SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT, dated as of July 7, 1999, is entered into by
and among Zenith Insurance Company, a California Corporation ("Zenith"),
RISCORP, Inc., a Florida corporation ("RISCORP, Inc."), RISCORP Management
Services, Inc., a Florida corporation ("RMS"), 0000 Xxxx Xxxxxx Services,
Inc., a Florida corporation ("1390 Main Street"), RISCORP of Illinois, Inc.,
an Illinois corporation ("RI"), Independent Association Administrators
Incorporated, an Alabama corporation ("IAA"), RISCORP Insurance Services,
Inc., a Florida corporation ("RIS"), RISCORP Managed Care Services, Inc.
("RMCS"), a Florida corporation, CompSource, Inc., a North Carolina
corporation ("CompSource"), RISCORP Real Estate Holdings, Inc., a Florida
corporation ("RRE"), RISCORP Acquisition, Inc., a Florida corporation ("RA"),
RISCORP West, Inc., an Oklahoma corporation ("RW"), RISCORP of Florida, Inc.,
a Florida corporation ("RF"), RISCORP Insurance Company, a Florida
corporation ("RIC"), RISCORP Property & Casualty Insurance Company, a Florida
corporation ("RP&C"), RISCORP National Insurance Company, a Missouri
corporation ("RNIC"), RISCORP Services, Inc., a Florida corporation ("RS"),
RISCORP Staffing Solutions Holding Company, a Florida corporation ("RSS
Holding"), RISCORP Staffing Solutions, Inc. I, a Florida corporation ("RSSI")
and RISCORP Staffing Solutions, Inc. II, a Florida corporation ("RSSII").
RISCORP, Inc., RMS, 0000 Xxxx Xxxxxx, XX, IAA, RIS, RMCS, CompSource, RRE,
RA, RW, RF, RIC, RP&C, RNIC, RS, RSS Holding, RSSI and RSSII are from time to
time hereinafter referred to collectively as "RISCORP" or the "RISCORP
Companies."
WITNESSETH:
WHEREAS:
A. Zenith and RISCORP are parties to (a) an Asset Purchase Agreement,
dated as of June 17, 1997, as subsequently amended on June 26, 1997, July 11,
1997, and March 30, 1998 (the "Asset Purchase Agreement"); (b) an Escrow
Agreement with First Union National Bank as Escrow Agent dated April 1, 1998
(the "Escrow Agreement"); (c) a letter agreement dated April 1, 1998 (the
"Letter Agreement"); and (d) those documents and instruments listed on
Exhibit A hereto (together with the Escrow Agreement and the Letter
Agreement, the "Transaction Documents"). Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the Asset
Purchase Agreement;
B. Pursuant to the Asset Purchase Agreement, on April 1, 0000, Xxxxxx
acquired substantially all of RISCORP's assets and assumed certain of
RISCORP's liabilities (the "Asset Sale") for a purchase price equal to the
amount by which the book value of the Transferred Assets exceeded the book
value of the Transferred Liabilities as set forth on a Final Business Balance
Sheet to be determined in accordance with the procedures set forth in the
Asset Purchase Agreement;
C. On April 1, 1998, in connection with the closing of the Asset Sale,
Zenith paid RISCORP $35 million to be applied toward the final Purchase Price
payable pursuant to the Asset Purchase Agreement, $10 million of which was
deposited with the Escrow Agent to be distributed pursuant to the terms of
the Asset Purchase Agreement and the Escrow Agreement;
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D. The Letter Agreement contained certain provisions pursuant to which
certain of RISCORP's Assets would be deemed not to be Transferred Assets for
purposes of determining the Final Business Balance Sheet and the Purchase
Price payable pursuant to the Asset Purchase Agreement.
E. On October 16, 1998, RISCORP commenced an action against Zenith in
the United States District Court for the Middle District of Florida, Tampa
Division, captioned RISCORP, INC., ET AL. V. ZENITH INSURANCE CO., Case No.
98-2122-CIV-T-25E (the "Florida Action"), in which RISCORP alleged various
claims against Zenith, including claims relating to Zenith's alleged breaches
of the Asset Purchase Agreement and the Letter Agreement;
F. On January 8, 1999, Zenith commenced an action in the United States
District Court for the Southern District of New York, captioned ZENITH
INSURANCE CO. V. RISCORP, INC., ET AL., Case Xx. 00 Xxx. 0000 (XXX) (the "New
York Action"), in which Zenith asserted various claims against RISCORP,
including claims relating to RISCORP's alleged breaches of the Asset Purchase
Agreement;
G. On March 19, 1999, Xxxxxx Xxxxxxxx LLP ("Xxxxxx Xxxxxxxx"), acting as
Neutral Auditor and Neutral Actuary pursuant to the Asset Purchase Agreement,
issued (i) a report containing its determinations of certain issues that
Xxxxxx Xxxxxxxx found to be in dispute between the parties regarding the
manner in which certain items should be treated in the preparation of the
Final Business Balance Sheet; and (ii) its determination of the Final
Business Balance Sheet;
H. As a result of the issuance of the Final Business Balance Sheet, (i)
on or about Xxxxx 00, 0000, Xxxxxx wire transferred to RISCORP, Inc. the sum
of $50,853,182, and wire
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transferred to the Escrow Agent the sum of $2,835,723; and (ii) on April 14,
0000, Xxxxxx wire transferred to RISCORP, Inc. the sum of $619,173.32;
I. The parties agree that in determining the final Purchase Price to be
paid by Zenith in connection with the Asset Sale certain adjustments to the
Final Business Balance Sheet are required based on (i) certain provisions of
the Letter Agreement; (ii) the value of certain assets identified on Exhibit
F-1 included among the Transferred Assets on the Final Business Balance Sheet
that in fact were not transferred to Zenith, and (iii) the value of a
treasury note acquired by Zenith that was not included among the Transferred
Assets on the Final Business Balance Sheet. In addition, certain adjustments
to the Final Balance Sheet may be required based on certain errors that were
allegedly made by Xxxxxx Xxxxxxxx in determining the Final Business Balance
Sheet; and
J. Zenith and RISCORP desire to compromise and settle the claims and all
pending and potential litigation between them (except as otherwise expressly
provided herein), and they have therefore agreed to enter into this
Settlement Agreement to settle and resolve, on the terms specified herein,
all such claims and disputes.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, it is hereby agreed as follows:
1. THE FINAL BUSINESS BALANCE SHEET. Zenith and RISCORP agree not to
commence or prosecute any action or proceeding, or to take any other action,
that seeks to confirm, modify, vacate, challenge or otherwise review the
Final Business Balance Sheet or the Revised Final Business Balance Sheet (as
defined herein) except as provided below in this paragraph 1.
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(a) The parties agree that RISCORP may request that Xxxxxx Xxxxxxxx
review and/or correct any alleged errors made in its determination of the
Final Business Balance Sheet with respect to its failure to make appropriate
adjustment for certain reinsurance treaties in effect during accident years
1991 through 1993, inclusive, including, without limitation, whether issues
relating to Xxxxxx Xxxxxxxx'x adjustment to reinsurance recoverable were in
dispute between the parties (the "RISCORP Reinsurance Claims").
(b) Within five business days after the date of this Settlement
Agreement, Zenith may make a submission to Xxxxxx Xxxxxxxx regarding the
RISCORP Reinsurance Claims in respect of (i) correspondence from Xxxxxxx
Hammock & Company to Xxxxxx Xxxxxxxx dated May 17, 1999; (ii) correspondence
from Xxxxxx & Bird LLP to Xxxxxx Xxxxxxxx dated May 24, 1999; and (iii)
correspondence from Xxxxxx & Bird LLP to Xxxxxx Xxxxxxxx dated June 4, 1999.
Zenith's submission to Xxxxxx Xxxxxxxx shall be to the effect that the
RISCORP Reinsurance Claims were not "in dispute" under Section 2.02(b) of the
Asset Purchase Agreement and that Xxxxxx Xxxxxxxx did not make an error with
respect to this issue in the Final Business Balance Sheet. On or before July
27, 1999, RISCORP may make an additional submission to Xxxxxx Xxxxxxxx
addressing the RISCORP Reinsurance Claims or any issues raised in Zenith's
submission to Xxxxxx Xxxxxxxx pursuant to this paragraph 1(b).
(c) Zenith and RISCORP agree that, in reviewing the RISCORP
Reinsurance Claims, Xxxxxx Xxxxxxxx may: (i) determine whether such claims
were "in dispute" under Section 2.02(b) of the Asset Purchase Agreement; (ii)
resolve such claims on the merits by applying the standards for review by the
Neutral Auditors and Neutral Actuary under Section 2.02(b) of the Asset
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Purchase Agreement; and (iii) if appropriate, issue a revised or corrected
Final Business Balance Sheet reflecting any resolution of such claims (the
"Revised Final Business Balance Sheet").
(d) If Xxxxxx Xxxxxxxx issues the Revised Final Business Balance
Sheet, then (i) RISCORP shall pay to Zenith the amount of the net reduction,
if any, in the Net Assets Transferred reflected on the Revised Final Business
Balance Sheet; or (ii) Zenith shall pay to RISCORP on behalf of the Sellers
the amount of the net increase, if any, in the Net Assets Transferred
reflected on the Revised Final Business Balance Sheet. RISCORP or Zenith, as
the case may be, shall pay interest on any amounts due under this paragraph 1
at the rate of 6.25% per annum from (and including) April 1, 1998 to (but
excluding) the date of payment. Any such payment shall be made within five
business days after receipt of the Revised Final Business Balance Sheet by
wire transfer of immediately available funds to an account designated by the
party entitled to receive such payment.
(e) Notwithstanding anything to the contrary in this Settlement
Agreement, including, without limitation, the foregoing provisions of this
paragraph 1, neither Zenith nor RISCORP has waived any right to commence
legal action in any court of competent jurisdiction: (i) to seek correction
of alleged errors with respect to the RISCORP Reinsurance Claims that were
not corrected by Xxxxxx Xxxxxxxx in a Revised Final Business Balance Sheet
pursuant to this paragraph 1; or (ii) to correct, modify, vacate or set aside
any revision of the Final Business Balance Sheet made in the Revised Final
Business Balance Sheet.
2. DISBURSEMENTS FROM ESCROW. (a) Zenith and RlSCORP agree to cause
all funds currently on deposit with the Escrow Agent to be distributed as
soon as reasonably practicable, but in no event later than 20 business days
after execution of this Settlement Agreement, as follows:
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(i) Six million dollars ($6,000,000) to Zenith; and
(ii) the balance of all principal and interest to RISCORP, Inc.
(b) Following the foregoing disbursement of funds, the Escrow
Agreement shall be terminated and the parties shall execute such documents or
instruments as may be reasonably necessary to evidence such termination.
(c) RISCORP acknowledges that Zenith intends to treat the amounts
received under this paragraph 2 as reimbursement for unexpected expenses
incurred by Zenith in connection with carrying on the Business acquired from
RISCORP.
3. CLAIMS FOR REFUNDS. The parties agree that RISCORP's claims for
refunds made to the Florida Department of Labor and Employment Security,
Division of Workers' Compensation Administrative and Field Support Unit will
be divided between them as follows:
(a) RISCORP, Inc. shall be the sole owner of and is entitled to any
refund granted in connection with its request for a refund for Five Million
Two Hundred Ninety Two Thousand, One Hundred Eighty-Three Dollars
($5,292,183) related to deductions for commissions against gross premiums
(the "Commission Refund"); and
(b) Of the approximate balance of Twenty-Seven Million Dollars
($27,000,000) of potential additional refunds related to deduction for
premiums ceded to others (the "Reinsurance Refunds"), RISCORP, Inc. shall
receive the first Ten Million Dollars ($10,000,000) of any Reinsurance
Refunds recovered, and should the Reinsurance Refunds recovery exceed Ten
Million Dollars ($10,000,000), RISCORP and Zenith will share equally in any
excess proceeds.
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(c) The fees and expenses incurred in connection with RISCORP's
efforts to seek recovery of the Reinsurance Refunds shall be shared by Zenith
and RISCORP in the same ratio as the amounts which each ultimately recovers.
All such fees and expenses shall initially be borne by RISCORP, which shall
be entitled to reimbursement for Zenith's share of such fees and expenses
only if Zenith shares in any Reinsurance Refunds. RISCORP shall have the
right to direct and control the prosecution of any attempts to recover the
Reinsurance Refunds. RISCORP shall not compromise or settle such claims
without the prior written approval of Zenith, which approval shall not be
unreasonably withheld. At RISCORP's request, Zenith shall jointly prosecute
the claims to recovery of the Reinsurance Refunds, but RISCORP shall retain
the right to direct and control the prosecution in such event. RISCORP may
cease prosecuting such claims at any time in its sole discretion, provided,
however, that RISCORP first offers in writing to assign such claims to Zenith
without consideration, and Zenith does not accept such assignment within ten
business days of receipt of such offer. If Zenith does accept such
Assignment, RISCORP shall be dismissed as a party, and Zenith, as assignee of
RISCORP, shall be substituted. Zenith shall thereafter bear all fees and
expenses incurred in connection with its prosecution of such claim.
4. RELEASE BY ZENITH. Effective with the execution of this Settlement
Agreement, Zenith and its affiliates, subsidiaries, parents, shareholders,
agents, employees, attorneys, accountants, representatives, directors, and
officers (the "Zenith Releasors") hereby release, acquit and forever
discharge RISCORP and its affiliates, subsidiaries, parents, shareholders,
agents, employees, attorneys, accountants, representatives, directors and
officers (the "RISCORP Releasees") from any and all claims, causes of action,
debts, accounts, contracts, torts, demands, judgments, whether at law
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or in equity, accrued or contingent, known or unknown, discovered or
undiscovered, in the past or in the future, which the Zenith Releasors had,
have, or may in the future have, of any form or nature, from the beginning of
time through and including the date of this Settlement Agreement
(collectively, "Zenith Claims"), except for any Zenith Claims that arise
from, relate to, or are based on (i) any of the obligations contained within
this Settlement Agreement; (ii) the surviving provisions of the Asset
Purchase Agreement; and (iii) the surviving provisions of the Transaction
Documents.
5. RELEASE BY RISCORP. Effective with the execution of this Settlement
Agreement, the RISCORP Releasees hereby release, acquit and forever discharge
the Zenith Releasors from any and all claims, causes of action, debts,
accounts, contracts, torts, demands, judgments, whether at law or in equity,
accrued or contingent, known or unknown, discovered or undiscovered, in the
past or in the future, which the RISCORP Releasees had, have, or may in the
future have, of any form or nature, from the beginning of time through and
including the date of this Settlement Agreement (collectively, "RISCORP
Claims"), except for any RISCORP Claims that arise from, relate to, or are
based on (i) any of the obligations contained within this Settlement
Agreement including, without limitation, any claims arising out of or related
to any alleged errors made by Xxxxxx Xxxxxxxx as provided in paragraph 1
hereof; (ii) the surviving provisions of the Asset Purchase Agreement; (iii)
the surviving provisions of the Transaction Documents; and (iv) RISCORP's
right to seek indemnification from Zenith with respect to BRISTOL HOTEL
MANAGEMENT CORPORATION, ET AL. V. AETNA CASUALTY & SURETY COMPANY, A/K/A
AETNA GROUP, ET AL. (the "Bristol Hotel Action").
6. COVENANT NOT TO XXX OR ARBITRATE BY ZENITH. Except as contemplated
by paragraphs 1 and 14 hereof, effective with the execution of this
Settlement Agreement Zenith and its affiliates,
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subsidiaries, parents, shareholders, agents, employees, attorneys,
accountants, representatives, directors, and officers (the "Zenith
Convenantors") hereby covenant not to xxx and covenant not to arbitrate
against RISCORP and its affiliates, subsidiaries, parents, shareholders,
agents, employees, attorneys, accountants, representatives, directors and
officers (the "RISCORP Covenantees") as to any and all claims, causes of
action, debts, accounts, contracts, torts, demands, and judgments, whether at
law or in equity, which the Zenith Covenantors had, have, or may have in the
future, of any form or nature, based in whole or in substantial part on facts
actually known to the officers or former officers of Zenith identified on
Exhibit B attached hereto, or which should have been known to such officers
of Zenith after reasonable inquiry, from the beginning of time up to the date
of this Settlement Agreement.
7. COVENANT NOT TO XXX OR ARBITRATE BY RISCORP. Except as contemplated
by paragraphs 1 and 14 hereof and as to the Bristol Hotel Action, effective
with the execution of this Settlement Agreement the RISCORP Covenantees
hereby covenant not to xxx and covenant not to arbitrate against the Zenith
Covenantors as to any and all claims, causes of action, debts, accounts,
contracts, torts, demands, and judgments, whether at law or in equity, which
the RISCORP Covenantees had, have, or may have in the future, of any form or
nature, based in whole or in substantial part on facts actually known to the
officers of RISCORP, or which should have been known to the officers of
RISCORP after reasonable inquiry, from the beginning of time up to the date
of this Settlement Agreement.
8. DISMISSAL OF FLORIDA ACTION. Within five business days of the
execution of this Settlement Agreement, Zenith and RISCORP agree to submit a
Stipulation in the form annexed
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hereto as EXHIBIT C to the United States District Court for the Middle
District of Florida, Tampa Division, for filing in the action captioned
RISCORP. INC., ET AL. V. ZENITH INSURANCE CO., Case No. 98-2122-CIV-T-25E.
9. DISMISSAL OF NEW YORK ACTION. Within five business days of the
execution of this Settlement Agreement, Zenith and RISCORP agree to submit a
Stipulation in the form annexed hereto as EXHIBIT D to the United States
District Court for the Southern District of New York for filing in the action
captioned ZENITH INSURANCE CO. V. RISCORP, INC., ET AL., Case Xx. 00 Xxx.
0000 (XXX).
10. RELEASE OF SECURITIES. Zenith agrees promptly to execute upon
RISCORP's request letters in substantially the form attached as EXHIBIT E
evidencing Zenith's acknowledgment that it has no right, title or interest in
or to certain funds on deposit with various state regulatory agencies and its
consent to the release of such funds or securities to RISCORP. Zenith
further covenants and agrees that it shall execute any additional documents
or instruments as may be reasonably necessary to assist RISCORP in the
recovery of such funds. The funds or securities currently on deposit with
various state agencies to which Zenith acknowledges RISCORP's full
entitlement are set forth on Exhibit F.
11. ASSESSMENTS. Responsibility for satisfaction of assessments,
including those assessments at issue in the Florida Action and the New York
Action and those arising in the future, from state insurance departments and
other state and federal regulatory agencies will be borne by the parties as
follows:
(a) The parties have set forth on EXHIBIT G those assessments
currently known to the parties and have identified whether or the extent to
which each such assessment is the
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responsibility of RISCORP or Zenith. Unless otherwise specifically provided
on EXHIBIT G, the parties will each satisfy their respective obligations as
reflected on EXHIBIT G within 15 days of the execution of this Settlement
Agreement and shall provide to the other party evidence of such satisfaction.
(b) Any other assessment or Tax attributable to the Business for a
period prior to April 1, 1998 will be the responsibility of RISCORP.
(c) Any other assessment or Tax attributable to the Business for a
period on or after April 1, 1998 will be the responsibility of Zenith,
regardless of whether the premiums or other amounts used to calculate such
assessment or Tax relate to a period before or after April 1, 1998.
(d) Any other assessment or Tax attributable to the Business for a
period both prior to and following April 1, 1998 shall be prorated between
RISCORP and Zenith, respectively, by following the methodology described in
paragraphs (b) and (c) above based on the ratio of (i) the number of days in
the period prior to April 1, 1998, to (ii) the number of days in the period
on and after April 1, 1998 in the period being assessed.
12. AMENDMENT TO ASSET PURCHASE AGREEMENT. The parties hereto agree
that the Asset Purchase Agreement is hereby amended as follows:
(a) The following Sections or Articles of the Asset Purchase
Agreement shall have no further force or effect: Sections 3.03, 3.04, 3.05,
3.06, 3.07, 3.09, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 3.15 A, 3.18, 3.19,
3.20, 3.21, 3.22, 4.03, 4.04; Article V; Article VI; Article VII; and Article X.
(b) The following Sections of the Asset Purchase Agreement are
amended as set forth below:
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(i) SECTION 8.01. Section 8.01 of the Asset Purchase Agreement
is amended to provide as follows:
Section 8.01: SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in Sections 3.01, 3.02,
3.08, 3.16, 3.17, 4.01, and 4.02 of the Asset Purchase Agreement
shall survive the Closing and shall terminate and expire at the
close of business on April 1, 2000.
(ii) SECTION 11.06. Section 11.06 of the Asset Purchase
Agreement is hereby amended by deleting subpart (b) thereof
in its entirety.
(c) To the extent that any provisions of this Settlement Agreement
may conflict with any surviving provisions of the Asset Purchase Agreement or
the Transaction Documents, the provisions of this Settlement Agreement shall
control.
13. PENDING LITIGATION. Attached as Exhibit H is a schedule of pending
litigation, along with a designation as to which party shall be responsible
for the defense of, and satisfaction of any judgment or settlement arising
from, each suit.
14. VOIDED CHECKS/STOP PAYMENT ORDERS. (a) Zenith and RISCORP agree
that Zenith shall have 60 days from the date of this Settlement Agreement to
submit to RISCORP the following: (i) a Schedule of Unpaid Checks listing
checks that were issued by any RISCORP company prior to April 1, 1998 that
either (A) were voided by Zenith, or (B) are subject to stop payment orders
issued by Zenith; and (ii) copies of canceled checks, reasonable proof of
reissuance or other documentation demonstrating Zenith's right to
reimbursement for checks listed on the Schedule of Unpaid Checks
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(collectively, the "Check Documentation"); PROVIDED, HOWEVER, Zenith's right
to reimbursement shall be limited to the lesser of (A) the amount actually
paid by Zenith in connection with the reissuance of a check listed on the
Schedule of Unpaid Checks, or (B) the amount RISCORP carried on its
outstanding check list for such check as of April 1, 1998.
(b) Within ten business days after RISCORP's receipt of the Check
Documentation, RISCORP shall (i) provide Zenith a written schedule listing
its objections, if any, to reimbursing Zenith for checks listed on the
Schedule of Unpaid Checks, and (ii) reimburse Zenith, by wire transfer to an
account designated by Zenith, in an aggregate amount equal to the amount of
all checks as to which RISCORP is not objecting to reimbursement.
(c) Except for checks for which Check Documentation has been
provided to RISCORP within 60 days of the date of this Settlement Agreement,
Zenith agrees that it has no right to assert any claim against RISCORP or any
RISCORP company for reimbursement of any check that was issued by any RISCORP
company prior to April 1, 1998 whether or not such check was included on the
Schedule of Unpaid Checks.
(d) Any disputes between the parties concerning Zenith's right to
reimbursement for unpaid checks that are the subject of this paragraph 14
shall be resolved by arbitration pursuant to paragraph 15 hereof.
15. SUBMISSION OF MATTERS TO ARBITRATION. (a) The parties expressly agree
that, except as otherwise set forth in paragraph 1 hereof or as to any claim
or controversy that is subject to the agreement not to xxx or arbitrate as
provided in paragraphs 6 or 7 hereof, any claim or controversy arising out of
or in connection with (i) the surviving provisions of the Asset Purchase
Agreement, (ii)
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the surviving provisions of the Transaction Documents, (iii) the enforcement
or interpretation of this Settlement Agreement, or (iv) any of the
obligations contained within this Settlement Agreement, shall be resolved by
binding arbitration before the Xxxxxxxxx Xxxxxxx X. Xxxxxx, unless he is
unavailable or unwilling to serve. In the event the Xxxxxxxxx Xxxxxxx X.
Xxxxxx is unavailable or unwilling to serve, an arbitrator shall be selected
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association. Any arbitration pursuant to this Settlement
Agreement shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association except as modified by this
paragraph 15. The arbitration shall take place in Tampa, Florida. The
Xxxxxxxxx Xxxxxxx X. Xxxxxx or other arbitrator selected in accordance with
this paragraph shall be hereinafter referred to as the "Arbitrator." The
decision or award of the Arbitrator shall be final, binding and conclusive.
Either party may seek confirmation of any award or decision entered pursuant
to this paragraph 15 by any court of competent jurisdiction.
(b) The parties expressly waive any right to file a civil action and
any right to a jury trial as to any claim or controversy between them, except
as to the potential claims described in paragraph 1 above.
(c) Except as expressly authorized in this Settlement Agreement, the
parties agree that it shall be a breach of this Settlement Agreement for any
party hereto to file against any other party any civil action or arbitration
proceeding relating to (i) any of the Zenith Claims or RISCORP Claims that
are released pursuant to paragraphs 4 and 5 of this Settlement Agreement,
(ii) the claims in respect of which the parties have agreed not to xxx or
arbitrate pursuant to paragraphs 6 and 7 of this Settlement Agreement, (iii)
the enforcement or interpretation of this Settlement Agreement, or
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(iv) any dispute that may arise between the parties relating to the Asset
Purchase Agreement, the Transaction Documents, or the transactions
contemplated by the Asset Purchase Agreement. In the event of such a breach,
the non-breaching party or parties shall be entitled to recover any
consequential damages as well as its reasonable attorneys' fees and expenses
from the breaching party or parties.
(d) As a condition precedent to the submission of any dispute for
determination by the Arbitrator, a party shall serve upon the other party to
this Settlement Agreement, in the manner provided for notices pursuant to
Section 11.03 of the Asset Purchase Agreement, a written statement of the
matter in dispute, and thereafter the parties shaft negotiate in good faith
to attempt to resolve the matter in dispute for a time period not to exceed
ten (10) days (unless the parties mutually agree in writing to extend this
time period).
(e) Within twenty (20) days following the end of the period of good
faith negotiations set forth in the immediately preceding paragraph, any
party to this Settlement Agreement who desires to arbitrate a claim shall
submit to the other party and to the Arbitrator a demand for arbitration
setting forth with reasonable specificity the nature and amount of the claim,
and the parties shall follow the following procedures:
(i) The party receiving the demand for arbitration shall have
ten business days from receipt of the other party's
demand to dispute the claim in writing. If the claim is
not disputed, the amount claimed in the arbitration demand
will be the award of the Arbitrator.
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(ii) Should the party receiving the claim dispute it, the party
asserting the claim shall submit, no later than ten
business days after receipt of its adversary's notice of
dispute, a position paper, setting forth its position as
to why it should prevail on its claim, including any
appropriate evidentiary material.
(iii) The party disputing the demand for arbitration will have
ten business days after its receipt of its adversary's
position paper to submit a response, including any
appropriate evidentiary material.
(iv) The Arbitrator shall issue his award within thirty days of
his receipt of the response of the party opposing the
claim.
(v) For purposes of this paragraph 15, all claims, responses,
notices, position papers or other papers of any kind shall
be served by facsimile and overnight delivery (next
business day) to the persons identified in paragraph 11.03
of the Asset Purchase Agreement and upon the Arbitrator,
except that exhibits, appendices, and other lengthy
documents need only be served by overnight delivery
service. The time for any party to take any action
pursuant to this paragraph after receipt of notice or
written material shall commence to run from receipt of
such notice or written material by overnight delivery
service.
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16. TERMINATION OF LETTER AGREEMENT AND POWER OF ATTORNEY. The parties
expressly agree that the Letter Agreement and the Power of Attorney executed
by RISCORP in connection with the closing of the Asset Sale are hereby
terminated and shall be of no further force or effect.
17. FURTHER ASSURANCES. On and after execution of this Settlement
Agreement, Zenith and RISCORP shall take all reasonably appropriate action
and execute any additional documents, instruments or conveyances of any kind
which may be reasonably necessary to carry out any of the provisions of this
Settlement Agreement or the surviving provisions of the Asset Purchase
Agreement and the Transaction Documents.
18. ENTIRE AGREEMENT. This Settlement Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, written or oral, with
respect thereto.
19. AMENDMENTS AND WAIVERS. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by each of the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right, power or
privilege, nor any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.
20. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, permitted assigns
and legal representatives.
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21. GOVERNING LAW. This settlement agreement shall be governed by and
construed in accordance with the laws of the State of Florida, without giving
effect to the principles of conflicts of laws thereof.
22. NO ADMISSION OF LIABILITY. Zenith and RISCORP agree (a) that
neither this Settlement Agreement nor the fact of settlement are an admission
of any liability or wrongdoing whatsoever; (b) that neither this Settlement
Agreement nor the fact of settlement shall be used or construed as an
admission of any fault, liability or wrongdoing by any person; and (c) that
neither this Settlement Agreement, the fact of settlement, the settlement
negotiations, nor any related document shall be offered or received in
evidence as an admission, concession, presumption or inference against any
party in any action or proceeding other than an action or proceeding to
enforce this Settlement Agreement.
23. REPRESENTATIONS OF RISCORP. RISCORP, Inc., RMS, 0000 Xxxx Xxxxxx,
XX, IAA, RIS, RMCS, CompSource, RRE, RA, RW, RF, RIC, RP&C, RNIC, RS, RSS
Holding, RSSI and RSSII each represent and warrant that (a) each such entity
has the requisite corporate power and authority to execute, deliver and
perform its obligations under this Settlement Agreement; (b) the execution
and delivery of this Settlement Agreement and the performance of the
obligations thereunder have been duly authorized by all necessary corporate
action; (c) this Settlement Agreement constitutes the legal, valid and
binding obligation of each such entity, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such
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enforceability is considered in a proceeding in equity or in law); and (d)
after giving effect to the transactions contemplated by this Settlement
Agreement, the RISCORP Companies, individually and on a consolidated basis,
will be solvent, able to pay their debts as they mature, have capital
sufficient to carry on their businesses and all businesses in which they are
about to engage, and:
(i) the assets of the RISCORP Companies, individually and on a
consolidated basis, at a fair evaluation, exceed the total
liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities) of the RISCORP Companies;
(ii) current projections which are based on underlying
assumptions which provide a reasonable basis for the
projections and which reflect the RISCORP Companies'
judgment based on present circumstances, the most likely
set of conditions and the RISCORP Companies' most likely
course of action for the period projected, demonstrate
that the RISCORP Companies, individually and on a
consolidated basis, will have sufficient cash flow to
enable them to pay their debts as they mature or the
RISCORP Companies are reasonably satisfied that they will
be able to refinance such debt at or prior to maturity on
commercial reasonable terms; and
(iii) the RISCORP Companies, individually and on a consolidated
basis, do not have unreasonably small capital base with
which to engage in their anticipated businesses.
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24. REPRESENTATIONS OF ZENITH. Zenith represents and warrants that (a)
it has the requisite corporate power and authority to execute, deliver and
perform its obligations under this Settlement Agreement (b) the execution and
delivery of this Settlement Agreement and the performance of its obligations
thereunder have been duly authorized by all necessary corporate action, and
(c) this Settlement Agreement constitutes the legal, valid and binding
obligation of Zenith, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or in law).
25. COUNTERPARTS. This Settlement Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ZENITH INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxx
-----------------------
Name: Xxxxxxx X. Xxx
Title: Chairman & President
RISCORP, INC.
RISCORP MANAGEMENT SERVICES, INC.
0000 XXXX XXXXXX SERVICES, INC.
RISCORP OF ILLINOIS, INC.
INDEPENDENT ASSOCIATION
ADMINISTRATORS INCORPORATED
RISCORP INSURANCE SERVICES, INC.
RISCORP MANAGED CARE SERVICES, INC.
COMPSOURCE, INC.
RISCORP REAL ESTATE HOLDINGS, INC.
RISCORP ACQUISITION, INC,
RISCORP WEST, INC.
RISCORP OF FLORIDA, INC.
RISCORP INSURANCE COMPANY
RISCORP PROPERTY & CASUALTY
INSURANCE COMPANY
RISCORP NATIONAL INSURANCE COMPANY
RISCORP SERVICES, INC.
RISCORP STAFFING SOLUTIONS
HOLDING COMPANY
RISCORP STAFFING SOLUTIONS, INC. I
RISCORP STAFFING SOLUTIONS, INC. II
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
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Exhibits A, B, C, D, E, F, G and H to the Settlement Agreement are not included.
