1
EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF
OCTOBER 11, 1999
AMONG
HCC INSURANCE HOLDINGS, INC.,
MERGER SUB OF DELAWARE, INC.
AND
THE CENTRIS GROUP, INC.
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 THE OFFER............................................................................1
Section 1.1 The Offer............................................................................1
Section 1.2 Company Action.......................................................................3
Section 1.3 Directors............................................................................4
ARTICLE 2 THE MERGER...........................................................................5
Section 2.1 The Merger...........................................................................5
Section 2.2 Conversion of Shares.................................................................5
Section 2.3 Surrender and Payment................................................................6
Section 2.4 Dissenting Shares....................................................................7
Section 2.5 Stock Options........................................................................7
ARTICLE 3 THE SURVIVING CORPORATION............................................................8
Section 3.1 Certificate of Incorporation.........................................................8
Section 3.2 Bylaws...............................................................................8
Section 3.3 Directors and Officers...............................................................8
ARTICLE 4 REPRESENTATIONS AND WARRANTIES.......................................................8
Section 4.1 Representations and Warranties of the Company........................................8
(a) Organization, Standing and Corporate Power...........................................8
(b) Subsidiaries.........................................................................9
(c) Capital Structure...................................................................10
(d) Authority; Noncontravention.........................................................11
(e) SEC Documents; Financial Statements; No Undisclosed Liabilities.....................12
(f) Disclosure Documents................................................................13
(g) Absence of Certain Changes or Events................................................14
(h) Litigation..........................................................................15
(i) Absence of Changes in Stock or Benefit Plans........................................16
(j) Participation and Coverage in Benefit Plans.........................................16
(k) ERISA Compliance....................................................................16
(l) Taxes...............................................................................18
(m) State Takeover Statutes.............................................................20
(n) Brokers; Schedule of Fees and Expenses..............................................20
(o) Licenses and Permits; Agents........................................................20
(p) Contracts; Debt Instruments; Leases.................................................22
(q) Opinion of Financial Advisor........................................................24
(r) Interests of Officers and Directors.................................................24
(s) Technology..........................................................................24
(t) Change of Control...................................................................25
(u) Environmental.......................................................................25
(v) Title to Properties.................................................................27
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(w) Other Obligations...................................................................27
(x) Public Utility Holding Company Act; Non-Utility Status..............................28
(y) Year 2000...........................................................................28
(z) Insurance...........................................................................29
(aa) Investments.........................................................................29
(bb) Investment Company..................................................................30
(cc) Internal Controls...................................................................30
(dd) Assumed and Ceded Reinsurance Agreements............................................30
(ee) Accounts with Financial Institutions................................................32
(ff) Minute Books; Stock Books; Officers and Directors...................................32
(gg) Continuing Business Relationships...................................................32
(hh) Insurance Reserves..................................................................32
(ii) Disclosure..........................................................................33
Section 4.2 Representations and Warranties of Parent and Merger Subsidiary......................33
(a) Organization, Standing and Corporate Power..........................................33
(b) Authority; Noncontravention.........................................................33
(c) Disclosure Documents................................................................34
(d) Financing...........................................................................35
ARTICLE 5 COVENANTS OF THE COMPANY............................................................35
Section 5.1 Conduct of Business.................................................................35
Section 5.2 Shareholder Meeting; Proxy Material.................................................37
Section 5.3 Access to Information...............................................................38
Section 5.4 Other Offers........................................................................39
Section 5.5 Rights Agreement....................................................................39
Section 5.6 State Takeover Statutes.............................................................40
Section 5.7 Regulatory Filings..................................................................40
Section 5.8 Affirmative Actions.................................................................40
Section 5.9 Termination of Benefit Plans........................................................41
ARTICLE 6 COVENANTS OF PARENT.................................................................41
Section 6.1 Obligations of Merger Subsidiary....................................................41
Section 6.2 Voting of Shares....................................................................41
Section 6.3 Director and Officer Liability......................................................41
Section 6.4 Employees...........................................................................43
ARTICLE 7 COVENANTS OF PARENT AND THE COMPANY.................................................43
Section 7.1 HSR Act Filings; Other Filings Reasonable Efforts; Notification.....................43
Section 7.2 Public Announcements................................................................46
Section 7.3 Confidentiality.....................................................................46
Section 7.4 Interim Financial Statements........................................................46
ARTICLE 8 CONDITIONS TO THE MERGER............................................................47
Section 8.1 Conditions to the Obligations of Each Party.........................................47
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ARTICLE 9 TERMINATION.........................................................................48
Section 9.1 Termination.........................................................................48
Section 9.2 Effect of Termination...............................................................48
ARTICLE 10 MISCELLANEOUS.......................................................................49
Section 10.1 Notices.............................................................................49
Section 10.2 Survival of Representations and Warranties..........................................49
Section 10.3 Amendments; No Waivers..............................................................50
Section 10.4 Fees and Expenses...................................................................50
Section 10.5 Successors and Assigns..............................................................51
Section 10.6 Governing Law.......................................................................51
Section 10.7 Counterparts; Effectiveness; Interpretation.........................................51
Section 10.8 Enforcement.........................................................................52
Section 10.9 Severability........................................................................52
Section 10.10 Entire Agreement; No Third Party Beneficiaries......................................52
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of October
11, 1999, is entered into among The Centris Group, Inc., a Delaware corporation
(the "Company"), HCC Insurance Holdings, Inc., a Delaware corporation
("Parent"), and Merger Sub of Delaware, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of the Company, the Parent
and the Merger Subsidiary have determined that it is advisable and in the best
interests of their respective shareholders for the Parent and Merger Subsidiary
to acquire the Company upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Company, the Parent and the Merger Subsidiary desire to
make certain representations, warranties, covenants and agreements in
connection with this Agreement; and
WHEREAS, and furtherance of such acquisition, Parent proposes to cause
Merger Subsidiary to make the Offer (as defined in Section 1.1(a)) to purchase
all of the issued and outstanding shares of common stock, par value $.01 per
share of the Company together with attached right to purchase shares (the
"Common Stock") upon the terms and subject to the conditions of this Agreement
and the Board of Directors of the Company (the "Board" or the "Board of
Directors") has unanimously approved the Offer and recommended that the
shareholders of the Company accept the Offer; and
WHEREAS, the respective Boards of Directors of the Company, the Parent
and Merger Subsidiary have deemed advisable and have approved the Offer and the
Merger (as defined in Section 2.1) of the Merger Subsidiary with and into the
Company upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, the Company and the Parent have determined it is advisable
and in the best interests of the shareholders of the Company, for the Company
to grant an option to Parent to acquire shares of Common Stock and have entered
into a Stock Option Agreement dated the date hereof providing therefor.
NOW, THEREFORE, in consideration of the representations, warranties
and agreements herein contained, and subject to the terms and conditions herein
set forth, the parties hereto do hereby agree as follows:
ARTICLE 1
THE OFFER
Section 1.1 The Offer.
(a) Provided that nothing shall have occurred that would
result in a failure to satisfy any of the conditions set forth in
Annex I hereto, Merger Subsidiary shall, as promptly as practicable
after the date hereof, but in no event later than the first Business
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Day (as defined in Rule 14b-1(c)(6) of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act")), following the execution of
this Agreement, issue a public announcement of the execution of this
Agreement and as promptly as practicable, but in any event within five
Business Days following the public announcement of the terms of this
Agreement, commence an offer (the "Offer") to purchase all of the
outstanding shares of common stock, par value $.01 per share together
with attached rights to purchase shares (the "Shares"), of the Company
at a price of $12.50 per Share, net to the seller in cash. Such Offer
shall remain open for a period not to exceed 30 Business Days (the
"Offer Period") subject to extension as provided below. The Offer
shall be subject to the condition that there shall be validly tendered
in accordance with the terms of the Offer prior to the expiration date
of the Offer and not withdrawn a number of Shares which, together with
the Shares then owned by Parent and Merger Subsidiary, represents at
least a majority (the "Minimum Condition") of the total number of
outstanding Shares, assuming the exercise of all outstanding options,
rights and convertible securities (if any) (other than options to be
canceled pursuant to Section 2.5 hereof, and Shares to be issued
pursuant to the Stock Option Agreement defined herein) and the
issuance of all Shares that the Company is obligated to issue (such
total number of outstanding Shares being hereinafter referred to as
the "Fully Diluted Shares") and to the other conditions set forth in
Annex I hereto. Parent and Merger Subsidiary expressly reserve the
right to waive the conditions to the Offer and to make any change in
the terms or conditions of the Offer; provided however, that, without
the written consent of the Company, no change may be made which (i)
except as provided in the next sentence, extends the Offer; (ii)
changes the form of consideration to be paid for the Shares, (iii)
decreases the price per Share or the number of Shares sought in the
Offer, (iv) imposes conditions to the Offer in addition to those set
forth in Annex I, (v) changes or waives the Minimum Condition, or (vi)
makes any other change to any condition to the Offer set forth in
Annex I which is materially adverse to the holders of Shares.
Notwithstanding the foregoing, without the consent of the Company,
Merger Subsidiary may (i) extend the Offer Period until all of the
conditions to the Merger Subsidiary's obligation to purchase Shares
shall be satisfied or waived, including, without limitation, any
period required (A) by any rule, regulation, interpretation, or
position of the Securities and Exchange Commission (the "SEC") or the
staff thereof applicable to the Offer; or (B) pursuant to the HSR Act,
defined below, shall have terminated, or (C) to obtain necessary
approval of each state insurance regulatory agency required for
consummation of the Offer, (ii) extend the Offer Period for a period
of not more than 10 Business Days beyond the expiration thereof, as
such may be extended pursuant to subparagraph (i) hereof, (iii) extend
the Offer Period for an additional period of not more than 10 Business
Days beyond that permitted by subparagraphs (i) and (ii) hereof if on
the date of such extension, less than ninety percent (90%) of the
Fully Diluted Shares have been validly tendered and not properly
withdrawn pursuant to the Offer, and (iv) extend the Offer for any
reason for a period of not more than five Business Days beyond the
latest Expiration Date that would be otherwise permitted under clauses
(i), (ii), or (iii) of this sentence. Subject to the terms of the
Offer and this Agreement and the satisfaction (or waiver to the extent
permitted by this Agreement) of the conditions of the Offer, Merger
Subsidiary shall accept for payment all Shares validly tendered and
not
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withdrawn pursuant to the Offer as soon as practicable after the
applicable expiration of the Offer.
(b) A soon as practicable on the date of commencement of the
Offer, Parent and Merger Subsidiary shall (i) file with the SEC a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer
which will contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments
thereto, collectively the "Offer Documents") and (ii) cause the Offer
Documents to be disseminated to holders of Shares. Parent, Merger
Subsidiary and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any
material respect. Parent and Merger Subsidiary agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities laws.
Parent and Merger Subsidiary agree to provide the Company and its
counsel in writing with any comments Parent, Merger Subsidiary or
their counsel may receive from the SEC or its staff, including, but
not limited to, comments with respect to the Offer Documents, promptly
after receipt of such comments. The Company and its counsel shall be
given a reasonable opportunity to review and comment upon the Offer
Documents and all amendments and supplements thereto prior to their
filing with the SEC.
Section 1.2 Company Action.
(a) The Company hereby consents to the Offer and represents
that its Board of Directors, at a meeting duly called and held, has
(i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (defined below
in Section 2.1), the Stock Option Agreement dated as of the date
hereof (the "Stock Option Agreement") and the Shareholder Option
Agreement, dated as of the date hereof (the "Shareholder Option
Agreement"), among the shareholders of the Company that are named
therein and Merger Subsidiary, and the transactions contemplated
thereby, are fair to and in the best interest of the Company's
shareholders, (ii) unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer, the Merger, the
Stock Option Agreement and the Shareholder Option Agreement and the
transactions contemplated thereby, which approval satisfies in full
the requirements of Section 203 of the General Corporation Law of the
State of Delaware (the "Delaware Law"), (iii) unanimously resolved to
recommend acceptance of the Offer and approval and adoption of this
Agreement and the Merger by its shareholders, and (iv) determined that
the consummation of the transactions contemplated hereby including the
Offering, the Merger, the Stock Option Agreement and the Shareholder
Option Agreement and thereby have not, and will not, cause the Rights,
as defined herein, to become exercisable. The Company further
represents that Advest Investment Banking, Inc. ("Advest") has
delivered to the Company's Board of Directors its opinion that the
consideration to be paid in the Offer and the Merger is fair to the
holders of Shares from a financial point of view. The Company has been
advised that each of its directors and executive officers presently
intend either to tender their Shares pursuant to the Offer or to vote
in favor of the Merger. The Company will promptly furnish Parent and
Merger
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Subsidiary with a list of its shareholders, mailing labels and any
available listing or computer file containing the names and addresses
of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case as of the most recent
practicable date, and will provide to Parent and Merger Subsidiary
such additional information (including, without limitation, updated
lists of shareholders, mailing labels and lists of securities
positions) and such other assistance as Parent or Merger Subsidiary
may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced the Company will file with the SEC and disseminate to
holders of Shares a Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") which shall reflect the recommendations
of the Company's Board of Directors referred to above, subject to the
fiduciary duties of the Board of Directors of the Company as advised
in writing by Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Company. The
Company, Parent and Merger Subsidiary each agrees promptly to correct
any information provided by it for use in the Schedule 14D-9 if and to
the extent that it shall have become false or misleading in any
material respect. The Company agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its
counsel shall be given an opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC.
Section 1.3 Directors.
(a) Effective upon the payment by Merger Subsidiary for a
majority of the Shares pursuant to the Offer, Parent shall be entitled
to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of
(i) the total number of directors on the Company's Board of Directors
(giving effect to the election of any additional directors pursuant to
this Section) and (ii) the percentage that the number of Shares owned
by Parent or Merger Subsidiary (including Shares accepted for payment)
bears to the total number of Shares outstanding, and the Company shall
take all action necessary to cause Parent's designees to be elected or
appointed to the Company's Board of Directors, including, without
limitation, increasing the number of directors, or seeking and
accepting resignations of incumbent directors, or both; provided
however, that, prior to the Effective Time (defined below), the
Company's Board of Directors shall always have one member who is
neither a designee nor an affiliate of Parent or Merger Subsidiary nor
an employee of the Company (an "Independent Director"). If the number
of Independent Directors is reduced below one for any reason prior to
the Effective Time the departing Independent Director shall be
entitled to designate a person to fill such vacancy. No action
proposed to be taken by the Company to amend or terminate this
Agreement or waive any action by Parent or Merger Subsidiary shall be
effective without the approval of the Independent Director. At such
times, the Company will use its best efforts to cause individuals
designated by Parent to constitute the same percentage as such
individuals represent on the Company's Board of Directors of (x) each
committee of the Board, (y) each board of directors of each Subsidiary
(defined below) and (z) each committee of each such board.
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(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-l in
order to fulfill its obligations under this Section 1.3 and shall
include in the Schedule 14D-9 such information 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
1.3. Parent will supply to the Company in writing and be solely
responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
ARTICLE 2
THE MERGER
Section 2.1 The Merger.
(a) At the Effective Time, Merger Subsidiary shall be merged
(the "Merger") with and into the Company in accordance with Delaware
Law, whereupon the separate existence of Merger Subsidiary shall
cease, and the Company shall be the surviving corporation (the
"Surviving Corporation").
(b) As soon as practicable after satisfaction of or, to the
extent permitted hereunder, waiver of all conditions to the Merger,
the Company and Merger Subsidiary will file a certificate of merger
with the Secretary of State of the State of Delaware and make all
other filings or recordings required by Delaware Law in connection
with the Merger. The Merger shall become effective at such time as the
certificate of merger is duly filed with the Secretary of State of the
State of Delaware or, with the consent of the Independent Director, at
such later time as is specified in the certificate of merger (the
"Effective Time").
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and
franchises and be subject to all of the restrictions, disabilities and
duties of the Company and Merger Subsidiary, all as provided under
Delaware Law.
Section 2.2 Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned
by Parent, Merger Subsidiary or any subsidiary of either of them
immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted
and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation; and
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(c) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.2(a) or as
provided in Section 2.4 with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$12.50 in cash without interest (the "Merger Consideration").
Section 2.3 Surrender and Payment.
(a) Prior to the Effective Time, Parent shall appoint an
exchange agent (the "Exchange Agent") for the purpose of exchanging
certificates representing Shares for the Merger Consideration. Parent
will make available to the Exchange Agent, as needed, the Merger
Consideration to be paid in respect of the Shares (the "Exchange
Fund"). For purposes of determining the Merger Consideration to be
made available, Parent shall assume that no holder of Shares will
perfect the right to appraisal of Shares. Promptly after the Effective
Time, Parent will send, or will cause the Exchange Agent to send, to
each holder of Shares at the Effective Time a letter of transmittal
for use in such exchange (which shall specify that the delivery shall
be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange
Agent). The Exchange Agent shall, pursuant to irrevocable
instructions, make the payments provided for in this Section 2.3. The
Exchange Fund shall not be used for any other purpose, except as
provided in this Agreement.
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the
Exchange Agent of a certificate or certificates representing such
Shares, together with a properly completed letter of transmittal
covering such Shares, and such other documents as shall be reasonably
requested, will be entitled to receive the Merger Consideration
payable in respect of such Shares. Until so surrendered, each such
certificate shall, after the Effective Time, represent for all
purposes, only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid
to a person other than the registered holder of the Shares represented
by the certificate or certificates surrendered in exchange therefor,
it shall be a condition to such payment that the certificate or
certificates so surrendered shall be properly endorsed or otherwise be
in proper form for transfer and that the person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes
required as a result of such payment to a person other than the
registered holder of such Shares or establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not payable. For
purposes of this Agreement, "person" or "Person" means an individual,
a corporation, a partnership, a limited liability company, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time,
certificates representing Shares are presented to the Surviving
Corporation, they shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set
forth, in this Article 2.
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(e) Any portion of the Exchange Fund made available to the
Exchange Agent pursuant to Section 2.3(a) that remains unclaimed by
the holders of Shares six months after the Effective Time shall be
returned to Parent, upon demand, and any such holder who has not
exchanged his Shares for the Merger Consideration in accordance with
this Section 2.3 prior to that time shall thereafter look only to
Parent for payment of the Merger Consideration in respect of his
Shares. Notwithstanding the foregoing, Parent shall not be liable to
any holder of Shares for any amount paid to a public official pursuant
to applicable abandoned property laws. Any amounts remaining unclaimed
by holders of Shares immediately prior to such time as such amounts
would otherwise escheat to or become property of any governmental
entity shall, to the extent permitted by applicable law, become the
property of Parent, free and clear of any claims or interest of any
person previously entitled thereto.
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for
which appraisal rights have been perfected shall be returned to
Parent, upon demand.
Section 2.4 Dissenting Shares. Notwithstanding Section 2.2, Shares
outstanding immediately prior to the Effective Time and held by a holder who
has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with Delaware Law shall
not be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses the right to appraisal.
If after the Effective Time such holder fails to perfect or withdraws or loses
the right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the
right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands.
Section 2.5 Stock Options.
(a) At the time that Merger Subsidiary has accepted for
payment all Shares validly transferred and not withdrawn pursuant to
the Offer, each outstanding Company Option (defined below) shall be
canceled, and each holder of any such option shall be paid by Merger
Subsidiary promptly for each such option an amount determined by
multiplying (i) the excess, if any, of $12.50 per Share over the
applicable exercise price of such option by (ii) the number of Shares
such holder could have purchased had such holder exercised such option
in full immediately prior to the time that Merger Subsidiary has
accepted for payment all Shares validly transferred and not withdrawn
pursuant to the Offer (as if such Company Option was exercisable in
full). "Company Option" means any option granted, whether or not
exercisable, and not exercised or expired, to a current or former
employee, director or independent contractor of the Company or any of
its subsidiaries or any predecessor thereof to purchase Shares
pursuant to any stock option, stock bonus, stock award, or stock
purchase plan, program, or arrangement of the Company or any of its
subsidiaries or any predecessor thereof (collectively, the "Stock
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Plans") or any other contract or agreement (other than the Stock
Option Agreement) entered into by the Company or any of its
subsidiaries.
(b) As soon as practicable following the date of this
Agreement, the Company shall use its best efforts to (i) obtain any
consents from holders of Company Options and (ii) make any amendments
to the terms of such Stock Plans or arrangements that, in the case of
either clauses (i) or (ii), are necessary to give effect to the
transactions contemplated by Section 2.5(a). Notwithstanding any other
provision of this Section 2.5, payment may be withheld in respect of
any Company Option until necessary consents are obtained. All amounts
payable pursuant to this Section 2.5 shall be subject to, and reduced
by, any required withholding of taxes and shall be paid without
interest.
ARTICLE 3
THE SURVIVING CORPORATION
Section 3.1 Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to the name of the Company.
Section 3.2 Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
Section 3.3 Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation, and (ii) the officers of
the Merger Subsidiary at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Merger Subsidiary as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each of the Company and each of its subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed (individually or in the aggregate) could not
reasonably be expected to have a Material
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Adverse Effect, as defined below, on the Company and its subsidiaries
taken as a whole. The Company has delivered to Parent complete and
correct copies of its Certificate of Incorporation and By-Laws and the
certificates of incorporation or other charter or organizational
documents and by-laws of its subsidiaries, in each case as amended to
the date of this Agreement. For purposes of this Agreement, a
"subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests) of which is
owned directly or indirectly by such first person. As used herein
"Material Adverse Effect" means with respect to the Company, any
change in, or effect on, the Company or the business of the Company;
in each case including its subsidiaries taken as a whole, which is, or
which is reasonably likely to be, materially adverse to the business,
operations, assets, liabilities, results of operations, condition
(financial or otherwise), prospects, insurance licenses or other
material permits of the Company or its subsidiaries or which will, or
is reasonably likely to, prevent or materially delay, the transactions
contemplated by this Agreement, provided, however, (i) that any effect
on the Company or the business of the Company which is due to, arises
from, or relates to any action taken by the Company or its
subsidiaries after the date of this Agreement at the request of or
done at the direction or with the consent of the Parent shall not be
considered to have a Material Adverse Effect for any purpose under
this Agreement and (ii) provided, further, that a Material Adverse
Effect on the Company shall not be deemed to have occurred as a result
of (w) the Company establishing additional reserves and taking other
charges at September 30, 1999 in the amount of $13.5 million; (x) the
Company's independent actuarial review of the Company's reserves and
all other aspects of the Company's business, as contemplated by
Section 5.8 hereof, and the establishment of appropriate reserve
adjustments and other charges (collectively the "Charges") so long as
the Charges do not exceed $17 million in the aggregate (there being no
presumption that the establishment of reserves or charges in excess of
$17 million either will or will not have a Material Adverse Effect);
(y) any change (including changes in the market value of invested
assets) in general economic conditions affecting the insurance
business or their holding companies generally; or (z) the termination
of the Management Agreements between the Company and The Continental
Insurance Company as a result of a change of control.
"Material Adverse Effect" with respect to the Parent, means
any change in, or effect on, the Parent which is, or which is
reasonably likely to be, materially adverse to the Parent's
operations, assets, liabilities, results of operations, condition
(financial or otherwise) or prospects, on a consolidated basis, or
which will prevent or materially delay the transactions contemplated
by this Agreement.
(b) Subsidiaries.
(i) Section 4.1(b) of the disclosure schedule
delivered by the Company to Parent and Merger Subsidiary
prior to the execution of this Agreement (the "Disclosure
Schedule") lists each subsidiary of the Company and its
respective jurisdiction of incorporation and each state in
which the Company
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14
and each of its subsidiaries is licensed or qualified to
carry out its businesses. Except as disclosed in Section
4.1(b) of the Disclosure Schedule, all of the outstanding
shares of capital stock of each such subsidiary have been
validly issued and are fully paid and nonassessable and are
owned by the Company, by another subsidiary of the Company or
by the Company and another such subsidiary, free and clear of
all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock). Except for
the capital stock of its subsidiaries, the Company does not
own, directly or indirectly, any capital stock or other
ownership interest in any person except as disclosed in
Section 4.1(b)(i) of the Disclosure Schedule.
(ii) Except as set forth in Section 4.1(b)(ii) of
the Disclosure Schedule there are no corporations,
partnerships, limited liability companies, joint ventures,
associations or other entities (A) in which the Company owns,
of record or beneficially, any direct or indirect equity,
membership or other interest or any right (contingent or
otherwise) to acquire the same, or (B) which the Company
controls, directly or indirectly, by contract or proxy or
otherwise, alone or in combination with any other Person. As
used herein, unless the context otherwise requires, the term
"Company" includes the Company and each of its subsidiaries.
(c) Capital Structure. The authorized capital stock of the
Company (and not its subsidiaries) consists of 40,000,000 Shares and
5,000,000 shares of Preferred Stock of the Company. As of the date of
this Agreement, (i) 11,536,076 Shares were issued and outstanding,
(ii) 928,824 Shares were held by the Company in its treasury or by any
of the Company's subsidiaries, and (iii) 1,060,453 Shares were
reserved for issuance pursuant to the outstanding Company Options. No
Shares of Preferred Stock were outstanding. All outstanding Shares of
the Company are, and all Shares which may be issued pursuant to the
Stock Plans will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive rights.
Except as set forth in Section 4.1(c) of the Disclosure Schedule,
there are no bonds, debentures, notes, warrants or other indebtedness
or securities of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which shareholders of the Company may vote. Except as set
forth above and in Section 4.1(c) of the Disclosure Schedule, there
are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them
is bound obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or
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15
other voting securities of the Company or of any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Except as set forth
in Section 4.1(c) of the Disclosure Schedule, there are no outstanding
rights, commitments, agreements, arrangements or undertakings of any
kind obligating the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock or other
voting securities of the Company or any of its subsidiaries or any
securities of the type described in the two immediately preceding
sentences. The Company has delivered to Parent complete and correct
copies of the Stock Plans and all forms of Company Options. Section
4.1(c) of the Disclosure Schedule sets forth a complete and accurate
list of all Company Options outstanding as of the date of this
Agreement and the exercise price of each outstanding Company Option.
The authorized and outstanding capital stock of each of the Company's
subsidiaries is set forth in Section 4.1(c) of the Disclosure
Schedule.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement
and, except for any required approval by the Company's shareholders in
connection with the consummation of the Merger, to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of the
Company, except for any required approval by the Company's
shareholders in connection with the consummation of the Merger. This
Agreement has been duly executed and delivered by the Company and,
assuming this Agreement constitutes a valid and binding agreement of
Parent and Merger Subsidiary, constitutes a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforceability
may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or
at law. Except as set forth in Section 4.1(d) of the Disclosure
Schedule, the execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of
any Lien upon any of the properties or assets of the Company or any of
its subsidiaries under, (i) the Certificate of Incorporation or
By-Laws of the Company or the comparable charter or organizational
documents of any of its subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the
Company or any of its subsidiaries or their respective properties or
assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company
or any of its subsidiaries or their respective properties or assets
other than, in the case of clause (ii) or (iii) above, any such
conflicts, violations, defaults, rights or Liens that individually or
in the aggregate could not reasonably be expected to (A) have a
Material Adverse Effect, (B) impair the ability of the Company to
perform its obligations under this Agreement or (C) prevent or
materially delay consummation of any of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with or exemption by
(collectively, "Consents") any federal, state or local government or
any court, administrative or
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16
regulatory agency or commission or other governmental authority or
agency, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions
contemplated by this Agreement, except for (i) the filing of a
certificate of merger in accordance with Delaware Law and appropriate
documents with the relevant authorities of other states in which the
Company is qualified to do business, (ii) the filing of a premerger
notification and report form by the Company under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations thereunder (the "HSR Act"), (iii) compliance
with any applicable requirements of the Exchange Act, (iv) such
notices, filings and consents as may be required under relevant state
property transfer or environmental laws, (v) filing with the insurance
regulatory agencies set forth in Section 4.1(d) of the Disclosure
Schedule, and (vi) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as to which
the failure to obtain or make could not reasonably be expected to (x)
have a Material Adverse Effect or (y) prevent or materially delay the
consummation of any of the transactions contemplated by this
Agreement.
(e) SEC Documents; Financial Statements; No Undisclosed
Liabilities.
(i) The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC
since January 1, 1996 (the "SEC Documents"). As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933,
as amended, and the rules and regulations thereunder (the
"Securities Act"), or the Exchange Act, as the case may be,
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material fact
or omitted to state a 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. The financial statements of the Company included
in the SEC Documents (the "Financial Statements") comply as
to form in all material respects with applicable accounting
requirements and the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated
financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods
then ended (subject to the items set forth in Section 4.1(e)
of the Disclosure Schedule, and in the case of unaudited
statements, to normal, recurring year-end audit adjustments).
Except as set forth in the Company Filed SEC Documents
(defined below) or on Section 4.1(e) of the Disclosure
Schedule, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) and there is no
existing condition, situation or set of circumstances which
are required by generally accepted accounting
12
17
principles to be set forth on a consolidated balance sheet of
the Company and its consolidated subsidiaries or in the notes
thereto, except for liabilities which, individually or in the
aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(ii) The Company has heretofore delivered to the
Parent true and complete copies of the Annual Statutory
Statements and the Quarterly Statutory Statements filed with
each Governmental Entity. Each of the Annual Statutory
Statements and Quarterly Statutory Statements was prepared in
accordance with Statutory Accounting Practices ("SAP")
consistently applied throughout the periods involved, was
prepared in accordance with the books and records of the
Company, has been audited by the Company's independent public
accountants (the "Company's Accountants"), and presents
fairly the statutory financial position of the Company at the
respective dates thereof and the statutory results of
operations and cash flows of the Company for the respective
periods then ended, subject to the items set forth in Section
4.1(e) of the Disclosure Schedule, except that the Quarterly
Statutory Statements have not been audited and are subject to
normal recurring year-end audit adjustments. Except as set
forth in Section 4.1(e) of the Disclosure Schedule, each of
the Annual Statutory Statements and Quarterly Statutory
Statements (i) complies in all material respects with the
Insurance Codes, rules and regulations of any jurisdiction in
which such statements are required to be filed, (ii) was
complete and correct in all material respects when filed,
(iii) was filed with or submitted to each jurisdiction in
which such statements are required to be filed in a timely
manner on forms prescribed or permitted by each such
jurisdiction, and (iv) was not prepared utilizing any
material accounting practices that are permitted rather than
prescribed by each such jurisdiction. Except as set forth in
Section 4.1(e) of the Disclosure Schedules, no material
deficiency has been asserted with respect to any of the
Annual Statutory Statements or Quarterly Statutory Statements
by any Governmental Entity.
(f) Disclosure Documents.
(i) Each document required to be filed by the
Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure
Documents"), including, without limitation, the Schedule
14D-9, the proxy or information statement of the Company (the
"Company Proxy Statement"), if any, to be filed with the SEC
in connection with the Merger, and any amendments or
supplements thereto will, when filed, comply as to form in
all material respects with the applicable requirements of the
Exchange Act.
(ii) At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to
shareholders of the Company, and at the time such
shareholders vote on adoption of this Agreement, the Company
Proxy Statement, as supplemented or amended, if applicable,
will not contain any untrue
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18
statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made,
not misleading. At the time of the filing of any Company
Disclosure Document other than the Company Proxy Statement
and at the time of any distribution thereof, such Company
Disclosure Document will not contain any untrue statement of
a material fact or omit to state a material fact necessary in
order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading.
The representations and warranties contained in this Section
4.1(f)(ii) will not apply to statements or omissions included
in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or Merger
Subsidiary specifically for use therein.
(iii) The information with respect to the Company or
any subsidiary that the Company furnishes to Parent or Merger
Subsidiary in writing specifically for use in the Offer
Documents will not, at the time of the filing thereof, at the
time of any distribution thereof and at the time of the
consummation of the Offer, 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 made therein, in the light of the circumstances
under which they were made, not misleading.
(g) Absence of Certain Changes or Events. Except as disclosed
in the SEC Documents filed and publicly available prior to the date of
this Agreement (the "Company Filed SEC Documents") or in Section
4.1(g) of the Disclosure Schedule, since December 31, 1998, the
Company has conducted its business only in the ordinary course
consistent with past practice, and there has not been (i) any event,
occurrence or development of a state of circumstances which has had or
could reasonably be expected to have a Material Adverse Effect, (ii)
any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any
of the Company's capital stock or any repurchase, redemption or other
acquisition by the Company or any of its subsidiaries of any
outstanding shares of capital stock or other securities of the Company
or any of its subsidiaries, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv)
(A) any granting by the Company or any of its subsidiaries to any
current or former director, officer or employee of the Company or any
of its subsidiaries of any increase in compensation or benefits,
except in the ordinary course of business consistent with past
practice, (B) any granting by the Company or any of its subsidiaries
to any such director, officer or employee of any increase in severance
or termination pay (including the acceleration in the exercisability
of Company Options or in the vesting of Shares (or other property) or
the provision of any tax gross-up), except as was required under
employment, severance or termination agreements or plans in effect as
of December 31, 1998 which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect, or (C) any
entry by the Company or any of its subsidiaries into any employment,
deferred compensation, severance or termination
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agreement with any such current or former director, officer or
employee, except in the ordinary course of business consistent with
past practice, (v) any damage, destruction or loss, whether or not
covered by insurance, that has had or could have a Material Adverse
Effect, (vi) any change in accounting methods, principles or practices
by the Company or any of its subsidiaries, except insofar as may have
been required by a change in generally accepted accounting principles,
(vii) any amendment of any material term of any outstanding security
of the Company or any of its subsidiaries, (viii) any incurrence,
assumption or guarantee by the Company or any of its subsidiaries of
any material indebtedness for borrowed money other than in the
ordinary course of business consistent with past practice, but in no
event in the amount of more than $250,000 in the aggregate, (ix) any
creation or assumption by the Company or any of its subsidiaries of
any Lien on any asset other than in the ordinary course of business
consistent with past practice, but in no event in the amount of more
than $250,000 for any one transaction or $500,000 in the aggregate,
(x) any making of any loan, advance or capital contributions to or
investment in any person other than (A) made in the ordinary course of
business consistent with past practice, but in no event in the amount
of more than $100,000 for any one transaction or $150,000 in the
aggregate and (B) investments in cash equivalents made in the ordinary
course of business consistent with past practice, (xi) any transaction
or commitment made, or any contract or agreement entered into, by the
Company or any of its subsidiaries relating to its assets or business
(including the acquisition or disposition of any assets or the merger
or consolidation with any person) or any relinquishment by the Company
or any of its subsidiaries of any contract or other right, in either
case, material to the Company or any of its subsidiaries, other than
transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this
Agreement, but in no event representing commitments on behalf of the
Company or any of its subsidiaries of more than $250,000 for any
transaction or $500,000 for any series of transactions, (xii) any
material labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof
to organize any employees of the Company or any of its subsidiaries,
which employees were not subject to a collective bargaining agreement
at December 31, 1998, or any material lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to such employees
or (xiii) any agreement, commitment, arrangement or undertaking by the
Company or any of its subsidiaries to perform any action described in
clauses (i) through (xii).
(h) Litigation. Except as disclosed in Section 4.1(h) of the
Disclosure Schedule, there is no suit, action or proceeding pending
or, to the knowledge of the Company, threatened against or affecting
the Company or any of its subsidiaries that, individually or in the
aggregate, could reasonably be expected to (i) have a Material Adverse
Effect, (ii) impair the ability of the Company to perform its
obligations under this Agreement or (iii) prevent or materially delay
the consummation of the Offer, the Merger or any of the other
transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its
subsidiaries having, or which, insofar as reasonably can be foreseen,
in the future would have, any such effect. Section 4.1(h) of the
Disclosure Schedule sets forth, with respect to any pending suit,
action or proceeding
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20
to which the Company or any of its subsidiaries is a party, the forum,
the parties thereto, the subject matter thereof and the amount of
damages claimed. Any representation or warranty in this Agreement
which is expressed as made to the Company's knowledge or to the
knowledge of the Company means the knowledge, after reasonable
investigation and due inquiry, of the officers of the Company listed
on Schedule 4.1(h) of the Disclosure Schedule.
(i) Absence of Changes in Stock or Benefit Plans. Except as
disclosed in Section 4.1(i) of the Disclosure Schedule, since December
31, 1998, and through the date hereof, there has not been (i) any
acceleration, amendment or change of the period of exercisability or
vesting of any Company Options or restricted stock, stock bonus or
other awards under the Stock Plans or any other options to purchase
Shares or stock of any subsidiary of the Company (including any
discretionary acceleration of the exercise periods or vesting by the
Company's Board of Directors or any committee thereof or any other
persons administering a Stock Plan) or authorization of cash payments
in exchange for any Company Options, restricted stock, stock bonus or
other awards granted under any of such Stock Plans or any other
options to purchase Shares as stock of any subsidiary of the Company
or (ii) any adoption or amendment by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom
stock, stock appreciation right, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, workers'
compensation, disability, supplementary unemployment benefits, or
other plan, arrangement or understanding (whether or not legally
binding) or any employment agreement providing compensation or
benefits to any current or former employee, officer, director or
independent contractor of the Company or any of its subsidiaries or
any beneficiary thereof or entered into, maintained or contributed to,
as the case may be, by the Company or any of its subsidiaries or ERISA
affiliates (as hereafter defined) (collectively, "Benefit Plans")
other than immaterial amendments to any such Benefit Plan. Section
4.1(i) of the Disclosure Schedule sets forth for each of the fifteen
most highly compensated employees of the Company, the aggregate
maximum amount of all termination, severance or other similar benefits
to which such employee is entitled in connection with the Merger and
the other transactions contemplated by this Agreement.
(j) Participation and Coverage in Benefit Plans. Except as
set forth in Section 4.1(j) of the Disclosure Schedule, there has been
no adoption of, or amendment to, or change in employee participation
or coverage under, or written interpretation or announcement (whether
or not written) by the Company or any of its subsidiaries relating to,
any Benefit Plans which would increase materially the expense of
maintaining such Benefit Plans above the level of the expense incurred
in respect thereof for the fiscal year ended on December 31, 1998.
(k) ERISA Compliance.
(i) Except as otherwise indicated therein, Section
4.1(k) of the Disclosure Schedule lists all Benefit Plans and
"employee benefit plans" (defined
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21
in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), currently maintained, or
contributed to, by the Company or any of its subsidiaries or
ERISA affiliates (defined below) for the benefit of any
current or former employees, officers or directors of the
Company or any of its subsidiaries or ERISA affiliates or
under which the Company or any of its subsidiaries or ERISA
affiliates has any liability. The Company has delivered to
Parent a complete copy of (A) the current plan document for
each Benefit Plan (or, in the case of any unwritten Benefit
Plans, descriptions thereof), (B) a copy of the most recent
Form 5500 filed with the Internal Revenue Service with
respect to each Benefit Plan (if any such report was
required), (C) the most recent summary plan description for
each Benefit Plan for which a summary plan description is
required, (D) each trust agreement and group annuity or
insurance contract relating to any Benefit Plan, and (E) to
the extent still in the Company's possession, all material
correspondence to or from the Internal Revenue Service or the
Department of Labor from January 1, 1996 through the date
hereof to or from the Internal Revenue Service or the
Department of Labor relating to any Benefit Plan. For
purposes of this Agreement, "ERISA affiliate" of the Company
means any person which, together with the Company or any of
its subsidiaries, would be treated as a single employer under
Section 414 of the Internal Revenue Code of 1986, as amended
(the "Code").
(ii) Except as set forth in Section 4.1(k) of the
Disclosure Schedule, to the knowledge of the Company, each
Benefit Plan has been maintained and administered in
compliance with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules
and regulations except as would not have a Material Adverse
Effect and is, to the extent required by applicable law or
contract, fully funded on a termination basis without having
any deficit or unfunded actuarial liability. Any Benefit Plan
intended to be qualified under Section 401(a) of the Code has
obtained from the Internal Revenue Service a favorable
determination letter as to its qualified status under the Tax
Reform Act of 1986 and, to Company's knowledge, nothing has
occurred since the issuance of each such letter which could
reasonably be expected to cause the loss of the tax qualified
status of any Benefit Plan intended to be qualified under
Code Section 401(a).
(iii) Except as set forth in Section 4.1(k) of the
Disclosure Schedule, no Benefit Plan is or ever has been
covered by Title IV of ERISA or Section 412 of the Code and
none of the Company, any of its subsidiaries, or any ERISA
affiliate has ever participated in, maintained, or
contributed to any such plan. To the knowledge of the
Company, neither the Company nor any of its subsidiaries or
ERISA affiliates has incurred or expects to incur any
liability under Title IV of ERISA or any liability or penalty
under Section 4975 or 4980B of the Code or Section 502(i) of
ERISA. To the knowledge of the Company, none of the Company,
any of its subsidiaries, or any ERISA affiliate has ever
engaged in, or is a successor or affiliate of any entity that
has engaged in, a transaction which is described in Section
4069 of ERISA.
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(iv) Except as set forth in Section 4.1(k) of the
Disclosure Schedule, to the Company's knowledge, there are no
pending or anticipated material claims against or otherwise
involving any of the Benefit Plans and no suit, action or
other litigation (excluding claims for benefits incurred in
the ordinary course of Benefit Plan activities) has been
brought against or with respect to any Benefit Plan.
(v) Except as set forth in Section 4.1(k) of the
Disclosure Schedule, to the Company's knowledge, all material
contributions, reserves or premium payments, required to be
made as of the date hereof to or with respect to the Benefit
Plans have been made or provided for except as would not have
a Material Adverse Effect.
(vi) Except as set forth in Section 4.1(k) of the
Disclosure Schedule, or as otherwise required by law, neither
the Company nor any of its subsidiaries or ERISA affiliates
has any obligations for post-retirement or post-termination
health (including medical, dental and vision), life
(including accidental death and dismemberment), and/or long
term disability benefits under any Benefit Plan. Except as
set forth in Section 4.1(k) of the Disclosure Schedule, each
Benefit Plan, including each plan providing coverage or
benefits for retired employees and/or their beneficiaries,
may be amended or terminated at any time by the Company or
any of its subsidiaries or ERISA affiliates. None of the
Benefit Plans are self-insured "multiple employer welfare
arrangements" as such term is defined in Section 3(40) of
ERISA.
(l) Taxes. As used in this Agreement, "tax" or "taxes" shall
include all Federal, state, local and foreign income, property, sales,
excise and other taxes, tariffs or similar governmental charges or
assessments as well as any interest, penalties and additions thereto.
(i) The Company and each of its subsidiaries have
timely filed all tax returns, statements, reports and forms
required to be filed with any tax authority and in accordance
with all applicable laws. All such tax returns are correct
and complete in all material respects. All taxes owed by the
Company and any of its subsidiaries (whether or not shown on
any tax return) have been paid (excluding any taxes owed but
not yet due). There are no Liens on any of the assets of the
Company or any of its subsidiaries that arose in connection
with any failure (or alleged failure) to pay any tax.
(ii) The Company and each of its subsidiaries has
withheld and timely paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, shareholder,
or other third party.
(iii) To the knowledge of the Company, there is no
potential assessment by a taxing authority of any additional
taxes against the Company or any of its subsidiaries for any
period for which tax returns have been filed. Except as set
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23
forth in Section 4.1 (l) (iii) of the Disclosure Schedule no
dispute or claim concerning any tax liability of the Company
or any of its subsidiaries has been proposed or claimed in
writing by any authority. The Company has provided Parent
with a list of all Federal, state, local, and foreign income
tax returns filed with respect to the Company and any of its
subsidiaries for taxable periods ended on or after December
31, 1994, indicating those tax returns that have been
audited, and indicating those tax returns that currently are
the subject of audit. The Company has provided Parent with
correct and complete copies of all its Federal income tax
returns, and examination reports, and statements of
deficiencies assessed against or agreed to by the Company and
any of its subsidiaries since December 31, 1994.
(iv) Neither the Company nor any of its subsidiaries
has waived any statute of limitations in respect of taxes or
agreed to any extension of time with respect to a tax
assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries
has filed a consent pursuant to Section 341(f) of the Code
concerning collapsible corporations. Except as set forth on
Section 4.1(l)(v) of the Disclosure Schedule, neither the
Company nor any of its subsidiaries is a party to any tax
allocation or sharing agreement. Neither the Company nor any
of its subsidiaries has any liability for the taxes of any
person (other than the Company and any of its subsidiaries
that is currently a member of the Company's affiliated group
filing a consolidated federal income tax return) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(vi) As of the date of the most recent financial
statements included in the Company Filed SEC Documents, the
unpaid taxes of the Company and its subsidiaries did not
exceed the reserve for taxes (rather than any reserve for
deferred taxes established to reflect timing differences
between book and tax income) established in such financial
statements.
(vii) Neither the Company nor any of its
subsidiaries is required to include in income any adjustment
pursuant to Section 481(a) of the Code (or similar provisions
of other law or regulations) in its current or in any future
taxable period by reason of a change in accounting method;
nor does the Company or any of its subsidiaries have any
knowledge that the Internal Revenue Service (or other taxing
authority) has proposed or is considering proposing, any such
change in accounting method. Except as set forth on Section
4.1(l)(vii) of the Disclosure Schedule, neither the Company
nor any of its subsidiaries is a party to any agreement,
contract, or arrangement that, individually or collectively,
could give rise to the payment of any amount (whether in cash
or property, including Company Stock) that would not be
deductible pursuant to the terms of Sections 162(a)(1),
162(m), 162(n) or 280G of the Code.
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(viii) The Company qualifies as an insurance company
under the Code and the Company has received no notice or
other communication relating to or affecting such
qualification of the Company as an insurance company.
(ix) Section 4.1(l)(ix) of the Disclosure Schedule
contains a list of all states, territories and jurisdictions
(foreign or domestic) to which any tax is properly payable by
the Company. No claim has ever been made by any taxing
authority in a jurisdiction in which the Company does not
file tax returns that it is or may be subject to tax in that
jurisdiction.
(m) State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement, and the
transactions contemplated hereby and thereby, and such approval is
sufficient to render inapplicable to the Offer, the Merger, this
Agreement, and the transactions contemplated hereby or thereby, the
provisions of Section 203 of Delaware Law. To the best of the
Company's knowledge, no other "fair price", "moratorium", "control
share acquisition", or other anti-takeover statute or similar statute
or regulation, applies or purports to apply to the Offer, the Merger,
the Shareholder Option Agreement, this Agreement, the Stock Option
Agreement or any of the transactions contemplated hereby or thereby.
(n) Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than
Advest, the fees and expenses of which will be paid by the Company
(and a copy of whose engagement letter and a calculation of the fees
that would be due thereunder has been provided to Parent), is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company
or any of its subsidiaries. No such engagement letter obligates the
Company to continue to use the services or pay fees or expenses in
connection with any future transaction.
(o) Licenses and Permits; Agents.
(i) Except as set forth in Section 4.1(o)(i) of the
Disclosure Schedule, the Company and its subsidiaries have
all governmental licenses, permits and authorizations (other
than those relating to the writing of insurance which are
covered by the next sentence) necessary to carry on the
Business now being conducted by the Company and its
subsidiaries (collectively, the "Permits"), all of which are
valid and in full force and effect, except for such Permits
the absence of which, individually or in the aggregate, would
not have a Material Adverse Effect. The Company and its
subsidiaries have been, and are, in compliance in all
material respects with all applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees or orders
of any Governmental Entity, except for such non-compliance
which, individually or in the aggregate would not have a
Material Adverse Effect, and neither the Company nor any of
its subsidiaries has received any notice from any
Governmental Entity or any other person that either the
Company or any of its subsidiaries is in violation of, or has
violated, any
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applicable statutes, laws, ordinances, regulations, rules,
judgments, decrees or orders. Section 4.1(o)(i) of the
Disclosure Schedule lists all jurisdictions in which the
Company is licensed, authorized or permitted to write
insurance or reinsurance. The Company has been duly
authorized by the relevant state, foreign and other insurance
regulatory authorities to write the lines of insurance or
reinsurance that it is currently writing in the respective
jurisdictions in which it does business. Except as set forth
in Section 4.1(o)(i) of the Disclosure Schedule, the Company
does not conduct any business or underwrite reinsurance in
any foreign jurisdiction which requires any license or
approval for the Company to conduct its business as currently
conducted. No insurance regulator in any state has notified
the Company, orally or in writing, that the Company is
commercially domiciled in any jurisdiction, and the Company
is not aware of any facts that would result in the Company
being commercially domiciled in any state. The insurance
licenses listed in Section 4.1(o)(i) of the Disclosure
Schedule are the licenses necessary for the Company to
conduct the business in the manner and in the areas in which
such business is currently being conducted except where the
failure to be so licensed would not, individually or in the
aggregate, have a Material Adverse Effect, and all of the
insurance licenses are valid and in full force and effect.
The Company has not received any notice, oral or written,
that it has, and to its knowledge it has not, engaged in any
activity which would cause modification, limitation,
non-renewal, revocation or suspension of any insurance
license or permit, and no action, inquiry, investigation or
proceeding looking to or contemplating the revocation,
modification, limitation, non-renewal or suspension of any
thereof is pending or threatened. Except as set forth in
Section 4.1(o)(i) of the Disclosure Schedule, (i) all
reports, statements, documents, registrations, filings and
submissions to state insurance regulatory authorities
complied in all respects with applicable law in effect when
filed and (ii) no deficiencies have been asserted by any such
regulatory authority with respect to such reports,
statements, documents, registrations, filings or submissions
that have not been satisfied except to the extent that any
failure to file such items or such deficiencies would not,
individually or in the aggregate, result in a Material
Adverse Effect.
(ii) To the best of the Company's knowledge, all
Persons through whom the Company has placed or sold
reinsurance and insurance are duly licensed (to the extent
such licensing is required) to sell or place insurance and
reinsurance in the jurisdiction where they do so on behalf of
the Company. Except as set forth in Section 4.1(o)(ii) of the
Disclosure Schedule, no single agent, broker, intermediary or
producer generated more than $500,000 of the aggregate gross
written premium of the Company during the years ended
December 31, 1997 or December 31, 1998 or the period ending
August 31, 1999. Except as otherwise set forth in Section
4.1(o)(ii) of the Disclosure Schedule, no Person listed on
Section 4.1(o)(ii) of the Disclosure Schedule has given or
been given written notice of termination or, to the knowledge
of the Company, threatened or been threatened with
termination, or threatened or been threatened with a
substantial reduction in the amount of premiums to be written
by such Person on behalf of the Company. Except as set forth
in Section 4.1(o)(ii) of the
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Disclosure Schedule, the Company is not a party to any
managing general agency contracts or other similar
arrangements. Except as set forth in Section 4.1(o)(ii) of
the Disclosure Schedule, the Company is not a party to any
fronting or similar agreement to place or sell reinsurance or
insurance for any other Person.
(p) Contracts; Debt Instruments; Leases.
(i) Except as otherwise disclosed in Section
4.1(p)(i)(A)-4.1(p)(i)(F) of the Disclosure Schedule, neither
the Company nor any of its subsidiaries is a party to or
subject to:
(A) any union contract, or any employment,
consulting, severance, termination, or
indemnification agreement, contract or arrangement
providing for future payments, written or oral, with
any current or former officer, consultant, director
or employee which (1) exceeds $25,000 per annum or
(2) requires aggregate annual payments or total
payments over the life of such agreement, contract
or arrangement to such current or former officer,
consultant, director or employee in excess of
$25,000 or $50,000, respectively, and is not
terminable by it or its subsidiary on 30 days'
notice or less without penalty or obligation to make
payments related to such termination;
(B) any joint venture contract or
arrangement or any other agreement which has
involved or is expected to involve a sharing of
revenues of $50,000 per annum or more with other
persons;
(C) any lease for real or personal
property;
(D) any material agreement, contract,
policy, license, Permit, document, instrument,
arrangement or commitment which has not been
terminated or performed in its entirety and not
renewed which may be, by its terms, terminated,
impaired or adversely affected by reason of the
execution of this Agreement, the closing of the
Offer or the Merger, or the consummation of the
transactions contemplated hereby;
(E) any agreement, contract, policy,
license, Permit, document, instrument, arrangement
or commitment that materially limits the freedom of
the Company or any subsidiary of the Company to
compete in any line of business or with any person
or in any geographic area or which would so
materially limit the freedom of the Company or any
subsidiary of the Company after the Effective Time;
or
(F) any other agreement, contract, policy,
license, Permit, document, instrument, arrangement
or commitment not made in the ordinary course of
business which is material to the Company or any of
its subsidiaries.
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27
(ii) All contracts, policies, agreements, leases,
licenses, Permits, documents, instruments, arrangements and
other commitments listed in Section 4.1(p)(i)(A)-4.1(p)(i)(F)
and Section 4.1(p)(iv) of the Disclosure Schedule or
otherwise disclosed in the Company Filed SEC Documents are
valid and binding agreements of the Company or a subsidiary
of the Company and are in full force and effect, except to
the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other
laws affecting the enforcement of creditors' rights generally
and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity
or at law and neither the Company, any of its subsidiaries
nor, to the knowledge of the Company, any other party
thereto, is in default in any material respect under the
terms of any such contract, plan, arrangement, agreement,
lease, license, Permit, instrument or other commitment.
(iii) Neither the Company nor any subsidiary of the
Company is in default in any material respect under the terms
of any exclusive license or distribution agreement or
arrangement, true and complete copies or descriptions of all
of which have been delivered to Parent. To the knowledge of
the Company, none of the parties to any of the contracts
identified pursuant to the immediately proceeding sentence,
in Section 4.1(p)(i)(A)-4.1(p)(i)(F) of the Disclosure
Schedule or otherwise disclosed in the Company Filed SEC
Documents has terminated, or in any way expressed an intent
to materially reduce or terminate the amount of, its business
with the Company or any of its subsidiaries in the future.
(iv) Set forth in Section 4.1(p)(iv) of the
Disclosure Schedule is (A) a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any indebtedness
of the Company or any of its subsidiaries in an aggregate
principal amount in excess of $100,000 is outstanding or may
be incurred and (B) the respective principal amounts
currently outstanding thereunder. For purposes of this
Section 4.1(p)(iv), "indebtedness" shall mean, with respect
to any person, without duplication, (A) all obligations of
such person for borrowed money, or with respect to deposits
or advances of any kind to such person, (B) all obligations
of such person evidenced by bonds, debentures, notes or
similar instruments, (C) all obligations of such person upon
which interest charges are customarily paid, (D) all
obligations of such person under conditional sale or other
title retention agreements relating to property purchased by
such person, (E) all obligations of such person issued or
assumed as the deferred purchase price of property or
services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred
in the ordinary course of such person's business), (F) all
capitalized lease obligations of such person, (G) all
obligations of others secured by any Lien on property or
assets owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all
obligations of such person under interest rate or currency
swap transactions (valued at the termination value thereof),
(I) all letters of credit issued for the account of such
person (excluding letters of credit issued for the benefit of
suppliers to support accounts payable
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to suppliers incurred in the ordinary course of business),
(J) all obligations of such person to purchase securities (or
other property) which arises out of or in connection with the
sale of the same or substantially similar securities or
property, and (K) all guarantees and arrangements having the
economic effect of a guarantee of such person of any
indebtedness of any other person.
(v) All equipment, fixtures and other Properties
owned or leased by the Company (including those listed in the
Company's Depreciation Ledger in Section 4.1(p)(v) of the
Disclosure Schedule) are (i) in good operating condition and
repair, reasonable wear and tear excepted, and (ii) adequate
for the Business currently conducted by the Company and
suitable in all respects for the purposes for which they are
being used, except for such failures to be in such good
operating condition or adequacy or suitability which,
individually and in the aggregate, do not have a Material
Adverse Effect.
(q) Opinion of Financial Advisor. The Company has received
the opinion of Advest, dated the date hereof, a copy of which has been
or, within two business days of the date hereof, will be provided to
Parent, to the effect that, as of such date, the consideration to be
paid in the Offer and the Merger is fair to the Company's shareholders
from a financial point of view.
(r) Interests of Officers and Directors. None of the
Company's or any of its subsidiaries' officers or directors has any
interest in any property, real or personal, tangible or intangible,
including inventions, patents, copyrights, trademarks, trade names,
trade secrets or know-how, used in or pertaining to the business of
the Company or that of its subsidiaries, or any supplier, distributor
or customer of the Company or any of its subsidiaries, except for the
normal rights of a shareholder and rights under existing employee
Benefit Plans and Stock Plans.
(s) Technology.
(i) Except as set forth in Section 4.1(s) of the
Disclosure Schedule, the Company exclusively owns, or is
licensed to use, the rights to all patents, trademarks, trade
names, service marks, copyrights and any applications
therefor, technology, trade secrets, know-how, computer
software programs or applications and tangible or intangible
proprietary information or material that in any material
respect are used or proposed to be used in the business of
the Company and any of its subsidiaries as currently
conducted or proposed to be conducted (the "Company
Intellectual Property Rights"). Section 4.1(s) of the
Disclosure Schedule lists: (A) all patents, registered
trademarks, trade names, registered service marks, registered
copyrights, and any applications therefor included in the
Company Intellectual Property Rights; and (B) all material
licenses and other agreements to which the Company or any of
its subsidiaries is a party and pursuant to which the Company
or any of its subsidiaries is authorized to use any Company
Intellectual Property Right, and includes the identities of
the parties thereto, a description of the nature and subject
matter thereof, the applicable
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royalty and the term thereof. Neither the Company nor any of
its subsidiaries is, or as a result of the execution,
delivery or performance of the Company's obligations
hereunder will be, in violation of, or lose any rights
pursuant to, any material license or agreement described in
Section 4.1(s) of the Disclosure Schedule.
(ii) No claims with respect to the Company
Intellectual Property Rights have been asserted in writing
or, to the knowledge of the Company, are threatened by any
person nor does the Company or any subsidiary of the Company
know of any valid grounds for any bona fide claims (A) to the
effect that the manufacture, sale or use of any product or
process as now used or offered or proposed for use or sale by
the Company or any subsidiary of the Company infringes on any
United States copyright, trade secret, United States patent
or other United States intellectual property right of any
person, (B) against the use by the Company or any subsidiary
of the Company of any Company Intellectual Property Rights,
or (C) challenging the ownership, validity or effectiveness
of any of the Company Intellectual Property Rights. All
granted and issued patents and all registered trademarks and
service marks listed in Section 4.1(s) of the Disclosure
Schedule and all registered copyrights held by the Company or
any of its subsidiaries are valid, enforceable and
subsisting. To the Company's knowledge, there has not been
and there is not any material unauthorized use, infringement
or misappropriation of any of the Company Intellectual
Property Rights by any third party, employee or former
employee.
(t) Change of Control. Except as disclosed in Section 4.1(t)
of the Disclosure Schedule, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
and thereby will not (i) result in any payment (including severance,
unemployment compensation, tax gross-up, bonus or otherwise) becoming
due to any current or former director, employee or independent
contractor of the Company or any of its subsidiaries, from the Company
or any of its subsidiaries under any Stock Plan, Benefit Plan,
agreement or otherwise, (ii) materially increase any benefits
otherwise payable under any Stock Plan, Benefit Plan, agreement or
otherwise or (iii) result in the acceleration of the time of payment,
exercise or vesting of any such benefits, in each case, that could
reasonably be expected to have a Material Adverse Effect.
(u) Environmental. Except as set forth in Section 4.1(u) of
the Disclosure Schedule, (i) the businesses as presently or formerly
engaged in by the Company and its subsidiaries are and have been
conducted in compliance in all material respects with all applicable
Environmental Laws (defined below), including having all permits,
licenses and other approvals and authorizations, during the time the
Company (or such subsidiary) engaged in such businesses, (ii) to the
knowledge of the Company, the properties presently owned or operated
by the Company or any subsidiary of the Company (including soil,
groundwater or surface water on, under or adjacent to the properties,
and buildings thereon) ("Company Properties") do not contain any
Hazardous Substance (defined below) other than as permitted under
applicable Environmental Laws,
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(iii) neither the Company nor any subsidiary of the Company has
received any notices, demand letters or requests for information from
any federal, state, local or foreign governmental entity or any third
party indicating that the Company or any subsidiary of the Company may
be in violation of, or liable under, any Environmental Law in
connection with the ownership or operation of the Company's or any of
its subsidiaries' businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or to the knowledge of the
Company, threatened against the Company or any subsidiary of the
Company with respect to the Company or any subsidiary of the Company
or the Company Properties relating to any violation, or alleged
violation, of any Environmental Law, (v) to the knowledge of the
Company, no reports have been filed, or are required to be filed, by
the Company or any subsidiary of the Company concerning the release of
any Hazardous Substance or the threatened or actual violation of any
Environmental Law on or at Company Properties, (vi) to the knowledge
of the Company, no Hazardous Substance has been disposed of,
transferred, released or transported from any Company Property during
the time such Company Property was owned or operated by the Company or
any subsidiary of the Company, other than as permitted under
applicable Environmental Law, (vii) to the knowledge of the Company,
there have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the
possession of the Company or any subsidiary of the Company relating to
the Company or any subsidiary of the Company or the Company Properties
which have not been delivered to Parent prior to the date hereof,
(viii) to the knowledge of the Company, there are no underground
storage tanks on, in or under any of the Company Properties and no
underground storage tanks have been closed or removed from any Company
Properties while such Company Property was in the ownership of the
Company or any subsidiary of the Company, (ix) to the knowledge of the
Company, there is no asbestos present in any Company Property
presently owned or operated by the Company or any subsidiary of the
Company in violation of any Environmental Law, and no asbestos has
been removed from any Company Property while such Company Property was
owned or operated by the Company or any subsidiary of the Company, (x)
none of the Company Properties has been used at any time by the
Company or any subsidiary of the Company as a sanitary landfill or
hazardous waste disposal site, and (xi) neither the Company nor any
subsidiary of the Company has incurred, and to the knowledge of the
Company, none of the Company Properties are presently subject to, any
liabilities (fixed or contingent) relating to any suit, settlement,
court order, administrative order, judgment or claim asserted or
arising under any Environmental Law.
"Environmental Law" means (i) any federal, state, foreign and
local law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, order, judgment, decree, injunction,
requirement or agreement with any governmental entity, (A) relating to
the protection, preservation or restoration of the environment
(including air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or
any other natural resource), or to human health or safety or (B)
relating to the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of, Hazardous Substances, in each case
as amended and as now or hereafter in effect and
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(ii) any common law or equitable doctrine (including injunctive
relief) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Substance.
"Hazardous Substance" means any substance presently listed,
defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law,
whether by type or by quantity, including any substance containing any
such substance as a component. The term "Hazardous Substance" includes
any toxic waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste, or petroleum or any
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
(v) Title to Properties. Except as set forth in Section
4.1(v) of the Disclosure Schedule,
(i) each of the Company and its subsidiaries has
good and marketable or indefeasible title to, or valid
leasehold interests in, all its properties and assets, free
and clear of all Liens, except for defects in title,
easements, restrictive covenants and similar encumbrances or
impediments that, in the aggregate, do not and will not
materially interfere with the use of the properties or assets
subject thereto or affected thereby or otherwise materially
impair business operations at such properties;
(ii) each of the Company and each of its
subsidiaries has complied in all material respects with the
terms of all leases to which it is a party and under which it
is in occupancy, and all such leases are in full force and
effect and each of the Company and each of its subsidiaries
enjoys peaceful and undisturbed possession under all such
leases;
(iii) all royalties, rentals, and other payments due
with respect to the Company's its subsidiaries' leasehold or
other property interests have been properly and timely paid,
except (A) for payments which will not result in grounds for
cancellation of the Company's or its subsidiaries' rights and
(B) such failures as would not have a Material Adverse
Effect; and
(iv) neither the Company nor any of its subsidiaries
is in default (and there exists no event or circumstance
which with notice or the passage of time or both could
constitute a default by the Company or its subsidiaries)
under the terms of any leases, or other contracts or
agreements respecting the Company's or its subsidiaries'
which could (A) interfere in any material respect with the
operation or use thereof, (B) prevent the Company or its
subsidiaries from receiving the proceeds attributable to
their interest therein, (C) result in cancellation of the
Company's interest therein, or (D) impair the value of the
Company's or its subsidiaries' interest therein.
(w) Other Obligations.
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(i) except as disclosed in Section 4.1(w) of the
Disclosure Schedule, none of the Company and its subsidiaries
engages in any futures or options trading or is a party to
any related price swaps, xxxxxx, futures or similar
instruments. Section 4.1(w) of the Disclosure Schedule
discloses a true and correct statement of the position, as of
the date hereof, of the Company and its subsidiaries with
respect to obligations under Fixed Price Contracts
(including, with respect to each Fixed Price Contract,
location of delivery and variations in the obligation to take
or deliver) and price swaps, xxxxxx, futures or similar
instruments to which the Company or any of its subsidiaries
is a party and that are material to the Company. "Fixed Price
Contracts" shall mean any contracts, commitments or
agreements (x) having a remaining term of more than sixty
(60) days, wherein the purchase or sale price thereunder
throughout part of the remaining life of such contract,
commitment or agreement is a fixed amount or an amount that
is otherwise reasonably determinable as of the date hereof
pursuant to the terms of such contract, commitment or
agreement, or (y) which has been hedged with futures
contracts or otherwise.
(ii) neither the Company nor any of its subsidiaries
has entered into, or is a party to, or has any obligations
under, any contract for property or services that require
payment to be made by the Company or its subsidiaries
regardless of whether or not delivery is ever made of such
property or services.
(x) Public Utility Holding Company Act; Non-Utility Status.
Except as set forth in Section 4.1(x) of the Disclosure Schedule, (i)
neither the Company nor any of its subsidiaries is a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended; (ii) neither the Company nor
any of its subsidiaries is a regulated utility under the laws of any
state; (iii) no claim or complaint to the effect that the Company or
any of its subsidiaries is a regulated utility under the laws of any
state has been made to the Company or any of its subsidiaries or by
or, to the knowledge of the Company, to any public utilities
commission of any state; and (iv) neither the Company nor any of its
subsidiaries has offered pipeline service or gas transportation
services to the general public or to any significant segment thereof
or has dedicated its pipelines or related facilities in any manner to
public use.
(y) Year 2000. To the knowledge of the Company after due
inquiry except as disclosed in Section 4.1(y) of the Disclosure
Schedule, all of the MIS Systems (other than immaterial systems) and
the Facilities (other than immaterial Facilities) are, or prior to
November 1, 1999 will be, Year 2000 Compliant. The Company has made
inquiries of all material vendors of products or services to the
Company and its subsidiaries as to whether those vendors will continue
to furnish their products or services to the Company and its
subsidiaries without interruption or material delay, on and after
January 1, 2000, and as to whether such products and services are Year
2000 compliant. Section 4.1(y) of the Disclosure Schedule sets forth a
list of all vendor and supplier Year 2000 inquiry responses received
by the Company. "Year 2000 Compliant" means that (i) the MIS Systems
accurately process, provide and/or receive all date/time data
(including
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calculating, comparing, sequencing, processing and outputting) within,
from, into, and between centuries (including the twentieth and
twenty-first centuries and the years 1999 and 2000), including leap
year calculations, and (ii) neither the Company's or any of its
subsidiaries' provision of their products and services nor the
performance on functionality of those products and services will be
materially adversely impacted by the transition from the twentieth to
the twenty-first century. "Facilities" means any facilities or
equipment used by the Company or any of its subsidiaries in any
location, including HVAC systems, mechanical systems, elevators,
security systems, fire suppression systems, telecommunications
systems, fax machines, copy machines, and equipment, whether or not
owned by the Company or any of its subsidiaries. "MIS Systems" means
any computer software and systems (including hardware, firmware,
operating system software, utilities software and applications
software) used in the ordinary course of business by or on behalf of
the Company or any of its subsidiaries, including in conjunction with
the Company's or any of its subsidiaries' payroll, accounting,
billing/receivables, inventory, asset tracking, customer service,
human resources, and e-mail systems.
(z) Insurance. Schedule 4.1(z) of the Disclosure Schedule
contains a true and complete list of all insurance policies held by
either the Company or any of its subsidiaries. All such policies held
by the Company or its subsidiaries, are in full force and effect and
all related premiums have been paid to date. There are no pending or
to the knowledge of the Company, threatened disputes or communications
with or from any insurance carrier denying or disputing any claim or
regarding cancellation or nonrenewal of any such policy. Since January
1, 1996, the Company has not failed to give any material notice or to
present any material claim under any insurance policy or surety bond
in due and timely fashion. The Company has given the Parent the most
recently available reports for the Company on: (i) accidents,
casualties or damages occurring on or to the properties or assets of
the Company; and (ii) claims by the Company for damages, reimbursement
of losses, contribution or indemnification under any insurance policy
and settlements or negotiations of settlements relating thereto,
except with respect to claims pursuant to Reinsurance Agreements or
Retrocession Arrangements, each as defined herein.
(aa) Investments.
(i) The Disclosure Schedule sets forth a true and
complete list of all bonds, stocks, mortgages and other
investments of any type owned by the Company as of the date
hereof (collectively, the "Scheduled Investments"). The
Company has good and marketable title to each of the
Scheduled Investments.
(ii) Except as set forth on the Disclosure Schedule,
none of the Scheduled Investments is currently in default in
the payment of principal or interest, and, to the knowledge
of the Company, no event has occurred which reasonably would
be expected to result in a diminution of the value of any
nonpublicly traded security owned by the Company.
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(iii) There are no Liens on any of the Scheduled
Investments, except for (i) those Scheduled Investments
deposited with governmental authorities, as indicated on the
Disclosure Schedule, (ii) Liens which do not materially
detract from the value of the Scheduled Investments subject
thereto, and (iii) assets pledged to secure assumed
reinsurance contract obligations which assets are listed on
the Disclosure Schedule.
(iv) The Company has not taken or omitted to take,
any action which would result in the Company being unable to
enforce the terms of any Scheduled Investment or which would
cause any Scheduled Investment to be subject to any valid
offset, defense or counterclaim against the right of the
Company to enforce the terms of such Scheduled Investment.
(v) Except as disclosed on Section 4.1(aa)(v) of the
Disclosure Schedule, since December 31, 1998, the Company has
not (i) purchased or otherwise invested in, or committed to
purchase or otherwise invest in, any interest in real
property (including without limitation any extension of
credit secured by a mortgage or deed of trust), (ii)
purchased or otherwise invested in, or committed to purchase
or otherwise invest in, bonds, notes, debentures or other
evidences of indebtedness rated lower than "Baa" by Xxxxx'x
Investors Service Inc. or "BBB" by Standard & Poor's
Corporation at the time of purchase, (iii) entered into any
contract, agreement or arrangement with any affiliate with
respect to the purchase or other acquisition, sale or other
disposition or allocation of any Scheduled Investment or (iv)
entered into any contract, agreement or arrangement with
respect to any foreign investments.
(bb) Investment Company. The Company is not an "investment
company" within the meaning of the Investment Company Act of 1940.
(cc) Internal Controls. The Company maintains a system of
internal accounting controls, which it reasonably believes is
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate actions are taken with respect to
any differences.
(dd) Assumed and Ceded Reinsurance Agreements.
(i) As used in this Agreement, the term "Reinsurance
Agreements" shall mean all assumed and ceded reinsurance and
retrocession agreements, contracts, treaties, or other
reinsurance or retrocession commitments, arrangements or
undertakings of any kind to which the Company is a party or
by which the Company or any of its respective Properties may
be bound or affected.
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(ii) Set forth in Section 4.1(dd)(ii) of the
Disclosure Schedule is a complete and accurate list of each
Reinsurance Agreement pursuant to which the Company has
assumed business and which was in force at any time after
December 31, 1996 and prior to August 31, 1999, including a
description of certain of the terms thereof (including the
name of the ceding company, the name of the broker, type of
contract, inception date, estimated premium and limit). The
Company will deliver to the Parent at the Closing a complete
and accurate list of each assumed Reinsurance Agreement in
force five Business Days prior to the Closing Date, including
information similar to Section 4.1(dd)(ii) of the Disclosure
Schedule.
(iii) Set forth in Section 4.1(dd)(iii) of the
Disclosure Schedule is a complete and accurate list of each
Reinsurance Agreement pursuant to which the Company has ceded
or transferred any portion of its obligations or liabilities
under any reinsurance or insurance agreement (a "Retrocession
Arrangement") and which was in force at August 31, 1999,
including a description of certain of the terms thereof
(including the name of the retrocessionaire, type of
contract, inception date, estimated premium and limit).
Except as set forth in Section 4.1(dd)(iii) of the Disclosure
Schedule, (i) to the knowledge of the Company, none of such
retrocessionaires is insolvent or the subject of a
rehabilitation, liquidation, conservatorship, receivership,
bankruptcy or similar proceeding; (ii) the financial
condition of any such retrocessionaires is not impaired to
the extent that a default thereunder is reasonably
anticipated, (iii) no notice of intended cancellation has
been received by the Company from of such retrocessionaires;
and (iv) the Company is entitled to take full credit in its
Annual Statutory Statements for all amounts recoverable by it
pursuant to any Retrocession Arrangement, and all such
amounts recoverable have been properly recorded in the books
and records of account of the Company and are properly
reflected in the Annual Statutory Statements. The Company
will deliver to the Parent at the Closing a complete and
accurate list of each Retrocession Arrangement in force five
Business Days prior to the Closing Date including information
similar to Section 4.1(dd)(iii) of the Disclosure Schedule.
Except as set forth in Section 4.1 (dd) (iii) of the
Disclosure Schedule no such Retrocession Arrangement contains
any provision providing that any such party thereto may
terminate, cancel, or commute the same by reason of the
transactions contemplated by this Agreement.
(iv) All of the Reinsurance Agreements and
Retrocession Arrangements are valid, binding and enforceable
against the Company and, to the best of the knowledge of the
Company, against the other parties thereto in accordance with
their terms and are in full force and effect. Except as set
forth in Section 4.1 (dd) (iv) of the Disclosure Schedule the
Company is not, and to the best of the knowledge of the
Company, no other party thereto is in, or claimed to be in,
material breach or material default under any Reinsurance
Agreement and Retrocession Arrangements, and no event has
occurred which (after notice or lapse of time or both) would
become a material breach or material default under,
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or would permit modification, cancellation, acceleration or
termination of, any Reinsurance Agreement and Retrocession
Arrangements or result in the creation of any material
encumbrance upon, or result in any Person obtaining any right
to acquire, any Properties, assets or rights of the Company.
Except as set forth in Section 4.1 (dd) (iv) of the
Disclosure Schedule there are no unresolved disputes under
any Reinsurance Agreement or Retrocession Arrangements.
(ee) Accounts with Financial Institutions. Section 4.1(ee) of
the Disclosure Schedule sets forth a list of all safe deposit boxes,
active bank accounts and other time or demand deposits of the Company,
together with names and addresses of the applicable financial
institution or other depository, the account number and the names of
all persons authorized to draw thereon or who have access thereto.
(ff) Minute Books; Stock Books; Officers and Directors. The
minute books of the Company which have been made available to the
Parent for its inspection contain true and complete records of all
meetings and consents in lieu of meetings of the Board of Directors
(and any committee hereof) of the Company and its shareholders since
incorporation and accurately reflect all transactions referred to in
such minutes and consents in lieu of meetings. Attached as Section
4.1(ff) of the Disclosure Schedule is a true and correct list of the
officers and directors of the Company and each of its subsidiaries as
of the date of this Agreement.
(gg) Continuing Business Relationships. Except as set forth
in Section 4.1(gg) of the Disclosure Schedule as of the date of this
Agreement, to the knowledge of the Company, no insured, reinsured,
retrocedent or retrocessionaire of the Company or the Parent has
informed the Company and the Company has no knowledge that any such
party may cease to do business or materially adversely change its
volume of business with the Company after the consummation of the
transactions contemplated hereby.
(hh) Insurance Reserves.
(i) The Company's reserves as of December 31, 1998
and each subsequent date on which such reserves may have been
redetermined (a) were determined in accordance with SAP; (b)
were computed in accordance with generally accepted loss
reserve standards and principles; (c) met the requirements of
all Governmental Authorities, including all insurance
regulatory agencies having authority over the Company; and
(d) made reasonable provision, in the aggregate, for all
unpaid loss and loss expense obligations, including
obligations for incurred but not reported loss and loss
adjustment expenses and unearned premiums as of the dates
referenced therein. The Company owns assets that qualify as
admitted assets under the insurance regulatory requirements
of each jurisdiction in which the Company is subject in an
amount at least equal to the reserves plus the minimum
statutory capital and surplus as required under such
insurance regulatory authorities.
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(ii) The Company has delivered or made available to
the Parent true and complete copies of all actuarial reports,
actuarial certificates on loss and loss adjustment expense
reserve reports prepared by or on behalf of the Company and
any other report prepared by any third party actuarial
consultant on behalf of or made available to the Company or
any of its affiliates, in each case relating to the adequacy
of the reserves for any period ending on or after December
31, 1995.
(ii) Disclosure. No representation or warranty of the Company
contained in this Agreement, and no statement contained in the
Disclosure Schedule or in any certificate, schedule, annex, list or
other writing furnished to the Parent, contains any untrue statement
of a material fact or omits to state a material fact necessary to make
the statement contained herein or therein, in light of the
circumstances under which they were made, not misleading.
Section 4.2 Representations and Warranties of Parent and Merger
Subsidiary. Parent and Merger Subsidiary represent and warrant to the Company
as follows:
(a) Organization, Standing and Corporate Power. Each of
Parent and Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to carry on its
business as now being conducted.
(b) Authority; Noncontravention. Parent and Merger Subsidiary
have all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of
Parent and Merger Subsidiary. This Agreement has been duly executed
and delivered by Parent and Merger Subsidiary and, assuming this
Agreement constitutes a valid and binding agreement of the Company,
constitutes a valid and binding obligation of such party, enforceable
against such party in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles
of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under, (i) the certificate of
incorporation or By-Laws of Parent or Merger Subsidiary or the
comparable charter or organizational documents of any other subsidiary
of Parent, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or Merger Subsidiary or
their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the
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following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent, Merger Subsidiary
or any other subsidiary of Parent or their respective properties or
assets, other than, in the case of clause (ii) or (iii), any such
conflicts, violations, defaults, rights or Liens that individually or
in the aggregate would not (A) have a Material Adverse Effect on
Parent or any of its subsidiaries, (B) impair the ability of Parent
and Merger Subsidiary to perform their respective obligations under
this Agreement or (C) prevent the consummation of any of the
transactions contemplated by this Agreement. No Consent is required by
or with respect to Parent, Merger Subsidiary or any other subsidiary
of Parent in connection with the execution and delivery of this
Agreement or the consummation by Parent or Merger Subsidiary, as the
case may be, of any of the transactions contemplated by this
Agreement, except for (i) the filing of a certificate of merger in
accordance with Delaware Law and appropriate documents with the
relevant authorities of other states in which the Company is qualified
to do business, (ii) the filing of a premerger notification and report
form under the HSR Act, (iii) compliance with any applicable
requirements of the Exchange Act, (iv) such notices, filings and
consents as may be required under relevant state property transfer or
environmental laws, (v) filing with the insurance regulatory agencies
set forth in Section 4.1(d) of the Disclosure Schedule, and (vi) such
other consents, approvals, orders, authorizations, registrations,
declarations and filings as may be required under the laws of any
foreign country in which the Company or any of its subsidiaries
conducts any business or owns any property or assets.
(c) Disclosure Documents.
(i) The information with respect to Parent and its
subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will
not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances
under which they were made, not misleading (A) in the case of
the Company Proxy Statement at the time the Company Proxy
Statement or any amendment or supplement thereto is first
mailed to shareholders of the Company, at the time the
shareholders vote on adoption of this Agreement and at the
Effective Time, and (B) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time
of the filing thereof and at the time of any distribution
thereof.
(ii) The Offer Documents, when filed, will comply as
to form in all material respects with the applicable
requirements of the Exchange Act and will not at the time of
the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein,
in the light of the circumstances under which they were made,
not misleading, provided, however, that this representation
and warranty will not apply to statements or omissions in the
Offer Documents based upon information furnished to Parent or
Merger Subsidiary in writing by the Company specifically for
use therein.
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(d) Financing. At the Effective Time, Parent and Merger
Subsidiary will have available all funds necessary (i) to satisfy
their respective obligations under this Agreement, and (ii) to pay all
the related fees and expenses in connection with the foregoing.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
Section 5.1 Conduct of Business. During the period from the date of
this Agreement to the Effective Time, the Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all commercially reasonable efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them to the end that their goodwill and ongoing business
shall be unimpaired at the Effective Time. The Company will (i) comply in all
material respects with all laws, statutes, ordinances, rules and regulations
applicable to the Company, (ii) take all commercially reasonable steps to
preserve the current relationships of the Company with its brokers, reinsurance
intermediaries, ceding companies, reinsurers, agents, managing general agents,
suppliers and other persons with which the Company has significant business
relationships, and (iii) perform its obligations under all Reinsurance
Agreements, Contracts and commitments to which it is a party or by or to which
it is bound or subject; and (iv) require the Company's Accountants to conduct
an interim quarterly review with a written report of the Company's Form 10-Q
filing for the period ended September 30, 1999, in accordance with generally
accepted auditing standards. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any of its subsidiaries to, without the
prior written approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by any direct or indirect wholly
owned subsidiary of the Company to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities (other than
in connection with the exercise of Company Options);
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than the issuance of Shares upon the exercise of Company
Options);
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(c) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(d) acquire or agree to acquire (including, without
limitation, by merger, consolidation or acquisitions of stock or
assets) any business, including through the acquisition of any
interest in any corporation, partnership, limited liability company,
joint venture, association or other business organization or division
thereof;
(e) mortgage or otherwise encumber or subject to any Lien or,
except in the ordinary course of business consistent with past
practice and pursuant to existing contracts or commitments, sell,
lease, license, transfer or otherwise dispose of any of the Company
Intellectual Property Rights or any other material properties or
assets;
(f) make or agree to make any new capital expenditures in
excess of $100,000;
(g) make any material tax election (unless required by law)
or settle or compromise any material income tax liability;
(h) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or settle any lawsuit other than the payment, discharge,
satisfaction or settlement, in the ordinary course of business
consistent with past practice and in accordance with their terms and
in an amount not to exceed $25,000, or waive the benefits of, or agree
to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(i) commence a lawsuit other than (i) for the routine
collection of bills or (ii) in such cases where the Company in good
faith determines that the failure to commence suit would result in a
material impairment of a valuable aspect of the Company's business,
provided that the Company consults with Parent prior to filing such
suit;
(j) (i) hire any permanent employee or any other employee
whose employment cannot be terminated at will without further payment
or enter into or amend any employment or severance agreement or
similar arrangements, (ii) make any determination as to amounts
payable under any plan, arrangement, or agreement, providing for
discretionary incentive compensation or bonus to any officer,
director, employee or independent contractor of the Company or any of
its subsidiaries, (iii) enter into, adopt, or amend (except as
required by Sections 2.5 and 5.9) any agreement, arrangement, or
Benefit Plan so as to increase the liability (whether or not
contingent) of the Company or the Parent or any of their subsidiaries
or ERISA affiliates in respect of compensation or benefits except as
may be required by law, or (iv) grant any options or increase any
employee or director compensation;
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(k) amend, commute, terminate or waive any of its rights
under any Reinsurance Agreement pursuant to which the Company has
ceded or transferred any of its obligations or liabilities.
(l) conclude any negotiations relating to outstanding issues
arising from the Eureko/VASA purchase or the Folksamerica/USF RE sale.
(m) make any material changes in their investment portfolio
or investment guidelines.
(n) authorize any of, or commit or agree to take any of, the
foregoing actions; or
(o) (i) take or agree or commit to take any action that would
make any representation or warranty of the Company hereunder
inaccurate in any material respect at, or as of any time prior to, the
Effective Time or (ii) omit or agree or commit to omit to take any
action necessary to prevent any such representation or warranty from
being inaccurate in any material respect at any such time.
Section 5.2 Shareholder Meeting; Proxy Material. The Company shall
cause a meeting of its shareholders (the "Company Shareholder Meeting") to be
duly called and held as soon as reasonably practicable following Merger
Subsidiary's acquisition of Shares in the Offer for the purpose of voting on
the approval and adoption of this Agreement and the Merger unless a vote of
shareholders of the Company is not required by Delaware Law. The Directors of
the Company shall, subject to their fiduciary duties as advised in writing by
Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Company, recommend approval and
adoption of this Agreement and the Merger by the Company's shareholders. In
connection with such meeting, the Company (i) will promptly prepare and file
with the SEC, will use its best efforts to have cleared by the SEC and will
thereafter mail to its shareholders as promptly as practicable the Company
Proxy Statement and all other proxy materials for such meeting, (ii) subject to
the fiduciary duties of the Board of Directors of the Company as advised in
writing by Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Company, will use its
best efforts to obtain the necessary approvals by its shareholders of this
Agreement and the transactions contemplated hereby and (iii) will otherwise
comply with all legal requirements applicable to such meeting. The Company,
Parent and Merger Subsidiary, as the case may be, shall promptly prepare and
file any other filings required under the Exchange Act or any other federal or
state securities or corporate laws relating to the Merger and the transactions
contemplated herein (the "Other Filings"). Each of the parties hereto shall
notify the other parties hereto promptly of the receipt by it of any comments
from the SEC or its Staff and of any request of the SEC for amendments or
supplements to the Company Proxy Statement or by the SEC or any other
governmental officials with respect to any Other Filings or for additional
information and will supply the other parties hereto with copies of all
correspondence between it and its representatives, on the one hand, and the SEC
or the members of its Staff or any other governmental officials, on the other
hand, with respect to the Company Proxy Statement, any Other Filings or the
Merger. The Company, Parent and Merger Subsidiary each shall use all reasonable
efforts to obtain and furnish the information required to be included in the
Company Proxy Statement or any Other Filings. If at any time prior to the time
of
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approval of this Agreement and the Merger by the Company's shareholders there
shall occur any event that should be set forth in an amendment or supplement to
the Company Proxy Statement, the Company shall promptly prepare and mail to its
shareholders such amendment or supplement. The Company shall not mail the
Company Proxy Statement or, except as required by the Exchange Act or the rules
and regulations promulgated thereunder, any amendment or supplement thereto to
its shareholders to which Parent reasonably objects.
At the Company Shareholder Meeting, Parent, the Merger Subsidiary and
their respective affiliates will vote all Shares owned by them in favor of
approval and adoption of this Agreement, the Merger and the transactions
contemplated hereby and thereby.
Notwithstanding the foregoing, in the event that Parent and Merger
Subsidiary shall acquire at least 90% of the outstanding Shares pursuant to the
Offer or otherwise, the parties hereto agree, at the request of Parent and
Merger Subsidiary, to take all necessary and appropriate action to cause the
Merger to become effective in accordance with Section 253 of the DGCL, as soon
as reasonably practicable after such acquisition and the satisfaction or waiver
of the conditions of this Agreement, without a meeting of the shareholders of
the Company.
Section 5.3 Access to Information.
(a) From the date hereof until the Effective Time, the
Company shall, and shall cause each of its subsidiaries to, give
Parent, its counsel, financial advisors, auditors and other authorized
representatives full access (during normal business hours and upon
reasonable notice) to the offices, properties, books and records of
the Company and the subsidiaries, will furnish to Parent, its counsel,
financial advisors, auditors and other authorized representatives all
their respective properties, books, contracts, commitments, personnel
and records and, during such period, the Company shall, and shall
cause each of its subsidiaries to, furnish (i) a copy of each report,
schedule, registration statement and other document filed by it during
such period pursuant to the requirements of Federal or state
securities laws, (ii) a copy of each tax return, report and
information statement filed by it during such period, and (iii) all
other information concerning its business, assets, properties and
personnel (including financial and operating data) as such persons may
reasonably request and will instruct the Company's employees, counsel
and financial advisors to cooperate with Parent in its investigation
of the business of the Company and the subsidiaries; provided that no
investigation pursuant to this Section 5.3 shall affect any
representation or warranty given by the Company hereunder.
(b) From the date hereof until the Effective Time, the
Company will give Parent, its counsel, financial advisors, auditors
and other authorized representatives full access (during normal
business hours at their actual location) to all accounting, revenue,
marketing, producer, processing, and other books, records and data in
possession of Company, except such records or data which Company is
prevented by contractual obligations with third parties from
disclosing; provided that in the event the Company is prohibited from
making files or records available because of provisions of third party
agreements, then the Company shall inform Parent of the existence of
such records, the parties thereto and the subject matter of such
records.
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(c) From the date hereof, the order issued in that certain
litigation entitled The Centris Group, Inc. et al. v. HCC Benefits
Corporation, et al. Civil Action No. 99-1-4866-28 in the Superior
Court of Xxxx County, State of Georgia (the "Xxxxxx Litigation") shall
be suspended except for the running of any time limitations on Xx.
Xxxxx Xxxxxx'x ("Xxxxxx") activities which shall continue and the
restriction on Xxxxxx shall be of no further force and effect,
provided, however, that if this Agreement is terminated by Parent for
any reason other than the occurrence of a Trigger Event, as defined
herein, such restrictions shall be reinstated. The parties agree to
use their best efforts to cause the Order in the Xxxxxx Litigation to
be amended to conform to the terms hereof.
Section 5.4 Other Offers. Until the termination of this Agreement, the
Company and its subsidiaries will not, and will not authorize or permit the
officers, directors, employees or other agents of the Company and its
subsidiaries to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal (defined below) or (ii) subject
to the fiduciary duties of the Board of Directors under applicable law, as
advised in writing by Xxxxxx, Xxxx & Xxxxxxxx LLP, counsel to the Company, and
in response to an unsolicited request that has been submitted to the Company's
Board of Directors and determined to be a Superior Acquisition Proposal
(defined below), engage in negotiations with, or disclose any nonpublic
information relating to the Company or any of its subsidiaries or afford access
to the properties, books or records of the Company or any of its subsidiaries
to, any person that has advised the Company that it may be considering making,
or that has made, an Acquisition Proposal, provided, however, nothing herein
shall prohibit the Company's Board of Directors from taking and disclosing to
the Company's shareholders a position with respect to a tender offer pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act. The Company will
promptly notify Parent after receipt of any Acquisition Proposal or any
indication that any person is considering making an Acquisition Proposal or any
request for nonpublic information relating to the Company or any of its
subsidiaries or for access to the properties, books or records of the Company
or any of its subsidiaries by any person that has advised the Company that it
may be considering making, or that has made, an Acquisition Proposal and will
keep Parent fully informed of the status and details of any such Acquisition
Proposal, notice or request. For purposes of this Agreement, "Acquisition
Proposal" means any offer or proposal for, or any indication of interest in, a
merger or other business combination involving the Company or any of its
subsidiaries or the acquisition of any significant equity interest in, or a
significant portion of the assets of, the Company or any of its subsidiaries,
other than the transactions contemplated by this Agreement. "Superior
Acquisition Proposal" means an Acquisition Proposal which a majority of the
disinterested directors determines in its good faith judgment (based on the
written advice of Advest) to be more favorable to the Company's shareholders
than the Offer or the Merger, and for which financing, to the extent required,
is then committed.
Section 5.5 Rights Agreement. The Company hereby agrees that upon
execution of this Agreement, it shall take all necessary action under the
Rights Agreement dated as of May 24, 1990, as amended, by and between the
Company and American Stock Transfer & Trust Company (the "Rights Agreement"),
including any required amendment thereto, so that commencement of the Offer,
the consummation of the Offer, the grant or exercise of any rights under the
Stock Option Agreement or the Shareholder Option Agreement or any other acts
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pursuant hereto or thereto on the terms permitted hereunder and thereunder and
as contemplated herein and therein will not cause (A) the rights (the "Rights")
issued pursuant to the Rights Agreement to become exercisable under the Rights
Agreement, (B) the Parent, or any subsidiary of the Parent, including Merger
Subsidiary to be deemed a "10% Stockholder" (as defined in the Rights
Agreement) or (C) the "10% Stock Ownership Date" (as defined in the Rights
Agreement) to occur, provided, however, that the Company shall not be required
to make such amendments to the Rights Agreement if, (i) the Parent has not
performed or complied in all material respects with this Agreement prior to the
consummation of the Offer or (ii) the Company obtains, and there is in force
from the Delaware Court of Chancery, an order permanently, preliminarily or
temporarily declaring that the making of such amendments to the Rights
Agreement would be contrary to the fiduciary duties of the Board of Directors
of the Company. Notwithstanding anything else contained herein, in no event
shall the Board of Directors of the Company make an amendment of the Rights
Agreement in favor of any other person without making such amendment in favor
of the Parent.
Section 5.6 State Takeover Statutes. If any "fair price", "control
share acquisition", "moratorium" or other anti-takeover statute, or similar
statute or regulation shall become applicable to this Agreement, the
Shareholder Option Agreement, the Stock Option Agreement or any of the
transactions contemplated hereby or thereby, including, without limitation, the
Offer or the Merger, the Company and its Board of Directors shall take all
action necessary to ensure that the Offer, the Merger and the other
transactions contemplated hereby and thereby, may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise to minimize the
effect of such statute or regulation on the Offer, the Merger and the other
transactions contemplated hereby or thereby.
Section 5.7 Regulatory Filings. The Company covenants and agrees to
commence preparation of and, consistent with past practice and on a timely
basis, if required prior to the Closing Date, file with or submit to any
insurance department or other Governmental Entity with which the Company is
required to make such filings or submissions, and, if filed prior to the
Closing Date, deliver to the Parent true and complete copies of, the quarterly
statutory statement for each quarter of 1999 ended prior to the Closing Date,
together with all related notes, exhibits and schedules thereto. All such
quarterly statements filed with or submitted to any insurance department or
Governmental Entity (i) shall be prepared from the books of account and other
financial records of the Company, (ii) shall be filed with or submitted to such
insurance departments and Governmental Entities, on forms prescribed or
permitted thereby, (iii) shall be prepared in accordance with SAP applied on a
basis consistent with the past practices of the Company (except as set forth in
the notes, exhibits or schedules thereto), and shall comply on their respective
dates of filing or submission with the laws of such jurisdictions, (iv) shall
present fairly the statutory assets, liabilities, capital and surplus, results
of operations and cash flows of the Company as of the dates thereof or for the
periods covered thereby (subject to normal estimation of accruals and reserves
and normal year-end audit adjustments), and (v) shall not use any accounting
practices that are permitted rather than prescribed by the insurance
departments and regulatory authorities.
Section 5.8 Affirmative Actions. The Company shall retain an
independent actuary (the "Actuary") which is acceptable to Parent to prepare an
independent actuarial review of all
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aspects of the Company's business, including, without limitation, the Company's
property/casualty reserves, including discontinued operations, the medical
lines business, recoverable value of the Company's notes receivable and
indemnification obligations of the Company. Such actuarial study shall commence
no later than five Business Days from the date this Agreement is executed and
shall be completed no later than two Business Days after receipt of all
regulatory approvals to the Merger from required state insurance regulatory
agencies. The Company shall make the reserve adjustments and take such other
charges, in accordance with GAAP and SAP, consistent with the findings of such
actuarial review. Such adjustments and charges shall be recorded on the
Company's books no later than three Business Days following the receipt from
the Actuary of such review. The Company further agrees to utilize reasonable
commercial efforts and to cooperate with Parent in the establishment of
underwriting standards for business commencing January 1, 2000.
Section 5.9 Termination of Benefit Plans. The Company shall terminate
or cause to be terminated The Centris Group, Inc. Employees' Savings Plan and
the VASA North America, Inc. 401(k) Profit Sharing Plan prior to the date on
which the Company and/or its subsidiaries and ERISA affiliates become members
of a "controlled group" with or under "common control" with Parent as such
terms are defined in Section 414(b) and 414(c) of the Code.
ARTICLE 6
COVENANTS OF PARENT
Parent agrees that:
Section 6.1 Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Offer and the Merger on the terms and
conditions set forth in this Agreement.
Section 6.2 Voting of Shares. Parent agrees to be present and vote all
Shares acquired in the Offer or otherwise beneficially owned by it in favor of
adoption of this Agreement at the Company Shareholder Meeting.
Section 6.3 Director and Officer Liability. (a) After the Effective
Time, Parent will cause the Surviving Corporation to indemnify and hold
harmless the present and former officers, directors, employees and agents of
the Company and its subsidiaries (the "Indemnified Parties") in respect of acts
or omissions based in whole or in part on, or arising in whole or in part out
of, or pertaining to (i) the fact that such Indemnified Party is or was a
director, officer or employee of the Company, any of its subsidiaries or any of
their respective predecessors or was prior to the Effective Time serving at the
request of any such party as an officer, director, employee or agent of another
corporation, partnership, trust or other enterprise or (ii) this Agreement, or
any of the transactions contemplated hereby and all actions taken by an
Indemnified Party in connection herewith. The parties hereto agree to cooperate
and use commercially reasonable efforts to defend against and respond to such
proceedings to the extent set forth in the next sentence. It is understood and
agreed that after the Effective Time, Parent shall cause Surviving Corporation
to indemnify and hold harmless, as and to the fullest extent permitted by the
Company's Certificate of Incorporation and By-Laws in effect on the date hereof
and by law, each such Indemnified
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Party against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorneys' fees and expenses payable as incurred and in
advance of the final disposition of any claim, suit, proceeding or
investigation subject to the obligation of each Indemnified Party to repay such
advanced expenses if it is finally and unappealably determined that such
Indemnified Party was not entitled to indemnification hereunder), judgments,
fines and amounts paid in settlement in connection with any such threatened or
actual claim, action, suit, proceeding or investigation, and in the event of
any such threatened or actual claim, action, suit, proceeding or investigation
(whether asserted or arising before or after the Effective Time) (collectively,
"Claims"), the Indemnified Parties may retain counsel reasonably satisfactory
to them after consultation with the Surviving Corporation, provided, however,
that (1) the Surviving Corporation shall have the right to assume the defense
thereof and upon such assumption the Surviving Corporation shall not be liable
to any Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by an Indemnified Party in connection with the
defense thereof, except that if the Surviving Corporation elects not to assume
such defense, or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are or may be (whether or not any have yet
actually arisen) issues which raise conflicts of interest between the Surviving
Corporation and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them, and the Surviving Corporation shall
pay the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) the Surviving Corporation shall be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties, (3)
the Surviving Corporation shall not be liable for any settlement effected
without its prior written consent, and (4) the Surviving Corporation shall have
no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by the Certificate of
Incorporation or By-Laws of the Company or its subsidiaries or applicable law.
Any Indemnified Party wishing to claim indemnification under this Section 6.3,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify the Surviving Corporation thereof, provided that the failure to so
notify shall not affect the obligations of the Surviving Corporation under this
Section 6.3 except (and only) to the extent such failure to notify materially
prejudices the Surviving Corporation.
(b) Without limiting any of the obligations under paragraph (a) of
this Section 6.3, the Surviving Corporation agrees that all rights to
indemnification and all limitations of liability existing in favor of the
Indemnified Parties as provided in the Company's Certificate of Incorporation
or By-Laws or in the similar governing documents of any of the Company's
subsidiaries as in effect as of the date of this Agreement with respect to
matters occurring on or prior to the Effective Time shall survive the Merger
and shall continue in full force and effect thereafter, without any amendment
thereto; provided, however, that nothing contained in this Section 6.3(b) shall
be deemed to preclude the liquidation, consolidation or merger of the Company
or any subsidiary thereof, in which case all of such rights to indemnification
and limitations on liability shall be deemed to so survive and continue
notwithstanding any such liquidation, consolidation or merger and shall
constitute rights which may be asserted against the Surviving Corporation.
Nothing contained in this Section 6.3(b) shall be deemed to preclude any rights
to indemnification or limitations on liability provided in the Company's
Certificate of Incorporation or By-Laws or similar governing documents of the
Surviving Corporation with
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respect to matters occurring subsequent to the Effective Time to the extent
that the provisions establishing such rights or limitations are not otherwise
amended to the contrary.
(c) The Surviving Corporation shall use its commercially reasonable
effects to cause the persons serving as officers and directors of the Company
and its subsidiaries immediately prior to the Effective Time to be covered for
a period of three years from the Effective Date by the directors' and officers'
liability insurance policy maintained by the Surviving Corporation (provided
that the Surviving Corporation may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are not less
advantageous to such directors and officers than the terms and conditions of
such existing policy and provided further that in no event will the Surviving
Corporation be required to expend in any one year an amount in excess of 200%
of the annual premiums currently paid by the Company for such insurance) with
respect to acts or omissions occurring prior to the Effective Time which were
committed by such officers and directors in their capacity as such.
(d) The provisions of this Section 6.3 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 6.4 Employees. Parent agrees at the Effective Time that it (or
the Surviving Corporation) shall be a successor employer with respect to, and
shall assume sponsorship of (or cause the Surviving Corporation to assume
sponsorship of), in accordance with their terms all Benefit Plans and "employee
benefit plans" (as defined in Section 3(3) of ERISA) previously delivered to
Parent and all accrued benefits vested thereunder, other than Benefit Plans
terminated prior to the Effective Time; it being understood and agreed that
nothing in this Section 6.4 shall prevent Parent from terminating any such
Benefit Plan in accordance with its terms or shall require Parent or the
Surviving Corporation to incur any liability or assume any obligation other
than liabilities and obligations existing under the terms of such plans as in
effect as of the date hereof.
ARTICLE 7
COVENANTS OF PARENT AND THE COMPANY
The parties hereto agree that:
Section 7.1 HSR Act Filings; Other Filings Reasonable Efforts;
Notification.
(a) Each of Parent and the Company shall (i) promptly make or
cause to be made the filings required of such party or any of its
subsidiaries under the HSR Act with respect to the transactions
contemplated by this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional
information, documents, or other material received by such party or
any of its subsidiaries from the Federal Trade Commission or the
Department of Justice or any other Governmental Entity in respect of
such filings or such transactions, and (iii) cooperate with the other
party in connection with any such filing and in connection with
resolving any investigation or other inquiry of any such agency or
other Governmental Entity under any Antitrust Laws (defined below)
with respect to any such filing or any such transaction.
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Each party shall promptly inform the other party of any communication
with, and any proposed understanding, undertaking, or agreement with,
any Governmental Entity regarding any such filings or any such
transaction. The Company shall not participate in any meeting (whether
in person or by telephone) with any Governmental Entity in respect of
any such filings, investigation, or other inquiry without Parent's
consent and without giving Parent notice of the meeting and, to the
extent permitted by such Governmental Entity, the opportunity to
attend and participate.
(b) Each of Parent and the Company shall use all commercially
reasonable efforts to resolve such objections, if any, as may be
asserted by any Governmental Entity with respect to the transactions
contemplated by this Agreement under the HSR Act, the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the Federal Trade Commission
Act, as amended, and any other Federal, state or foreign statutes,
rules, regulations, orders or decrees that are designed to prohibit,
restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws").
In connection therewith, if any administrative or judicial action or
proceeding is instituted (or threatened to be instituted) challenging
any transaction contemplated by this Agreement as violative of any
Antitrust Law, and, if by mutual agreement, Parent and the Company
decide that litigation is in their best interests, each of Parent and
the Company shall cooperate and use all reasonable efforts vigorously
to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent
(each an "Order"), that is in effect and that prohibits, prevents, or
restricts consummation of any such transaction. Each of Parent and the
Company shall use all commercially reasonable efforts to take such
action as may be required to cause the expiration of the notice
periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this
Agreement.
(c) Each of the parties agrees to promptly make or cause to
be made the filings required of each such party or any of its
subsidiaries under any insurance regulatory law or act in any state
where such filing is required or, at the request of Parent, deemed
advisable, and to comply at the earliest practicable date with any
requests made by any insurance regulatory agency or any other
Governmental Entity for additional information, documents or other
material received by such party or any of its subsidiaries and to
cooperate with the other party in connection with any such filing and
in connection with resolving any investigation or other inquiry or
hearing of any such agency or other Governmental Entity under any
insurance law relating to licensing, holding company applications,
change in control, etc. with respect to any such filing or any such
transaction. Each party shall promptly inform the other party of any
communication with, and any proposed understanding, undertaking
agreement with, any Governmental Entity or insurance agency regarding
any such filings or any such transaction. The Company shall not
participate in any meeting (whether in person or by telephone) with
any Governmental Entity or insurance regulatory agency in respect of
any such filings, investigation, or other inquiry without Parent's
consent and without giving Parent notice of the meeting, and to the
extent permitted by such Governmental Entity, the opportunity to
attend and participate.
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(d) Each of the parties agrees to use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger, and the other transactions
contemplated by this Agreement, including (i) the obtaining of all
other necessary actions or nonactions, waivers, consents and approvals
from Governmental Entities and the making of all other necessary
registrations and filings (including other filings with Governmental
Entities, if any), (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the preparation of the
Company Disclosure Documents and the Offer Documents, and (iv) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement.
(e) Notwithstanding anything to the contrary in Section
7.1(a), 7.1(b), 7.1(c), or 7.1(d), (i) neither Parent nor any of its
subsidiaries shall be required to divest any of their respective
businesses, product lines or assets, or to take or agree to take any
other action or agree to any limitation that could reasonably be
expected to have a material adverse effect on the business, assets,
financial condition, results of operations or prospects of Parent or
any of its subsidiaries or the Surviving Corporation after the
Effective Time, (ii) neither the Company nor its subsidiaries shall be
required to divest any of their respective businesses, product lines
or assets, or to take or agree to take any other action or agree to
any limitation that could reasonably be expected to have a Material
Adverse Effect, (iii) no party shall be required to agree to the
imposition of, or to comply with, any condition, obligation or
restriction on Parent or any of its subsidiaries or on the Surviving
Corporation or any of its subsidiaries of the type referred to in
clause (a) or (b) of Annex I and (iv) neither Parent nor Merger
Subsidiary shall be required to waive any of the conditions to the
Offer set forth in Annex I or any of the conditions to the Merger set
forth in Article 8.
(f) Each of the Company and Parent agree to give prompt
notice to the other of (i) any representation or warranty made by such
party contained in this Agreement becoming untrue or inaccurate in any
respect or (ii) the failure by such party to comply with or satisfy in
any respect any covenant, condition or agreement to be complied with
or satisfied by such party under this Agreement; provided, however,
that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions
to the obligations of the parties under this Agreement.
(g) The Company shall give prompt notice to Parent, and
Parent or Merger Subsidiary shall give prompt notice to the Company,
of:
(i) any notice or other communication from any
person alleging that the consent of such person is or may be
required in connection with the transactions contemplated by
this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions
contemplated by this Agreement; and
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(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge
threatened against, relating to or involving or otherwise
affecting it or any of its subsidiaries which, if pending on
the date of this Agreement would have been required to have
been disclosed pursuant to this Agreement or which relate to
the consummation of the transactions contemplated by this
Agreement.
Section 7.2 Public Announcements. Each party will consult with the
others before issuing, and provide the others the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, the Shareholder Option Agreement
and the Stock Option Agreement, including the Offer and the Merger, and each
party shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange or with the NASD.
Section 7.3 Confidentiality. The terms of the letter agreement, agreed
and consented to by the Parent on August 22, 1999, between the Company and the
Parent (the "Confidentiality Agreement") are hereby incorporated by reference
and shall continue in full force and effect except the last sentence of Section
(5) on page 4, which is hereby deleted in its entirety until the Closing, at
which time such Confidentiality Agreement and the obligations of the Parent
under this Section 7.3 shall terminate; provided, however, that the
Confidentiality Agreement shall not terminate in respect of that portion of
such confidential information relating exclusively to matters not related to
the transactions contemplated by this Agreement. If this Agreement is, for any
reason, terminated prior to the Closing, the Confidentiality Agreement shall
continue in full force and effect in respect of such confidential information.
After the Closing Date, each of the persons who were the Company's officers,
directors and affiliates as of the date hereof shall keep all non-public
information relating to the Company and the Parent confidential on the same
terms as set forth in the Confidentiality Agreement.
Section 7.4 Interim Financial Statements. The Company shall, as soon
as available, but no later than 60 days after the end of the relevant month or
quarter, as the case may be, deliver promptly to the Parent any and all final
monthly and quarterly financial statements for the Company, audited or
unaudited, prepared for the management of the Company after the date of this
Agreement and prior to the Closing Date.
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ARTICLE 8
CONDITIONS TO THE MERGER
Section 8.1 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) if required by Delaware law, this Agreement shall have
been adopted by the shareholders of the Company in accordance with
such law;
(b) any applicable waiting period under the HSR Act relating
to the Merger shall have expired;
(c) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation
of the Merger;
(d) Parent or Merger Subsidiary shall have purchased Shares
in an amount equal to at least the Minimum Condition pursuant to the
Offer; and
(e) other than the filing of the certificate of merger in
accordance with Delaware Law, all Consents required to permit the
consummation of the Merger including those set forth in Sections
4.1(d) and 4.2(b) and those of any insurance regulatory agency or body
shall have been filed, occurred or been obtained (other than any such
Consents the failure to file, occur or obtain, in the aggregate, could
not reasonably be expected to (i) have a Material Adverse Effect or
(ii) prevent or materially delay the consummation of the Merger).
(f) each Governmental Entity having jurisdiction over the
Company or any of its subsidiaries, their business, licenses or
permits, shall have, where applicable, approved the transactions
contemplated by this Agreement and any "change of control" incidental
thereto.
(g) each of the Officers and employees whose names are set
forth on Annex II shall have executed an agreement to remain in the
employment of the Surviving Corporation for a period of 120 days after
the Effective Time and as of the Effective Time, none of such persons
listed on Annex II-A, and no more than two of those persons set forth
on Annex II-B shall have voluntarily terminated or terminated for Good
Reason, as defined in the respective Severance Agreements entered into
by each of such persons.
(h) The Company shall have performed its obligations under
Section 5.8 hereof.
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ARTICLE 9
TERMINATION
Section 9.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the shareholders of the
Company):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not
been consummated by June 30, 2000 (provided that the party seeking to
terminate the Agreement shall not have breached its obligations under
this Agreement in any material respect);
(c) by either the Company or Parent, if such party has
received an opinion from its counsel that there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining
Parent or the Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable;
(d) by either the Company or Parent (provided that no party
shall be entitled to terminate this Agreement pursuant to this clause
(d) as a result of its breach of this Agreement), (x) if Parent or
Merger Subsidiary shall have failed to commence the Offer within five
business days following the date of this Agreement, (y) if Parent or
Merger Subsidiary shall not have purchased any Shares pursuant to the
Offer prior to February 29, 2000 (or, if the Offer shall have been
extended by Merger Subsidiary pursuant to this Agreement, on or prior
to March 31, 2000) or (z) the Offer shall have been terminated without
Parent or Merger Subsidiary having purchased any Shares pursuant to
the Offer;
(e) by Parent, upon the occurrence of any Trigger Event
described in clauses (i) through (iii) of Section 10.4(b); or
(f) by the Company, upon the occurrence of any Trigger Event
described in clause (i) of Section 10.4(b).
Section 9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto or their respective officers and
directors, except that the agreements contained in Sections 10.4 and 10.6 shall
survive the termination hereof and except to the extent that such termination
results from the material breach by a party of any representations, warranties,
covenants or agreements set forth in this Agreement.
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ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Parent or Merger Subsidiary, to:
HCC Insurance Holdings, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
if to the Company, to:
The Centris Group, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0 Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx
or such other address or telecopy number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice,
request or other communication shall be effective when delivered at the address
specified in this Section.
Section 10.2 Survival of Representations and Warranties. The
representations, warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement except for the agreements
set forth in Sections 10.4 and 10.6.
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Section 10.3 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver
is in writing and signed, in the case of an amendment, by the Company,
Parent and Merger Subsidiary or in the case of a waiver, by the party
against whom the waiver is to be effective; provided, however, that
after the adoption of this Agreement by the shareholders of the
Company, no such amendment or waiver shall, without the further
approval of such shareholders, alter or change (i) the amount or kind
of consideration to be received in exchange for any shares of capital
stock of the Company, (ii) any term of the certificate of
incorporation of the Surviving Corporation or (iii) any of the terms
or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the
Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law.
Section 10.4 Fees and Expenses.
(a) Except as otherwise provided in this Section, all costs
and expenses incurred in connection with this Agreement shall be paid
by the party incurring such cost or expense.
(b) The Company agrees to pay to Parent, at Parent's demand
and sole election, a fee (the "Termination Fee") in immediately
available funds, promptly, but in no event later than one business
day, after the termination of this Agreement as a result of the
occurrence of any of the events set forth below (a "Trigger Event") in
an amount equal to $6,000,000 in the case of the occurrence of a
Trigger Event described below:
(i) the Company shall have entered into, or shall
have publicly announced its intention to enter into, an
agreement or an agreement in principle with respect to any
Acquisition Proposal;
(ii) any person or group (as defined in Section
13(d)(3) of the Exchange Act) (other than Parent or any of
its affiliates) shall have become the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of
at least 20% of the outstanding Shares or shall have
acquired, directly or indirectly, at least 20% of the assets
of the Company;
(iii) any representation or warranty made by the
Company in, or pursuant to, this Agreement that is qualified
as to materiality shall not have been true and correct when
made or at any time prior to the consummation of the Offer as
if made at and as of such time, or any representation or
warranty made by the Company in, or pursuant to, this
Agreement that is not so qualified shall not have
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been true and correct in all material respects when made or
at any time prior to the consummation of the Offer as if made
at and as of such time, or the Company shall have failed to
observe or perform in any material respect any of its
obligations under this Agreement; provided that it shall not
be a Trigger Event unless the breaches of the representations
and warranties without regard to any materiality qualifier or
threshold, and failure to perform or breach of any
obligation, individually or in the aggregate, could
reasonably be expected to have or result in a Material
Adverse Effect; or
(iv) the Board of Directors of the Company (or any
special committee thereof) shall have withdrawn or materially
modified in a manner adverse to Parent or Merger Subsidiary
its approval or recommendation of the Offer, the Merger, this
Agreement, the Shareholder Option Agreement, the Stock Option
Agreement in any such case whether or not such withdrawal or
modification is required by the fiduciary duties of the Board
of Directors (or any special committee thereof).
(c) If this Agreement is terminated as a result of the
occurrence of a Trigger Event, in addition to the Termination Fee paid
or payable by the Company to Parent pursuant to Section 10.4(b),
Company shall assume and pay, or reimburse Parent for, all reasonable
fees payable and expenses incurred by Parent (including the fees and
expenses of its counsel) in connection with this Agreement and the
transactions contemplated hereby, up to a maximum of $1,000,000.
(d) Parent shall not be entitled to the Termination Fee if
Parent shall have exercised all or any part of the option granted to
Parent in the Stock Option Agreement.
Section 10.5 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Merger Subsidiary
may transfer or assign, in whole or from time to time in part, to one or more
of Parent or any of its wholly-owned subsidiaries, the right to purchase Shares
pursuant to the Offer, but any such transfer or assignment will not relieve
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Section 10.6 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware (without
reference to the Delaware conflicts of law provisions).
Section 10.7 Counterparts; Effectiveness; Interpretation. This
Agreement may be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto. When a reference is made in this Agreement to a Section, such
reference
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shall be to a Section of this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
Section 10.8 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States or
any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 10.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
Section 10.10 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the Disclosure Schedule) and the Confidentiality Agreement
dated as of August 22, 1999 between Parent and the Company (a) constitute the
entire agreement and supersede all prior agreements and understandings, both
written and oral, among the parties hereto with respect to the subject matter
hereof, and (b) are not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder other than rights to indemnity
under Section 6.3.
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The parties hereto have caused this Agreement to be duly executed by
their respective authorized officers as of the day and year first above
written.
THE CENTRIS GROUP, INC.
By: /s/ XXXXX X. XXXXXXX
------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
HCC INSURANCE HOLDINGS, INC.
By: /s/ XXXXXXX X. WAY
------------------------------------
Name: Xxxxxxx X. Way
----------------------------------
Title: Chairman of the Board and
Chief Executive Officer
---------------------------------
MERGER SUB OF DELAWARE, INC.
By: /s/ XXXXXXX X. WAY
------------------------------------
Name: Xxxxxxx X. Way
----------------------------------
Title: Chairman of the Board and
Chief Executive Officer
---------------------------------
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ANNEX I
Notwithstanding any other provision of the Offer, Parent and Merger
Subsidiary shall not be required to accept for payment or (subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Merger Subsidiary's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer)) to pay for
any Shares, and may terminate the Offer, if (i) by the expiration of the Offer
(as permitted to be extended), the Minimum Condition shall not have been
satisfied, (ii) by the expiration of the Offer (as permitted to be extended),
the applicable waiting period under the HSR Act shall not have expired or been
terminated, (iii) by the expiration of the Offer (as permitted to be extended),
all regulatory approvals of Governmental Entities shall not have been received,
or (iv) at any time on or after October 3, 1999, and prior to the acceptance
for payment of Shares pursuant to the Offer, any of the following conditions
exist:
(a) there shall be instituted or pending any action or proceeding by
any Governmental Entity or by any other person, domestic or foreign, before any
Governmental Entity or arbitrator, (i) challenging or seeking to make illegal,
to delay materially or otherwise directly or indirectly to restrain or prohibit
the making of the Offer, the acceptance for payment of or payment for some of
or all the Shares by Parent or Merger Subsidiary or the consummation by Parent
or Merger Subsidiary of the Merger, seeking to obtain material damages or
otherwise directly or indirectly relating to the transactions contemplated by
the Shareholder Option Agreement, this Agreement, the Offer or the Merger, (ii)
seeking to restrain or prohibit Parent's or Merger Subsidiary's ownership or
operation (or that of their respective subsidiaries or affiliates) of all or
any material portion of the business or assets of the Company or any of its
subsidiaries or of Parent and its subsidiaries or to compel Parent or any of
its subsidiaries or affiliates to dispose of or hold separate all or any
material portion of the business or assets of the Company or any of its
subsidiaries or of Parent and its subsidiaries (iii) seeking to impose material
limitations on the ability of Parent or any of its subsidiaries or affiliates
effectively to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by Parent or
any of its subsidiaries or affiliates on all matters properly presented to the
Company's shareholders, (iv) seeking to require divestiture by Parent or any of
its subsidiaries or affiliates of any Shares, or (v) that otherwise, in the
reasonable judgment of Parent, is likely to materially adversely affect the
business, assets, liabilities, operations, condition (financial or otherwise),
results of operations or prospects of the Company or any of its subsidiaries,
or Parent and its subsidiaries, taken as a whole; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued or
deemed applicable to the Shareholder Option Agreement, the Stock Option
Agreement, this Agreement, the Offer or the Merger, by any Governmental Entity
or arbitrator (other than the application of the waiting period provisions of
the HSR Act to the Shareholder Option Agreement, the Stock Option Agreement,
this Agreement, the Offer or the Merger), that, in the reasonable judgment of
Parent, is substantially likely, directly or indirectly, to result in any of
the consequences referred to in clauses (i) through (v) of paragraph (a) above;
or
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(c) any change (other than changes requested by, or done at the
direction or with the consent of Parent) shall have occurred or been threatened
(or any development shall have occurred or been threatened involving a
prospective change) in the business, assets, liabilities, financial condition,
capitalization, operations, results of operations or prospects of the Company
or any of its subsidiaries that, has, or is likely to have, a Material Adverse
Effect (as defined in the Agreement) on the Company and its subsidiaries taken
as a whole; or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange or
in the NASDAQ over-the-counter market in the United States, (ii) a declaration
of a banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any material limitation (whether or not mandatory) by
any Governmental Entity on the extension of credit by banks or other lending
institutions, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the United
States which would reasonably be expected to have a Material Adverse Effect or
prevent (or materially delay) the consummation of the Offer or (v) in the case
of any of the foregoing existing at the time of commencement of the Offer, a
material acceleration or worsening thereof; or
(e) a tender or exchange offer for some or all of the Shares shall
have been publicly made by another person, or it shall have been publicly
disclosed or Parent shall have otherwise learned that any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) (other than Parent or any of
its affiliates) shall have acquired or made an offer to acquire beneficial
ownership (as defined in Rule 13d-3 promulgated under the Exchange Act) of more
than 20% of the outstanding Shares through the acquisition of stock, the
formation of a group or otherwise, or shall have been granted any option, right
or warrant, conditional or otherwise, to acquire beneficial ownership of more
than 20% of the outstanding Shares; or
(f) any Consent (other than the filing of the certificate of merger or
approval by the shareholders of the Company of the Merger (if required by
Delaware law)) required to be filed, occurred or been obtained by the Company
or any of its subsidiaries or Parent of any of its subsidiaries (including
Merger Subsidiary) in connection with the execution and delivery of this
Agreement, the Offer and the consummation of the transactions contemplated by
this Agreement shall not have been filed, occurred or been obtained (other than
any such Consents as to which the failure to file, occur or obtain in the
aggregate, could not reasonably be expected to (i) have a Material Adverse
Effect or (ii) prevent or materially delay the consummation of the Offer or the
Merger); or
(g) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under this Agreement, or
any of the representations and warranties of the Company set forth in this
Agreement that are qualified as to materiality shall not be true when made or
at any time prior to consummation of the Offer as if made at and as of such
time, or any of the representations and warranties set forth in this Agreement
that are not so qualified shall not be true in any material respect when made
or at any time prior to the consummation of the Offer as if made at and as of
such time; or
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(h) any party to the Shareholder Option Agreement (other than Merger
Subsidiary or Parent) shall have breached or failed to perform in any material
respect any of their agreements under the Shareholder Option Agreement or any
of the representations and warranties of any such party set forth in the
Shareholder Option Agreement shall not be true in any material respect, in each
case, when made or at any time prior to the consummation of the Offer as if
made at and as of such time, or the Shareholder Option Agreement shall have
been invalidated or terminated with respect to any Shares subject thereto; or
(i) this Agreement or the Shareholder Option Agreement shall have been
terminated in accordance with its terms; or
(j) the Board of Directors of the Company (or any special committee
thereof) shall have withdrawn or materially modified in a manner adverse to
Parent or Merger Subsidiary its approval or recommendation of the Offer, the
Merger or this Agreement or its approval of the entry by Parent and Merger
Subsidiary into the Stock Option Agreement; or
(k) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in principle
with respect to any Acquisition Proposal;
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may be asserted by Parent in its sole discretion regardless of
the circumstances giving rise to any such condition or (other than the Minimum
Condition) may be waived by Parent and Merger Subsidiary in their discretion in
whole at any time or in part from time to time. The failure by Parent or Merger
Subsidiary at any time to exercise its rights under any of the foregoing
conditions shall not be deemed a waiver of any such right; the waiver of any
such right with respect to particular facts and 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 which may be asserted at any time
or from time to time.
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ANNEX II
ANNEX II-A
Xxxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxx, III
Xxxx X. Xxxxxxx
ANNEX II-B
In addition to those persons set forth in II-A above whose names are
hereby incorporated by reference, the following additional persons:
Xxxxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
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