number of shares of
Common Stock required to be delivered by Grantor pursuant to the Stock Exercise
Notice, (b) deliver to the Grantor for cancellation Shares previously purchased
by Grantee, (c) reduce the cash payable to Grantee pursuant to Section l(c) or
l(d) hereof, (d) pay cash or other consideration to the Grantor, or (e)
undertake any combination thereof, so that Grantee's Total Profit shall not
exceed $100 million after taking into account the foregoing actions.
Notwithstanding any other provision of this Agreement, this Option may
not be exercised for a number of Shares as would, as of the date of the Stock
Exercise Notice, result in a Notional Total Profit (as defined below) of more
than $100 million and, if exercise of the Option otherwise would exceed such
amount, the Grantee, at its discretion, may increase the Purchase Price for
that number of Shares set forth in the Stock Exercise Notice so that the
Notional Total Profit shall not exceed $100 million; provided, that nothing in
this sentence shall restrict any exercise of the Option permitted hereby on any
subsequent date at the Purchase Price set forth in Section 1(a) hereof.
As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Grantee pursuant to Section
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8.5 of the Merger Agreement and Section l(c) and Section l(d) hereof, (ii) the
amount of (x) cash received by Grantee pursuant to the Grantor's repurchase of
Shares pursuant to Sections 7 or 8 hereof, less (y) the Grantee's purchase
price for such Shares, and (iii) (x) the net cash amounts received by Grantee
pursuant to the sale of Shares (or any other securities into which such Shares
are converted or exchanged) to any unaffiliated party prior to the first
anniversary of the Merger Termination Date, less (y) the Grantee's purchase
price for such Shares.
As used herein, the term "Notional Total Profit" with respect to any
number of Shares as to which Grantee may propose to exercise this Option shall
be the Total Profit determined as of the date of the Stock Exercise Notice
assuming that this Option were exercised on such date for such number of Shares
and assuming that such Shares, together with all other Shares held by Grantee
and its affiliates as of such date, were sold for cash at the closing market
price for the Common Stock as of the close of business on the preceding trading
day (less customary brokerage commissions).
21. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
22. Public Announcement. The Grantee will consult with the
Grantor and the Grantor will consult with the Grantee before issuing any press
release with respect to the initial announcement of this Agreement, the Option
or the transactions contemplated hereby and neither party shall issue any such
press release prior to such consultation except as may be required by law or
the applicable rules and regulations of the NYSE.
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IN WITNESS WHEREOF, the Grantee and the Grantor have caused this
Agreement to be duly executed and delivered on the day and year first above
written.
AMERICAN BANKERS INSURANCE
GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: President, Chief Executive Officer
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and Vice Chairman of the Board
FORTIS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
-------------------------------------
Title: Secretary / Senior VP
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