Exhibit 10.1
RESTRUCTURING AGREEMENT
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RESTRUCTURING AGREEMENT dated as of the 1st day of
March, 1996 by and among WARNER INSURANCE SERVICES, INC., a
Delaware corporation ("Warner"), ATLANTIC EMPLOYERS INSURANCE
COMPANY ("AEIC"), a New Jersey corporation, PACIFIC EMPLOYERS
INSURANCE COMPANY ("PEIC"), a California corporation, ELECTRIC
INSURANCE COMPANY ("Electric"), a Massachusetts corporation,
(each of AEIC, PEIC and Electric are sometimes individually
herein referred to as a "Customer" or collectively as the
"Customers"), THE ▇▇▇▇▇▇ PLAN CORPORATION ("RPC"), a Delaware
corporation, MATERIAL DAMAGE ADJUSTMENT CORPORATION ("MDA"), a
New York corporation, LION INSURANCE COMPANY ("LIC"), a New
Jersey corporation and NATIONAL CONSUMER INSURANCE COMPANY
("NCIC"), a New Jersey corporation (all parties hereto, other
than Warner, are sometimes herein individually called a
"Releasee" or collectively the "Releasees")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Warner is a party to certain insurance
services contracts with certain of the Customers as listed on
SCHEDULE 1 hereto (collectively, the "Services Contracts") and
Warner and the Customers wish to restructure their arrangements
under the Services Contracts on the terms herein set forth; and
WHEREAS, Warner, RPC, MDA, LIC and NCIC are parties to
the lawsuits described on SCHEDULE 2 annexed hereto (the "RPC
Lawsuits") and wish to settle the RPC Lawsuits on the terms
herein set forth; and
WHEREAS, Warner has performed insurance services
pursuant to the Services Contracts, and as part of the
transactions contemplated hereby and to induce the Customers to
release Warner from its obligations under the Services Contracts,
Warner is entering into an Asset Purchase Agreement (the "Asset
Purchase Agreement") of even date herewith with MDA Services,
Inc., a New Jersey corporation ("Newco") pursuant to which Warner
will transfer to Newco the assets of Warner relating to the
insurance services business and Newco will enter into new
insurance services contracts with the Customers on revised terms
and the Customers will release Warner from its obligations under
the Services Contracts as herein set forth; and
WHEREAS, to further induce the Customers to release
Warner from its obligations under the Services Contracts, to
induce the Customers to enter into new contracts with Newco and
to settle the RPC Lawsuits, Warner will (i) issue an aggregate of
3,256,201 shares of common stock, par value $.01 per share, of
Warner ("Common Stock") (the "Settlement Shares") to the
Releasees which shall represent 27.55% of the outstanding shares
of Common Stock of Warner after the issuance thereof, (ii) issue
to the Releasees five-year warrants (the "Warrants") to acquire
an aggregate of 1,553,125 shares of Common Stock at $2.00 per
share (the Warrants being in the form annexed hereto as Exhibit
A), and (iii) assign to the Releasees the cash collateral (the
"Cash Collateral") described on SCHEDULE 3 annexed hereto
securing the Letter of Credit also described on SCHEDULE 3
annexed hereto.
NOW, THEREFORE, in consideration of the mutual premises
and the representations, warranties and covenants herein
contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as
follows:
1. Description of Transaction.
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1.1 Issuance of Settlement Shares and Warrants. On
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the Closing Date, Warner shall issue and deliver certificates
representing all of the Settlement Shares and the Warrants to the
Releasees in the amounts indicated next to the name of each
Releasee as set forth on SCHEDULE 4 annexed hereto.
1.2 Cash Collateral. Upon the expiration of the
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Letter of Credit described in SCHEDULE 3 annexed hereto and the
termination by Chase Manhattan Bank, N.A. of all of its right,
title and interest in the Cash Collateral also described in said
SCHEDULE 3, Warner shall deposit $887,500 of the Cash Collateral
into an escrow account with ▇▇▇▇ & Priest LLP, as escrow agent.
On the Closing Date, the Cash Collateral shall be released from
escrow to the Releasees listed on SCHEDULE 5 annexed hereto, in
the percentage amounts indicated next to the name of each
Releasee on said SCHEDULE 5.
2. Services Contract Releases. On the Closing Date,
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in consideration of the issuance by Warner of the Settlement
Shares, the Warrants and the payment of the Cash Collateral
pursuant to Section 1 hereof, each Customer shall separately
release Warner from its obligations under the Services Contract
with such Customer (collectively, the "Services Contract
Releases"), such release to be substantially in the form annexed
hereto as Exhibit B, and each such Customer shall enter into a
new services contract (the "Revised Newco Service Agreements")
with Newco.
3. ▇▇▇▇▇▇ Plan Corporation Lawsuits. On the Closing
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Date, the RPC Lawsuits shall be settled and dismissed with
prejudice, such settlement and dismissal to be pursuant to the
Stipulation in the form annexed hereto as Exhibit C (the
"Stipulation"), the Mutual General Release (the "Mutual General
Release") in the form annexed hereto as Exhibit D and the CWP
Assignment Agreement (the "CWP Assignment") in the form annexed
hereto as Exhibit E.
4. Closing Date. The closing of the transactions
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herein contemplated (the "Closing") will take place on March 1st,
1996 at 10:00 A.M. at the offices of ▇▇▇▇ & Priest LLP, ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other date and time
as the parties may mutually agree upon (the "Closing Date").
5. Representations and Warranties of Warner. In
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order to induce each Releasee to enter into this Agreement and to
consummate the transactions contemplated hereunder, Warner hereby
represents and warrants to each Releasee as follows:
5.1 Corporate Existence and Qualification. Warner is
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a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business
as now being conducted and to own, lease and operate its
properties as and in the places where such business is now
conducted and such properties are now owned, leased or operated.
Warner has all requisite corporate power to execute and deliver
this Agreement, the Asset Purchase Agreement, the Services
Contract Releases, the Warrants, the Stipulation, the Mutual
General Release and the CWP Assignment (the Asset Purchase
Agreement, the Services Contract Releases, the Warrants, the
Stipulation, the Mutual General Release and the CWP Assignment
are sometimes collectively called the "Related Agreements"), and
to perform its obligations under each such agreement.
5.2 Capitalization. The authorized capital stock of
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Warner consists of 20,000,000 shares of Common Stock, $.01 par
value. As of the date hereof, 8,560,904 shares of Common Stock
are issued and outstanding, and such shares have been duly
authorized, and are validly issued, fully paid and non-
assessable. On the date hereof and with the contemporaneous
public announcement of the transactions contemplated by this
Agreement and the Related Agreements, the shares of Common Stock
of Warner shall be suspended from trading on the New York Stock
Exchange ("NYSE") and Warner has been advised by the NYSE that
its shares will subsequently be delisted by and from the NYSE.
Except as set forth on SCHEDULE 6 hereto, there are no other
shares of capital stock or other equity securities of Warner
issued or issuable. All Settlement Shares to be issued by Warner
hereunder shall, upon issuance thereof, be duly authorized,
validly issued, fully paid and non-assessable shares of Common
Stock of Warner. The Warrants have been duly authorized for
issuance and the shares of Common Stock to be issued upon the
exercise thereof in accordance with the terms thereof will be
duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock of Warner.
5.3 Authorization of Agreements; Validity. The
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execution and delivery by Warner of this Agreement, and the
Related Agreements and the consummation by Warner of the
transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on behalf of Warner.
Except as set forth on SCHEDULE 7 hereto, this Agreement has been
duly executed and delivered by Warner, and this Agreement
constitutes, and, when executed, the Related Agreements will
constitute, the legal, valid and binding obligations of Warner,
enforceable against Warner in accordance with their respective
terms, except to the extent that such validity, binding effect
and enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and by
general equitable principles.
5.4 Effect of Agreements. Except as set forth on
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SCHEDULE 8 hereto, neither the execution and delivery of this
Agreement, or any of the Related Agreements by Warner, nor the
consummation of the transactions contemplated hereby and thereby
nor compliance by Warner with the provisions of this Agreement or
any of the Related Agreements by Warner (i) violates or will
violate, conflicts or will conflict with, or results or will
result in a breach of any provision, term or condition of, or
constitutes or will constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of a Lien upon any
of the properties or assets of Warner or any subsidiary of Warner
under the terms, conditions or provisions of (x) the Certificate
of Incorporation, as amended, the By-Laws, as amended, of Warner,
or of any of its subsidiaries, or (y) any other agreement or
instrument to which Warner or any subsidiary of Warner is a
party, or by which any of them is bound, or any of their
respective properties or assets, may be subject, or (ii) violates
any judgment, ruling, order, writ, injunction, decree, law,
statute, ordinance, rule or regulation, domestic or foreign
(collectively, "Law"), applicable to Warner or any other
subsidiary of Warner or any of their respective properties or
assets, except in the case of each of clauses (i) and (ii) above,
for such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of Liens, which, in the aggregate,
would not have any material adverse effect on the condition
(financial or otherwise) or the operations of Warner and its
subsidiaries taken as a whole, the business or on the ability of
the parties to consummate the transactions contemplated hereby.
5.5 Private Sale. Warner has not, either directly or
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through any agent, offered the Settlement Shares or the Warrants
to or solicited any offer to acquire the Settlement Shares or the
Warrants from, or otherwise approached, negotiated or
communicated in respect of the Settlement Shares or the Warrants
with, any person so as to require that the Settlement Shares or
the Warrants be registered pursuant to the provisions of
Section 5 of the Securities Act of 1933, as amended (the
"Securities Act") or any applicable state securities law.
5.6 Filings, Notices, Consents and Approvals. Except
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as set forth on SCHEDULE 9 annexed hereto, no notice to, filing
with, or authorization, consent or approval of, any domestic or
foreign governmental or public body, agency or authority or any
person not a party to this Agreement, is necessary in connection
with the execution, delivery and performance of this Agreement or
any of the Related Agreements by Warner or the consummation by
Warner of the transactions contemplated, except where failure to
give such notice, make such filings, or obtain such
authorizations, consents or approvals would, in the aggregate,
not have a material adverse effect on the condition (financial or
otherwise) or operations of Warner and its subsidiaries taken as
a whole, or on the ability of the parties to consummate the
transactions contemplated hereby.
5.7 Performance Representation. Except as set forth
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on SCHEDULE 10 annexed hereto, Warner represents and warrants
that as of the date hereof and through the Closing Date, it has
performed and will perform its obligations incurred in the
ordinary course of business in all material respects, including
all obligations under the Services Contracts in all material
respects.
5.8 Solvency Representation. Warner represents and
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warrants that it is receiving fair and adequate consideration, as
a result of arms length negotiations, for the transfer of the
assets pursuant to the Asset Purchase Agreement and other assets
being transferred and issued pursuant to this Agreement in that
the RPC Lawsuits are being settled and the Services Contract
Releases are being executed. Warner further represents and
warrants that its current net worth deficit should be decreased
as a result of the consummation of the transactions contemplated
by this Agreement and the Asset Purchase Agreement and that
Warner currently intends to pay its retained liabilities in
accordance with their terms as they mature.
6. Representations and Warranties of the Releasees.
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In order to induce Warner to enter into this Agreement and to
consummate the transactions contemplated hereunder, each Releasee
hereby represents and warrants to Warner severally as to itself
as follows:
6.1 Corporate Existence and Qualification. Such
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Releasee is a corporation duly incorporated, validly existing and
in good standing under the laws of its respective state of
incorporation and has all requisite corporate power and authority
to carry on its business as now being conducted and to own, lease
and operate its properties as and in the places where such
business is now conducted and such properties are now owned,
leased or operated. Such Releasee has all requisite power to
execute and deliver this Agreement and to perform its obligations
hereunder.
6.2 Authorization of Agreements. The execution and
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delivery by such Releasee of this Agreement, any Related
Agreement, and the Revised Newco Service Agreement and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate
action on behalf of such Releasee. This Agreement has been duly
executed and delivered by such Releasee, and this Agreement
constitutes, and when executed, each of the Related Agreements
and the Revised Newco Service Agreements will constitute the
legal, valid and binding obligation of such Releasee, enforceable
against such Releasee in accordance with their respective terms,
except to the extent that such validity, binding effect and
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and by
general equitable principles.
6.3 Securities Laws. (a) Each Releasee acknowledges
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and understands that the Settlement Shares and the Warrants have
not been registered under the Securities Act, or the securities
laws of any state, and that such Settlement Shares and the
Warrants may not be offered or sold unless first registered under
the Securities Act and any applicable state securities laws, or
unless such offer or sale is exempt from registration.
(b) Except to the extent contemplated by the Customers
pursuant to Section 7.2, each Releasee is purchasing the
Settlement Shares and the Warrants for investment purposes, has
no current intention to sell the Settlement Shares or the
Warrants and will not sell or dispose of the Settlement Shares
and the Warrants in violation of applicable United States federal
and state securities laws.
(c) Each Releasee has received a copy of the most
recent annual report on Form 10-K and the three most recent
quarterly reports on Form 10-Q, and is aware that Warner has
suffered significant losses, will report additional losses in the
fourth quarter and has serious cash flow problems.
(d) Each Releasee agrees that the following legend may
be placed on any certificates evidencing the Settlement Shares
and on any other securities issued in respect of the Settlement
Shares:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
PURSUANT TO ANY STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL TO THE COMPANY OR OF
COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED."
Each Releasee understands that, so long as the above legend
remains on the certificates representing the Settlement Shares,
Warner may maintain appropriate "stop transfer" orders with
respect to the Settlement Shares on its books and records and
with its registrar and transfer agent. Each Releasee agrees that
prior to any proposed transfer of the Settlement Shares and as a
condition thereto, if such transfer is not made pursuant to an
effective Registration Statement under the Securities Act or an
opinion of counsel to Warner (or other counsel reasonably
acceptable to Warner and its counsel) that the Settlement Shares
may be sold publicly without registration under the Securities
Act, the respective Releasee will, if requested by Warner,
deliver to Warner (i) an agreement by such transferee to the
impression of the restrictive legends set forth above on the
Settlement Shares and (ii) an agreement by such transferee that
Warner may place a "stop transfer" order with Warner's transfer
agent and registrar.
7. Covenants of Warner.
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7.1 Election of Director to Board of Directors. For
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a period of three years after the Closing Date, Warner shall
elect to its Board of Directors one designee selected by the
holders of a majority in amount of the Settlement Shares issued
pursuant to this Agreement. Such designee shall be elected as a
director in the Class of 1998 (due to the staggered director
provisions contained in Warner's By-Laws, as amended), such
designee will be subject to reelection at the 1998 Annual Meeting
of Stockholders of Warner called for the election of directors
(the "1998 Annual Meeting") on the Closing Date, or as soon
thereafter as Warner is notified in writing of such designation.
Beginning with the 1998 Annual Meeting, Warner shall include such
designee, or any successor designee selected as described in the
preceding sentence, as a nominee in management's slate of
directors for election at such annual meeting, and Warner shall
recommend to its stockholders the election of such designee or
successor, as a director at the 1998 Annual Meeting. In the
event that said designee shall not be elected as a director at
the 1998 Annual Meeting, Warner shall, following said meeting,
elect said designee to its Board of Directors and amend its By-
Laws to create any vacancy, if required, to serve for a period
equal to the remainder of the three-year term contained herein.
Warner agrees that if such designee dies or resigns, his
successor shall be designated as herein provided.
7.2 Registration Rights.
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7.2.1 Demand Registration. (a) At any time following
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the filing with the United States Securities and Exchange
Commission (the "Commission") by Warner of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, upon
receipt by Warner of a written request executed by one or more of
the Releasees receiving Settlement Shares (the "Initiating
Holder") requesting registration of a number of shares of Common
Stock at least equal to (i) thirty percent (30%) or more of the
Settlement Shares and the shares of Common Stock underlying the
Warrants (the "Warrant Shares") then held by the Holders or (ii)
the entire remaining number of Settlement Shares and the Warrant
Shares owned by the Initiating Holder, Warner will give notice of
such request to each other Holder (the "Other Holders") and give
them the right to participate therein in accordance with this
Section 7.2.1.
(b) Upon receipt of the request given pursuant to
Subsection (a) above, Warner shall promptly prepare and file with
the Commission a registration statement (the "Registration
Statement") under the Securities Act covering the Settlement
Shares and/or the Warrant Shares requested to be sold under a
Registration Statement by the Initiating Holder and by the Other
Holders who elect to have their Settlement Shares and/or Warrant
Shares included in a Registration Statement by providing written
notice of its election to Warner within 30 days from receipt by
such Other Holders of notice from Warner pursuant to Section
7.2.1(a) (the "Registered Shares") and shall otherwise comply
with its obligations under Section 7.2.1.
(c) Warner's obligations under Section 7.2.1 shall be
limited to two (2) effective Registration Statements under the
Securities Act; provided, however, that if the Settlement Shares
and/or Warrant Shares may be registered by means of a
Registration Statement on Form S-3 or a successor form thereto,
the Holders of Settlement Shares and/or Warrant Shares shall be
entitled to exercise their rights under Section 7.2 on an
unlimited number of occasions, but not more than once every
fiscal quarter, until all of the Settlement Shares and/or Warrant
Shares are either subject to an effective Registration Statement
under the Securities Act or have been sold.
7.2.2 Piggy Back Registration Rights. (a) At any
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time after the receipt by the Holders of any Settlement Shares,
Warner will send written notice to the Holders then owning
Settlement Shares and/or Warrant Shares, at least twenty (20)
days prior to the filing of each and every Registration Statement
filed by Warner, whether or not pursuant to this Agreement (other
than a Registration Statement covering exclusively securities
under an employee option or stock purchase plan, a merger,
acquisition or similar transaction) and give to such Holders the
right to have included therein any Settlement Shares and/or
Warrant Shares then held by the Holders. Such notice must
specify the proposed offering price and the plan of distribution.
Warner must receive written notice from such Holders within
fifteen days after the date of Warner's written notice,
indicating the full name and address of each Holder desiring to
have Settlement Shares and/or Warrant Shares included for sale in
such Registration Statement and the number of Settlement Shares
or Warrant Shares requested to be covered.
(b) If the registration of which Warner gives notice
is for a registered public offering involving an underwriting,
Warner shall so advise the Holders as a part of the written
notice given pursuant to Section 7.2.2(a).
To the extent Holders propose to distribute their
Settlement Shares or Warrant Shares through such underwriting,
such Holders shall, together with Warner, enter into an
underwriting agreement in customary form with the managing
underwriter selected for such underwriting by Warner which
underwriting agreement shall also be reasonably acceptable to the
Holders. Warner shall use its reasonable best efforts to cause
the managing underwriter of such proposed underwritten offering
to permit the Settlement Shares or Warrant Shares proposed to be
included in such registration to be included in the registration
statement for such offering on no less than the most favorable
terms and conditions as any similar securities of Warner included
therein. Notwithstanding any other provision of this Section
7.2.2, the Holders shall be entitled to include in the
registration all of the shares which they desire to sell for
their own account, and if the managing underwriter determines
that general marketing conditions are such that the inclusion of
all of the shares to be sold by the Holders for their own
accounts would jeopardize the sale of shares for the account of
Warner, the managing underwriter may reduce the similar
securities to be included in such registration for the accounts
of the Holders, pro rata among the Holders whose shares are
included in the registration, but only after the shares of Warner
to be included in the registration for the account of persons
other than Warner and the Holders are first reduced, to zero if
necessary.
If any Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by
written notice to Warner and the managing underwriter. Any
Settlement Shares or Warrant Shares excluded or withdrawn from
such underwriting shall not be transferred prior to sixty (60)
days after the effective date of the registration statement
relating thereto, or such other shorter period of time as the
underwriters may require.
7.2.3 Miscellaneous Registration Provisions. (a) In
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connection with any Registration Statement filed pursuant to
Sections 7.2.1 or 7.2.2 hereof:
(i) Warner's obligation under this Agreement to
include Settlement Shares or Warrant Shares in a Registration
Statement shall mean shares of Common Stock or any security
received by a Holder in exchange or upon reclassification of the
present Common Stock or the securities then owned by a Holder by
reason of a prior exchange or reclassification of or on account
of present Common Stock;
(ii) the Holders of Settlement Shares or Warrant
Shares (herein "Registering Holders") shall furnish to Warner in
writing such information as shall be required by the Securities
Act or the rules and regulations promulgated thereunder in
respect of the Holder or the Settlement Shares or Warrant Shares
to be included in the Registration Statement;
(iii) the Registering Holders and Warner shall
enter into the usual and customary form of underwriting agreement
agreed to by Warner and any underwriter with respect to any such
offering, if required, and such underwriting agreement shall
contain the customary reciprocal rights of indemnity and
contribution between Warner, the underwriters, and the selling
shareholder, including the Registering Holders, to the extent the
obligations of the Registering Holders do not exceed those set
forth in Subsections (f) and (g) herein; provided, however, that
no Registering Holder shall be obligated to refrain from selling
or otherwise disposing of such Registering Holder's shares for a
period of in excess of sixty (60) days from the effective date of
the Registration Statement;
(iv) the Registering Holders shall agree that they
shall execute, deliver and/or file with or supply to Warner, any
underwriters, the Commission and/or any state or other regulatory
authority such information, documents, representations,
undertakings and/or agreements necessary to carry out the
provisions of the registration covenants contained in this
Agreement and/or to effect the registration or qualification of
their Settlement Shares or Warrant Shares under the Securities
Act and/or any of the laws and regulations of any state or
governmental instrumentality; and
(v) the Registering Holders shall furnish Warner
with such questionnaires and other documents regarding their
identity and background as may be necessary to permit the offer
and sale of the Settlement Shares and/or Warrant Shares in those
jurisdictions requested by the Registering Holders.
(b) if and whenever Warner is required to effect the
registration of any Settlement Shares or Warrant Shares pursuant
to Section 7.2.1 or 7.2.2, Warner will use its best efforts to
effect such registration to permit the sale of such Settlement
Shares or Warrant Shares in accordance with the intended method
or methods of disposition thereof, and pursuant thereto it will,
as promptly as is practicable:
(i) prepare and file with the Commission such
amendments (including post-effective amendments) and supplements
to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Settlement Shares or Warrant Shares covered by such
Registration Statement until such time as all of such Settlement
Shares or Warrant Shares have been disposed of in accordance with
the intended methods of disposition set forth in such
Registration Statement;
(ii) furnish to the Holders and to any underwriter
of Settlement Shares or Warrant Shares such number of conformed
copies of such Registration Statement and of each such amendment
and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in such
Registration Statement (including each preliminary prospectus and
any summary prospectus) and any amendment or supplement thereto,
in conformity with the requirements of the Securities Act, such
documents incorporated by reference in such Registration
Statement or prospectus, and such other documents, as the Holders
or such underwriter may reasonably request, and, if requested, a
copy of any and all transmittal letters or other correspondence
to, or received from, the Commission or any other governmental
agency or self-regulatory body or other body having jurisdiction
(including any domestic or foreign securities exchange) relating
to such offering;
(iii) use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
Registration Statement at the earliest possible moment;
(iv) use its best efforts to list all such
Settlement Shares or Warrant Shares covered by such Registration
Statement on the principal securities exchange and inter-dealer
quotation system on which a class of common equity securities of
Warner is then listed, and to pay all fees and expenses in
connection therewith;
(v) cooperate and assist in any filings required
to be made and with any performance of any due diligence
investigation by any underwriter; and
(c) Warner shall pay all out-of-pocket expenses and
disbursements incurred by Warner and the Holders in connection
with the Registration Statements filed by it pursuant to Sections
7.2.1 and 7.2.2 or, including, without limitation, all legal and
accounting fees, Commission filing fees, exchange filing fees,
printing costs, registration or qualification fees and expenses
to comply with state Blue Sky or other state securities laws, the
fees of other experts, and any expenses or other compensation
paid to the underwriters; provided, however, that such
registration expenses shall not include underwriting commissions
and discounts and transfer taxes, if any.
(d) Warner shall be obligated to keep any Registration
Statement filed by it under Sections 7.2.1 and 7.2.2 effective
under the Securities Act until such time as all of the Settlement
Shares or Warrant Shares covered by such Registration Statement
have been disposed of in accordance with the intended methods of
disposition set forth in such Registration Statement and to
prepare and file such supplements and amendments necessary to
maintain an effective Registration Statement for such period. As
a condition to Warner's obligation under this Subsection (d), the
Registering Holders will take all actions as shall be necessary
to comply with the relevant provisions of the Securities Act.
(e) Warner shall use its best efforts to register or
qualify the Registered Shares under such securities or Blue Sky
laws in such jurisdictions within the United States as the
Registering Holders may reasonably request; provided, however,
that Warner reserves the right, in its sole discretion, not to
register or qualify such Registered Shares in any jurisdiction
where such Registered Shares do not meet with the requirements of
such jurisdiction after having taken reasonable steps to meet
such requirements or where Warner is required to qualify as a
foreign corporation to do business in such jurisdiction and is
not so qualified therein.
(f) The Registering Holders agree that upon notifi-
cation by Warner that, in the opinion of its counsel, the
prospectus contains an untrue statement of a material fact or
omits to state a fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in
which they were made, not misleading, they shall immediately upon
receipt of such notification (i) cease to offer or sell any
securities of Warner which must be accompanied by such
prospectus; (ii) return all such prospectuses in their hands to
Warner; and (iii) shall not offer or sell any securities of
Warner until they have been provided with a current prospectus
and Warner has given them notification permitting them to resume
offers and sales. Warner covenants to promptly correct such
prospectus and file with the Commission such amended prospectus
or supplement and shall use its best efforts to cause such
amended prospectus or supplement to be declared effective by the
Commission.
(g) As a condition to the filing of a Registration
Statement pursuant to this Agreement, Warner shall indemnify and
hold harmless each Registering Holder and each underwriter and
each of such Registering Holder's and underwriter's officers,
directors, employees, agents and counsel and each other person,
if any, who controls such Registering Holder or underwriter
within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended from and against any and all
losses, claims, damages, expenses or liabilities whatsoever
caused by any failure of Warner to comply with the Securities Act
or any rule or regulation promulgated thereunder in connection
with the registration in which the Settlement Shares or Warrant
Shares have been included or any untrue statement of a material
fact contained in the Registration Statement, any post-effective
amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of
this Agreement or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused
by any such untrue statements or alleged untrue statements or
omissions based upon information furnished or required to be
furnished in writing to Warner by the party seeking
indemnification expressly for use therein; provided, however,
that Warner shall not be obligated to so indemnify the
Registering Holders or any such underwriter or other person
referred to above unless the Registering Holders or underwriter
or other person, as the case may be, shall at the same time
indemnify Warner, its directors, each officer signing the
Registration Statement and each person, if any, who controls
Warner within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any registration
statement or any prospectus required to be filed or furnished by
reason of this Agreement or caused by any omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, insofar
as such losses, claims, damages or liabilities are caused by any
untrue statement or alleged untrue statement or omission based
upon information furnished in writing to Warner by the Holder or
underwriter expressly for inclusion therein; provided, however,
that the extent of any Registering Holder's indemnification
obligation hereunder shall be limited to the aggregate net
proceeds received by such Registering Holder upon the sale of the
Settlement Shares and/or the Warrant Shares included in such
Registration Statement.
(h) Each party entitled to indemnification under
paragraph (g) above (the "Indemnified Party") shall, promptly
after receipt of notice of any claim or the commencement of any
action against such Indemnified Party in respect of which
indemnity may be sought, notify the party required to provide
indemnification (the "Indemnifying Party") in writing of the
claim or the commencement thereof; provided that the failure of
the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which it may
have to an Indemnified Party pursuant to the provisions of
paragraph (g), unless the Indemnifying Party was materially
prejudiced by such failure, and in no event shall such failure
relieve the Indemnifying Party from any other liability which it
may have to such Indemnified Party. If any such claim or action
shall be brought against an Indemnified Party, it shall notify
the Indemnifying Party thereof and the Indemnifying Party shall
be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified Indemnifying
Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying
Party shall not be liable (except to the extent the proviso to
this sentence is applicable, in which event it will be so liable)
to the Indemnified Party under paragraph (g) for any legal or
other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs
of investigation: provided that each Indemnified Party shall have
the right to employ separate counsel to represent it and assume
its defense (in which case, counsel to the Indemnifying Party
shall not represent it) if (i) upon the advice of counsel, the
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party will not have the right to assume the defense
of such claim or action on behalf of such Indemnified Party), or
(ii) in the event the Indemnifying Party has not assumed the
defense thereof within ten (10) days of receipt of notice of such
claim or commencement of action, in which case the fees and
expenses of one such separate counsel shall be paid by the
Indemnifying Party. If any Indemnified Party employs such
separate counsel it will not enter into any settlement agreement
which is not approved by the Indemnifying Party, such approval
not to be unreasonably withheld. If the Indemnifying Party so
assumes the defense thereof (and by so assuming shall be solely
responsible for liabilities relating to such claim or action, and
shall release the Indemnified Party from such liabilities to the
extent permitted by law, except to the extent the Indemnified
Party is not entitled to be indemnified pursuant to paragraph
(g), it may not agree to any settlement of any such claim or
action as the result of which any remedy or relief, other than
monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the
Indemnified Party, without the prior written consent of the
Indemnified Party. No Indemnified Party will consent to entry of
any judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or action. In any action
hereunder as to which the Indemnifying Party has assumed the
defense thereof with counsel satisfactory to the Indemnified
Party, the Indemnified Party shall continue to be entitled to
participate in the defense thereof, with counsel of its own
choice, but, except as set forth above, the Indemnifying Party
shall not be obligated hereunder to reimburse the Indemnified
Party for the costs thereof.
(i) If for any reason the indemnification provided for
above is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss,
claim, damage, liability or expense referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable
by the Indemnified Party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the Indemnified Party and
the Indemnifying Party, but also the relative fault of the
Indemnified Party and the Indemnifying Party, as well as any
other relevant equitable considerations, subject in all events,
to the limitations described in the last proviso set forth in
Subsection 7.2(g).
7.3 Rule 144 Reporting. With a view to making
------------------
available the benefits of certain rules and regulations of the
Commission which may permit the sale of the Settlement Shares and
the Warrant Shares to the public without registration, Warner
agrees to:
(a) Make and keep public information available, as
those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after the issuance of the
Settlement Shares and the Warrant Shares;
(b) Not take any action which would cause Warner to no
longer be registered under Section 12(g) of the Exchange Act;
(c) File with the Commission in a timely manner all
reports and other documents required of Warner under the
Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and
(d) Furnish to the Holders forthwith upon request: a
written statement by Warner as to its compliance with the
reporting requirements of Rule 144 and of the Securities Act and
the Exchange Act; a copy of the most recent annual or quarterly
report of Warner filed under the Exchange Act; and such other
reports and documents so filed as the Holder shall be required to
have in order to avail itself of any rule or regulation of the
Commission allowing the Holder to sell any of the Settlement
Shares and the Warrant Shares without registration.
7.4 Access to Records and Operations Of Warner. (a)
------------------------------------------
Pending the Closing of the transactions contemplated by this
Agreement, each Customer shall have the right to designate a
representative who shall have access to the premises of Warner
for the purpose of reviewing records and operations of Warner
with respect to such Customer. Further, in the event that Warner
shall, pending the Closing, cease operations, commence a
bankruptcy or insolvency proceeding or commit a performance
default under an existing service contract, such designated
representative shall have the right to communicate, independently
of Warner, with Micro Graphics Corporation, regarding graphic
imaging record retrieval.
(b) From and after the Closing Date the Customers
shall have reasonable access to the books and records of Warner
relating to the details of Warner's performance under the
Services Contracts from and before the Closing Date.
7.5 Escrow of Portion of Proceeds from Sale or
------------------------------------------
Liquidation of Alerion Insurance Company. On the date hereof,
----------------------------------------
Warner agrees to deposit into an escrow account with ▇▇▇▇ &
Priest LLP, as escrow agent, pursuant to the terms and conditions
of an escrow agreement in the form annexed hereto as Exhibit F, a
portion of the proceeds to be received by Warner upon the
liquidation of its wholly-owned insurance company, Alerion
Insurance Company ("Alerion"), in the amount of $920,000 for the
purpose of paying certain due and unpaid legal and administrative
expenses ("ALE") of Warner, as well as accrued but unbilled ALE
obligations of Warner, in connection with insurance services
performed by Warner under existing Services Contracts with the
Customers. SCHEDULE 11 annexed hereto contains an updated list
prepared by Warner of ALE accrued expenses through February 19,
1996. After the Closing Date, such escrowed funds will be
released in payment of such ALE in accordance with the procedures
set forth in Exhibit F. The balance of the funds received from
the liquidation of Alerion have been used to pay the expenses
outlined in SCHEDULE 11.
7.6 Covenant to Maintain Certain Insurance. Warner
--------------------------------------
covenants and agrees to maintain its current third party
administrators professional liability insurance coverage of up to
$5 million in the aggregate, as contained in Policy Number 243-
30-95 issued by Lexington Insurance Company, through the
expiration date of such policy on December 31, 1996.
7.7 Employee Compensation. Warner covenants for a
---------------------
period of two years from the Closing Date that it will not renew
the employment contracts currently in effect with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and that beginning August
1, 1996, the aggregate annual compensation payable to such
persons shall not exceed $250,000.
7.8 Covenant to Execute the Related Agreements.
------------------------------------------
Warner covenants and agrees to execute the Related Agreements on
the Closing Date.
8. Covenants of Each Releasee.
--------------------------
8.1 Control of Warner. Each Releasee covenants and
-----------------
agrees that, for a period of two (2) years from the Closing Date,
such Releasee, or any of its affiliates as such term is defined
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), will not, without the prior approval of Warner's
Board of Directors, initiate or otherwise participate in any
activity in a manner the intent of which would require such
Releasee or affiliate to file with the Commission a Schedule 13D,
either individually or as a member of a group, to report the
occurrence of any of the events described in Item 4 of Schedule
13D; provided, however, that nothing herein shall prevent
Releasee or its affiliates from: (i) acquiring additional
securities of Warner, or from selling securities of Warner, in
each case in the ordinary course which would require such
Releasee or affiliate to file or amend a previously filed
Schedule 13D solely due to an increase or decrease in such
Releasee's or affiliates' beneficial ownership of securities of
Warner; (ii) voting its shares of Warner on any matter as it
determines in its sole discretion, or (iii) tendering its shares
of Warner in connection with any tender, exchange or similar
offer made by a third party.
8.2 Right of First Refusal.
----------------------
(a) Bona Fide Offer. Except as provided in Section
---------------
8.2(b) below, until July 31, 1996 each Releasee covenants and
agrees that it shall not sell, assign, transfer, pledge, encumber
or in any other manner dispose of thirty-five percent (35%) or
more of the Settlement Shares of Warner acquired by each such
Releasee pursuant to the terms and conditions of this Agreement,
except upon receipt by such Releasee of a bona fide offer in
writing from an unrelated third party (hereinafter referred to as
a "Bona Fide Offer") to purchase such Settlement Shares. The
Bona Fide Offer shall specify the name and background of the
third party, the number of Settlement Shares subject to the Bona
Fide Offer, the amount to be paid for the Settlement Shares and
the terms of payment, and all other material conditions of such
offer. Upon receipt of a Bona Fide Offer, such Releasee shall
promptly offer in writing (hereinafter referred to as the
"Reoffer") to sell such Settlement Shares to Warner or to a third
party acceptable to Warner (the "Selected Purchaser"), upon the
same terms and conditions contained in the Bona Fide Offer. The
Reoffer may be accepted by Warner or the Selected Purchaser at
any time within fifteen (15) business days next following its
receipt and shall expire on the close of business on such 15th
business day. Acceptance of a Reoffer must be made
unconditionally by notice to such Releasee prior to its
expiration, which notice shall set forth a time and place for
closing no earlier than the day after the expiration date of the
Reoffer and no later than thirty (30) days thereafter.
Upon the expiration of the Reoffer, such Releasee shall
be free to accept the Bona Fide Offer provided that the third
party offeror agrees to hold such Settlement Shares subject to
all terms, conditions and restrictions of this Agreement. Any
Bona Fide Offer shall be deemed to have expired ninety (90) days
after it was made unless accepted in accordance with its original
terms and may not thereafter be accepted. If the amount of a
Bona Fide Offer should be reduced, or if any of its terms or
provisions should be changed, then it shall be treated as a new
Bona Fide Offer and may not be accepted unless the provisions of
this subsection shall have been complied with and a Reoffer made
with respect to it.
(b) Unrestricted Transfers. The restrictions
----------------------
specified in this Section 8.2 shall not apply to the sale or
transfer of the Settlement Shares held by a Releasee to a wholly-
owned subsidiary, partnership or affiliate of such Releasee;
provided, however, that such sale or transfer shall not relieve
such Releasee of its obligations hereunder. Prior to such
transfer, such wholly-owned subsidiary, partnership or affiliate,
shall agree in writing to be bound by the terms and conditions of
this Agreement.
8.3 Payment of All Amounts Under Services Contracts.
-----------------------------------------------
Pending the Closing of the transactions contemplated by this
Agreement, each Customer covenants and agrees to continue to make
all regularly required payments under existing Services Contracts
with Warner consistent with past billing practices in order to
enable Warner to continue to perform its obligations in
accordance with the terms of such contracts. The amount of such
payments which are or will be due and payable on or prior to the
Closing Date are set forth on SCHEDULE 12 hereto. At the
Closing, Warner shall deliver to the Customers a Certificate of
the President and Chief Executive Officer of Warner certifying
that the amounts set forth on SCHEDULE 12 are true and correct
and have been calculated in accordance with Warner's past,
ordinary billing practices and procedures. The parties agree
that, upon payment of such amounts as reflected in said Schedule,
no other amounts will be required to be paid by each Customer
and/or Warner in accordance with the terms of their respective
Services Contracts.
8.4 Option of Warner to Purchase Settlement Shares and
--------------------------------------------------
Warrants. (a) For a period of six months after the Closing
--------
Date, Warner shall have the option to acquire from the Releasees
50% of the Settlement Shares at a cash price equal to the greater
of $3.00 or 50% of the then market price of a share of Warner
Common Stock. For purposes of this subsection, market price
shall mean the average closing price for a share of Warner Common
Stock on such market which is or may become the major trading
market for Warner Common Stock for the five (5) business days
immediately prior to the notice of exercise of such option, as
provided for in subsection (c) below.
(b) For a period of six months after the Closing Date
Warner shall have the option to acquire from the Releasees 50% of
the Warrants at a cash price equal to $1.00 per Warrant.
(c) The options granted hereunder shall be exercisable
by written notice by Warner to the Releasees, which notice shall
set a date and time and place of closing, which closing date
shall be no earlier than five (5) business days after the date of
such notice and no later than ten (10) business days after the
date of such notice, at which closing Warner shall deliver the
consideration by certified check payable to the order of each
Releasee, and each Releasee shall deliver the securities being
acquired by Warner duly endorsed for transfer. The options
granted hereunder shall be exercised pro rata as to each Releasee
based upon the original number of Settlement Shares and/or
Warrants issued to such Releasee. The certificates for such
securities will be appropriately legended to reflect the options
granted hereunder.
(d) Warner shall have the right to assign the options
granted herein in its sole discretion subject to such assignee
agreeing in writing to be bound by the provisions of this Section
8.4.
8.5 Covenant As To Related Agreements. Each Releasee
---------------------------------
agrees to execute and deliver any Related Agreement which is
required to be executed by it on the Closing Date.
9. Covenant and Indemnification Among Warner, RPC and
--------------------------------------------------
MDA.
---
The agreements among Warner, RPC, NCIC and MDA relating
to the RPC lawsuits and the settlements thereof are contained in
the Stipulation, the Mutual General Release and the CWP
Assignment annexed hereto as Exhibits C, D and E, respectively.
10. Conditions to Obligations of Warner. This
-----------------------------------
Agreement and the obligations of Warner to perform hereunder are
subject to the satisfaction by each Releasee, or a waiver in
writing by Warner, of the following conditions, each of which is
individually hereby deemed material, at or prior to the Closing:
10.1 Concurrent Agreements. Each Releasee will execute
---------------------
and deliver its respective Services Contract Release and its
respective Revised Newco Service Agreement and any Related
Agreements referred to in this Agreement.
10.2 Wausau Services Contract Release. Employees
--------------------------------
Insurance of Wausau, a Mutual Company, a Wisconsin corporation,
Wausau Underwriters Insurance Company, a Wisconsin corporation,
and Providian Auto and Home Insurance Company (formerly Worldwide
Underwriters Insurance Company), a Missouri corporation
(collectively "Wausau") shall each execute a Services Contract
Release, such release to be substantially in the form annexed
hereto as Exhibit B.
10.3 Representations, Warranties and Obligations. All
-------------------------------------------
representations and warranties of each Releasee contained in this
Agreement and in the Exhibits hereto shall be true and correct
commencing as of the date hereof and ending with and on the
Closing Date as though made on and as of such Closing Date. Each
Releasee shall have performed and complied with all of their
respective covenants and obligations under this Agreement in all
material respects.
11. Conditions to Obligations of Releasees. This
--------------------------------------
Agreement and the obligations of each Releasee to perform
hereunder are subject to the satisfaction by Warner, or a waiver
in writing by the all of the Releasees, of the following
conditions, each of which is individually hereby deemed material,
at or prior to the Closing:
11.1 Concurrent Agreements. Warner will have entered
---------------------
into the Asset Purchase Agreement on the date hereof, and on the
Closing Date, will execute and deliver all the Related Agreements
and each Releasee will have executed and delivered its Revised
Newco Service Agreement and any Related Agreement related to it.
11.2 Corporate Authorization. On the Closing Date,
-----------------------
Warner shall have delivered to each Releasee certified copies of
the resolution(s) of the Board of Directors of Warner authorizing
the execution, delivery and performance by Warner of this
Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby.
11.3 Representations, Warranties and Obligations. All
-------------------------------------------
representations and warranties of Warner contained in this
Agreement and in the Exhibits hereto shall be true and correct in
all material respects commencing as of the date hereof and ending
with and on the Closing Date as though made on and as of such
Closing Date. Warner shall have performed and complied with all
of their respective covenants and obligations under this
Agreement in all material respects.
11.4 Issuance and Delivery of Settlement Shares and
----------------------------------------------
Warrants to the Releasees. Warner shall issue and deliver
-------------------------
certificates to the Releasees representing all of the Settlement
Shares and Warrants.
11.5 Payment of a Portion of the Cash Collateral.
-------------------------------------------
Warner shall direct the Escrow Agent to release from escrow to
the Releasees $887,500 of the Cash Collateral in accordance with
the terms of Section 1.2 hereof.
11.6 Legal Opinion. On the Closing Date, ▇▇▇▇ & Priest
-------------
LLP, counsel to Warner, shall deliver an opinion of counsel dated
as of the Closing Date and addressed to the Releasees, in the
form set forth in Exhibit G annexed hereto.
12. Survival; Indemnification. The representations,
-------------------------
warranties, covenants and agreements of Warner on the one hand,
and each Releasee on the other hand, contained in this Agreement,
and the Exhibits hereto, shall survive and remain operative and
in full force following the execution and delivery of this
Agreement and the Related Agreements. The following provisions
are applicable to claims made under these Agreement(s):
12.1 Obligation of Warner to Indemnify. Warner hereby
---------------------------------
agrees to indemnify, defend and hold harmless each Releasee (and
its directors, officers, employees, affiliates and assigns) from
and against all claims, losses, suits, proceedings, demands,
judgments, damages, expenses and costs (including reasonable
attorneys' fees and disbursements) (collectively, "Losses") which
any Releasee may incur relating to (i) any material inaccuracy
in, or any material breach of, any representation, warranty,
covenant or agreement of Warner contained in this Agreement or
the Exhibits hereto or (ii) any claim by a third party who is a
creditor or shareholder of Warner or any of its subsidiaries
relating to damages caused to such third party by the transfer of
assets by Warner pursuant to the provisions of the Asset Purchase
Agreement.
12.2 Obligation of Each Releasee to Indemnify. Each
----------------------------------------
Releasee hereby agrees to indemnify, defend and hold harmless
Warner (and its directors, officers, employees, affiliates and
assigns) from and against any Losses which it may incur arising
from any material inaccuracy in, or any material breach of, any
representation, warranty, covenant or agreement of such Releasee
contained in this Agreement.
12.3 Notice to Indemnitor. Promptly after any party
--------------------
hereto (i) receives notice of any claim or the commencement of
any action or proceeding against it, (ii) has knowledge of any
claim, action or proceeding against it, or (iii) has knowledge of
any matter for which it intends to seek indemnification
hereunder, the party seeking indemnification (the "Indemnitee")
shall, if a claim for indemnity with respect thereto is to be
made against any party hereto obligated to provide indemnifica-
tion under Sections 12.1 or 12.2 hereof (the "Indemnitor"), give
the Indemnitor written notice of such claim or the commencement
of such action or proceeding, in all cases within sufficient time
to respond to such claim or to answer or otherwise plead in any
such action. Such notice shall be a condition precedent to the
Indemnitor's obligation to provide indemnification under this
Section 12.
12.4 Right to Defend; Compromise of Claims. The
-------------------------------------
Indemnitor shall have the duty to defend and right to compromise,
at its own expense and by its own counsel, any matter involving
the asserted liability of any Indemnitee; provided, however, that
-------- -------
no compromise of any claim shall be made without the consent of
the Indemnitee unless such compromise results in the full and
unconditional release of all claims against the Indemnitee by the
party asserting such claim. The opportunity to compromise or
defend as herein provided shall be a condition precedent to any
liability of an Indemnitor under the provisions of this Section
12.4. If any Indemnitor shall undertake to compromise or defend
any such asserted liability, it shall promptly notify the
Indemnitee of its intention to do so and provide the Indemnitee
with reasonable assurance as to the ability of the Indemnitor to
defend and/or compromise such matter, which, in the case of
Warner, as Indemnitor, shall include documentation evidencing the
ability of Warner to pay any judgment with regard to any such
asserted liability. The Indemnitee at Indemnitor's expense shall
cooperate with the Indemnitor and its counsel in the defense
against any such asserted liability and in any compromise
thereof. Such cooperation shall include, but not be limited to,
furnishing the Indemnitor with any books, records or information
reasonably requested by the Indemnitor and taking such action as
the Indemnitor may reasonably request to mitigate or reduce any
claim. After an Indemnitor has notified an Indemnitee of its
intention to defend any asserted liability, the Indemnitor shall
not be liable for any additional legal expenses incurred by the
Indemnitee unless the Indemnitor fails to prosecute the defense
of such claim. If the Indemnitor shall desire to compromise any
such asserted liability by the payment of a liquidated amount
which the party asserting such liability is willing to accept in
exchange for fully and unconditionally releasing all claims
against the Indemnitee, and the Indemnitee shall refuse to
consent to such compromise, then the Indemnitor's liability under
this Section 12 with respect to such asserted liability shall be
limited to the amount so offered in compromise. Under no
circumstances shall the Indemnitee compromise any asserted
liability without the written consent of the Indemnitor.
13. Miscellaneous.
-------------
13.1 Entire Agreement. This Agreement and the Related
----------------
Agreements and the Exhibits and Schedules annexed hereto and made
a part hereof, contain the entire agreement between Warner and
each Releasee with respect to the matters set forth herein and
supersede all prior agreements and understandings among them as
to the subject matter thereof. No party shall be bound by nor
shall be deemed to have made any representations, warranties or
covenants except those contained herein.
13.2 Benefits. All of the terms and provisions of
--------
this Agreement and the Related Agreements shall bind and inure to
the benefit of Warner and each Releasee and their respective
successors and assigns.
13.3 Notices, Etc. All notices, requests, consents
------------
and other communications hereunder shall be in writing and shall
be deemed to be duly given (i) upon receipt, if personally
delivered with receipt acknowledged, (ii) not less than three (3)
business days after mailing, if mailed by registered or certified
mail, first class, postage prepaid, and (iii) on the next
business day, if delivered by a nationally recognized overnight
courier service or if transmitted by facsimile machine addressed
as follows:
(i) if to Warner:
Warner Insurance Services, Inc.
▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or such other person(s) as Warner may
designate by written notice to the other parties hereto.
(ii) if to the Releasees, at the addresses set forth on
SCHEDULE 13 annexed hereto.
or to such other address or such other person(s) as each Customer
may designate by written notice to the other parties hereto.
13.4 Governing Law; Submission to Jurisdiction. (i)
-----------------------------------------
This Agreement shall be construed in accordance with and governed
by the internal laws of the State of New York.
(ii) The parties hereto (A) submit for themselves
in any legal action or proceeding relating to the enforcement of
the rights of and the obligations under this Agreement to the
jurisdiction of the New York State Supreme Court, New York
County, Commercial Part and the appellate courts therefrom, (B)
consent that any such action or proceeding shall be brought in
such courts, and waive any objection each may have now or
hereafter have to the venue of any such action or proceeding in
any such court, (C) agree that service of process of any such
action or proceeding may be effected by certified mail (or
substantially similar form of mail), postage prepaid, to the
appropriate party at its address as set forth herein and service
made shall be deemed to be completed upon the earlier of actual
receipt or five (5) days after the same shall have been posted as
aforesaid, and (D) agree that nothing herein shall affect the
right to effect service of process in any other manner permitted
by law.
13.5 Severability. If any provision of this Agreement
------------
shall be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall
not in any manner affect or render invalid or unenforceable any
other severable provision of this Agreement, and this Agreement
shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
13.6 Modification, Waivers, Etc. Neither this
--------------------------
Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally but only by an instrument in
writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
13.7 Captions. The captions of sections and
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subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.
13.8 Further Assurances. At any time and from time to
------------------
time, upon the reasonable request of any party hereto, the
requested party shall execute, deliver and acknowledge, or cause
to be executed, delivered and acknowledged, such further
documents and instruments and do such other acts and things as
the requesting party may reasonably request in order to fully
effect this Agreement.
13.9 Counterparts. This Agreement may be executed in
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several counterparts, each of which shall be deemed an original,
but all of which, when taken together, shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto either
individually or by their duly authorized representatives have
caused this Agreement to be executed and delivered in their
respective names as of the date and year first above written.
WARNER INSURANCE SERVICES, INC. ELECTRIC INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Title: Vice President &
Executive Officer Treasurer
ATLANTIC EMPLOYERS INSURANCE COMPANY THE ▇▇▇▇▇▇ PLAN CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------- --------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President Title: Secretary
PACIFIC EMPLOYERS INSURANCE COMPANY MATERIAL DAMAGE ADJUSTMENT
CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇▇ ▇. Nezamoondeen
-------------------------- ----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name: ▇▇▇▇▇▇▇▇ ▇. Nezamoondeen
Title: Senior Vice President Title: Executive Vice President
NATIONAL CONSUMER INSURANCE LION INSURANCE COMPANY
COMPANY
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇▇ ▇. Nezamoondeen
--------------------------- ----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. Nezamoondeen
Title: Secretary Title: Secretary