1
RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT dated as of the ____ 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
2
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.
1.1 Issuance of Settlement Shares and Warrants. On 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 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, 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 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
-2-
3
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 herein
contemplated (the "Closing") will take place on March ___, 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 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 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 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
-3-
4
duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock of Warner.
5.3 Authorization of Agreements; Validity. The 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 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.
-4-
5
5.5 Private Sale. Warner has not, either directly or 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 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 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 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. 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:
-5-
6
6.1 Corporate Existence and Qualification. Such 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 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 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.
-6-
7
(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.
7.1 Election of Director to Board of Directors. For 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
-7-
8
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.
7.2.1 Demand Registration. (a) At any time following 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
-8-
9
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 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
-9-
10
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 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,
-10-
11
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;
-11-
12
(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.
-12-
13
(f) The Registering Holders agree that upon notification 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
-13-
14
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
-14-
15
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
-15-
16
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
-16-
17
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 ▇▇▇-▇▇-▇▇ 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
-17-
18
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
-18-
19
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
-19-
20
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. Employers 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.
-20-
21
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):
-21-
22
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 indemnification 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
-22-
23
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
-23-
24
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.
-24-
25
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 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.
-25-
26
13.9 Counterparts. This Agreement may be executed in 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/
-------------------------- --------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer Title: Vice President and
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/
-------------------------- --------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President Title: Secretary
NATIONAL CONSUMER INSURANCE LION INSURANCE COMPANY
COMPANY
By: /s/ By: /s/
-------------------------- --------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Secretary Title: Secretary
-26-
27
LIST OF SCHEDULES AND EXHIBITS
TO
THE RESTRUCTURING AGREEMENT
Schedules:
1 - List of Services Contracts
2 - Description of RPC Lawsuits
3 - Description of Cash Collateral and Letter of Credit
4 - Number of Settlement Shares to be Issued to each Releasee
5 - Percentage Amounts of Cash Collateral to be received
by each Releasee
6 - Shares of Capital Stock of Warner Issued or Issuable
7 - Exceptions to Due Execution and Delivery
8 - List of Conflicts, etc.
9 - Notices, Consents, Approvals Required
10 - Exceptions to Performance of Obligations
11 - List of ALE Accrued Expenses through February 19, 1996 and
Expenses Paid with Balance of Funds
12 - Amounts Payable through the Closing Date under the
Services Contracts
13 - Notice Address for each Customer
Exhibits:
A - Form of Warrant
B - Form of Services Contract Release
C - Form of Stipulation in respect of the RPC Lawsuits
D - Form of Mutual General Release in respect of the RPC Lawsuits
E - Form of CWP Assignment
F - Form of Escrow Agreement
G - Form of Legal Opinion from ▇▇▇▇ & Priest LLP