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EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April 14,
1998, by and among FPIC Insurance Group, Inc., a Florida corporation ("FIG"),
Anesthesiologists Professional Assurance Association, Inc., a Florida
not-for-profit corporation ("APAA"), for itself and on behalf of a Florida for
profit corporation to be formed and named Anesthesiologists Professional
Assurance Association, Inc. ("Newco"), the APAA Liquidating Trust created
pursuant to that certain Liquidating Trust Agreement of even date herewith (the
"Liquidating Trust"), and Anesthesiologists Professional Assurance Company, a
Florida corporation ("APAC") (collectively, APAA, Newco, the Liquidating Trust
and APAC shall be referred to as the "APAA Group" and, each individually, a
member of the APAA Group).
W I T N E S S E T H:
WHEREAS, the Board of Directors of FIG has determined that it is in the
best interest of FIG and its shareholders to effect a merger of FIG and Newco
through the consummation of the business combination transactions provided for
in this Agreement; and
WHEREAS, the Trustees of the Liquidating Trust and the Boards of Directors
of APAA and APAC have determined that it is in the best interests of their
respective members and shareholders to effect a merger of FIG and Newco through
the consummation of the business combination transactions provided for in this
Agreement; and
WHEREAS, it is the intent of the Trustees of the Liquidating Trust and
respective Boards of Directors of APAA and APAC, and of the Board of Directors
of FIG, that FIG and APAC be the surviving corporations in such business
combination transactions; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with, and to prescribe certain conditions to, such
business combination transactions.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained in this Agreement, and intending to be
legally bound by this Agreement, the parties to this Agreement agree as follows:
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ARTICLE 1
THE MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement and in
accordance with the Florida Insurance Code, at the Effective Time, Newco shall
merge with and into FIG (the "Merger"). FIG shall be the surviving corporation
in the Merger, and shall continue its corporate existence under the laws of the
State of Florida. Upon consummation of the Merger, the separate existence
(corporate and otherwise) of Newco shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in
articles of merger, a form of which is attached as Exhibit A (the "Articles of
Merger"), filed with the appropriate authorities of the State of Florida on the
Closing Date (as defined in Section 9.1 of this Agreement). The effective date
and time of the Merger specified in the Articles of Merger shall be no earlier
than the date and time the Articles of Merger are filed with the appropriate
authorities of the State of Florida and shall be as soon after such filing as is
practicable. The term "Effective Time" shall be the date and time when the
Merger becomes effective, as set forth in the Articles of Merger filed in
accordance with the Florida Insurance Code and the Florida Business Corporation
Act, as amended (the "FBCA").
1.3 Effects of Merger. At and after the Effective Time, the Merger shall
have the effects set forth in this Agreement, the Articles of Merger, the
Florida Insurance Code and the FBCA. At the Effective Time, (i) all rights,
franchises, licenses and interests of Newco in and to every type of property,
real, personal and mixed, and all choses in action of Newco shall continue
unaffected and uninterrupted by the Merger and shall accrue to FIG; (ii) all
obligations and liabilities of Newco then outstanding shall become and be
obligations of FIG and shall continue unaffected and uninterrupted by the
Merger; and (iii) no action or proceeding then pending and to which Newco is a
party shall be abated or discontinued but may be prosecuted to final judgment by
FIG.
1.4 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any security of FIG
or Newco:
(1) Conversion of Newco Common Stock. The aggregate issued and
outstanding shares of Newco voting and nonvoting common stock ("Newco Common
Stock"), shall be canceled and converted into the right to receive $4,800,000 in
immediately available funds (the "Cash Consideration") and an aggregate number
of shares of common stock $0.10 par value per share, of FIG ("FIG Common Stock")
determined by dividing $9,000,000 by the average (weighted to reflect daily
trading volume) of the daily closing prices per share of FIG Common Stock on the
NASDAQ National Market as reported in the Southeast edition of the Wall Street
Journal for the period of twenty (20) business days ending on the last business
day prior to the Closing Date (the "Average Price") (the "Stock Consideration");
provided however, (i) that in the event the Average Price is $27.125 or lower,
then the Average Price shall be deemed to be $27.125 (the "Floor Price") and the
Stock Consideration shall be divided by the Floor Price (so that, in such case,
the Stock Consideration would be 331,797 shares of FIG Common Stock), and (ii)
that in the event the Average Price is $37.125 or higher, then the Average Price
shall be deemed to be $37.125 (the "Ceiling Price") and the Stock Consideration
shall be divided by the Ceiling Price (so that, in such case, the Stock
Consideration would be 242,424 shares of FIG Common Stock). At the Closing, FIG
shall deliver to the Liquidating Trust (a) the Cash Consideration and (b)
seven-ninths of the shares of FIG Common Stock comprising the Stock
Consideration, (the "Non-Pledged Stock Consideration"). The remaining shares of
FIG Common Stock comprising the Stock Consideration
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(the "Pledged Stock Consideration") shall be issued in the name of the
Liquidating Trust and pledged in favor of FIG as provided in Section 2.9.
(2) Anti-dilution. If, as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, or other similar change in capitalization prior to the Effective Time,
the outstanding shares of FIG Common Stock shall have been increased or
decreased by one (1%) percent or more or changed into or exchanged for a
different number or kind of shares or securities, then an appropriate and
proportionate adjustment shall be made to the Stock Consideration.
(3) No Change to FIG Common Stock. Each issued and outstanding share
of FIG Common Stock shall remain outstanding and shall continue to represent one
fully paid and nonassessable share of FIG Common Stock.
1.5 FIG Articles of Incorporation. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Articles of Incorporation of FIG then
in effect shall be, and shall continue in effect as, the Articles of
Incorporation of FIG, as the surviving corporation in the Merger, until
thereafter amended in accordance with applicable law.
1.6 FIG Bylaws. Subject to the terms and conditions of this Agreement, at
the Effective Time, the Bylaws of FIG then in effect shall be, and shall
continue in effect as, the Bylaws of FIG, as the surviving corporation in the
Merger, until thereafter amended in accordance with applicable law.
1.7 Merger Tax Consequences. It is intended that (i) the Merger shall
constitute a reorganization within the meaning of Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) this Agreement
shall constitute a "plan of reorganization" for the purposes of Section 368(a)
of the Code. The parties intend through the Merger to further their mutual
business objectives by obtaining synergies of operation, concentration of
business, acquisition of expertise, reduction of costs, and pooling of
well-trained and efficient personnel to strengthen the operations of both
parties in view of the increasingly more competitive market for the sale of
professional liability insurance to anesthesiologists and other physicians.
ARTICLE 2
OTHER AGREEMENTS
1.8 Note and Lien. At the Closing, but immediately following the
Effective Time, FIG shall pay American Professional Assurance, Ltd., a Cayman
Islands exempted limited company ("APAL"), $2,700,000 in full repayment of the
Renewal and Consolidated Note dated May 31, 1992, made by APAA to APAL (the
"Note"). APAA shall pay all accrued and unpaid interest owing under the Note
prior to Closing so that no accrued interest is owed on the Closing Date. Upon
the payment of the Note as contemplated herein, the Liquidating Trust and FIG
shall obtain a full release of any and all liens or other interests that APAL
may have in the outstanding shares of APAC common stock.
1.9 Contribution of Surplus Note. Prior to the Closing, APAA shall
contribute to the capital of APAC the Surplus Note, in the outstanding principal
amount as of the date hereof of $1,650,000, issued by APAC in favor of APAA (the
"Surplus Note"). Prior to such contribution, and after the date of this
Agreement, APAC shall make no further payments of principal, interest or other
amounts owing under the
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Surplus Note, except as required to allow APAA to make regularly scheduled
payments of interest under the Note, or except to permit APAA to recontribute
back to APAC the amount so received by APAA in payment of the Surplus Note as a
contribution to the capital APAC.
1.10 Transaction Fee. As of the Closing, but immediately following the
Effective Time, FIG shall pay Consulting Group of APA, Inc., a Florida
corporation ("CGA"), a transaction fee in the amount of $1,150,000 in cash for
its services rendered in connection with the transactions contemplated by this
Agreement.
1.11 Registration Rights. At the Closing, but immediately following the
Effective Time, FIG and the Liquidating Trust shall enter into a Stock
Restriction and Registration Rights Agreement substantially in the form attached
as Exhibit B.
1.12 APAC Board of Directors.
(1) The initial Board of Directors of APAC immediately after the
Closing shall be the same as before the Closing except that two representatives
of FIG shall be appointed to the APAC Board at the Closing. As APAC's sole
shareholder after the Closing, FIG shall have the right, in its discretion, to
elect and replace the directors of APAC, but FIG hereby agrees not to do so as
long as the Management Agreement (as defined in Section 2.7) remains in effect
(provided, however, in the event the Management Agreement is terminated by APAM
in accordance with Section Seventeen (C) thereof, until the date the then
current term of the Management Agreement (excluding any automatic extensions
thereof) would have expired had such termination not occurred).
(2) APAC acknowledges and agrees that the APAC Board will not have
authority to authorize or approve and will not authorize or approve any action
not contemplated by the Management Agreement and that is outside of the ordinary
course of business of APAC, unless at least one of the FIG representatives
consents to such action. APAC acknowledges and agrees that it has furnished FIG
copies of all of APAC's underwriting policies, pricing policies, and claims
handling policies (collectively, the "Management Policies"). FIG acknowledges
and agrees that the Management Policies shall remain in effect after
consummation of the Merger contemplated hereby, subject to the rights of the
APAC Board of Directors to change the same to reflect changed circumstances;
provided, that APAC shall obtain FIG's prior written consent before materially
changing any of the Management Policies.
(3) The provisions of this Section 2.5 shall survive the Closing and
the consummation of the Merger.
1.13 FIG and FPIC Boards of Directors. FIG shall cause Xx. Xxxxx Xxxx to
be appointed for a three year term to FIG's Board of Directors and for a one
year term to Florida Physicians Insurance Company, Inc.'s ("FPIC") Board of
Directors concurrently with the Closing. Should Xx. Xxxx cease serving as a
Director for any reason while the Management Agreement remains in effect, then
FIG shall cause a replacement for Xx. Xxxx designated by APA Management, Inc., a
Florida corporation ("APAM"), to fill that vacancy on the Board of Directors of
FIG and/or FPIC, as the case may be, so that at all times while the Management
Agreement remains in effect Xx. Xxxx or such other designee of APAM serves on
such Boards of Directors. After the Closing, FIG's Board of Directors and FPIC's
Board of Directors will also consider in good faith the appointment of Xx. Xxxxx
Xxxx as a member of their respective Executive Committees.
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1.14 Management Agreement. At the Closing, FIG, APAC and APAM shall enter
into a Management Agreement substantially in the form attached as Exhibit C (the
"Management Agreement").
1.15 Investment Management Agreement. At the Closing, FIG, APAM and APAC
shall enter into an Investment Management Agreement substantially in the form
attached as Exhibit D (the "Investment Management Agreement").
1.16 Agreements Regarding the Stock Consideration. At the Closing, FIG and
the Liquidating Trust shall enter into (i) an Indemnification and Stock Pledge
Agreement containing substantially the terms specified in Exhibit E and other
mutually agreeable terms typically included in agreements of such type (the
"Pledge Agreement") and (ii) a Stock Retention Agreement containing
substantially the terms specified in Exhibit F and other mutually agreeable
terms typically included in agreements of such type (the "Stock Retention
Agreement").
1.17 Newco. Prior to the Closing, APAA shall cause Newco to be organized
as a Florida for profit corporation. APAA agrees that (i) Newco shall not have
or incur any liabilities of any nature from the time of its organization through
the Effective Time other than (a) the liabilities of APAA set forth on the
balance sheet of APAA as of December 31, 1997, a copy of which has been provided
to FIG, (b) the Newco Expense Obligation (as defined in Section 9.3), and (c)
liabilities disclosed in Section 4.18 of the Disclosure Schedule which it is
anticipated that APAA will incur from and after January 1, 1998, and (ii) the
assets of Newco as of the Effective Time shall consist of the assets of APAA set
forth on the balance sheet of APAA as of December 31, 1997. Newco and the
Liquidating Trust shall not engage in any activities or operations of any nature
except as provided in this Agreement. APAA and the Liquidating Trust shall cause
Newco, upon its formation, to be bound by and to comply with all of the
obligations and agreements of or pertaining to Newco contained in this
Agreement.
1.18 Assumed Liability. The parties acknowledge that there has been
accrued but not paid an expense of $1,500,000 in respect of compensation due to
approximately 40 of the respective Directors, Officers, consultants, members of
the Board of Medical Advisors and key employees of APAC and APAM (the
"Compensation Accrual"). Notwithstanding any conflicting or inconsistent
provision of this Agreement, the parties acknowledge that the Compensation
Accrual shall not cause or contribute to any extent to the inaccuracy or breach
of any representation, warranty, covenant or agreement in this Agreement and
shall be completely disregarded in determining whether the conditions precedent
to FIG's obligations to close have been satisfied. At the Closing, and
immediately after the Effective Time, FIG shall pay the Compensation Accrual to
a nominee or paying agent designated by APAC for the approximately 40 persons
among whom the Compensation Accrual shall be distributed.
1.19 Cash Payments. All references to cash payments to be made
concurrently with or immediately after the Closing shall require payment by wire
transfer of immediately available US funds to the account designated by the
party receiving such payment, or otherwise in immediately available funds as
directed by the party receiving such payment.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FIG
Except as disclosed in the FIG disclosure schedule delivered to APAA
concurrently herewith (the "FIG Disclosure Schedule"), FIG hereby represents and
warrants to APAA as follows:
1.20 Corporate Organization.
(1) FIG is incorporated and its status is active under the laws of
the State of Florida. FIG has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not have a Material Adverse Effect on FIG. As used in this Agreement, the
term "Material Adverse Effect" means, with respect to FIG, APAA, Newco, the
Liquidating Trust, APAC, or the surviving corporation in the Merger, as the case
may be, a material adverse effect on the business, assets, properties, results
of operations, or financial condition of such party and its Subsidiaries taken
as a whole, excluding for this purpose only, however, the payment and/or
incurrence of transactional expenses by FIG, APAA, Newco, or APAC, in connection
with the Merger, as provided in this Agreement, to the extent having or
contributing to any extent to such an effect. As used in this Agreement, the
word "Subsidiary" when used with respect to any party means any corporation,
association, partnership, limited liability company, or other organization,
whether incorporated or unincorporated, more than 50% of the outstanding
securities or other equity ownership interests having ordinary voting power of
which shall be owned or controlled, directly or indirectly, by such party or by
one or more of such party's subsidiaries. True and complete copies of the
Articles of Incorporation and Bylaws of FIG, as in effect as of the date of this
Agreement, have previously been made available by FIG to APAA.
(2) A record of all material corporate action taken by the
shareholders and Board of Directors (including committees thereof) of FIG and
complete and accurate copies of all of its proceedings and actions by written
consent, and all minutes of its meetings, are contained in the minute books of
FIG. The minute books and stock ledgers of FIG contain an accurate and complete
record of all issuances, transfers and cancellations of shares of capital stock
of FIG. APAA has been given access to and an opportunity to review all such
minutes, minute books and stock ledgers.
1.21 Capitalization.
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(1) The authorized capital stock of FIG consists of 50,000,000 shares
of preferred stock and 25,000,000 shares of FIG Common Stock. As of December 31,
1997, no shares of such preferred stock and 9,179,581 shares of FIG Common Stock
were issued and outstanding. All of the issued and outstanding shares of FIG
Common Stock have been authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights with no personal liability attaching
to the ownership thereof. The shares of FIG Common Stock to be issued pursuant
to the Merger will be authorized and validly issued and, at the Effective Time,
all such shares will be fully paid, nonassessable and free of preemptive rights
and with no personal liability attaching to the ownership thereof, and shall be
free and clear of any Liens, restrictions, or adverse claims, except those
arising (a) under applicable securities laws, (b) under this Agreement, or (c)
by, through or under any member of the APAA Group
1.22 Authority; No Violation.
(1) FIG has full corporate power and authority to execute and deliver
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 approved by the Board
of Directors of FIG, and does not require the consent or approval of the
shareholders of FIG. This Agreement has been executed and delivered by FIG and
(assuming due authorization, execution and delivery by the APAA Group and the
receipt of all Requisite Regulatory Approvals (as defined in Section 7.1(iii) of
this Agreement) constitutes a valid and binding obligation of FIG, enforceable
against FIG in accordance with its terms.
(2) Neither the execution and delivery of this Agreement by FIG nor
the consummation by FIG of the transactions contemplated by this Agreement, nor
compliance by FIG with any of the terms or provisions of this Agreement, will
(i) violate any provision of the Articles of Incorporation or Bylaws of FIG or
(ii) assuming that all Requisite Regulatory Approvals and all of the consents
and approvals referred to in Section 3.4 of this Agreement are duly obtained,
(x) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to FIG or any of its properties or assets,
or (y) violate, conflict with, result in a breach of any provision of or the
loss of any benefit under, constitute a default (or an event that, with notice
or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any lien, charge or
encumbrance of any nature (collectively "Lien") upon any of the properties or
assets of FIG under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which FIG is a party, or by which it or any of its
properties or assets may be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches or defaults which, either
individually or in the aggregate, will not have or be reasonably likely to have
a Material Adverse Effect on FIG.
1.23 Consents and Approvals. Except for (i) the filing of
applications, notices and forms with, and the obtaining of approvals from, the
Department of Insurance of the State of Florida (the "Florida Insurance
Department") under the Florida Insurance Code, with respect to the transactions
contemplated by this Agreement, (ii) the filing of any other required
applications, notices and forms with, and the obtaining of approvals from, any
other Governmental Entity (as defined in this Section 3.4), (iii) the filing of
the Articles of Merger with the appropriate authorities of the State of Florida
pursuant to the Florida Insurance Code and the FBCA, (iv) the filing of a
notification and report form (the "HSR Act Report") with the Pre-Merger
Notification Office of the
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Federal Trade Commission and with the Antitrust Division of the Department of
Justice (collectively, the "Pre-Merger Notification Agencies") pursuant to the
Xxxx-Xxxxx- Xxxxxx Anti-Trust Improvements Act, as amended, and the rules and
regulations thereunder (collectively, the "HSR Act"), (v) any consents,
authorizations, orders and approvals required under the Florida Insurance Code
and the HSR Act, (vi) any consents, authorizations, approvals, filings or
exemptions in connection with compliance with FIG's listing on the Nasdaq
National Market, and (vii) such filings and approvals as are required to be made
or obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of the shares of FIG Common Stock pursuant to this
Agreement, no consents or approvals of or filings or registrations with any
court, administrative agency or commission or other governmental authority or
instrumentality (together with the SEC, the Pre-Merger Notification Agencies,
and the Florida Insurance Department, a "Governmental Entity") or, except as set
forth in the FIG Disclosure Schedule, with any third party are necessary in
connection with the execution and delivery by FIG of this Agreement or the
consummation by FIG of the transactions contemplated by this Agreement.
1.24 Financial Statements. FIG has previously made available to APAA
copies of the consolidated balance sheets of FIG and its Subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for the fiscal years 1997 and
1996, inclusive, as reported in FIG's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 filed with the SEC under the Securities Exchange
Act of 1934, as amended and the rules and regulations thereunder (collectively,
the "Exchange Act"), in each case accompanied by the audit reports of KPMG Peat
Marwick LLP (with respect to the years ended December 31, 1997 and 1996),
independent public accountants with respect to FIG. Prior to the Closing, FIG
will deliver to APAA copies of the unaudited consolidated balance sheet of FIG
and its Subsidiaries and the related unaudited consolidated statements of income
and cash flows as reported in FIG's Quarterly Report on Form 10-Q for each
quarter period ended at least 45 days prior to the Closing. The consolidated
balance sheets of FIG as of December 31, 1997 and 1996 (including the related
notes, where applicable) fairly present the consolidated financial position of
FIG and its Subsidiaries as of the dates thereof, and the other financial
statements referred to in this Section 3.5 (including the related notes, where
applicable) fairly present or will fairly present (subject, in the case of the
unaudited statements, to recurring year end and audit adjustments normal in
nature and amount) the results of the consolidated operations and changes in
shareholders' equity and consolidated financial position of FIG and its
Subsidiaries for the respective fiscal periods or as of the respective dates
therein set forth; each of such statements (including the related notes, where
applicable) comply (or will comply) in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto; and each of such statements (including the related notes,
where applicable) has been (or will be) prepared in all material respects in
accordance with generally accepted accounting principles consistently applied
("GAAP") during the periods involved, except, in each case, as indicated in such
statements or in the notes thereto (or, in the case of unaudited statements, as
permitted by Form 10-Q). The books and records of FIG and its Subsidiaries have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements and reflect only
actual transactions.
1.25 Broker's Fees. Except as described in Section 2.3, neither FIG
nor any Subsidiary of FIG nor any of their respective officers or directors has
employed any broker or finder
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or incurred any liability for any broker's fees, commissions or finder's fees in
connection with the transactions contemplated by this Agreement.
1.26 Absence of Certain Changes or Events.
(1) Except as disclosed in the FIG Reports (as defined in Section 3.9
of this Agreement) filed prior to the date of this Agreement, since December 31,
1997, (i) FIG and its Subsidiaries taken as a whole have not incurred any
material indebtedness or other liability or obligation (whether absolute,
accrued, contingent or otherwise), other than in the ordinary course of their
business; (ii) FIG has not declared or paid any dividend or other distribution
in respect of the capital stock of FIG, or any direct or indirect redemption,
purchase or other acquisition by FIG of any such stock; and (iii) no event has
occurred which has had, or is likely to have, individually or in the aggregate,
a Material Adverse Effect on FIG.
(2) Except as disclosed in the FIG Reports filed prior to the date of
this Agreement, and except as disclosed in the FIG Disclosure Schedule, since
December 31, 1997, FIG and its Subsidiaries have carried on their respective
businesses in all material respects in the ordinary and usual course theretofore
conducted.
1.27 Legal Proceedings.
(1) Neither FIG nor any of its Subsidiaries is a party to any, and
there are no pending or, to the best of their knowledge, threatened, material
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature (including
noncontractual claims, bad faith claims and claims against any directors or
officers of FIG or any Subsidiary of FIG, but excluding coverage and other
claims not alleging bad faith made with respect to insurance policies issued by
any FIG Subsidiary) against FIG or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement as to
which there is a reasonable likelihood of an adverse determination and which, if
adversely determined, either individually or in the aggregate, would have a
Material Adverse Effect on FIG.
(2) There is no injunction, order, judgment, decree, or regulatory
restriction (including noncontractual claims, bad faith claims and claims
against any directors or officers of FIG or any Subsidiary of FIG, but excluding
coverage and other claims not alleging bad faith made with respect to insurance
policies issued by any FIG Subsidiary) imposed upon FIG, any of its Subsidiaries
or the assets of FIG or any of its Subsidiaries which has had, or might
reasonably be expected to have, a Material Adverse Effect on FIG.
1.28 SEC Reports. FIG has previously made available to APAA a
complete copy of each (a) final registration statement, prospectus, report
(including but not limited to reports on Forms 10-K, 8-K and 10-Q), schedule and
definitive proxy statement filed since June 11, 1996 and prior to the date of
this Agreement by FIG with the SEC pursuant to the Securities Act of 1933, as
amended and the rules and regulations thereunder (collectively, the "Securities
Act"), or the Exchange Act (collectively, the "FIG Reports") and (b)
communication mailed by FIG to its shareholders since June 11, 1996 and prior to
the date of this Agreement, and no such registration statement, prospectus,
report, schedule, proxy statement or communication contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify
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information as of an earlier date. Since June 11, 1996, FIG has timely filed all
FIG Reports and other documents required to be filed by it under the Securities
Act and the Exchange Act, and, as of their respective dates, all FIG Reports
complied in all material respects with respect to form, content and otherwise
with the published rules and regulations of the SEC with respect thereto.
1.29 Compliance with Applicable Law. FIG and each of its Subsidiaries
hold all material licenses, franchises, permits and authorizations necessary for
the lawful conduct of their respective businesses under and pursuant to, and
have complied in all material respects with and are not in default in any
material respect under any, and have maintained and conducted their respective
businesses in all material respects in compliance with, all applicable laws,
statutes, orders, rules, regulations, policies and/or guidelines of each
Governmental Entity relating to FIG or any of its Subsidiaries, except where the
failure to hold such license, franchise, permit or authorization or such
noncompliance or default would not, either individually or in the aggregate,
have a Material Adverse Effect on FIG. Neither FIG nor any of its Subsidiaries
engages in any activity prohibited by applicable law.
1.30 Agreements with Regulatory Agencies. Neither FIG nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or has been since
January 1, 1994, a recipient of any supervisory letter from, or since January 1,
1994, has adopted any board resolutions at the request of any Governmental
Entity that currently restricts in any material respect the conduct of its
business or that in any material manner relates to its capital adequacy, its
credit policies, its management or its business (each, whether or not set forth
in the FIG Disclosure Schedule, a "FIG Regulatory Agreement"), nor has FIG or
any of its Subsidiaries been advised since January 1, 1994, by any Governmental
Entity that it is considering issuing or requesting any such FIG Regulatory
Agreement.
1.31 Undisclosed Liabilities. Except for (i) those liabilities that are
fully reflected or reserved against on the consolidated balance sheet of FIG
included in the FIG December 31, 1997 Form 10-K, (ii) those liabilities incurred
in the ordinary course of business consistent with past practice since December
31, 1997, and (iii) coverage and other claims (other than bad faith claims) made
with respect to insurance policies issued by any FIG Subsidiary, neither FIG nor
any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) that, either alone or when combined with all similar liabilities, has had,
or could reasonably be expected to have, a Material Adverse Effect on FIG.
1.32 State Takeover Laws. The Board of Directors of FIG has approved the
transactions contemplated by this Agreement and taken such action such that the
provisions of any state or local "takeover" law applicable to FIG will not apply
to this Agreement or any of the transactions contemplated by this Agreement.
1.33 No Investment Company. Neither FIG nor any Subsidiary of FIG is an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of either the Investment Company Act of 1940, as amended, or
Sections 368(a)(2)(F)(iii) and (iv) of the Code.
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1.34 Full Disclosure. No representation or warranty by FIG in this
Agreement, nor in any certificate, schedule, statement, document or instrument
furnished by FIG to APAA Group pursuant to this Agreement contains or will
contain any untrue statement of a material fact or, taking into account the
scope of such representations and warranties and the context in which they are
made, omits or will omit to state a material fact required to be stated herein
or therein or necessary to make any statement herein or therein not misleading.
1.35 Legal Compliance. Neither FIG nor, to the best knowledge of FIG, any
director, officer, agent, employee or other person associated with or acting on
behalf of FIG has, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
from corporate funds; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment, using corporate funds.
1.36 Effective Time of Representations, Warranties, Covenants and
Agreements. Each representation, warranty, covenant and agreement of FIG set
forth in this Agreement, as updated by any written disclosure schedule delivered
pursuant to Section 6.6 of this Agreement, shall be deemed to be made on and as
of the date of this Agreement, as of the Closing Date, and as of the Effective
Time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE APAA GROUP
Except as disclosed in the APAA Group disclosure schedule delivered to FIG
concurrently herewith (the "APAA Group Disclosure Schedule"), the APAA Group
(provided that references to Newco in this Section shall be deemed applicable
only from and after the formation of Newco) hereby jointly and severally
represents and warrants to FIG as follows:
1.37 Organization.
(1) APAA is incorporated as a not-for-profit corporation and its
status is active under the laws of the State of Florida. APAA has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is registered, licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such registration, licensing or qualification
necessary, except where the failure to be so registered, licensed or qualified
would not have a Material Adverse Effect on APAA. True and complete copies of
the Articles of Incorporation and Bylaws of APAA, as in effect as of the date of
this Agreement, have previously been made available by APAA to FIG.
(2) As of the Closing, (a) Newco will be incorporated and its status
will be active under the laws of the State of Florida, (b) Newco will have the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is then being conducted, and (c) Newco will
be registered, licensed or qualified to do business in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such registration,
licensing or qualification necessary, except
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where the failure to be so registered, licensed or qualified would not have a
Material Adverse Effect on Newco. True and complete copies of the Articles of
Incorporation and Bylaws of Newco, as in effect as of the Closing, will be made
available to FIG upon Newco's organization. As of the Closing, Newco will be a
wholly owned subsidiary of the Liquidating Trust.
(3) The Liquidating Trust has been formed and organized and its
status is active under the laws of the State of Florida. The Liquidating Trust
has the legal power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is
registered, licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such registration, licensing
or qualification necessary, except where the failure to be so registered,
licensed or qualified would not have a Material Adverse Effect on the
Liquidating Trust. True and complete copies of the organizational documents of
the Liquidating Trust, as currently in effect, have previously been made
available by the Liquidating Trust to FIG.
(4) APAC is incorporated and its status is active under the laws of
the State of Florida. APAC has the corporate power and authority to own or lease
all of its properties and assets and to carry on its business as it is now being
conducted, and is registered, licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such registration, licensing or qualification necessary, except where the
failure to be so registered, licensed or qualified would not have a Material
Adverse Effect on APAC. True and complete copies of the Articles of
Incorporation and Bylaws of APAC, as in effect as of the date of this Agreement,
have previously been made available by APAC to FIG.
(5) A record of all material action taken by the Trustees of the
Liquidating Trust and the Boards of Directors of APAA and APAC (including
committees thereof), and a record of all corporate action taken by the
shareholders of APAC, and complete and accurate copies of all of their
respective proceedings and actions by written consent, and all minutes of their
respective meetings, are contained in the respective minute books of the APAA
Group. The records of APAA and the Liquidating Trust contain an accurate and
complete record of all members of APAA and their membership rights (to the
extent required to be reflected therein). The minute books and stock ledgers of
APAC contain an accurate and complete record of all issuances, transfers and
cancellations of shares of capital stock of APAC. FIG has been given access to
and an opportunity to review all such minutes, minute books, membership records
and stock ledgers.
1.38 Capitalization.
(1) The authorized capital stock of Newco will consist of 900 shares
of nonvoting common stock and 100 shares of voting common stock. All of the
Newco Common Stock, as of the Closing, will have been authorized and validly
issued and will be fully paid, nonassessable and free of preemptive rights with
no personal liability attaching to the ownership thereof. As of the time
immediately prior to the Merger and except as contemplated by this Agreement,
Newco will not have and will not be bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the purchase or issuance of any shares of Newco capital stock or any
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other equity securities of Newco or any securities representing the right to
purchase or otherwise receive any shares of Newco capital stock or any other
equity securities of Newco, and no shares of Newco capital stock will be
reserved for issuance, nor will Newco have issued any shares of Newco capital
stock or other equity securities of Newco, or any securities convertible into or
exercisable for any shares of Newco capital stock or other equity securities of
Newco, other than as contemplated by this Agreement.
(2) The authorized capital stock of APAC consists of 600,000 shares
of common stock, $1.00 par value ("APAC Common Stock"). As of December 31, 1997,
all of the authorized shares of APAC Common Stock were issued and outstanding.
All of the issued and outstanding shares of APAC Common Stock have been
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights with no personal liability attaching to the ownership thereof.
As of the date of this Agreement, and except as contemplated by this Agreement,
APAC does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of APAC Common Stock or any other equity
securities of APAC or any securities representing the right to purchase or
otherwise receive any shares of APAC Common Stock or any other equity securities
of APAC, except with respect to the pledge encumbering the APAC Common Stock and
securing the Note. No shares of APAC Common Stock are reserved for issuance.
Since December 31, 1997, APAC has not issued any shares of APAC Common Stock or
other equity securities of APAC, or any securities convertible into or
exercisable for any shares of APAC Common Stock or other equity securities of
APAC, other than as contemplated by this Agreement.
(3) The APAA Group Disclosure Schedule sets forth a complete list of
the officers and directors of APAA and APAC. The APAA Group does not have any
direct or indirect equity or ownership interest in any other business or entity,
other than (upon formation thereof) Newco and APAC, and does not have any direct
or indirect obligation or any commitment to invest any funds in any corporation
or other business or entity, other than for investment purposes in the ordinary
course of business.
1.39 Authority; No Violation.
(1) Each member of the APAA Group has full power and authority to
execute and deliver 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 and validly approved by all of the members of APAA who have the right to
vote thereon and have been, or prior to the Closing will be, duly and validly
approved by the Board of Directors of APAA, Newco and APAC, the Trustees of the
Liquidating Trust and the shareholder of APAC. No other corporate proceedings on
the part of the members of the APAA Group are necessary to approve this
Agreement and to consummate the transactions contemplated by this Agreement.
This Agreement has been validly executed and delivered by APAA, the Liquidating
Trust and APAC and (assuming due authorization, execution and delivery by FIG
and the receipt of all Requisite Regulatory Approvals) constitutes a valid and
binding obligation of each member of the APAA Group, enforceable against each
member of the APAA Group in accordance with its terms. Except for the approval
of the voting members of APAA, which has been obtained, no member of APAA and no
beneficiary of the Liquidating Trust has or will have any right to vote upon or
approve or any other rights to affect the consummation of the transactions
contemplated by this Agreement.
(2) Neither the execution and delivery of this Agreement by APAA, the
Liquidating Trust and APAC nor the consummation by APAA, the Liquidating Trust,
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Newco and APAC of the transactions contemplated by this Agreement, nor
compliance by APAA, the Liquidating Trust, Newco and APAC with any of the terms
or provisions of this Agreement, will (i) violate or will violate any provision
of the organizational documents of any member of the APAA Group or (ii) assuming
that the consents and approvals referred to in Section 4.4 of this Agreement are
duly obtained, (x) violate or will violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable or that will
be applicable to any member of the APAA Group or any of their properties or
assets, or (y) violate, conflict with, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any Lien upon any of
the properties or assets of any member of the APAA Group under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which any
member of the APAA Group is a party, or by which it or any of its properties or
assets may be bound or affected.
1.40 Consents and Approvals. Except for (i) the filing of
applications, notices and forms with, and the obtaining of approvals from, the
Florida Insurance Department under the Florida Insurance Code, with respect to
the transactions contemplated by this Agreement, (ii) the filing of any other
required applications, notices and forms with, and the obtaining of approvals
from any other Governmental Entity, (iii) the filing of the Articles of Merger
with the appropriate authorities of the State of Florida pursuant to the Florida
Insurance Code and the FBCA, (iv) the filing of the HSR Act Report with the
Pre-Merger Notification Agencies pursuant to the HSR Act, and (v) any consents,
authorizations, orders and approvals required under the Florida Insurance Code
and the HSR Act, no consents or approvals of or filings or registrations with
any Governmental Entity or with any third party are necessary in connection with
the execution and delivery by the APAA Group of this Agreement or the
consummation by the APAA Group of the transactions contemplated by this
Agreement.
1.41 Reports. Each member of the APAA Group, as applicable (i) has
timely filed all annual and quarterly statements (including the financial
statements contained therein), reports, registrations and statements, together
with all amendments required to be made with respect thereto, it was required to
file since January 1, 1993 with each Governmental Entity having jurisdiction,
(ii) has timely filed all other reports and statements, together with all
amendments required to be made with respect thereto, that it was required to
file since January 1, 1998 under all applicable laws, rules or regulations
(including any report or statement required to be filed pursuant to the laws,
rules or regulations of the United States, any state, or any other Governmental
Entity), and (iii) has paid all fees and assessments due and payable in
connection therewith, except in each case for such delinquencies and defects in
such filings as did not have any Material Adverse Effect upon any member of the
APAA Group. All such reports, registrations and statements, together with all
such amendments, were in substantial compliance with applicable law when filed
and, as of their respective dates, did not contain any false statements or
material misstatements of fact or (when taken as a whole) omit to state any
material facts required to be disclosed therein and necessary to make the
statements set forth therein not materially misleading in light of the
circumstances in which such statements were made. No deficiencies have been
asserted by any Governmental Entity with
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respect to such reports, registrations and statements or any such amendments
thereto, that have any Material Adverse Effect on any member of the APAA Group.
The APAA Group has delivered to FIG complete and accurate copies of all annual
and quarterly statements (including the financial statements contained therein)
required to be filed by APAC under applicable law since January 1, 1993. Except
for normal examinations conducted by a Governmental Entity in the regular course
of the business of APAA and APAC, no Governmental Entity has given any member of
the APAA Group notice of the initiation of any proceeding or investigations into
the business or operations of any member of the APAA Group since January 1,
1993. No member of the APAA Group has knowledge of or has received any notice of
any unresolved violation, criticism, or exception by any Governmental Entity
with respect to any report or statement relating to any examinations of any
member of the APAA Group which, either individually or in the aggregate, has had
or is likely to have a Material Adverse Effect on any member of the APAA Group.
1.42 Financial Statements.
(1) The APAA Group has previously made available to FIG copies of the
balance sheets of the consolidated APAA Group as of December 31, for the fiscal
years 1997 and 1996, and the related statements of income, changes in capital
and surplus and cash flows for the fiscal years 1997, 1996 and 1995, in each
case accompanied by the audit reports of KPMG Peat Marwick LLP, independent
public accountants with respect to the consolidated APAA Group. Prior to the
Closing, APAA will deliver to FIG copies of the unaudited balance sheet of the
consolidated APAA Group and the related unaudited statements of income and cash
flows for each quarter period ended at least 45 days prior to the Closing. The
balance sheets of the consolidated APAA Group as of December 31, 1997 and 1996
(including the related notes, where applicable) fairly present in all material
respects the financial position of the consolidated APAA Group as of the dates
thereof, and the other financial statements referred to in this Section 4.6(i)
(including the related notes, where applicable) fairly present in all material
respects (subject, in the case of the unaudited statements, to recurring year
end and audit adjustments normal in nature and amount) the results of the
operations and changes in capital and surplus and financial position of the
consolidated APAA Group for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) comply in all material respects with applicable
accounting requirements; and each of such statements (including the related
notes, where applicable) has been prepared in all material respects in
accordance with GAAP during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto. For purposes of the
consolidated financial statements of the APAA Group referred to in this Section
4.6(i), the APAA Group shall be deemed not to include Newco. The books and
records of the consolidated APAA Group have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
(2) APAC has previously made available to FIG copies of the annual
Statutory Financial Statements for APAC for the years ended December 31, 1997
and 1996 (collectively, the "APAC Statutory Statements"). Prior to the Closing,
APAC will deliver to FIG copies of its quarterly Statutory Financial Statements
for each quarter period ended at least 45 days prior to the Closing
(collectively, the "APAC Quarterly Statements"). The APAC Statutory Statements
(i) complied in all material respects with all applicable laws when filed, (ii)
are true and complete in all material respects and (iii) present fairly in all
material respects the financial position of APAC at the end of each of the years
then ended and the results of APAC's operations and changes in capital and
surplus and in cash flow for each such year, in conformity with accounting
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practices prescribed or permitted by the applicable state insurance laws and
regulations applied on a consistent basis as and to the extent described in such
annual statements and related statutory financial statements. The APAC Quarterly
Statements (i) will comply in all material respects with all applicable laws
when filed, (ii) will be true and complete in all material respects and (iii)
will present fairly in all material respects the financial position of APAC at
the end of each of the quarters then ended and the results of APAC's operations
and changes in capital and surplus and in cash flow for each such quarter, in
conformity with accounting practices prescribed or permitted by the applicable
state insurance laws and regulations applied on a consistent basis as and to the
extent described in such quarterly statements and related statutory financial
statements. APAC is not aware of and has not received any notice of the
assertion of any deficiency by any insurance regulatory authority with respect
to the APAC Statutory Statements or the APAC Quarterly Statements that has had
or is reasonably likely to have a Material Adverse Effect on APAC.
1.43 Broker's, Financial Advisory and Transaction Fees. Neither APAA
nor APAC nor any of their respective officers or trustees or directors has
employed any broker or finder or incurred any liability for any broker's fees,
financial advisory or transaction, commissions or finder's fees in connection
with the transactions contemplated by this Agreement, other than the $1,150,000
transaction fee payable to CGA, which shall be paid by FIG at the Closing as
provided in Section 2.3, and the financial advisory fees payable to Metis
Financial, LLC, which shall be paid by APAA (subject to FIG's agreement to pay
the Newco Expense Obligation).
1.44 Absence of Certain Changes or Events. Except for matters
provided for in this Agreement, matters disclosed in the APAA Group Disclosure
Schedule and legal, accounting, actuarial and financial advisory fees incurred
by APAA in connection with the transactions contemplated by this Agreement,
since December 31, 1997 there has not been:
(1) any material adverse change in the financial condition,
business, assets, properties, liabilities, operations, results of operations or
prospects of any member of the APAA Group;
(2) any declaration, setting aside or payment of any dividend,
or other distribution, in respect of any of the capital stock of any member of
the APAA Group or any direct or indirect redemption, purchase or other
acquisition by any member of the APAA Group of any of its capital stock;
(3) any entry into or amendment of any employment or deferred
compensation agreement between any member of the APAA Group and any of their
officers, directors, employees, agents or consultants;
(4) any issuance or sale by any member of the APAA Group of any
of its capital stock, debentures, bonds, notes or other corporate securities, or
any modification or amendment of the rights of the holders of any of their
outstanding capital stock, debentures, bonds, notes or other securities;
(5) any creation of any lien of any kind (other than deposits
with state insurance departments and liens for current taxes not yet due),
including, without limitation, any deposit for security made of, created on or
in any asset or property of any member of the APAA Group, or assumed by any
member of the APAA Group with respect to any such asset or property;
(6) any material indebtedness or other liability or obligation
(whether absolute, accrued, contingent or otherwise) incurred or forgiven, or
other material transaction
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engaged in by any member of the APAA Group, except in the ordinary course of
business and consistent with past practices;
(7) any sale, transfer or other disposition of any assets or
properties of any member of the APAA Group, or any acquisition by any member of
the APAA Group of any assets or properties, or any agreement to do any of the
foregoing, except in the ordinary course of business;
(8) any amendment, termination or waiver of any material right
of any member of the APAA Group under any contract, agreement or governmental
license or permit, except for amendments to reinsurance agreements and other
contractual amendments in the ordinary course of business;
(9) any material change in the policies customarily followed by
any member of the APAA Group (including, without limitation, any underwriting,
actuarial, pricing, financial or accounting practices or policies);
(10) any material increase in APAC's policy lapse ratio, or any
material decrease in the amount of APAC's in-force business or the premium rates
charged by APAC;
(11) any actual or threatened labor trouble, strike, loss of
employees or agents of any member of the APAA Group;
(12) any increase in salaries or other compensation of, or
advances (other than travel and other advances in the ordinary course of
business) to, any employees of any member of the APAA Group, other than
increases to non-executive employees in the ordinary course of business and
consistent with past practices;
(13) any loss of agents of APAC that has had or could reasonably
be expected to have a Material Adverse Effect on APAC;
(14) any transaction between APAC on the one hand, and APAA or
any person or company, corporation or other entity controlled by, controlling or
under common control with APAA, on the other hand, except for 1998 servicing and
claims handling agreements with APAM, which shall be terminated as of the
Closing without liability to APAC or APAM;
(15) any rights or licenses granted under any of the trade names
of any member of the APAA Group or any general agency arrangements entered into
by any member of the APAA Group.
(16) any agreement regarding reinsurance, surplus relief
obligations, excess insurance, ceding of insurance, assumption of insurance or
indemnification entered into with respect to insurance or management of
business;
(17) any materially adverse change in the operations, results of
operations, business, assets, properties, financial condition, income or
liabilities of any member of the APAA Group;
(18) any materially adverse damage, destruction or loss, whether
or not covered by insurance or reinsurance, suffered by any member of the APAA
Group, other than casualties covered by insurance policies issued by APAC;
(19) any strike, picketing, boycott or other labor trouble
adversely affecting the business, operations or prospects of any member of the
APAA Group; or
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(20) any transaction that was not in the ordinary course of
business and consistent with past practices.
1.45 Legal Proceedings.
(1) No member of the APAA Group is a party to any, and there are
no pending or, to the best of their knowledge, threatened, legal,
administrative, arbitral or other proceedings, claims, actions or governmental
or regulatory investigations of any nature (including noncontractual claims, bad
faith claims and claims against any directors or officers of any member of the
APAA Group, but excluding coverage and other claims not alleging bad faith made
with respect to insurance policies issued by APAC) against any member of the
APAA Group or challenging the validity or propriety of the transactions
contemplated by this Agreement.
(2) There is no injunction, order, judgment, decree, or
regulatory restriction (including noncontractual claims, bad faith claims and
claims against any directors or officers of any member of the APAA Group, but
excluding coverage and other claims not alleging bad faith made with respect to
insurance policies issued by APAC) imposed upon any member of the APAA Group or
the assets of any member of the APAA Group.
1.46 Taxes and Tax Returns. None of the Tax matters described
below, individually or in the aggregate, will have or are reasonably likely to
have a Material Adverse Effect on any member of the APAA Group.
(1) Each member of the APAA Group has filed all Tax Returns
required to be filed by it under applicable law, giving effect to permissible
extensions under applicable law. All Tax Returns were in all material respects
(and, as to Tax Returns not filed as of the date hereof, will be) true, complete
and correct and filed on a timely basis.
(2) Each member of the APAA Group has, within the time and in
the manner described by law, paid (and until the Effective Time will pay within
a time and in the manner prescribed by law) all Taxes that are currently due and
payable except for Taxes for which adequate reserves have been made on the
financial statements described in Section 4.6(i) of this Agreement.
(3) Since 1993, no tax returns of any member of the APAA Group
have been examined by the Internal Revenue Service (the "IRS") or any state,
local or foreign Tax authority for state, county, local and foreign Taxes.
(4) No audits or other administrative proceedings or court
proceedings are presently pending against any member of the APAA Group nor has
any member of the APAA Group given any currently effective waivers extending the
statutory period of limitation applicable to any Tax Return for any period.
(5) Proper and accurate amounts have been withheld by each
member of the APAA Group, as applicable, from its employees, if any, for all
prior periods in compliance in all material respects with the tax withholding
provisions of applicable federal, state and local laws. Except for APAA's and
APAC's 1997 Tax Return, as to which APAA and APAC are subject to a filing
extension in accordance with applicable law, Tax Returns that are accurate and
complete in all material respects have been filed by each member of the APAA
Group for all periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes. The amounts shown on such
Tax Returns (and the amounts that will be shown on APAA's and
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APAC's 1997 Tax Return) to be due and payable have been paid in full or adequate
provision therefor has been included by each of APAC and APAA in its
consolidated financial statements as of December 31, 1997,
(6) There are no Tax Liens upon any property or assets of any
member of the APAA Group except Liens for current Taxes not yet due.
(7) No member of the APAA Group has been required to include in
income any adjustment pursuant to Section 481 of the Code by reason of a
voluntary change in accounting method initiated by such entity, and the IRS has
not initiated or proposed any such adjustment or change in accounting method.
(8) No member of the APAA Group has entered into a transaction
which is being accounted for as an installment obligation under Section 453 of
the Code.
(9) No member of the APAA Group is a party to or bound by any
tax indemnity, tax sharing or tax allocation agreement, except with other
members of the APAA Group (excluding the Liquidating Trust) and except for the
Pledge Agreement. APAC and its parent entity, APAA, file consolidated income tax
returns and are each liable for the taxes of the other pursuant to the
provisions of Treasury Regulation Section 1.1502-6.
(10) No member of the APAA Group has any liability for Taxes of
any person other than such entity (i) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law) as a transferee or
successor, (ii) by contract or (iii) otherwise.
(11) No member of the APAA Group is a party to any joint
venture, partnership or other arrangement or contract that could be treated as a
partnership for federal income tax purposes.
(12) Each member of the APAA Group has or had substantial
authority (within the meaning of Section 6661 of the Code for Tax Returns filed
on or before December 31, 1990, and within the meaning of Section 6662 of the
Code for Tax Returns filed after December 31, 1990) for all transactions that
could give rise to any understatement of federal income tax (within the meaning
of Section 6661 of the Code for Tax Returns filed on or before December 31,
1990, and within the meaning of Section 6662 of the Code for Tax Returns filed
after December 31, 1990).
(13) No election under Code Section 338 (or any predecessor
provision) has been made by or with respect to any member of the APAA Group or
any of their respective assets or properties.
(14) No member of the APAA Group has engaged in any intercompany
transactions within the meaning of Treasury Regulations Section 1.1502-13 for
which any income or gain will remain unrecognized as of the close of the last
taxable year prior to the Effective Time.
(15) No power of attorney currently in force has been granted by
any member of the APAA Group concerning any Tax matter.
(16) No member of the APAA Group has received a Tax Ruling or entered
into a Closing Agreement with any taxing authority that would have a continuing
effect after the Effective Time.
(17) There has been no disallowance of a deduction under Section
162(m) of the Code by any member of the APAA Group for employee remuneration of
any amount paid or payable
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by any member of the APAA Group under any contract, plan, program, arrangement
or understanding.
(18) As used in this Agreement, (i) the term "Tax" or "Taxes"
means all taxes, charges, fees, levies and other governmental assessments and
impositions of any kind payable to any governmental authority or agency
(including all federal, state, county, local, and foreign income, excise, gross
receipts, gross income, ad valorem, profits, gains, property, capital, sales,
transfer, use, payroll, employment, severance, withholding, duties, intangibles,
franchise, backup withholding, and other taxes, charges, levies or like
assessments together with all penalties and additions to tax and interest
thereon); and (ii) the term "Tax Return" or "Tax Returns" means any and all
returns, reports, information returns and information statements with respect to
Taxes required to be filed by any member of the APAA Group with the IRS or any
other Governmental Entity or tax authority or agency, whether domestic or
foreign (including consolidated, combined and unitary tax returns). "Tax
Ruling," as used in this Agreement, shall mean a written ruling of a Taxing
authority relating to Taxes imposed on or incurred by any member of the APAA
Group. "Closing Agreement," as used in this Agreement, shall mean a written and
legally binding agreement with a Tax authority relating to Taxes imposed on or
incurred by any member of the APAA Group.
1.47 Employee Benefit Plans; Labor Matters. Except as
contemplated by this Agreement and with respect to the allocation and
distribution of the Cash Consideration and/or Stock Consideration to and by the
Liquidating Trust and otherwise:
(1) No member of the APAA Group now has or has ever had any
employees. APAC has contracted with APAM for the furnishing of all
administrative services since the inception of APAC in 1987. No member of the
APAA Group has any employee benefit plans (as that term is defined in ERISA
Section 3(3)), agreements, or arrangements that are maintained by any Affiliate
or any other person which might be deemed a 'single employer' within the meaning
of Section 4001 of ERISA.
(2) No individuals are or would be considered leased employees
(as that term is defined in Code Section 414(n)) of any member of the APAA Group
or their affiliates, except that no such representation is made with respect to
the employees of APAM that are engaged in managing APAC under the management
agreements in effect prior to and after the Effective Time.
(3) Intentionally Omitted
(4) Intentionally Omitted.
(5) No person treated as an independent contractor by any member
of the APAA Group is an employee as defined in Section 3401(c) of the Code, nor
has any employee been otherwise improperly classified, as exempt, nonexempt or
otherwise, for purposes of federal or state income tax withholding or overtime
laws, rules, or regulations.
(6) Except as provided in Item 4.8 (xx) of the Disclosure
Schedule, no member of the APAA Group has any commitment to (i) create any
compensation or benefit plan or (ii) enter into any contract to provide
compensation or benefits to any individual.
1.48 Compliance with Applicable Law. Each member of the APAA
Group holds all licenses, franchises, permits and authorizations necessary for
the lawful conduct of its business under and pursuant to, and has complied in
all respects with and is not in default in any respect under any, and has
maintained and, conducted its business in all respects in compliance with, all
applicable
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laws, statutes, orders, rules, regulations, policies and/or guidelines of each
Governmental Entity relating to such entity except where the failure to have
such licenses, franchises, permits and authorizations or where the failure to so
conduct its business would not have a Material Adverse Effect on such entity.
1.49 Certain Contracts. The APAA Group Disclosure Schedule contains a
list, as of the date hereof, of each contract, agreement, understanding or other
commitment, other than insurance policies issued by APAC in the ordinary course
of its business, whether written or oral (including any and all amendments
thereto), to which any member of the APAA Group is a party or by which any
member of the APAA Group is bound relating to the business of any member of the
APAA Group (collectively, the "APAA Group Contracts"), of a nature described
below:
(1) any contract with any employee, former employee, consultant
or labor union;
(2) any contract for the future purchase of, or payment for,
supplies or products or services in any single instance exceeding $20,000, or in
the aggregate $50,000, that is not terminable without penalty upon advance
notice of 30 days or less;
(3) any representative or sales agency contract;
(4) any contract limiting or restraining any member of the APAA
Group or any of their current or future affiliates from engaging or competing in
any lines of business with any person or entity;
(5) any contract with any customer providing for a retrospective
price adjustment or future premium guarantee;
(6) any commitment to guarantee the obligations of others or
commitments by others to guarantee the obligations of any member of the APAA
Group;
(7) any real or personal property lease;
(8) any mortgage, indenture, note, debenture, bond, letter of
credit agreement, line of credit agreement, surety agreement, loan or other
financing agreement or other commitment for the borrowing or lending of money
relating to any member of the APAA Group;
(9) any license, franchise, distributorship or other agreement,
including those that relate in whole or in part to any software, technical
assistance or other know-how, to which any member of the APAA Group is a party
or relating to any member of the APAA Group or their businesses or operations;
(10) any commitment or agreement for any capital expenditure or
leasehold improvement in excess of $10,000;
(11) any contract regarding reinsurance, excess insurance,
ceding of insurance, assumption of insurance, or indemnification with respect to
insurance currently being provided directly or indirectly by any member of the
APAA Group or regarding the management of any portion of its business or
regarding the sale of any of its products through any other entity or the sale
by any other entity of its products through it;
(12) any investment in or agreement to invest in derivative
securities;
(13) any contracts for the provision of data processing services;
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(14) any finder's, franchise, distribution, sales or brokerage
agreements;
(15) any contracts or options to purchase or sell real property;
or
(16) any other material contract, agreement or commitment of any
nature not otherwise disclosed herein as to which any member of the APAA Group
has Knowledge.
True and complete copies of the APAA Group Contracts have been delivered to FIG.
Each APAA Group Contract is a valid and binding obligation and is in full force
and effect. Except as disclosed in the APAA Group Disclosure Schedule, no member
of the APAA Group is in default under any of the APAA Group Contracts; and, to
the best knowledge of the APAA Group, no third party is in default under any of
the APAA Group Contracts. The APAA Group Disclosure Schedule identifies each
APAA Group Contract that requires consent or approval of or notice to any party
in order to consummate the transactions contemplated by this Agreement or action
on behalf of a third party to give FIG all rights under such APAA Group Contract
following the consummation of the transactions contemplated by this Agreement.
Except as set forth in the APAA Group Disclosure Schedule, no member of the APAA
Group has any outstanding powers of attorney.
1.50 Agreements with Regulatory Agencies. No member of the APAA Group
is subject to any cease-and-desist or other order issued by, or is a party to
any written agreement, consent agreement or memorandum of understanding with, or
is a party to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or has been since January 1, 1993, a recipient of any
supervisory letter from, or since January 1, 1993, has adopted any board
resolutions at the request of any Governmental Entity that currently restricts
in any material respect the conduct of its business or that in any material
manner relates to its capital adequacy, its credit policies, its management or
its business (each, whether or not set forth in the APAA Group Disclosure
Schedule, an "APAA Group Regulatory Agreement"), nor has any member of the APAA
Group been advised since January 1, 1993, by any Governmental Entity that it is
considering issuing or requesting any such APAA Group Regulatory Agreement.
1.51 Other Activities of APAA, Newco and APAC. No member of the APAA
Group, directly or indirectly, engages in any activity prohibited by applicable
law.
1.52 Investment Securities. Each member of the APAA Group has good
and marketable title to all securities held by it (except securities sold under
repurchase agreements or held in any fiduciary or agency capacity), free and
clear of any Lien, except (a) to the extent such securities are pledged in the
ordinary course of business consistent with prudent business practices to secure
obligations of such member of the APAA Group, and (b) with respect to the Lien
encumbering the securities of APAC to secure the Note owing to APAL. Such
securities are permissible investments under all applicable laws, such
securities are valued on the books of the applicable member of the APAA Group in
accordance with GAAP, and none of such securities is in default in the payment
of principal, interest, dividends or otherwise.
1.53 Interest Rate Risk Management Instruments. All interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of any member of
the APAA Group, were entered into in the ordinary course of business and, in
accordance with prudent business practice and applicable rules, regulations and
policies of any Governmental Entity and with counter parties believed to be
financially responsible at the time and are legal, valid and binding obligations
of the applicable member of the APAA Group
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enforceable in accordance with their terms (except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable remedies), and
are in full force and effect. The applicable member of the APAA Group has
performed in all material respects all of its material obligations thereunder to
the extent that such obligations to perform have accrued; and, to the best
knowledge of the APAA Group, there are no material breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
1.54 Undisclosed Liabilities. Except for (i) those liabilities that
are fully reflected or reserved against on the balance sheets of the APAA Group
at December 31, 1997, which have been provided to FIG, (ii) those liabilities
incurred in the ordinary course of business consistent with past practice since
December 31, 1997 or provided for in this Agreement, (iii) coverage and other
claims (other than bad faith claims) made with respect to insurance policies
issued by APAC, (iv) liabilities disclosed in the APAA Group Disclosure Schedule
and (v) legal, accounting, actuarial and financial advisory fees incurred by
APAA in connection with the transactions contemplated by this Agreement, no
member of the APAA Group has not incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due) that, either alone or when combined with all similar liabilities, has had,
or could reasonably be expected to have, a Material Adverse Effect on such
member of the APAA Group.
1.55 Intellectual Property.
(1) Each member of the APAA Group owns or has the right to use
pursuant to license, sublicense, agreement or permission all intellectual
property necessary for the operation of its business as presently conducted and
as presently proposed to be conducted.
(2) To the best of the APAA Group's knowledge, no member of the
APAA Group has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any intellectual property rights of third parties and
such member of the APAA Group, nor any of the directors or officers (and
employees with responsibility for intellectual property matters) of any member
of the APAA Group have ever received any charge, complaint, claim or notice
alleging any such interference, infringement, misappropriation or violation. To
the best of the APAA Group's knowledge, no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
intellectual property rights of any member of the APAA Group.
(3) The APAA Group Disclosure Schedule identifies each item of
intellectual property that any third party owns and that any member of the APAA
Group uses pursuant to license, sublicense, agreement, or permission. The APAA
Group has made correct and complete copies of all such licenses, sublicenses,
agreements and permissions (as amended to date) available to FIG. To the best of
the APAA Group's knowledge, with respect to each such item of such intellectual
property: (i) the license, sublicense, agreement or permission covering the item
is legal, valid, binding, enforceable and in full force and effect; (ii) the
license, sublicense, agreement or permission will continue to be legal, valid,
binding and enforceable and in full force and effect on identical terms on and
after the Closing Date; (iii) no party to the license, sublicense, agreement or
permission is in material breach or default, and no event of default has
occurred which with notice or lapse of time, or both, would constitute a
material breach or default or permit termination, modification or acceleration
thereunder; (iv) no party to the license, sublicense, agreement or permission
has repudiated any provision thereof; (v) with respect to each such sublicense,
the representations and warranties set forth in (i) through (iv) above are true
and correct with respect to
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the underlying license; and (vi) no member of the APAA Group has granted any
sublicense or similar right with respect to the license, sublicense, agreement
or permission other than to APAM.
1.56 Real Property; Environmental Liability.
(1) No member of the APAA Group owns any right, title or
interest in any real property. The APAA Group Disclosure Schedule sets forth a
complete and accurate list and general description of all leases for real
property ("APAA Group Real Property Leases") to which any member of the APAA
Group is a party or by which any of them is bound. Each member of the APAA Group
has valid leasehold interests in each of the APAA Group Real Property Leases
held by any of them, free and clear of all mortgages, options to purchase,
covenants, conditions, restrictions, easements, liens, security interests,
charges, claims, assessments and encumbrances, except for (i) rights of lessors,
co-lessees or sublessees that are reflected in each APAA Group Real Property
Lease, (ii) current taxes not yet due and payable; (iii) Liens or other
instruments of public record; and (iv) such nonmonetary imperfections of title
and encumbrances, if any, as do not materially detract from the value of or
materially interfere with the present use of such property. The activities of
each member of the APAA Group with respect to all APAA Group Real Property
Leases held by each of them for use in connection with their respective
operations are in all material respects permitted and authorized by applicable
zoning laws, ordinances and regulations and all laws, rules and regulations of
any court, administrative agency or commission or other governmental authority
or instrumentality affecting such properties. Each member of the APAA Group
enjoys peaceful and undisturbed possession under all APAA Group Real Property
Leases to which they are parties, and all of such APAC Real Property Leases are
valid and in full force and effect.
(2) There are no legal, administrative, arbitral or other
proceedings, claims, actions, causes of action, private environmental
investigations or remediation activities or governmental investigations of any
nature seeking to impose on any member of the APAA Group any liability or
obligation arising under common law relating to environmental matters or under
any local, state or federal environmental statute, regulation or ordinance
(including, CERCLA), pending or threatened against any member of the APAA Group
which liability or obligation will or could reasonably be expected to have a
Material Adverse Effect on any member of the APAA Group. To the best knowledge
of the APAA Group, there is no reasonable basis for any such proceeding, claim,
action or governmental investigation that would impose any material liability or
obligation that will or could reasonably be expected to have a Material Adverse
Effect on any member of the APAA Group. No member of the APAA Group is subject
to any agreement, order, judgment, decree, letter or memorandum by or with any
court, governmental authority, regulatory agency or third party imposing any
material liability or obligation relating to environmental matters that will or
could reasonably be expected to have a Material Adverse Effect on any member of
the APAA Group.
1.57 State Takeover Laws. The Boards of Directors of APAA and APAC
have approved the transactions contemplated by this Agreement and taken such
action such that the provisions of FBCA and any other provisions of any state or
local "takeover" law applicable to any member of the APAA Group will not apply
to this Agreement or any of the transactions contemplated by this Agreement.
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1.58 Insurance Matters.
(1) Each form of insurance policy, policy endorsement or
amendment, reinsurance contract, annuity contract, application form, sales
material and service contract now in use by APAC in any jurisdiction has, where
required, received interim or final approvals from the appropriate Governmental
Entity of such jurisdiction.
(2) APAC has not issued any participating policies or any
retrospectively rated policies of insurance.
(3) All premium rates required to be filed with or approved by
any Governmental Entity have been so filed and have received interim or final
approval from each such Governmental Entity, and all premiums charged by APAC
conform with such approvals.
(4) The APAC Statutory Statements and the APAC Quarterly
Statements set forth all of the reserves of APAC as of the dates of such
statements (collectively, the "APAC Reserves"). The APAC Reserves, gross and net
of the reinsurance thereof, (i) were determined in accordance with commonly
accepted actuarial assumptions consistently applied, (ii) were fairly stated in
all material respects in accordance with sound actuarial principles, (iii) were
based on actuarial assumptions that are in accordance with or stronger than
those specified in the related insurance and the related reinsurance,
coinsurance, and other similar contracts, (iv) met in all material respects the
requirements of the applicable insurance laws and regulations of each applicable
jurisdiction, (v) were computed on the basis of assumptions consistent with
those used in computing the corresponding items in APAC's Statutory Statements
for the immediately preceding comparable period, and (vi) to the best of APAC's
knowledge, made good and sufficient provisions for the total amount of all
matured and actuarially anticipated unmatured benefits, dividends, losses,
claims, expenses, and other obligations and liabilities (whether absolute,
accrued, contingent, or otherwise) of APAC under all outstanding insurance and
reinsurance, coinsurance, and other similar contracts pursuant to which APAC has
or reasonably could have any obligation or liability (whether absolute, accrued,
contingent, or otherwise) as of the date of APAC's Statutory Statements.
Outstanding claims and claims expenses have been opined upon as reasonable and
adequate as of December 31, 1997, by Xxxxxxxxxxx-Xxxxxx Xxxxxx, a duly qualified
actuary that is a member in good standing in the American Academy of Actuaries.
APAC has assets that qualify as admitted assets under the insurance laws of the
applicable jurisdictions in an amount at least equal to the sum of all such
reserves and liability amounts and its minimum statutory capital and surplus as
required by such insurance laws.
(5) The APAA Group Disclosure Schedule sets forth a list and
description of all reinsurance agreements or treaties to which APAC is a party.
The consummation of the transactions contemplated by this Agreement will not
result in the termination of any such reinsurance agreements or treaties, except
as expressly provided for herein. APAC has provided FIG true and correct copies
of all such reinsurance agreements or treaties. The reserve for unpaid losses,
loss adjustment expenses and unearned premiums at each of December 31, 1997 and
December 31, 1996, as reflected in the balance sheets in the financial
statements of APAC identified in Section 4.6 of this Agreement, are stated net
of reinsurance ceded amounts. APAC has no knowledge of and has received no
notice of any facts that would reasonably cause it to believe that the
reinsurance recoverable amounts reflected in said balance sheets are not
collectible, and APAC has no knowledge of and has received no notice of any
material adverse change in the financial condition of its reinsurers wherein it
has been stated that they will not be able or are likely not to be able to
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honor their reinsurance commitments, and no party to any of such reinsurance
agreements or treaties has given notice to APAC that such party intends to
terminate or cancel any of such reinsurance agreements or treaties as a result
of or following consummation of the Merger. Each reinsurance agreement or treaty
to which APAC is a party is valid and binding on APAC, and to the best knowledge
of APAC, each other party thereto and is in full force and effect in accordance
with its terms except as enforceability may be limited by bankruptcy, insolvency
or other similar laws affecting the enforcement of creditors rights generally
and except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which the
enforcement of any proceeding therefor may be brought. APAC is not in default in
any material respect with respect to any such reinsurance agreement or treaty
and, other than as contemplated herein, no such reinsurance agreement or treaty
contains any provision providing that the other party thereto may terminate the
same by reason of the transactions contemplated by this Agreement, or contains
any other provision that would be altered or otherwise become applicable by
reason of such transactions.
(6) The APAC Reserves, gross and net of reinsurance thereof, as
set forth in the APAC Statutory Statements and the APAC Quarterly Statements
pertaining to the property and casualty insurance businesses (including medical
malpractice) of APAC have been determined on a consistent basis in accordance
with past practices.
(7) The APAA Disclosure Schedule lists all written contracts
between APAC and each of its agents, managing general agents, and brokers. To
the best of the APAA Group's knowledge, (a) each insurance agent, at the time
such agent offered, wrote, sold or produced business for APAC, was duly licensed
in the relevant jurisdiction as an insurance agent for such business and (b) no
such insurance agent violated any term or provision of any law or any writ,
judgment, decree, injunction or similar order applicable to, or engaged in any
misrepresentation with respect to, the writing, sale or production of business
for APAC.
(8) No member of the APAA Group owns, beneficially or of record,
any shares of FIG Common Stock or other equity securities of FIG, or any
securities convertible into or exercisable for any shares of FIG Common Stock or
other equity securities of FIG.
(9) APAC is fully qualified, licensed, registered or otherwise
approved as a risk retention group in each jurisdiction in which it has issued
policies.
1.59 No Investment Company. No member of the APAA Group is an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of either the Investment Company Act of 1940, as amended, or
Sections 368(a)(2)(F)(iii) and (iv) of the Code.
1.60 Legal Compliance. No member of the APAA Group nor, to the best
knowledge of the APAA Group, any director, officer, agent, employee or other
person associated with or acting on behalf of any member of the APAA Group has,
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment, using corporate funds.
1.61 Year 2000. The APAA Group's hardware and software systems
include design, performance and functionality so that the APAA Group does not
reasonably expect to experience
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invalid or incorrect results or abnormal hardware or software operation related
to calendar year 2000. The APAA Group's hardware and software systems include
calendar year 2000 date conversion and compatibility capabilities, including but
not limited to, date data century recognition, same century and multiple century
formula and date value calculations, and user interface date data values that
reflect the century. No representation or warranty, express or implied, is made
hereunder with respect to the interface between the APAA Group's hardware and
software systems and those of any party with whom any member of the APAA Group
or APAM deals from time to time, with respect to the extent of Year 2000
compliance that any such party's software or hardware systems might have.
1.62 Full Disclosure. No representation or warranty by any member of
the APAA Group in this Agreement, nor in any certificate, schedule, statement,
document or instrument furnished to FIG pursuant to this Agreement contains or
will contain any untrue statement of a material fact or, taking into account the
scope of such representations and warranties and the context in which they are
made, omits or will omit to state a material fact required to be stated herein
or therein or necessary to make any statement herein or therein not misleading.
1.63 Activities, Assets and Liabilities of Newco and the Liquidating
Trust. Newco and the Liquidating Trust have engaged in no activities or
operations of any nature except as provided in this Agreement. Newco shall not
have or incur any liabilities of any nature other than (i) the liabilities of
APAA set forth on the balance sheet of APAA as of December 31, 1997, a copy of
which has been provided to FIG, and (ii) the Newco Expense Obligation, and (iii)
liabilities disclosed in Section 4.18 of the Disclosure Schedule which it is
anticipated that APAA will incur from and after January 1, 1998 . The assets of
Newco as of the Effective Time shall consist of the assets of APAA set forth on
the balance sheet of APAA as of December 31, 1997.
1.64 Effective Time of Representations, Warranties, Covenants and
Agreements. Each representation, warranty, covenant and agreement of the APAA
Group set forth in this Agreement, as updated by any written disclosure schedule
delivered pursuant to Section 6.6 of this Agreement, shall be deemed to be made
on and as of the date of this Agreement, as of the Closing Date, and as of the
Effective Time.
ARTICLE 5
COVENANTS RELATING TO CONDUCT OF BUSINESS
1.65 Conduct of Businesses Prior to the Effective Time. During the
period from the date of this Agreement to the Effective Time, except as
expressly contemplated or permitted by this Agreement (including the APAA Group
Disclosure Schedule), each member of the APAA Group shall, and shall cause each
of its respective Subsidiaries to, (a) conduct its business in the usual,
regular and ordinary course consistent with past practice, (b) use reasonable
best efforts to maintain and preserve intact its business organization and
advantageous business relationships and retain the services of its key officers
and (c) take no action which would materially adversely affect or materially
delay the ability of any party to this Agreement to obtain any Requisite
Regulatory Approval for the transactions contemplated by this Agreement or to
perform its covenants and agreements under this Agreement.
1.66 APAA Group Forbearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in the APAA Group
Disclosure Schedule, as the case may
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be, and, except as expressly contemplated or permitted by this Agreement, no
member of the APAA Group shall, and no member of the APAA Group shall permit any
of their respective Subsidiaries to, without the prior written consent of FIG,
not to be unreasonably withheld or delayed:
(1) other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity, or make any loan or
advance (it being understood and agreed that incurrence of indebtedness in the
ordinary course of business shall include, without limitation, entering into
repurchase agreements and reverse repurchase agreements);
(2) redeem, repay, discharge or defease any surplus note;
(3) (a) adjust, split, combine or reclassify any capital stock; (b)
make, declare or pay any dividend or make any other distribution on, or directly
or indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, (c) grant any stock appreciation rights or grant
any individual, corporation or other entity any right to acquire any shares of
its capital stock;
(4) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets to any individual, corporation or other
entity, or cancel, release or assign any material indebtedness to any such
person or any claims held by any such person, except in the ordinary course of
business or pursuant to contracts or agreements in force at the date of this
Agreement;
(5) except for transactions in the ordinary course of business
consistent with past practice, or as expressly contemplated or permitted by this
Agreement, make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity other
than a Subsidiary thereof;
(6) except for transactions in the ordinary course of business, enter
into or terminate any material contract or agreement, or make any change in any
of its material leases or contracts, other than renewals of contracts and leases
without material adverse changes of terms;
(7) hire any employees or become a party to, or commit itself to any
pension, retirement, profit-sharing or welfare benefit plan or agreement or
employment agreement with or for the benefit of any person;
(8) settle any claim, action or proceeding involving money damages,
except in the ordinary course of business;
(9) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the Code;
(10) amend their Articles of Incorporation, or their Bylaws or other
organizational documents, except as contemplated by or for purposes of
effectuating this Agreement;
(11) other than in accordance with its present investment guidelines,
materially restructure or materially change its investment securities portfolio
through purchases, sales or otherwise, or the manner in which the portfolio is
classified or reported;
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(12) agree to, or make any commitment to, take any of the
actions prohibited by this Section 5.2.
1.67 FIG Forebearances. During the period from the date of this
Agreement to the Effective Time, except as set forth in the FIG Disclosure
Schedule, as the case may be, and, except as expressly contemplated or permitted
by this Agreement, FIG shall not, and FIG shall not permit any of its
Subsidiaries to (i) insure any of APAC's existing insureds, without the written
consent of APAC or (ii) take any action that would prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368 of the
Code.
ARTICLE 6
ADDITIONAL AGREEMENTS
1.68 Regulatory Matters.
(1) FIG will prepare and file, and the APAA Group will cooperate
with and assist FIG in preparing and filing, all statements, applications,
correspondence or forms required to be filed with appropriate state securities
law regulatory authorities to register or qualify the shares of FIG Common Stock
to be issued upon consummation of the Merger or to establish an exemption for
such registration or qualification (the "Blue Sky Filings").
(2) FIG and the APAA Group will promptly prepare and file, or
cause to be filed, the HSR Act Report with the Pre-Merger Notification Agencies
in respect of the transactions contemplated by this Agreement, which filing
shall comply as to form with all requirements applicable thereto and all of the
data and information reported therein shall be accurate and complete in all
material respects. Each of FIG and the APAA Group will promptly comply with all
requests, if any, of the Pre-Merger Notification Agencies for additional
information or documentation in connection with the HSR Act Report forms filed
by or on behalf of each of such parties pursuant to the HSR Act, and all such
additional information or documentation shall comply as to form with all
requirements applicable thereto and shall be accurate and complete in all
material respects. Each of FIG and APAA will pay one-half (1/2) of the HSR
filing fee.
(3) Each of FIG and the APAA Group shall make all other
regulatory filings required to be made by each in respect of this Agreement or
the transactions contemplated by this Agreement. Each party shall use all
reasonable efforts to obtain all material permits, approvals and consents
required to be obtained prior to the consummation of the Merger or necessary to
carry out the transactions contemplated by this Agreement under applicable
federal, state, local and foreign laws, rules and regulations, including any
approvals required under applicable state insurance laws. A representative of
each party shall participate in all substantive discussions with the Pre-Merger
Notification Agencies and any other Governmental Entity, unless such right to
participate is waived by such party.
(4) Each party will furnish all information, including
certificates, consents and opinions of counsel concerning it and its
Subsidiaries reasonably deemed necessary by the other party for the filing or
preparation for filing of the Blue Sky Filings, the HSR Act Report and the
applications for all Requisite Regulatory Approvals. Each party covenants and
agrees that all information furnished by it for inclusion in Blue Sky Filings
and all other documents filed to obtain the Requisite Regulatory Approvals will
comply in all material respects with the provisions of applicable law, including
the Securities Act and the Exchange Act, and will not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary
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to make the statements contained therein, in light of the circumstances under
which they were made, not misleading.
(5) Each party shall provide to the other, (i) promptly after
filing thereof, copies of all statements, applications, correspondence or forms
filed by such party prior to the Closing Date with state securities law
regulatory authorities, the Pre-Merger Notification Agencies and any other
Governmental Entity in connection with the transactions contemplated by this
Agreement; and (ii) promptly after delivery to, or receipt from, such regulatory
authorities, all written communications, letters, reports or other documents
relating to the transactions contemplated by this Agreement.
(6) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, to obtain as promptly
as practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including the Merger), and to
comply with the terms and conditions of all such permits, consents, approvals
and authorizations of all such Governmental Entities. FIG and APAA Group shall
have the right to review in advance, and, to the extent practicable, each will
consult the other on, in each case subject to applicable laws relating to the
exchange of information, all the information relating to FIG or APAA Group, as
the case may be, and any of their respective Subsidiaries, which appear in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto shall
act reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated by this
Agreement.
(7) FIG and APAA Group shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with any statement, filing, notice or application
made by or on behalf of FIG, APAA Group or any of their respective Subsidiaries
to any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(8) FIG and APAA Group shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
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1.69 Access to Information.
(1) Upon reasonable notice and subject to applicable laws
relating to the exchange of information and to the Confidentiality Agreement
dated December 1, 1997 as amended (the "Confidentiality Agreement"), among the
parties to this Agreement, each of FIG and APAA Group shall, and shall cause
each of their respective Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during such
period, each of FIG and APAA Group shall, and shall cause their respective
Subsidiaries to, make available to the other party (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws or
state insurance laws (other than reports or documents which FIG or APAA Group,
as the case may be, is not permitted to disclose under applicable law or by
agreement) and (ii) all other information concerning its business, properties
and personnel as such party may reasonably request. Neither FIG nor APAA Group
nor any of their respective Subsidiaries shall be required to provide access to
or to disclose information where such access or disclosure would violate or
prejudice the rights of FIG's or APAA Group's, as the case may be, customers,
jeopardize the attorney-client and work product privileges of the entity in
possession or control of such information or contravene any law, rule,
regulation, order, judgment, decree, fiduciary duty or binding agreement entered
into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
(2) Each of FIG and APAA Group agrees to keep confidential, and
not divulge to any other party or person (other than employees of, and
attorneys, accountants, financial advisors and other representatives for, any
said party who agree to be bound by the Confidentiality Agreement), all
non-public documents, information, records and financial statements received
from the other and, in addition, any and all reports, information and financial
information obtained through audits or other reviews conducted pursuant to this
Agreement (unless readily ascertainable from public or published information, or
trade sources, or already known or subsequently developed by a party
independently of any investigation or received from a third party not under an
obligation to the other party to keep such information confidential), and to use
the same only in connection with the transactions contemplated by this
Agreement; and if the transactions contemplated by this Agreement are not
consummated for any reason, each party agrees to promptly return to the other
party all written materials furnished by the other party, and all copies
thereof, in connection with such investigation, and to destroy all documents and
records in its possession containing extracts or summaries of any such
non-public information.
(3) No investigation by either of the parties or their
respective representatives shall affect the representations, warranties,
covenants, indemnity obligations or conditions of the other set forth in this
Agreement, provided that if either party has actual knowledge of a matter which
is contrary to a representation or warranty made by the other party, then such
matter shall be deemed to have been included on the other party's Disclosure
Schedule.
(4) The parties acknowledge that FIG may, as a result of its due
diligence investigations, propose that APAC's loss reserves be increased prior
to the Effective Time. The APAA Group agrees to make any such increase in loss
reserves that FIG may reasonably request, subject to the approval of APAC's
actuaries and accountants (the "Reserve Increase"), provided that:
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(A) The Reserve Increase shall not be deemed to cause or contribute
to any extent to the inaccuracy or breach of any representation,
warranty, covenant or agreement in this Agreement; and
(B) The Reserve Increase shall be completely disregarded in
determining whether the conditions precedent to FIG's obligations to
close have been satisfied.
1.70 Legal Conditions to Merger. Each of FIG and APAA Group shall,
and shall cause its Subsidiaries to, use their best reasonable efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VII of this Agreement, to consummate the transactions contemplated by
this Agreement and (b) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any Governmental Entity and any other third party which is required to be
obtained by FIG or APAA Group or any of their respective Subsidiaries in
connection with the Merger and the other transactions contemplated by this
Agreement.
1.71 Nasdaq National Market Listing. FIG shall cause the shares of
FIG Common Stock to be issued in the Merger to be approved for trading and
reporting on the Nasdaq National Market subject to official notice of issuance,
prior to the Effective Time.
1.72 Additional Agreements.
(1) In case at any time prior to the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement
(including obtaining authorization for APAC to transact business under the laws
of any state in which the parties hereto mutually agree that APAC should obtain
authorization) or the Merger, the proper officers and directors of each party to
this Agreement and their respective Subsidiaries shall take all such necessary
action as may be reasonably requested by FIG.
(2) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest FIG or any of its Subsidiaries with full title to all properties,
assets, rights, approvals, immunities and franchises of any of the parties to
this Agreement or the Merger, the proper officers and directors of each party to
this Agreement and their respective Subsidiaries shall take all such necessary
action, at the expense of FIG, as may be reasonably requested by FIG.
(3) Prior to the Effective Time, no member of the APAA Group
shall acquire, directly or indirectly, beneficial or record ownership of any
shares of FIG Common Stock or other equity securities of FIG, or any securities
convertible into or exercisable for any shares of FIG Common Stock or other
equity securities of FIG.
(4) APAC and FIG shall insure that the officers and directors of
APAC retain their rights to indemnity for corporate liabilities after the
Closing, to the same extent as such rights existed prior thereto; and shall
further assure that such officers and directors become covered and insured under
the Directors and Officers insurance policies maintained by FIG.
1.73 Advice of Changes. FIG and APAA Group shall give prompt notice
to the other party as soon as practicable after it has actual knowledge of (i)
the occurrence, or failure to occur, of any event which would or would be likely
to cause any party's representations or
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warranties contained in this Agreement to be untrue or incorrect in any material
respect at any time from the date of this Agreement to the Effective Time, or
(ii) any failure on its part or on the part of any of its or its Subsidiaries'
officers, directors, employees, representatives or agents (other than persons or
entities who are such employees, representatives or agents only because they are
appointed insurance agents of such parties) to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by such party under this Agreement. Each party shall have the right to
deliver to the other party a written disclosure schedule as to any matter of
which it becomes aware following execution of this Agreement which would
constitute a breach of any representation, warranty or covenant of this
Agreement by such party, identifying on such disclosure schedule the
representation, warranty or covenant which would be so breached, provided that
each such disclosure schedule shall be delivered as soon as practicable after
such party becomes aware of the matter disclosed therein. If and only if any
such new disclosure schedule discloses a matter which has or is reasonably
likely to have a Material Adverse Effect on the disclosing party, the
nondisclosing party shall have five (5) business days from receipt of such
disclosure schedule to notify the disclosing party that (x) it will close
notwithstanding the new disclosure, (y) it will not close based on such new
disclosure, or (z) further investigation or negotiation is required for it to
reach a determination whether or not to close based on such new disclosure,
which determination shall in any event be made within fifteen (15) business days
after delivery of such disclosure schedule. If the parties thereafter are unable
to reach agreement on a mutually satisfactory means of resolving the matter so
disclosed, the nondisclosing party shall have the right in its discretion, to
terminate this Agreement pursuant to Article 8 of this Agreement. FIG shall
update the FIG Disclosure Schedule (the "Closing Date FIG Disclosure Schedule")
to a date that is no earlier than ten (10) business days prior to the Closing
Date and no later than seven (7) business days prior to the Closing Date and
shall deliver the Closing Date FIG Disclosure Schedule to APAA Group no earlier
than six (6) business days prior to the Closing Date. APAA Group shall update
the APAA Group Disclosure Schedule (the "Closing Date APAA Group Disclosure
Schedule") to a date that is no earlier than ten (10) business days prior to the
Closing Date and no later than seven (7) business days prior to the Closing Date
and shall deliver the Closing Date APAA Group Disclosure Schedule to FIG no
earlier than six (6) business days prior to the Closing Date.
1.74 No Solicitations.
(1) So long as this Agreement remains in effect and no notice of
termination has been given under this Agreement APAA Group shall not authorize
or knowingly permit any of its representatives, directly or indirectly, to
initiate, solicit, encourage, engage in, or participate in, negotiations with
any person or entity or any group of persons or entities other than FIG or any
of its affiliates (a "Potential Acquiror") concerning any Acquisition Proposal
(as defined in this Section 6.7) other than pursuant to this Agreement. APAA
Group will promptly inform FIG of any serious, bona fide inquiry it may receive
with respect to any Acquisition Proposal and shall furnish FIG a copy thereof,
if in writing, or a written summary thereof, if oral. The APAA Group shall
immediately cease and cause to be terminated all existing discussions and
negotiations, if any, with any parties conducted heretofore with respect to any
Acquisition Proposal.
(2) Nothing contained in this Agreement shall prohibit the Board
of Directors of APAA from furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an unsolicited
Acquisition Proposal if: (A) the Board of Directors of APAA, after consultation
with and receiving the advice of its legal counsel, determines in good faith
that such action is necessary or required for the Board of Directors of APAA to
comply with its
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fiduciary duties to its members under applicable law or its organizational
documents, (B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, APAA Group discloses to
FIG that it is furnishing information to, or entering into discussions or
negotiations with, such person or entity, which notice shall describe the terms
thereof, (C) prior to furnishing such information to such person or entity, APAA
Group receives from such person or entity an executed confidentiality agreement
with terms not materially more favorable to such person than the terms contained
in the Confidentiality Agreement, (D) APAA Group keeps FIG informed promptly of
the status (including the terms) of any such discussions or negotiations
(provided that, APAA Group shall not be required to disclose to FIG confidential
information concerning the business or operations of the person or entity making
the expression of interest) and (E) the APAA Group shall give FIG prior notice
of at least three (3) business days before entering into any agreement, other
than a confidentiality agreement, with such person.
(3) As used in this Agreement, "Acquisition Proposal" means any
(i) proposal pursuant to which any corporation, partnership, person or other
entity or group, other than FIG, would acquire or participate in a merger or
other business combination involving any member of the APAA Group, directly or
indirectly; (ii) proposal by which any corporation, partnership, person or other
entity or group, other than FIG, would acquire the right to vote 10% or more of
the capital stock of any member of the APAA Group, entitled to vote thereon for
the election of directors; (iii) acquisition of 10% or more of the assets of any
member of the APAA Group, other than in the ordinary course of business; or (iv)
acquisition in excess of 10% of the outstanding capital stock of or equity
interest in any member of the APAA Group, other than as contemplated by this
Agreement.
1.75 Tax Consistency. The parties hereto mutually agree that
each of the parties shall make and file for the year of the Merger, and for all
other relevant taxable years, federal, state, local and, if relevant, foreign
income tax returns and information returns, and other tax notifications that
reflect the Merger in a manner in all respects consistent with the opinions of
counsel referred to in Section 7.3(vi) hereof and acknowledge that in the event
of failure to comply, damages will include the amount of all reasonable legal,
accounting and expert witness, court and other compliance costs incurred as a
result of any challenge to the income tax-free status of the Merger.
1.76 Termination of Agreements. Prior to the Closing, the APAA Group shall
cause to be terminated the APAA Group agreements marked with an asterisk on the
APAA Group Disclosure Schedule.
1.77 Trust Continuance. From the date of this Agreement and throughout the
effective term of the Pledge Agreement, (a) the Liquidating Trust shall remain
in existence, and (b) the Liquidating Trust's organizational documents shall not
be amended or revised in any manner that has (or is reasonably likely to have) a
material adverse effect on FIG's rights under the Pledge Agreement or the Stock
Retention Agreement.
1.78 Continuation. (a) From and after the Effective Time, FIG will retain
a sufficient amount of APAC stock and APAC will retain a sufficient amount of
its assets and business operations such that FIG and APAC will continue the
historic business of Newco and APAC or use a significant portion of Newco's and
APAC's historic business assets in a business, as provided in Treasury
Regulation Section 1.368-1 (d).
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(b) As of the date hereof and the Effective Time, neither FIG nor any of
its affiliates has or will have a plan or intention to acquire any FIG Common
Stock issued in connection with the Merger, except for acquisitions made in the
ordinary course of business, acquisitions effected pursuant to any stock
buy-back or similar plans in effect on the date of this Agreement, or pursuant
to the terms of the Stock Retention Agreement and/or the Pledge Agreement.
ARTICLE 7
CONDITIONS PRECEDENT
1.79 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(1) The shares of FIG Common Stock which shall be issued to the
Liquidating Trust upon consummation of the Merger shall have been authorized for
trading and reporting on the Nasdaq National Market, subject to official notice
of issuance.
(2) The Articles of Merger shall have been filed with the
appropriate Governmental Entities immediately prior to the Closing.
(3) All approvals of Governmental Entities required to
consummate the transactions contemplated by this Agreement shall have been
obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired, without the imposition of any
condition which in the reasonable judgment of FIG or APAC is materially
burdensome upon FIG or its Subsidiaries or APAC, as the case may be (all such
approvals and the expiration of all such waiting periods being referred to in
this Agreement as the "Requisite Regulatory Approvals"). Without limiting the
generality of the foregoing: (i) all Blue Sky Filings shall have been made, and
the sale of FIG Stock resulting from the Merger shall have been qualified or
registered with the appropriate state securities law regulatory authorities of
all states in which qualification or registration is required under applicable
state securities laws, and such qualifications or registrations shall not have
been suspended or revoked, or shall be exempt from such qualification or
registration; (ii) the HSR Act Report shall have been submitted to the
Pre-Merger Notification Agencies, and the waiting period under the HSR Act shall
have expired or notice of early termination of the waiting period shall have
been received; and (iii) the Merger shall have been approved by the Florida
Insurance Department and the insurance departments of all states in which APAC,
FIG and any Subsidiaries of either of them conduct material business, to the
extent such approvals are legally required.
(4) No order, injunction or decree issued by any Governmental
Entity of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or any of the other transactions
contemplated by this Agreement shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, materially restricts or
makes illegal consummation of the Merger.
(5) Immediately prior to the Effective Time, FIG shall acquire a
9.9% interest in APAL pursuant to a separate agreement between FIG and APAL
being executed and delivered concurrently herewith (the "APAL Stock Purchase
Agreement").
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At the Closing (as defined in Section 9.1), APAC shall enter into a reinsurance
agreement with APAL, which will become effective as of 12:01 A.M. on January 1,
1999, in the form attached to the APAL Stock Purchase Agreement. At the Closing,
APAC shall issue and cause to be delivered, as required under the applicable
agreements, to the respective reinsurers involved, notices of cancellations of
all reinsurance agreements or treaties to which APAC is a party (exclusive of
the new reinsurance agreement with APAL as provided above), which shall provide
for cancellation effective at 12:01 A.M. on January 1, 1999.
(6) FIG, APAC and APAM shall have entered into the Management
Agreement.
(7) The Consulting Agreement dated the date of this Agreement
between APAC and CGA shall be in full force and effect.
(8) The Non-Competition Agreements each dated the date of this
Agreement among FPIC and APAC and each of APAM, CGA, Xx. Xxxxx Xxxx, Xxxx
XxXxxxx, Xxxxxxxxx Xxxx, Xx. Xxxxx Xxxxxxxxx and Xxxx Xxxxxxxxxxx shall be in
full force and effect.
1.80 Conditions to Obligation of FIG. The obligation of FIG to effect
the Merger is also subject to the satisfaction or waiver by FIG at or prior to
the Effective Time of the following conditions:
(1) The representations and warranties of APAA Group to the
extent that the same are not qualified by a materiality standard set forth in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and (except (a) to the extent such representations and
warranties speak as of an earlier date and (b) for any changes to the APAC
Disclosure Schedule that are disclosed to FIG by the APAA Group in the Closing
Date APAC Disclosure Schedule) as of the Closing Date as though made on and as
of the Closing Date. The representations and warranties of APAA Group to the
extent that the same are qualified by a materiality standard set forth in this
Agreement shall be true and correct in all respects as of the date of this
Agreement and (except (a) to the extent such representations and warranties
speak as of an earlier date and (b) for any changes to the APAC Disclosure
Schedule that are disclosed to FIG by the APAA Group in the Closing Date APAC
Disclosure Schedule) as of the Closing Date as though made on and as of the
Closing Date. FIG shall have received a certificate signed on behalf of APAA
Group by the Chairman of the Board and the Chief Executive Officer of APAA and
the Chief Executive Officers and the Chief Financial Officers of Newco and APAC
to the foregoing effect, and to which any Closing Date APAA Group Disclosure
Schedule shall be appended.
(2) APAA Group shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and FIG shall have received a certificate signed on behalf of
APAA Group by the Chairman of the Board and the Chief Executive Officer of APAA
and the Chief Executive Officers and the Chief Financial Officers of Newco and
APAC to such effect.
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(3) No member of the APAA Group shall have suffered a material
adverse change in its business, assets, properties, results of operations or
condition (financial or otherwise); and no event or circumstance shall have
occurred which has, or is likely to have, a Material Adverse Effect on any
member of the APAA Group, or upon the right of any member of the APAA Group to
conduct its respective businesses as presently conducted.
(4) APAA Group shall have delivered to FIG an opinion, dated the
Closing Date, of counsel for APAA Group, reasonably satisfactory to FIG and its
counsel as to such matters as FIG may reasonably request (which shall not
include tax matters). In rendering their opinion, counsel to APAA Group may rely
on certificates of officers of APAA Group, opinions of other counsel reasonably
acceptable to FIG, the authenticity of all signatures on documents believed to
be genuine and such other evidence as they may deem necessary or desirable. Such
opinion may contain such assumptions, limitations and qualifications as are
normally included in similar opinions.
(5) APAL shall have released any and all liens and interest that
APAL may have in the outstanding shares of APAC Common Stock.
(6) FIG and APAC shall have entered into the Investment
Management Agreement.
(7) Intentionally Omitted.
(8) FIG, the Liquidating Trust and a collateral agent mutually
acceptable to FIG and the Liquidating Trust shall have entered into the Pledge
Agreement and FIG and the Liquidating Trust shall have entered into the Stock
Retention Agreement.
(9) As of and immediately following the Effective Time, APAC
shall continue as a Florida domiciled insurance company, duly licensed in
Florida to write the lines of insurance that it is currently writing.
(10) FIG shall have reasonably determined, based on advice of its tax
counsel, that the formation of Newco, the transfer of the assets and liabilities
of APAA to Newco, the dissolution of APAA and the related transactions and the
Merger will constitute and qualify as tax free reorganizations under Sections
368(a)(1) of the Code and no gain or loss will be recognized and no taxes will
be incurred by APAC, FIG or any affiliate of FIG as the result thereof.
(11) The APAA Group shall have provided to FIG a letter from
KPMG Peat Marwick LLP, in form and content reasonably acceptable to FIG, or
other evidence that is reasonably satisfactory to FIG, certifying that (A) as of
December 31, 1997, APAA's tax basis in the APAC stock owned by APAA (the " APAA
Basis") was not materially less than $10,987,000, and (B) as of December 31,
1997, the pro forma APAA Basis as adjusted to reflect APAA's contribution of the
Surplus Note to the capital of APAC (or, alternatively, as adjusted to reflect
the repayment of the Surplus Note by APAC to APAA and APAA's contribution of the
amount so repaid to the capital of APAC) was not materially less than
$12,637,000.
(12) APAA Group shall have delivered to FIG such other
certificates and instruments as FIG and its counsel may reasonably request. The
form and substance of all certificates, instruments, opinions and other
documentation delivered to FIG under this Agreement shall be reasonably
satisfactory to FIG and its counsel.
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1.81 Conditions to Obligation of APAA Group. The obligation of
APAA Group to effect the Merger is also subject to the satisfaction or waiver by
APAA Group at or prior to the Effective Time of the following conditions:
(1) The representations and warranties of FIG set forth in this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and (except (i) to the extent such representations and warranties
speak as of an earlier date and (ii) for any changes to the FIG Disclosure
Schedule that are disclosed by FIG to APAA Group in the Closing Date FIG
Disclosure Schedule) as of the Closing Date as though made on and as of the
Closing Date. APAA Group shall have received a certificate signed on behalf of
FIG by the President and Chief Executive Officer and the Senior Vice President
and Chief Financial Officer of FIG to the foregoing effect, and to which any
Closing Date FIG Disclosure Schedule shall be appended.
(2) FIG shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date, and APAA Group shall have received a certificate signed on
behalf of FIG by the President and Chief Executive Officer and the Senior Vice
President and Chief Financial Officer of FIG to such effect.
(3) FIG and its Subsidiaries, taken as a whole, shall not have
suffered a material adverse change in their financial condition, operations or
assets and no event or circumstance shall have occurred which has a Material
Adverse Effect on FIG or upon the right of FIG or any of the FIG Subsidiaries to
conduct their respective businesses as presently conducted.
(4) FIG shall have delivered to APAA Group an opinion, dated the
Closing Date, of counsel for FIG, reasonably satisfactory to APAA Group and its
counsel as to such matters as APAA may reasonably request (which shall not
include tax matters). In rendering their opinion, counsel to FIG may rely on
certificates of officers of FIG, opinions of other counsel reasonably acceptable
to APAA Group, the authenticity of all signatures on documents believed to be
genuine and such other evidence as they may deem necessary or desirable. Such
opinion may contain such assumptions, limitations and qualifications as are
normally included in similar opinions.
(5) APAA Group shall have received the favorable opinion from
Metis Financial LLC, in form and substance reasonably satisfactory to the APAA
Group, that consummation of the Merger and the other transactions contemplated
by this Agreement upon the terms and conditions provided in this Agreement and
in the other agreements referred to in this Agreement is fair to APAA Group and
the members of APAA from a financial point of view.
(6) APAA Group shall have received an opinion of their tax
counsel, addressed to APAA Group, in form and substance reasonably satisfactory
to APAA Group, dated as of the Effective Time, substantially to the effect that,
on the basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time:
The Merger should constitute a tax free reorganization under
Section 368(a)(1)(A) of the Code and FIG and Newco will each be a
party to the reorganization;
No gain or loss should be recognized by FIG or Newco as a result
of the Merger; and
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No gain or loss should be recognized by the Liquidating Trust
(except with respect to cash received from FIG).
In rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of FIG, APAA Group and others.
(7) FIG shall have delivered to APAA Group such other
certificates and instruments as APAA Group and its counsel may reasonably
request. The form and substance of all certificates, instruments and other
documentation delivered to APAA Group under this Agreement shall be reasonably
satisfactory to APAA Group and its counsel.
(8) FIG shall not have experienced a Change of Control as defined
herein. For the purpose of this Agreement, a "Change of Control" shall mean (a)
the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 33 1/3% or more of the then
outstanding shares of FIG Common Stock; provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from FIG, (ii) any acquisition by FIG, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by FIG or any
corporation controlled by FIG or (iv) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, (a) more than 33 1/3% of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such reorganization, merger or consolidation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, of the outstanding FIG Common Stock immediately prior to
such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization, merger
or consolidation, of the outstanding FIG Common Stock, or (b) no Person
(excluding FIG, any employee benefit plan (or related trust) of FIG or such
corporation resulting from such reorganization, merger or consolidation and any
Person beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 33 1/3% or more of the outstanding FIG
Common Stock) beneficially owns, directly or indirectly 33 1/3% or more of, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation.
(9) The payment due under the Non-Competition Agreement with CGA in
the amount of $2,000,000 shall have been paid.
ARTICLE 8
TERMINATION AND AMENDMENT
1.82 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of the matters presented
in connection with the Merger by the Boards of Directors of FIG, APAA or Newco:
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(1) by mutual consent of FIG and APAA Group in a written instrument,
if the Boards of Directors of FIG, APAA and Newco so determine, in each case by
an affirmative vote of a majority of the members of their respective entire
Boards;
(2) by either FIG or APAA Group if (i) any Governmental Entity that
must grant a Requisite Regulatory Approval has denied approval of the Merger and
such denial has become final and nonappealable or any Governmental Entity of
competent jurisdiction shall have issued a final nonappealable order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and (ii) the Board of Directors of FIG or the
Boards of Directors of APAA or Newco, as the case may be, so determines by an
affirmative vote of a majority of the members of its entire Board;
(3) by either FIG or APAA Group if (i) the Merger shall not have been
consummated on or before October 1, 1998, unless the failure of the Merger to be
consummated by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth in this Agreement, and (ii) the Board of Directors of FIG
or the Boards of Directors of APAA or Newco, as the case may be, so determines
by an affirmative vote of a majority of the members of its entire Board;
(4) by either FIG or APAA Group (provided that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained in this Agreement) if there shall have been a material
breach of any of the covenants or agreements set forth in this Agreement on the
part of the other party;
(5) by either FIG or APAA Group (providing that the terminating party
is not then in material breach of any representation, warranty, covenant or
other agreement contained in this Agreement) if (i) any representation or
warranty of the other party contained in this Agreement that is not qualified by
a materiality standard shall be inaccurate in any material respect or any
representation or warranty of the other party contained in this Agreement that
is qualified by a materiality standard shall be inaccurate in any respect, and
such inaccuracy is not cured within forty-five days following written notice to
the party making the representation or warranty, or such inaccuracy, by its
nature or timing, cannot be cured prior to the Closing Date, and (ii) the Board
or Boards of Directors of the non-breaching party so determines by an
affirmative vote of a majority of the members of its entire Board;
(6) by FIG upon written notice to APAA or Newco if any members of the
APAA Group shall have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or entered into an
agreement with any person or entity other than FIG to effect an Acquisition
Proposal; provided, however, that notwithstanding anything in this Section
8.1(vi) to the contrary, FIG and APAA Group intend this Agreement to be an
exclusive agreement and, accordingly, nothing in this Agreement is intended to
constitute a solicitation of an Acquisition Proposal, it being acknowledged and
agreed that any such proposal would interfere with the strategic advantages and
benefits that FIG and APAA Group expect to derive from this Agreement and the
transactions contemplated hereby; or
(7) by FIG if the Closing Date APAA Group Disclosure Schedule
discloses any change from the APAA Group Disclosure Schedule which has, or is
reasonably likely to have, a Material Adverse Effect on any member of the APAA
Group; or by APAA or Newco if the
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Closing Date FIG Disclosure Schedule discloses any change from the FIG
Disclosure Schedule which has, or is reasonably likely to have, a Material
Adverse Effect on FIG.
1.83 Effect of Termination. In the event of termination of this
Agreement by either FIG or APAA or Newco as provided in Section 8.1 of this
Agreement, (i) this Agreement shall forthwith become void and have no effect,
except that Sections 6.2(ii), 8.2, 8.5, 9.3, 9.4, 9.5, 9.6, 9.13, 9.14, 9.16 and
9.18 of this Agreement shall survive any termination of this Agreement, and (ii)
none of FIG, APAA, Newco or APAC, any of their respective Subsidiaries or any of
the officers or directors of any of them shall have any liability of any nature
whatsoever under this Agreement, or in connection with the transactions
contemplated by this Agreement, except as otherwise provided in Section 8.5 of
this Agreement; provided, however, that notwithstanding anything to the contrary
contained in this Agreement, neither FIG nor APAA or Newco or APAC shall be
relieved or released from any liabilities or damages arising out of the
inaccuracy or breach of any representation, warranty, covenant or other
provision of this Agreement.
1.84 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
the Board of Directors of FIG and the Boards of Directors of APAA or Newco, at
any time before the Merger. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
1.85 Extension; Waiver. At any time prior to the Effective Time, the
parties to this Agreement may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts of the other
parties to this Agreement, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant
hereto and (c) waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to this
Agreement to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
1.86 Liquidated Damages; Termination Fee. Notwithstanding anything to
the contrary contained in this Agreement, in the event that any of the following
events or circumstances shall occur, APAA Group shall, within ten (10) days
after notice of the occurrence thereof by FIG, pay to FIG the sum equal to
$600,000 plus all reasonable out-of-pocket expenses for outside legal counsel
and outside consultants and professionals of FIG, which the parties agree and
stipulate as reasonable and full liquidated damages and reasonable compensation
for the involvement of FIG in the transactions contemplated in this Agreement,
is not a penalty or forfeiture, and will not affect the provisions of this
Section 8.5: (i) at any time prior to termination of this Agreement an APAC
Acquisition Event (as defined in this Section 8.5) shall occur; or (ii) FIG
shall terminate this Agreement pursuant to Section 8.1(vi). For purposes of this
Agreement an "APAC Acquisition Event" shall mean that any member of APAA Group
or an authorized representative thereof shall have authorized, recommended,
publicly proposed or publicly announced an intention to authorize, recommend or
propose, or entered into an agreement with any person (other than FIG or an
affiliate of FIG) to effect an Acquisition Proposal. Upon the making and receipt
of such payment under this Section 8.5, APAA Group shall have no further
obligation of any kind under this Agreement and FIG shall not have any further
obligation of any kind under this Agreement, except in each case
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under Section 8.2 of this Agreement, and no party shall have any liability for
any breach or alleged breach by such party of any provision of this Agreement.
ARTICLE 9
GENERAL PROVISIONS
1.87 Closing. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") will take place at 10:00 a.m. on a
date and at a place to be specified by the parties, which shall be on the later
of June 30, 1998 or five (5) business days after the satisfaction or waiver
(subject to applicable law) of the latest to occur of the conditions set forth
in Article 7 of this Agreement, unless extended or changed by mutual agreement
of the parties (the "Closing Date").
1.88 Survival of Representations and Warranties. All statements of
fact contained in any schedule, certificate or other instrument delivered by or
on behalf of FIG, APAA, Newco or APAC pursuant hereto, as well as the warranties
and representations contained herein, shall be deemed representations and
warranties by such party. The representations and warranties made by the parties
herein with regard to any and all tax matters, employee benefit plans or labor
matters and the right to make claims for the breach thereof, shall survive until
all applicable statutes of limitations expire. All other representations and
warranties made by the parties herein, and the right to make claims for the
breach thereof, including but not limited to claims for indemnification under
Section 9.4, below shall survive the Closing for 12 months following the
Closing. Any claim for indemnification for which notice has been given within
the prescribed period (which notice shall be given to the party against which
indemnity is being sought, and shall describe in reasonable detail the basis for
the claim that has arisen and is being asserted) may be prosecuted to conclusion
notwithstanding the subsequent expiration of the period.
1.89 Expenses. Except as otherwise expressly provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated by this Agreement shall be paid by FIG, to the
extent FIG incurs such costs or expenses, or the Liquidating Trust, to the
extent any member of the APAA Group incurs such costs or expenses; provided,
however, at the Closing, by virtue of the merger of Newco into FIG, FIG will
assume and become obligated to pay the lesser of (i) $200,000, or (ii) 50% of
all expenses of the transaction incurred by APAA, including legal, accounting,
financial advisory and other transaction fees, but excluding fees for a fairness
opinion and the CGA transaction fee (such amount to which FIG will become
obligated to pay being herein referred to as the "Newco Expense Obligation").
Payment of the Newco Expense Obligation by Newco, APAA or APAC shall be deemed
the payment thereof by FIG. To the extent that any member of the APAA Group pays
(other than from the proceeds of the Cash Consideration) legal, accounting,
financial advisory or other costs or expenses attributable to the transactions
contemplated by this Agreement which is in excess of the Newco Expense
Obligation, the Liquidating Trust shall reimburse at Closing such excess expense
payments to the party that paid the same. All costs and expenses associated with
obtaining for APAC "admitted carrier" status in any State shall be an APAC
expense, which shall be borne by APAC. The parties acknowledge, consent and
agree that APAA and/or APAC have paid, and shall continue to pay through the
Closing ( including but not limited to payment from the proceeds of the Cash
Consideration) legal, actuarial, accounting, financial advisory and other
transaction fees, costs and expenses incurred by the members of the APAA Group,
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including without limitation, fees, costs and expenses for a fairness opinion.
Notwithstanding any conflicting provisions of this Agreement, the incurrence,
accrual and payment of the foregoing fees, costs and expenses shall not
constitute or contribute to the inaccuracy, violation or breach of any
representation, warranty, covenant or agreement herein.
1.90 Indemnification and Reimbursement.
(1) APAA's and the Liquidating Trust's Indemnification. APAA and
the Liquidating Trust agree to indemnify FIG, Newco and APAC and to hold FIG,
Newco and APAC harmless from and against all losses, claims, damages,
liabilities, penalties, judgments, awards, or other costs or expenses of any
nature (including reasonable attorneys' fees and costs) (collectively, "Losses")
incurred or sustained by FIG, Newco or APAC resulting from or arising out of (i)
any material breach or material inaccuracy of any representation or warranty to
that is not qualified by a materiality standard made by any member of the APAA
Group contained in this Agreement or in any schedule, certificate, or exhibit
delivered by the APAA Group pursuant to this Agreement, (ii) any breach or
inaccuracy of any representation or warranty that is qualified by a materiality
standard made by any member of the APAA Group contained in this Agreement or in
any schedule, certificate or exhibit delivered by the APAA Group pursuant to
this Agreement or (iii) any failure by any member of the APAA Group to perform
or otherwise fulfill in any material respect any of their agreements, covenants
or obligations hereunder or any material breach by the APAA Group of any of
their agreements, covenants or obligations hereunder. Notwithstanding any
conflicting or inconsistent provisions in this Agreement, APAA and the
Liquidating Trust shall not be obligated to provide indemnification, and shall
not otherwise be liable in damages, until aggregate Losses for which indemnity
or damages would otherwise be available hereunder exceed $153,000, at which time
APAA and the Liquidating Trust shall then be obligated to provide
indemnification for all Losses from the first dollar thereof.
(2) FIG's Indemnification. FIG agrees to indemnify APAA and the
Liquidating Trust and hold APAA and the Liquidating Trust harmless from and
against any Losses incurred or sustained by APAA resulting from or arising out
of (i) any breach or inaccuracy of any representation or warranty made by FIG
contained in this Agreement or in any schedule, certificate or exhibit delivered
by FIG pursuant to this Agreement or (ii) any failure of FIG to perform or
otherwise fulfill in any material respect any of its covenants, agreements or
obligations hereunder or any material breach by FIG of any of its agreements,
covenants or obligations hereunder. Notwithstanding any conflicting or
inconsistent provisions in this Agreement, FIG shall not be obligated to provide
indemnification, and shall not otherwise be liable in damages, until Losses for
which indemnity or damages would otherwise be available hereunder exceed
$153,000, at which time FIG shall then be obligated to provide indemnification
for all Losses from the first dollar thereof.
(3) Indemnification Procedures.
In the event that any claim is asserted against any party hereto, or any party
hereto is made a party defendant in any action or proceeding, and such claim,
action or proceeding involves a matter which is the subject of this
indemnification, then such party (an "Indemnified Party") shall give written
notice to the other party hereto (the "Indemnifying Party") of such claim,
action or proceeding, and such Indemnifying
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Party shall have the right to join in and (prior to the time an answer is filed
in a litigated proceeding) control the defense and settlement of such claim,
action or proceeding at such Indemnifying Party's own cost and expense and
through counsel reasonably acceptable to the Indemnified Party (the parties
agree that any law firm identified in the notice section of this Agreement shall
be acceptable for such purposes), except that, in such case, the Indemnified
Party shall have the right to join in the defense of said claim, action or
proceeding at its own cost and expense.
1.91 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied or by facsimile transmission (with confirmation), mailed by
registered or certified mail (return receipt requested) or delivered by an
express courier (with confirmation) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(1) if to FIG:
FPIC Insurance Group Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with copies to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
00 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
and
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(2) if to APAA, Newco or APAC, to:
Anesthesiologists Professional Assurance
Association, Inc.
000 Xxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxxxxxx
Fax: (000) 000-0000
with copies to:
Xxxxxx Xxxxxxx, Esq.
Xxxxxx Xxxxx & Xxxxxxxxx
000 XX Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
and
Xxxx & Genauer, P.A.
0 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Fax: (000) 000-0000
Xxxxxx Xxxxxxx, Esq.
1.92 Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the
jurisdiction in which the defendant's principal place of business is located
(i.e., the State of Florida, County of Xxxxx or the United States District Court
for the Middle District of Florida for FIG, and the State of Florida, County of
Dade or the United States District Court for the Southern District of Florida
for APAA Group), and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
1.93 Further Assurances. At the request of any party to this
Agreement, the other parties shall execute, acknowledge and deliver such other
documents and/or instruments as may be reasonably required by the requesting
party to carry out the purposes of this Agreement. In the event any party to
this Agreement shall be involved in litigation, threatened litigation or
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government inquiries with respect to a matter covered by this Agreement, every
other party to this Agreement shall also make available to such party, at
reasonable times and subject to the reasonable requirements of its own
businesses, such of its personnel as may have information relevant to such
matters, provided that such party shall reimburse the providing party for its
reasonable costs for employee time incurred in connection therewith if more than
one business day is required. Following the Closing, the parties will cooperate
with each other in connection with tax audits and in the defense of any legal
proceedings.
1.94 Remedies Cumulative. Unless expressly made the exclusive
remedy by the terms of this Agreement, all remedies provided for in this
Agreement are cumulative and shall be in addition to any and all other rights
and remedies provided by law and by any other agreements between the parties.
1.95 Presumptions. It is expressly acknowledged and agreed that
all parties have been represented by counsel and have participated in the
negotiation and drafting of this Agreement, and that there shall be no
presumption against any party on the ground that such party was responsible for
preparing this Agreement or any part of it.
1.96 Exhibits and Schedules. Each of the exhibits and schedules
referred to in, and/or attached to, this Agreement is an integral part of this
Agreement and is incorporated in this Agreement by this reference.
1.97 Interpretation. When a reference is made in this Agreement
to Articles, Sections, Exhibits or Schedules, such reference shall be to an
Article of, a Section of or Exhibit or Schedule to this Agreement unless
otherwise indicated. The 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". No provision of this Agreement shall be construed to require FIG,
APAA Group or any of their respective Subsidiaries or affiliates to take any
action which would violate any applicable law, rule or regulation.
1.98 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart. This Agreement may be executed by facsimile with
the same force and effect as an original.
1.99 Entire Agreement. This Agreement (including the documents
and the instruments referred to in this Agreement) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
1.100 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Florida, without regard to
any applicable conflicts of law principles.
1.101 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this agreement or affecting the validity or enforceability of
any of the terms or
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provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
1.102 Publicity. Except as otherwise required by applicable law
or the rules of the NASD and the Nasdaq National Market, neither FIG nor APAA
Group shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which consent shall
not be unreasonably withheld.
1.103 Assignment; Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations shall be assigned by
any of the parties to this Agreement (whether by operation of law or otherwise)
without the prior written consent of the other parties to this Agreement.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns. This Agreement (including the documents and instruments referred to
in this Agreement) is not intended to confer upon any person other than the
parties to this Agreement any rights or remedies under this Agreement.
1.104 Attorney Fees. If litigation is brought concerning this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall upon final judgment and
expiration of all appeals immediately pay upon demand all reasonable attorneys'
fees and expenses of the prevailing party.
1.105 Single Disclosure Sufficient; "Knowledge" Defined.
Notwithstanding any conflicting or inconsistent provisions of this Agreement,
disclosure of any matter by a party on any one of the Exhibits or Schedules to
this Agreement shall be sufficient to qualify (to the extent of the disclosure)
all representations and warranties made in any relevant provisions of this
Agreement. References in this Agreement to "Knowledge" (whether or not such term
is capitalized) (i) of FIG shall mean the actual (and not the constructive)
knowledge after due inquiry of Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx or Xxxxxx X.
Xxxxx and (ii) of any member of the APAA Group shall mean the actual (and not
the constructive) knowledge after due inquiry of Xx. Xxxxx Xxxx, Xxxx XxXxxxx,
Xxxxxxxxx Xxxx, Xx. Xxxxx Xxxxxxxxx or Xxxx Xxxxxxxxxxx.
1.106 . Domicile of Newco; Subsidiary Merger. Notwithstanding
any conflicting or inconsistent provisions of this Agreement, in the event that
the parties shall mutually agree: (a) the domicile of Newco may be changed from
Florida (as contemplated herein) to Delaware; and/or (b) Newco may be merged
into a subsidiary of FIG rather than into FIG (as contemplated herein), provided
that in such event FIG shall guaranty or remain liable for all of the
obligations of such subsidiary hereunder. In either such event as described in
this Section, the parties shall negotiate, execute and deliver such documents
and instruments as are necessary to include the foregoing and such additional
non-substantive revisions to the terms hereof as may be required to reflect the
applicable changes.
1.107 No Personal Liability. The persons executing and delivering
this Agreement do so only in a representative or corporate capacity, and no
individual liability shall attach to any
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such person thereby.
IN WITNESS WHEREOF, FIG, APAA, the Liquidating Trust and APAC have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
FPIC INSURANCE GROUP, INC.,
a Florida corporation
By:
---------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
ANESTHESIOLOGISTS PROFESSIONAL
ASSURANCE ASSOCIATION, INC.,
a Florida not-for-profit corporation
By:
---------------------------------------
Xxxxx Xxxx, M.D.
Chairman
ANESTHESIOLOGISTS PROFESSIONAL
ASSURANCE COMPANY,
a Florida corporation
By:
---------------------------------------
Xxxxx Xxxx, M.D., Chairman
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APAA Liquidating Trust
a Florida Trust
By:
---------------------------------------
Xxxxx Xxxx, M.D., Chairman
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SCHEDULE OF EXHIBITS
Exhibit A - Articles of Merger
Exhibit B - Form of Stock Restriction and Registration Rights Agreement
Exhibit C - Form of Management Agreement
Exhibit D - Form of Investment Management Agreement
Exhibit E -Terms of Pledge Agreement
Exhibit F -Terms of Stock Retention Agreement
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