AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 2002
REGISTRATION NO. 333-87056
AMENDMENT NO. 1
TO
FORM S-1
DELAWARE 6331 13-4181699
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Classification Code Number) Identification No.)
incorporation or organization)
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20 CUSTOM HOUSE STREET
BOSTON, MA 02110
(617) 951-0600
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
WILLIAM J. BEGLEY, JR.
CHIEF FINANCIAL OFFICER AND SECRETARY
SAFETY HOLDINGS, INC.
20 CUSTOM HOUSE STREET
BOSTON, MA 02110
(617) 951-0600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
Robert S. Rachofsky Jeff S. Liebmann
LeBoeuf, Lamb, Greene & MacRae, L.L.P. Jonathan L. Freedman
125 West 55th Street Dewey Ballantine LLP
New York, NY 10019-5389 1301 Avenue of the Americas
New York, NY 10019-6092
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Approximate date of commencement of the proposed sale of the securities to the public: As soon as practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / /
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / /
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1)(2) REGISTRATION FEE(3)
Common Stock, par value $0.01 per share..................... $100,000,000 $ 9,200
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(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended.
(2) Includes shares subject to the underwriters' over-allotment option.
(3) Registration fee has been previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registration Fees........................................... $ 9,200 Transfer Agent's Fees*...................................... ** Printing Costs*............................................. ** Legal Fees*................................................. ** Accounting Fees*............................................ ** NASDAQ Listing Fees*........................................ ** Total..................................................... ** |
* Estimated
** To be filed by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the General Corporation Law of Delaware, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he or she is or was our director, officer, employee or agent, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to our best interests, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Our certificate of incorporation and our bylaws provide for such indemnification.
The General Corporation Law of Delaware and our bylaws provide that we may indemnify any person who was or is a party to or is threatened to be made a party to any threatened, pending or completed action or suit by or in our right to procure a judgment in our favor by reason of the fact that he or she is or was our director, officer, employee or agent, or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to our best interests. However, in such an action by or on our behalf, no indemnification may be made in respect of any claim, issue or matter as to which the person is adjudged liable to us unless and only to the extent that the court determines that, despite the adjudication of liability but in view of all the circumstances, the person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.
Additionally, as permitted under the General Corporation Law of Delaware, our certificate of incorporation and our bylaws provide that: (i) subject to certain limitations, we may pay expenses incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding in advance of the final disposition of such action, suit or proceeding; and (ii) the indemnification and advancement of expenses provided by, or granted pursuant to, our certificate of incorporation and our bylaws shall, unless otherwise provided, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person.
The indemnification rights set forth above are not exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
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We maintain insurance that provides for indemnification of our officers and directors and certain other persons against liabilities and expenses incurred by any of them in certain stated proceedings and under certain stated conditions.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
certificate of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director: (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders;
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) under Section 174 of the
Delaware General Corporation Law (relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock); or (iv) for any
transaction from which the director derived an improper personal benefit. Our
certificate of incorporation contains such a provision.
In the underwriting agreement, the underwriters will agree to indemnify our officers, directors and controlling persons against certain liabilities, including liabilities under the Securities Act of 1933 under certain conditions and with respect to certain limited information.
In connection with the Acquisition, we entered into an agreement with
members of our Management Team to indemnify them for any tax loss they may incur
in connection with the purchase of our common stock at the time that Safety
Group acquired Thomas Black Corporation, due to a determination by the Internal
Revenue Service that the value of such stock was higher than the purchase price
agreed upon by Safety Group and our Management Team. The agreement provides that
in such case we would pay the executives an amount such that, after payment of
taxes on the payment, they would retain an amount equal to (i) the excess value
of the common stock multiplied by a percentage equal to the difference between
the combined U.S. federal, state and local tax rate on ordinary income and the
combined U.S. federal, state and local tax rate on long-term capital gains, plus
(ii) related interest, penalties or additions, and the executive's portion of
applicable payroll taxes, if any. Under the agreement, we would also loan to
members of our Management Team an amount equal to the excess value of the common
stock (as determined by the Internal Revenue Service) multiplied by the
applicable capital gains tax rate, which loan would be secured by the common
stock owned by such executive.
In connection with the Acquisition, the previous owners of Thomas Black Corporation, severally and not jointly, agreed to indemnify us and our affiliates, stockholders, officers, directors, employees, agents, representatives and successors and assigns against any losses sustained by them as a result of (i) any facts or circumstances which constitute a misrepresentation or breach of any representation or warranties made by Thomas Black Corporation as set forth in the Merger Agreement, dated May 31, 2001, by and among Safety Group, Safety Acquisition Inc., Thomas Black Corporation and the holders of Thomas Black Corporation capital stock, or in any certificate, document, or instrument to be delivered by Thomas Black Corporation pursuant to the Merger Agreement or (ii) any nonfulfillment or breach of any covenant of Thomas Black Corporation set forth in the Merger Agreement. Notwithstanding the foregoing, the previous owners of Thomas Black Corporation are only obligated to indemnify such persons for losses that exceed $1 million, and are only obligated to indemnify such persons in respect of losses up to a maximum of $10 million in the aggregate.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
As part of the Acquisition, we made the following sales of unregistered securities:
- Issued and sold 250,000 shares of common stock for an aggregate purchase price of $2.5 million on October 16, 2001 to the following: 24,487.5 shares to David F. Brussard; 9,500 shares to Edward N. Patrick, Jr.; 4,512.5 shares to William J. Begley, Jr.; 6,650 shares to Daniel F. Crimmins; 12,237.5 shares to Daniel D. Loranger; 6,412.5 shares to Robert J. Kerton; 5,700
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shares to David E. Krupa; 22,406.25 shares to Leucadia Investors, Inc.; 11,875.31 shares to John W. Jordan, II Rev. Trust; 11,875.31 shares to David W. Zalaznick; 16,132.5 shares to Jonathan F. Boucher; 11,203.13 shares to A. Richard Caputo, Jr.; 11,203.13 shares to Adam E. Max; 3,585 shares to Douglas J. Zych; 448.12 shares to Brian Higgins; 896.25 shares to Paul Rodzevik; 89,625 shares to JZ Equity Partners plc; and 1,250 shares to Robert D. & Ann Marie Mann, trustees, Mann Trust, 4/16/00. These securities were issued in reliance on the exemption from registration provided by Section 4(2) and Regulation D, Rule 506, under the Securities Act.
- Issued and sold 22,400 shares of Series A 6.0% Cumulative Senior Preferred Stock at a per share price of $1,000 for an aggregate purchase price of $22.4 million on October 15, 2001 to JZ Equity Partners plc. These securities were issued in reliance on the exemption from registration provided by Section 4(2) and Regulation D, Rule 506, under the Securities Act.
- Sold $30 million in 13% senior subordinated notes due October 31, 2011 on October 15, 2001 to JZ Equity Partners plc. These securities were issued in reliance on the exemption from registration provided by Section 4(2) and Regulation D, Rule 506, under the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith:
EXHIBIT
NUMBER DESCRIPTION
----- ------------------------------------------------------------
1 Form of Underwriting Agreement*
2.1 Merger Agreement dated May 31, 2001 by and among Safety
Holdings, Inc., Safety Acquisition, Inc., Thomas Black
Corporation and the stockholders of Thomas Black
Corporation
2.2 First Amendment to the Merger Agreement, dated July 17, 2001
by and among Safety Holdings, Inc., Safety Merger Co.,
Inc. and Thomas Black Corporation
3.1 Form of Amended and Restated Certificate of Incorporation of
Safety Insurance Group, Inc.*
3.2 Form of Amended and Restated Bylaws of Safety Insurance
Group, Inc.*
4 Form of Stock Certificate for the Common Stock*
5 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.*
10.1 Lease Agreement between Thomas Black Corporation and Aman,
Inc. for the lease of office space located on the 1st
through 5th, 11th and 12th floors of 20 Custom House
Street, Boston, Massachusetts, dated June 11, 1987, and as
amended on October 11, 1988, September 14, 1989,
September 19, 1990, February 23, 1994 and December 20,
1996.*
10.2 Stockholders Agreement of Safety Holdings, Inc., dated
October 16, 2001.
10.3 Purchase Agreement between Safety Holdings, Inc. and JZ
Equity Partners plc, dated as of October 15, 2001.
10.4 Subscription Agreement by and among Safety Holdings, Inc.
and the Management Team, dated as of October 16, 2001.
10.5 Subscription Agreement by and among Safety Holdings, Inc.
and John W. Jordan II Revocable Trust, Leucadia Investors,
Inc., David W. Zalaznick, Jonathan F. Boucher, Adam E.
Max, A. Richard Caputo, Jr., Paul Rodzevik, Brain Higgins,
Douglas J. Zych and Robert D. Mann, dated as of
October 16, 2001.
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EXHIBIT
NUMBER DESCRIPTION
----- ------------------------------------------------------------
10.6 Promissory Note between Safety Holdings, Inc. and David F.
Brussard, dated October 16, 2001.
10.7 Promissory Note between Safety Holdings, Inc. and David F.
Brussard, dated October 16, 2001.
10.8 Promissory Note between Safety Holdings, Inc. and Daniel F.
Crimmins, dated October 16, 2001.
10.9 Promissory Note between Safety Holdings, Inc. Robert J.
Kerton, dated October 16, 2001.
10.10 Promissory Note between Safety Holdings, Inc. and Daniel D.
Loranger, dated October 16, 2001.
10.11 Promissory Note between Safety Holdings, Inc. and Daniel D.
Loranger, dated October 16, 2001.
10.12 Promissory Note between Safety Holdings, Inc. and Edward N.
Patrick, Jr., dated October 16, 2001.
10.13 Pledge Agreement between Safety Holdings, Inc. and David F.
Brussard, dated October 16, 2001.
10.14 Pledge Agreement between Safety Holdings, Inc. and David F.
Brussard, dated October 16, 2001.
10.15 Pledge Agreement between Safety Holdings, Inc. and Daniel F.
Crimmins, dated October 16, 2001.
10.16 Pledge Agreement between Safety Holdings, Inc. and Robert J.
Kerton, dated October 16, 2001.
10.17 Pledge Agreement between Safety Holdings, Inc. and Daniel D.
Loranger, dated October 16, 2001.
10.18 Pledge Agreement between Safety Holdings, Inc. and David D.
Loranger, dated October 16, 2001.
10.19 Pledge Agreement between Safety Holdings, Inc. and Edward N.
Patrick, Jr., dated October 16, 2001.
10.20 Tax Indemnity Agreement by and among Safety Holdings, Inc.
and the Management Team, dated October 16, 2001.
10.21 Management Consulting Agreement by and among TJC Management
Corporation and Safety Holdings, Inc., dated October 16,
2001.
10.22 First Amendment to the Management Consulting Agreement by
and among TJC Management Corporation and Safety Group.*
10.23 2001 Restricted Stock Plan
10.24 Executive Incentive Compensation Plan
10.25 2002 Management Omnibus Incentive Plan*
10.26 Employment Agreement by and between Safety Insurance
Company, Inc. and David F. Brussard, dated October 16,
2001.
10.27 Employment Agreement by and between Safety Insurance
Company, Inc. and Edward N. Patrick, Jr., dated October
16, 2001.
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EXHIBIT
NUMBER DESCRIPTION
----- ------------------------------------------------------------
10.28 Employment Agreement by and between Safety Insurance
Company, Inc. and Daniel F. Crimmins, dated October 16,
2001.
10.29 Employment Agreement by and between Safety Insurance
Company, Inc. and Daniel D. Loranger, dated October 16,
2001.
10.30 Employment Agreement by and between Safety Insurance
Company, Inc. and Robert J. Kerton, dated October 16,
2001.
10.31 Stock Appreciation Rights Agreement by and between Safety
Holdings, Inc. and David F. Brussard.
10.32 Stock Appreciation Rights Agreement by and between Safety
Holdings, Inc. and Daniel F. Crimmins.
10.33 Stock Appreciation Rights Agreement by and between Safety
Holdings, Inc. and Daniel D. Loranger.
10.34 Stock Appreciation Rights Agreement by and between Safety
Holdings, Inc. and Robert J. Kerton.
10.35 Stock Appreciation Rights Agreement by and between Safety
Holdings, Inc. and Edward N. Patrick, Jr.
10.36 Senior Subordinated Note issued to Fairholme Partners, L.P.
10.37 Senior Subordinated Note issued to TCW/Crescent Mezzanine
Trust III.
10.38 Senior Subordinated Note issued to TCW/Crescent Mezzanine
Partners III, L.P.
10.39 Senior Subordinated Note issued to TCW/Crescent Mezzanine
Partners III (Netherlands), L.P.
10.40 Senior Subordinated Note issued to J/Z CBO (Delaware), LLC.
10.41 Senior Subordinated Note issued to JZ Equity Partners plc.
21 Subsidiaries of Safety Insurance Group, Inc.
23.1 Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. (contained
in its opinion filed as Exhibit 5 hereto)*
23.2 Consent of PricewaterhouseCoopers LLP**
24 Power of Attorney**
99.1 Consent of Bruce R. Berkowitz**
99.2 Consent of David K. McKown**
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* To be filed by amendment
** Previously filed
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in
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reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of the its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this amendment no. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Boston, Commonwealth of Massachusetts, on May 10, 2002.
SAFETY HOLDINGS, INC.
By: /s/ WILLIAM J. BEGLEY, JR.
----------------------------------------
Name: William J. Begley, Jr.
Title: Chief Financial Officer,
Vice President and
Secretary
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Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
*
------------------------------------------- Chief Executive Officer, May 10, 2002
David F. Brussard President and Director
/s/ WILLIAM J. BEGLEY, JR.
------------------------------------------- Chief Financial Officer, Vice May 10, 2002
William J. Begley, Jr. President and Secretary
*
------------------------------------------- Director May 10, 2002
A. Richard Caputo, Jr.
*
------------------------------------------- Director May 10, 2002
John W. Jordan II
*
------------------------------------------- Director May 10, 2002
David W. Zalaznick
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*By: /s/ WILLIAM J. BEGLEY, JR.
--------------------------------------
William J. Begley, Jr. May 10, 2002
AS ATTORNEY-IN-FACT
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[EXECUTION COPY]
EXHIBIT 2.1
MERGER AGREEMENT
BY AND AMONG
SAFETY HOLDINGS, INC.,
SAFETY ACQUISITION, INC.,
THOMAS BLACK CORPORATION
AND
THE SHAREHOLDERS OF
THOMAS BLACK CORPORATION
DATED AS OF MAY 31, 2001
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
1.01 Definitions.........................................................1
1.02 Interpretation......................................................8
1.03 Accounting Conventions..............................................9
1.04 Business Days.......................................................9
ARTICLE II
THE MERGER
2.01 The Merger..........................................................9
2.02 Time and Place of Closing..........................................11
2.03 Directors..........................................................12
2.04 Officers...........................................................12
2.05 Certificate of Incorporation and By-Laws...........................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES
RELATING TO THE COMPANY AND SUBSIDIARIES
3.01 Corporate Organization; Etc........................................12
3.02 Capitalization.....................................................13
3.03 Authority Relative to this Agreement...............................13
3.04 Consents and Approvals; No Violations..............................13
3.06 Financial Statements...............................................14
3.07 Absence of Certain Changes.........................................15
3.08 Compliance with Law................................................15
3.09 Contracts and Commitments..........................................15
3.10 No Undisclosed Liabilities.........................................16
3.11 No Default.........................................................16
3.12 Litigation........................................................16
3.13 Taxes..............................................................16
3.14 Brokers and Finders................................................17
3.15 Title to Properties................................................17
3.16 Intellectual Property..............................................18
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TABLE OF CONTENTS
(continued)
PAGE
3.17 Insurance..........................................................19
3.18 Environmental Matters..............................................19
3.19 Employee Benefit Plans.............................................20
3.20 Insurance Business.................................................21
3.21 Real Property......................................................24
3.22 Permits............................................................24
3.23 Reinsurance........................................................24
3.24 No Other Agreements to Sell the Business...........................25
3.25 Accuracy of Information............................................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND ACQUISITION
4.01 Organization.......................................................26
4.02 Authority Relative to this Agreement...............................26
4.03 Consents and Approvals; No Violation...............................27
4.04 Litigation.........................................................27
4.05 Brokers and Finders................................................27
4.06 Purchaser's Acknowledgments........................................28
ARTICLE V
COVENANTS OF THE PARTIES
5.01 Conduct of Business................................................28
5.02 Access to Information..............................................30
5.03 Further Assurances.................................................30
5.04 Filings............................................................31
5.05 Public Announcements...............................................31
5.06 Fees and Expenses..................................................31
5.07 Disclosure Supplements............................................31
5.08 Employee Benefit Matters...........................................32
5.09 Exclusivity........................................................33
5.10 Financing Commitments..............................................34
5.11 Appointment of Shareholder Representative..........................34
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TABLE OF CONTENTS
(continued)
PAGE
5.12 Termination of Certain Agreements..................................35
5.13 Meeting of Shareholders............................................35
5.14 Shareholders/Voting Arrangement....................................35
5.15 Proxy Statement....................................................35
5.16 Assignment.........................................................36
ARTICLE VI
CLOSING CONDITIONS
6.01 Conditions to the Obligations of the Company and the Shareholders
to Effect the Transactions Contemplated Hereby.....................36
6.02 Conditions to the Obligations of the Purchaser and Acquisition
to Effect the Transactions Contemplated Hereby.....................37
ARTICLE VII
TERMINATION AND ABANDONMENT
7.01 Termination........................................................39
7.02 Procedure and Effect of Termination................................39
ARTICLE VIII
INDEMNIFICATION
8.01 Survival, Representations and Warranties...........................40
8.02 Indemnification Obligation of the Shareholders.....................40
8.03 Indemnification Obligation of Purchaser............................41
8.04 Indemnification Procedures.........................................41
8.05 Payment............................................................42
8.06 Adjustment to Indemnities..........................................42
8.07 Payment of Taxes ..................................................43
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 Amendment and Modification.........................................45
9.02 Waiver of Compliance; Consents.....................................45
9.03 Notices............................................................45
9.04 Assignment.........................................................46
9.05 Jurisdiction; Forum................................................46
9.06 Governing Law......................................................47
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TABLE OF CONTENTS
(continued)
PAGE
9.07 Counterparts.......................................................47
9.08 Interpretation.....................................................47
9.09 Entire Agreement...................................................47
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MERGER AGREEMENT
THIS MERGER AGREEMENT is made as of this 31st day of May, 2001, by and among Safety Holdings, Inc., a Delaware corporation (the "PURCHASER"), Safety Acquisition, Inc., a Delaware corporation and first-tier, wholly-owned subsidiary of the Purchaser ("ACQUISITION"), Thomas Black Corporation, a Massachusetts corporation (the "COMPANY"), and the holders of Company Capital Stock (the "SHAREHOLDERS").
WHEREAS, upon the terms and subject to the conditions of this Agreement and in the related Certificate of Merger attached as EXHIBIT A hereto (the "CERTIFICATE OF MERGER"), and in accordance with the Massachusetts Business Corporation Law ("MBCL") and the Delaware General Corporation Law ("DGCL"), Acquisition will be merged with and into the Company (the "MERGER") with the Company being the surviving corporation (the "SURVIVING CORPORATION");
WHEREAS, the Surviving Corporation will be a corporation organized under the DGCL pursuant to Section 78 of the MBCL, and Section 252 of the DGCL; and
WHEREAS, the parties to this Agreement desire for Acquisition and the Company to engage in, and the boards of directors of the Purchaser, Acquisition, and the Company have approved and adopted this Agreement and have approved, the Merger and other transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth in this Agreement and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. The terms defined in this SECTION 1.01, whenever used herein, shall have the following meanings for all purposes of this Agreement.
"Accounting Referee" means KPMG LLP.
"Acquisition" shall have the meaning set forth in the preamble hereof.
"Acquisition Proposal" shall have the meaning set forth in SECTION 5.09 hereof.
"Affiliate" means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlled" and "controlling" have meanings correlative thereto.
"Affiliate Contracts" shall mean any Contract between the Company or any of its Subsidiaries, on the one hand, and any Affiliate or Associate of the Company or any of its Subsidiaries, on the other hand. For clarity, the term "Affiliate Contracts" shall not include Contracts solely between the Company and any Subsidiaries or solely between or among Subsidiaries.
"Agency Agreements" shall have the meaning set forth in SECTION 3.20(b) hereof.
"Agreement" means this Merger Agreement, including all exhibits and schedules hereto, as it and they may be amended from time to time in accordance herewith.
"Associate" shall have the meaning given to such term in Rule 12b-2 under the Securities Exchange Act of 1934, as in effect as of the date of this Agreement.
"Audited Financial Statements" shall have the meaning set forth in
SECTION 3.06 hereof.
"Breach" shall have the meaning set forth in SECTION 5.07 hereof.
"Business Day" means any day on which banking institutions are not required or authorized to close in Boston, Massachusetts or New York, New York.
"Certificate of Merger" shall have the meaning set forth in the recitals hereof.
"Closing" shall have the meaning set forth in SECTION 2.02 hereof.
"Closing Audit" shall mean the statement of the Post-Closing Adjustment Consideration of the Company.
"Closing Date" shall have the meaning set forth in SECTION 2.02 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the preamble hereof.
"Company Actuarial Analyses" shall have the meaning set forth in SECTION 3.20(i) hereof.
"Company Capital Stock" shall have the meaning set forth in SECTION 2.01(c) hereof.
"Company Expenses" shall have the meaning set forth in Section 5.06 hereof.
"Company Group" shall have the meaning set forth in SECTION 5.09 hereof.
"Company Identified Other IP" shall have the meaning set forth in
SECTION 3.16(a) hereof.
"Company Indemnified Parties" shall have the meaning set forth in
SECTION 5.08(b) hereof.
"Company IP" shall have the meaning set forth in SECTION 3.16(a) hereof.
"Company Marks" shall have the meaning set forth in SECTION 3.16(a) hereof.
"Company Patents" shall have the meaning set forth in SECTION 3.16(a) hereof.
"Company Registered Copyrights" shall have the meaning set forth in SECTION 3.16(a) hereof.
"Company's Knowledge" means the actual knowledge as of the date hereof of Richard B. Simches, David F. Brussard and William J. Begley, Jr., Chairman, President, and Chief Financial Officer of the Company, respectively, without any investigation or inquiry.
"Consolidated After Tax Net Income" shall mean, for any period, the net earnings (or Loss) after Taxes of the Company and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; PROVIDED, HOWEVER that Consolidated After Tax Net Income will not include any deduction or addition for a gain resulting from the revaluation of the ESOP, contributions by the Company to the XSOP, any breakage or similar fee incurred by the ESOP in connection with a buyout of the swap related to the ESOP Note or the fees and expenses paid or payable by the Company to Tucker Anthony Incorporated in connection with this Agreement and the transactions contemplated hereby.
"Contract" shall mean any contract, agreement, indenture, note, bond, loan, instrument, lease, conditional sale contract, mortgage, license, franchise, insurance policy, commitment or other arrangement or agreement, whether written or oral.
"Debt" means any amount owed (including accrued and unpaid interest
thereon) by the Company or its Subsidiaries in respect of (i) borrowed money or
(ii) capitalized lease obligations.
"DGCL" shall have the meaning set forth in the recitals hereof.
"Disclosure Date" shall have the meaning set forth in SECTION 5.07 hereof.
"Disclosure Schedule" shall mean the Disclosure Schedule delivered by the Company to the Purchaser concurrently with and as an integral part of this Agreement.
"Dissenting Shares" shall have the meaning set forth in SECTION 2.01(f) hereof.
"Division" shall have the meaning set forth in SECTION 3.05 hereof.
"Effective Time" shall have the meaning set forth in SECTION 2.01(b) hereof.
"Encumbrance" shall mean any claim, lien, pledge, option, charge, easement, deed of trust, security interest, mortgage, right-of-way, encroachment, encumbrance, restriction on transfer (such as a right of first refusal or other similar rights but not including any restrictions on transfer arising under federal or state securities laws), defect of title or other similar right of any third party whether voluntarily incurred or arising by operation of law, and includes any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.
"Environmental Law" means any Law and any orders, consent orders, judgments, notices, Permits or demand letters issued, promulgated or entered pursuant thereto, concerning pollution or the protection of human health, safety and the environment, including, but not limited to, the federal Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, and the Occupational Safety and Health Act, each as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any similar or successor federal statute, and the rules, regulations and interpretations thereunder, all as the same shall be in effect at the time.
"ERISA Affiliate" means, with respect to any Person, any corporation, trade or business which, together with such Person, is a member of a controlled group of corporations or a group of trades or businesses under common control within the meaning of Section 414 of the Code.
"ESOP" means the Safety Insurance Employee Stock Ownership Plan (created by the Agreement dated April 12, 1995, as amended or supplemented to date) entered into between the Plan Sponsor and Eastern Bank and Trust Company, as Initial Trustee.
"ESOP Holdback Amount" shall have the meaning set forth in SECTION 2.01(h) hereof.
"ESOP Note" means the Secured Promissory Note, dated April 12, 1995, in the original principal amount of $36,000,000, given by the ESOP in favor of the Company.
"Financial Statements" shall have the meaning set forth in SECTION 3.06 hereof.
"Financing Commitments" shall mean the commitments emanating from or contained in the financing letters or financing term sheets entered into for the purpose of obtaining debt and equity financing in respect of the Merger and the other transactions contemplated in this Agreement.
"GAAP" shall have the meaning set forth in SECTION 3.06 hereof.
"Governmental Entity" shall mean any federal, state, local or foreign governmental, regulatory or administrative body, agency, department, board, commission or governmental entity (including the Division), any court or judicial governmental entity, any public, private or industry regulatory governmental entity, whether federal, state, local, foreign or otherwise, or any Person lawfully empowered by any of the foregoing to enforce or seek compliance with any applicable Law.
"Hazardous Substance" means all pollutants, contaminants, chemicals, wastes, and any other carcinogenic, ignitable, corrosive, reactive, toxic or otherwise hazardous substances or materials (whether solids, liquids or gases) subject to regulation, control or remediation under applicable Environmental Laws. By way of example only, the term Hazardous Substances includes petroleum, urea formaldehyde, flammable, explosive and radioactive materials, PCBs, pesticides, herbicides, asbestos, sludge, slag, acids, metals, solvents, medical wastes, and waste waters.
"HSR Act" means Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"HSR Filings" means filings required under the HSR Act.
"Indemnification Agreement" shall have the meaning set forth in
SECTION 5.08(b) hereof.
"Indemnified Party" shall have the meaning set forth in SECTION 8.04(a) hereof.
"Indemnifying Party" shall have the meaning set forth in SECTION 8.04(a) hereof.
"Insurance Companies" shall have the meaning set forth in SECTION 3.20(c) hereof.
"Insurance Division Documents" shall have the meaning set forth in SECTION 3.05 hereof.
"Insurance Policies" shall have the meaning set forth in SECTION 3.17 hereof.
"Insurance Statements" shall have the meaning set forth in SECTION 3.20(d) hereof.
"IRS" shall mean the Internal Revenue Service.
"Law" shall mean any federal, state, local or foreign law, statute, constitution, ordinance, decree, requirement, code, order, judgment, settlement agreement, injunction, restriction, rule or regulation, including, but not limited to, the terms of any license or Permit issued by any Governmental Entity.
"Leased Property" shall have the meaning set forth in SECTION 3.21(b) hereof.
"Loss" or "Losses" shall mean any and all actual losses (including actual losses in value), liabilities, costs, damages, penalties and expenses (including reasonable attorneys' fees and expenses and litigation costs); PROVIDED, HOWEVER, that punitive damages shall not be included in any calculation of "Losses" except to the extent awarded in a third party claim.
"Material Adverse Effect" shall mean any change, circumstance or effect that, individually or in the aggregate, has, or would reasonably be expected to have, a material adverse effect on the business, assets, operations, properties, prospects or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or which would reasonably be expected to materially impair or materially delay the ability of the Company to consummate the transactions contemplated by this Agreement.
"Material Contract" shall have the meaning set forth in SECTION 3.09(a) hereof.
"MBCL" shall have the meaning set forth in the recitals hereof.
"Merger" shall have the meaning set forth in the recitals hereof.
"Merger Consideration" shall mean the sum of (i) the amount of One Hundred Twelve Million Eight Hundred Five Thousand Sixty Three Dollars ($112,805,063) reduced, dollar for dollar, by all Transaction Costs paid or payable as of the Effective Time and (ii) the Post-Closing Adjustment Consideration.
"New Facts" shall have the meaning as set forth in SECTION 5.07 hereof.
"Ordinary Course of Business" shall mean the ordinary course of business consistent with past custom and practice including quantity and frequency.
"Outside Financing Commitment Date" shall have the meaning set forth in
SECTION 5.10(a) hereof.
"Owned Property" shall have the meaning set forth in SECTION 3.21(a) hereof.
"Permits" shall mean all licenses, permits, franchises, approvals, authorizations, consents or orders of, or filings with, any Governmental Entity.
"Person" shall mean an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other organization, whether or not a legal entity, or any Governmental Entity.
"Plan" shall have the meaning set forth in SECTION 3.19(a) hereof.
"Plan Sponsor" shall mean Thomas Black Insurance Agency, Inc., a Massachusetts corporation.
"Post-Closing Adjustment Consideration" shall mean an amount equal to the lesser of: (i) an annual amount of $12.0 million pro rated for the period from January 1, 2001 through the Closing Date; or (ii) 55.0% of the Consolidated After Tax Net Income of the Company for the period from January 1, 2001 through the Closing Date; PROVIDED, THAT, either such amount shall be reduced by (w) the amount of all releases or reversals of Reserves during this period, (x) the amount of dividends or other distributions made to the holders of Shares during this period, (y) all payments by the Company to Richard B. Simches and his Affiliates and Associates from January 1, 2001 through the Closing Date in excess of an annual rate of $3.0 million in the aggregate, pro- rated for the period from January 1, 2001 through the Closing Date and (z) any contribution to or benefits provided by the Company to the XSOP in excess of $1,130,483 for the period from January 1, 2001 through the Closing Date; PROVIDED, FURTHER, THAT the Company notifies the Purchaser prior to such releases, reversals and excess payments and the Purchaser consents in advance to such releases, reversals and excess payments, which consent will not be (1) unreasonably withheld, delayed or conditioned or (2) required for any such releases and/or reserves required by GAAP or Statutory Accounting Practice. In addition, the Post-Closing Adjustment Consideration shall be further increased or decreased to the extent that the capitalized lease obligations of the Company and its Subsidiaries as of the Effective Time are less or more than $64,454, as applicable.
"Potential Sale" shall have the meaning set forth in SECTION 5.09 hereof.
"Pro Rata Indemnification Share" shall have the meaning set forth in
SECTION 8.02(b) hereof.
"Proceeding" shall have the meaning set forth in SECTION 8.04(a) hereof.
"Profit Sharing-Retirement Plan" means the Thomas Black Insurance Agency, Inc. and Affiliates Profit Sharing-Retirement Plan effective November 1, 1972, as most recently amended by a First Amendment dated December 20, 1995.
"Proprietary Rights" means any or all of the following, and all rights in, arising out of or associated therewith: (i) patents, patent applications, patent disclosure and inventions (whether patentable or unpatentable and whether or not reduced to practice) including all reissues, divisions, renewals, extensions, provisionals, confirmations and confirmations-in-part thereof, (ii) trademarks, service marks, trade dress, trade names, logos, slogans, corporate names and Internet domain names, and registrations and applications for registration thereof, together with all of the goodwill associated therewith, (iii) copyrights and copyrightable works, and registrations and applications for registration thereof, (iv) computer software in source and object code and all enhancements, modifications and derivative works thereto, data bases and documentation, and (v) trade secrets and other confidential information (including ideas, formulae and compositions), know-how, processes, techniques, research and development information, drawings, specifications, computer models, pricing and cost information, designs, plans, proposals, data, financial, business and marketing plans and customer and supplier lists and information.
"Purchaser" shall have the meaning set forth in the preamble hereof.
"Purchaser Indemnitees" shall have the meaning set forth in SECTION 8.02(a) hereof.
"Purchaser Material Adverse Effect" shall have the meaning set forth in
SECTION 4.01(a) hereof.
"Real Property" shall have the meaning set forth in SECTION 3.21(b) hereof.
"Reserves" shall have the meaning set forth in SECTION 3.20(h) hereof.
"Revised Schedule" shall have the meaning set forth in SECTION 5.07 hereof.
"Seller Indemnitee" shall have the meaning set forth in SECTION 8.03 hereof.
"Share(s)" shall have the meaning set forth in SECTION 2.01(c) hereof.
"Shareholder(s)" shall have the meaning set forth in the preamble hereof.
"Shareholder Representative" shall have the meaning set forth in
SECTION 5.11 hereof.
"Statutory Accounting Practices" shall mean statutory accounting practices consistently applied throughout the periods specified and the immediately prior period in accordance with the National Association of Insurance Commissioners Annual Statement Instructions and Accounting Practices and Procedures Manual, except to the extent that applicable state law may differ or that state rules or regulations require differences in reporting not related to accounting practices and procedures in which case such state requirements shall apply.
"Statutory Financial Statements" shall have the meaning set forth in
SECTION 3.06 hereof.
"Subsidiaries" shall collectively mean Safety Insurance Company, Inc., Safety Indemnity Insurance Company, RBS, Inc. and Thomas Black Insurance Agency, Inc., all Massachusetts corporations, and any other Person with respect to which the Company (or a Subsidiary thereof) owns a majority of the common stock of such Person or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors or similar governing body of such Person.
"Surviving Corporation" shall have the meaning set forth in the recitals hereof.
"Tax Benefit" shall mean (i) an actual reduction in Taxes payable, (ii) a refund of Taxes previously paid, or (iii) the present value of any future refund, future credit, reduction in future Taxes payable as a result of an increased net operating loss or other future reduction in an otherwise required Tax payment, including in each such case any interest paid (or in the case of a future refund, payable) thereon. The present value of the amounts described in clause (iii) of the preceding sentence shall be computed (i) using the Tax rate applicable to the highest level of income with respect to such Tax under the applicable Tax law on the date prescribed for payment of the indemnity payment (taking into account, if applicable, the character of the income which is reduced by the loss or similar item) and assuming sufficient income in all applicable Tax periods to use such benefit, and (ii) using as a discount rate the interest rate on such date imposed on corporate deficiencies paid within thirty (30) days of a notice of proposed deficiency under the Code or other applicable Tax law..
"Tax Return" means any return, declaration, report, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
"Taxes" shall mean all taxes, of any kind whatsoever, including (without limitation) income, gross receipts, net proceeds, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, franchise, excise, value added, stamp, user, transfer, fuel, excess profits, occupational, interest equalization, windfall profits, and employees' income withholding, unemployment and Social Security taxes, which are imposed by the United States, or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions to tax related thereto.
"Transaction Costs" means (i) all expenses paid or incurred and to be paid and incurred by the Company or its Subsidiaries in conjunction with the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated hereby, including, but not limited to, attorneys' fees and expenses and accounting fees and expenses and (ii) charges, expenses, fees, penalties, duties, breakage costs and other obligations of the Company or its Subsidiaries that are incurred in connection with the repayment or refinancing of the existing Debt of the Company or its Subsidiaries; PROVIDED, HOWEVER, that up to $1,250,000 of the fees and expenses of Tucker Anthony Incorporated shall be (x) excluded from the term Transaction Costs and (y) borne by the Company.
"Transaction Documents" shall mean, collectively, this Agreement and all agreements, instruments, certificates, and other documents executed or delivered in accordance with the terms of this Agreement or any other Transaction Document.
"XSOP" means the Safety Insurance Supplemental Executive Stock Ownership Plan dated June 30, 1995.
1.02 INTERPRETATION. Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, "herein," "hereto," "hereof" and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (ii) the word "including" means "including, but not limited to"; (iii) masculine gender shall also include the feminine and neutral genders, and vice versa; (iv) words importing the singular shall also include the plural, and vice versa, and (v) references to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.
1.03 ACCOUNTING CONVENTIONS. Each accounting term used herein, including within the defined terms herein, shall have the meaning that is applied thereto in accordance with GAAP, consistently applied, and shall be consistent in all material respects with the books and records of the Company and its Subsidiaries.
1.04 BUSINESS DAYS. Whenever the last day for the exercise of any privilege or the discharge of any duty hereunder shall fall upon any day which is not a Business Day, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding Business Day.
ARTICLE II
THE MERGER
2.01 THE MERGER.
(a) Upon the performance of the terms, covenants and obligations and subject to the fulfillment of all conditions to the obligations of the parties contained herein (other than such covenants, obligations and conditions as shall have been waived in accordance with the terms hereof), and in accordance with the relevant provisions of the MBCL and DGCL, at the Effective Time, Acquisition shall be merged with and into the Company in accordance with the Certificate of Merger, the separate existence of Acquisition shall cease and the Company shall be the Surviving Corporation and shall continue its corporate existence under the laws of the State of Delaware. The Merger shall have the effects set forth in Section 78 of the MBCL and Section 252 of the DGCL.
(b) On the Closing Date, Acquisition and the Company shall duly execute and file the Certificate of Merger with the Secretaries of State of the Commonwealth of Massachusetts and the State of Delaware in accordance with the provisions of Section 78 of the MBCL and Section 252 of the DGCL, respectively. The Merger shall become effective at such time (the "EFFECTIVE TIME") as the Certificate of Merger is filed with the Secretaries of State of the Commonwealth of Massachusetts and the State of Delaware, respectively.
(c) At the Effective Time, by virtue of the Merger and without any action on the part of the holders of shares of capital stock of the Company ("COMPANY CAPITAL STOCK"), each
issued and outstanding share (each a "SHARE" and collectively, the "SHARES," which terms, for purposes of this Agreement, shall include any and all fractional shares) of Company Capital Stock immediately prior to the Effective Time (other than treasury shares and Dissenting Shares, which shall be disposed of in the manner set forth in the Certificate of Merger and in SECTION 2.01(f) hereof), shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of any issued and outstanding certificate or certificates representing such Shares of Company Capital Stock shall cease to have any rights with respect thereto, except the right to receive a cash payment from the Company equal to (i) that portion of the Merger Consideration which will be allocable to such Shares as set forth on SCHEDULE 2.01 annexed hereto, upon the surrender of the certificate(s) representing such Shares and the delivery of a letter of transmittal to the Company stating that such holder represents and warrants that such holder owns such Shares free and clear of any Encumbrances, plus (ii) subject to adequate delivery and review of the Closing Audit and the procedures set forth in SECTION 2.01(d) below, the portion of the Post-Closing Adjustment Consideration which would be allocable to such Shares.
(d) The Shareholder Representative shall cause the Closing Audit to be determined and delivered to the Purchaser as soon as practicable after the Closing Date but, in any event, no later than forty-five (45) days after the Closing Date. The Company will allow the Shareholder Representative to access its books and records for purposes of preparing the Closing Audit. The Closing Audit shall be prepared in good faith by or on behalf of the Shareholder Representative and, when delivered to the Purchaser, shall be accompanied by work papers showing, in reasonable detail, the calculation of the Post-Closing Adjustment Consideration. The Purchaser shall have forty-five (45) days to consider the Closing Audit after the delivery thereof. In the event the Purchaser disputes the calculation of the Post-Closing Adjustment Consideration, the Purchaser shall send a notification of such dispute (which shall be prepared in writing and set forth the Purchaser's computations in reasonable detail), to the Shareholder Representative. In the event such forty-five (45) day period lapses without any written notice of Purchaser having been sent to the Shareholder Representative, then the Purchaser shall be deemed to have finally accepted such determination by the Shareholder Representative. The Shareholder Representative shall have ten (10) days following its receipt of the Purchaser's notification to consider and object to the Purchaser's determination of the Post-Closing Adjustment Consideration. In the event that the Shareholder Representative objects to such determination by the Purchaser, the Shareholder Representative and the Purchaser shall use their reasonable efforts to promptly, and, in any event within seven (7) days, resolve any differences they may have with respect to such determination of the Post-Closing Adjustment Consideration. In the event that such ten (10) day period lapses without any written notice of the Shareholder Representative having been sent to the Purchaser, then the Shareholder Representative shall be deemed to have finally accepted such determination of the Purchaser. In the event that the Purchaser and the Shareholder Representative are not able to agree upon the Post-Closing Adjustment Consideration during such seven (7) day period, the calculation of such amounts (but only amounts in dispute between the Shareholder Representative and Purchaser) will be referred for final binding resolution to an Accounting Referee. The Accounting Referee shall be directed to issue its written determination of such amounts within thirty (30) days after such submission. The fees and expenses of the Accounting Referee shall be allocated between the Shareholders and the Purchaser in the same proportion that the aggregate amount of disputed items so submitted that is unsuccessfully disputed by each such party (as finally determined by such
independent accounting) bears to the total amount of such remaining disputed items so submitted. The Purchaser shall cause the Company to pay the Shareholders the Post-Closing Adjustment Consideration as promptly as practicable after the final determination thereof but, in any event, within three (3) Business Days of the final determination. All amounts not paid when due under this SECTION 2.01(d) will accrue interest, payable on demand, at the rate of eighteen percent (18%) per annum from the date due until paid in full and Purchaser will pay the Shareholder Representative's reasonable and documented out-of-pocket costs and expenses (including without limitation, reasonable attorneys' fees and expenses) incurred in collecting the Post-Closing Adjustment Consideration.
(e) In the event any certificate representing Company Capital Stock shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed and the undertaking of corresponding indemnity in form and substance reasonably satisfactory to the Purchaser, such Person shall receive in the Merger such portion of the Merger Consideration as would otherwise have been deliverable to such Person in respect of the lost, stolen or destroyed certificate.
(f) Notwithstanding anything in this Agreement to the contrary, Shares
which are issued and outstanding immediately prior to the Effective Time and
which are held by stockholders who were entitled to vote in connection with
approval of the Merger, and who did not vote in favor of the Merger, and who
comply with all of the relevant provisions of Section 45 of the MBCL
("DISSENTING SHARES"), shall not be converted into or exchangeable for the right
to receive any allocable portion of the Merger Consideration under
SECTION 2.01(c) above (but instead shall be converted into the right to receive
payment from the Company with respect to such Dissenting Shares under the MBCL),
unless and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their rights to appraisal under the MBCL. If any
such holder shall have failed to perfect or shall have effectively withdrawn or
lost such right, such holder's Shares shall be treated as having been converted
as of the Effective Time of the Merger into the right to receive the allocable
portion of the Merger Consideration in accordance with SECTION 2.01(c) above.
The Company shall give prompt notice to the Purchaser of any demands received by
the Company for appraisal of Shares of Company Capital Stock, and the Purchaser
shall have the right to participate in all negotiations and proceedings with
respect to such demands.
(g) As of the Effective Time of the Merger, each holder of an outstanding certificate or certificates which prior thereto represented Shares of Company Capital Stock shall, upon surrender to the Company of such certificate or certificates and acceptance thereof by the Company, be entitled to and shall receive prompt payment of the amount of cash into which the number of Shares of Company Capital Stock previously represented by such certificate or certificates surrendered shall have been converted pursuant to this Agreement. After the Effective Time there shall be no further transfer on the records of the Company or its transfer agent of certificates representing Shares which have been converted pursuant to this Agreement into the right to receive cash, and if such certificates are presented to the Company for transfer, they shall be cancelled against delivery of cash.
(h) To assure sufficient funds for the payment of the indemnification obligations of the ESOP provided for in ARTICLE VIII, the ESOP shall not distribute and shall retain an
amount equal to 10% of its share of the Merger Consideration (the "ESOP HOLDBACK Amount") to the individual participants in the ESOP until the date that is 540 days after the Closing Date. The right of any individual participant to receive distributions of the ESOP Holdback Amount shall be subject to the indemnification obligations of the ESOP set forth in ARTICLE VIII hereof.
2.02 TIME AND PLACE OF CLOSING. Consummation of the Merger and the other transactions contemplated by this Agreement (the "CLOSING") will take place at the offices of Hutchins, Wheeler & Dittmar, A Professional Corporation, 101 Federal Street, Boston, MA 02110, at 10:00 a.m. on the second Business Day following the satisfaction or waiver of the closing conditions contemplated hereby, or at such other place or time as the parties may agree. The date and time at which the Closing actually occurs is hereinafter referred to as the "CLOSING DATE."
2.03 DIRECTORS. The directors of Acquisition at the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and by-laws of the Surviving Corporation until such director's successor is duly elected or appointed and qualified.
2.04 OFFICERS. The officers of Acquisition at the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and by-laws of the Surviving Corporation until such officer's successor is duly elected or appointed and qualified.
2.05 CERTIFICATE OF INCORPORATION AND BY-LAWS. The certificate of incorporation of the Surviving Corporation shall be in the form attached to the Certificate of Merger until amended in accordance with applicable law. The by-laws of the Surviving Corporation shall be amended and restated at the Effective Time to read the same as the by-laws of Acquisition until amended in accordance with applicable Law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
RELATING TO THE COMPANY AND SUBSIDIARIES
The Company represents and warrants to the Purchaser and Acquisition that the statements contained in this ARTICLE III are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date hereof throughout this ARTICLE III):
3.01 CORPORATE ORGANIZATION; ETC. The Company and each of the Subsidiaries is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to conduct its business as it is now being conducted and to own, lease and operate its properties and assets except where the failure to be so organized, existing and in good standing or to have such power or authority is not, in the aggregate, reasonably likely to be material to the Company and the Subsidiaries, taken as a whole. Neither the Company nor any of the Subsidiaries is qualified or licensed to do business as a foreign corporation in any jurisdiction except for its jurisdiction of
incorporation, and such qualification is not required. True and complete copies of the certificate of incorporation and by-laws of the Company and each of the Subsidiaries, in each case as presently in effect, have previously been delivered to the Purchaser. Section 3.01 of the Disclosure Schedule lists the directors and officers of the Company and each of its Subsidiaries as of the date hereof.
3.02 CAPITALIZATION. The capitalization of the Company and each of the Subsidiaries is set forth on Section 3.02 of the Disclosure Schedule. Section 3.02 of the Disclosure Schedule lists the name and address of each lawful owner of all Shares of Company Capital Stock and each lawful owner of all shares of the capital stock of each Subsidiary and the number of shares owned by each such Person. Except as disclosed in Section 3.02 of the Disclosure Schedule, there are no outstanding shares of capital stock or other equity interests of the Company or any of the Subsidiaries, and there is no subscription, option, warrant, call, right, agreement or other commitment relating to the issuance, sale, delivery or transfer by the Company or any of the Subsidiaries of any capital stock or other equity interests or security convertible into or exchangeable for any capital stock or other equity interests of the Company or any of the Subsidiaries, nor are there outstanding or authorized any stock appreciation rights, phantom stock or similar rights or instruments with respect to the Company Capital Stock or the capital stock of the Subsidiaries. All of the issued and outstanding shares of Company Capital Stock are duly authorized, fully paid and non-assessable and are, to the Company's Knowledge, held free and clear of any preemptive rights or Encumbrances. All of the issued and outstanding shares of capital stock of each of the Subsidiaries are duly authorized, validly issued, fully paid and non-assessable and are held free and clear of any preemptive rights or Encumbrances.
3.03 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all requisite
power and authority (including corporate authority and power) to execute and
deliver this Agreement and the other Transaction Documents to which it is a
party and to consummate the transactions provided for herein. The execution and
delivery of this Agreement and the other Transaction Documents to which it is a
party and the consummation of the transactions contemplated hereby have been
duly and validly authorized by the Board of Directors of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the other Transaction Documents to which it is a
party or to consummate the transactions contemplated hereby except for the
consent and approval of the stockholders of the Company as set forth in
SECTION 5.13. Subject to obtaining such stockholder consent and approval, this
Agreement has been duly and validly executed and delivered by the Company, and,
assuming this Agreement has been duly authorized, executed and delivered by the
Purchaser, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that (a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other similar Laws
now or hereafter in effect relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
3.04 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth in Section 3.04 of the Disclosure Schedule, neither the execution and delivery of this Agreement by the Company or the other Transaction Documents to which it is a party, nor the consummation of the transactions
contemplated hereby by the Company, will (i) violate any Law, ruling or other restriction of any Governmental Entity to which the Company or any of the Subsidiaries is subject, (ii) breach or violate any provision of the certificate of incorporation or by-laws of the Company or any of the Subsidiaries, (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party a right to accelerate, terminate or modify or cancel, any Contract to which the Company or any of the Subsidiaries is a party or by which it is bound (x) that involves annual payments by or to the Company or any of its Subsidiaries in excess of One Hundred Thousand Dollars ($100,000) per Contract or series of related Contracts or (y) if the existence of such conflict, breach, acceleration or right under such Contract would have a Material Adverse Effect, or (iv) require any consent, waiver, approval, authorization or permit of, or filing with or notification to any other party to any such Contract in connection with the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby or to, any Governmental Entity; except for (a) HSR Filings (or other competition filings), (b) such filings as may be required as a result of the specific legal or regulatory status of the Company, the Subsidiaries and/or Purchaser, or as a result of any other facts that specifically relate to the business or activities in which the Company, the Subsidiaries and/or Purchaser is or proposes to be engaged or (c) such violations, breaches, defaults, conflicts or consents which, in the aggregate, are not reasonably likely to be expected to be material to the Company and the Subsidiaries, taken as a whole, or with respect to which requisite waivers or consents have been or shall be obtained prior to the Closing.
3.05 FILINGS. Each of the Insurance Companies is current and up-to-date in
all material respects with all reports, forms and other documents (the
"INSURANCE DIVISION DOCUMENTS") required to be filed with or submitted to the
Massachusetts Division of insurance (the "DIVISION") and has made available to
the Purchaser and Acquisition for its review and inspection all Insurance
Division Documents filed with or submitted to the Division over the last three
(3) years. As of their respective dates, the Insurance Division Documents
complied in all material respects with the requirements of the Division and the
rules and regulations of the Division applicable thereto. The Statutory
Financial Statements of the Insurance Companies included in the Insurance
Division Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the Division with respect thereto
and have been prepared in accordance with the rules and regulations of the
Division as such rules and regulations were in effect at the time of the
preparation and submission thereof.
3.06 FINANCIAL STATEMENTS. The Company has furnished the Purchaser with its Consolidated Financial Statements and Additional Information dated December 31, 2000 and 1999 audited by Price Waterhouse Coopers LLP (the "AUDITED FINANCIAL STATEMENTS") and the "Safety Insurance Company Consolidated Financial Statements and Related Materials To Comply with Statutory Filing Requirements" for the years ended December 31, 2000 and 1999 audited by Price Waterhouse Coopers LLP (the "STATUTORY FINANCIAL STATEMENTS" and sometimes together with the Audited Financial Statements, collectively, the "FINANCIAL STATEMENTS"). The Audited Financial Statements, including the notes thereto, have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods indicated ("GAAP"), and are correct and complete in all material respects and consistent in all material respects with the Company's books and records. The Balance Sheets included among the Audited Financial Statements fairly present the financial condition of the Company and the Subsidiaries on a consolidated basis at the respective dates thereof, and reflect all claims against
and debts and liabilities of the Company and the Subsidiaries, fixed or contingent, as at the respective dates thereof which are required to be disclosed in accordance with GAAP; and the related statements of income, stockholders' equity and cash flows fairly present the results of the operations of the Company and the Subsidiaries and the changes in its financial position for the periods indicated. The Statutory Financial Statements, including the notes thereto have been audited in accordance with generally accepted auditing standards and the Statutory Financial Statements and other Insurance Statements have been prepared in conformity with Statutory Accounting Practices, and are correct and complete in all material respects and consistent in all material respects with the Company's books and records.
3.07 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 3.07 of the Disclosure Schedule and except for the transactions contemplated by this Agreement, since the date of the most recent Audited Financial Statements, neither the Company nor any of the Subsidiaries has (a) suffered any change in its business, operations or financial position, except such changes which, in the aggregate, are not reasonably likely to be material and adverse to the Company and the Subsidiaries, taken as a whole, (b) conducted its business in any material respect not in the Ordinary Course of Business, (c) except in the Ordinary Course of Business, incurred any long-term indebtedness for borrowed money or issued any debt securities or assumed, guaranteed or endorsed the obligations of any Person other than the obligations of each other or (d) except in the Ordinary Course of Business, (i) sold, transferred or otherwise disposed of, any of their material property or assets or (ii) mortgaged or encumbered any of their material property or assets.
3.08 COMPLIANCE WITH LAW. Except as set forth in Section 3.08 of the Disclosure Schedule, as of the date of this Agreement, to the Company's Knowledge, the businesses of the Company and the Subsidiaries are not being conducted in violation of any applicable Law except such violations which in the aggregate are not reasonably likely to be material and adverse to the Company and the Subsidiaries, taken as a whole.
3.09 CONTRACTS AND COMMITMENTS.
(a) Section 3.09(a) of the Disclosure Schedule sets forth a list of all Contracts involving annual payments in excess of Five Hundred Thousand Dollars ($500,000) and indentures, mortgages and notes or other instruments evidencing indebtedness (contingent or otherwise) (collectively, the "MATERIAL CONTRACTS") to which the Company or any of the Subsidiaries is a party. Except as set forth in Section 3.09(b) of the Disclosure Schedule, as of the date of this Agreement, neither the Company nor any of the Subsidiaries is in default under any of the Material Contracts, except such defaults which, in the aggregate, are not reasonably likely to be material to the Company and the Subsidiaries, taken as a whole.
(b) With respect to each Material Contract and except as set forth in
Section 3.09(b) of the Disclosure Schedule: (i) each Material Contract is legal,
valid, binding and enforceable against the Company and/or the Subsidiary which
is party thereto, and, to the Company's Knowledge, the other parties thereto,
and, to the Company's Knowledge, is in full force and effect; (ii) to the
Company's Knowledge, no other party to any such agreement is in material breach
or default thereunder and no event has occurred which with notice or lapse of
time would reasonably be expected to constitute such a material breach or
default, or permit
termination, modification, or acceleration, under any Material Contract; (iii) neither the Company nor any of the Subsidiaries has repudiated any material provision of any Material Contract; (iv) each of the Company and the Subsidiaries has performed, in all material respects, all requirements to be performed by it under each of such Material Contract; and (v) none of the Company nor any of the Subsidiaries has received any written notice that it has violated, defaulted or breached under any of such Material Contract. Except as set forth in Section 3.09(b) of the Disclosure Schedule, neither the Company nor any of the Subsidiaries is required to obtain any authorization, waiver, license, consent, or approval of, or make any declaration, filing or registration with, or give notice to any other party to any such Material Contract in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby.
3.10 NO UNDISCLOSED LIABILITIES. Except as and to the extent set forth in the Audited Financial Statements and the notes thereto, the Company did not have at December 31, 2000 any liabilities of a nature required by GAAP to be reflected therein. Except as and to the extent set forth in Section 3.10 of the Disclosure Schedule, since December 31, 2000, neither the Company nor any of the Subsidiaries has incurred any material liabilities, of a nature required by GAAP to be reflected on, a consolidated balance sheet of the Company except liabilities incurred in the Ordinary Course of Business.
3.11 NO DEFAULT. Except as set forth in Section 3.11 of the Disclosure
Schedule, neither the Company nor any of the Subsidiaries is in default or
violation (and no event has occurred which with notice or the lapse of time or
both would constitute a material default or violation) of any term, condition or
provision of (i) their respective certificate of incorporation or by-laws or
(ii) any Law applicable to the Company or the Subsidiaries, except such defaults
and violations which, in the aggregate, are not reasonably likely to be material
to the Company and the Subsidiaries, taken as a whole.
3.12 LITIGATION. Except as set forth in Section 3.12 of the Disclosure Schedule, as of the date of this Agreement, there is no action, suit or proceeding pending or, to the Company's Knowledge, threatened, against the Company or the Subsidiaries before any court or Governmental Entity, except for the defense of claims asserted by insureds in the Ordinary Course of Business against the Insurance Companies' business. No such action, suit or proceeding is reasonably likely to be material to the Company and the Subsidiaries, taken as a whole. Except as set forth in Section 3.12 of the Disclosure Schedule, as of the date of this Agreement, neither the Company nor any of the Subsidiaries has received notice that it is subject to any outstanding judgment, order, injunction or decree of any Governmental Entity which is reasonably likely to be material to the Company and the Subsidiaries, taken as a whole.
3.13 TAXES.
(a) The reserves (excluding reserves for deferred Taxes) provided on the balance sheet of the most recent Audited Financial Statements for all Taxes imposed by any taxing authority are adequate to cover all unpaid liabilities for which the Company and the Subsidiaries may be liable for all Taxes (including any interest or penalties with respect to such Taxes), whether or not disputed, for any years and periods ending on or prior to December 31, 2000, and the amount of all unpaid liabilities for which the Company and the Subsidiaries may be liable for
all Taxes (including any interest or penalties with respect to such Taxes), whether or not disputed, for all periods ending on or before the Closing Date, excluding all such Taxes relating to the transaction that is the subject of this Agreement, shall not, in the aggregate, exceed such reserves adjusted for the operations and transactions in the Ordinary Course of Business of the Company and the Subsidiaries since December 31, 2000. There are no Tax liens (other than liens for current Taxes not yet due and payable) upon the properties or assets of the Company or the Subsidiaries. Except as set forth in Section 3.13 of the Disclosure Schedule, the Company or the Subsidiaries have not granted or been requested in writing to grant waivers of any statutes of limitations applicable to any claim for Taxes.
(b) All material Federal, state, local and foreign Tax Returns have been filed for the Company and the Subsidiaries, as required by all applicable laws for all periods through and including the Closing Date. All Taxes shown as due on all such Tax Returns have been paid. Each such Tax Return is true and correct in all material respects. Except as set forth in Section 3.13 of the Disclosure Schedule, none of the income Tax Returns that include the operations of the Company or the Subsidiaries have ever been audited or investigated by any taxing authority. Except as set forth in Section 3.13 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries have received written notice of any material issues that have been raised in any examination by any taxing authority with respect to the businesses and operations of the Company or the Subsidiaries which, by application of similar principles, reasonably could be expected to result in a proposed adjustment to the liability for Taxes for any other period not so examined. All Taxes which the Company or the Subsidiaries are required by law to withhold or collect, including without limitation, sales and use taxes, and amounts required to be withheld for Taxes of employees, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental Entities or are held in separate bank accounts for such purpose.
(c) Neither the Company nor any of the Subsidiaries is a "foreign person" as defined in Section 1445(f)(3) of the Code.
(d) Except as set forth in Section 3.13 of the Disclosure Schedule, the Company is not subject to any joint venture, partnership or other arrangement or contract which is treated as a partnership for Federal income tax purposes. Except as set forth in Section 3.13 of the Disclosure Schedule, the Company is not a party to any tax sharing agreement.
(e) Except as set forth in Section 3.13 of the Disclosure Schedule, as of the date hereof, no Subsidiary is required, or has agreed, to make any adjustment under Section 481 of the Code (or any similar provision of state, local or foreign law) as a result of any change of accounting method.
3.14 BROKERS AND FINDERS. Neither the Company, any of the Subsidiaries nor any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement, except for fees and expenses payable to Tucker Anthony Incorporated. The Company has previously delivered to the Purchaser a true and complete copy of the engagement letter between the Company and Tucker Anthony Incorporated.
3.15 TITLE TO PROPERTIES. Except as set forth in Section 3.15 of the Disclosure Schedule, the Company and each of the Subsidiaries has good and marketable title to all of the material assets, personal property and real property which it owns and which are reflected on the balance sheets included as part of the most recent Audited Financial Statements or acquired since the date of the most recent Audited Financial Statements (except for assets, personal property and real property sold, consumed or otherwise disposed of by any of them in the Ordinary Course of Business since the date thereof), and such assets, personal property and real property are owned free and clear of all Encumbrances, except for (a) Encumbrances listed in Section 3.15 of the Disclosure Schedule, (b) liens for current Taxes not yet due and payable or for Taxes the validity of which is being contested in good faith, (c) Encumbrances to secure indebtedness reflected on such balance sheets or indebtedness incurred in the Ordinary Course of Business and (d) mechanic's, materialmen's and other Encumbrances which have arisen in the Ordinary Course of Business.
3.16 INTELLECTUAL PROPERTY.
(a) Section 3.16(a) of the Disclosure Schedule sets forth an accurate and complete list of (i) all marks in which the Company or any Subsidiary has an ownership interest or which the Company or any Subsidiary uses in its business, other than those licensed from another person on a non-exclusive basis (collectively "COMPANY MARKS"), including all registrations and applications for registration with all Governmental Entities that have been made by or for the Company or any Subsidiary with regard to such Company Marks, identifying for each (w) its registration (as applicable) and application numbers, (x) whether it is owned by or exclusively licensed to the Company or such Subsidiary, (y) its current status and (z) the class(es) of goods or services to which it relates; (ii) all Patents in which the Company or any Subsidiary has an ownership interest or which have been exclusively licensed to the Company or any Subsidiary (collectively the "COMPANY PATENTS") and identifies for each (w) the patent number and issue date (if issued) or application number and filing date (if not issued), (x) its title, (y) the named inventors and (z) whether it is owned by or exclusively licensed to the Company or such Subsidiary; (iii) all registered copyrights (whether registered with the United States Copyright Office or in or with the appropriate office or Governmental Entity in any other jurisdiction) in which the Company or any Subsidiary has an ownership interest or which have been licensed to the Company or any Subsidiary, and all pending applications for registration of Copyrights filed anywhere in the world by or for the Company or any Subsidiary, or which has been exclusively licensed to the Company or any Subsidiary (collectively the "COMPANY REGISTERED COPYRIGHTS"); and (iv) all other intellectual property in which the Company or any Subsidiary has an ownership interest or which have been licensed to the Company or any Subsidiary that are material to the Company or the Subsidiaries, taken as a whole (collectively the "COMPANY IDENTIFIED OTHER IP", with the Company Marks, Company Registered Copyrights, Company Patents and Company Identified Other IP sometimes collectively called "COMPANY IP").
(b) Except as set forth in Section 3.16(b) of the Disclosure Schedule,
(i) the Company IP are the only Proprietary Rights which are material to the
conduct of the business of the Company and the Subsidiaries, taken as a whole,
(ii) as of the date of this Agreement, the validity of the Company IP and the
title thereto are not being questioned in any litigation nor, to the Company's
Knowledge, is any such litigation threatened and (iii) as of the date of this
Agreement, to the Company's Knowledge, the conduct of the business of the
Company and the
Subsidiaries as now conducted does not conflict with any valid patents, trademarks, trade name, service marks or copyrights of others in any way which is reasonably likely to be material to the Company and the Subsidiaries, taken as a whole.
3.17 INSURANCE. All material insurance policies (the "INSURANCE POLICIES")
with respect to the property, assets, operations and business of the Company and
the Subsidiaries are in full force and effect. Except as set forth in Section
3.17 of the Disclosure Schedule, as of the date of this Agreement, there are no
pending material claims against the Insurance Policies as to which the insurers
have denied liability or which would give rise to retroactive premium
adjustments or other material Loss-sharing arrangements. The Company makes no
representation or warranty that such insurance will be continued or is
continuable after the Closing. Neither the Company, the Subsidiaries, nor to the
Company's Knowledge, any other party to the policy is in material breach or
default (including with respect to the payment of premiums or the giving of
notices), and, to the Company's Knowledge, no event has occurred which, with
notice or the lapse of time, would constitute such a material breach or default,
or permit termination, modification, or acceleration, under the Insurance
Policies; and, to the Company's Knowledge, no party to the policy has repudiated
any material provision thereof. Section 3.17 of the Disclosure Schedule
describes any material self-insurance arrangements affecting any of the Company
and the Subsidiaries. All known claims, if any, made against the Company or any
of the Subsidiaries that are covered by insurance have been disclosed to and
accepted by the appropriate insurance companies and, to the Company's Knowledge,
are being defended by such appropriate insurance companies and are described in
Section 3.17 of the Disclosure Schedule and, except as disclosed in Section 3.17
of the Disclosure Schedule, and, to the Company's Knowledge, no claims have been
denied coverage during the last three years. Except as set forth in Section 3.17
of the Disclosure Schedule, neither the Company nor any of the Subsidiaries is
required to obtain any authorization, waiver, consent or approval of, make any
declaration, filing or registration with, or give notice to any other party to
any such Insurance Policy in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
3.18 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Section 3.18(a) of the Disclosure Schedule, the Company and each Subsidiary holds, and is in substantial compliance with, all material permits, licenses and government authorizations, if any, required for it to conduct its businesses under Environmental Laws;
(b) Except as set forth in Section 3.18(b) of the Disclosure Schedule, neither the Company nor any of the Subsidiaries has received any lawsuit, claim, notice of violation, written request for information, or has been notified in writing that it is a potentially responsible party, under any Environmental Law;
(c) Except as set forth in Section 3.18(c) of the Disclosure Schedule, neither the Company nor any of the Subsidiaries has entered into or agreed to any consent decree or order, and none of them is subject to any judgment, decree, or order relating to compliance with any Environmental Law or to investigation or cleanup of regulated substances under any Environmental Law;
(d) to the Company's Knowledge, no Hazardous Substance is present or has been released at, on or under, any Real Property in such amount as would require remediation under any applicable Environmental Law;
(e) the Purchaser has been provided with true and correct copies of any reports, audits or assessments in the possession or control of the Company or any of the Subsidiaries that describe the environmental conditions at any of the Real Property or any property previously owned, leased or occupied by the Company or any of the Subsidiaries; and
(f) the Company and the Subsidiaries have never owned or operated an underground storage tank at any Real Property.
3.19 EMPLOYEE BENEFIT PLANS.
(a) Section 3.19 of the Disclosure Schedule lists and identifies each
profit sharing, 401(k), retirement, disability, medical, dental, severance pay,
vacation pay, sick pay, stock purchase, stock option, deferred compensation,
bonus, incentive compensation, fringe benefit, stay-with-bonus, change of
control agreement or other employee benefit plan, program or agreement,
including without limitation, any employee benefit plan as defined in
Section 3(3) of ERISA, which is maintained or contributed to by the Company or
any of the Subsidiaries, or under or with respect to which the Company or any of
the Subsidiaries has any liability or contingent liability (individually a
"PLAN" and collectively, the "PLANS"). Each Plan which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
favorable determination letter from the IRS to the effect that it meets the
requirements of Section 401(a) of the Code which favorable determination letter
covers all amendments to any such plan for which the remedial amendment period
(within the meaning of Section 401(b) of the Code and applicable regulations)
has expired. None of the Plans is or has been subject to Title IV of ERISA and
none of the Plans is a multi-employer plan (as defined in Section 3(37) of
ERISA).
(b) Subject to Section 3.19(d) of the Disclosure Schedule, to the Company's Knowledge, all Plans have been administered in all material respects in accordance with their terms and comply in all material respects in form and operation with all applicable requirements of law and subject to Section 3.19(d) of the Disclosure Schedule, to the Company's Knowledge, no event has occurred which will or could cause any such Plan to fail to comply with such requirements and no notice has been issued by any Governmental Entity questioning or challenging such compliance.
(c) Subject to Section 3.19(d) of the Disclosure Schedule, none of the Company, the Subsidiaries nor any of its ERISA Affiliates has engaged in any "prohibited transaction" (as described in section 406 of ERISA or Section 4975 of the Code) with respect to any Plan.
(d) There have been no acts or omissions by the Company, the Subsidiaries or any of its ERISA Affiliates which have given rise to fines, penalties, Taxes or related charges under section 502 of ERISA or Chapters 43, 47, 68 or 100 of the Code for which the Company or any of the Subsidiaries was liable or, except as set forth in Section 3.19 of the Disclosure Schedule, which, to the Company's Knowledge, may give rise to such fines, penalties, Taxes or related charges.
(e) Except as set forth in Section 3.19 of the Disclosure Schedule, the Company and the Subsidiaries have not made or become obligated to make, and will not as a result of any event connected with the Acquisition or any other transaction contemplated herein become obligated to make, any material payment that will not be deductible under Section 280G of the Code.
(f) There are no actions, suits or claims (other than routine claims for benefits) pending or, to the Company's Knowledge, threatened involving any Plan or the assets thereof.
(g) None of the Company or the Subsidiaries has any liability or contingent liability for providing, under any Plan or otherwise, any post-retirement medical or life insurance benefits, other than statutory liability for providing group health plan continuation coverage under Part 6 of Title I of ERISA and Section 4980B of the Code or applicable state law.
(h) A true and complete copy of each Plan, and where applicable, a copy of the most recent IRS Form 5500 annual report, IRS determination letter, trust agreement or other funding arrangement, and summary plan description with respect to each such Plan have been made available to the Purchaser.
(i) To the Company's Knowledge, no executive, key employee, or significant group of employees presently plans to terminate employment with the Company or any of the Subsidiaries during the next twelve (12) months.
(j) Except as set forth in Section 3.19 of the Disclosure Schedule, there is no labor strike pending against or involving or, to the Company's Knowledge, threatened against the Company or any of the Subsidiaries.
3.20 INSURANCE BUSINESS.
(a) Except as disclosed in Section 3.20(a) of the Disclosure Schedule,
all policies of insurance issued by the Company and the Subsidiaries as now in
force are, to the extent required under applicable Law, on forms which have been
approved by applicable insurance regulatory authorities or which have been filed
and not objected to by such authorities within the period provided for
objection. Except as disclosed in Section 3.20(a) of the Disclosure Schedule,
any premium rates required to be filed with or approved by insurance regulatory
authorities have been so filed and/or approved and premium rates established by
the Company and each of the Subsidiaries conform thereto. Except as disclosed in
Section 3.20(a) of the Disclosure Schedule, any Contract to which the Company or
any Subsidiary is a party and which is required to be filed with or approved by
insurance regulatory authorities has been so filed or approved except for those
which, if not filed or approved, as the case may be, would not be material to
the Insurance Companies taken as a whole.
(b) The Company will furnish to Purchaser a list of all material written Contracts between the Company or any of the Subsidiaries and its agents, managing general agents or brokers ("AGENCY AGREEMENTS"). Included in Section 3.20(b) of the Disclosure Schedule are copies of the Company's and each of the Subsidiaries' standard agency agreements, including copies of all schedules and exhibits customarily attached thereto and made part of such
Agency Agreements. Except as set forth in Sections 3.12 and 3.23 of the Disclosure Schedule, or as separately set forth in writing by the Company to the Purchaser, neither the Company nor any of the Subsidiaries has received any notification by its agents threatening litigation or termination of their agency agreements with the Company or the Subsidiaries. No insurance agent or group of related agents accounted for more than two (2) percent of the gross premium income of the Company and the Subsidiaries combined for the year ended December 31, 2000.
(c) Section 3.20(c) of the Disclosure Schedule sets forth a complete and accurate list of each Subsidiary that is an insurance company (each an "INSURANCE COMPANY" and, collectively, the "INSURANCE COMPANIES"). Each of the Insurance Companies is (i) duly licensed or authorized as an insurance company in its jurisdiction of incorporation, (ii) duly licensed or authorized as an insurance company and, where applicable, to engage in the business of reinsurance in each other jurisdiction where it is required to be so licensed or authorized and (iii) duly licensed or authorized in its jurisdiction of incorporation to write or conduct each line of its business. Each Insurance Company is, where required, duly licensed or authorized and appointed as a third party administrator, insurance agency, managing general agency or similar service provider in its jurisdiction of incorporation and in each other jurisdiction where it is required to be so licensed or authorized.
(d) Each Insurance Company has filed all required annual and quarterly statements with the Insurance Department of the Commonwealth of Massachusetts or any other applicable regulatory authorities for the years ended December 31, 1999 and 2000 or such other periods as required by such regulatory authorities (the "INSURANCE STATEMENTS"). The Company has previously furnished the Purchaser with copies of the Insurance Statements, together with all exhibits and schedules thereto, and any actuarial opinions, affirmations or certifications filed in connection therewith.
(e) The business and operations of the Insurance Companies have been
conducted in material compliance with all applicable Laws regulating the
business of insurance and all applicable orders and directives of Governmental
Entities. To the Company's Knowledge, none of the Insurance Companies is in
violation of or since January 1, 1999 has violated, any applicable Laws
regulating the business of insurance or has received any notice from any
Governmental Entity or any other person that any Insurance Company is in
violation of, or has violated, any applicable provisions of any applicable Laws
regulating the business of insurance. To the Company's Knowledge, all insurance
products marketed, serviced, administered, sold or issued by or on behalf of an
Insurance Company have been marketed, serviced, administered, sold and issued in
compliance with all applicable consumer protection laws, whether federal or
state, and all applicable insurance Laws, including, without limitation, in
compliance with (i) all applicable prohibitions on withdrawal of business lines,
(ii) all applicable requirements relating to the disclosure of the nature of
insurance products as policies of insurance, (iii) all applicable requirements
relating to insurance product projections and illustrations, (iv) all applicable
prohibitions against "churning" and (v) all applicable anti-discrimination Laws.
(f) All policies, binders slips, certificates, annuity contracts and participation agreements and other agreements of insurance, and all amendments, applications, brochures, illustrations and certificates pertaining thereto, and any and all marketing materials, in effect as
of the date hereof that are issued or have been issued by the Insurance Companies are, to the extent required under applicable Law, on forms approved by applicable regulatory authorities or which have been filed and not objected to by such authorities within the period provided for objections, and all such forms comply in all material respects with applicable insurance Laws. Any premium rates of the Insurance Companies that are required to be filed with or approved by any Governmental Entity have been so filed or approved and the premiums charged conform thereto, and such premiums comply in all material respects with all applicable anti-discrimination Laws and all applicable insurance Laws.
(g) No material claim or assessment that is peculiar or unique to any Insurance Company is pending or to the Company's Knowledge threatened against any Insurance Company by any state insurance guaranty association in connection with such association's fund relating to insolvent insurers, and none of the Companies, the Subsidiaries, nor any Insurance Company has received notice of any such claim or assessment.
(h) The reserves for payment of future policy benefits, Losses, claims, expenses and similar purposes under all presently issued policies reflected in, or included with, the Insurance Statements (collectively, the "RESERVES") were determined in all material respects in accordance with the Statutory Accounting Practices, to the Company's Knowledge, utilized actuarial assumptions which are appropriate in all material respects for the risks of the relevant policy and contract provisions, are fairly stated in accordance with sound actuarial principles and are in compliance, in all material respects, with the requirements of applicable Laws, including, without limitation, meeting all applicable statutory and regulatory requirements as to reserve amounts for each line of business in which the applicable Company or Subsidiary operates, and to the Company's Knowledge, such Reserves were appropriate to cover the total amount of all reasonably anticipated liabilities of the Company and each Subsidiary under all outstanding insurance, reinsurance and other applicable agreements as of the respective dates of such Insurance Statements.
(i) Prior to the date of this Agreement, the Company has delivered or made available to the Purchaser copies of all actuarial reports prepared by actuaries, independent or otherwise, with respect to any of the Insurance Companies since December 31, 1998, and all attachments, addenda, supplements and modifications thereto (the "COMPANY ACTUARIAL ANALYSES"). The information and data furnished by any of the Company, the Subsidiaries or Insurance Companies to its independent actuaries in connection with the preparation of the Company Actuarial Analyses were accurate and complete in all material respects. To the Company's Knowledge, each Company Actuarial Analysis was based upon an accurate inventory of policies in force for the Insurance Companies at the relevant time of preparation, was prepared using appropriate modeling procedures accurately applied and in conformity with generally accepted actuarial standards consistently applied, and the projections contained therein were properly prepared in accordance with the assumptions stated therein.
(j) Since December 31, 1999, neither A.M. Best Company nor any other ratings agency has announced that it has under surveillance or review its rating of the financial strength or claims-paying ability of any Insurance Company, and the Company has no reason to believe that any rating presently held by any Insurance Company is likely to be modified,
qualified, lowered or placed under such surveillance for any reason, including, without limitation, as a result of the transactions contemplated by this Agreement.
3.21 REAL PROPERTY.
(a) Section 3.21(a) of the Disclosure Schedule lists all real property that the Company or any of the Subsidiaries owns ("OWNED PROPERTY"). Except as set forth in Section 3.21(a) of the Disclosure Schedule, with respect to each such parcel of Owned Property:
(i) the identified owner has sole, good and marketable title to the parcel of Owned Property, free and clear of any Encumbrances;
(ii) there are no leases, subleases, licenses, concessions, or other agreements granting to any party or parties the right of use or occupancy of any portion of the parcel of Owned Property; and
(iii) there are no outstanding options or rights of first refusal to purchase the parcel of Owned Property, or any portion thereof or interest therein.
(b) Section 3.21(b) of the Disclosure Schedule lists all real property leased or subleased from or to the Company or any of the Subsidiaries, the name of the third party lessor or lessee and the date of the lease and all amendments thereto (the "LEASED PROPERTY" and, collectively with the "OWNED PROPERTY", the "REAL PROPERTY"). The Company has delivered to the Purchaser correct and complete copies of the leases and subleases and all amendments thereto set forth in Section 3.21(b) of the Disclosure Schedule (the "PROPERTY LEASES").
(c) The Company and the Subsidiaries have the right to use the Real Property in the manner and for the purposes as each is currently being used by the Company or the Subsidiaries, as the case may be. To the Company's Knowledge, there are no material eminent domain, condemnation or other similar proceedings pending or threatened against the Company or any of the Subsidiaries or otherwise affecting any portion of the Real Property and none of the Company nor any of the Subsidiaries has received any written notice of the same. None of the Company nor any of the Subsidiaries has received any written notice of any material violation or claimed material violation by any of them of any material applicable building, zoning, subdivision, health and safety and other similar land use Laws with respect to the Real Property within the past three (3) years.
3.22 PERMITS. Except as set forth in Section 3.22 of the Disclosure Schedule, the Company and each of its Subsidiaries has obtained all Permits that are necessary for the ownership and conduct of the business of the Company and each of its Subsidiaries as presently conducted including any Permits required by the Division pursuant to Massachusetts' Law; such Permits are in full force and effect and are sufficient for the ownership and conduct of such business; to the Company's Knowledge, no violations are or have been recorded by the entity that issued the Permit in respect of any such Permit; and no proceeding is pending or, to the Company's Knowledge, threatened, to suspend, revoke or limit any such Permit.
3.23 REINSURANCE. Section 3.23 of the Disclosure Schedule sets forth a list of all reinsurance and coinsurance treaties or agreements, including retrocessional agreements, to
which any Insurance Company is a party or under or with respect to which any Insurance Company has any existing rights, obligations or liabilities. All such reinsurance and coinsurance treaties or agreements are legal, valid, binding and enforceable against the Insurance Company party thereto and, to the Company's Knowledge, the other parties thereto, and to the Company's Knowledge, are in full force and effect. None of the Company or any Subsidiary, nor, to the Company's Knowledge, any other party to any such reinsurance or coinsurance treaty or agreement, is in default in any material respect under any provision thereof, and no such agreement contains any provision providing that the other party thereto may terminate such agreement by reason of the transactions contemplated by this Agreement. None of the Insurance Companies has received any notice to the effect that the financial condition of any other party to any such agreement is impaired with the result that a default thereunder may reasonably be anticipated, whether or not such default may be cured by the operation of any offset clause in such agreement. No insurer or reinsurer or group of affiliated insurers or reinsurers accounted for the direction to Insurance Companies or the ceding by the Insurance Companies of insurance or reinsurance business in an aggregate amount equal to two percent (2%) or more of the consolidated gross premium income of the Insurance Companies for the year ended December 31, 2000.
3.24 NO OTHER AGREEMENTS TO SELL THE BUSINESS. None of the Companies or any Subsidiary has any agreement, absolute or contingent, with any other person to sell the capital stock, material assets or business of any of the Subsidiaries or to effect any merger, consolidation or other reorganization of any of the Subsidiaries or to enter into any agreement with respect thereto.
3.25 MANAGEMENT AGREEMENTS AND BONUSES. Section 3.25 of the Disclosure Schedule sets forth all agreements providing for salary, bonuses and other compensation by the Company or any of its Subsidiaries to any officer, director, employee or former employee of the Company or any of its Subsidiaries, as applicable. Section 3.25 of the Disclosure Schedule lists in all material respects the amount and form of the salary, bonuses and other compensation payable pursuant to each such agreement, including as a result of the transactions contemplated by this Agreement.
3.26 ACCURACY OF INFORMATION. Other than as set forth on Section 3.26 of the Disclosure Schedule, the representations and warranties set forth in this Agreement (including the exceptions to such representations and warranties set forth in the Disclosure Schedule) do not contain any untrue statement of a material fact.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER AND ACQUISITION
The Purchaser and Acquisition jointly and severally represent and warrant to the Company and the Shareholders as follows:
4.01 ORGANIZATION.
(a) The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted except where the failure to be so organized, existing and in good standing or to have such power or authority (i) is not, in the aggregate, reasonably likely to have a material adverse effect on the business, assets or financial condition of the Purchaser ("PURCHASER MATERIAL ADVERSE EFFECT"), or (ii) would not impair, hinder or adversely affect the ability of the Purchaser to perform any of its obligations under this Agreement or to consummate the transactions contemplated hereby. The Purchaser has heretofore delivered to the Company complete and correct copies of its certificate of incorporation and by-laws, as currently in effect.
(b) Acquisition is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted except where the failure to be so organized, existing and in good standing or to have such power or authority (i) is not, in the aggregate, reasonably likely to have a material adverse effect on the business, assets or financial condition of Acquisition or (ii) would not impair, hinder or adversely affect the ability of Acquisition to perform any of its obligations under this Agreement or to consummate the transactions contemplated hereby. Acquisition has heretofore delivered to the Company complete and correct copies of its certificate of incorporation and by-laws, as currently in effect.
4.02 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) The Purchaser has full corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of the Purchaser and no other corporate proceedings on the part of the Purchaser are necessary to authorize the execution and delivery of this Agreement and the other Transaction Documents to which it is a party or to consummate the transactions contemplated hereby. This Agreement and the other Transaction Documents to which it is a party have been duly and validly executed and delivered by the Purchaser and constitute valid and binding agreements of the Purchaser, enforceable against the Purchaser in accordance with their terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium (whether general or specific) or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
(b) Acquisition has full corporate power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other Transaction Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of Acquisition and no other corporate proceedings on the part of Acquisition are necessary to authorize the execution and delivery of this Agreement and the other Transaction Documents to which it is a party or to consummate the transactions contemplated hereby. This Agreement and the other Transaction Documents to which it is a party have been duly and validly executed and delivered by Acquisition and constitute valid and binding agreements of Acquisition, enforceable against Acquisition in accordance with their terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium (whether general or specific) or other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
4.03 CONSENTS AND APPROVALS; NO VIOLATION. Except for HSR Filings (and other competition filings) and the filings, permits, authorizations, consents and approvals set forth on Section 4.03 to the Disclosure Schedule, there is no requirement applicable to the Purchaser or Acquisition to make any filing with, or to obtain any permit, authorization, consent or approval of, any governmental or regulatory authority as a condition to lawful consummation by the Purchaser and Acquisition of the consummation of the transactions contemplated by the Transaction Documents. Neither the execution and delivery of this Agreement or the other Transaction Documents by the Purchaser or Acquisition nor the consummation of the transactions pursuant to this Agreement will (i) conflict with or result in any breach of any provision of the certificate of incorporation or by-laws of the Purchaser or Acquisition, (ii) require any consent, waiver, approval, authorization or permit of, or filing with or notification to, any Governmental Entity, except as set forth in said Section 4.03 to the Disclosure Schedule and except for such consents, waivers, approvals, authorizations, permits, filings or notifications which, in the aggregate, are not reasonably likely to have a Purchaser Material Adverse Effect, (iii) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement, lease or other instrument or obligation to which the Purchaser or Acquisition or any of the Purchaser's subsidiaries is a party, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been or shall prior to the Closing be obtained or which, in the aggregate, would not have a Purchaser Material Adverse Effect or (d) violate any applicable order, writ, injunction or decree.
4.04 LITIGATION. There is no action, suit or proceeding pending, or, to the knowledge of the Purchaser, action, suit or proceeding threatened, against the Purchaser or Acquisition before any Governmental Entity which is reasonably likely to have a Purchaser Material Adverse Effect. The Purchaser has not received notice that it or Acquisition is subject to any outstanding judgment, order or decree of any Governmental Entity which is reasonably likely to have a Purchaser Material Adverse Effect.
4.05 BROKERS AND FINDERS. Neither the Purchaser nor Acquisition nor any of their officers, directors or employees has employed any investment banker, broker or finder, or incurred any liability for any investment banking fees, brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement, except for fees and
expenses payable by the Purchaser to Mann & Co. and The Jordan Company LLC for investment banking services.
4.06 PURCHASER'S ACKNOWLEDGMENTS. The Purchaser and Acquisition acknowledge and agree that they (i) have made their own inquiry and investigation into, and, based thereon, have formed an independent judgment concerning, the Company and the Subsidiaries and (ii) have been furnished with or given adequate access to such representatives of the Company and the Subsidiaries, and books, records and other information about the business of the Company and the Subsidiaries as they have requested.
ARTICLE V
COVENANTS OF THE PARTIES
5.01 CONDUCT OF BUSINESS. Except as contemplated by this Agreement, during the period from the date of this Agreement to the Closing Date, the Company will, and will cause the Subsidiaries to, conduct its and their business and operations according to in the Ordinary Course of Business. Without limiting the generality of the foregoing, the Company will not, without the prior written consent of the Purchaser (which consent shall not be unreasonably withheld or delayed), and will not permit any Subsidiary to:
(a) (i) create, incur or assume any indebtedness for money borrowed, including obligations in respect of capital leases but excluding short term indebtedness or (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person; PROVIDED, HOWEVER, that the Company and the Subsidiaries may incur indebtedness in the Ordinary Course of Business and (ii) endorse negotiable instruments in the Ordinary Course of Business;
(b) except in the Ordinary Course of Business, (i) sell, transfer or otherwise dispose of any of its material property or assets or (ii) mortgage or encumber any of its material property or assets;
(c) enter into any agreement, commitment or transaction (including without limitation any borrowing, capital expenditure or capital financing) material to the Company and the Subsidiaries, taken as a whole, except agreements, commitments or transactions in the Ordinary Course of Business or as contemplated herein;
(d) materially change the accounting methods, principles or practices employed by any of them;
(e) amend their respective certificates of incorporation, by-laws or other organizational or governing documents or effect any reclassification, recapitalization or similar change in the capitalization of the Company or any of the Subsidiaries;
(f) (i) enter into any new or amend any existing, employment, severance, deferred compensation or similar arrangements, (ii) increase the compensation payable, or to become payable, by the Company or any of the Subsidiaries to any employee, or any director or officer
of the Company or any of the Subsidiaries, (iii) except pursuant to agreements, plans or other arrangements existing as of the date hereof, pay or make provision for the payment of any bonus, stock option, stock purchase, profit sharing, deferred compensation, pension or retirement payment to any employee of the Company or any of the Subsidiaries, or any director or officer of the Company or any of the Subsidiaries, or (iv) provide for the first time or increase the coverage or benefits available under, any severance pay, termination pay, vacation pay, company awards, salary continuation or disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan, payment or arrangement made to, for or with any employee or former employee of the Company or any of the Subsidiaries or any director or officer of the Company or any of the Subsidiaries, other than, in the case of clauses (ii), (iii) and (iv) normal increases or payments in the Ordinary Course of Business that are not material, individually or in the aggregate, and that do not result in any material increase in the cost of any such plans;
(g) liquidate, sell, lease, transfer, assign or dispose of or agree to liquidate, sell, lease, transfer, assign or dispose of any tangible or intangible assets outside the Ordinary Course of Business;
(h) take or omit to take any action that would have a Material Adverse Effect;
(i) enter into, adopt or terminate any Plan;
(j) acquire (by merger, consolidation or other combination, or acquisition of stock or assets) any corporation, partnership or other business organization, or any division thereof;
(k) issue, sell or otherwise dispose of or agree to issue sell or otherwise dispose of any of its capital stock, or grant any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its capital stock;
(l) create, incur, issue any debt securities, endorse, assume or guaranty or enter into any agreement to provide for indebtedness for borrowed money and capitalized lease obligations;
(m) make or commit to make any capital expenditure not in the Ordinary Course of Business in an amount in excess of $50,000, individually or in the aggregate;
(n) declare, set aside or pay any dividend or make any distribution with respect its capital stock (whether in cash or in kind) or redeem, purchase, or otherwise acquire any of its capital stock, other than any such dividend by any Subsidiary to the Company;
(o) make any loan to, or enter into any transaction with, any of its directors, officers, stockholders or any Affiliate or Associate thereof, except for advances for travel and other business expenses in the Ordinary Course of Business that do not exceed $50,000 in the aggregate;
(p) create or impose any Encumbrances upon any of its assets or properties, tangible or intangible, except for Encumbrances arising by operation of Law;
(q) grant any license or sublicense of any material rights under or allow to lapse, sell, transfer or otherwise dispose of, or otherwise experience any adverse effect with respect to any material Company Proprietary Rights;
(r) make any equity or debt investment in, or any loan to, any other Person, other than transactions between the Company and the Subsidiaries or between the Subsidiaries;
(s) initiate any legal proceeding or action or compromise any pending legal proceeding or action outside the Ordinary Course of Business, except for legal proceedings or actions relating to any employee of the Company or the Subsidiaries or against the Purchaser or its Affiliates in connection with this Agreement or the transactions contemplated hereby;
(t) make any material Tax election or settle or compromise any federal, state, local or foreign Tax liability, or waive or extend the statute of limitations in respect of any Taxes; or
(u) materially change its overall pricing of insurance premiums on contracts of insurance sold by the Company or any of the Subsidiaries except for any premium increases reflected in filings made with state insurance departments; or
(v) enter into any agreement to take, or cause to be taken, any of the actions prohibited in this SECTION 5.01.
5.02 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Closing Date, the
Company will, during ordinary business hours and upon reasonable advance notice,
(i) give the Purchaser and its authorized representatives reasonable access to
all books, records, offices and other facilities and properties of the Company
and the Subsidiaries, (ii) permit the Purchaser to make such inspections thereof
as the Purchaser may reasonably request, and (iii) cause the officers of the
Company to furnish the Purchaser with such financial and operating data and
other information with respect to the business and properties of the Company and
the Subsidiaries as the Purchaser may from time to time reasonably request;
PROVIDED, HOWEVER, that any such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operation of the business of
the Company and the Subsidiaries.
(b) Any information provided pursuant to this Agreement shall be held by the Purchaser in accordance with and shall be subject to the terms of the Confidentiality Agreement, dated March 13, 2001, between The Jordan Company, LLC and the Company (the "CONFIDENTIALITY AGREEMENT") which agreement is and shall remain in full force and effect in accordance with its terms.
(c) Purchaser may, upon prior notice to the Shareholder Representative, meet with designated members of the Company's senior management, at reasonable times and in a manner not disruptive to the Company's business for the purpose of discussing and negotiating post-Closing employment arrangements and the terms and conditions on which such senior management may participate as investors in the Purchaser, PROVIDED, HOWEVER, that no such prior notice shall be necessary for the Purchaser to contact the Company's senior management for
purposes of assisting Purchaser in preparing any and all documents necessary for Purchaser to secure the Financing Commitments or otherwise as is reasonably necessary in connection with the consummation of the transactions contemplated by this Agreement. Such employment and investment negotiations shall be subject to the terms of the Confidentiality Agreement and any arrangements negotiated with any employee of the Company shall expressly by its terms not become effective or impose any obligation on such employee prior to the Effective Date of the Merger. If for any reason this Agreement is terminated or the Merger does not become effective, all such agreements will by their terms terminate and be without any further force or effect.
5.03 FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the Company, the Purchaser and Acquisition agrees to use its
commercially reasonable efforts and good faith to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective and pay for as promptly as
practicable the transactions contemplated by this Agreement and to cooperate in
connection with the foregoing, including using its commercially reasonable
efforts (i) to obtain all necessary waivers, consents and approvals from other
parties to material leases and other Contracts, (ii) to obtain all consents,
approvals and authorizations that are required to be obtained under any Law,
(iii) to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereby, (iv) to effect all necessary registrations and
filings including, but not limited to, HSR Filings and other competition filings
(the cost of which will be borne by the Purchaser) and submissions of
information requested or required by Governmental Entities, (v) to obtain
sufficient financing in order to consummate the transactions contemplated hereby
and (vi) to fulfill all conditions to this Agreement. Each of the Company, the
Purchaser and Acquisition further covenants and agrees, with respect to a
threatened or pending preliminary or permanent injunction or other order, decree
or ruling or statute, rule, regulation or executive order that would adversely
affect the ability of the parties hereto to consummate the transactions
contemplated hereby, to use their respective best efforts to prevent the entry,
enactment or promulgation thereof, as the case may be.
5.04 FILINGS. The Purchaser will make or cause to be made and pay for all such HSR Filings (and any other such competition filings) and submissions under laws and regulations applicable to the Purchaser, if any, as may be required of the Purchaser for the consummation of the transactions contemplated by this Agreement, including, without limitation, any such filings with the Division pursuant to Massachusetts Law. The Company will make or cause to be made and pay for all such filings and submissions under laws and regulations applicable to the Company and the Subsidiaries as may be required of the Company and the Subsidiaries for the consummation of the transactions contemplated by this Agreement, including any such filing with the Division pursuant to Massachusetts Law. The parties hereto will coordinate and cooperate with one another in exchanging such information and providing reasonable assistance as may be requested in connection with all of the foregoing.
5.05 PUBLIC ANNOUNCEMENTS. The Shareholder Representative and the Purchaser will consult with each other before issuing any press releases or otherwise making any public statements with respect to this Agreement and the transactions contemplated hereby and shall not issue any such press release or make any such public statement without the consent of the other,
except that such approval shall not be required for a public statement to the extent either party is advised by its legal counsel that such disclosure is required by applicable Law.
5.06 FEES AND EXPENSES. Whether or not the transactions contemplated hereby are consummated, each party agrees to bear its own expenses in connection with the transactions contemplated hereby, including fees and expenses of accountants, attorneys, investment advisors and other professionals; PROVIDED, HOWEVER, if the transactions contemplated hereby are not consummated due to the failure of Purchaser to satisfy the covenant set forth in SECTION 5.10, Purchaser shall pay or reimburse the Company for all of the reasonable and documented out of pocket expenses incurred by the Company in connection with the transactions contemplated hereby ("COMPANY EXPENSES") and; PROVIDED, FURTHER if the transactions contemplated hereby are not consummated due to the failure of the Shareholders to satisfy the conditions set forth in SECTION 6.02(G), the Company shall pay or reimburse the Purchaser for up to $500,000 of the reasonable and documented out of pocket expenses incurred by the Purchaser or Acquisition in connection with the transactions contemplated hereby.
5.07 DISCLOSURE SUPPLEMENTS. Between the date of this Agreement and the Closing Date, the Company shall promptly notify Purchaser in writing to the extent of the Company's Knowledge of any fact or condition that causes or constitutes, or reasonably could cause or constitute, a misrepresentation or breach of any of the Company's representations and warranties as of the date of this Agreement (in either case, a "BREACH"). Between the date of this Agreement and the Closing Date, the Company shall also promptly notify Purchaser in writing to the extent of the Company's Knowledge of any fact, thing, matter, occurrence, variance or condition hereafter arising ("NEW FACTS") which, if existing or occurring at, or prior to the date of this Agreement, would have been required to be set forth in the Disclosure Schedule, in the form of a "REVISED SCHEDULE" delivered to the Purchaser. Each such date of disclosure shall hereinafter be referred to as a "DISCLOSURE DATE". Any Revised Schedule shall be marked to show changes between the original Disclosure Schedule and the Revised Schedule. The Purchaser shall have ten (10) days following each Disclosure Date to review the New Facts so disclosed. In the event that such New Facts would reasonably be expected to constitute a material Breach, the Purchaser may deliver to the Company a notice setting forth in reasonable detail the basis for such conclusion and its election to terminate its obligations under this Agreement (the "TERMINATION NOTICE") no later than 5:00 p.m. Eastern Time on the tenth calendar day following the Disclosure Date. In the event the Purchaser does not have the right or for any reason does not terminate this Agreement pursuant to this SECTION 5.07, then such Revised Schedule shall be deemed to amend and/or supplement the original Disclosure Schedule hereto and cure and correct for all purposes any Breach which would have existed by reason of the Company not having disclosed such Revised Schedule.
5.08 EMPLOYEE BENEFIT MATTERS.
(a) BENEFIT ARRANGEMENTS. Except as set forth in SECTION 5.08(e), (f) and (g), the Purchaser shall on and after the Effective Time, cause the Company and each of the Subsidiaries to honor, without offset, deduction, counterclaims, interruptions or deferment (other than withholdings under applicable law), all plans and employment, severance, termination and retirement agreements and arrangements set forth on Section 5.08(a) of the Disclosure Schedule to which each of them is presently a party, as such plans, agreements and arrangements may
hereafter be modified with the consent of the other party or as otherwise permitted by such plans, agreements and arrangements of the Company and the Subsidiaries in effect on the date hereof.
(b) INDEMNIFICATION. The Purchaser agrees that all rights to indemnification or exculpation now existing in favor of the employees, agents, directors or officers of the Company and each Subsidiary (the "COMPANY INDEMNIFIED PARTIES") as provided in their respective certificate of incorporation or by-laws, as provided in an agreement between a Company Indemnified Party and the Company and/or any Subsidiary (the "INDEMNIFICATION AGREEMENT") or otherwise in effect on the date hereof shall continue in full force and effect for a period of not less than seven (7) years from the Closing Date; PROVIDED, HOWEVER, that, in the event any claim or claims are asserted or made within such seven (7) year period, all rights to indemnification in respect of any such claim or claims shall continue until disposition of any and all such claims. Any determination required to be made with respect to whether a Company Indemnified Party's conduct complies with the standards set forth in such certificate of incorporation or by-laws or under the Indemnification Agreements or otherwise shall be made by independent counsel selected by the Company Indemnified Party reasonably satisfactory to the Company (whose fees and expenses shall be paid by the Company).
(c) BENEFITS; PRIOR SERVICE. From and after the Effective Time, the Company shall cause each employee of the Company and each employee of any Subsidiary to be credited with service with the Company and/or a Subsidiary for purposes of determining such employee's eligibility to participate in and vesting under each employee benefit plan maintained by the Purchaser or its Affiliates after the Effective Time; PROVIDED, HOWEVER, that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits.
(d) BINDING ON SUCCESSORS. If the Company or any of the Subsidiaries or any of their successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, then and in each such case, proper provision shall be made so that the successors and assigns of the Company or any of the Subsidiaries (or their successors or assigns) shall assume the obligations set forth in SECTIONS 5.08(a), (b) and (c).
(e) XSOP. Effective as of the Closing Date, the XSOP shall be terminated and each participant thereunder at that time or then beneficiary of a deceased participant shall receive as soon as administratively feasible a cash payment equal to the value, determined as of the day before the termination occurs, of the participant's benefits under the XSOP. Prior to the Closing Date, the Plan Sponsor shall take all actions that are necessary to give effect to the transaction contemplated by this SECTION 5.08(e).
(f) ESOP. As of the Closing Date, but subject to SECTION 2.01(h) hereof, the ESOP shall be terminated. Prior to the Closing Date, the Plan Sponsor shall take all actions (including but not limited to, if appropriate, amending the ESOP) that are necessary to give effect to the transaction contemplated by this SECTION 5.08(f).
(g) PROFIT SHARING-RETIREMENT PLAN. Effective as of the day immediately preceding the Closing Date, the Plan Sponsor shall terminate the Profit Sharing-Retirement Plan,
and the employees of the Company and each of the Subsidiaries shall be eligible to participate in a profit sharing retirement plan as soon as administratively practicable after the Effective Time.
5.09 EXCLUSIVITY.
(a) Until the termination of this Agreement, neither the Company, the
Subsidiaries nor the Shareholders nor any of their respective directors,
officers, employees, agents, representatives or shareholders (collectively, the
"COMPANY GROUP") shall initiate, solicit, entertain, negotiate, accept or
discuss, or encourage inquiries or proposals (each, an "ACQUISITION PROPOSAL")
with respect to, or furnish any information relating to or participate in any
negotiations or discussions concerning, or enter into any agreement with respect
to, any acquisition or purchase of all or a substantial portion of the business,
assets, properties, capital stock or capital stock equivalents of the Company or
any of the Subsidiaries (a "POTENTIAL SALE"), whether by merger, combination,
sale of stock, sale of assets, or otherwise, or enter into any agreement,
arrangement or undertaking requiring it to abandon, terminate or fail to
consummate the transactions contemplated by this Agreement. The Company and the
Shareholders shall, and shall cause each other member of the Company Group to,
immediately cease and cause to be terminated any existing activities, including
discussions or negotiations with any parties, other than Purchaser, conducted
prior to the date hereof with respect to any Acquisition Proposal. The Company
and the Shareholders shall (i) promptly inform Purchaser of any inquiries any
member of the Company Group receives after the date hereof concerning an
Acquisition Proposal or Potential Sale and provide Purchaser with copies of all
correspondence or other documents received in connection therewith and (ii)
inform the Persons sending such inquiries, requests or proposals that the
Company is bound by an exclusivity arrangement (without any reference to
Purchaser, or its potential financing sources). The Company represents that it
is not a party to or bound by any agreement with respect to an Acquisition
Proposal other than under this Agreement. The Company and the Subsidiaries shall
cause their officers, directors, agents and advisors to comply with this
SECTION 5.09.
(b) Each Shareholder further agrees that, except as contemplated by this Agreement, without the prior written consent of the Purchaser, such holder shall not, directly or indirectly, during the term of this Agreement (i) grant or enter into any Encumbrance, power of attorney or other agreement or arrangement with respect to the voting of such holder's shares of Company Capital Stock, (ii) sell, assign, transfer, encumber or otherwise dispose of, or enter into any Contract, option or other arrangement or understanding with respect to the direct or indirect sale, assignment, transfer, encumbrance or other disposition of any of such shares of Company Capital Stock or (iii) take any other action that would in any way restrict, limit or interfere with the performance of such Person's obligations hereunder or the transactions contemplated hereby.
5.10 FINANCING COMMITMENTS.
(a) On or prior to 5 p.m. (Boston, Massachusetts time) on July 18, 2001 (the "Outside Financing Commitment Date"), the Purchaser will deliver to the Company Financing Commitments that are in form and substance reasonably satisfactory to the Company. If the Company has not received such Financing Commitments from Purchaser by the Outside Financing Commitment Date, or if such Financing Commitments are not reasonably satisfactory to the Company, the Company may, at its option, within ten (10) days of the Outside Financing
Commitment Date, terminate this Agreement by written notice to Purchaser, in
which event, this Agreement shall forthwith terminate (except for the provisions
hereof which expressly survive such termination by their terms) and there shall
be no liability or obligation whatsoever on the part of any party hereto except
for the obligation of Purchaser to pay the Company Expenses as set forth in
SECTION 5.06.
(b) At reasonable intervals and at the Company's request, Purchaser shall inform the Company of the status regarding Purchaser's efforts to secure the Financing Commitments between the date hereof and the Outside Financing Commitment Date.
5.11 APPOINTMENT OF SHAREHOLDER REPRESENTATIVE. By their execution of a counterpart of this Agreement, each Shareholder hereby irrevocably constitutes and appoints Richard B. Simches (the "SHAREHOLDER REPRESENTATIVE"), with full power of substitution, as such Shareholder's true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Shareholder, for the purpose of (i) contesting, defending, disputing, settling, compromising or otherwise disposing of any Losses asserted by any Purchaser Indemnitee, (ii) resolving, disputing, receiving, agreeing to and collecting (including, without limitation, instituting legal actions therefor), the amount of the Post-Closing Adjustment Consideration and otherwise carry out the provisions of SECTION 2.01(d), (iii) carrying out the other responsibilities of the Shareholder Representative contained in the Agreement, and (iv) to take any and all appropriate action and to execute any documents and instruments that may be necessary or desirable to accomplish the purposes of any and all of the foregoing, and the transactions, documents, instruments, agreements and certificates contemplated thereby, including, to perform or make any waivers, statements, restatements, modifications and supplements in the documents or other agreements, instruments or documents that may be entered into in connection therewith on such Shareholder's behalf, as from time to time may be agreed upon by the Shareholder Representative; and such Shareholder Representative shall be authorized on behalf of each Shareholder and in the name of such Shareholder to execute, deliver and perform each of such documents and agreements with such waivers, modifications, changes, deletions, supplements or amendments as have been approved by the Shareholder Representative, such approval to be conclusively evidenced by the Shareholder Representative's execution and delivery thereof. Each Shareholder agrees that the power granted by this SECTION 5.11 is coupled with an interest and irrevocable. In the event of the death, incapacity, or resignation of, or if for any other reason Richard B. Simches shall cease to serve as Shareholder Representative, then, and in such event, S. Nancy Simches shall, and without any further action on the part of the Shareholders, immediately be the Shareholder Representative hereunder. In the event of the death, incapacity or resignation of, or if for any other reason S. Nancy Simches shall cease to serve as Shareholder Representative, then, and in such event, the Persons (or in the case of any individual who is deceased at the time of such action, then such Person's personal representative) who were the holders of record of a majority of the Company Capital Stock which was outstanding immediately prior to the Closing (on a one-Share-for-one-Share vote basis) shall by written designation constitute and appoint a successor Shareholder Representative and shall give notice of such action to the Purchaser and to the other Shareholders of record.
5.12 TERMINATION OF CERTAIN AGREEMENTS. At or prior to the Closing, the Company shall take all actions necessary if any, to terminate the Affiliate Contracts.
5.13 MEETING OF SHAREHOLDERS. As promptly as practicable after the Purchaser's full satisfaction of SECTION 5.10(a), the Company shall take all actions necessary in accordance with applicable Law and its certificate of incorporation and by-laws to duly call, give notice of, convene and hold a meeting of the Shareholders or to solicit and obtain the written consent of the Shareholders for the purpose of considering and voting upon or consenting to the adoption and approval of this Agreement and the transactions contemplated hereby. Subject to its fiduciary duties, the board of directors of the Company shall recommend approval and adoption of this Agreement and the transactions contemplated hereby by the Shareholders.
5.14 SHAREHOLDERS/VOTING ARRANGEMENT. Each Shareholder (other than the ESOP) hereby agrees to vote all shares of Company Capital Stock that such Shareholder (other than the ESOP) is entitled to vote at the time of any meeting of the Shareholders or by written consent at which the approval and adoption of this Agreement, the Merger and the transactions contemplated hereby are submitted for the consideration and vote of the Shareholders, and at any adjournment thereof, in favor of the approval and adoption of this Agreement, the Merger and the transactions contemplated hereby. The Company and each Shareholder (other than the ESOP) shall use its reasonable best efforts to cause each other Shareholder to vote all shares of Company Capital Stock that such other Shareholders are entitled to vote at the time of any meeting of the Shareholders or by written consent at which the approval and adoption of this Agreement, the Merger and the transactions contemplated hereby are submitted for the consideration and vote of the Shareholders, and at any adjournment thereof, in favor of the approval and adoption of this Agreement (or any amended version), the Merger and the transactions contemplated hereby.
5.15 PROXY STATEMENT. As soon as reasonably practicable following the date of this Agreement, the Company shall prepare and mail a proxy statement to the ESOP Trustee, for distribution to the ESOP participants, soliciting such ESOP participants' votes with respect to the Merger and the other transactions contemplated by this Agreement. The Company covenants and agrees that the proxy statement shall include the recommendation of the Company's board of directors, subject to its fiduciary duties, that such ESOP participants vote to approve this Agreement and the transactions contemplated hereby.
5.16 ASSIGNMENT. At or prior to the Effective Time and in consideration of the transactions contemplated hereby, Richard B. Simches shall assign to the Purchaser all of his right, title and interest in and to the capital stock of the Company's Subsidiary, Safety Insurance Company, Inc. Mr. Simches shall represent and warrant to the Purchaser at the time of such assignment that the capital stock so assigned is free and clear of any Encumbrances. Any failure of Mr. Simches to so assign such capital stock shall be deemed a material non-compliance for purposes of SECTION 6.02(b) hereof.
ARTICLE VI
CLOSING CONDITIONS
6.01 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS TO EFFECT THE TRANSACTIONS CONTEMPLATED HEREBY. The obligations of the Company and Shareholders to effect
the transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Company:
(a) The representations and warranties of the Purchaser and Acquisition contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing Date as though such representations and warranties were made at and as of such date.
(b) The Purchaser and Acquisition shall have performed and complied in all material respects with all agreements, obligations, covenants and conditions required by this Agreement to be performed or complied with by them on or prior to the Closing Date.
(c) No Law, preliminary or permanent injunction or restraining order shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits or restricts the consummation of the transactions contemplated hereby. No action or proceeding by any Governmental Entity shall have been commenced (and be pending) against the Company, any of the Subsidiaries or any of their respective affiliates, associates, officers or directors seeking to prevent or delay the transactions contemplated hereby or challenging any of the terms or provisions of this Agreement or seeking material damages in connection therewith.
(d) All consents and approvals of Governmental Entities necessary for consummation of the transactions contemplated hereby shall have been obtained, other than those which, if not obtained, would not have a Material Adverse Effect or a Purchaser Material Adverse Effect.
(e) The Purchaser and Acquisition shall have furnished the Company with such certificates of its officers and others to evidence its compliance with the conditions set forth in SECTION 6.01(a) through (d) as may be reasonably requested by the Company.
(f) Acquisition shall have executed and delivered the Certificate of Merger.
(g) Any waiting period applicable to the Merger under the HSR Act shall have terminated or expired.
(h) The Company shall have received the written opinion of Mayer, Brown & Platt, special legal counsel to each of the Purchaser and Acquisition, in form and substance reasonably satisfactory to the Company.
6.02 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER AND ACQUISITION TO EFFECT THE TRANSACTIONS CONTEMPLATED HEREBY. The obligations of the Purchaser and Acquisition to effect the transactions contemplated hereby shall be further subject to the fulfillment at or prior to the Closing Date of the following conditions, any one or more of which may be waived by the Purchaser:
(a) The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing Date as though such representations and warranties were made at and as of such date.
(b) The Company shall have performed and complied in all material respects with all agreements, obligations, covenants and conditions required by this Agreement to be performed or complied with by them on or prior to the Closing Date.
(c) No Law, preliminary or permanent injunction or restraining order shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits or restricts the consummation of the transactions contemplated hereby. No action or proceeding by any Governmental Entity shall have been commenced (and be pending) against the Purchaser or Acquisition or any of their affiliates, associates, officers, or directors seeking to prevent or delay the transactions contemplated hereby or challenging any of the terms or provisions of this Agreement or seeking material damages in connection therewith.
(d) All consents and approvals required under the Contracts set forth on Section 3.04 or Section 3.09(b) of the Disclosure Schedule and all consents and approvals of Governmental Entities necessary for consummation of the transactions contemplated hereby shall have been obtained, other than those which, if not obtained, would not have a Material Adverse Effect or a Purchaser Material Adverse Effect.
(e) The Company shall have furnished the Purchaser and Acquisition with such certificates of the Company's officers and others to evidence their compliance with the conditions set forth in this SECTION 6.02(a) through (d) as may be reasonably requested by the Purchaser.
(f) The Company shall have executed and delivered the Certificate of Merger.
(g) The Merger shall have been approved by the vote of the Shareholders in accordance with applicable Law and the Company's organizational documents, with at least ninety percent (90%) approval having been obtained with respect to each class of Company Capital Stock, and the Company shall have delivered to the Purchaser a certificate, dated as of the Closing Date, to such effect.
(h) Any waiting period applicable to the Merger under the HSR Act shall have terminated or expired.
(i) The Purchaser shall have received the written opinions of Hutchins, Wheeler & Dittmar, A Professional Corporation, legal counsel to the Company and Morrison, Mahoney & Miller, LLP, insurance counsel to the Company, in each case in form and substance reasonably satisfactory to the Purchaser, on which the Purchaser's lenders may rely.
(j) On or prior to the Closing Date, the action required pursuant to
SECTION 5.08(e), (f) and (g) relating to the XSOP, the ESOP and the Profit
Sharing-Retirement Plan shall have been taken.
(k) The Purchaser shall have received cash proceeds, pursuant to the Financing Commitments, in an amount necessary to consummate the Merger and other transactions contemplated by this Agreement and to pay all fees and expenses in connection therewith.
(l) Richard B. Simches shall have entered into a Non-Competition Agreement with Purchaser and Acquisition, substantially in the form of EXHIBIT B attached hereto.
(m) During the period from the date hereof to the Closing Date, no event shall have occurred or be continuing (including any litigation or change in the financial or business condition of the Company and the Subsidiaries, taken as a whole) which has or had a Material Adverse Effect.
(n) The Purchaser shall have received from the Company a duly executed certificate in the form specified by Treasury Regulation Section 1.1445-2(b)(2).
(o) The ESOP shall have paid to the Company or the Company shall have forgiven the payment of all amounts due and owing under the ESOP Note in full satisfaction and release of the ESOP Note.
(p) The Company shall have paid to Fleet National Bank f/k/a The First National Bank of Boston ("FNBB") all amounts due and owing as of the Closing Date under the Loan Agreement, dated April 12, 1995, in the original principal amount of $36,000,000, between the Company and FNBB, and the other documents related thereto (the "LOAN DOCUMENTS") in full satisfaction and release of the Loan Documents and FNBB shall have released any and all Encumbrances and filed all appropriate UCC filings effecting such release.
(q) Richard B. Simches and S. Nancy Simches shall have paid to the Company all amounts due and owing under the Amended and Restated Promissory Note, dated July 15, 1996, in the original principal amount of $1,100,000.00.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.01 TERMINATION. This Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual consent of the Purchaser and the Company;
(b) by the Company or by the Purchaser at any time after the date which is (180) days after the date hereof, unless the approvals and consents listed on Section 3.04 of the Disclosure Schedule have been applied for or submitted but not received by such date, in which case either party may extend such date by an additional ninety (90) days, PROVIDED, HOWEVER, that the right to terminate this Agreement under this SECTION 7.01 shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date;
(c) by the Purchaser, if there has been (i) a material violation or breach by the Company or Shareholder of any agreement, covenant, representation or warranty contained in this Agreement or any violation or breach which has rendered the satisfaction of any condition to
the obligations of the Purchaser impossible and (ii) such violation or breach has not been waived by the Purchaser; or
(d) by the Company, if there has been (i) a material violation or breach by the Purchaser or Acquisition of any agreement, covenant, representation or warranty contained in this Agreement or any violation or breach which has rendered the satisfaction of any condition to the obligations of the Company impossible (ii) and such violation or breach has not been waived by the Company.
7.02 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination of this Agreement and abandonment of the transactions contemplated hereby by any or all of the parties pursuant to SECTION 7.01, written notice thereof shall forthwith be given to the other parties and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action by any of the parties hereto. If this Agreement is terminated as provided herein, this Agreement, other than the obligations of each party under SECTIONS 5.02(b) and 5.06 hereof, shall forthwith become null and void, without any liability on the part of any party hereto, or any subsidiaries or affiliates of, or any officers, directors or employees of, any party; PROVIDED, HOWEVER, that, nothing contained in this SECTION 7.02 shall relieve any party from liability for a breach of any covenant, agreement, representation or warranty contained in this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.01 SURVIVAL, REPRESENTATIONS AND WARRANTIES. The representations and
warranties provided for in this Agreement shall survive until the 540th day
following the Closing Date, except that (i) the representations and warranties
contained in SECTIONS 3.02, 3.03, 3.14 and 4.05 shall survive indefinitely and
(ii) the representations and warranties contained in SECTIONS 3.13, 3.18 and
3.19 shall survive until the third anniversary of the Closing Date. The
provisions of this SECTION 8.01 shall not limit any covenant or agreement of the
parties hereto which, by its terms, contemplates performance after the Closing
Date. The indemnification provisions contained in this ARTICLE VIII are the sole
and exclusive remedy of the parties hereto and are in lieu of any statutory,
equitable, or common law remedy any party hereto may otherwise have for any
breach of any representation, warranty, or covenant. The applicable survival
period of warranties, representations, agreements and covenants is referred to
herein as the "INDEMNIFICATION PERIOD". The termination of the Indemnification
Period shall not affect the rights of a party in respect of a claim made by such
party prior to the expiration of the Indemnification Period therefor. The
covenants and agreements in this ARTICLE VIII shall survive until such time as
any claim for indemnification is finally settled in accordance with the terms
hereof. No investigation by or knowledge of any of the parties hereto shall in
any way limit the representations and warranties of the parties or
indemnification rights hereunder.
8.02 INDEMNIFICATION OBLIGATION OF THE SHAREHOLDERS.
(a) Each of the Shareholders, severally (and not jointly or jointly and severally) and only to the extent set forth herein, agrees from and after the Closing to indemnify Purchaser and Acquisition and their respective affiliates, stockholders, officers, directors, employees, agents, representatives and successors and assigns (each a "PURCHASER INDEMNITEE" and, collectively the "PURCHASER INDEMNITEES") in respect of, and save and hold each Purchaser Indemnitee harmless against and pay on behalf of or reimburse each Purchaser Indemnitee as and when incurred, any Losses which any Purchaser Indemnitee suffers, sustains or becomes subject to as a result of or by virtue of, without duplication:
(i) any facts or circumstances which constitute a misrepresentation or breach of any representation or warranties made by the Company set forth in this Agreement (including the Disclosure Schedule) or any certificate, document or instrument to be delivered by the Company pursuant to this Agreement; or
(ii) any nonfulfillment or breach of any covenant of the Company or the Shareholders set forth in this Agreement.
(b) Notwithstanding the foregoing, the Shareholders shall not be required to indemnify the Purchaser Indemnitees in respect of any Losses any Purchaser Indemnitee suffers, sustains or becomes subject to as a result of or by virtue of any of the occurrences referred to in SECTION 8.02(a)(i) above unless and until the aggregate of all such Losses exceeds $1,000,000 (the "MINIMUM THRESHOLD"; and, in such event, the Shareholders shall be responsible only for the amount of such Losses which exceed the Minimum Threshold. In no event shall (i) any Shareholder be obligated to indemnify the Purchaser Indemnitees in respect of any Losses any Purchaser Indemnitee suffers, sustains, or becomes subject to, as a result of or by virtue of any of the occurrences referred to in SECTION 8.02(a) in excess of his Pro Rata Indemnification Percentage (as defined below) thereof and (ii) the Shareholders collectively be obligated to indemnify the Purchaser Indemnitees under this ARTICLE VIII in respect of any Losses in excess of the aggregate amount of $10,000,000 (the "INDEMNIFICATION CAP"). Notwithstanding any other provision of this SECTION 8.02, the Minimum Threshold and the Indemnification Cap shall not apply with respect to breaches of SECTIONS 3.02, 3.03 or 3.14. As used herein, the term "PRO RATA INDEMNIFICATION PERCENTAGE" shall mean for each Shareholder, a fraction, the numerator of which is the Merger Consideration received by such Shareholder and the denominator of which is aggregate amount of all Merger Consideration received by all of the Shareholders.
(c) Each Shareholder acknowledges that the agreement contained in this ARTICLE VIII is an integral part of the transactions contemplated by this Agreement and that, without such agreement, Purchaser would not enter into this Agreement; accordingly, if any Shareholder fails to pay promptly any amounts due by such Signing Shareholder pursuant to this Section 8.02 and in order to obtain such amounts, the Purchaser commences a suit against such Signing Shareholder to collect the amounts provided for herein, if the Purchaser succeeds on the merits in such action or proceeding, such Shareholder shall pay to Purchaser its reasonable costs and expenses (including reasonable attorneys' fees) in connection with such suit; PROVIDED, HOWEVER, that should the Purchaser be the losing party on the merits in any such action or proceeding, the
Purchaser shall pay to such Shareholder its reasonable costs and expenses (including reasonable attorneys' fees) in connection with such suit.
8.03 INDEMNIFICATION OBLIGATION OF PURCHASER. Purchaser will indemnify the Company and its affiliates, stockholders, officers, managers, directors, employees, agents, representatives and successors and assigns, including, without limitation, the Shareholders (collectively, the "SELLER INDEMNITEES") in respect of, and save and hold each Seller Indemnitee harmless against any Losses which such Seller Indemnitee suffers, sustains or becomes subject to as a result of or by virtue of, without duplication:
(a) any facts or circumstances which constitute a misrepresentation or breach of any representation or warranties by the Purchaser set forth in this Agreement or any certificate document, or instrument to be delivered by the Purchaser pursuant to this Agreement; or
(b) any nonfulfillment or breach of any covenant or agreement of the Purchaser set forth in this Agreement.
8.04 INDEMNIFICATION PROCEDURES.
(a) Any Person making a claim for indemnification pursuant to SECTION 8.02 or 8.03 above (each, an "INDEMNIFIED PARTY") must give the party from whom indemnification is sought (an "INDEMNIFYING PARTY") written notice of such claim promptly after the Indemnified Party receives any written notice of any action, lawsuit, proceeding, investigation or other claim (a "PROCEEDING") against or involving the Indemnified Party by any Person or otherwise discovers the liability, obligation or facts giving rise to such claim for indemnification; PROVIDED, that the failure to notify or delay in notifying an Indemnifying Party will not relieve the Indemnifying Party of its obligations pursuant to SECTION 8.02 or 8.03 above, as applicable, except to the extent that such failure or delay actually harms the Indemnifying Party.
(b) With respect to the defense of any Proceeding against or involving an Indemnified Party in which any Person in question seeks only the recovery of a sum of money (and not for injunctive or equitable relief) for which indemnification is provided in SECTION 8.02 or 8.03 above, at its option an Indemnifying Party may appoint as lead counsel of such defense any legal counsel approved by the Indemnified Party, such approval not to be unreasonably withheld or delayed.
(c) Notwithstanding SECTION 8.02(b) above: (i) the Indemnified Party will be entitled to participate in the defense of such claim and to employ counsel of its choice for such purpose at its own expense (provided that the Indemnifying Party will bear the fees and expenses of such separate counsel incurred prior to the date upon which the Indemnifying Party effectively assumes control of such defense) and (ii) the Indemnifying Party will not be entitled to assume control of the defense of such claim, and will pay the reasonable fees and expenses of legal counsel retained by the Indemnified Party, if:
(x) an adverse determination of such Proceeding would be reasonably likely to have a material and adverse effect upon the Indemnified Party's business;
(y) the Indemnified Party reasonably believes that there exists a conflict of interest which, under applicable principles of legal ethics, could prohibit a single legal counsel from representing both the Indemnified Party and the Indemnifying Party in such Proceeding; or
(z) the Indemnified Party reasonably believes that the Indemnifying Party has failed or is failing to prosecute or defend vigorously such claim following written notice and a 30 day opportunity to cure.
(d) the Indemnifying Party must obtain the prior written consent of the Indemnified Party (which the Indemnified Party will not unreasonably withhold, delay or condition) prior to entering into any settlement of such claim or Proceeding or ceasing to defend such claim or Proceeding; PROVIDED that any such settlement shall provide for the full release of all claims against each Indemnified Party.
8.05 PAYMENT. Upon the determination of the liability under ARTICLE VIII or otherwise between the parties or by judicial proceeding, the appropriate party shall pay to the other, as the case may be, within ten (10) days after such determination, the amount of any claim for indemnification made hereunder. All amounts not paid when due under ARTICLE VIII will accrue interest, payable on demand, at the rate of eighteen percent (18%) per annum from the date due until paid in full and each paying party will pay the other party's reasonable and documented out-of-pocket costs and expenses (including without limitation, reasonable attorneys' fees and expenses) incurred in attempting to collect any such amounts.
8.06 ADJUSTMENT TO INDEMNITIES. The amount of indemnity payable under
SECTION 8.02 or SECTION 8.03 shall be treated by the Purchaser and the Company
as an adjustment to the Merger Consideration, and shall be (i) calculated after
giving effect to any proceeds actually received from insurance policies covering
the Loss that is the subject of the claim for indemnity, net of any increase in
premium as a result of such claim, (ii) reduced (but not below zero) by an
amount equal to the Tax Benefit, if any, to the Indemnified Party or one or more
of its Affiliates resulting from the Loss that is the subject of the indemnity
payment, and (iii) in the case of an indemnity payment relating to Taxes,
reduced (but not below zero) by the Tax Benefit, if any to the Indemnified Party
and/or one or more of its Affiliates, attributable to (or arising out of) the
adjustment giving rise to the indemnity payment, including, but not limited to,
any corresponding adjustments relating to any period ended after the Closing
Date, and whether or not realized, calculated on a present value basis as set
forth in the definition of Tax Benefit.
8.07 PAYMENT OF TAXES.
(a) The Purchaser shall cause to be prepared and filed all Tax Returns for the Company and its Subsidiaries for all Tax periods ending on or prior to the Closing Date which are required to be filed after the Closing, and shall also cause to be prepared and filed any Tax Returns for the Company and its Subsidiaries for all Tax periods that begin prior to and end after the Closing Date. In the case of any Tax payable for a Tax period including (but not ending on) the Closing Date, the portion of such Tax relating to the portion of the Tax period ending on the Closing Date shall be deemed to equal the following applicable amount, PROVIDED, HOWEVER, that in no event shall any Tax be allocated to the portion of a Tax period ending on the Closing Date
to the extent such Tax relates to a transaction (including, but not by way of limitation, the acquisition of property) occurring on or after the Closing: (i) if such Tax is not based upon or related to income or receipts, the portion of such Tax equal to the entire Tax multiplied by a fraction, the numerator of which is the number of days in the Tax period through the Closing Date and denominator of which is the number of days in the entire Tax period, and (ii) if such Tax (including sales and use Taxes) is based on or related to income or receipts, the amount that would have been due had the Tax period ended on the Closing Date, PROVIDED, HOWEVER, that any such Tax arising under Section 338 of the Code shall be treated as arising in a period after the Closing Date.
(b) The Purchaser shall permit the Shareholders, at least thirty (30) days in advance of the filing thereof, to review and comment on all Tax Returns to be filed for the Company and its Subsidiaries for any period for which the Shareholders may have an indemnification obligation under this Agreement, and shall make such revisions to such Tax Returns as are reasonably requested by the Shareholder Representative. The Shareholders shall be entitled to participate in the preparation of such Tax Returns. Such Tax Returns shall be prepared consistent with past practices, except as provided in the next sentence. No position shall be taken on the Tax Returns that could reasonably be expected to give rise to an indemnification obligation of the Shareholders hereunder without the prior written consent of the Shareholders, which shall not be unreasonably withheld.
(c) In the event any Tax authority informs or is deemed to inform the Purchaser or any of its Affiliates, including the Company, of any notice of proposed audit, claim, assessment, or other dispute concerning an amount of Taxes with respect to which the Shareholders may incur liability hereunder, the Purchaser shall promptly notify, or shall cause the party so informed promptly to notify, the Shareholders in writing of such matter. Such notice shall contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice or other documents received from any Tax authority with respect to such matter. If an Indemnified Party fails to provide, or cause to be provided to, the Indemnifying Party prompt notice of such asserted Tax liability and such failure to provide the required notice results in a monetary detriment to the Indemnifying Party, then the Indemnified Party shall promptly pay over to the Indemnifying Party the amount of such detriment or the amount of the indemnity will be reduced by such detriment.
(d) With respect to any examination, audit, contest, appeal, or other proceeding relating to Taxes of the Company or its Subsidiaries that could give rise to indemnification obligations of the Shareholders hereunder, the Shareholders shall have the right to control the contest and settlement of any such proceeding, PROVIDED, HOWEVER, that the Shareholders shall not settle any such proceeding without the prior written consent of the Purchaser, which shall not be unreasonably withheld. The Purchaser, on behalf of itself and each of its Affiliates, including the Company, shall cooperate with the Shareholders and shall provide the Shareholders with access to its accountants, accountant's work papers, Tax Returns, books and records, and other relevant information and shall execute any necessary powers of attorney relevant to the Shareholders' authority hereunder. In the event that the Shareholders elect not to control such contest and settlement, the Shareholders shall have the right to participate in such contest and settlement, and the Purchaser shall not settle, and shall not permit any of its Affiliates, including
the Company, to settle, any audit or proceeding without the prior written consent of the Shareholders, which shall not be unreasonably withheld.
(e) The Shareholders, on the one hand, shall cooperate and the Purchaser, on the other hand, shall cooperate and cause each of its Affiliates, including the Company, to cooperate with each other and with each other's agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Company and its Subsidiaries, including (i) the preparation and filing of Tax Returns, (ii) determining the liability and amount of any Taxes due or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include each such party making all relevant information and documents in its possession or, in the case of the Purchaser, in its possession or the possession of its accountants and/or Affiliates available to the other party. The parties shall retain, and the Purchaser shall cause each of its Affiliates, including the Company to retain, all Tax Returns, schedules, and work papers, and all material records and other documents relating thereto, until the expiration of the applicable statute of limitations (including, to the extent notified by any party, any extension thereof) of the Tax period to which such Tax Returns and other documents and information relate. Each of such parties shall also make available to the other party, as reasonably requested and available, personnel (including officers, directors, employees, and agents) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes.
(f) The Purchaser shall not amend or permit to be amended any Tax Returns of the Company or any of its Subsidiaries for Tax periods ending on or prior to the Closing Date, or file a claim for refund of Taxes attributable to a Tax period ending on or prior to the Closing Date, without the prior written consent of the Shareholders, which shall not be unreasonably withheld.
(g) For the purposes of this Agreement, the Indemnified Party shall not be treated as having incurred a Loss related to Taxes until such time as there has been a final disposition relating to the Tax at issue.
(h) The Shareholders shall have no indemnification obligation under this Agreement with respect to Taxes attributable to, arising out of or relating to any and all transactions occurring after the Closing Date or on the Closing Date, but after the Closing. Should, by reason of the Merger, the Company and its Subsidiaries become members of a new consolidated group of which the Purchaser is a member, then the Purchaser, on behalf of itself and on behalf of the Company and its Subsidiaries, agrees to report all transactions not in the Ordinary Course of Business that occur on the Closing Date as occurring after the event resulting in the change in the consolidated group status of the Company and each of its Subsidiaries, unless precluded from doing so under Treasury Regulations Section 1.1502-76(b)(1)(ii)(B).
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01 AMENDMENT AND MODIFICATION. Subject to applicable Law, this Agreement may be amended, modified or supplemented only by written agreement of the Company and the Purchaser with respect to any of the terms contained herein.
9.02 WAIVER OF COMPLIANCE; CONSENTS. Any failure of any of the parties to comply with any obligation, covenant, agreement or condition contained herein may be waived by the party entitled to the benefits thereof, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
9.03 NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties as follows:
If to the Purchaser or Acquisition:
Safety Holdings, Inc.
c/o The Jordan Company, LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: A. Richard Caputo, Jr.
Facsimile No.: 212-755-5263
with a copy to:
Mayer, Brown & Platt
1675 Broadway
New York, NY 10019
Attention: Martin J. Collins
Facsimile No.: 212-262-1910
If to the Company:
Thomas Black Corporation
20 Custom House Street
Boston, Massachusetts 02110
Attention: President
Facsimile No.: 617-951-0697
with copies to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 02110
Attention: Charles W. Robins and
Jack H. Fainberg
Facsimile No.: 617-951-1295
or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above (PROVIDED that notice of any change of address shall be effective only upon receipt thereof).
9.04 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party, nor is this Agreement
intended to confer upon any other person except the parties hereto any rights or
remedies hereunder; PROVIDED, HOWEVER, that Purchaser may assign any or all of
its rights, interests and obligations hereunder to any direct or indirect wholly
owned subsidiary of Purchaser or Acquisition; and PROVIDED, further, that
Purchaser may assign its rights and delegate its obligations hereunder to any
(i) Person in connection with a sale of all or substantially all assets of the
Purchaser, (ii) Person who acquires all of the capital stock of Purchaser, and
(iii) Person providing financing to Purchaser or its Affiliates. This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and their
successors and permitted assigns.
9.05 JURISDICTION; FORUM. By the execution and delivery of this Agreement, the Purchaser and Acquisition (i) submit to the personal jurisdiction of any state or federal court in the Commonwealth of Massachusetts in any suit or proceeding arising out of or relating to this Agreement and (ii) agrees that service of process upon it at its address set forth in this
Agreement shall be deemed in every respect effective service of process upon the Purchaser in any such suit or proceeding.
9.06 GOVERNING LAW. This Agreement shall be governed by the laws of The Commonwealth of Massachusetts (regardless of the laws that might otherwise govern under applicable Massachusetts principles of conflicts of law) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies.
9.07 COUNTERPARTS. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
9.08 INTERPRETATION. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement.
9.09 ENTIRE AGREEMENT. This Agreement, including the documents, schedules, certificates and instruments referred to herein, embody the entire agreement and understanding of the parties hereto in respect of the transactions contemplated by this Agreement. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such transactions, other than the Confidentiality Agreement.
IN WITNESS WHEREOF, the Purchaser, Acquisition, and the Company have caused this Merger Agreement to be signed by their duly authorized officers as of the date first above written.
PURCHASER:
SAFETY HOLDINGS, INC.
By:/s/A. Richard Caputo, Jr. ------------------------------ Name: A. Richard Caputo, Jr. Title: Vice President |
ACQUISITION:
SAFETY ACQUISITION, INC.
By:/s/A. Richard Caputo, Jr. ------------------------------ Name: A. Richard Caputo, Jr. Title: Vice President |
COMPANY:
THOMAS BLACK CORPORATION
By:/s/Richard B. Simches ------------------------------ Name: Richard B. Simches Title: Chairman of the Board |
SHAREHOLDERS:
/s/Richard B. Simches --------------------------------- Richard B. Simches /s/Sherri A. Mahne --------------------------------- Sherri A. Mahne |
The Sherri A. Simches Family Trust
By:/s/Sherri A. Simches ------------------------------ Sherri A. Simches, Trustee By:/s/William C. Sawyer ------------------------------ William C. Sawyer, Trustee By:/s/Kenneth A. Korb ------------------------------ Kenneth A. Korb, Trustee |
The Lorri S. Simches Family Trust
By:/s/Lorri S. Simches ------------------------------ Lorri S. Simches, Trustee By:/s/Deborah Kay ------------------------------ Deborah Kay, Trustee |
The Lorri S. Simches Family Trust II
By:/s/Lorri S. Simches
------------------------------
Lorri S. Simches, Trustee
By:/s/Deborah Kay
------------------------------
Deborah Kay, Trustee
|
The Safety Insurance Employee Stock Option Plan
By:/s/Richard B. Simches ------------------------------ Richard B. Simches, Trustee |
The Jeremy S. Owades 1996 Irrevocable Trust
By:/s/Manfred Tidor ------------------------------ Manfred Tidor, Trustee By:/s/Lorri S. Owades ------------------------------ Lorri S. Owades, Trustee |
The Mackenzie M. Owades 1996 Irrevocable Trust
By/s/Manfred Tidor ------------------------------ Manfred Tidor, Trustee By:/s/Lorri S. Owades ------------------------------ Lorri S. Owades, Trustee |
The Justin T. Owades 1996 Irrevocable Trust
By:/s/Manfred Tidor ------------------------------ Manfred Tidor, Trustee By:/s/Lorri S. Owades ------------------------------ Lorri S. Owades, Trustee |
The Thomas C. Mahne 1996 Irrevocable Trust
By:/s/Manfred Tidor ------------------------------ Manfred Tidor, Trustee By:/s/Sherri A. Mahne ------------------------------ Sherri A. Mahne, Trustee |
The Sherri A. Mahne 2000 Grantor Retained Annuity Trust
By:/s/Sherri A. Mahne ------------------------------ Sherri A. Mahne, Trustee |
The Justin T. Owades Family Trust of 2001
By:/s/Lorri S. Owades ------------------------------ Lorri S. Owades, Trustee |
Beacon Fiduciary Advisors, Inc., Trustee
By:/s/Frederick Shultz ------------------------------ Name: Frederick Shultz Title: President |
The Mackenzie M. Owades Family Trust of 2001
By:/s/Lorri S. Owades ------------------------------ Lorri S. Owades, Trustee |
Beacon Fiduciary Advisors, Inc., Trustee
By:/s/Frederick Shultz ------------------------------ Name: Frederick Shultz Title: President |
The Jeremy S. Owades Family Trust of 2001
By:/s/Lorri S. Owades ------------------------------ Lorri S. Owades, Trustee |
Beacon Fiduciary Advisors, Inc., Trustee
By:/s/Frederick Shultz -------------------------------- Name: Frederick Shultz Title: President |
The Simches 2001 Charitable Remainder Annuity Trust dated April 3, 2001
By:/s/Richard B. Simches ------------------------------ Richard B. Simches, Trustee By:/s/S. Nancy Simches ------------------------------ S. Nancy Simches, Trustee By:/s/Deborah Kay ------------------------------ Deborah Kay, Trustee |
LIST OF EXHIBITS
Exhibit A - Certificate of Merger
Exhibit B - Form of Non-competition Agreement.
LIST OF SCHEDULES
Schedule 2.01 - Merger Consideration
|
DISCLOSURE SCHEDULES
Section 3.01 Corporate Organization
Section 3.02 Capitalization
Section 3.04 Consents and Approvals; No Violations
Section 3.07 Absence of Certain Changes
Section 3.08 Compliance with Law
Section 3.09 Material Contracts
Section 3.10 Undisclosed Liabilities
Section 3.11 Defaults
Section 3.12 Litigation
Section 3.13 Taxes
Section 3.15 Title To Properties
Section 3.16 Intellectual Property
Section 3.17 Insurance
Section 3.18 Environmental Matters
Section 3.19 Employee Benefits
Section 3.20 Insurance Business
Section 3.21 Real Property
Section 3.22 Permits
Section 3.25 Management Agreements and Bonuses
Section 3.26 Accuracy of Information
Schedule 4.03 Consents and Approvals; No Violation
Schedule 5.08 Employee Benefit Matters
EXHIBIT 2.2
FIRST AMENDMENT TO MERGER AGREEMENT
THIS FIRST AMENDMENT TO MERGER AGREEMENT, dated as of July 17, 2001 (this "AMENDMENT"), is by and among Safety Holdings, Inc., a Delaware corporation (the "PURCHASER"), Safety Merger Co., Inc., a Delaware corporation and first-tier, wholly-owned subsidiary of the Purchaser ("ACQUISITION"), and Thomas Black Corporation, a Massachusetts corporation (the "COMPANY").
WHEREAS, the Merger Agreement, dated as of May 31, 2001 (the "MERGER AGREEMENT") was entered into by and among the Purchaser, Acquisition (although name "Safety Acquisition, Inc." was erroneously used therein), the Company and the holders of the Company's capital stock;
WHEREAS, Section 9.01 of the Merger Agreement provides that the Purchaser and the Company may, by their written agreement, amend the Merger Agreement;
WHEREAS, the parties hereto desire to amend the Merger Agreement as provided in this Amendment for, among others, purposes of (i) amending the definition of "Consolidated After Tax Net Income", (ii) amending Section 5.10(b), (iii) acknowledging the satisfaction of the Purchaser's obligations pursuant to Section 5.10(a) of the Merger Agreement and (iv) clarifying the true and correct name of Acquisition;
NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.
2. AMENDMENT TO SECTION 1.01 OF THE MERGER AGREEMENT. Section 1.01 of the Merger Agreement is hereby amended by amending and restating the definition of "Consolidated After Tax Net Income", which shall read in its entirety as follows:
"Consolidated After Tax Net Income" shall mean, for the period set forth in the definition of "Post-Closing Adjustment Consideration", the net earnings (or loss) after Taxes of the Company and its Subsidiaries on a consolidated basis for such period, taken as a single accounting period, and determined in conformity with GAAP; PROVIDED, HOWEVER that Consolidated After Tax Net Income will not include any deduction or addition for (w) a gain resulting from the revaluation of the ESOP or the XSOP, (x) contributions by the Company to the XSOP, (y) any breakage or similar fee incurred by the ESOP in connection with a buyout of the swap related to the ESOP Note or (z) any fees and expenses paid or payable by the Company to Tucker Anthony Incorporated in connection with this Agreement and the transactions contemplated hereby.
3. AMENDMENT TO SECTION 5.10(b) OF THE MERGER AGREEMENT. Section 5.10(b) of the Merger Agreement is hereby amended and restated in its entirety as follows:
(b) Purchaser shall, upon the reasonable request of the Company from time to time, inform the Company of the status of the Financing Commitments and provide the Company with updates with respect thereto, including any satisfaction of conditions thereunder and/or change in circumstance with respect thereto.
4. ACKNOWLEDGMENT REGARDING SECTION 5.10 OF THE MERGER. The Company
hereby acknowledges and agrees that (i) the Financing Commitments previously
delivered by the Purchaser to the Company pursuant to Section 5.10(a) of the
Merger Agreement are in form and substance satisfactory to the Company, (ii) the
Company's right to terminate the Merger Agreement pursuant to Section 5.10(a) is
hereby forever waived by the Company and shall have no further force or effect,
and (iii) the Purchaser has complied with and satisfied its obligations under
Section 5.10(a) of the Merger Agreement.
5. AMENDMENT AND JOINDER. The parties acknowledge and agree that the true and correct name of Acquisition is "Safety Merger Co., Inc." Accordingly, the Merger Agreement is hereby amended to replace each reference therein to the name "Safety Acquisition, Inc.", wherever appearing in the Merger Agreement, with the name "Safety Merger Co., Inc." For the avoidance of doubt, the parties hereto agree that Acquisition shall hereby become, and shall be deemed for all purposes to be, a party to the Merger Agreement effective as of the date of the Merger Agreement and shall be subject to all of the responsibilities, duties, liabilities and obligations, and entitled to all of the rights and benefits, of "Acquisition" under the Merger Agreement.
6. NO COMMITMENT REDUCTION. Acquisition hereby agrees that it will not voluntarily terminate or cancel, in whole or in part, the unused portion of the revolving line of credit contemplated by the Financing Commitment delivered by Fleet National Bank at any time prior to the payment of the Post Closing Adjustment Consideration under and in accordance with the Merger Agreement.
7. EFFECTIVENESS. Except as modified hereby, the Merger Agreement shall remain in full force and effect and is ratified in all respects. On and after the effectiveness of this Amendment, each reference in the Merger Agreement to "this Merger Agreement," "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference to the Merger Agreement in any other agreements, documents or instruments executed and delivered pursuant to the Merger Agreement, shall mean and be a reference to the Merger Agreement, as amended by this Amendment.
8. COUNTERPARTS. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
9. INCORPORATION OF TERMS. This Amendment shall be construed in accordance with the provisions contained in Article IX of the Merger Agreement and such provisions are hereby incorporated by reference as though expressly set forth herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be duly executed as of the date first above written.
PURCHASER:
SAFETY HOLDINGS, INC.
By: /s/ A. Richard Caputo, Jr.
----------------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
|
ACQUISITION:
SAFETY MERGER CO., INC.
By: /s/ A. Richard Caputo, Jr.
----------------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
|
COMPANY:
THOMAS BLACK CORPORATION
By: /s/ Richard B. Simches
----------------------------------------
Name: Richard B. Simches
Title: Chairman of the Board
|
EXHIBIT 10.2
SAFETY HOLDINGS, INC.
STOCKHOLDERS AGREEMENT
Dated as of October 16, 2001
TABLE OF CONTENTS
(Not Part of Agreement)
PAGE
Recitals ...............................................................1
ARTICLE I
Certain Definitions
ARTICLE II
Management
Section 2.1 Registration of Common Stock...................................7
Section 2.2 No Conflict with Agreement.....................................7
ARTICLE III
Corporate Governance
Section 3.1 Board of Directors.............................................8
Section 3.2 Vacancies......................................................9
Section 3.3 Covenant to Vote...............................................9
Section 3.4 Restrictions On Other Agreements...............................9
Section 3.5 Consent of Management Director.................................9
ARTICLE IV
Transfers of Stock
Section 4.1 Restrictions on Transfer......................................10
Section 4.2 Exceptions to Restrictions....................................10
Section 4.3 Endorsement of Certificates...................................11
Section 4.4 Transfers to Competitors......................................12
Section 4.5 Improper Transfer.............................................12
|
TABLE OF CONTENTS
(Not Part of Agreement)
PAGE
ARTICLE V
Rights of First Offer; New Securities;
Section 5.1 Transfers by a Stockholder....................................12
Section 5.2 Transfer of Offered Shares to Third Parties...................13
Section 5.3 Purchase of Offered Shares....................................14
Section 5.4 Waiting Period with Respect to Subsequent Transfers...........14
Section 5.5 Right of First Refusal for New Securities.....................14
Section 5.6 Right to Join in Sale.........................................15
Section 5.7 Take Along....................................................16
Section 5.8 Call Rights Upon Failure to Obtain Necessary Approval.........17
Section 5.9 Legally Binding Obligation; Power of Attorney; Personal
Rights........................................................17
ARTICLE VI
Registration Rights
Section 6.1 Demand Registrations..........................................18
Section 6.2 Piggyback Registrations.......................................20
Section 6.3 Registration Procedures.......................................21
Section 6.4 Indemnification...............................................24
Section 6.5 Contribution..................................................26
Section 6.6 Rule 144......................................................27
Section 6.7 Limitations on Subsequent Registration Rights.................27
ARTICLE VII
Termination
Section 7.1 Certain Terminations..........................................27
|
TABLE OF CONTENTS
(Not Part of Agreement)
PAGE
ARTICLE VIII
Miscellaneous
Section 8.1 Successors and Assigns........................................28
Section 8.2 Amendment and Modification; Waiver of Compliance; Conflicts...28
Section 8.3 Notices.......................................................28
Section 8.4 Entire Agreement..............................................29
Section 8.5 Inspection....................................................29
Section 8.6 Headings......................................................29
Section 8.7 Recapitalizations, Exchanges, Etc., Affecting the Common
Stock; New Issuances..........................................29
Section 8.8 Ratification of Prior Acts of Board of Directors of Company;
Right to Negotiate............................................30
Section 8.9 LITIGATION....................................................30
Section 8.10 No Strict Construction........................................30
Section 8.11 Counterparts..................................................31
Section 8.12 New Stockholders..............................................31
|
EXHIBITS
Exhibit A Stockholder Schedule Exhibit B Form of Jordan Investor Subscription Agreement Exhibit C Form of Management Subscription Agreement Exhibit D Form of 2001 Restricted Stock Plan Exhibit E Form of Purchase Agreement Exhibit F Form of Stock Purchase Agreement Exhibit G Form of By-Laws of the Company Exhibit H Form of Management Consulting Agreement |
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, dated as of October 16, 2001 (this "AGREEMENT"), is by and among Safety Holdings, Inc., a Delaware corporation (the "COMPANY"), JZ Equity Partners, PLC, a public limited company incorporated in England and Wales ("JZEP"), the Jordan Investors (as hereinafter defined) that are signatories hereto, and certain directors, officers and employees of the Company who are signatories hereto (the "MANAGEMENT STOCKHOLDERS").
WHEREAS, on the date hereof, the Company is authorized by its Restated Certificate of Incorporation (as amended, restated or otherwise modified from time to time, the "CERTIFICATE OF INCORPORATION") to issue an aggregate of 500,000 shares of capital stock, consisting of (i) 400,000 shares of Common Stock, par value $0.01 per share ("COMMON STOCK") and (ii) 100,000 shares of Preferred Stock, par value $0.001 per share (the "PREFERRED STOCK"). Each class of Stock (as defined below) has the respective voting powers, designations, preferences and relative qualifications, limitations and restrictions set forth with respect thereto in the Certificate of Incorporation;
WHEREAS, as of the date hereof and after giving effect to the transactions contemplated hereby, the Stockholders (as defined below) will beneficially own the number of shares of Stock as set forth in the Stockholder Schedule attached as EXHIBIT A hereto (the "STOCKHOLDER SCHEDULE");
WHEREAS, the Company has entered into the Jordan Investors Subscription Agreement, dated as of the date hereof and in substantially the form of EXHIBIT B attached hereto (as amended, restated or otherwise modified from time to time, the "JORDAN INVESTOR SUBSCRIPTION AGREEMENT"), by and among the Company and the Jordan Investors, pursuant to which the Jordan Investors are purchasing 90,875 shares of Common Stock;
WHEREAS, the Company has entered into the Management Subscription Agreement, dated as of the date hereof and in substantially the form of EXHIBIT C attached hereto (as amended, restated or otherwise modified from time to time, the "MANAGEMENT SUBSCRIPTION AGREEMENT"), by and among the Company and the Management Investors, pursuant to which the Management Investors will purchase 57,000 shares of Common Stock;
WHEREAS, the Company has adopted the 2001 Restricted Stock Plan, dated as of the date hereof and substantially in the form of EXHIBIT D hereto (as amended, restated or otherwise modified from time to time, the "RESTRICTED STOCK PLAN") and authorized the issuance to each of David F. Brussard and Daniel D. Loranger of 10,000 and 2,500 shares of Common Stock, respectively.
WHEREAS, the Company has entered into the Purchase Agreement, dated as of the date hereof and in substantially the form of EXHIBIT E hereto (as amended, restated or otherwise modified, from time, the "PURCHASE AGREEMENT"), by and among the Company and JZEP, pursuant to which JZEP will purchase $30 million of the Company's 13.00% Senior
Subordinated Notes (the "SUBORDINATED NOTES"), 22,400 shares of Preferred Stock and 89,625 shares of Common Stock;
WHEREAS, the parties hereto deem it in their best interests and in the best interests of the Company to set forth their respective rights and obligations in connection with their investment in the Company;
WHEREAS, the parties hereto also desire to restrict the sale, assignment, transfer, encumbrance or other disposition of certain shares of capital stock of the Company, including issued and outstanding shares of Common Stock, and to provide for certain rights and obligations in respect thereto as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following respective meanings:
"AFFILIATE" of any specified Person shall mean any other Person (a) that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person, (b) that beneficially owns or holds 10% or more of the Voting Stock of such specified Person or (c) 10% or more of the Voting Stock (or in the case of a Person that is not a corporation, 10% or more of the equity interests) of which is beneficially owned or held by such specified Person or one of its subsidiaries. The term "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of Voting Stock, by contract or otherwise. Notwithstanding the foregoing, (i) the Principals and their respective Affiliates shall be deemed to be Affiliates of the Company and (ii) none of JZEP nor any of its Affiliates, shall be deemed, because of their investment in the Stock, to be Affiliates of the Company.
"AGREEMENT" shall mean this Agreement as in effect on the date hereof and as hereafter from time to time amended, modified or supplemented in accordance with the terms hereof.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company, as duly constituted in accordance with this Agreement, or any committee thereof duly constituted in accordance with this Agreement, the By-laws and applicable law and duly authorized to make the relevant determination or take the relevant action.
"BY-LAWS" shall mean the By-Laws of the Company as amended and in effect on the date hereof, substantially in the form of EXHIBIT G hereto, and as hereafter further amended or restated in accordance with the terms hereof and pursuant to applicable law.
"CERTIFICATE OF INCORPORATION" shall have the meaning specified in the first recital.
"CHANGE OF CONTROL" means any of the following: (i) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, of a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing, (ii) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings, (iii) the closing of any sale by the holders of Common Stock of an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing or (iv) the voluntary liquidation or dissolution of the Company; provided, however, that the term "Change of Control" shall not include any liquidation, dissolution or other transaction mandated under any agreement, instrument or commitment of the Company or its subsidiaries for borrowed money or other extension of credit, whether now existing or hereafter created.
"COMMISSION" shall mean the U.S. Securities and Exchange Commission and any successor commission or agency having similar powers.
"COMMON STOCK" shall have the meaning specified in the first recital.
"COMPANY" shall have the meaning specified in the Preamble.
"COMPANY SECURITIES" shall have the meaning specified in SECTION 6.1(f).
"DATE OF DELIVERY" means, for purposes of ARTICLE V, the date that a particular notice is received or deemed to be received.
"DISPOSING STOCKHOLDER" shall have the meaning specified in SECTION 5.6(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect, and a reference to a particular section thereof shall include a reference to the comparable section, if any, of such similar federal statute.
"FIRST OFFER PRICE" shall have the meaning specified in SECTION 5.1(a).
"GAAP" shall mean the generally accepted accounting principles in the United States of America in effect from time to time, applied on a consistent basis both as to classification of items and amounts.
"HOLDER REQUEST" shall have the meaning specified in SECTION 6.1(a).
"INVESTMENT AGREEMENT" shall have the meaning specified in the Introduction.
"JORDAN INVESTORS" shall mean the Persons signatories to the Jordan Investor Subscription Agreement, and any Permitted Transferee of any of them who becomes a Stockholder in accordance with the terms hereof.
"JORDAN INVESTOR SUBSCRIPTION AGREEMENT" shall have the meaning specified in the Introduction.
"JZEP" shall mean JZ Equity Partners PLC, a public limited liability company incorporated in England and Wales under the Companies Act (1985) and its nominees.
"MANAGEMENT CONSULTING AGREEMENT" shall mean the Management Consulting Agreement, of even date herewith, by and among TJC Management, the Company and its Subsidiaries substantially in the form attached hereto as EXHIBIT H, as amended, restated or otherwise modified from time to time.
"MANAGEMENT INVESTORS" shall mean any officer or managerial employee of the Company or any of its Subsidiaries who acquires any shares of Common Stock from the Company pursuant to the Management Subscription Agreement, or any other subscription agreement presented by the Company to an officer or managerial employee of the Company, and enters into or becomes subject to this Agreement (including execution of a counterpart to this Agreement), and any Permitted Transferee of any of such Persons who becomes a Stockholder in accordance with the terms hereof (including execution of a counterpart to this Agreement).
"MANAGEMENT STOCKHOLDERS" shall have the meaning specified in the preamble.
"MANAGEMENT SUBSCRIPTION AGREEMENT" shall have the meaning specified in the fourth recital.
"MANAGING UNDERWRITER" shall mean the investment banker (or investment bankers) that shall manage or act as "book runner" for any offering of the Company's Stock.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NEW SECURITIES NOTICE" shall have the meaning specified in SECTION 5.5(c).
"NOTICE OF EXERCISE" shall have the meaning specified in SECTION 5.1(b).
"NOTICE OF INTENTION" shall have the meaning specified in SECTION 5.1(a).
"OFFERED SECURITIES" shall have the meaning specified in SECTION 5.1(a).
"PERCENTAGE OWNERSHIP" means, with respect to any Stockholder at any time,
(i) the number of shares of Common Stock that such Stockholder beneficially owns
(or, without duplication, has the right to acquire pursuant to any securities
convertible into or exchangeable for Common Stock, options, warrants and other
irrevocable rights to purchase or subscribe for Common Stock or securities
convertible into or exchangeable for Common Stock) at such time, including,
without limitation, the Restricted Shares that are vested under the Restricted
Stock
Plan, divided by (ii) the total number of shares of Common Stock outstanding at such time and all shares described in the parenthetical in clause (i) of this definition for any Stockholder.
"PERMITTED TRANSFEREE" shall mean, (i) the Company or any Jordan Investor and (ii) those Persons to whom transfers of Stock are permitted to be made pursuant to SECTIONS 4.1, 4.2, 5.1 and 5.2.
"PERSON" shall mean an individual, a corporation, limited liability company, association, partnership, joint venture, organization, business, trust, or any other entity or organization, including a government or any subdivision or agency thereof.
"PREFERRED STOCK" shall have the meaning specified in the first recital and shall include any payment-in-kind dividends thereon.
"PRINCIPALS" shall mean The Jordan Company, LLC and its Affiliates, principals, partners, stockholders, members and employees, family members of any of the foregoing and trusts for the benefit of any of the foregoing. Notwithstanding the foregoing, JZEP, shall not be deemed to be a Principal or an Affiliate of a Principal.
"PROPOSED PURCHASER" shall have the meaning specified in SECTION 5.6(b).
"PUBLIC DISTRIBUTION" shall mean a Public Offering of Common Stock, at the conclusion of which the aggregate number of shares of Common Stock that have been sold to the public pursuant to one or more effective registration statements under the Securities Act equals at least 5% of the shares of Common Stock then outstanding (on a fully diluted basis) after giving effect to such sale and results in the Company receiving at least $25 million in gross proceeds from such sale.
"PUBLIC OFFERING" shall mean a bona fide underwritten public offering and sale of equity securities of the Company pursuant to an effective registration statement under the Securities Act.
"PURCHASE OFFER" shall have the meaning set forth in SECTION 5.6(b).
"QIB" shall mean a "qualified institutional buyer" as defined under Rule 144A of the Securities Act that is a financial or institutional investor.
"REGISTRABLE SECURITIES" shall mean the following:
(a) all shares of Common Stock outstanding on the date hereof and now or hereafter owned of record by the Stockholders;
(b) all shares of Common Stock which have vested under the Restricted Stock Plan; and
(c) any shares of Common Stock issued or issuable by the Company in respect of any shares of Common Stock referred to in the foregoing clauses (a) or (b) by way of a stock
dividend or stock split or in connection with a combination or subdivision of shares, reclassification, recapitalization, merger, consolidation or other reorganization of the Company.
As to any particular Registrable Securities that have been issued, such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement, (ii) they shall have been distributed to the public pursuant to Rule 144, (iii) they shall have been otherwise transferred or disposed of, and new certificates therefor not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent transfer or disposition of them shall not require their registration or qualification under the Securities Act or any similar state law then in force, or (iv) they shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean any and all out-of-pocket expenses incident to the Company's performance of or compliance with ARTICLE VI hereof, including, without limitation, all Commission, stock exchange or NASD registration and filing fees, all fees and expenses of complying with securities and blue sky laws (including the reasonable fees and disbursements of underwriters' counsel in connection with blue sky qualifications and NASD filings), all fees and expenses of the transfer agent and registrar for the Registrable Securities, all printing expenses, the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance, and one firm of counsel (other than in-house counsel) retained by the holders of Registrable Securities held by each of JZEP and the Jordan Investors, but excluding underwriting discounts and commissions and applicable transfer and documentary stamp taxes, if any, which shall be borne by the seller of the securities in all cases.
"REQUESTING STOCKHOLDER" shall have the meaning specified in
SECTION 6.1(a).
"SALE PROPOSAL" shall have the meaning specified in SECTION 5.1(a).
"SECURITIES ACT" shall mean, as of any date, the Securities Act of 1933, as amended, or any similar federal statute then in effect, and in reference to a particular section thereof shall include a reference to the comparable section, if any, of any such similar federal statute and the rules and regulations thereunder.
"SELLING INVESTORS" shall have the meaning specified in SECTION 5.7.
"SELLING STOCKHOLDER" shall have the meaning specified in SECTION 5.1(a).
"STOCK" shall mean (a) the Common Stock and the Preferred Stock issued and outstanding at the date hereof, (b) any Restricted Shares and (c) any Common Stock, Preferred Stock or other capital stock of the Company hereafter acquired by any Stockholder, including pursuant to ARTICLE V of this Agreement, or pursuant to any convertible security, option, warrant or other right to acquire Common Stock, Preferred Stock or capital stock of the Company, whether or not held by them as of the date hereof.
"STOCK PURCHASE AGREEMENT" shall have the meaning specified in the Recitals.
"STOCKHOLDER" shall mean any of the Jordan Investors, JZEP and the Management Investors, and any Permitted Transferee of any such Person or other transferee who becomes a party to or bound by the provisions of this Agreement in accordance with the terms hereof.
"STOCKHOLDER SCHEDULE" shall have the meaning specified in the Recitals.
"SUBORDINATED NOTES" shall have the meaning specified in the Recitals.
"SUBSIDIARY" shall mean as to any Person a corporation of which outstanding shares of stock having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors of such corporation are at the time owned, directly or indirectly through one or more intermediaries, or both, by such Person.
"TJC MANAGEMENT" shall mean TJC Management Corp., a Delaware corporation, or its designee.
"TRANSFER" shall have the meaning set forth in SECTION 4.1.
"UNDERWRITTEN OFFERING" shall have the meaning specified in SECTION 6.1(b).
"VOTING STOCK" shall mean capital stock of the Company (other than Preferred Stock) of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of corporate directors (or Persons performing similar functions).
"VOTING STOCKHOLDER" shall mean a Stockholder who holds, without duplication, Voting Stock or retains, by proxy or otherwise, the power to vote such Voting Stock.
ARTICLE II
MANAGEMENT
Section 2.1 REGISTRATION OF COMMON STOCK. In the event of a Public Offering of the Company's Common Stock, each Voting Stockholder shall, at a meeting convened for the purpose of amending the Certificate of Incorporation, vote to increase or decrease the number of authorized shares of Common Stock and, if necessary, increase or decrease the number of issued and outstanding shares of Common Stock, whether by stock split, stock dividend, reverse stock split or otherwise, or change in its par value, as recommended in good faith by a majority of the members of the Board of Directors in order to facilitate such Public Offering.
Section 2.2 NO CONFLICT WITH AGREEMENT. Each Voting Stockholder shall vote his shares of Voting Stock to ensure that the Certificate of Incorporation and By-Laws do not, at any time, conflict with the provisions of this Agreement.
ARTICLE III
CORPORATE GOVERNANCE
Section 3.1 BOARD OF DIRECTORS. (a) The Stockholders hereby agree that at all times after the date hereof, the Board of Directors of the Company shall consist of not less than one (1) nor more than four (4) members. Promptly after the date hereof, the Stockholders shall take all actions necessary to elect, or to cause the Board of Directors to approve and appoint, the designees described below to be members of the Company's Board of Directors:
(i) three (3) individuals designated by the Jordan Investors ("JORDAN DIRECTORS"), which Jordan Directors initially shall be John W. Jordan II, David W. Zalaznick and A. Richard Caputo, Jr.; and
(ii) one (1) individual designated by the Management Stockholders ("MANAGEMENT DIRECTOR"), which Management Director initially shall be David F. Brussard; PROVIDED, HOWEVER in the event that (x) the Management Director ceases to be employed by the Company or its Subsidiaries for any reason or (y) the Company shall exercise its repurchase rights with respect to the Stock owned by Mr. Brussard pursuant to Section 8 of the Management Subscription Agreement, then the Stockholders shall promptly take all actions necessary to cause the resignation or removal of the Management Director and elect or cause the Board of Directors to approve and appoint, an individual designated by the Management Stockholders then employed by the Company or its subsidiaries; and, PROVIDED, FURTHER, that if the Company exercises its purchase rights pursuant to Section 5.8 of this Agreement, then the Stockholders shall promptly take all actions necessary to cause the resignation or removal of the Management Director and elect, or cause the Board of Directors to approve and appoint, an individual designated by the Jordan Investors and, at all times thereafter, the Jordan Investors shall have the right to appoint all four members of the Board of Directors and the Management Stockholders shall no longer have the right to appoint any members of the Board of Directors.
(b) Each Stockholder hereby agrees to vote all shares of Voting Stock owned or held of record by such Stockholder at each annual or special meeting of stockholders of the Company at which directors of the Company are to be elected, in favor of, or to take all actions by written consent in lieu of any such meeting as are necessary to cause, the election as members of the Board of Directors of those individuals described in SECTION 3.1(a) in accordance with, and to otherwise effect the intent of, the provisions of SECTION 3.1(a). A Director may be removed from the Board of Directors only by the Stockholders entitled to designate such Director pursuant to this ARTICLE III, PROVIDED, that any Management Director may be removed, upon the vote of a majority of the Jordan Directors, as set forth in SECTION 3.1(a)(ii).
(c) Except as provided in this SECTION 3.1, directors shall be elected by a plurality of the votes cast at annual meetings of Stockholders, and each director so elected shall hold office until the next annual meeting and until his successor is duly elected and qualified, or until his earlier
resignation or removal. Any director may resign at any time upon notice to the Company. Directors need not be stockholders.
Section 3.2 VACANCIES. Subject to SECTION 3.1(a)(ii), in the event that a vacancy is created on the Board of Directors at any time by the death, disability, retirement, resignation or removal of any member of the Board of Directors, or for any other reason there shall exist or occur any vacancy on the Board of Directors, each Stockholder hereby agrees to take such actions as will result in the election or appointment as a director of an individual designated or elected to fill such vacancy and serve as a director by the Stockholders that had, pursuant to SECTION 3.1(a), designated or elected the director whose death, disability, retirement, resignation or removal resulted in such vacancy on the Board of Directors. During the period, from the time the vacancy is created until a new director is designated pursuant to SECTION 3.1(a), the remaining Jordan Directors may appoint a replacement to act as a director until a new director is duly elected.
Section 3.3 COVENANT TO VOTE. Each Stockholder hereby agrees to take all actions necessary to call, or cause the Company and the appropriate officers and directors of the Company to call, an annual meeting (and when circumstances so require, a special meeting) of stockholders of the Company and to vote all Voting Stock owned or held of record by such Stockholder at any such meeting and at any other annual or special meeting of stockholders in favor of, or take all actions by written consent in lieu of any such meeting as may be necessary to cause, the election as members of the Board of Directors of those individuals so designated in accordance with, and to otherwise effect the intent of, this ARTICLE III.
Section 3.4 RESTRICTIONS ON OTHER AGREEMENTS. No Stockholder shall grant any proxy or enter into or agree to be bound by any voting trust with respect to the Stock nor shall any Stockholder enter into any other agreements or arrangements of any kind with any Person with respect to the Stock on terms which conflict with the provisions of this Agreement (whether or not such proxy, voting trust, agreements or arrangements are with other Stockholders, holders of Stock that are not parties to this Agreement or otherwise), including but not limited to, agreements or arrangements with respect to the acquisition, disposition or voting of shares of Stock inconsistent herewith.
Section 3.5 CONSENT OF MANAGEMENT DIRECTOR. All matters requiring the approval of the Board of Directors, which shall include any transaction that constitutes a Change of Control, including, but not limited to transfers of shares pursuant to SECTION 5.7 below, shall be decided by the affirmative vote of a majority of the members of the Board of Directors in office, as set forth in the By-Laws, Certificate of Incorporation or as otherwise provided by law; PROVIDED, HOWEVER that the affirmative vote of the Management Director shall be required to effect a Change of Control. Notwithstanding the foregoing, a majority of the members of the Board of Directors may cause the Company to effectuate a Change of Control provided the Company first exercises its right to repurchase the shares of Common Stock held by the Management Investors as set forth in SECTION 5.8 below.
ARTICLE IV
TRANSFERS OF STOCK
Section 4.1 RESTRICTIONS ON TRANSFER. Each Stockholder agrees that such Stockholder will not, directly or indirectly, whether by operation of law or otherwise, offer, sell, transfer, assign or otherwise dispose of (or make any exchange, gift, assignment or pledge of) any Stock or any rights or interests therein (collectively, a "TRANSFER"), except (a) as provided in SECTION 4.2; (b) in accordance with ARTICLE V; or (c) with regard to any bona fide pledge, hypothecation or similar charge by JZEP and any foreclosure in connection therewith. In addition to the other restrictions noted in this ARTICLE IV, each Stockholder agrees that it will not, directly or indirectly, Transfer any of its Stock except as permitted under the Securities Act and other applicable securities laws.
Section 4.2 EXCEPTIONS TO RESTRICTIONS. The provisions of SECTION 4.1 and ARTICLE V shall not apply to any of the following Transfers:
(a) (i) From any of the Jordan Investors to any of the other Jordan Investors or JZEP, (ii) from any Jordan Investor to any trust, partnership, limited liability company or similar entity solely for such Jordan Investor's benefit or the benefit of such Jordan Investor's family members, or (iii) from any of the Jordan Investors to any corporation, partnership or other entity that is controlled by and whose owners or beneficiaries are Jordan Investors or a trust created solely for the benefit of a Jordan Investor or the spouse or children of a Jordan Investor, or (iv) any pension, profit sharing, 401(k) or similar plan for such Jordan Investor's benefit; provided, that with respect to clause (ii) such Jordan Investor acts as trustee and retains the sole power to direct the voting and disposition of such shares; and PROVIDED, FURTHER, that in the case referred to in clauses (i), (ii) and (iii), each such Person including any such entity shall execute a counterpart of and become a party to this Agreement and shall agree in a writing in form and substance satisfactory to the Company to be bound and becomes bound by the terms of this Agreement as a Stockholder.
(b) (i) From any Management Investor to any trust, partnership, limited
liability company or similar entity solely for such Management Investor's
benefit or the benefit of such Management Investor's family members, or (ii) any
pension, profit sharing, 401(k) or similar plan for such Management Investor's
benefit; PROVIDED, that, with respect to clause (i), such Management Investor
acts as trustee and retains the sole power to direct the voting and disposition
of such Stock; and PROVIDED, FURTHER, that in the case referred to in clause
(i), each such Person including any such trust shall execute a counterpart of
and become a party to this Agreement and shall agree in a writing in form and
substance satisfactory to the Company to be bound and becomes bound by the terms
of this Agreement as a Stockholder.
(c) From any Management Investor or Permitted Transferee of a Management Investor to the Company pursuant to SECTION of the Management Subscription Agreement.
(d) Pursuant to a Public Offering or pursuant to Rule 144 under the Securities Act.
(e) From any Jordan Investor or any Management Investor to the family members of such Stockholders, PROVIDED, that such Person shall execute a counterpart and become a party to this Agreement and shall agree in a writing in form and substance satisfactory to the Company to be bound by the terms of the Agreement as a Stockholder.
(f) From any Jordan Investor to any foundations, charitable remainder trust, or charitable, religious or non-profit organization.
(g) From any Stockholder to any Person pursuant to SECTIONS 5.6 and 5.7.
(h) From any Stockholder to the Company.
(i) From JZEP to any Institutional Holder, under and as defined in the Purchase Agreement.
(j) From any Institutional Holder to any of its Affiliates (or any successor to all or substantially all of its assets).
Section 4.3 ENDORSEMENT OF CERTIFICATES.
(a) Upon the execution of this Agreement, in addition to any other legend which the Company may deem advisable under the Securities Act and applicable state securities laws, all certificates representing shares of issued and outstanding Common Stock and Preferred Stock shall be endorsed at all times prior to any Public Offering of such shares or sale of such shares pursuant to Rule 144 under the Securities Act as follows:
THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A STOCKHOLDERS AGREEMENT, DATED OCTOBER 16, 2001 AMONG THE COMPANY AND ITS STOCKHOLDERS. REFERENCE ALSO IS MADE TO THE RESTRICTIVE PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE COMPANY. COPIES OF THE ABOVE REFERENCED AGREEMENTS ARE ON FILE AT THE OFFICE OF THE COMPANY C/O THE JORDAN COMPANY, LLC AT 767 FIFTH AVENUE, 48TH FLOOR, NEW YORK, NEW YORK 10153.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT.
At the request of the Stockholder, the Company shall remove the legend referring to the Securities Act at such time as the Stock becomes eligible for resale pursuant to Rule 144(k) under the Securities Act. At the request of the Stockholder, the Company shall remove the legend referring to the Stockholders Agreement and any applicable Subscription Agreement at such time as such Agreements no longer restrict the Transfer of the Stock.
(b) Except as otherwise expressly provided in this Agreement, all
certificates representing shares of Stock hereafter issued to or acquired by any
of the Stockholders or their successors hereto shall bear the legends set forth
above, and the shares of Stock represented by such certificates shall be subject
to the applicable provisions of this Agreement. The rights and obligations of
each party hereto shall inure to and be binding upon each transferee to whom
Stock is Transferred by any party hereto, whether or not such Transfer is
permitted under the terms of this Agreement, except for Transfers described in
SECTION 4.2(d). Prior to consummation of any Transfer, except for Transfers
described in SECTION 4.2(d), such party shall cause the transferee to execute an
agreement in form and substance reasonably satisfactory to the other parties
hereto, providing that such transferee shall fully comply with the terms of this
Agreement. Any Stockholder wishing to Transfer Stock shall give written notice
to the Company prior to any transfer (whether or not to a Permitted Transferee)
of any Stock.
Section 4.4 TRANSFERS TO COMPETITORS. Notwithstanding SECTIONS 4.1, 4.2 and ARTICLE V, and except as provided in SECTION 5.7, no Stockholder will Transfer any Stock to any person that competes, directly or indirectly, with the business conducted or then proposed to be conducted by the Company and its Subsidiaries.
Section 4.5 IMPROPER TRANSFER. Any attempt to Transfer or encumber any Stock not in accordance with this Agreement shall be null and void and neither the Company nor any transfer agent of such securities shall give any effect to such attempted transfer or encumbrance in its stock records.
ARTICLE V
RIGHTS OF FIRST OFFER; NEW SECURITIES;
TAG ALONG RIGHTS; DRAG ALONG RIGHTS
Section 5.1 TRANSFERS BY A STOCKHOLDER.
(a) Except for Transfers permitted by SECTIONS 4.1 or 4.2, if at any time any Stockholder shall desire to sell any Stock owned by such Stockholder (such Stockholder desiring to sell shares of such Stock being referred to herein as a "SELLING STOCKHOLDER"), then such Selling Stockholder shall deliver written notice of its desire to sell such Stock (a "NOTICE OF INTENTION"), accompanied by a copy of a proposal relating to such sale (the "SALE PROPOSAL"), to each of the other Stockholders and to the Company, setting forth such Selling Stockholder's desire to make such sale (which shall be for cash only), the number and class of shares of Stock proposed to be transferred (the "OFFERED SECURITIES") and the price at which such Selling Stockholder proposes to sell the Offered Securities (the "FIRST OFFER PRICE") and other terms applicable thereto.
(b) Upon receipt of the Notice of Intention, the Company and the other
Stockholders shall then have the right to purchase at the First Offer Price and
on the other terms specified in the Sale Proposal all or, subject to
SECTION 5.1(d), any portion of the Offered Securities in the following order of
priority: (i) if the Selling Stockholder is a Management Investor or a Permitted
Transferee of a Management Investor, the Company shall have the first right to
purchase the Offered Securities, and thereafter, the Stockholders shall have the right to purchase the Offered Securities allocated on a pro rata basis among the Stockholders so electing to purchase according to their Percentage Ownership (or in such other proportion as such other Stockholders may agree) and (ii) if the Selling Stockholder is a Jordan Investor or JZEP or a Permitted Transferee of a Jordan Investor or JZEP, the other Jordan Investors, JZEP and any such Permitted Transferee shall have the first right to purchase the Offered Securities allocated on a pro rata basis among those of the Jordan Investors, JZEP and any such Permitted Transferee so electing to purchase according to their Percentage Ownership (or in such other proportion as such Jordan Investors, JZEP and any such Permitted Transferee may agree), thereafter, the Company shall have the right to purchase the Offered Securities, and thereafter, all other Stockholders shall have the right to purchase the Offered Securities allocated on a pro rata basis among the Stockholders so electing to purchase (or in such other percentages as such other Stockholders may agree). The rights of the Stockholders and the Company pursuant to this SECTION 5.1(b) shall be exercisable by the delivery of notice to the Selling Stockholder (the "NOTICE OF EXERCISE"), within 30 calendar days from the Date of Delivery of the Notice of Intention. The Notice of Exercise shall state the total number of shares of the Offered Securities such Stockholder (or the Company) is willing to purchase without regard to whether or not other Stockholders purchase any shares of the Offered Securities. A copy of such Notice of Exercise shall also be delivered by each Stockholder to the Company and each other Stockholder. The rights of the Stockholders and the Company pursuant to this SECTION 5.1(b) shall terminate if no Notice of Exercise is delivered within 30 calendar days after the Date of Delivery of the Notice of Intention.
(c) Subject to SECTION 5.1(d), in the event that the Stockholders or the
Company exercise their rights to purchase Offered Securities in accordance with
SECTION 5.1(b), then the Selling Stockholder must sell the Offered Securities to
such Stockholders (or, as the case may be, the Company) in accordance with
SECTION 5.3. If the Stockholders collectively request to purchase more than the
amount of Offered Securities, then, subject to the priorities established in
SECTION 5.1(b), such Stockholders will be allocated such Offered Securities
based upon the priorities set forth in SECTION 5.1(b) and then on a pro rata
basis according to their Percentage Ownership within such group of Stockholders.
(d) Notwithstanding the foregoing provisions of this SECTION 5.1, unless the Selling Stockholder shall have consented to the purchase of less than all of the Offered Securities, no Stockholder or Stockholders nor the Company may purchase any Offered Securities hereunder unless all of the Offered Securities are to be so purchased.
(e) For purposes of this ARTICLE V, any Person who has failed to give notice of the election of an option hereunder within the specified time period will be deemed to have waived its rights on the day after the last day of such period.
(f) Each Stockholder in its capacity only as a stockholder (i) agrees and
acknowledges that the Company may purchase or acquire Common Stock pursuant to
SECTION 5.1(b) hereof and (ii) approves such purchases and acquisitions, and
waives any objection or claim relating thereto, whether against the Company, the
Board of Directors or otherwise.
Section 5.2 TRANSFER OF OFFERED SHARES TO THIRD PARTIES. If all notices
required to be given pursuant to SECTION 5.1 by a Selling Stockholder have been
duly given and the Stockholders and the Company do not exercise their respective
options to purchase all of the Offered Securities at the First Offer Price and
the Selling Stockholder does not desire to sell less than all the Offered
Securities or if with the consent of the Selling Stockholder, the other
Stockholders and the Company purchase less than all of the Offered Securities
pursuant to the provisions hereof, then in either such event the Selling
Stockholder shall have the right, subject to compliance by the Selling
Stockholder with the provisions of SECTIONS 4.3 and 4.4 hereof, for a period of
120 calendar days from the earlier of (i) the expiration of the other
Stockholders' or Company's rights to purchase such Stock pursuant to SECTION 5.1
with respect to such Sale Proposal or (ii) the date on which such Selling
Stockholder receives notice from all of the other Stockholders and the Company
that they will not exercise in whole or in part the rights granted pursuant to
SECTION 5.1, to sell to any third party all (but not less than all) of the
Offered Securities remaining unsold at a price of not less than 95% of the First
Offer Price, and on the other terms specified in the Sale Proposal.
Section 5.3 PURCHASE OF OFFERED SHARES. The consummation of any purchase and sale pursuant to SECTION 5.1 shall take place on such date, not later than 30 calendar days after the expiration of the option period pursuant to SECTION 5.1 with respect to such option, as the Selling Stockholder shall select. Prior to the date selected by the Selling Stockholder, the purchasers shall execute an agreement in form and substance reasonably satisfactory to the other parties hereto, providing that such purchasers shall fully comply with the terms of this Agreement. Upon the consummation of any such purchase and sale, the Selling Stockholder shall deliver certificates evidencing the Offered Securities sold duly endorsed, or accompanied by written instruments of transfer in form satisfactory to the purchaser duly executed by the Selling Stockholder free and clear of any liens, against delivery of the First Offer Price, payable in the manner specified in SECTION 5.1(a).
Section 5.4 WAITING PERIOD WITH RESPECT TO SUBSEQUENT TRANSFERS. In the event that the Stockholders and the Company do not exercise their options to purchase all of the Offered Securities, and the Selling Stockholder shall not have sold the remaining Offered Securities to a third party for any reason before the expiration, as applicable, of the 120-day period described in SECTION 5.2, then such Selling Stockholder shall not deliver another Notice of Intention pursuant to SECTION 5.1 for a period of 120 calendar days after the last day of such 120-day period.
Section 5.5 RIGHT OF FIRST REFUSAL FOR NEW SECURITIES.
(a) The Company hereby grants to each of the Stockholders a right of first refusal to purchase shares of any New Securities (as defined below) which the Company may, from time to time, propose to issue and sell. Such right of first refusal shall allow each Stockholder to purchase its pro rata share based on its Percentage Ownership of the New Securities proposed to be issued, provided, that if the New Securities are Preferred Stock, then the holders of then outstanding Preferred Stock will have the first and prior right of first refusal with respect to such Preferred Stock, and the other Stockholders will only be entitled to exercise their right of first refusal to the extent such Preferred Stockholders do not exercise their right of first refusal. In the event a Stockholder does not purchase any or all of its pro rata share based on its Percentage
Ownership of New Securities, the remaining Stockholders shall each have the
right to purchase its pro rata share based on its Percentage Ownership of such
unpurchased New Securities until all of the New Securities are purchased or
until no other Stockholder desires to purchase any more New Securities. The
right of first refusal granted hereunder shall terminate if unexercised within
30 calendar days after receipt of the New Securities Notice described in
SECTION 5.5(c) below.
(b) "NEW SECURITIES" shall mean any authorized but unissued shares, and any treasury shares, of capital stock of the Company and all rights, options or warrants to purchase capital stock, and securities of any type whatsoever that are, or may become, convertible into, or exchangeable for, capital stock; PROVIDED, HOWEVER, that the term "NEW SECURITIES" does not include (i) securities issued pursuant to the acquisition of another corporation by the Company by merger, purchase of all or substantially all of the assets or other reorganization whereby the Company shall become the owner of 50% or more of the voting power of such corporation; (ii) shares of Common Stock issued in connection with any stock split or stock dividend of the Company; (iii) subject to compliance with the Stock Purchase Agreement, if applicable, shares of Common Stock including warrants, options or other rights to purchase capital stock, or that are convertible into or exchangeable for capital stock of the Company (collectively, "CAPITAL STOCK RIGHTS"), issued in connection with any senior subordinated or other debt financing or preferred stock financing of the Company and its Subsidiaries provided by persons who are not Affiliates of the Company; PROVIDED, HOWEVER, that such Common Stock or Capital Stock Rights shall not be excluded from the definition of New Securities to the extent a Stockholder agrees to purchase or subscribe for the entire strip of financing or securities relating to such Common Stock or Capital Stock Rights in the same proportion as being offered to a third-party investor; (iv) Restricted Shares issued under the Restricted Stock Plan; (v) shares of Common Stock issued pursuant to any Public Offering; (vi) shares of Common Stock issued to a member of the management of the Company employed by the Company subsequent to the date hereof under any incentive plan or upon exercise of options granted under any incentive stock option plan; or (viii) shares of Preferred Stock issued as "payment-in-kind" dividends thereon as provided in the Certificate of Incorporation.
(c) In the event the Company proposes to undertake an issuance of New Securities, it shall promptly give each Stockholder written notice ("NEW SECURITIES NOTICE") of its intention, describing the class and number of securities intended to be issued as New Securities, the purchase price therefor (which shall be payable solely in cash) and the terms and conditions upon which the Company proposes to issue the same. Each Stockholder shall have 30 calendar days from the Date of Delivery of the New Securities Notice to determine whether to purchase all or any portion of the Stockholder's pro rata share based on its Percentage Ownership of such New Securities for the purchase price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased.
(d) The Company shall have 180 days from the expiration of the period set forth in SECTION 5.5(c) to issue, sell or exchange all or any part of such New Securities which Stockholders have not elected to purchase, but only upon terms and conditions which are not materially more favorable, in the aggregate, to the acquiring person or persons or less favorable to the Company than those set forth in the New Securities Notice.
Section 5.6 RIGHT TO JOIN IN SALE.
(a) In addition to the requirements imposed by SECTION 5.1, if any Stockholder proposes to Transfer (other than Transfers permitted pursuant to SECTIONS 4.1 or 4.2), its or their outstanding Common Stock (or securities convertible into, or exchangeable or exercisable for shares of Common Stock at the right of the holder) (each, a "DISPOSING STOCKHOLDER"), such person shall refrain from effecting such transaction or transactions unless, prior to the consummation thereof, each other Stockholder shall have been afforded the opportunity to join in such transaction or transactions on a pro rata basis, as hereinafter provided.
(b) Prior to consummation of any proposed Transfer of shares of Common
Stock described in SECTION 5.6(a), the Disposing Stockholder or Stockholders
shall cause the person or group that proposes to acquire such shares (the
"PROPOSED PURCHASER") to offer (the "PURCHASE OFFER") in writing to each other
Stockholder to purchase shares of Common Stock owned or acquirable by such
Stockholder, such that the number of shares of such Common Stock so offered to
be purchased from such Stockholder shall be equal to the product of (i) the
total number of shares of Common Stock (including the Restricted Shares, to the
extent vested under the Restricted Stock Plan) then owned by such Stockholder
multiplied by (ii) a fraction, the numerator of which is the aggregate number of
shares of Common Stock (including the Restricted Shares, to the extent vested
under the Restricted Stock Plan) proposed to be purchased by the Proposed
Purchaser from all Stockholders and the denominator of which is the aggregate
number of shares of Common Stock (including the Restricted Shares, to the extent
vested under the Restricted Plan) then outstanding. Such purchase shall be made
at the highest price per share and on such other terms and conditions as the
Proposed Purchaser has offered to purchase shares of Common Stock to be sold by
the Disposing Stockholder or Stockholders. Each Stockholder shall have 20
calendar days from the date of receipt of the Purchase Offer to accept such
Purchase Offer, and the closing of such purchase shall occur within 30 calendar
days after such acceptance or at such other time as such Stockholder and the
Proposed Purchaser may agree. The number of shares of Common Stock to be
Transferred to the Proposed Purchaser by the Disposing Stockholder or
Stockholders shall be reduced by the aggregate number of shares of Common Stock
purchased by the Proposed Purchaser from the other Stockholders pursuant to the
provisions of this SECTION 5.6(b). In the event that a Transfer subject to this
SECTION 5.6 is to be made to a Proposed Purchaser that is not a Stockholder, the
Disposing Stockholder shall notify the Proposed Purchaser that the Transfer is
subject to this SECTION 5.6 and shall ensure that no Transfer is consummated
without the Proposed Purchaser first complying with this SECTION 5.6. It shall
be the responsibility of each Disposing Stockholder to determine whether any
transaction to which it is a party is subject to this SECTION 5.6.
(c) Anything in this Agreement to the contrary notwithstanding, compliance by any Stockholder with any provision contained in SECTION 5.1 thereof shall not be deemed a waiver to comply with the terms and conditions of SECTION 5.6 hereof. Such compliance by any Stockholder of SECTIONS 5.1 and 5.6 hereof may be exercised concurrently.
Section 5.7 TAKE ALONG. Subject to SECTION 3.5, if at any time Stockholders representing a majority of the shares of Common Stock beneficially owned by the Jordan Investors (being referred to in this SECTION 5.7 as the "SELLING INVESTORS") shall determine to sell or exchange (in a
business combination or otherwise) all of their aggregate shares of Common Stock in a bona fide arm's-length transaction to a third party in which the same price per share shall be payable in respect of all shares of any class of the Common Stock, then, upon the written request of such Selling Investors, each other Stockholder shall be obligated to, and shall, if so requested by such third party, (a) sell, transfer and deliver or cause to be sold, transferred and delivered to such third party, all shares of Common Stock owned by them at the same price per share and on the same terms as are applicable to the Selling Investors, (b) if stockholder approval of the transaction is required, vote his, her or its shares of Voting Stock in favor thereof, and (c) convert, exercise or exchange, as the case may be, into Common Stock any convertible securities, warrants, options or other rights to acquire Common Stock that are held by such Stockholder.
Section 5.8 CALL RIGHTS UPON FAILURE TO OBTAIN NECESSARY APPROVAL. In the event that the Board of Directors intends to effectuate a Change of Control where the affirmative vote of the Management Director is required, but has not been obtained with respect to such action, then prior, and as a condition to causing the Company to effectuate such action, the Company shall have, and shall be required to offer to purchase from the Management Investors all, but not less than all, of the shares of Common Stock (other than shares of Common Stock issued pursuant to the Restricted Stock Plan) held by the Management Investors by giving the Management Investors notice within 30 days following such vote of the Board of Directors at a price per share equal to the quotient of (x) $42.5 million divided by (y) the aggregate number of shares of Common Stock (other than shares of Common Stock issued pursuant to the Restricted Stock Plan) issued and outstanding on a fully-diluted basis as of the date hereof. For this purpose, "FULLY-DILUTED BASIS" shall assume the full exercise of all options, warrants, calls and other similar securities and the full conversion (if dilutive) of all convertible stock, notes or other convertible securities, among other things.
Section 5.9 LEGALLY BINDING OBLIGATION; POWER OF ATTORNEY; PERSONAL RIGHTS. The making of a written offer, giving or failing to give written notice within the stated period, accepting an offer or making a decision or election, in each case as provided in SECTION 5.1 or 5.2, shall create a legally binding obligation to buy or sell, or an obligation not to buy or sell, as the case may be, the subject Stock as provided in such SECTION 5.1 or 5.2.
ARTICLE VI
REGISTRATION RIGHTS
Section 6.1 DEMAND REGISTRATIONS.
(a) At any time and from time to time from and after the first anniversary of a Public Offering, the Stockholders holding two-thirds of the issued and outstanding Registrable Securities (the "REQUESTING STOCKHOLDERS") may request in writing that the Company effect the registration under the Securities Act of all or part of such holder's or holders' Registrable Securities, specifying in the request the number and type of Registrable Securities to be registered by each such holder and the intended method of disposition thereof (such notice is hereinafter referred to as a "HOLDER REQUEST"). Upon receipt of such Holder Request, the Company will promptly give written notice of such requested registration to all other holders of Registrable Securities, which other holders shall have the right to include the Registrable Securities held by them in such registration, and thereupon the Company will, as expeditiously as possible, use its best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so requested to register by such Requesting Stockholder; and
(ii) all other Registrable Securities which the Company has been requested to register by any other holder thereof by written request given to the Company within 30 calendar days after the giving of such written notice by the Company (which request shall specify the intended method of disposition of such Registrable Securities), all to the extent necessary to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered;
PROVIDED, HOWEVER, that the Company shall not be obligated to file a registration statement relating to any Holder Request under this SECTION 6.1(a):
(x) with regard to more than two Holder Requests by the Stockholders other;
(y) unless the Company shall have received requests for such registration with respect to at least 5% of the shares of Common Stock then outstanding, and unless the aggregate purchase price of the Registrable Securities to be included in the requested registration (determined by reference to the offering price on the cover of the registration statement proposed to be filed) is greater than $25 million; or
(z) other than a registration statement on Form S-3 or a similar short form registration statement, within a period of 6 months after the effective date of any other registration statement relating to any registration request under this SECTION 6.1(a) that was not effected on Form S-3 (or any similar short form);
PROVIDED, FURTHER, HOWEVER, that the Company may postpone for not more than 30 calendar days, on one occasion only with respect to each request for registration made under this SECTION 6.1(a), the filing or effectiveness of a registration statement under this SECTION 6.1(a) if the Company
believes that such registration might reasonably be expected to have an adverse effect on any proposal or plan by the Company to engage in any acquisition of assets (other than in the ordinary course of business) or any merger, consolidation, tender offer of similar transaction; PROVIDED, that in such event, the Requesting Stockholder will be entitled to withdraw such request, and if such request is withdrawn such registration will not count as one of the permitted registrations under this SECTION 6.1. In any event, the Company will pay all Registration Expenses in connection with any registration initiated under this SECTION 6.1.
(b) If the Company proposes to effect a registration requested pursuant to this SECTION 6.1 by the filing of a registration statement on Form S-3 (or any similar short-form registration statement), the Company will comply with any request by the Managing Underwriter to effect such registration on another permitted form if such Managing Underwriter advises the Company that, in its opinion, the use of another form of registration statement is of material importance of such proposed offering.
(c) A registration requested pursuant to SECTION 6.1(a) will not be deemed to have been effected unless it has become effective; PROVIDED, that if after it has become effective, the offering of Registrable Securities pursuant to such registration is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court, such registration will be deemed not to have been effected.
(d) The Company will pay all Registration Expenses in connection with each
of the registrations of Registrable Securities effected by it pursuant to this
SECTION 6.1.
(e) The Company shall have the right to select the Managing Underwriter, provided, that such Managing Underwriter is reasonably acceptable to the holders of a majority of the Registrable Securities requested to be sold in such a firm commitment underwriting through a nationally recognized underwriter (an "UNDERWRITTEN OFFERING").
(f) In connection with any offering pursuant to this SECTION 6.1, the only
shares that may be included in such offering are (i) Registrable Securities, and
(ii) shares of authorized but unissued Common Stock that the Company elects to
include in such offering ("COMPANY SECURITIES").
(g) If in connection with any Underwritten Offering pursuant to this
SECTION 6.1 the Managing Underwriter shall advise the Company that, in its
judgment, the number of shares proposed to be included in such offering should
be limited due to market conditions, then the Company will promptly so advise
each holder of Registrable Securities that has requested registration and shares
shall be excluded from such offering in the following order until the number of
shares to be included in such offering has been reduced to a level acceptable to
the Managing Underwriter: any Company Securities requested to be registered, if
any, shall be excluded until all such Registrable Securities have been excluded;
and thereafter the Registrable Securities requested to be registered by the
Management Stockholders, if any, shall be excluded pro rata until all such
Registrable Securities have been excluded; and thereafter the Registrable
Securities requested by any other holders of Registrable Securities to be
included in such
offering shall be excluded pro rata, based on the respective number of Registrable Securities as to which registration has been so requested by such Persons.
Section 6.2 PIGGYBACK REGISTRATIONS.
(a) If the Company at any time proposes to register any of its equity securities under the Securities Act (other than a registration on Form S-4 or S-8 or any successor or similar forms thereto and other than pursuant to a registration under SECTION 6.1), whether or not for sale for its own account, on a form and in a manner that would permit registration of Registrable Securities for sale to the public under the Securities Act, it will give written notice to all the holders of Registrable Securities promptly of its intention to do so, describing such securities and specifying the form and manner and the other relevant facts involved in such proposed registration (including, without limitation, (x) whether or not such registration will be in connection with an Underwritten Offering of Registrable Securities and, if so, the identity of the Managing Underwriter and whether such offering will be pursuant to a "best efforts" or "firm commitment" underwriting and (y) the price (net of any underwriting commissions, discounts and the like) at which the Registrable Securities are reasonably expected to be sold). Upon the written request of any such holder delivered to the Company within 30 calendar days after the receipt of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such holder and the intended method of disposition thereof), the Company will use commercially reasonable best efforts to effect the registration under the Securities Act of all of the Registrable Securities that the Company has been so requested to register; PROVIDED, HOWEVER, that:
(i) If, at any time after giving such written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company may, at its election, give written notice of such determination to each holder of Registrable Securities who made a request as herein above provided and thereupon the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), without prejudice, however, to the rights, of Requesting Holders to request that such registration be effected as a registration under SECTION 6.1.
(ii) If such registration involves an Underwritten Offering, all holders of Registrable Securities requesting to be included in the Company's registration must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company, PROVIDED, HOWEVER, that such holders shall not be required to make any representations about the Company's business and will not be required to indemnify the underwriters for an amount which exceeds the net proceeds received by such holder.
No registration effected under this SECTION 6.2 shall relieve the Company of its obligation to effect registration upon request under SECTION 6.1.
(b) The Company shall not be obligated to effect any registration of Registrable Securities under this SECTION 6.2 incidental to the registration of any of its securities in connection with mergers, acquisitions, exchange offers, dividend reinvestment plans or stock option or other employee benefit plans.
(c) The Registration Expenses incurred in connection with each registration of Registrable Securities requested pursuant to this SECTION 6.2 shall be paid by the Company.
(d) If a registration pursuant to this SECTION 6.2 involves an Underwritten Offering and the Managing Underwriter advises the issuer that, in its opinion, the number of securities proposed to be included in such registration should be limited due to market conditions, then the Company will include in such registration (i) the securities the Company proposes to sell and (ii) the number of Registrable Securities requested by holders thereof to be included in such registration that, in the opinion of such Managing Underwriter, can be sold, such amount to be allocated among all such holders of Registrable Securities pro rata on the basis of the respective number of Registrable Securities each such holder has requested to be included in such registration.
(e) In connection with any Underwritten Offering with respect to which holders of Registrable Securities shall have requested registration pursuant to this SECTION 6.2, the Company shall have the right to select the Managing Underwriter with respect to the offering; PROVIDED, that such Managing Underwriter is reasonably acceptable to the holders of a majority of the Registrable Securities requested to be sold in such Underwritten Offering.
Section 6.3 REGISTRATION PROCEDURES.
(a) If and whenever the Company is required to effect or cause the registration of any Registrable Securities under the Securities Act as provided in SECTION 6.1 or 6.2, the Company will, as expeditiously as possible:
(i) Prepare and, in any event within 60 calendar days after the end of the period within which requests for registration may be given to the Company, (or in the event that the Company has postponed a registration statement pursuant to SECTION 6.1(a), not later than 30 days after the date to which the Company postponed such registration statement), file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become and remain effective; PROVIDED, that in the case of a registration provided for in SECTION 6.1 or 6.2, before filing a registration statement or prospectus or any amendments or supplements thereof, the Company will furnish to one counsel selected by JZEP, and one counsel selected by the Jordan Investors copies of all such documents proposed to be filed, which documents will be subject to the review of such counsel; and, PROVIDED, FURTHER, that the Company may discontinue any registration of its securities that is being effected pursuant to SECTION 6.2 at any time prior to the effective date of the registration statement relating thereto in accordance with the terms hereof.
(ii) 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 for at least nine months (or until all the shares are sold) and to comply with the provisions of the Securities Act with respect to the disposition of all Common Stock covered by such registration statement during such period in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement.
(iii) Furnish to each holder of Registrable Securities covered by the registration statement and to each underwriter, if any, of such Registrable Securities, such number of copies of a final prospectus and preliminary prospectus for delivery in conformity with the requirements of the Securities Act, and such other documents, as such Person may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities.
(iv) Use its commercially reasonable best efforts to register or
qualify such Registrable Securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as each
seller shall reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition of the Registrable Securities owned by such
seller, in such jurisdictions, except that the Company shall not for any
such purpose be required (A) to qualify to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
SECTION 6.3(a)(iv), it is not then so qualified, or (B) to subject itself
to taxation in any such jurisdiction, or (C) to take any action which would
subject it to general or unlimited service of process in any such
jurisdiction where it is not then so subject.
(v) Use its commercially reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities.
(vi) Immediately notify each seller of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act within the appropriate period mentioned in SECTION 6.3(a)(ii), if the Company becomes aware that the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and, at the request of any such seller, promptly deliver a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.
(vii) Otherwise use its commercially reasonable best efforts to comply with all applicable rules and regulations of the Commission and make generally available to its security holders, in each case as soon as practicable, but not later than 45 calendar days after the close of the period covered thereby (90 calendar days in case the period covered corresponds to a fiscal year of the Company), an earnings statement of the Company which will satisfy the provisions of Section 11(a) of the Securities Act.
(viii) Use its commercially reasonable best efforts in cooperation with the underwriters to list such Registrable Securities on each securities exchange or NASDAQ as they may reasonably designate.
(ix) In the event the offering is an Underwritten Offering, use its commercially reasonable best efforts to obtain a "cold comfort" letter from the independent public accountants for the Company and a legal opinion letter from counsel to the Company, each in customary form and covering such matters of the type customarily covered by such letters.
(x) Execute and deliver all instruments and documents (including in an Underwritten Offering an underwriting agreement in customary form) and take such other actions and obtain such certificates and opinions in order to effect an underwritten public offering of such Registrable Securities.
(xi) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.
(b) Each holder of Registrable Securities will, upon receipt of any notice
from the Company of the happening of any event of the kind described in
SECTION 6.3(a)(vi), forthwith discontinue disposition of the Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by SECTION 6.3(a)(vi).
(c) In connection with the Company's initial public offering, each Stockholder agrees, whether or not such Stockholder's Stock are included in such registration, not to effect any public sale or distribution, including any sale pursuant to Rule 144 under the Securities Act, of any Common Stock, or of any security convertible into or exchangeable or exercisable for Common Stock (other than as part of such Underwritten Offering), without the consent of the Managing Underwriter, during a period commencing seven calendar days before and ending 180 calendar days (or such lesser number as the Managing Underwriter shall designate) after the effective date of such registration.
(d) If a registration pursuant to SECTION 6.1 or 6.2 involves an Underwritten Offering, the Company agrees, if so required by the Managing Underwriter, not to effect any public sale or distribution of any of its equity or debt securities, as the case may be, or securities convertible into or exchangeable or exercisable for any of such equity or debt securities, as the case may be, during a period commencing seven calendar days before and ending 180 calendar days after the
effective date of such registration, except for such Underwritten Offering or except in connection with a registration statement with respect to a stock option plan, stock purchase plan, savings or similar plan, or an acquisition, merger or exchange offer.
(e) If a registration pursuant to SECTION 6.1 or 6.2 involves an Underwritten Offering, any holder of Registrable Securities requesting to be included in such registration may elect, in writing, prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration, unless such holder has agreed with the Company or the Managing Underwriter to limit its rights under this SECTION 6.3.
(f) It is understood that in any Underwritten Offering, in addition to any shares of Common Stock (the "INITIAL SHARES") the underwriters have committed to purchase, the underwriting agreement may grant the underwriters an option to purchase up to a number of additional shares of authorized but unissued shares of Common Stock (the "OPTION SHARES") equal to 15% of the initial shares (or such other maximum amount as the NASD may then permit), solely to cover over-allotments. Shares of Common Stock proposed to be sold by the Company and the other sellers shall be allocated between initial shares and option shares as agreed by the Company and such other sellers or, in the absence of agreement, pursuant to SECTION 6.1(h) or 6.2(d), as the case may be. The number of initial shares and option shares to be sold by requesting holders shall be allocated pro rata among all such holders on the basis of the relative number of shares of Registrable Securities each such holder has requested to be included in such registration.
Section 6.4 INDEMNIFICATION.
(a) In the event of any registration of any securities of the Company under the Securities Act pursuant to SECTION 6.1 or 6.2, the Company will, and it hereby agrees to, indemnify and hold harmless, to the extent permitted by law, each seller of any Stock covered by such registration statement, such seller's directors and officers or general and limited partners, each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such seller or any such underwriter within the meaning of the Securities Act or the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage or expense (joint or several) whatsoever arising out of or based upon (x) an untrue statement or alleged untrue statement of a material fact contained in any registration statement (including any preliminary or final prospectus contained therein or any amendment or supplement thereto), including all documents incorporated therein by reference; (y) the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of an untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or final prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein not misleading; or (z) any violation or alleged violation by the Company of the Securities
Act or the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act or the Exchange Act or any state securities law.
(ii) against any and all loss, liability, claim, damage and expense whatsoever to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and
(iii) against any and all expense reasonably incurred by such seller in connection with investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon the circumstances set forth in clauses (x), (y) and (z) above, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of any such seller expressly for use in the preparation of any registration statement (or any amendment thereto) or any preliminary prospectus or final prospectus (or any amendment or supplement thereto); and PROVIDED, FURTHER, that the Company will not be liable to any Person who participates as an underwriter in the offering or sale of Stock or any other Person, if any, who controls such underwriter within the meaning of the Securities Act, under the indemnity agreement in this SECTION 6.4(a) with respect to any preliminary prospectus or final prospectus or final prospectus as amended or supplemented, as the case may be, to the extent that any such loss, claim, damage or liability of such underwriter or controlling Person results from the fact that such underwriter sold Stock to a Person to whom there was not sent or given, at or prior to the written confirmation of such sale, a copy of the final prospectus or of the final prospectus as then amended or supplemented, whichever is most recent, if the Company has previously furnished copies thereof to such underwriter. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such seller or any such director, officer, general or limited partner, investment advisor or agent, underwriter or controlling Person and shall survive the transfer of such securities by such seller.
(b) The Company may require, as a condition to including any Stock in any
registration statement filed in accordance with SECTION 6.1 or 6.2, that the
Company shall have received an undertaking in customary form from the
prospective seller of such Stock or any underwriter, to indemnify and hold
harmless (in the same manner and to the same extent as set forth in
SECTION 6.4(a)) the Company with respect to any statement or alleged statement
in or omission or alleged omission from such registration statement, any
preliminary, final or summary prospectus contained therein, or any amendment or
supplement, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such seller or underwriter
specifically stating that it is for use in the preparation of such registration
statement, preliminary, final or
summary prospectus or amendment or supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling Person and shall survive the transfer of such securities by such seller.
The obligations of the Company and such sellers pursuant to this
SECTION 6.4 are to be several and not joint; PROVIDED, HOWEVER, that with
respect to each claim pursuant to this Section, the Company shall be liable for
the full amount of such claim, and each such seller's liability under this
SECTION 6.4 shall be limited to an amount equal to the net proceeds (after
deducting the underwriting discount and expenses) received by such seller from
the sale of Stock held by such seller pursuant to such registration statement.
(c) Promptly after receipt by an indemnified party hereunder of written
notice of the commencement of any action or proceeding involving a claim
referred to in this SECTION 6.4, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to such indemnifying party of the commencement of such action; PROVIDED,
HOWEVER, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
SECTION 6.4, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim (in which case the indemnifying party
shall not be liable for the fees and expenses of more than one firm of counsel
in each jurisdiction for a majority of the sellers of Stock, or more than one
firm of counsel in each jurisdiction for the underwriters in connection with any
one action or separate but similar or related actions), the indemnifying party
will be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similar notified, to the extent that it may
wish with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnifying party in connection with the defense thereof.
(d) The Company and each seller of Stock shall provide for the foregoing indemnity in any underwriting agreement with respect to any required registration or other qualification of securities under any federal or state law or regulation of any governmental authority.
Section 6.5 CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by
SECTION 6.4 is for any reason not available, the parties required to indemnify
by the terms thereof shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature contemplated by such indemnity
agreement incurred by the Company, any seller of Stock and one or more of the
underwriters, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act. In determining the amounts which the
respective parties shall contribute, there shall be considered the relative
benefits received by each party from the offering of the Stock (taking into
account the portion of the proceeds of the offering realized by each), the
parties' relative knowledge and access to information concerning the matter with
respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission and
any other equitable considerations appropriate under the circumstances. The
Company and each Person selling securities agree with each other that no seller
of Stock shall be required to contribute any amount in excess of the amount such
seller would have been required to pay to an indemnified party if the indemnity
under SECTION 6.4(b) were available. The Company and each such seller agree with
each other and the underwriters of the Stock, if requested by such underwriters,
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the underwriters were
treated as one entity for such purpose) or for the underwriters' portion of such
contribution to exceed the percentage that the underwriting discount bears to
the initial public offering price of the Stock. For purposes of this
SECTION 6.5, each Person, if any, who controls an underwriter within the meaning
of Section 15 of the Securities Act shall have the same rights to contribution
as such underwriter, and each director and each officer of the Company who
signed the registration statement, and each Person, if any, who controls the
Company or a seller of Stock within the meaning of Section 15 of the Securities
Act shall have the same rights to contribution as the Company or a seller of
Stock, as the case may be.
Section 6.6 RULE 144. If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act, the Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder (or, if the Company is not required to file such reports, it will, upon the request of any holder of Registrable Securities, make publicly available other information), and it will take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell shares of Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities, the Company will deliver to such holder a written statement as to whether it has complied with such requirements.
Section 6.7 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company shall not enter into any agreement (other than this Agreement) with any holder or prospective holder of any securities of the Company which grant such holder or prospective holder rights to include securities of the Company in a registration statement, unless such rights to include securities in a registration initiated by the Company or by Stockholders are not superior or prior to the rights of the Stockholders.
ARTICLE VII
TERMINATION
Section 7.1 CERTAIN TERMINATIONS. ARTICLES II, III, IV, and V shall terminate on the date on which any of the following events first occurs: (i) a merger or consolidation of the Company with or into another Person that is not an Affiliate of the Company, as a result of which the Stockholders immediately prior to such event own less than 51% of the outstanding shares of
Voting Stock of the surviving or resulting corporation, (ii) the sale or other disposition of all or substantially all the assets of the Company to a Person that is not an Affiliate of the Company, or (iii) a Public Offering.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, all of the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors and assigns of the parties hereto. No Stockholder may Transfer any of its rights hereunder to any Person other than in accordance with this Agreement. The Company may not assign any of its rights hereunder other than by operation of law. If any transferee of any Stockholder shall acquire any Stock, in any manner, whether by operation of law or otherwise, such shares shall be held subject to all of the terms of this Agreement, and by taking and holding such shares such Person shall be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to comply with all of the terms and provisions of this Agreement.
Section 8.2 AMENDMENT AND MODIFICATION; WAIVER OF COMPLIANCE; CONFLICTS.
(a) This Agreement may be amended only by a written instrument duly executed by (x) the Company, and (y) the holders of a majority of Stock held by the Jordan Investors and JZEP. Notwithstanding the foregoing: (i) without the consent of all Stockholders, this Agreement may not be amended in a manner which unequally or disproportionately affects holders of the same class or series of Stock; (ii) without the consent of each affected Stockholder, this Agreement may not be amended to require a Stockholder to vote its Stock in a particular manner, and (iii) the addition of another Person as a party to this Agreement in accordance with the terms hereof, including any Permitted Transferee, and any resulting change to the Stockholder Schedules will not be deemed to be an amendment to this Agreement. The Company shall give prompt written notice of any amendment of this Agreement to any Stockholder that did not consent in writing to such amendment.
(b) Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
Section 8.3 NOTICES. Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile (with such facsimile confirmed promptly in writing sent by certified or registered mail, return receipt requested), or first class mail, or by Federal Express, United Parcel Service or other similar courier or other similar means of communication, as follows:
(i) If to the Company, addressed to the Company c/o The Jordan Company, LLC, 48th Floor, 767 Fifth Avenue, New York, New York 10153; Attention: A. Richard Caputo, Jr.;
(ii) If to any Jordan Investor, addressed to the Company or to such Jordan Investor c/o The Jordan Company, LLC, 48th Floor, 767 Fifth Avenue, New York, New York 10153; Attention: A. Richard Caputo, Jr.
(iii) If to JZEP, addressed to JZEP, c/o Jordan/Zalaznick Advisers,
Inc., 48th Floor, 767 Fifth Avenue, New York, New York 10153; Attention:
Melissa Chuilli.
(iv) If to a Stockholder other than the Jordan Investors or JZEP, to the address of such Stockholder set forth in the stock records of the Company,
or, in each case, to such other address or facsimile number as such party may designate in writing to each Stockholder and the Company by written notice given in the manner specified herein.
All such communications shall be deemed to have been given, delivered or made when so delivered by hand or sent by facsimile, on the next business day if sent by overnight courier service or five business days after being so mailed.
Section 8.4 ENTIRE AGREEMENT. The provisions of this Agreement and the other writings referred to herein or delivered pursuant hereto which form a part hereof contain the entire agreement among the parties hereto with respect to the subject transactions contemplated thereby and supersede all prior oral and written agreements and memoranda and undertakings among the parties hereto with regard to such subject matter. The Company represents to the Stockholders that the rights granted to the Stockholders hereunder do not in any way conflict with and are not inconsistent with the rights granted or obligations accepted under any other agreement (including the Certificate of Incorporation) to which the Company is a party.
Section 8.5 INSPECTION. For so long as this Agreement shall be in effect, this Agreement shall be made available for inspection by any Stockholder at the principal executive offices of the Company.
Section 8.6 HEADINGS. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 8.7 RECAPITALIZATIONS, EXCHANGES, ETC., AFFECTING THE COMMON STOCK; NEW ISSUANCES. The provisions of this Agreement shall apply, to the full extent set forth herein with respect to the Common Stock and the Preferred Stock and to any and all equity or debt securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets, or otherwise) which may be issued in respect of, in exchange for, or in substitution of, such equity or debt securities and shall be appropriately adjusted for any stock dividends, splits, reverse splits, combinations, reclassifications, recapitalizations, reorganizations and the like occurring after the date hereof.
Section 8.8 RATIFICATION OF PRIOR ACTS OF BOARD OF DIRECTORS OF COMPANY; RIGHT TO NEGOTIATE. Each of the Stockholders hereby adopts, ratifies and confirm all of the actions heretofore taken by the Board of Directors in all respects. Each of the Stockholders hereby agrees that nothing in this Agreement (apart from ARTICLE V hereof) shall be deemed to restrict or prohibit the Company from purchasing Stock from any Stockholder at any time upon such terms and conditions and at such price as may be mutually agreed upon between the Company and such Stockholder, whether or not at the time of such purchase, circumstances exist which specifically grant the Company the right to purchase, or such Stockholder the right to sell, Stock pursuant to the terms of this Agreement.
Section 8.9 LITIGATION. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED,
APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. EACH
OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF
THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD
NOT BE MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY
TO WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED
TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES
THAT JURISDICTION AND VENUE WILL BE PROPER IN THE SOUTHERN DISTRICT OF NEW YORK
AND WAIVES ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. EACH PARTY WAIVES
PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING
AN ACTION OR PROCEEDING SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE PARTY AT THE
ADDRESS SET FORTH IN THIS AGREEMENT, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE
STATE OF DELAWARE OR THE UNITED STATES. THE CHOICE OF FORUM SET FORTH IN THIS
SECTION 8.9 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
Section 8.10 NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person.
Section 8.11 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Section 8.12 NEW STOCKHOLDERS. If the requirements of this Agreement otherwise have been met, new holders of Stock may become parties to this Agreement by executing a counterpart to this Agreement, at which time the Company shall revise EXHIBIT A as may be necessary or appropriate.
IN WITNESS WHEREOF, each of the undersigned has signed this Agreement as of the date first above written:
SAFETY HOLDINGS, INC.
By:/s/A. Richard Caputo, Jr. --------------------------------- Name: A. Richard Caputo, Jr. Title: |
JZ EQUITY PARTNERS PLC
By:/s/David W. Zalaznick --------------------------------- Name: David W. Zalaznick Title: |
LEUCADIA INVESTORS, INC.
By:/s/Joseph Orlando --------------------------------- Name: Joseph Orlando Title: |
JOHN W. JORDAN II REVOCABLE TRUST
By:/s/John W. Jordan II --------------------------------- Name: John W. Jordan II Title: Trustee /s/David W. Zalaznick ------------------------------------ David W. Zalaznick /s/Jonathan F. Boucher ------------------------------------ Jonathan F. Boucher |
/s/Adam E. Max ------------------------------------ Adam E. Max /s/A. Richard Caputo, Jr. ------------------------------------ A. Richard Caputo, Jr. /s/Paul Rodzevik ------------------------------------ Paul Rodzevik /s/Douglas J. Zych ------------------------------------ Douglas J. Zych /s/Brian Higgins ------------------------------------ Brian Higgins /s/Robert D. Mann ------------------------------------ Robert D. Mann |
MANAGEMENT STOCKHOLDERS:
/s/David F. Brussard ------------------------------------ David F. Brussard /s/Edward N. Patrick, Jr. ------------------------------------ Edward N. Patrick, Jr. /s/William J. Begley, Jr. ------------------------------------ William J. Begley, Jr. /s/Daniel F. Crimmins ------------------------------------ Daniel F. Crimmins |
/s/Robert J. Kerton ------------------------------------ Robert J. Kerton /s/David E. Krupa ------------------------------------ David E. Krupa /s/Daniel D. Loranger ------------------------------------ Daniel D. Loranger |
EXHIBIT 10.3
[EXECUTION COPY]
PURCHASE AGREEMENT,
dated as of October 15, 2001,
between
SAFETY HOLDINGS, INC.,
as the Issuer,
and
JZ EQUITY PARTNERS PLC,
as the Purchaser,
for
$30,000,000 Principal Amount of
13.0% SHI Notes due October 31, 2011,
22,400 6.0% SHI Series A Preferred Shares
and
89,625 SHI Common Shares.
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms.........................................................................2
SECTION 1.2. Senior Loan Agreement Terms..........................................................21
SECTION 1.3. Use of Defined Terms.................................................................22
SECTION 1.4. Cross References.....................................................................22
SECTION 1.5. Accounting and Financial Determinations..............................................22
ARTICLE II
PURCHASES AND SALES OF SUBJECT SECURITIES
SECTION 2.1. Purchase Commitments.................................................................22
SECTION 2.2. Issue Price..........................................................................22
SECTION 2.3. Closing..............................................................................23
SECTION 2.4. Purchaser's Representations..........................................................23
ARTICLE III
CONDITIONS TO CLOSING
SECTION 3.1. Certificates of Incorporation........................................................24
SECTION 3.2. Resolutions, ETC.....................................................................24
SECTION 3.3. Other Stockholder Purchases..........................................................24
SECTION 3.4. Preemption Letter....................................................................25
SECTION 3.5. OTBC Acquisition.....................................................................25
SECTION 3.6. STBC Filing Document.................................................................26
SECTION 3.7. Certain Affiliate Agreements.........................................................26
SECTION 3.8. Effectiveness, ETC. of Senior Loan Agreement.........................................27
SECTION 3.9. Performance; No Default..............................................................27
SECTION 3.10. Absence of Litigation, ETC...........................................................27
SECTION 3.11. Certificate as to Compliance, ETC....................................................28
SECTION 3.12. Certificate as to Solvency, ETC......................................................28
SECTION 3.13. Opinion of Counsel...................................................................28
SECTION 3.14. Legal Expenses.......................................................................28
SECTION 3.15. Legal Investment.....................................................................28
SECTION 3.16. Satisfactory Legal Form..............................................................28
ARTICLE IV
PAYMENTS, REGISTRATION, ETC
SECTION 4.1. Place of Payment.....................................................................28
SECTION 4.2. Home Office Payment..................................................................29
SECTION 4.3. Optional Payments....................................................................29
SECTION 4.4. Mandatory Prepayments of PIK Notes...................................................29
SECTION 4.5. Allocation...........................................................................30
SECTION 4.6. Mandatory Redemption of Notes........................................................30
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 4.7. Registration, Transfer, ETC..........................................................30
SECTION 4.8. Transfer and Exchange................................................................31
SECTION 4.9. Replacement..........................................................................31
SECTION 4.10. Taxes................................................................................31
SECTION 4.11. Representative Noteholder............................................................33
SECTION 4.11.1. Actions..............................................................................33
SECTION 4.11.2. Exculpation..........................................................................33
SECTION 4.11.3. Status as Noteholder.................................................................33
SECTION 4.11.4. Credit Decisions.....................................................................33
ARTICLE V
WARRANTIES, ETC
SECTION 5.1. Organization, Power, Authority, ETC..................................................34
SECTION 5.2. Due Authorization....................................................................34
SECTION 5.3. Validity, ETC........................................................................34
SECTION 5.4. Financial Information................................................................35
SECTION 5.5. Absence of Material Adverse Change...................................................35
SECTION 5.6. Continuing Indebtedness..............................................................36
SECTION 5.7. Contingencies........................................................................36
SECTION 5.8. Litigation, ETC......................................................................36
SECTION 5.9. Capitalization.......................................................................36
SECTION 5.10. Margin Regulations...................................................................37
SECTION 5.11. Government Regulation................................................................37
SECTION 5.12. Title to and Condition of Properties, ETC............................................37
SECTION 5.13. Patents, Trademarks, ETC.............................................................37
SECTION 5.14. Taxes................................................................................38
SECTION 5.15. Pension and Welfare Plans............................................................38
SECTION 5.16. Environmental Matters................................................................38
SECTION 5.17. Special Purpose Corporations.........................................................39
SECTION 5.18. Subsidiaries, ETC....................................................................39
SECTION 5.19. Offering of Subject Securities.......................................................40
SECTION 5.20. Accuracy of Information..............................................................40
ARTICLE VI
COVENANTS
SECTION 6.1. Certain Affirmative Covenants........................................................40
SECTION 6.1.1. Financial Information, ETC...........................................................41
SECTION 6.1.2. Notice of Default, Litigation, ETC...................................................42
SECTION 6.1.3. Use of Proceeds......................................................................43
SECTION 6.1.4. Perform Senior Loan Agreement........................................................44
SECTION 6.1.5. Conforming Changes...................................................................44
SECTION 6.1.6. Books and Records....................................................................44
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TABLE OF CONTENTS
(continued)
PAGE
SECTION 6.1.7. Ownership, ETC. of Subsidiaries......................................................45
SECTION 6.2. Certain Negative Covenants...........................................................45
SECTION 6.2.1. Business Activities..................................................................45
SECTION 6.2.2. Indebtedness and Disqualified Capital Stock..........................................46
SECTION 6.2.3. Liens................................................................................47
SECTION 6.2.4. Financial Test.......................................................................48
SECTION 6.2.5. Restricted Payments, ETC.............................................................48
SECTION 6.2.6. Investments..........................................................................49
SECTION 6.2.7. Consolidation, Merger, ETC...........................................................49
SECTION 6.2.8. Modification of Senior Loan Documents................................................50
SECTION 6.2.9. Modification of Subordinated Notes...................................................51
SECTION 6.2.10. Modification of SHI Stockholders' Agreement..........................................51
SECTION 6.2.11. Negative Pledges, Upstream Restrictions, ETC.........................................51
SECTION 6.2.12. Transactions with Affiliates.........................................................52
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. Events of Default....................................................................52
SECTION 7.1.1. Non-Payment of Obligations...........................................................52
SECTION 7.1.2. Default on Other Indebtedness........................................................53
SECTION 7.1.3. Bankruptcy, Insolvency, ETC..........................................................53
SECTION 7.1.4. Breach of Warranty...................................................................54
SECTION 7.1.5. Non-Performance of Certain Undertakings..............................................54
SECTION 7.1.6. Non-Performance of Other Undertakings................................................54
SECTION 7.1.7. Judgments............................................................................54
SECTION 7.1.8. Pension Plans........................................................................54
SECTION 7.2. Action if Bankruptcy.................................................................54
SECTION 7.3. Action if Other Event of Default.....................................................55
SECTION 7.4. Suits for Enforcement................................................................55
SECTION 7.5. Remedies Cumulative..................................................................55
ARTICLE VIII
SUBORDINATION IN SUBSTANTIVE CONSOLIDATION
SECTION 8.1. Payment Over Upon Dissolution, ETC...................................................55
SECTION 8.2. Turnover.............................................................................56
SECTION 8.3. Payment Otherwise Permitted, ETC.....................................................56
SECTION 8.4. Subrogation to Rights of Holders of Senior Indebtedness..............................56
SECTION 8.5. No Waiver of Subordination Provisions................................................57
SECTION 8.6. Proving, ETC. Claims.................................................................57
SECTION 8.7. Reliance on Judicial Order or Certificate of Liquidating Agent.......................57
SECTION 8.8. Amendment of Subordination, ETC. Provisions..........................................58
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Waivers, Amendments, ETC.............................................................58
SECTION 9.2. Notices..............................................................................59
SECTION 9.3. Costs and Expenses...................................................................59
SECTION 9.4. Indemnification......................................................................59
SECTION 9.5. Survival.............................................................................60
SECTION 9.6. Severability.........................................................................60
SECTION 9.7. Headings.............................................................................60
SECTION 9.8. Counterparts.........................................................................60
SECTION 9.9. Governing Law; Entire Agreement......................................................60
SECTION 9.10. Successors and Assigns...............................................................60
SECTION 9.11. Jurisdiction.........................................................................61
SECTION 9.12. Waiver of Jury Trial.................................................................61
SCHEDULE I - Disclosure Schedule
SCHEDULE II - Senior Loan Agreement Terms
EXHIBIT A - Note
EXHIBIT B - Certificate as to Certificate of Incorporation
EXHIBIT C - Certificate as to Authorizing Resolutions, ETC.
EXHIBIT D - Certificate as to Other Stockholder Purchases
EXHIBIT E - Preemption Letter
EXHIBIT F - Certificate as to OTBC Acquisition
EXHIBIT G - Certificate as to STBC Filing Document
EXHIBIT H - Certificate as to Affiliate Agreements
EXHIBIT I - Certificate as to Senior Loan Agreement
EXHIBIT J - Certificate as to Compliance
EXHIBIT K - Certificate as to Solvency
EXHIBIT L - Opinion of Counsel
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of October 15, 2001, between SAFETY HOLDINGS, INC., a Delaware corporation (alternatively, "SHI" or the "COMPANY"), and JZ EQUITY PARTNERS PLC, a public limited liability company incorporated in England and Wales under the Companies Act (1985) (alternatively, "JZEP" or the "PURCHASER"),
WHEREAS, the Jordan Parties (such and other capitalized terms are used herein with the meanings provided in SECTION 1.1) have formed the Company and its direct, wholly-owned Subsidiary Safety Merger Co., Inc., a Delaware corporation ("SMCI"), to acquire Thomas Black Corporation, a Massachusetts corporation (alternatively, "OTBC" and "OLD THOMAS BLACK"), which owns all of the Capital Stock of Safety Insurance Company, a Massachusetts corporation ("SAFETY INSURANCE"), which, together with its Subsidiaries, is engaged in providing property and casualty insurance (including passenger and commercial automobile, homeowner, fire, umbrella and business owner coverages) through independent insurance agents to the Massachusetts market from the 18 Persons (collectively, the "OTBC SELLERS") named in ITEM 3.7 ("OTBC Sellers") of the Disclosure Schedule for an aggregate consideration equal to the SUM of (x) the EXCESS of $112,805,063 OVER certain Transaction Costs PLUS (y) the lesser of (i) $12,000,000 pro rated from January 1, 2001 through the Closing Date and (ii) 55% of pre-Closing Date FY 2001 adjusted consolidated after-tax net earnings; and
WHEREAS, SMCI and the Company are parties to a merger agreement, dated as of May 31, 2001 and amended as of July 17, 2001 (as so executed and delivered, together with all further amendments thereto consented to by the Purchaser, the "OTBC ACQUISITION AGREEMENT"), with the OTBC Sellers pursuant to which SMCI will acquire all of the outstanding Capital Stock of Old Thomas Black (the "OTBC ACQUISITION"); and
WHEREAS, immediately upon the effectiveness of the OTBC Acquisition, (x) SMCI will merge with and into Old Thomas Black (the "OTBC MERGER") with the surviving Massachusetts corporation being named "Thomas Black Corporation" (alternatively, "STBC" or "SURVIVING THOMAS BLACK") and (y) Surviving Thomas Black will continue to transact the business previously conducted by Old Thomas Black and will be a direct, wholly-owned Subsidiary of the Company; and
WHEREAS, SMCI is a party to a revolving credit and term loan agreement, to be dated as of October 16, 2001 (as so originally executed and delivered, the "SENIOR LOAN AGREEMENT"), with Fleet National Bank ("FLEET"), as lender (together with such other institutional lenders as are or from time to time hereafter become parties thereto, the "SENIOR LENDERS") and as the administrative agent (the "SENIOR AGENT") for the Senior Lenders, pursuant to which the Senior Lenders will extend credit to SMCI and Surviving Thomas Black in an aggregate principal amount not to exceed $75,000,000 at any one time outstanding; and
WHEREAS, the Company is entering into with each Person (collectively, the "SHI STOCKHOLDERS") identified in ITEM 3.3 ("SHI Stockholders") of the Disclosure Schedule a stockholders' agreement, to be dated the Closing Date (the "SHI STOCKHOLDERS' AGREEMENT"), and
related subscription agreements pursuant to which each of the following groups of SHI Stockholders will agree to purchase Capital Stock of the Company as follows:
(a) the SHI Management Stockholders, collectively, 69,500 SHI Common Shares, including 12,500 SHI Restricted Common Shares;
(b) the individuals named under the caption "Providers (non-Jordan Parties), E.G., Brokers, ET AL." of such ITEM 3.3, collectively, 1,250 SHI Common Shares; and
(c) various Jordan Parties, collectively, 89,625 SHI Common Shares; and
WHEREAS, the Company has authorized the sale to the Purchaser, and the Purchaser is willing on the terms and conditions hereinafter set forth (including ARTICLE III) to purchase, directly or through nominees, on the Closing Date
(a) at par, $30,000,000 principal amount of 13.0% unsecured promissory notes in the form of EXHIBIT A hereto due October 31, 2011;
(b) 22,400 6.0% SHI Series A Preferred Shares, representing on the Closing Date 100%, of the SHI Preferred Shares which will then be issued and outstanding; and
(c) 89,625 SHI Common Shares, representing in the aggregate on the Closing Date 35.85 % of the authorized SHI Common Shares which will then be issued and outstanding on a Fully-Diluted Basis.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINED TERMS. The following terms (whether or not italicized) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):
"ADDITIONAL ACQUISITION" means any acquisition of a business by Surviving Thomas Black, whether directly or indirectly by or as one of its Subsidiaries, after the Closing Date in accordance with CLAUSE (d) of SECTION 6.2.7.
"ADDITIONAL SELLER" means a holder of Capital Stock of a business acquired in an Additional Acquisition.
"ADDITIONAL SELLER SUBORDINATED NOTE" means each unsecured promissory note
(x) which is issued from time to time after the Closing Date by the Company or
any Subsidiary to an Additional Seller and (y) which conforms to the
requirements of CLAUSE (b) and CLAUSE (l) of SECTION 6.2.2.
"AFFILIATE" means, relative to any Person, any other Person which, directly
or indirectly, controls or is controlled by or under common control with such
Person (EXCLUDING, HOWEVER, any trustee under, or any committee with
responsibility for administering, any Plan). For the purposes of this
definition, "CONTROL" (including the correlative terms "CONTROLLING",
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means, relative to any Person,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of Voting Stock, by agreement or otherwise; PROVIDED, HOWEVER, that
(x) beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control and (y) any of the foregoing to the contrary
notwithstanding, the term "Affiliate," relative to the Company and Subsidiaries,
shall not include JZEP.
"THIS AGREEMENT" means, on any date, this Purchase Agreement as originally in effect and as thereafter from time to time amended, supplemented or otherwise modified in accordance with the terms hereof and in effect on such date.
"APPLICABLE LAW" means, relative to any Person, (x) all provisions of laws, statutes, ordinances, rules, regulations, requirements, restrictions, permits, certificates or orders of any Governmental Authority applicable to such Person or any of its assets or property and (y) all judgments, injunctions, orders and decrees of all courts and arbitrators in proceedings or actions in which such Person is a party or by which any of its assets or properties are bound.
"APPROVAL" means, relative to any Person, each approval, license, permit, consent, exemption, filing or registration by or with any Governmental Authority necessary to (x) authorize or permit the execution, delivery or performance of, or for the validity or enforceability of, any Transaction Document or (y) its conduct of its business.
"AUTHORIZED OFFICER" means, relative to the Company, those of its officers whose signatures and incumbency shall have been certified to the Purchaser pursuant to CLAUSE (a)(ii) of SECTION 3.2.
"BUSINESS DAY" means any day, EXCLUDING, HOWEVER, a Saturday, Sunday and each legal holiday on which banks are authorized or required to close in Boston, Massachusetts or New York, New York.
"CAPITALIZED LEASE LIABILITY" means, relative to any Person, any monetary obligation under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capitalized lease, and, for purposes of this Agreement and each other Purchase Document, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP, and the stated maturity thereof shall be determined in accordance with GAAP.
"CAPITAL STOCK" means, relative to any Person, any and all shares, partnership or membership interests, participations, rights or other equivalents (however designated) of corporate stock, including (w) capital shares of such Person (whether voting or non-voting), (x) if such Person is a partnership, capital partnership interests (whether general or limited), (y) any other indicia of ownership of such Person and (z) all warrants, options, purchase rights, conversion or exchange rights, voting rights, calls or any claims of any character with respect thereto, EXCLUDING, HOWEVER, SARs.
"CASH EQUIVALENT INVESTMENT" shall refer to "Cash Equivalents" as defined in the Senior Loan Agreement; PROVIDED, HOWEVER, that references therein to "Borrower" shall refer to the Company.
"CHANGE OF CONTROL" means
(a) the sale, lease or transfer (EXCLUDING, HOWEVER, any direct or indirect transfer (x) involving the granting of a Lien by Surviving Thomas Black, Safety Indemnity or Safety Insurance on Non-Admitted Insurance Assets pursuant to any Senior Loan Document and (y) not involving any foreclosure or other exercise of remedies pursuant to any Senior Loan Document) of all or substantially all the assets of the Company, Safety Insurance or Safety Indemnity to any Person or group (as such term is defined in Section 13(d)(3) of the Exchange Act) other than the Jordan Investors and any Institutional Holder;
(b) the liquidation or dissolution of (or the adoption of a plan of liquidation by) the Company, Safety Insurance or Safety Indemnity, except as permitted by CLAUSE (c) of SECTION 6.2.7;
(c) the acquisition by any Person or group (as so defined) (other than the Jordan Investors and all Institutional Holders) of a direct or indirect majority in interest (more than 50%) of the issued and outstanding Voting Stock of the Company by way of merger or consolidation or otherwise;
(d) any transaction the result of which is that any Person or group (as so defined) (other than the Jordan Investors and all Institutional Holders) beneficially owns, directly or indirectly, more of the issued and outstanding Voting Stock of the Company than is owned beneficially, directly or indirectly, by the Jordan Investors and all Institutional Holders in the aggregate;
(e) after the first sale of common equity by the Company pursuant to a registration statement under the Securities Act that results in at least 20% of the then issued and outstanding Voting Stock of the Company being held by the public,
(i) the Jordan Investors and all Institutional Holders own beneficially, directly or indirectly, in the aggregate less than 25% of the issued and outstanding Voting Stock of the Company, or
(ii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of at least 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or
(f) for so long as any Indebtedness shall remain outstanding (or any unused commitments shall remain in effect) under the Senior Loan Agreement, any other event constituting an "Event of Default" of the nature referred to in Section 13.1(t) of the Senior Loan Agreement.
"CLOSING" is defined in SECTION 2.3.
"CLOSING DATE" is defined in SECTION 2.3.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.
"COMPANY" is defined in the PREAMBLE.
"CONSOLIDATED ESTATE" is defined in ARTICLE VIII.
"CONTINGENT LIABILITY" means, relative to any Person, any agreement, undertaking or arrangement by which such Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the Indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the Capital Stock of any other Person. The amount of any Person's Contingent Liability shall (SUBJECT, HOWEVER, to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the Indebtedness, obligation or other liability guaranteed thereby.
"CONTRACTUAL UNDERTAKING" means, relative to any Person, any provision of any debt or equity security issued by it or of any Instrument or undertaking to which it is a party or by which it or any of its property is bound or subject.
"CONTROLLED GROUP" means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with the Company, are treated as a single employer under Section 414(b) or 414(c) of the Code or section 4001(b)(1) of ERISA.
"DEFAULT" means
(a) any Event of Default or any act, condition or event which, after notice or lapse of time or both, would constitute an Event of Default; and
(b) any material act, condition or event which has resulted in, or would (including after notice or lapse of time or both) permit, any or all of the monetary obligations of SMCI or Surviving Thomas Black or any of its Subsidiaries under the Senior Loan Agreement to be declared immediately due and payable prior to their stated maturity;
"DEFAULT CIRCUMSTANCE" means (x) any Default shall have occurred and be continuing or (y) any PIK Note shall have been issued and remain outstanding.
"DIRECTOR INDEMNIFICATION PAYMENT" means any payment by the Company or Subsidiary pursuant to the director indemnification provisions of its Organizational Documents.
"DISCLOSURE SCHEDULE" means SCHEDULE I hereto.
"DISQUALIFIED CAPITAL STOCK" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder thereof), or upon the happening of any event, matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the sole option of the holder thereof (except, in each case, upon the occurrence of a change of control or asset disposition and excluding put or call repurchase obligations or rights in respect of SHI Common Shares held by any Management SHI Stockholder), on or prior to the date that is 91 days after the maturity date of the Notes.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is covered by ERISA and (x) which is currently
maintained or contributed to by the Company, (y) which was at any time during
the last six years maintained, contributed to or terminated by Old Thomas Black
or the Company or (z) with respect to which there is any potential or
outstanding liability of the Company.
"ENVIRONMENTAL CLAIM" is defined in clause (b) of SECTION 5.16.
"ENVIRONMENTAL LAW" means all present and future Applicable Laws imposing liability or standards of conduct relating to the environment, industrial hygiene, land use or the protection of human health and safety, natural resources, pollution (including Hazardous Materials) or waste management.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections.
"EVENT OF DEFAULT" is defined in SECTION 7.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FINANCING MEMORANDUM" is defined in SECTION 5.20.
"FISCAL QUARTER" or "FQ" means any period of three consecutive calendar months comprising one quarter of a Fiscal Year; references to a Fiscal Quarter with numbers corresponding to a calendar year and a number corresponding to a Fiscal Quarter (E.G., "2001 FQ 1") refer to such Fiscal Quarter (I.E., the first) of such Fiscal Year.
"FISCAL YEAR" or "FY" means a period of 12 consecutive calendar months ending on each December 31; references to a Fiscal Year with a number corresponding to any calendar year (E.G., "the 2001 Fiscal Year" or "2001 FY") refer to the Fiscal Year ending on December 31 of such calendar year.
"FLEET" is defined in the FOURTH RECITAL.
"F.R.S. BOARD" means the Board of Governors of the Federal Reserve System or any successor thereto.
"FULLY-DILUTED BASIS" means, relative to the number of SHI Common Shares included in the initial Subject Securities, the percentage which such SHI Common Shares is of the SUM of
(a) all SHI Common Shares issued on the Closing Date (after giving effect to the Transaction),
PLUS
(b) a number of SHI Common Shares equal to all SHI Common Shares added to the Management SHI Restricted Stock Plan (above the 12,500 SHI Common Shares initially subject thereto) by amendments from time to time made thereto in accordance with the SHI Stockholders Agreement.
FOR CLARITY'S SAKE, "FULLY-DILUTED BASIS" is not adjusted to reflect the (x) economic value of Management SHI SARs which may be from time to time awarded or issued by the Company or (y) the number of shares of Capital Stock of the Company into which the Management SHI SARs may be converted in the event of a first sale of common equity by the Company pursuant to a registration statement under the Securities Act.
"FUNDED DEBT TO STATUTORY SURPLUS RATIO" shall have the meaning provided in the Senior Loan Agreement as in effect on the Closing Date; PROVIDED, HOWEVER, that references therein to (x) the "Borrower" shall refer to SMCI (and, after the effectiveness of the STBC Filing Document, Surviving Thomas Black) and (y) defined terms used in such definition shall refer to the definitions of all such terms provided in the Senior Loan Agreement as in effect on the Closing Date.
"GAAP" shall have the meaning provided in the Senior Loan Agreement as in effect on the Closing Date; PROVIDED, HOWEVER, that references to (x) the "Borrower" shall refer to SMCI (and, after the effectiveness of the STBC Filing Document, Surviving Thomas Black), (y) references herein to GAAP which relate to financial information as of the close of any period other than a Fiscal Year shall not require footnotes or year-end adjustments or reserves and (z) defined terms used in such definition shall refer to the definitions of all such terms provided in the Senior Loan Agreement as in effect on the Closing Date.
"GOVERNMENTAL AUTHORITY" means any international, national, federal, state, provincial, local, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any court, in each case whether of the United States or foreign.
"HAZARDOUS MATERIAL" means:
(a) any substances that are defined or listed in, or otherwise classified pursuant to, any applicable Environmental Laws as "hazardous substances", "hazardous materials", "hazardous wastes", "toxic substances", "contaminants", "pollutants" or any
other formulation intended to define, list or classify substances by reason of adverse effects on the environment or deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity or "TLCP" toxicity or "EP" toxicity;
(b) any oil, petroleum or petroleum derived substances, natural gas, natural gas liquids or synthetic gas and drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources;
(c) any flammable substances or explosives or any radioactive materials; or
(d) any asbestos in any form or electrical equipment which contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of fifty parts per million.
"HEDGING LIABILITY" means, relative to any Person, all liabilities of such Person under interest rate and currency swap, cap and collar agreements and all other Instruments designed to protect such Person against fluctuations in interest or currency exchange rates.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in this Agreement or any other Purchase Document refer to this Agreement or such other Purchase Document, as the case may be, as a whole and not to any particular Article, Section, paragraph or provision of this Agreement or such other Purchase Document.
"HOLDER" is defined, relative to a Note, in SECTION 4.7.
"INCLUDING" means including without limiting the generality of any description preceding such term.
"INDEBTEDNESS" means, relative to any Person, without duplication:
(a) all obligations of such Person for borrowed money (including all notes payable and drafts accepted representing extensions of credit) and all obligations evidenced by bonds, debentures, notes or other similar instruments on which interest charges are customarily paid;
(b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and bankers' acceptances issued for the account of such Person;
(c) all Capitalized Lease Liabilities of such Person;
(d) net monetary liabilities of such Person under all Hedging Liabilities (calculated, at any time, as the aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if the agreements giving rise to such Hedging Liabilities were terminated at such time);
(e) all obligations of such Person to pay the deferred purchase price of property or services that, in accordance with GAAP, would be classified as indebtedness on the liability side of the balance sheet of such Person as of the date at which Indebtedness is to be determined;
(f) all indebtedness referred to in CLAUSE (a), (b), (c), (d) or (e) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; PROVIDED, HOWEVER, that, in the case of any such Indebtedness which is by its terms non-recourse to such Person, the amount of such Indebtedness shall, for the purpose of this clause, be deemed to be the LESSER of (x) the aggregate unpaid principal amount of such Indebtedness and (y) the fair market value of the property subject to such Lien, as determined by such Person in good faith; and
(g) all Contingent Liabilities of such Person in respect of any Indebtedness of any other Person.
"INDEMNIFIED LIABILITY" is defined in SECTION 9.4.
"INDEMNIFIED PARTY" is defined in SECTION 9.4.
"INITIAL NOTE" means each 13.0% note of the Company, issued on the Closing Date in accordance with SECTION 2.3, in the form of EXHIBIT A hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time) and all other promissory notes accepted from time to time in substitution, replacement or renewal therefor, including pursuant to SECTION 4.8 or 4.9.
"INSTITUTIONAL HOLDER" means, relative to any Note or other Subject Security, the Purchaser (so long as it or its nominee shall hold a Note or other Subject Security) and each other financial institution, private equity fund or mezzanine fund which shall hold a Note or other Subject Security (EXCLUDING, HOWEVER, any financial institution, private equity fund or mezzanine fund which is not a holder of a Note and acquired all of the other Subject Securities held by it in a distribution to the public or a sale pursuant to an offering circular in accordance with Rule 144A under the Securities Act or as the direct or indirect transferee of other Subject Securities acquired in such a distribution or sale); FOR THE SAKE OF CLARITY, references herein (including in the term "Change of Control") to a financial institution, private equity fund or mezzanine fund which shall hold a Note or other Subject Security and which shall also hold other Capital Stock or other securities of the Company as an Institutional Holder shall refer to such financial institution solely as the holder (and shall include only its holdings) of such Note or other Subject Security and shall not refer to such financial institution, private equity fund or mezzanine fund as the holder (and shall exclude its holdings) of such other Capital Stock or securities.
"INSTRUMENT" means any contract, agreement, indenture, mortgage, document or other writing (whether by formal agreement, letter or otherwise) under which any obligation is evidenced, assumed or undertaken or any Lien (or right or interest therein) is granted or perfected.
"INSURANCE REGULATORY AUTHORITY" shall have the meaning provided in the Senior Loan Agreement as in effect of the Closing Date.
"INSURANCE SUBSIDIARY" means, at any time, Safety Insurance, Safety Indemnity and each other Subsidiary of Surviving Thomas Black which is then regulated by an Insurance Regulatory Authority.
"INTELLECTUAL PROPERTY" is defined in SECTION 5.13.
"INTERCOMPANY CONSULTING AGREEMENT" is defined in CLAUSE (c) of SECTION
3.7.
"INTEREST PAYMENT DATE" means, relative to any Note, each April 30 and October 31, commencing with April 30, 2002.
"INVESTMENT" means, relative to any Person, all investments by such Person in any other Person (including Affiliates) in the forms of (v) loans or advances (EXCLUDING, HOWEVER, commission, travel and similar advances to officers and employees of such Person made in the ordinary course of business), (w) Contingent Liabilities of such Person incurred with respect to Indebtedness of any other Person, (x) capital contributions or purchases (or other acquisitions for consideration) of Indebtedness, equity interests or other securities, (y) payments in respect of tax savings or liabilities made by such Person to or for the benefit of any other Person with whom such Person files a consolidated tax return which are not reimbursed by such other Person and (z) any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. The amount of any Investment shall be the original principal or capital amount thereof LESS all returns of principal or equity, or distributions or dividends paid, thereon and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair value of such property at the time of such Investment.
"JI PARTNERS" means JI Partners Limited Partnership, an Illinois limited partnership.
"JORDAN INDUSTRIES" or "JI" means Jordan Industries, Inc., an Illinois corporation.
"JORDAN INVESTOR" means any Jordan Party or JZEP.
"JORDAN PARTY" means TJC, Jordan Industries, JI Partners and their respective Affiliates and Subsidiaries (EXCLUDING, HOWEVER, the Company and Subsidiaries) and, relative to each of the foregoing,
(a) each general partner, limited partner, stockholder, member, principal or employee thereof or any Affiliate thereof;
(b) any 50% (or more) owned Subsidiary of any one (or jointly of more than one of any) Person specified in CLAUSE (a); and
(c) the spouse or any immediate family member of any Person specified in CLAUSE (a) or any trust, investment fund or vehicle solely for the benefit of any such Person or the spouse or any immediate family member of such Person.
"JORDAN PAYMENT" means any payment to any Jordan Party of management fees, consulting fees, advisory fees, investment banking fees, director's fees or other fees for services provided to the Company or any Subsidiary, whether pursuant to the TJC Consulting Agreement or otherwise (EXCLUDING, HOWEVER, amounts paid as (x) reimbursement of out-of-pocket expenses paid to Persons who are not Affiliates in connection with the delivery of such services and (y) Director Indemnification Payments).
"JZAI" means Jordan/Zalaznick Advisers, Inc., a Delaware corporation.
"JZEP" is defined in the PREAMBLE.
"JZEP COMMITMENT LETTER" means the letter, dated July 17, 2001, from JZEP to the Company as to JZEP's providing the debt and equity financing contemplated thereby for the OTBC Acquisition.
"LIEN" means (x) any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other) or preference, priority or other security agreement, whether or not filed, recorded or otherwise perfected under Applicable Law and (y) any option or other agreement to sell or to provide any Instrument or financing statement of the nature referred to in ITEM (x) or (y).
"MANAGEMENT EMPLOYMENT AGREEMENT" means each employment and non-competition agreement, to be dated the Closing Date, between Surviving Thomas Black and each Management SHI Stockholder.
"MANAGEMENT NOTE" is defined in CLAUSE (c) of SECTION 6.2.6.
"MANAGEMENT SHI RESTRICTED STOCK PLAN" means the restricted stock plan established by the Company (x) to the Management SHI Stockholders on the Closing Date representing in the aggregate 12,500 SHI Common Shares and (y) to any director, officer or employee of the Company or any Subsidiary from time to time after the Closing Date.
"MANAGEMENT SHI SAR" means the SARs which may be awarded or issued from time to time by the Company (x) to the Management SHI Stockholders on the Closing Date representing in the aggregate the equivalent of 4,453 SHI Common Shares and (y) to any director, officer of employee of the Company or any Subsidiary from time to time after the Closing Date.
"MANAGEMENT SHI STOCKHOLDER" means each SHI Stockholder identified under the caption "Initial Management ET AL." of ITEM 3.3 ("SHI Stockholders") of the Disclosure Schedule and their permitted transferees in accordance with the SHI Stockholders' Agreement. At any time after the Closing Date, "MANAGEMENT SHI STOCKHOLDER" also means any other officer, director or employee of the Company or any Subsidiary who shall be granted any SHI Restricted Common Shares and who shall in connection therewith have executed a Management SHI Subscription Agreement and the SHI Stockholders' Agreement and their permitted transferees in accordance with the SHI Stockholders' Agreement.
"MANAGEMENT SHI SUBORDINATED NOTE" means each non-negotiable, junior promissory note issued by the Company pursuant to (and as defined in) the Management SHI Subscription
Agreement to a Management SHI Stockholder (or his estate) in the form of Exhibit 5 attached thereto.
"MANAGEMENT SHI SUBSCRIPTION AGREEMENT" means the management subscription agreement in the form of Exhibit C to the SHI Stockholders' Agreement between the Company and each Management SHI Stockholder.
"MATERIALLY ADVERSE EFFECT" means (x) a material adverse effect on the financial condition, business, assets, operations or properties of the Company and Subsidiaries, taken as a whole or (y) a material impairment of the ability of the Company to perform its respective payment obligations under the Purchase Documents to which it is or will be a party.
"NAIC" shall have the meaning provided in the Senior Loan Agreement as in effect on the Closing Date.
"NON-ADMITTED INSURANCE ASSET" means a "Non-Admitted Asset" as defined in the Senior Loan Agreement as in effect on the Closing Date.
"NON-INSURANCE SUBSIDIARY" means at any time any Subsidiary of Surviving Thomas Black which is not an Insurance Subsidiary.
"NON-U.S. NOTEHOLDER" is defined in SECTION 4.10.
"NOTE" means each Initial Note and each PIK Note, if any.
"NOTEHOLDER" means at any time each Person (including the Purchaser) then registered in accordance with SECTION 2.3, 4.8 or 4.9 as the owner or holder of a Note; PROVIDED, HOWEVER, that no Person which is an Affiliate of the Company shall be deemed to be a Noteholder for purposes of SECTION 9.1 or any other action requiring the consent, concurrence or other action of each Noteholder.
"OBLIGATION" means all obligations of the Company with respect to the repayment or performance of all obligations (monetary or otherwise) of the Company arising under or in connection with the Notes or under this Agreement or any other Purchase Document in respect of the Notes exclusively, the Indebtedness evidenced thereby or to any Person as the holder of a Note (and not as the holder of any other Subject Security).
"OLD THOMAS BLACK" is defined in the FIRST RECITAL.
"OR" is not exclusive.
"ORGANIZATIONAL DOCUMENT" means, relative to any Person, each Instrument that (x) defines its corporate existence, including its articles or certificate of incorporation (or formation), as filed or recorded with an applicable Governmental Authority or (y) governs its internal affairs, including its by-laws, limited liability company agreement, partnership agreement and all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized shares of Capital Stock, in each case as amended, supplemented or restated.
"OTBC" is defined in the FIRST RECITAL.
"OTBC ACQUISITION" is defined in the SECOND RECITAL.
"OTBC ACQUISITION AGREEMENT" is defined in the SECOND RECITAL.
"OTBC ACQUISITION DOCUMENT" means each of the OTBC Acquisition Agreement and the Management Employment Agreements.
"OTBC MERGER" is defined in the THIRD RECITAL.
"OTBC SELLER" is defined in the FIRST RECITAL.
"OUTSTANDING" means, at any time relative to the Notes, any Notes theretofore issued pursuant to SECTION 2.3, 4.8 or 4.9 and not surrendered pursuant to SECTION 4.8 or 4.9 but EXCLUDING, HOWEVER, all Notes which are (x) deemed pursuant to SECTION 4.9 to be not outstanding or (y) owned by any Jordan Party.
"PERMITTED JUNIOR PAYMENT" means any Restricted Payment which may be made by the Company or any Subsidiary pursuant to CLAUSE (b) or (c) of SECTION 6.2.5 and any time when, and only if, after giving effect thereto (in the good faith determination of the chief financial Authorized Officer of the Company), (x) the funds then available to the Company are sufficient (and are reasonably expected to continue to be sufficient) to make the next scheduled payment of interest to become due, and all other payments due and to become due in the next 190 days, on the Notes and (y) no Default shall have occurred and be continuing (or would reasonably be expected to occur within the next 190 days).
"PERMITTED LIEN" means the following types of Liens (other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA):
(a) Liens for taxes, assessments or governmental charges or claims the payment of which is not, at the time, required by SECTION 6.1.4;
(b) statutory Liens of landlords, Liens of carriers, warehousemen, mechanics, suppliers, materialmen and repairmen and other like Liens arising in the ordinary course of business for sums not yet more than 10 days delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor;
(c) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (EXCLUDING, HOWEVER, obligations for the payment of borrowed money);
(d) leases or subleases granted to others not interfering in any material respect with the ordinary course of the business of Surviving Thomas Black or any of its Subsidiaries;
(e) easements, rights-of-way, restrictions (including zoning restrictions), minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary course of the business of Surviving Thomas Black or any of its Subsidiaries;
(f) any (w) interest or title of a lessor or sublessor under any operating lease, (x) restriction or encumbrance to which the interest or title of such lessor or sublessor may be subject, (y) subordination of the interest of the lessee or sublessee under such lease to any restriction or encumbrance referred to in ITEM (x) or (z) Liens arising from filing Uniform Commercial Code financing statements regarding operating leases;
(g) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(h) Liens (including extensions, renewals and replacements thereof)
upon property acquired (the "ACQUIRED PROPERTY") by Surviving Thomas Black
or any of its Subsidiaries after the Closing Date; PROVIDED, HOWEVER, that
(w) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including the cost of construction) of the acquired property, (x) the
principal amount of the Indebtedness secured by such Lien does not exceed
100% of the cost of the acquired property, (y) such Lien does not extend to
or cover any property other than the acquired property and any improvements
on such acquired property and (z) the incurrence of the Indebtedness to
purchase the acquired property is permitted by SECTION 6.2.2;
(i) Liens granted by Old Thomas Black or any of its Subsidiaries prior to the Closing Date and permitted to exist thereafter by the Senior Loan Agreement;
(j) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual or warranty requirements;
(k) Liens arising out of consignment or similar arrangements for the sale of goods entered into by Surviving Thomas Black or any of its Subsidiaries in the ordinary course of business;
(l) judgment and attachment Liens not giving rise to an Event of Default;
(m) Liens in favor of the Company granted by Surviving Thomas Black or any of its Subsidiaries; and
(n) additional Liens granted by Surviving Thomas Black or any of its Subsidiaries at any one time outstanding in respect of properties or assets having, on the date such Lien is granted, an aggregate fair market value not to exceed $2,500,000.
"PERSON" means any natural person, corporation, firm, association, partnership, limited liability partnership, limited liability company, government, trust, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity.
"PIK NOTE" means each 15.0% promissory note of the Company, in
substantially the form of EXHIBIT A hereto (as such note may be amended,
endorsed or otherwise modified from time to time) and all other promissory notes
accepted from time to time in substitution, replacement or renewal therefor,
including pursuant to SECTION 4.8 or 4.9 which (x) is issued on any Interest
Payment Date in payment, IN LIEU of cash, of interest then accrued and due on
any Note, (y) IS ACCEPTED BY THE HOLDER OF SUCH NOTE IN ITS SOLE AND ABSOLUTE
DISCRETION (OR IS REQUIRED TO BE ACCEPTED BY THE HOLDER OF SUCH NOTE UPON THE
CONSENT OF THE REQUIRED NOTEHOLDERS GIVEN IN ACCORDANCE WITH THE PROVISO TO
CLAUSE (b) OF SECTION 9.1 IN THEIR SOLE AND ABSOLUTE DISCRETION) upon the
satisfaction of such conditions as such holder (or such Required Noteholders)
shall require (including the payment of fees, the obtaining of consents or
acknowledgments under other Contractual Undertakings or the undertaking or
cessation by the Company of certain activities) and (z) is authorized by a
resolution of the Company's board of directors that accepts such requirements.
EXCEPT AS OTHERWISE PROVIDED IN THE PROVISO TO CLAUSE (b) OF SECTION 9.1,
NEITHER THE INCLUSION OF THIS DEFINITION IN THIS AGREEMENT NOR ANY REFERENCE TO
THE TERM "PIK NOTE" CONTAINED IN ANY PURCHASE DOCUMENT SHALL BE CONSTRUED AS
IMPOSING AT ANY TIME ANY OBLIGATION ON ANY HOLDER OF A NOTE TO ACCEPT A PIK NOTE
IN PAYMENT, IN LIEU OF CASH, OF INTEREST DUE ON ANY NOTE, IT BEING THE EXPRESS
INTENTION OF THE PARTIES THAT INTEREST WILL BE PAID IN CASH WHEN DUE IN
ACCORDANCE WITH THE TERMS OF THE NOTES.
"PLAN" means (x) a "pension plan," as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which the Company or any corporation, trade or business that is, along with the Company, a member of a Controlled Group, may have liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA or (y) a "welfare plan," as such term is defined in section 3(1) of ERISA.
"POST-PETITION INTEREST" means, relative to any Senior Indebtedness, all interest accrued or accruing on such Senior Indebtedness after the commencement of any insolvency or liquidation proceeding against such Person in accordance with and at the contract rate, including any rate applicable upon default, specified in the Instrument creating, evidencing or governing such Senior Indebtedness, whether or not, pursuant to Applicable Law or otherwise, the claim for such interest is allowed as a claim in such insolvency or liquidation proceeding.
"PREEMPTION LETTER" is defined in SECTION 3.4.
"PRO FORMA BALANCE SHEET" is defined in CLAUSE (d) of SECTION 5.4.
"PROJECTIONS" means the projections and calculations for the periods from the Closing Date (assuming the Closing Date had occurred on January 1, 2002) through the close of each Fiscal Year through and including the 2008 Fiscal Year set forth in the Financing Memorandum,
including the projected income and cash flow statements, the EBITDA, balance sheets, amortization and capitalization calculations, the ratio analyses and the revenue and related cost assumptions.
"PURCHASE DOCUMENT" means this Agreement, the Notes and each other Instrument executed and delivered from time to time by the Company or any Subsidiary to the Purchaser or any other Noteholder pursuant hereto (and, FOR THE SAKE OF CLARITY, not including the SHI Stockholders' Agreement, the SHI Certificate of Incorporation or any other Organizational Document of the Company), whether or not mentioned herein.
"PURCHASER" is defined in the PREAMBLE.
"RATABLY" means, relative to the Noteholders, ratably according to the aggregate outstanding principal amount of all Notes (or, as appropriate, all Notes of any type) held by each Noteholder.
"REORGANIZATION SECURITY" means, relative to any insolvency or liquidation proceeding involving any Obligor, any Capital Stock or other securities of such Obligor as reorganized or readjusted (or Capital Stock or any other securities of any other Person provided for by a plan of reorganization or readjustment involving such Obligor) which (x) are subordinated, at least to the same extent as the Notes, to the payment of all outstanding Senior Indebtedness after giving effect to such plan of reorganization or readjustment (including as such Senior Indebtedness may be exchanged for Capital Stock or other securities pursuant to such plan) and authorized by an order or decree of a court of competent jurisdiction in a reorganization proceeding under any applicable bankruptcy, insolvency or similar law, giving effect, and stating in such order or decree that effect has been given, to ARTICLE VIII and (y) contain terms materially no less advantageous to the holders of Senior Indebtedness than the terms contained in the Purchase Documents.
"REPRESENTATIVE NOTEHOLDER" means JZEP (or, at any time when JZEP shall no longer comprise the Required Noteholders, such Noteholder as shall be designated in accordance with SECTION 4.11) acting as the representative for all Noteholders under this Agreement and any other Purchase Document.
"REQUIRED NOTEHOLDERS" means, at any time, Noteholders owning more than 50.0% of the then aggregate outstanding principal amount of all Initial Notes; PROVIDED, HOWEVER, that
(a) with respect to any amendment, waiver or modification which would modify in a manner adverse to the Noteholders (or less restrictive upon the Company or its Affiliates) the definition of the term "Change of Control", "Restricted Payment" or "Permitted Junior Payment" or any requirement of, or otherwise permit any action to be taken which is prohibited by, SECTIONS 4.6, 6.2.5 or 6.2.12, "REQUIRED NOTEHOLDER" means, at any time, Noteholders owning more than 75.0% of the then aggregate outstanding principal amount of all Initial Notes; and
(b) any Initial Notes which from time to time is held by any Affiliate of the Company shall be deemed to be not outstanding for all purposes of (x) SECTIONS 7.3 and
9.1 and (y) any other determination to be made by, or action to be taken by or at the direction of, the Required Noteholders.
"RESTRICTED PAYMENT" means
(a) relative to any Capital Stock of the Company,
(i) any dividend or other distribution (in cash, property or obligations), direct or indirect, by the Company on account of (x) any shares of any class of such Capital Stock (now or hereafter outstanding) or (y) any warrants, options or other rights with respect to any shares of any class of such Capital Stock (now or hereafter outstanding), EXCLUDING, HOWEVER, in each case, dividends or distributions payable in such Capital Stock, or warrants to purchase such Capital Stock, or split-ups or reclassifications of such Capital Stock into additional or other shares of its Capital Stock),
(ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, by the Company or any Subsidiary of any shares of any class of such Capital Stock (now or hereafter outstanding), and
(iii) any payment by the Company or any Subsidiary made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of such Capital Stock now or hereafter outstanding;
(b) any payment or prepayment by the Company or any Subsidiary of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to, any Indebtedness contractually or structurally subordinated in right of payment to the Obligations, including any Management SHI Subordinated Notes or any Additional Seller Subordinated Notes;
(c) any Jordan Payment by the Company or any Subsidiary; and
(d) any deposit to fund any of the foregoing.
"SAFETY INSURANCE" is defined in the FIRST RECITAL.
"SAFETY INDEMNITY" means Safety Indemnity Insurance Company, a Massachusetts corporation and a wholly-owned Subsidiary of Safety Insurance.
"SAR" means, relative to any Person, any stock appreciation, phantom stock, incentive stock or similar contractual rights arising under stock-based incentive or compensation plans or programs established by such Person for employees of such Person or its Subsidiaries which do not involve any issuance of any Capital Stock or other securities convertible thereinto.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR AGENT" is defined in the FOURTH RECITAL and also refers to any replacement or successor agent under a successor Senior Loan Agreement as provided in CLAUSE (a) of the definition of such term.
"SENIOR LENDER" is defined in the FOURTH RECITAL and also refers to any replacement or successor senior lenders under a successor Senior Loan Agreement as provided in CLAUSE (a) of the definition of such term.
"SENIOR LOAN" means a loan outstanding from time to time under the Senior Loan Agreement.
"SENIOR LOAN AGREEMENT" is defined in the FOURTH RECITAL. At any time after the Closing Date, "SENIOR LOAN AGREEMENT" also means the Senior Loan Agreement as originally executed and delivered, together with
(a) each successor Instrument pursuant to which Surviving Thomas Black obtains from other financial institutions revolving or term loans or commitments or other extensions of credit to refinance Indebtedness outstanding under the Senior Loan Agreement in effect on the date of such refinancing; PROVIDED, HOWEVER, that
(i) such successor Instrument shall contain no restricted payment limitation of the nature referred to in CLAUSE (b) of SECTION 6.2.8 which are collectively more restrictive in any material respect than the comparable limitations contained in the Senior Loan Agreement in effect on the date of such refinancing, and
(ii) if the final maturity of such loans is less than 365 days prior to October 31, 2011, such refinancing shall comply with the requirements of CLAUSE (c) of SECTION 6.2.8 as if such financing were an extension of the stated maturity of the Senior Loans under the Senior Loan Agreement then in effect; and
(b) all amendments, supplements, extensions, renewals and other modifications made thereto or to any such successor Instrument from time to time after the Closing Date in accordance with SECTION 6.2.8.
"SENIOR LOAN DOCUMENT" means any "Loan Document" as defined in the Senior Loan Agreement as in effect on the Closing Date. At any time after the Closing Date, "SENIOR LOAN DOCUMENT" also means all Instruments which are analogous to the "Loan Documents" (as defined on the Closing Date in the Senior Loan Agreement) under each successor Instrument which qualifies as the "Senior Loan Agreement" in accordance with CLAUSE (a) of the definition of such term.
"SENIOR LOAN INDEBTEDNESS" means (x) the aggregate outstanding principal amount of all Indebtedness, all unpaid interest accrued thereon (including Post-Petition Interest) and all other Senior Loan Liabilities outstanding from time to time under the Senior Loan Documents and (y) all Hedging Liabilities owing to a Senior Lender or any Affiliate thereof with respect to
Indebtedness outstanding under the Senior Loan Agreement; PROVIDED, HOWEVER, that the aggregate principal amount of all such Senior Indebtedness of the nature referred to in ITEM (x) shall never exceed the aggregate principal amount of Indebtedness permitted by ITEM (x) of CLAUSE (c) of SECTION 6.2.2 to be outstanding under the Senior Loan Agreement.
"SENIOR LOAN LIABILITY" means all "Obligations" under (and as defined on the Closing Date in) the Senior Loan Agreement of Surviving Thomas Black and its Subsidiaries. At any time after the Closing Date, "SENIOR LOAN LIABILITY" also means all liabilities or obligations of Surviving Thomas Black and its Subsidiaries under each successor Instrument which qualifies as the "Senior Loan Agreement" in accordance with CLAUSE (a) of the definition of such term which are analogous to the "Obligations" of Surviving Thomas Black and its Subsidiaries as defined on the Closing Date in the Senior Loan Agreement.
"SHI" is defined in the PREAMBLE.
"SHI CERTIFICATE OF INCORPORATION" means the amended and restated certificate of incorporation of the Company in substantially the form furnished to the Purchaser prior to the execution and delivery of this Agreement.
"SHI COMMON SHARE" means a share of common stock, $0.01 par value per share, of the Company as authorized by the SHI Certificate of Incorporation.
"SHI'S KNOWLEDGE" means, at any time and relative to any matter, knowledge which any Authorized Officer of the Company would have as to such matters.
"SHI PREFERRED SHARE" means a share of preferred stock, $0.001 par value per share, of the Company as authorized by the SHI Certificate of Incorporation.
"SHI RESTRICTED COMMON SHARES" means any SHI Common Shares issued pursuant to the Management SHI Restricted Stock Plan.
"SHI SERIES A PREFERRED SHARE" means a SHI Preferred Share issued as a 6.0% Series A Preferred Share.
"SHI STOCKHOLDER" is defined in the FIFTH RECITAL. At any time after the Closing Date, "SHI STOCKHOLDER" also means any employee of the Company becoming a "Management SHI Stockholder" in accordance with the SECOND SENTENCE of the definition of such term.
"SHI STOCKHOLDERS' AGREEMENT" is defined in the FIFTH RECITAL.
"SIGNIFICANT NOTEHOLDER" is defined in SECTION 6.1.6.
"SMCI" is defined in the FIRST RECITAL.
"STATUTORY ACCOUNTING PRACTICES" or "SAP" shall have the meaning provided in the Senior Loan Agreement as in effect on the Closing Date.
"STATUTORY ANNUAL FINANCIAL STATEMENTS" shall have the meaning provided in the Senior Loan Agreement as in effect on the Closing Date.
"STATUTORY QUARTERLY FINANCIAL STATEMENTS" shall have the meaning provided in the Senior Loan Agreement as in effect on the Closing Date.
"STBC" is defined in the THIRD RECITAL.
"STBC FILING DOCUMENT" means the certificate, plan or agreement of merger in due form for filing with the Secretaries of the States of Delaware and Massachusetts pursuant to which SMCI shall merge with and into Old Thomas Black.
"SUBJECT SECURITY" means (x) all Initial Notes and other securities purchased on the Closing Date pursuant to SECTION 2.3 and (y) all PIK Notes, if any, accepted from time to time by the holders of any Notes, together, in each case, with all other securities issued in replacement or exchange therefor or as a distribution thereon.
"SUBSIDIARY" means, relative to any Person, (x) any corporation, association or other business entity more than 50.0% of the outstanding shares of Voting Stock of which is owned directly or indirectly by such Person and (y) any partnership in which such Person is a general partner. Except as otherwise indicated herein, references to Subsidiaries refer to Subsidiaries of the Company.
"TAX" is defined in SECTION 4.10.
"TAX INDEMNITY AGREEMENT" is defined in CLAUSE (j) of SECTION 3.5.
"TAX INDEMNITY PAYMENT" means any payment made by the Company to a Management SHI Stockholder which is a party to the Tax Indemnity Agreement of such Management SHI Stockholder's Tax Loss (as defined in the Tax Indemnity Agreement) pursuant to Section 2 of the Tax Indemnity Agreement.
"TAX SHARING AGREEMENT" is defined in CLAUSE (a) of SECTION 3.7.
"TJC" means The Jordan Company LLC, a New York limited liability company.
"TJC CONSULTING AGREEMENT" is defined in CLAUSE (b) of SECTION 3.7.
"TJC MANAGEMENT" means TJC Management Corp., a Delaware corporation, or its designees, successors or assigns.
"TRANSACTION" means, collectively,
(a) the issuance by the Company of the initial Subject Securities in accordance with this Agreement,
(b) the issuance by the Company of all other shares of Capital Stock,
and the capitalization by the Company of SMCI, all in accordance with
SECTION 5.9 and the Financing Memorandum,
(c) the incurrence by Surviving Thomas Black of all of the Indebtedness to be incurred on the Closing Date under the Senior Loan Agreement,
(d) the consummation of all of the transactions comprising the OTBC Acquisition, and
(e) the filing of the STBC Filing Document
and, in each case, all of the other transactions contemplated hereby (including in accordance with ARTICLE III) to occur on the Closing Date or incidental thereto, including the payment of Transaction Costs.
"TRANSACTION COST" means any fee, cost or expense payable on the Closing Date by the Company or any Subsidiary in connection with the Transaction.
"TRANSACTION DOCUMENT" means the Purchase Documents, the SHI Certificate of Incorporation, the SHI Stockholders' Agreement, the OTBC Acquisition Documents, the Management SHI Subordinated Notes, the TJC Consulting Agreement, the Intercompany Consulting Agreement, the Tax Sharing Agreement, the Management SHI Restricted Stock Plan, the Management SHI SAR Agreement, the Tax Indemnity Agreement, the STBC Filing Document and the Senior Loan Documents and all schedules, exhibits, documents, certificates and Instruments delivered in connection with any thereof.
"2000 OTBC AUDITED FINANCIAL STATEMENT" is defined in CLAUSE (a) of SECTION
5.4.
"2001 OTBC INTERIM FINANCIAL STATEMENT" is defined in CLAUSE (c) of SECTION
5.4.
"TYPE" means, relative to the Notes, all Notes which are either Initial Notes or PIK Notes, respectively.
"VOTING STOCK" means, relative to any Person, Capital Stock of any class or kind (including any Capital Stock of such Person of any other class or kind which is then convertible Capital Stock of such class or kind) ordinarily having the power to vote (and irrespective of whether at the time Capital Stock of such Person of any other class or kind shall or might upon the occurrence of a contingency have voting power) for the election of directors, managers or other voting members of the governing body of such Person.
"WHOLLY-OWNED SUBSIDIARY" means, relative to any Person, any Subsidiary of such Person all of the Capital Stock (and all rights and options to purchase such Capital Stock) of which, other than directors' qualifying shares, are owned, beneficially and of record, by such Person or its wholly-owned Subsidiaries.
SECTION 1.2. SENIOR LOAN AGREEMENT TERMS. On the Closing Date, the Company and the Purchaser will, for ease of reference, attach to this Agreement as SCHEDULE II hereto a
restatement of all defined terms which are stated in SECTION 1.1 to be used herein with meanings provided or referred to in the Senior Loan Agreement as in effect on the Closing Date. In the event of any inconsistency between such restatement and the meanings provided in the Senior Loan Agreement as in effect on the Closing Date, such defined terms will be understood to conform to the meanings so provided in the Senior Loan Agreement.
SECTION 1.3. USE OF DEFINED TERMS. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule, each Note and any other Purchase Document or any notice or other communication delivered from time to time in connection with any Purchase Document.
SECTION 1.4. CROSS REFERENCES. Unless otherwise specified, references in this Agreement and in each other Purchase Document to any Article or Section are references to such Article or Section of this Agreement or such other Purchase Document, as the case may be, and unless otherwise specified, references in any Article, Section or definition to any item or clause are references to such item or clause of such Article, Section or definition.
SECTION 1.5. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise specified, all accounting terms used herein or in any other Purchase Document shall be interpreted, all accounting determinations and computations hereunder or thereunder for periods after the Closing Date shall be made and all financial statements required to be delivered hereunder or thereunder shall be prepared, in accordance with GAAP; PROVIDED, HOWEVER, that, relative to all Insurance Subsidiaries, all accounting terms, all accounting determinations and computations and all financial statements may be interpreted, made or prepared, as the case may be, in accordance with Statutory Accounting Practices.
ARTICLE II
PURCHASES AND SALES OF SUBJECT SECURITIES
SECTION 2.1. PURCHASE COMMITMENTS. The Purchaser hereby agrees, SUBJECT, HOWEVER, to the terms and conditions of this Agreement (including ARTICLE III), to purchase from the Company, and the Company hereby agrees to sell to the Purchaser, at the Closing the following securities:
(a) $30,000,000 principal amount of Initial Notes, at par;
(b) 22,400 6.0% SHI Series A Preferred Shares, at $1,000 per share; and
(c) 89,625 SHI Common Shares, at $10.00 per share.
SECTION 2.2. ISSUE PRICE. The Company and the Purchaser agree that, for purposes of section 1271 ET SEQ. of the Code, the issue price of each Initial Note is 100% of its principal amount and the issue price of each initial SHI Series A Preferred Share and SHI Common Share is the price set forth respectively for such Subject Security in SECTION 2.1, and that this agreement
is intended to constitute an agreement as to the issue price for all Federal and other income tax purposes.
SECTION 2.3. CLOSING. The purchase of the Initial Notes and the other
initial Subject Securities shall take place at a closing (the "CLOSING") at the
offices of Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts, at 10:00
a.m., local time, on October 16, 2001 or such other Business Day on or prior to
November 30, 2001 as may be agreed upon by the Company and the Purchaser (the
"CLOSING DATE"); PROVIDED, HOWEVER, that if the Closing Date shall not have
occurred on or prior to October 19, 2001, then, the Company will give the
Purchaser at least three Business Days' notice of any later Closing Date. At the
Closing, the Company will deliver to the Purchaser
(a) a single Initial Note in the aggregate principal amount set forth in CLAUSE (a) of SECTION 2.1, dated the Closing Date, and registered in the Purchaser's name,
(b) a certificate representing the aggregate number of 6.0% SHI Series A Preferred Shares set forth in CLAUSE (b) of SECTION 2.1, dated the Closing Date, and registered in the Purchaser's name, and
(c) a certificate representing the aggregate number of SHI Common Shares set forth in CLAUSE (c) of SECTION 2.1, dated the Closing Date, and registered in the Purchaser's name,
each against delivery by the Purchaser to the Company of immediately available funds in the amount of the purchase price therefor. If, at the Closing, the Company shall fail to tender to the Purchaser any initial Subject Security as provided in this Section or any of the conditions specified in ARTICLE III shall not have been fulfilled to the Purchaser's satisfaction, the Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any other rights the Purchaser may have by reason of such failure or such nonfulfillment.
SECTION 2.4. PURCHASER'S REPRESENTATIONS. The Purchaser represents and warrants that (v) the Purchaser is an "accredited investor" within the meaning of Regulation 501(a) under the Securities Act and the Subject Securities to be acquired by it pursuant to this Agreement are being acquired for its own account and without a view to, or for resale in connection with, any distribution thereof or any interest therein in violation of the Securities Act; (w) the execution, delivery and performance of this Agreement and the purchase of the Subject Securities pursuant hereto are within the Purchaser's powers and have been duly and validly authorized; (x) this Agreement has been duly executed and delivered by and constitutes a valid and binding agreement of the Purchaser; (y) the Purchaser has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Subject Securities and is capable of bearing the economic risks of such investment; and (z) no form of general solicitation or general advertising was used in connection with the purchase or sale of the Subject Securities. All subsequent holders of Notes or other Subject Securities shall, as a condition to their acquisition thereof, be required to make the representations and warranties set forth in ITEMS (v), (y) and (z) for the benefit of the Company; PROVIDED, HOWEVER, that the
representation and warranty set forth in ITEM (z) may be qualified to the knowledge of such subsequent holder.
ARTICLE III
CONDITIONS TO CLOSING
The Purchaser's obligation to purchase and pay for the initial Subject Securities is SUBJECT, HOWEVER, to the fulfillment, to the Purchaser's satisfaction, prior to, at or concurrently with the Closing, of all of the following conditions:
SECTION 3.1. CERTIFICATES OF INCORPORATION. Each of the following shall have occurred (and the Purchaser, including as the Representative Noteholder, shall have received from the Company and SMCI a certificate, dated the Closing Date, of its Secretary or Assistant Secretary in the form of EXHIBIT B hereto confirming, as applicable, INTER ALIA that):
(a) the Company and SMCI shall have adopted and duly filed with the Secretary of State of the State of Delaware the SHI Certificate of Incorporation and the SMCI Certificate of Incorporation, respectively; and
(b) in each case, no further amendments or modifications to any such certificate of incorporation shall have been adopted or filed (EXCLUDING, HOWEVER, in the case of SMCI, the STBC Filing Document).
SECTION 3.2. RESOLUTIONS, ETC. The Purchaser, including as the Representative Noteholder, shall have received:
(a) from the Company, a certificate, dated the Closing Date, in the form of EXHIBIT C hereto as to:
(i) resolutions of its Board of Directors then in full force and effect authorizing the issuance of the initial Subject Securities and the execution, delivery and performance of this Agreement and each other Purchase Document to be executed by it and the SHI Stockholders' Agreement, and
(ii) the incumbency and signatures of those of its officers authorized to act with respect to this Agreement, each other Purchase Document executed by it and the SHI Stockholders' Agreement); and
(b) such other documents (certified if requested) as the Purchaser may reasonably request with respect to any Organizational Document or Contractual Undertaking of, or Approval affecting, the Company, SMCI or Surviving Thomas Black.
SECTION 3.3. OTHER STOCKHOLDER PURCHASES. Each of the following shall have occurred (and the Purchaser, including as the Representative Noteholder, shall have received a certificate, dated the Closing Date, in the form of EXHIBIT D hereto confirming INTER ALIA that):
(a) the Company shall have entered into with each SHI Stockholder (other than the Purchaser) the SHI Stockholders' Agreement and related subscription agreements, each in substantially the form furnished to the Purchaser prior to the execution and delivery of this Agreement; and
(b) the Company shall have sold to all SHI Stockholders (other than the Purchaser) pursuant to the SHI Stockholders' Agreement and related subscription agreements the respective number of shares of Capital Stock shown in ITEM 3.3 ("SHI STOCKHOLDERS") of the Disclosure Schedule and shall have received payment in full therefor in Management Notes or good funds in accordance with the terms of such subscription agreements.
SECTION 3.4. PREEMPTION LETTER. The Company shall have delivered to the Purchaser a duly executed letter, dated the Closing Date (the "PREEMPTION LETTER"), in the form of EXHIBIT E hereto.
SECTION 3.5. OTBC ACQUISITION. Each of the following shall have occurred (and the Purchaser, including as the Representative Noteholder, shall have received a certificate, dated the Closing Date, in the form of EXHIBIT F hereto confirming INTER ALIA that):
(a) the OTBC Acquisition Agreement shall be in full force and effect, and no material term or condition thereof shall have been amended, waived or otherwise modified;
(b) all Approvals necessary or advisable in connection with the OTBC Acquisition, including from the Insurance Division of the Commonwealth of Massachusetts, shall have been obtained and be in full force and effect (except where the failure to obtain any such Approval from a non-Insurance Regulatory Authority would not reasonably be expected to have a Material Adverse Effect), and all applicable waiting periods shall have expired without any action being taken or threatened by any Governmental Authority which would restrain, prevent or otherwise impose adverse conditions on the OTBC Acquisition or the financing thereof;
(c) no pending or threatened material litigation, proceeding or investigation shall exist which contests the consummation of the OTBC Acquisition;
(d) no material adverse change shall have occurred in the consolidated financial condition, business, assets, operations or properties of Old Thomas Black and its Subsidiaries, taken as a whole since December 31, 2000;
(e) except with the consent of the Representative Noteholder (which shall not be unreasonably withheld or delayed), all material conditions in the OTBC Acquisition Agreement to the consummation of the OTBC Acquisition (including as to the continuing accuracy of all representations and warranties made thereunder) shall have been satisfied without recourse to any provision permitting the waiver by the Company or SMCI of any condition, obligation, covenant or other requirement;
(f) the OTBC Acquisition shall be consummated simultaneously with the Closing in the manner contemplated in all material respects by the OTBC Acquisition Agreement and the Financing Memorandum, including in exchange for cash consideration not to exceed $112,805,063 at Closing;
(g) taken collectively, the Non-Insurance Subsidiaries of Old Thomas Black shall not, for the 12 month period ending on the date (the "REPORTING DATE") of the most recent quarterly financial statement then delivered pursuant to OTBC Acquisition Agreement, have contributed more than 10% of the consolidated cash flow of Old Thomas Black and its Subsidiaries for such period;
(h) each Management SHI Stockholder shall have entered into a Management Employment Agreement;
(i) the Purchaser shall have received true and complete copies of the OTBC Acquisition Agreement and, to the extent reasonably requested by the Purchaser, all other certificates, filings, documents, consents, approvals, board of directors resolutions and opinions furnished pursuant to or in connection with the OTBC Acquisition Agreement and the OTBC Acquisition and all such items shall be satisfactory in all respects to the Purchaser;
(j) the Company and certain of the Management SHI Stockholders shall have entered into a tax indemnity agreement (as so originally executed and delivered, the "TAX INDEMNITY AGREEMENT"); and
(k) the Transaction Costs shall be reasonably expected to not exceed $9,000,000.
SECTION 3.6. STBC FILING DOCUMENT. Each of the following shall have occurred (and the Purchaser, including as the Representative Noteholder, shall have received a certificate, dated the Closing Date, in the form of EXHIBIT G hereto confirming INTER ALIA that):
(a) the STBC Filing Document, in recordable form, shall have been duly executed by the parties thereto;
(b) counterparts of the STBC Filing Document shall be available for filing with the Secretaries of State of the States of Massachusetts and Delaware (which filings shall have been authorized by all parties thereto); and
(c) such filings shall be consummated substantially concurrently with the Closing.
SECTION 3.7. CERTAIN AFFILIATE AGREEMENTS. Each of the following shall have occurred (and the Purchaser, including as the Representative Noteholder, shall have received a certificate, dated the Closing Date, in the form of EXHIBIT H hereto confirming INTER ALIA that):
(a) the Company, Surviving Thomas Black and Safety Insurance shall have entered into a tax sharing agreement (as so originally executed and delivered, the "TAX SHARING AGREEMENT"),
(b) the Company shall have entered into with TJC Management an agreement for the provision of management consulting and transaction advisory services (as so originally executed and delivered, the "TJC CONSULTING AGREEMENT"), and
(c) the Company and Surviving Thomas Black shall have entered into an intercompany consulting agreement (as so originally executed and delivered, the "INTERCOMPANY CONSULTING AGREEMENT"),
in each case in substantially the form furnished to the Purchaser prior to the execution and delivery of this Agreement.
SECTION 3.8. EFFECTIVENESS, ETC. OF SENIOR LOAN AGREEMENT. Each of the following shall have occurred (and the Purchaser, including as the Representative Noteholder, shall have received a certificate, dated the Closing Date, in the form of EXHIBIT I hereto confirming INTER ALIA that):
(a) SMCI and Fleet and the other Senior Lenders shall have executed and delivered the Senior Loan Agreement in substantially the form furnished to the Purchaser prior to the execution and delivery of this Agreement (including without any amendment or other modification of any of the definitions of Section 1.1 thereof which are stated in SECTION 1.1 to be used herein with meanings provided or referred to therein); and
(b) all conditions in the Senior Loan Agreement to obtaining the initial Senior Loans (including Sections 11.13, 11.18, 11.19 and 12.1 thereof) shall have been satisfied without recourse to any provision permitting the waiver by any party thereto of any condition, obligation, covenant or other requirement, and SMCI shall have received proceeds of the initial Senior Loans in an aggregate principal amount not to exceed $72,000,000.
SECTION 3.9. PERFORMANCE; NO DEFAULT. At the time of the Closing (and after giving effect to the Transaction),
(a) the representations and warranties of the Company contained in this Agreement and those made in writing by or on behalf of the Company in connection with any other Purchase Document delivered on the Closing Date shall be true and correct;
(b) the Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing; and
(c) no Default shall have occurred and be continuing.
SECTION 3.10. ABSENCE OF LITIGATION, ETC. Except as disclosed pursuant to
SECTION 5.7,
(a) no material litigation, arbitration or governmental investigation or proceeding shall be pending or, to SHI's Knowledge, threatened against either Old Thomas Black or any of its Subsidiaries or the Company or any Subsidiary which (x) affects any of their respective financial condition, business, assets, operations or properties and which would,
in the opinion of the Purchaser, reasonably be expected to have a Materially Adverse Effect or (y) relates to the Transaction; and
(b) no development shall have occurred in any such litigation, arbitration or governmental investigation or proceeding so disclosed, which would, in the opinion of the Purchaser, reasonably be expected to have a Materially Adverse Effect.
SECTION 3.11. CERTIFICATE AS TO COMPLIANCE, ETC. The Purchaser, including as the Representative Noteholder, shall have received from the Company a certificate, dated the Closing Date, of its chief executive or financial Authorized Officer as to satisfaction of the conditions set forth in SECTIONS 3.9 and 3.10 in the form of EXHIBIT J hereto.
SECTION 3.12. CERTIFICATE AS TO SOLVENCY, ETC. The Purchaser, including as the Representative Noteholder, shall have received a certificate, dated the Closing Date, of the chief accounting and financial Authorized Officer of the Company, in the form of EXHIBIT K hereto.
SECTION 3.13. OPINION OF COUNSEL. The Purchaser, including as the Representative Noteholder, shall have received an opinion, dated the Closing Date, from Mayer, Brown & Platt, counsel to the Company, substantially in the form of EXHIBIT L hereto.
SECTION 3.14. LEGAL EXPENSES. The Company shall have made payment in full of all fees and expenses of counsel to the Purchaser which shall have been invoiced to the Company on or prior to the Closing Date (including amounts invoiced on account).
SECTION 3.15. LEGAL INVESTMENT. On the Closing Date, the Purchaser's purchase of the initial Subject Securities shall not be prohibited by any Applicable Law and shall not subject it to any penalty or, in the Purchaser's reasonable judgment, other onerous condition under or pursuant to any Applicable Law.
SECTION 3.16. SATISFACTORY LEGAL FORM. All documents executed or submitted pursuant hereto by or on behalf of the Company or any Subsidiary shall be reasonably satisfactory in form and substance to the Purchaser and its counsel; the Purchaser and its counsel shall have received all information, and such counterpart originals or such certified or other copies of all Instruments, as the Purchaser or its counsel may reasonably request; and all legal matters incident to the transactions contemplated by this Agreement shall be reasonably satisfactory to counsel to the Purchaser.
ARTICLE IV
PAYMENTS, REGISTRATION, ETC.
SECTION 4.1. PLACE OF PAYMENT. Payments of principal and interest becoming due and payable on the Notes and any dividends or other payments on or in respect of any other Subject Securities shall be made at the office of HSBC Bank USA, 452 Fifth Avenue, 26th Floor, New York, New York 10018.
SECTION 4.2. HOME OFFICE PAYMENT. So long as the Purchaser or its nominee shall be the holder of any Subject Security, and notwithstanding anything contained in SECTION 4.1 or in any Subject Security to the contrary, the Company will pay all sums becoming due for principal of and interest on such Note and all dividends or other payments on or in respect of any other Subject Security, not later than 12:00 o'clock noon, New York City time, on the date such payment is due, in immediately available funds,
(a) in accordance with the payment instructions set forth below the Purchaser's signature hereto with instructions to the payee identified in such instructions to telephone advice of credit in accordance with such instructions, or
(b) by such other method or at such other address or bank account as the Purchaser may designate in writing,
without the presentation or surrender of such Note or other Subject Security or the making of any notation thereon, except that any Note paid or prepaid (or any other Subject Security redeemed) in full shall be surrendered to the Company at its principal office for cancellation. Prior to any sale or other disposition of any Note held by the Purchaser, the Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes, as the case may be, pursuant to SECTION 4.8. The Company will afford the benefits of this Section to any Institutional Holder which is the direct or indirect transferee of any Subject Security purchased by the Purchaser under this Agreement and which has made the same agreement relating to such Subject Security as the Purchaser has made in this Section.
SECTION 4.3. OPTIONAL PAYMENTS. The Company may, at its option, prepay at any time, without premium or penalty, all or any part (in an integral multiple of $1,000) of the outstanding principal amount of, or of interest due or to become due on the next semi-annual payment date under, the Notes; PROVIDED, HOWEVER, that no prepayment of principal of any Initial Notes shall be made at any time when any PIK Notes shall remain outstanding. Prepayments of principal of Notes of any type shall be in the amount so prepaid and be accompanied by payment in full of all interest accrued on such principal amount and not yet paid. Each prepayment of Notes of any type shall be SUBJECT, HOWEVER, to the Company having given each Noteholder written notice of such prepayment not more than 30 days and not less than five days prior to the date fixed for such prepayment, in each case specifying (w) such date, (x) the aggregate principal amount, if any, of (and the amount of unpaid interest accrued on such principal amount), or the amount of unpaid interest on the Notes of such type to be prepaid on such date, and (y) the principal amount, if any, of (and the amount of unpaid interest accrued on such principal amount), or the amount of unpaid interest on, each Note of such type held by such Noteholder to be prepaid on such date. Such notice shall be accompanied by an officers' certificate certifying that the procedures for such prepayment have been honored and specifying the particulars thereof.
SECTION 4.4. MANDATORY PREPAYMENTS OF PIK NOTES. The Company shall make prepayments of principal of all PIK Notes issued on any Interest Payment Date, together with all interest accrued on the principal amount then prepaid, when and to the full extent permitted to be made from time to time thereafter by the terms of Section 9.4(b) of the Senior Loan Agreement as each such Section is in effect on such Interest Payment Date and after giving
effect to any amendment to such Section which became effective as a condition to the Noteholders' acceptance of such PIK Notes. Prepayments required to be made pursuant to this Section of principal of PIK Notes issued on more than one Interest Payment Date shall be applied first to the prepayment in full of all outstanding principal of all PIK Notes issued on the earliest Interest Payment Date and thereafter, to the extent of such required prepayment, to the prepayment in full of all outstanding principal of all PIK Notes issued on each subsequent Interest Payment Date, in each case in the chronological order of such Interest Payment Dates.
SECTION 4.5. ALLOCATION. Each partial prepayment paid or to be prepaid of principal of Notes of any type and each prepayment of interest paid or to be prepaid shall be allocated Ratably (in integral multiples of $1,000) among all Notes of such type at the time outstanding, as nearly as practicable, with adjustments, to the extent practicable, to compensate for any prior prepayments not made exactly in such proportion. In the case of each voluntary prepayment of principal of or interest on Notes of any type, the principal amount to be prepaid, if any, (together with interest on such principal amount accrued to such date), or the amount of interest to be prepaid, as the case may be, shall mature and become due and payable on the date fixed for such prepayment. From and after the date of any such prepayment of principal, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued IN LIEU of any prepaid principal amount of any Note.
SECTION 4.6. MANDATORY REDEMPTION OF NOTES. Upon the earliest to occur of
(a) any Change of Control,
(b) the Company or any Subsidiary entering into any written or other arrangement which will give rise to a Change of Control, or
(c) the Company having notice that any other Person has entered into a written or other arrangement which will give rise to a Change of Control,
the Company will immediately give written notice of such transaction or event to each Noteholder, which notice shall describe such transaction or event in reasonable detail. Immediately upon (and concurrently with) the occurrence of any Change of Control, the Company will purchase from each Noteholder all of the outstanding Notes held by it at a purchase price, payable in immediately available funds, equal to the unpaid principal amount thereof together with all unpaid interest accrued on all Notes to the date of such purchase.
SECTION 4.7. REGISTRATION, TRANSFER, ETC. The Company will keep at its principal office a register in which the Company will provide for the registration of the Notes and their transfer. The Company may treat the Person in whose name any Note is registered on such register as the owner thereof for the purpose of receiving payment of the principal of and interest on such Note and for all other purposes, whether or not such Note shall be overdue, and the Company shall not be affected by any notice to the contrary from any Person other than the applicable Noteholder. All references in this Agreement to a "holder" of any Note shall mean the Person in whose name such Note is at the time registered on such register.
SECTION 4.8. TRANSFER AND EXCHANGE. Upon surrender of any Note for registration of transfer or for exchange to the Company at its principal office, the Company at its expense will execute and deliver in exchange therefor a new Note or Notes, as the case may be, of the same type in denominations of at least $100,000 (except a Note may be issued in a lesser principal amount if the unpaid principal amount of the surrendered Note is not evenly divisible by, or is less than, $100,000), as requested by the holder or transferee, which aggregate the unpaid principal amount of such Note, registered as such holder or transferee may request, dated so that there will be no loss of interest on such surrendered Note and otherwise of like tenor.
SECTION 4.9. REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Note and, in the case of any such loss, theft or destruction of any Note, upon delivery of an indemnity bond in such reasonable amount as the Company may determine (or, in the case of any Note or Notes held by the Purchaser or another Institutional Holder or the Purchaser's nominee, of an unsecured indemnity agreement from the Purchaser or such other holder reasonably satisfactory to the Company), or, in the case of any such mutilation, upon the surrender of such Note for cancellation to the Company at its principal office, the Company at its expense will execute and deliver, IN LIEU thereof, a new Note of the same type and of like tenor, dated so that there will be no loss of interest on (and registered in the name of the holder of) such lost, stolen, destroyed or mutilated Note. Any Note IN LIEU of which any such new Note has been so executed and delivered by the Company shall be deemed to be not outstanding for any purpose of this Agreement.
SECTION 4.10. TAXES. Except as otherwise provided in this Section, all payments by the Company of principal of, and interest on, the Notes, and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, EXCLUDING, HOWEVER, franchise taxes and taxes imposed on or measured by the Purchaser's or any other Noteholder's net income or receipts (such non-excluded items being called "TAXES"). In the event that any withholding or deduction from any payment to be made by the Company hereunder is required in respect of any Taxes pursuant to any Applicable Law, then, the Company will
(a) pay directly to the relevant authority the full amount required to be so withheld or deducted;
(b) promptly forward to the Purchaser and each other Noteholder an official receipt or other documentation satisfactory to the Purchaser and each other Noteholder evidencing such payment to such authority; and
(c) except as otherwise provided in this Section, pay to the Purchaser and each other Noteholder such additional amount or amounts as is necessary to ensure that the net amount actually received by each Noteholder will equal the full amount such Noteholder would have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Purchaser or any Noteholder with respect to any payment received by the Purchaser or such Noteholder hereunder, the Purchaser or such Noteholder may pay such Taxes, and, except as otherwise provided in this Section, the
Company will promptly pay such additional amount (including any penalties, interest or expenses) as is necessary in order that the net amount received by the Purchaser or such Noteholder after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount the Purchaser or such Noteholder would have received had no such Taxes been asserted.
If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Purchaser and the other Noteholders the required receipts or other required documentary evidence, the Company shall indemnify the Purchaser and the other Noteholders for any incremental Taxes, interest or penalties that may become payable by the Purchaser or any other Noteholder as a result of any such failure. For purposes of this Section, a distribution hereunder by the Purchaser or any other Noteholder to or for the account of any Noteholder shall be deemed a payment by the Company.
The Purchaser shall provide to the Company on or prior to the due date of the first payment under the Notes (and any Noteholder which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes (a "NON-U.S. NOTEHOLDER") that becomes a Noteholder under this Agreement after the Closing shall, upon the date of such Noteholder becoming a Noteholder hereunder, provide to the Company) either (i) two duly completed copies of either (x) Internal Revenue Service Form W-8BEN claiming a complete exemption from U.S. federal withholding tax under a provision of an applicable tax treaty or (y) Internal Revenue Service Form W-8ECI claiming a complete exemption from U.S. federal withholding tax under the Code because payments hereunder are effectively connected with the conduct by such Non-U.S. Noteholder of a trade or business in the United States, or in either case an applicable successor form or (ii) in the case of a Non-U.S. Noteholder (including the Purchaser) that is not legally entitled to deliver either form listed in ITEM(i), (x) a certificate of a duly authorized officer of such Non-U.S. Noteholder to the effect that such Non-U.S. Noteholder is not (A) a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of the Company with the meaning of Section 881(c)(3)(B) of the Code or (C) a controlled foreign corporation receiving interest from a related person within the meaning of Section 881(c)(3)(C) of the Code and (y) two duly completed copies of Internal Revenue Service Form W-8BEN or applicable successor form. To the extent legally entitled to do so, on or before the date any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, and otherwise from time to time upon the reasonable written request of the Company after the Closing, each Noteholder (including the Purchaser) that is a Non-U.S. Noteholder will provide to the Company two original signed copies of any forms or certificates required pursuant to this paragraph.
Notwithstanding anything to the contrary contained in this Section, the Company shall be entitled, to the extent it is required to do so by law, to deduct or withhold income or similar taxes imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, fees or other amounts payable hereunder for the account of any Noteholder that is a Non-U.S. Noteholder and that has not provided to the Company the forms required to be provided to the Company pursuant to the PRECEDING PARAGRAPH, and the Company shall have no obligation to pay any additional amount to a Non-U.S. Noteholder with respect to such withheld amounts or with respect to Taxes incurred by such Non-U.S. Noteholder to the extent such
withholding would not have been required or such Taxes would not have been incurred if such Non-U.S. Noteholder would have provided such forms to the Company in the manner required by the PRECEDING PARAGRAPH.
SECTION 4.11. REPRESENTATIVE NOTEHOLDER. The Representative Noteholder shall act in accordance with and be entitled to the benefits of SECTIONS 4.11.1 through 4.11.4. At any time when JZEP shall no longer comprise the Required Noteholders, then the Required Noteholders shall designate in writing to the Company a Noteholder as the Representative Noteholder.
SECTION 4.11.1. ACTIONS. Each Noteholder authorizes the Representative Noteholder (x) to act as a "representative" (as defined in Article 1 of the Uniform Commercial Code as in effect in the State of New York) of the Noteholders for purposes of actions to be taken for their benefit and under this Agreement and each other Purchase Document and (y) at the direction of the Required Noteholders, to exercise such powers thereunder as are specifically delegated to or required of the Representative Noteholder by the terms thereof, together with such powers as may be reasonably incidental thereto. Each Noteholder agrees to reimburse the Representative Noteholder Ratably for all reasonable out-of-pocket expenses (including attorneys' fees) incurred by the Representative Noteholder under the Purchase Documents or in connection therewith or in enforcing the obligations of the Company thereunder and for which the Representative Noteholder is not reimbursed by the Company. The Representative Noteholder shall not be required to take any action under the Purchase Documents, or to prosecute or defend any suit in respect thereof, unless indemnified to its satisfaction by each Noteholder against loss, costs, liability and expense. If any indemnity furnished to the Representative Noteholder shall become impaired, it may call for additional indemnity and cease to do the acts indemnified against until such additional indemnity is given.
SECTION 4.11.2. EXCULPATION. Neither the Representative Noteholder nor any of its directors, officers, employees or agents shall be liable to any Noteholder for any action taken or omitted to be taken by it or them under any Purchase Document, or in connection therewith, except for its own willful misconduct or gross negligence, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due authorization, execution or delivery of any Purchase Document, nor to make any inquiry respecting the performance by the Company of its obligations under any Purchase Document. The Representative Noteholder shall be entitled to rely upon advice of legal advisers (including counsel to the Company) concerning legal matters and upon any notice, consent, certificate, statement or writing which it believes to be genuine and to have been presented by a proper Person.
SECTION 4.11.3. STATUS AS NOTEHOLDER. The Representative Noteholder shall have the same rights and powers with respect to the Notes held by it as any Noteholder and may exercise the same as if it were not the Representative Noteholder, and the term "Noteholder" shall include the Representative Noteholder in its individual capacity.
SECTION 4.11.4. CREDIT DECISIONS. Each holder of Subject Securities acknowledges that it has, independently of the Representative Noteholder and each other holder of Subject Securities and based on the financial information referred to in SECTION 5.4 and such other documents, information and investigations as it has deemed appropriate, made its own credit
decision to purchase its Subject Securities. Each holder of a Note also acknowledges that it will, independently of the Representative Noteholder and each other Noteholder and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under any Purchase Document.
ARTICLE V
WARRANTIES, ETC.
To induce the Purchaser to enter into this Agreement and to purchase the initial Subject Securities hereunder, the Company represents and warrants unto the Purchaser, including as the Representative Noteholder, as follows (and, for all purposes of this Agreement, all of such representations and warranties shall be understood to be made by the Company on (and only on) the date of execution and delivery of this Agreement by the Company and the Closing Date; PROVIDED, HOWEVER, that (x) the representations in SECTION 5.4 and 5.20 relative to any financial, other information or projections delivered from time to time pursuant to this Agreement or any other Purchase Document shall also be understood to be made with respect thereto on the date of delivery thereof and (y) the representations in SECTIONS 5.1, 5.2 and 5.3 relative to Notes and Subject Securities shall also be understood to be made on the date, if any, of each issuance of any PIK Note.
SECTION 5.1. ORGANIZATION, POWER, AUTHORITY, ETC. The Company is a corporation validly organized and existing and in good standing under the laws of the jurisdiction of its incorporation and has full power and authority and holds all requisite Approvals to own and hold its property and to conduct its business substantially as currently conducted by it. The Company has full power and authority to enter into and perform its obligations under this Agreement, the initial Subject Securities, each other Purchase Document to which it is a party and the SHI Stockholders' Agreement.
SECTION 5.2. DUE AUTHORIZATION. The execution and delivery by the Company of this Agreement, the initial Subject Securities, each other Purchase Document to which it is a party and the SHI Stockholders' Agreement, the performance by the Company of its obligations hereunder and thereunder, and the issuance of the initial Subject Securities by the Company have been duly authorized by all necessary corporate action, do not and will not require any Approval, do not and will not conflict with, result in any violation of, or constitute any default under, any provision of any Organizational Document, any Applicable Law or material Contractual Undertaking and will not result in or require the creation or imposition of any Lien on any of its properties pursuant to the provisions of any material Contractual Undertaking (EXCLUDING, HOWEVER, Permitted Liens).
SECTION 5.3. VALIDITY, ETC. This Agreement constitutes, and the Notes and other initial Subject Securities, each other Purchase Document to which the Company is a party and the SHI Stockholders' Agreement will on the due execution and delivery thereof constitute, the legal, valid and binding obligations of the Company enforceable in accordance with their respective terms, SUBJECT, HOWEVER, as to enforcement only, to bankruptcy, insolvency, reorganization,
moratorium or similar laws at the time in effect affecting the enforceability of the rights of creditors generally.
SECTION 5.4. FINANCIAL INFORMATION. All balance sheets, all statements of income, of stockholders' equity and of cash flows and all other financial information of Old Thomas Black and its Subsidiaries which have been furnished by or on behalf of the Company to the Purchaser for the purposes of or in connection with the Transaction, including
(a) the Consolidated Financial Statements and Additional Information, dated December 31, 2000 and December 31, 1999, of Old Thomas Black and its Subsidiaries certified by PricewaterhouseCoopers LLP (the most recent of such information being the "2000 OTBC AUDITED FINANCIAL STATEMENTS"),
(b) the "Safety Insurance Consolidated Financial Statements and Related Materials To Company with Statutory Filing Requirements" for the years ended December 31, 2000 and December 31, 1999 certified by PricewaterhouseCoopers LLP, and
(c) the PRO FORMA consolidated balance sheet at June 30, 2001 (and after giving effect to the Transaction assuming it had occurred on such date), of each of the Company and Subsidiaries and of Surviving Thomas Black and its Subsidiaries (collectively, the "PRO FORMA BALANCE SHEETS"), contained in the Financing Memorandum,
have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved (except (x) as disclosed therein and (y) all financial information contained therein relating to Safety Insurance and its Subsidiaries having been prepared in accordance with Statutory Accounting Practices or GAAP) and present fairly (SUBJECT, HOWEVER, in the case of the Pro Forma Balance Sheets, to the assumptions specified therein, including as to the occurrence of the Transaction at an earlier date) the consolidated financial condition of the corporations covered thereby as at the dates thereof and the results of their operations for the periods then ended. All financial information as to the Company and Subsidiaries and of Surviving Thomas Black and its Subsidiaries which shall hereafter from time to time be furnished by or on behalf of the Company to the Purchaser and other Noteholders for the purposes of or in connection with this Agreement or any transaction contemplated hereby will be prepared in accordance with GAAP consistently applied throughout the periods involved (except (x) as disclosed therein and (y) all financial information contained therein relating to Insurance Subsidiaries will be prepared in accordance with Statutory Accounting Practices or GAAP) and will present fairly (SUBJECT, HOWEVER, in the case of PRO FORMA financial information, to the assumptions specified therein) the consolidated financial condition of the corporations covered thereby as at the dates thereof and the results of their operations for the periods then ended.
SECTION 5.5. ABSENCE OF MATERIAL ADVERSE CHANGE. There have been no occurrences, events or changed circumstances since December 31, 2000 (EXCLUDING, HOWEVER, the Transaction and the demise of Richard B. Simches) which, individually, as part of a series or in the aggregate, have had a materially adverse effect on the financial condition, business, assets, operations or properties of Old Thomas Black and its Subsidiaries taken as a whole.
SECTION 5.6. CONTINUING INDEBTEDNESS. The Pro Forma Balance Sheets fairly present all long-term Indebtedness of the Company, Surviving Thomas Black and its Subsidiaries on a consolidated basis expected to be outstanding immediately after giving effect to the Transaction, including as disclosed in ITEM 5.6 ("Continuing Indebtedness") of the Disclosure Schedule.
SECTION 5.7. CONTINGENCIES. Neither Old Thomas Black nor any of its Subsidiaries has any contingent liability for taxes, long-term leases or unusual forward or long-term commitments or material unrealized or unanticipated losses from unfavorable commitments which would, individually or in the aggregate, reasonably be expected to have a Materially Adverse Effect and which are not reflected in the financial statements described in CLAUSE (a), (b), (c) or (d) of SECTION 5.4 or in the notes thereto or in ITEM 5.7 ("Contingencies, ETC.") of the Disclosure Schedule.
SECTION 5.8. LITIGATION, ETC. There is no pending or, to the SHI's Knowledge, threatened litigation, arbitration or governmental investigation or proceeding against, or labor controversy affecting, either Old Thomas Black or any of its Subsidiaries or the Company or any Subsidiary or to which any of the properties, assets or revenues of any thereof is subject (x) which would, if adversely determined, reasonably be expected, individually or in the aggregate, to have a Materially Adverse Effect, except as disclosed in ITEM 5.8 ("Litigation, ETC.") of the Disclosure Schedule or (y) which relates to the Transaction.
SECTION 5.9. CAPITALIZATION. On the Closing Date, the authorized Capital Stock of the Company will be 500,000 shares, consisting of 100,000 SHI Preferred Shares and 400,000 SHI Common Shares, of which
(a) 22,400 6.0% SHI Series A Preferred Shares, and
(b) 250,000 SHI Common Shares, including 12,500 SHI Restricted Common Shares,
will be issued and outstanding in conformity with ITEM 3.3 ("SHI Stockholders") of the Disclosure Schedule. Of the 100,000 authorized SHI Preferred Shares and 400,000 authorized SHI Common Shares which will be unissued on the Closing Date, 77,600 SHI Preferred Shares and 150,000 SHI Common Shares will be unissued and unreserved and will be subject to the restrictions on issuance contained in the Preemption Letter and Section 5.5 of the SHI Stockholders' Agreement. The SHI Common Shares and the SHI Preferred Shares to be issued to the Purchaser will have been duly authorized for issuance and, when sold and delivered against payment therefor as provided herein, will be validly issued, fully paid and non-assessable and will be free and clear of all preemptive rights and Liens except as provided in the SHI Stockholders' Agreement and restrictions under applicable securities laws and will be entitled to the respective voting powers, designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as are set forth with respect thereto in the SHI Certificate of Incorporation. The Company does not have outstanding any Capital Stock or securities convertible into or exchangeable for any shares of its Capital Stock, nor does it have outstanding any rights or options to subscribe for or to purchase any Capital Stock or securities convertible into or exchangeable for any of its shares of Capital Stock except for the Management SHI SARs. Except as disclosed in ITEM 5.9 ("Repurchase, ETC.
Agreements") of the Disclosure Schedule, the Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Capital Stock. Except for the SHI Stockholders' Agreement, none of the Company or any Subsidiary is party to an agreement to register any of its securities under the Securities Act.
SECTION 5.10. MARGIN REGULATIONS. The Company is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock, and less than 25% of the assets of the Company, individually and on a consolidated basis with all Subsidiaries, consists of margin stock. Terms for which meanings are provided in F.R.S. Board Regulation U or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings.
SECTION 5.11. GOVERNMENT REGULATION. Neither the Company nor any Subsidiary is (or shall upon the consummation of the Transaction become) (x) an "investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended, or (y) subject to regulation under the Federal Power Act, the Interstate Commerce Act, the Commodity Exchange Act or any Applicable Law limiting its ability to incur or assume Indebtedness for borrowed money (EXCLUDING, HOWEVER, in the case of any Insurance Subsidiary, the regulations of its relevant Insurance Regulatory Authority).
SECTION 5.12. TITLE TO AND CONDITION OF PROPERTIES, ETC. Each of the Company, Surviving Thomas Black and their respective Subsidiaries (x) has good and marketable title to all of the real property, and valid title to all of the personal properties and other assets (tangible, intangible or mixed), which it purports to own, free and clear of all Liens (EXCLUDING, HOWEVER, the failure to own properties which would not reasonably be expected to have a Material Adverse Effect and Liens permitted by SECTION 6.2.3) and (y) enjoys peaceful and undisturbed possession under all leases to which it is a party as lessee (EXCLUDING, HOWEVER, leases the absence of which would not reasonably be expected, individually or in the aggregate, to have a Materially Adverse Effect). All material Contractual Undertakings to which the Company or Surviving Thomas Black or any of their respective Subsidiaries is a party are valid and binding and in full force and effect, and no default has occurred or is continuing thereunder which would reasonably be expected, individually or in the aggregate, to have a Materially Adverse Effect. No consent need be obtained from any Person (which is not required by ARTICLE III to be obtained on or prior to the Closing Date) in respect of any such Contractual Undertaking in connection with the Transaction which, if not obtained, would reasonably be expected, individually or in the aggregate, to have a Materially Adverse Effect.
SECTION 5.13. PATENTS, TRADEMARKS, ETC. The Company and Surviving Thomas Black and their respective Subsidiaries own, or are licensed under, and have the rights to use, all material patents, trademarks, trade names, copyrights, technology, recipes, know-how and processes (collectively, "INTELLECTUAL PROPERTY") necessary for the conduct of their businesses as set forth in the Financing Memorandum, and the consummation of the Transaction does not alter or impair any such rights. Except as disclosed in ITEM 5.13 ("Patents, Trademarks, ETC.") of the Disclosure Schedule, there is no (x) claim which has been asserted by any Person to the use of
any Intellectual Property or challenging or questioning the validity or effectiveness of any license or agreement related thereto or (y) valid basis for any such claim or any claim that the use of such Intellectual Property by the Company, Surviving Thomas Black or their respective Subsidiaries infringes or will infringe on the rights of any Person.
SECTION 5.14. TAXES. Each of Old Thomas Black and each of its Subsidiaries has filed all tax returns and reports required by Applicable Law to have been filed by it and has paid all taxes and governmental charges thereby shown to be owing, EXCLUDING, HOWEVER, any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.
SECTION 5.15. PENSION AND WELFARE PLANS. Except as contemplated by the OTBC Acquisition Documents, during the 12 consecutive-month period prior to the Closing Date, no steps have been taken to terminate any Plan, and no contribution failure has occurred with respect to any Plan sufficient to give rise to a Lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any Plan which would reasonably be expected to result in the incurrence by the Company or any member of the Controlled Group of any material liability, fine or penalty. Except as disclosed in ITEM 5.15 ("Employee Benefit Plans") of the Disclosure Schedule, neither Old Thomas Black nor any of its Subsidiaries nor any member of the Controlled Group has any contingent liability with respect to any post-retirement benefit under a Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA.
SECTION 5.16. ENVIRONMENTAL MATTERS. Except as disclosed in ITEM 5.16 ("Environmental Matters") of the Disclosure Schedule,
(a) all facilities and property (including underlying groundwater) owned or leased by Old Thomas Black or any of its Subsidiaries are owned or leased by it in material compliance with all applicable Environmental Laws,
(b) there have been no unresolved past, and there are, to SHI's Knowledge, no pending or threatened claims, complaints or notices of violations received by Old Thomas Black or any of its Subsidiaries with respect to any alleged violation of any Environmental Law, or complaints, notices or claims to Old Thomas Black or any of its Subsidiaries regarding potential liability under any Environmental Law (collectively, "ENVIRONMENTAL CLAIMS"),
(c) there have been no material releases of Hazardous Materials at, on or under any property, to SHI's Knowledge, now or previously owned or leased by Old Thomas Black or any of its Subsidiaries except in material compliance with applicable Environmental Laws,
(d) no property now or previously owned or leased by Old Thomas Black or any of its Subsidiaries is listed or, to SHI's Knowledge, proposed for listing (with respect to owned property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up,
(e) none of Old Thomas Black or any of its Subsidiaries has received notice from any Governmental Authority that Old Thomas Black or any of its Subsidiaries is potentially responsible for clean-up or other corrective action under any Environmental Law,
(f) to SHI's Knowledge here are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now or previously owned or leased by Old Thomas Black or any of its Subsidiaries,
(g) to SHI's Knowledge neither Old Thomas Black nor any of its Subsidiaries has directly transported or directly arranged for the transportation of any Hazardous Material to any location which is listed on the National Priorities List pursuant to CERCLA or on any similar federal, state or provincial list or which is the subject of federal, state, provincial or local enforcement actions which would reasonably be expected to lead to material claims against the Company or any Subsidiary for any remedial work, damage to natural resources or personal injury, including claims under CERCLA,
(h) to SHI's Knowledge, no conditions exist at, on or under any property now or previously owned or leased by Old Thomas Black or any of its Subsidiaries which, with the passage of time, or the giving of notice or both, would be reasonably likely to give rise to material liability under any Environmental Law,
except, in any and all such cases, as would not reasonably be expected, individually or in the aggregate, to have a Materially Adverse Effect.
SECTION 5.17. SPECIAL PURPOSE CORPORATIONS. Each of the Company and SMCI as of the Closing Date (and prior to giving effect to the Transaction), (x) will have been created solely for purposes of consummating the Transaction and (y) will not have any Indebtedness, liabilities (whether direct or contingent) or commitments other than in connection with the Transaction, pursuant to the Transaction Documents or representing Transaction Costs.
SECTION 5.18. SUBSIDIARIES, ETC. As of the Closing Date,
(a) the Company will have no Subsidiaries other than SMCI (and after the effectiveness of the STBC Filing Document, Surviving Thomas Black and its Subsidiaries);
(b) the Company will be the record and beneficial owner, free of Liens, of 100% of the issued and outstanding Capital Stock of SMCI (and after the effectiveness of the STBC Filing Document, Surviving Thomas Black);
(c) Surviving Thomas Black will have no Subsidiaries and no other Investments in any joint venture, partnership or other Person, except as disclosed in ITEM 5.18 ("Old Thomas Black Subsidiaries, ETC.") of the Disclosure Schedule; and
(d) Surviving Thomas Black will be the record and beneficial owner, free of Liens (except under the Senior Loan Documents), of 100% of the issued and outstanding Capital Stock of Safety Insurance.
SECTION 5.19. OFFERING OF SUBJECT SECURITIES. Neither the Company, nor Old Thomas Black or any Jordan Party (or anyone acting on behalf of any of them) has taken or will take any action which would subject the issuance or sale of the Notes, SHI Common Shares or SHI Preferred Shares to the provisions of Section 5 of the Securities Act or to the registration or qualification requirements of any securities or blue sky law of any applicable jurisdiction.
SECTION 5.20. ACCURACY OF INFORMATION. All factual information (and, FOR THE SAKE OF CLARITY, not including any projections) heretofore or contemporaneously furnished by or on behalf of the Company in writing to the Purchaser for purposes of or in connection with the Transaction, including the financing memorandum, dated June 2001 (as updated by TJC's letter, dated October 10, 2001, and by the revised projections, dated August 3, 2001, the "FINANCING MEMORANDUM"), prepared by TJC and transmitted under JZAI's letter, dated June 15, 2001, to JZEP, and true and complete copies of which were furnished to the Purchaser prior to the execution and delivery of this Agreement, is collectively, and all other such factual information hereafter furnished by or on behalf of the Company or any Subsidiary to the Purchaser, the Representative Noteholder or any Noteholder, taken as a whole with all other information furnished concurrently therewith, will be true and accurate in every material respect taken as a whole on the date as of which such information is dated or certified, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. There is, to SHI's Knowledge, no fact that the Company or Surviving Thomas Black has not disclosed to the Purchaser in writing that would, individually or in the aggregate, reasonably be expected to have a Materially Adverse Effect. All projections (including the Projections) heretofore, contemporaneously and hereafter furnished by or on behalf of the Company or any Subsidiary in writing to the Purchaser, the Representative Noteholder or any Noteholder for purposes of this Agreement or any transaction contemplated hereby are and will be based on good faith estimates and assumptions which the Company believes are fair and reasonable in light of the historical financial performance of Old Thomas Black and current and reasonably foreseeable business conditions, and, to SHI's Knowledge, there are or will be no facts or circumstances existing at the time such projections are furnished which would, individually or in the aggregate, reasonably be expected to cause a material adverse change in such projections, IT BEING RECOGNIZED, HOWEVER, by the Purchaser that projections as to future events are not to be viewed as fact and that actual results during the period or periods covered by any such projections may differ from the projected results and that the differences may be material.
ARTICLE VI
COVENANTS
SECTION 6.1. CERTAIN AFFIRMATIVE COVENANTS. The Company agrees with
(a) each Noteholder that, until all Obligations have been paid and performed in full, the Company will perform all of the covenants contained in SECTION 6.1;
(b) the Purchaser and each other Institutional Holder which holds at least 5,000 SHI Series A Preferred Shares, the Company will perform for the benefit of the Purchaser
or such Institutional Holder the covenants contained in CLAUSE (b) of
SECTION 6.1.1 as if it were the holder of a Note; and
(c) the Purchaser that, for so long as it shall hold any Subject
Security (other than a Note), the Company will perform for the benefit of
the Purchaser the covenants contained in CLAUSES (c) and (e) of SECTION
6.1.1 as if the Purchaser were the holder of a Note and in SECTION 6.1.6 as
if it were the Representative Noteholder; PROVIDED, HOWEVER, that the
Purchaser may not exercise its rights under this clause in respect of
SECTION 6.1.6 more than once in any Fiscal Year.
SECTION 6.1.1. FINANCIAL INFORMATION, ETC. The Company will furnish, or will cause to be furnished, to each Noteholder copies of the following financial statements, reports and information:
(a) promptly when available and in any event when furnished pursuant to the Senior Loan Agreement, copies of all financial statements, certificates, audit and other reports, filings, projections, management letters and other information furnished pursuant to Section 8.4 (EXCLUDING, HOWEVER, clauses (c), (h) and (i) thereof) thereof (and the Company hereby agrees that (x) each Noteholder is hereby entitled to rely on such information as if it were required to have been furnished directly pursuant to this Agreement and (y) all certifications and representations made therein shall be deemed to be made directly to each Noteholder as if such information was expressly addressed to them);
(b) promptly when available and in any event within 120 days after the close of each Fiscal Year (and only if, and to the extent, financial information is not being furnished pursuant to CLAUSE (a)),
(i) a consolidated balance sheet as of the end of such Fiscal Year, and consolidated statements of income, of stockholders' equity and of cash flow for such Fiscal Year, of the Company and Subsidiaries, prepared, commencing with the 2003 Fiscal Year, on a comparative basis with the preceding Fiscal Year and certified without qualification by PricewaterhouseCoopers LLP (or other independent public accountants of recognized national standing selected by the Company and consented to by the Required Noteholders, such consent not be unreasonably withheld or delayed),
(ii) an unaudited consolidating balance sheet as of the end of such Fiscal Year, and consolidating statements of income, of stockholders' equity and of cash flow for such Fiscal Year, of the Company and Subsidiaries, prepared, commencing with the 2003 Fiscal Year, on a comparative basis with the preceding Fiscal Year and certified by the chief accounting, executive or financial Authorized Officer, and
(iii) Statutory Annual Financial Statements as of the end of and for such Fiscal Year;
(c) promptly when available and in any event within 60 days after the close of each of the first three Fiscal Quarters of each Fiscal Year (and only if, and to the extent, financial information is not being furnished pursuant to CLAUSE (a)),
(i) consolidated and consolidating balance sheets at the close of such Fiscal Quarter, and the related consolidated and consolidating statements of income, of stockholders' equity and of cash flow for such Fiscal Quarter and for the period commencing at the close of the previous Fiscal Year and ending with the close of such Fiscal Quarter, of the Company and Subsidiaries (with, commencing with the 2003 FQ4, comparative information at the close of and for the corresponding Fiscal Quarter of the prior Fiscal Year and for the corresponding portion of such prior Fiscal Year), certified by the chief accounting, executive or financial Authorized Officer; and
(ii) Statutory Quarterly Financial Statements as of the end of such Fiscal Quarter, and for the period commencing as of the close of the previous Fiscal Year and ending with the close of such Fiscal Quarter;
(d) together with each set of financial statements delivered from time to time as at the close of any Fiscal Year or Fiscal Quarter, a certificate of the chief accounting, executive or financial Authorized Officer stating that (x) no Default had occurred or was continuing at the close of such Fiscal Year or Fiscal Quarter, as the case may be, or, if a Default had occurred and was continuing, a description thereof and a statement as to whether it is continuing and as to what actions are being taken to cure it and (y) to SHI's Knowledge, no event had occurred and was continuing at the close of such Fiscal Year or Fiscal Quarter, as the case may be, as the result of which the Company will not be able to make payment when due on account of principal of or accrued and unpaid interest on the Notes or, if such an event had occurred and was continuing, a description of the event and what action the Company is taking or proposing to take with respect thereto; and
(e) such other information with respect to the financial condition, business, property, assets, revenues and operations of the Company or any Subsidiary as the Required Noteholders may from time to time reasonably request.
For purposes of any consolidating financial statements delivered pursuant to CLAUSES (b)(iii) and (c)(i), any Non-Insurance Subsidiary may be treated on a consolidated basis with all of its Non-Insurance Subsidiaries.
SECTION 6.1.2. NOTICE OF DEFAULT, LITIGATION, ETC. The Company will furnish, or will cause to be furnished, to each Noteholder prompt notice (with a description in reasonable detail) of:
(a) the occurrence, to SHI's Knowledge, of any Default;
(b) each amendment, waiver or other modification to the Senior Loan Agreement (and each approval, consent, notice, communication or other writing delivered, received or exchanged pursuant to Section 8.5.1, 8.5.2, 8.5.3, 8.5.4, 8.5.5(b), 8.5.6, 8.7, 8.13(a),
13.1 or 13.2 of the Senior Loan Agreement) and, in each case, enclosing therewith a copy of such modification or approval, ETC.;
(c) if, and to the extent that, notice thereof is not being furnished pursuant to CLAUSE (b):
(i) the occurrence of any litigation, any arbitration or any
governmental investigation, inquiry or proceeding or any labor
controversy (EXCLUDING, HOWEVER, litigation and proceedings asserted
by insureds in the ordinary course of business against any Insurance
Subsidiary) not previously disclosed by the Company pursuant hereto
(x) which has been instituted or, to SHI's Knowledge, is threatened
against, the Company or any Subsidiary or to which any properties,
assets or revenues of any thereof is subject and (y) which would, if
adversely determined, reasonably be expected to have a Materially
Adverse Effect,
(ii) any material adverse development which shall occur in any litigation, any arbitration or any governmental investigation, inquiry or proceeding or any labor controversy previously disclosed by the Company,
(iii) any circumstance which would reasonably be expected to have a Materially Adverse Effect of the nature referred to in CLAUSE (a) of the definition thereof,
(iv) any steps by the Company or any other Person to terminate any Plan, or the failure to make a required contribution to any Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA, or of any action with respect to a Plan which could result in the requirement that the Company or any Subsidiary furnish a bond or other security with the PBGC or such Plan, or any event with respect to any Plan which could result in the incurrence by the Company or any Subsidiary of any material liability, fine or penalty, or any material increase in the Contingent Liability of the Company or any Subsidiary with respect to any post-retirement Plan benefit, notice thereof and copies of all documentation relating thereto, and
(v) material written claims, complaints, notices or inquiries relating to the condition of any facilities and properties of the Company or any Subsidiary and compliance with Environmental Laws.
SECTION 6.1.3. USE OF PROCEEDS. The proceeds of the Initial Notes and other initial Subject Securities, together with other funds available to the Company, shall be applied by the Company to fund the OTBC Acquisition, to pay Transaction Costs and to provide working capital for Surviving Thomas Black and its Subsidiaries. No portion of the proceeds of any Subject Securities shall be used by the Company in any manner that might cause the issuance and sale of the Subject Securities or the application of such proceeds to violate F.R.S. Board Regulation T, U or X or any other regulation of such Board or to violate the Exchange Act, in each case as in effect on the date or dates of such issuance and sale and such use of proceeds.
SECTION 6.1.4. PERFORM SENIOR LOAN AGREEMENT. The Company will, and will cause each Subsidiary to perform, comply with and be bound by at all times (and whether or not the Senior Loan Agreement shall continue to remain in effect among the parties thereto) all of its agreements, covenants and obligations, contained in Sections 8.6, 8.7, 8.8, 8.10 and 8.13(c) of the Senior Loan Agreement as in effect on the Closing Date, such Sections, and all other terms of the Senior Loan Agreement to which reference is made herein, together with all related definitions and ancillary provisions, being hereby incorporated into this Agreement by reference as though specifically set forth in this Agreement; PROVIDED, HOWEVER, that:
(a) all references to the "Agent" and the "Lenders" shall be deemed to refer to the Representative Noteholder and the Noteholders, respectively hereunder;
(b) all references to the "Borrower" shall be deemed to refer to the Company and SMCI (and, after the effectiveness of the STBC Filing Document, Surviving Thomas Black);
(c) all references to the "Loans", the "Notes" or the "Commitments" shall be deemed to refer to the Notes outstanding hereunder, and references to the "Obligations" shall be deemed to refer to the Obligations hereunder;
(d) all references to "Default" and "Event of Default" shall be deemed to refer to a Default and Event of Default, respectively, hereunder; and
(e) all references to "this Agreement" and "herein", "hereof" and words of similar purport shall, except where the context otherwise requires, be deemed to refer to this Agreement.
All such Sections and other terms, definitions and provisions of the Senior Loan Agreement shall, except as otherwise provided in this Section or consented to by the Required Noteholders for purposes of this Agreement, continue in full force and effect for the benefit of all Noteholders as if they were the Lenders (as defined in the Senior Loan Agreement), whether or not the Commitments and Loans (as so defined) remain outstanding or the Senior Loan Agreement remains in effect between the parties thereto.
SECTION 6.1.5. CONFORMING CHANGES. Concurrently with the execution and delivery by Surviving Thomas Black of a successor Instrument which qualifies as the Senior Loan Agreement in accordance with CLAUSE (a) of the definition of such term, the Company will enter into an amendment to this Agreement clarifying or correcting, as shall be necessary or appropriate, all references herein (including in SECTIONS 1.1, 2.4, 3.7, 4.4, 6.1.1, 6.1.2, 6.1.4, 6.2.2, 6.2.3, 6.2.6, 6.2.7 and 6.2.8) to the Senior Loan Agreement to refer to such successor Instrument and its terms and provisions, and each Noteholder shall, SUBJECT, HOWEVER, to such amendment being in form reasonably satisfactory to the Required Noteholders, execute and deliver a counterpart thereof.
SECTION 6.1.6. BOOKS AND RECORDS. The Company will, and will cause each Subsidiary to, keep books and records reflecting all of its business affairs and transactions in accordance with GAAP (or, in the case of any Insurance Subsidiary, the regulations of its relevant Insurance Regulatory Authority) and permit the Representative Noteholder and each
other Noteholder owning more than 30% of the then outstanding principal amount of the Notes (each a "SIGNIFICANT NOTEHOLDER") or any of their respective representatives, at reasonable times and intervals and on reasonable notice, to visit all of its offices, to discuss its financial matters with its officers and independent public accountant (and hereby authorizes such independent public accountant to discuss its financial matters with the Representative Noteholder and each Significant Noteholder or their respective representatives whether or not any representative of the Company is present) and to examine (and, at the expense of the Company, photocopy extracts from) any of its books or other corporate records; PROVIDED, HOWEVER, that neither the Representative Noteholder nor any Significant Noteholder shall be entitled (EXCLUDING, HOWEVER, at any time when a Default Circumstance shall have occurred and be continuing) to excise its rights under the FOREGOING SENTENCE more often than once in any Fiscal Year. The Company shall pay any fees of such independent public accountant incurred in connection with the Representative Noteholder's exercise of its rights pursuant to this Section.
SECTION 6.1.7. OWNERSHIP, ETC. OF SUBSIDIARIES. The Company will continue to own directly, and free of Liens, all of the outstanding shares of Capital Stock of Surviving Thomas Black, and Surviving Thomas Black will continue to own directly and free of any Liens (except Permitted Liens and Liens under Senior Loan Documents) all of the outstanding shares of Capital Stock of Safety Insurance, and Safety Insurance will continue to own directly and free of any Liens (except as aforesaid) all of the outstanding shares of Capital Stock of Safety Indemnity.
SECTION 6.2. CERTAIN NEGATIVE COVENANTS. The Company agrees with
(a) each Noteholder that, until all Obligations have been paid and performed in full, the Company will perform all of the covenants contained in SECTION 6.2; and
(b) the Purchaser that, for so long as it shall hold any Subject Security (other than a Note), the Company will perform for the benefit of the Purchaser the covenants contained in SECTION 6.2.5 (solely insofar as it relates to Jordan Payments) and ITEM (y) of SECTION 6.2.10, in each case as if the Purchaser were the holder of a Note.
SECTION 6.2.1. BUSINESS ACTIVITIES. The Company will not and will not permit any Subsidiary to, engage in any business activity, EXCLUDING, HOWEVER,
(a) in the case of the Company, its consummation of the Transaction and its performance from time to time of its obligations under the Transaction Documents,
(b) in the case of Surviving Thomas Black and its Subsidiaries, the engaging in activities in which Old Thomas Black and its Subsidiaries were engaged or proposed to be engaged on the Closing Date, and
(c) in the case of Insurance Subsidiaries acquired by Surviving Thomas Black from time to time as Additional Acquisitions, the engaging, within States which are contiguous or in close proximity to Massachusetts, in providing insurance coverages of the types provided by Old Thomas Black and its Subsidiaries on the Closing Date,
and, in each case, activities incidental and related thereto.
SECTION 6.2.2. INDEBTEDNESS AND DISQUALIFIED CAPITAL STOCK. The Company will not, and will not permit any Subsidiary to, (x) create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness or (y) issue any Disqualified Capital Stock, other than:
(a) Indebtedness in respect of the Notes and other Obligations;
(b) Indebtedness of the Company in respect of any Management SHI Subordinated Note or any Additional Seller Subordinated Note; PROVIDED, HOWEVER, that the Company is the sole obligor in respect of the payment of all principal of, interest on and other obligations relating to such Management SHI Subordinated Note or Additional Seller Subordinated Note;
(c) Indebtedness of Surviving Thomas Black (x) under (and of Non-Insurance Subsidiaries as guarantors of) the Senior Loan Documents in an aggregate principal amount at any time outstanding not to exceed the EXCESS of $103,500,000 OVER the aggregate amount of all permanent payments and prepayments of principal, and (without duplication) all permanent reductions to commitments, made from time to time thereunder (EXCLUDING, HOWEVER, all such payments and prepayments made from the proceeds of, and all such commitments replaced by, any refinancing provided under a successor Senior Loan Agreement as provided in CLAUSE (a) of the definition of such term) and (y) consisting of Hedging Liabilities owing to a Senior Lender;
(d) for so long as Surviving Thomas Black shall have any Indebtedness outstanding (or unused commitments in effect) under the Senior Loan Agreement, any other Indebtedness of Surviving Thomas Black or any of its Subsidiaries which shall then be permitted by Section 9.1 of the Senior Loan Agreement to be outstanding (EXCLUDING, HOWEVER, any Indebtedness incurred to any Additional Seller, its designees or assigns);
(e) at any time after payment in full of all Indebtedness of Surviving Thomas Black under the Senior Loan Agreement (and the expiration or termination of all commitments thereunder), other Indebtedness of Surviving Thomas Black and its Subsidiaries in an aggregate principal amount not to exceed $37,500,000 at any one time outstanding;
(f) Indebtedness of the Company in respect of the TJC Consulting Agreement, the Tax Sharing Agreement, the Tax Indemnity Agreement, the Management SHI SAR Agreement or any Director's Indemnification Payment;
(g) Indebtedness of the Company to Surviving Thomas Black in an aggregate principal amount not to exceed $25,000,000 at any time outstanding;
(h) Indebtedness owing among Surviving Thomas Black and its Subsidiaries;
(i) other unsecured Indebtedness of the Company incurred for money borrowed in an aggregate principal amount at any time outstanding not to exceed $25,000,000; and
(j) Indebtedness of any Insurance Subsidiary incurred in the ordinary course of its business in accordance with Applicable Laws;
PROVIDED, HOWEVER, that,
(k) no Indebtedness otherwise permitted pursuant to any of the foregoing clauses (EXCLUDING, HOWEVER, CLAUSE (a)) shall be permitted if such Indebtedness is acquired by a Jordan Party unless such Indebtedness is acquired by such Jordan Party in the ordinary course of its business for no more than its fair value; and
(l) no Additional Seller Subordinated Note otherwise permitted pursuant CLAUSE (b) and no other Indebtedness otherwise permitted pursuant to CLAUSE (g) or (i) shall be permitted unless it is, relative to all Obligations, subordinated and subject to postponement and standstill provisions during the pendency of a Default Circumstance, and it has terms of payment and other covenants, defaults, rights and privileges, in each case consented to by the Required Noteholders.
SECTION 6.2.3. LIENS. The Company will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except:
(a) Liens securing the Obligations;
(b) Liens granted by Surviving Thomas Black or any of its Non-Insurance Subsidiaries, and Liens granted by any Insurance Subsidiary on Non-Admitted Insurance Assets, to secure the Senior Loan Liabilities;
(c) Liens granted by Surviving Thomas Black or any of its Non-Insurance Subsidiaries, and Liens granted by any Insurance Subsidiary on Non-Admitted Insurance Assets, at any time on or after the Closing Date when Surviving Thomas Black has any Indebtedness outstanding (or unused commitments in effect) under the Senior Loan Agreement and which, when granted, were permitted by the Senior Loan Agreement to be granted and, if such Liens secure Indebtedness, such Indebtedness was then permitted by CLAUSE (d) of SECTION 6.2.2;
(d) Liens granted by the Company on SHI Common Shares repurchased by the Company in accordance with CLAUSE (a) of SECTION 6.2.5 to secure the Management SHI Subordinated Notes issued in payment therefor;
(e) Liens granted by any Insurance Subsidiary in the ordinary course of its business in accordance with Applicable Laws; and
(f) Permitted Liens;
PROVIDED, HOWEVER, that, except as permitted by CLAUSE (a), the Company will not create, incur or suffer to be created or incurred or to exist any Lien or other restriction of any kind upon any Capital Stock of Surviving Thomas Black owned by the Company (EXCLUDING, HOWEVER, Section 13.1(v) of the Senior Loan Agreement).
SECTION 6.2.4. FINANCIAL TEST. The Company will not permit, on a cumulative basis for any four consecutive Fiscal Quarters ending on the last day of a Fiscal Quarter occurring during any period set forth below, Surviving Thomas Black's "Funded Debt to Statutory Surplus Ratio" to be more than the ratio or amount set forth below opposite such period and under such caption:
Funded Debt
to Statutory
Period Surplus Ratio
----------------------------- -------------
Closing Date through 2002 FQ3 69.0%
2002 FQ4 through 2003 FQ3 66.0%
2003 FQ4 through 2004 FQ3 60.0%
2004 FQ4 through 2005 FQ3 54.0%
2005 FQ4 and thereafter 48.0%
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SECTION 6.2.5. RESTRICTED PAYMENTS, ETC. On or after the Closing Date, the Company will not, and will not permit any Subsidiary to, declare, pay, make, apply any of its funds, property or assets to making or making any deposit to fund any Restricted Payment, except:
(a) SUBJECT, HOWEVER, to no Default Circumstance having occurred and being continuing, the Company may make payments of interest accrued on and of principal of any Additional Seller Subordinated Note issued by it on the dates on which such payments are scheduled to be due by the terms thereof; PROVIDED, HOWEVER, that the aggregate amount of all payments of principal made by all Obligors pursuant to this clause shall not exceed $5,000,000 until the aggregate amount of Senior Indebtedness of Surviving Thomas Black (and all unused continuing commitments of the Senior Lenders) under the Senior Loan Agreement permitted by CLAUSE (c) of SECTION 6.2.2 shall have been permanently reduced to less than $52,500,000;
(b) the Company may repurchase SHI Common Shares held by a Management SHI Stockholder pursuant to any put or call repurchase obligation or right contained in Section 7 of the Management SHI Subscription Agreement or pursuant to any similar payment obligation in Section 5.1 or 5.8 of the SHI Stockholders' Agreement upon the occurrence of any of the events referred to therein and solely in accordance with the terms of such Sections; PROVIDED, HOWEVER, that (x) no payment of cash shall be made to effect any such repurchase (or to make payment of interest on or principal of any Management SHI Subordinated Note issued IN LIEU of cash to effect any such repurchase) unless, after giving effect thereto, (1) such payment is permitted to be made as a Permitted Junior Payment and (2) the aggregate amount of all payments made by the Company pursuant to this clause shall not exceed $3,000,000 and (y) no payment of any Management SHI Subordinated Note shall be made prior to the date on which such payment is scheduled to be due by the terms thereof; and
(c) SUBJECT, HOWEVER, to each such payment then being permitted to be made as a Permitted Junior Payment, the Company may pay the Jordan Parties or their designees (v) closing fees on the Closing Date in an aggregate amount not to exceed 2% of the total
cost of the OTBC Acquisition (including any deferred consideration and Transaction Costs), (w) consulting fees on a quarterly basis at an aggregate annual rate not to exceed 3% of net income before interest expense, depreciation, taxes, amortization and other non-cash charges for such Fiscal Year, (x) directors fees in an aggregate amount not to exceed $90,000 in any Fiscal Year, (y) disposition fees in an aggregate amount not to exceed 2% of either (1) the total sale proceeds on a sale of the equity capital of the Company or of all or substantially all of the assets of the Company and Subsidiaries or (2) the total market capitalization of the Company in connection with the first sale of common equity by the Company pursuant to a registration statement under the Securities Act and (z) without duplication of any of the foregoing, investment banking fees not to exceed 2% of the value to the Company of other transactional events (including acquisitions and financings).
SECTION 6.2.6. INVESTMENTS. The Company will not make any Investments, except:
(a) Investments in SMCI and Surviving Thomas Black (u) by way of the Company's issuance from time to time of Additional Seller Subordinated Notes, (v) on the Closing Date in the manner contemplated by the OTBC Acquisition Agreement and the Financing Memorandum, (x) from time to time pursuant to the Tax Sharing Agreement as in effect on the Closing Date, (y) from time to time when no Default Circumstance shall have occurred and be continuing, amounts representing the proceeds of the issuance by the Company of SHI Preferred Shares or SHI Common Shares in an amount equal to the principal amount of the related prepayment of the Senior Loans required to be made pursuant to Section 4.3.3(b) of the Senior Loan Agreement as in effect on the Closing Date;
(b) Cash Equivalent Investments;
(c) the promissory notes (the "MANAGEMENT NOTES") to be issued on the Closing Date to the Company by various Management SHI Stockholders identified in ITEM 3.4(b) ("Management Stockholder Loans") of the Disclosure Schedule in the respective original principal amounts specified in such item and in an aggregate original principal amount not to exceed $695,000; and
(d) promissory notes at any time outstanding issued from time to time after the Closing Date by various Management SHI Stockholders in payment for the purchase of additional shares of SHI Common Stock in an aggregate principal amount at any time outstanding not to exceed $1,000,000.
SECTION 6.2.7. CONSOLIDATION, MERGER, ETC. The Company will not, and will not permit any Subsidiary to,
(a) liquidate or dissolve, consolidate with, or merge into or with (EXCLUDING, HOWEVER, the OTBC Merger), any other corporation or purchase or otherwise acquire all or substantially all of the assets of any Person (or of any division thereof); or
(b) sell, transfer, convey or otherwise dispose of all or any substantial part of its assets;
PROVIDED, HOWEVER, that
(c) any Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into any other Subsidiary;
(d) Surviving Thomas Black or any of its Subsidiaries may purchase or acquire all of the outstanding shares of Capital Stock of, or substantially all of the assets of, any Person (or any division thereof), if immediately after giving effect thereto, no Default Circumstance shall have occurred and be continuing;
(e) any Subsidiary of Surviving Thomas Black may merge with any other corporation permitted to be acquired pursuant to CLAUSE (d) and may be created and capitalized for such purposes;
(f) the Company may merge with Surviving Thomas Black; PROVIDED, HOWEVER, that Surviving Thomas Black shall expressly assume all obligations of the Company under this Agreement, the Notes and each other Purchase Document pursuant to an assumption agreement satisfactory to the Required Noteholders; and
(g) for so long as Surviving Thomas Black shall have any Indebtedness outstanding (or any unused commitments in effect) under the Senior Loan Agreement, any sale, transfer, conveyance or other disposition of assets, including a sale, transfer, conveyance or other disposition by Surviving Thomas Black of the Capital Stock of any of its Subsidiaries (other than Safety Insurance or Safety Indemnity), which is permitted by Section 9.5.2 of the Senior Loan Agreement; PROVIDED, HOWEVER, that
(i) in connection therewith Surviving Thomas Black shall have made a permanent prepayment of principal of Senior Indebtedness outstanding (or of unused commitments under the Senior Loan Agreement) in the full amount required by Section 4.3.2 thereof as in effect on the Closing Date, and
(ii) immediately after giving effect thereto, no Default Circumstance shall have occurred and be continuing.
SECTION 6.2.8. MODIFICATION OF SENIOR LOAN DOCUMENTS. The Company will not, and will not permit Surviving Thomas Black or any of its Subsidiaries to, consent to or enter into any Instrument which amends, supplements, waives or otherwise modifies any agreement, covenant or undertaking contained in any Senior Loan Document in any of the following respects:
(a) so as to increase the maximum principal amount of Indebtedness (EXCLUDING, HOWEVER, Hedging Liabilities) permitted to be incurred and at any time be outstanding pursuant thereto above the maximum aggregate principal amount of Indebtedness then permitted to be outstanding thereunder by ITEM (x) of CLAUSE (c) of SECTION 6.2.2; or
(b) so as to alter in any respect adverse to the Noteholders Section 4.3.2(b) or 9.4(b) of the Senior Loan Agreement; or
(c) so to extend the stated maturity of the Senior Loans (or the effectiveness of any commitments under the Senior Loan Agreement) to a date less than 365 days prior to October 31, 2011 without amending Section 4.3.2(b) or 9.4(b) of the Senior Loan Agreement so that the Company may receive in accordance therewith "Net Equity Proceeds" or "Restricted Payments" (as defined therein) in an amount sufficient to make all payments of principal of and interest on the Notes when due.
SECTION 6.2.9. MODIFICATION OF SUBORDINATED NOTES. The Company will not consent or agree to any amendment, supplement or other modification of any Additional Seller Subordinated Note or Management SHI Subordinated Note so as to
(a) increase the frequency or amount, or shorten the maturity, of any payments of principal of or interest on any Additional Seller Subordinated Note or Management SHI Subordinated Note;
(b) materially increase any of the rights or privilege of any holders of, or any of the obligations or duties of any Obligor under, any Additional Seller Subordinated Note or Management SHI Subordinated Note; or
(c) modify in any respect any of the subordination, postponement or standstill provisions applicable to any Additional Seller Subordinated Note or Management SHI Subordinated Note.
SECTION 6.2.10. MODIFICATION OF SHI STOCKHOLDERS' AGREEMENT. The Company will not (x) take any action to amend or modify any of the terms of the SHI Stockholders' Agreement or the Management SHI Subscription Agreement so as, in either case, to increase the obligations of the Company thereunder to call, redeem or otherwise make payment for shares of SHI Common Stock acquired pursuant thereto from any Management SHI Stockholder or (y) Article 4 or 5 of the SHI Stockholders' Agreement (or the definition of "Permitted Transferee" as used therein).
SECTION 6.2.11. NEGATIVE PLEDGES, UPSTREAM RESTRICTIONS, ETC. The Company will not, and will not permit any Subsidiary to, enter into any agreement, EXCLUDING, HOWEVER, this Agreement the other Purchase Documents, any Senior Loan Document as in effect on the Closing Date (or, if such Senior Loan Document is specifically defined herein and the definition thereof permits waivers, amendments and other modifications to from time to time be made thereto, such Senior Loan Document as shall from time to time be in effect, SUBJECT, HOWEVER, to its continuing qualification with the terms of such definition), which expressly prohibits or restricts
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired (EXCLUDING,
HOWEVER, (x) any agreement governing any Indebtedness permitted by CLAUSE
(d) of SECTION 6.2.2 as to the assets financed with the proceeds of such
Indebtedness) (y) customary non-assignment provisions in operating leases
entered into in the ordinary course of business as to the leasehold
interest created thereby and (z) customary non-assignment provisions in
contracts, to the extent such provisions prohibit Liens on the rights under
such contracts);
(b) the ability of the Company or any Subsidiary to amend or otherwise modify, or to perform obligations under, this Agreement or any other Purchase Document;
(c) the ability of any Subsidiary to make any payments, directly or indirectly, to the Company by way of dividends, advances, repayments of loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on Investments, or any other agreement or arrangement which restricts the ability of any such Subsidiary to make any payment, directly or indirectly, to the Company; or
(d) the performance by the Company or any Subsidiary of its obligations under this Agreement or any other Purchase Document.
SECTION 6.2.12. TRANSACTIONS WITH AFFILIATES. The Company will not, and will not permit any Subsidiary to, enter into, or cause, suffer or permit to exist:
(a) any arrangement or contract with any of its other Affiliates of a nature customarily entered into by Persons which are Affiliates of each other (including management or similar contracts or arrangements relating to the allocation of revenues, taxes and expenses or otherwise) requiring any payments to be made by the Company or any Subsidiary to any Affiliate unless such arrangement is fair and equitable to the Company or such Subsidiary; or
(b) any other transaction, arrangement or contract with any of its other Affiliates which would not be entered into by a prudent Person in the position of the Company or such Subsidiary with, or which is on terms which are less favorable than are obtainable from, any Person which is not one of its Affiliates;
PROVIDED, HOWEVER, that this Section shall not be construed to restrict or
prohibit (x) any payment which is expressly permitted to be made pursuant to
SECTION 6.2.5 or (y) any payment made in accordance with the terms of any
Transaction Document or (z) Tax Indemnity Payments.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. The term "EVENT OF DEFAULT" means any of the following events:
SECTION 7.1.1. NON-PAYMENT OF OBLIGATIONS. The Company shall default in the payment or prepayment when due of any principal of any Note, or the Company shall default (and such default shall continue unremedied for a period of 10 days) in the payment when due of interest on any Note or any other Obligation. For purposes of this Section, the amount of interest due on any Interest Payment Date on any Note shall be deemed to have been paid in full if the holder of such Note shall, in its sole discretion, elect (or the Required Noteholders in accordance with the PROVISO to CLAUSE (b) of SECTION 9.1 shall, in their sole and absolute discretion, elect) to
accept, IN LIEU of cash, a PIK Note in an original principal amount equal to the amount of such interest then due.
SECTION 7.1.2. DEFAULT ON OTHER INDEBTEDNESS. Any default shall occur under the terms applicable to any Indebtedness (EXCLUDING, HOWEVER, any Obligation) outstanding in a principal amount exceeding $1,000,000 of the Company (treating all Additional Seller Subordinated Notes issued in connection with any Additional Acquisition, in each case, as a single obligation) or $5,000,000 of any Subsidiary, in each case, representing any borrowing or financing or arising under any other material agreement, and such default shall:
(a) consist of the failure to make any payment of principal or interest on, or any redemption (or to make any required offer to redeem) of, such Indebtedness when due (SUBJECT, HOWEVER, to any applicable grace period) in accordance with the terms thereof, and such failure, if it shall have occurred under the Senior Loan Agreement, shall continue unremedied and unwaived for a period of 90 days; or
(b) have resulted in any or all of such Indebtedness (EXCLUDING, HOWEVER, any Indebtedness which is, notwithstanding its acceleration, by its terms postponed and subordinate in right of payment to the prior payment in full in cash of all Obligations) having become (or, in the case of any Indebtedness of the Company, continue unremedied for a period of time sufficient to permit any holder of such Indebtedness to declare any or all of such Indebtedness to be) due and payable in accordance with its terms prior to its stated maturity, whether by declaration or otherwise.
SECTION 7.1.3. BANKRUPTCY, INSOLVENCY, ETC. The Company or any Subsidiary shall
(a) become insolvent or generally fail to pay, or admit in writing its inability to pay, debts as they become due;
(b) apply for, consent to or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company or such Subsidiary or any property of any thereof or make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Company or such Subsidiary or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days;
(d) permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company or such Subsidiary, and, if such case or proceeding is not commenced by the Company or such Subsidiary, such case or proceeding shall be consented to or acquiesced in by the Company or such Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed; or
(e) take any corporate action authorizing, or in furtherance of, any of the foregoing.
SECTION 7.1.4. BREACH OF WARRANTY. Any warranty of the Company or any Subsidiary hereunder or in any other Purchase Document or any other writing furnished by or on behalf of the Company or any Subsidiary to any Noteholder for the purposes of or in connection with this Agreement or any such Purchase Document is or shall be incorrect when made in any material and adverse respect, and such circumstance shall, if it is susceptible of being remedied, continue unremedied for a period of 30 days after notice thereof shall have been given to the Company by the Representative Noteholder or the Required Noteholders.
SECTION 7.1.5. NON-PERFORMANCE OF CERTAIN UNDERTAKINGS. The Company shall
default in the due performance and observation of any agreement contained in
SECTION 6.1.7, 6.2.3 (solely as it relates to the Company), 6.2.4, 6.2.5, 6.2.7,
6.2.8, 6.2.9, 6.2.11 or 6.2.12.
SECTION 7.1.6. NON-PERFORMANCE OF OTHER UNDERTAKINGS. Any Obligor shall default in the due performance and observance of any other agreement contained herein or in any other Purchase Document, and such default shall continue unremedied for a period of 90 days at any time when the Senior Loan Agreement shall continue to be in effect or, at any time thereafter, 30 days after notice thereof shall have been given to the Company by the Representative Noteholder or the Required Noteholders.
SECTION 7.1.7. JUDGMENTS. A final judgment, to the extent not fully covered by insurance, shall be rendered against the Company or any Subsidiary and (x) if such judgment is rendered against the Company, such judgment, together with all other such outstanding final judgments against the Company, exceeds (to the extent of all such uninsured portions) an aggregate of $500,000 or (y) if such judgment is rendered against Surviving Thomas Black or any of its Subsidiaries, such judgment shall remain in force, undischarged, unsatisfied and unstayed for more than 30 days, whether or not consecutive, and such judgment, together with all other such outstanding final judgments against Surviving Thomas Black or any of its Subsidiaries, exceeds (to the extent of all such uninsured portions) an aggregate of $5,000,000.
SECTION 7.1.8. PENSION PLANS. Any of the following events shall occur with respect to any Plan
(a) the institution of any steps by the Company, any member of its Controlled Group or any other Person to terminate a Plan if, as a result of such termination, the Company or any such member could be required to make a contribution to such Plan, or could reasonably expect to incur a liability or obligation to such Plan, in excess of $5,000,000; or
(b) a contribution failure occurs with respect to any Pension Plan sufficient to (x) give rise to a Lien under Section 302(f) of ERISA and (y) have a Material Adverse Effect.
SECTION 7.2. ACTION IF BANKRUPTCY. If any Event of Default described in CLAUSES (a) through (d) of SECTION 7.1.3 shall occur with respect to the Company, Surviving Thomas Black or Safety Insurance, the outstanding principal amount of all outstanding Notes and all other
Obligations shall automatically be and become immediately due and payable, without notice or demand.
SECTION 7.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(EXCLUDING, HOWEVER, any Event of Default described in CLAUSES (a) through (d)
of SECTION 7.1.3 with respect to the Company, Surviving Thomas Black or Safety
Insurance), shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Required Noteholders may, upon notice or demand, declare all or
any portion of the outstanding principal amount of the Notes to be due and
payable and any or all other Obligations to be due and payable, whereupon the
full unpaid amount of such Notes and any and all other Obligations which shall
be so declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment.
SECTION 7.4. SUITS FOR ENFORCEMENT. If any Event of Default shall have occurred and be continuing, the Required Noteholders may proceed to protect and enforce the rights of the holders of such Notes, either by suit in equity or by action at law, or both, whether for the specific performance of any covenant or agreement contained in this Agreement or in aid of the exercise of any power granted in this Agreement, and may proceed to enforce the payment of all sums due upon such Notes, and such further amounts as shall be sufficient to cover the costs and expenses of collection (including reasonable counsel fees and disbursements), or to enforce any other legal or equitable right of the holder of such Notes.
SECTION 7.5. REMEDIES CUMULATIVE. No remedy conferred in this Agreement or in the other Purchase Documents upon the Noteholders is intended to be exclusive of any other remedy and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
ARTICLE VIII
SUBORDINATION IN
SUBSTANTIVE CONSOLIDATION
The Purchaser, on behalf of all Noteholders, hereby agrees, for the benefit of all Senior Lenders, that, in the event of any substantive consolidation of the estate of the Company with the estate of Surviving Thomas Black in any bankruptcy, insolvency, liquidation, receivership, readjustment, reorganization or similar proceeding involving the Company or Surviving Thomas Black or their respective properties, all claims of the Noteholders under the Notes and this Agreement with respect to such consolidated estates (the "CONSOLIDATED ESTATE") shall be subordinate and subject in right of payment to the prior payment in full in cash of all Senior Loan Liabilities in accordance with this Article.
SECTION 8.1. PAYMENT OVER UPON DISSOLUTION, ETC. In the event of any distribution, division or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the property, assets or business of the Consolidated Estate, or the proceeds thereof, to any creditor or creditors of the Consolidated Estate or upon any indebtedness of the Consolidated Estate, by reason of any liquidation, dissolution or other
winding up of the Consolidated Estate or its business or by reason of any sale of any of its assets, then, and in any such event, any payment or distribution of any kind or character, whether in cash, property or securities (EXCLUDING, HOWEVER, Reorganization Securities) which, but for the subordination provisions of this Article, would otherwise be payable or deliverable upon or in respect of the Notes, shall instead be paid over or delivered to the Senior Agent for application to Senior Indebtedness, and, until the Senior Indebtedness has been irrevocably repaid in full in cash, the Noteholders shall not receive any such payment or distribution or benefit therefrom.
SECTION 8.2. TURNOVER. In the event that, notwithstanding the foregoing provisions of this Section, the holder of any Note shall have received, at any time following the determination of the substantive consolidation of the estate of the Company with the estate of Surviving Thomas Black any payment or distribution (EXCLUDING, HOWEVER, Reorganization Securities) of assets of the Consolidated Estate of any kind or character, whether in cash, property or securities, including any such payment or distribution which may be payable or deliverable by reason of the payment of any other Indebtedness of Consolidated Estate being subordinated to the payment of the Notes, before all Senior Indebtedness is paid in full in cash, then, and in such event, such payment or distribution shall be held in trust for and paid over or delivered forthwith to the Senior Agent or to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of assets of the Consolidated Estate for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full in cash, after giving effect to any concurrent payment or distribution in cash to or for the holders of Senior Indebtedness.
SECTION 8.3. PAYMENT OTHERWISE PERMITTED, ETC. Nothing contained in this Article or elsewhere in this Agreement or in the Notes is intended to or shall impair, as between the Company and the Consolidated Estate, on the one hand, and the creditors thereof (other than the holders of Senior Indebtedness) and the Noteholders, on the other hand, the obligation of the Company and the Consolidated Estate, which is absolute and unconditional, to make payment to each Noteholder of all amounts owing under the Notes and this Agreement as and when such amounts become due and payable in accordance with their terms, or to in any way affect the relative rights of the Noteholders and other creditors of the Company or the Consolidated Estate (other than the holders of Senior Indebtedness).
SECTION 8.4. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS. Subject to the irrevocable payment in full in cash of all Senior Indebtedness (and the termination of all commitments of the Senior Lenders under the Senior Loan Agreement), each Noteholder shall, to the extent of all payments or distributions made to the holders of Senior Indebtedness pursuant to this Article which would otherwise be payable in respect of Obligations, be subrogated to the rights of the holders of Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of and interest on the Notes and all other Obligations shall be irrevocably paid in full in cash. For purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness of any cash, property or securities to which any Noteholder would be entitled except for the provisions of this Article, and no payments over pursuant to the provisions of this Article to the holders of Senior Indebtedness by the Noteholders, shall, as between Consolidated Estate and its creditors (other than holders of Senior Indebtedness), and the Noteholders, be deemed to be a payment or distribution by the Consolidated Estate to or on account of the Senior Indebtedness.
SECTION 8.5. NO WAIVER OF SUBORDINATION PROVISIONS. No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any non-compliance by the Company with the terms, provisions and covenants of this Agreement, regardless of any knowledge thereof any such holder may have or be otherwise charged with. Without in any way limiting the generality of the foregoing, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to any Noteholder, without incurring responsibility to any Noteholder and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the Noteholders to the holders of Senior Indebtedness, do any one or more of the following:
(a) rescind, amend, waive, supplement or otherwise modify in any
manner any Senior Loan Document; PROVIDED, HOWEVER, that any such
modification of such Senior Loan Document without the consent of the
Noteholders, if required pursuant to SECTION 6.2.8, shall nevertheless
constitute a breach by the Company of the covenants contained herein, and
the Noteholders shall not in any way be deemed by the provisions of this
Section to have limited or waived any of their rights and remedies against
any Person (other than the holders of any Senior Indebtedness) under this
Agreement with respect to such SECTION 6.2.8;
(b) exercise or refrain from exercising its rights to, foreclose upon, seize, sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness;
(c) release any Person liable in any manner for the collection of Senior Indebtedness; and
(d) exercise or refrain from exercising any rights, remedies, powers or privileges against any Obligor and any other Person, whether under the Senior Loan Documents, Applicable Law or otherwise, including any waiver, consent, extension, indulgence or other action or inaction in respect of any thereof.
SECTION 8.6. PROVING, ETC. CLAIMS. If the Representative Noteholder or Noteholders have not filed, proved or voted, as the case may be, in any proceeding involving the Consolidated Estate, the Senior Agent, upon 15 days prior written notice to the Representative Noteholder (and unless the Representative Noteholder or Noteholders do file, prove or vote, as the case may be during such period), may so file, prove or vote, as the case may be, in the name of the Noteholders or otherwise, with respect to any and all claims of the Noteholders relating to the Obligations of any Obligor.
SECTION 8.7. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon any payment or distribution of assets of the Consolidated Estate referred to in this Article, the Noteholders shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending and giving effect (and stating in such order or decree that effect has been given) to this Article, or a certificate so stating of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution, delivered to the Noteholders, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other Indebtedness of such Obligor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 8.8. AMENDMENT OF SUBORDINATION, ETC. PROVISIONS. The subordination, postponement, standstill and other provisions contained in this Article are for the benefit of the holders of Senior Indebtedness and may not be rescinded, cancelled, amended or modified in any way without the prior written consent thereto of the Required Lenders under (and as defined in) the Senior Loan Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement and of each other Purchase Document may from time to time be amended, waived or otherwise modified, if such amendment, waiver or modification is in writing and consented to by the Company and the Required Noteholders; PROVIDED, HOWEVER, that no such amendment, waiver or modification:
(a) which would modify any requirement hereunder that any particular action be taken by each Noteholder or by the Required Noteholders shall be effective unless consented to by each Noteholder;
(b) which would modify this Section or change the definition of "Required Noteholders" or which would extend the due date for, or reduce the amount of, any payment or prepayment of principal of or interest on any Note (or reduce the rate of interest on any Note) shall be made without the consent of the holder of such Note; PROVIDED, HOWEVER, that, with the consent of the Required Noteholders, the Company may, make on any (but not more than two) Interest Payment Date payment of all accrued interest then due on each Note by delivering to the holder thereof, IN LIEU of cash, a PIK Note; or
(c) which would amend the subordination provisions of ARTICLE VIII shall be effective unless made in accordance with SECTION 8.8.
No failure or delay on the part of any Noteholder or the Representative Noteholder in exercising any power or right under this Agreement or any other Purchase Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on any Obligor in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by any Noteholder, the Representative Noteholder under this Agreement or any other Purchase Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 9.2. NOTICES. All notices and other communications provided to any party hereto under this Agreement or any other Purchase Document shall be in writing and addressed or delivered to it at its address set forth below its signature hereto or at such other address as may be designated by such party in a notice to the other parties. Any notice, if sent by mail or courier and properly addressed and prepaid, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when transmitted and electronically confirmed.
SECTION 9.3. COSTS AND EXPENSES. The Company agrees to pay all expenses of the Purchaser or Representative Noteholder (including reasonable fees and expenses of counsel) for the negotiation, preparation, execution and delivery of the JZEP Commitment Letter, this Agreement, including Schedules and Exhibits hereto, each other Purchase Document and any Subject Security and any amendments, waivers, consents, supplements or other modifications as may from time to time hereafter be required, whether or not the Transaction is consummated, and to pay all expenses of the Purchaser or Representative Noteholder (including reasonable fees and expenses of counsel) incurred from time to time after the Closing Date in connection with the administration hereof and thereof, the consideration of legal questions relevant hereto and thereto or the enforcement or preservation of rights as to, or restructuring or "work-out" of, any Obligations or the rights and preferences of any Subject Security. The Company also agrees to reimburse each Noteholder upon demand for all reasonable out-of-pocket expenses (including reasonable attorneys' fees and legal expenses) incurred by such Noteholder to enforce or to preserve rights as to, or to restructure or "work out", any Obligations.
SECTION 9.4. INDEMNIFICATION. In consideration of the execution and delivery of this Agreement by the Purchaser, the Company hereby indemnifies, exonerates and holds the Purchaser, the Representative Noteholder and each other Noteholder and each of their respective officers, directors, employees, trustees and agents (the "INDEMNIFIED PARTIES") free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages and expenses actually incurred in connection therewith (irrespective of whether such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (the "INDEMNIFIED LIABILITIES"), incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Note,
(b) the entering into and performance of this Agreement and any other Purchase Document by any of the Indemnified Parties (including any action brought by or on behalf of the Company as the result of any determination by the Purchaser pursuant to ARTICLE III to not purchase the Subject Securities), or
(c) any investigation, litigation or proceeding related to the Transaction,
EXCLUDING, HOWEVER, any such Indemnified Liabilities arising for the account of a particular Indemnified Party by reason of the relevant Indemnified Party's gross negligence or willful misconduct. If, and to the extent that, the foregoing undertaking may be unenforceable for any reason, the Company hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under Applicable Law.
SECTION 9.5. SURVIVAL. The obligations of the Company under CLAUSES (b) and
(c) of SECTION 6.1 and CLAUSE (b) of SECTION 6.2 shall survive the payment in
full of all Obligations and the termination of any other provisions of this
Agreement or any other Purchase Document and shall continue for the benefit of
the Purchaser for so long as it shall hold any of the relevant Subject
Securities. The obligations of the Company UNDER SECTION 9.4 shall remain in
full force and effect, regardless of any investigation made by or on behalf of
any Indemnified Party, and the obligations of the Company under SECTIONS 9.3 and
9.4 shall survive the payment or prepayment of the Notes, at maturity, upon
redemption or otherwise, any transfer of the Notes by the Purchaser, and any
termination of this Agreement and the other Purchase Documents. The
representations and warranties made by the Company and any Obligor in this
Agreement and in each other Purchase Document shall survive the execution and
delivery of this Agreement and each such other Purchase Document.
SECTION 9.6. SEVERABILITY. Any provision of this Agreement or any other Purchase Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Purchase Document or affecting the validity or enforceability of such provision in any other jurisdiction.
SECTION 9.7. HEADINGS. The various headings of this Agreement and of each other Purchase Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such Purchase Document or any provisions hereof or thereof.
SECTION 9.8. COUNTERPARTS. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be executed by the Company and the Purchaser and be deemed to be an original and all of which shall constitute together but one and the same agreement.
SECTION 9.9. GOVERNING LAW; ENTIRE AGREEMENT. This Agreement, the Notes and each other Purchase Document shall each be deemed to be a contract made under and governed by the internal laws of the State of New York. This Agreement, the Notes, the other Purchase Documents and the SHI Stockholders' Agreement constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto, including the JZEP Commitment Letter.
SECTION 9.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; PROVIDED, HOWEVER, that:
(a) the Company may not assign or transfer its rights or obligations hereunder without the prior written consent of all Noteholders; and
(b) the rights of sale, assignment, and transfer of the Notes are subject to SECTIONS 2.4 and 4.7.
All Noteholders may rely upon all certificates, opinions and other writings delivered to the Purchaser as the Representative Noteholder pursuant to ARTICLE III.
SECTION 9.11. JURISDICTION. For purpose of any action or proceeding involving this Agreement or any other Purchase Document, the Company hereby expressly submits to the jurisdiction of all Federal and State Courts located in the City of New York, State of New York and consents that it may be served with any process or paper by registered mail or by personal service within or without the State of New York, provided a reasonable time for appearance is allowed.
SECTION 9.12. WAIVER OF JURY TRIAL. THE PURCHASER AND THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER PURCHASE DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE PURCHASER OR THE COMPANY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.
SAFETY HOLDINGS, INC.
By /s/A. Richard Caputo, Jr.
-----------------------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
|
Address: c/o The Jordan Company
767 Fifth Avenue
New York, New York 10153
Facsimile: 212-755-5263
Attention: A. Richard Caputo, Jr.
|
JZ EQUITY PARTNERS PLC
By /s/David W. Zalaznick
-----------------------------------------------
Name: David W. Zalaznick
Title: Authorized Signatory
|
Notices: c/o Jordan/Zalaznick Advisers, Inc.
767 Fifth Avenue
New York, New York 10153
Facsimile: 212-980-4280
Attention: Ms. Melissa A. Chuilli
Copy to: Jay Parry Monge, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
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Payments to: For investment and return on investment:
Account No.: 134-038-398
(JZEP Capital Account)
For interest, dividends and other payments:
Account No.: 134-038-401
(JZEP Income Account)
HSBC Bank USA
(ABA No. 021-001-088)
452 Fifth Avenue - 26th Floor
New York, New York 10018
Confirmation to: Ms. Melissa A. Chuilli
c/o Jordan/Zalaznick Advisers, Inc.
Telephone No.: 212-572-0826
212-572-0800 (Main)
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EXHIBIT 10.4
SAFETY HOLDINGS, INC.
MANAGEMENT SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of October 16, 2001 (this "AGREEMENT"), is made by and among Safety Holdings, Inc., a Delaware corporation (the "COMPANY"), whose address is c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, and the persons and entities whose names are set forth at the end of this Agreement (collectively the "STOCKHOLDERS").
1. STOCK SUBSCRIPTIONS.
(a) Each Stockholder (i) subscribes for the number of shares set
forth opposite such Stockholder's name in EXHIBIT 1 hereto of the Common Stock,
par value $.01 per share (the "COMMON STOCK"), at a purchase price of $10.00 per
share, (ii) tenders in consideration of the subscription for such Common Stock a
Promissory Note executed and delivered by the Stockholder in favor of the
Company in substantially the form of EXHIBIT 2 attached hereto (the "NOTES") and
in an initial principal amount set forth in EXHIBIT 1 hereto, and (iii) agrees
to enter into a Stock Pledge Agreement in favor of the Company in substantially
the form of EXHIBIT 3 attached hereto (the "PLEDGE AGREEMENTS") in order to
secure the payment of amounts due under the Notes. Each of the Stockholders, in
order to facilitate the transactions contemplated by this Agreement, authorizes
and appoints the Company or any of its representatives to direct the transfer of
the subscription consideration from any account which such amounts may be paid
into for the benefit of such Stockholder to any account established for the
benefit of the Company or any of its subsidiaries. For purposes of this
Agreement, the Common Stock and the Restricted Shares (as defined in SECTION
1(b)) are collectively referred to as the "SECURITIES").
(b) The Company pursuant to the Restricted Stock Plan (as defined in
SECTION 2(b)) hereof may grant to certain executives shares of Common Stock (the
"RESTRICTED SHARES"). Such Restricted Shares shall vest as set forth in the
Restricted Stock Plan.
(c) Each Stockholder acknowledges to the Company and the other Stockholders that such Stockholder understands and agrees, as follows:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SECURITIES ARE VERY SPECULATIVE AND RISKY. THERE IS NO PUBLIC OR OTHER MARKET FOR THE SECURITIES NOR IS ANY LIKELY TO DEVELOP. THE COMPANY AND ITS SUBSIDIARIES HAVE BORROWED A SUBSTANTIAL PORTION OF THE FUNDS USED TO OPERATE ITS BUSINESS. EACH STOCKHOLDER ACKNOWLEDGES THAT SUCH STOCKHOLDER MAY AND CAN AFFORD TO LOSE SUCH STOCKHOLDER'S ENTIRE INVESTMENT AND THAT SUCH STOCKHOLDER UNDERSTANDS SUCH STOCKHOLDER MAY HAVE TO HOLD THIS INVESTMENT INDEFINITELY.
2. PROPOSED TRANSACTIONS.
(a) This Agreement references certain pertinent documents as well as applicable laws and regulations. Each Stockholder acknowledges to the Company and the other
Stockholders that such references are not summaries or complete and are qualified in their entirety by the complete texts of the documents, laws and regulations so summarized.
(b) Each Stockholder acknowledges to the Company and the other Stockholders that such Stockholder has had access to and has had ample opportunity to review and understand each of the following documents:
(i) Restated Certificate of Incorporation of the Company;
(ii) By-laws of the Company;
(iii) Merger Agreement, dated as of May 31, 2001, by and among the Company and the other parties signatory thereto, including all exhibits and schedules thereto;
(iv) Stockholders Agreement, including all exhibits and schedules thereto;
(v) Notes, including all exhibits and schedules thereto;
(vi) Pledge Agreements, including all exhibits and schedules thereto;
(vii) Jordan Investors Subscription Agreement, dated as of the date hereof, by and among the Company and the stockholders named therein, including all exhibits and schedules thereto;
(viii) Management Consulting Agreement, dated as of the date hereof, by and among the Company and TJC Management Corp. ("TJC MANAGEMENT"), including all exhibits and schedules thereto (the "MANAGEMENT CONSULTING AGREEMENT");
(ix) Revolving Credit and Term Loan Agreement, dated as of the date hereof (the "CREDIT AGREEMENT"), among Thomas Black Corporation, Fleet National Bank ("FLEET"), the other lenders party thereto, and Fleet, as agent for itself and such other lenders, including all exhibits and schedules thereto;
(x) Purchase Agreement, dated as of the date hereof (the "PURCHASE AGREEMENT"), by and among the Company and JZ Equity Partners PLC ("JZEP");
(xi) 2001 Restricted Stock Plan (the "RESTRICTED STOCK PLAN"), substantially in the form of EXHIBIT 4 attached hereto, adopted by the Board of Directors of the Company, including all exhibits and schedules thereto; and
(xii) This Agreement and all exhibits and schedules hereto.
The documents referred to in (i) through (xii) are hereinafter collectively referred to as the "OPERATIVE DOCUMENTS", except that, for purposes of SECTION 10(g) only, this Agreement will not be considered an Operative Document.
3. STOCKHOLDER REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Stockholder represents, warrants and covenants to the Company and each other Stockholder that:
(a) Such Stockholder has the legal capacity, power and authority to enter into and perform all of its obligations under this Agreement. The execution, delivery and performance of this Agreement by such Stockholder will not violate any other agreement to which such Stockholder is a party including, without limitation, any voting agreement, stockholders agreement or voting trust, other than the Stockholders Agreement. This Agreement has been duly and validly authorized, executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and (ii) is subject to general principles of equity.
(b) Such Stockholder is employed in a managerial or executive position with the Company's subsidiaries and is familiar with the Company's and its subsidiaries' operations, financial condition and business prospects.
(c) Such Stockholder (i) will not transfer any Securities if such transfer would result in a default by the Company or its subsidiaries under any of the provisions of the Operative Documents, (ii) except as required by the Operative Documents, grant any proxies, deposit any Securities into a voting trust or enter into a voting agreement with respect to any Securities, or (iii) take any action that would make any representation or warranty of such Stockholder contained herein untrue or incorrect or have the effect of preventing or disabling such Stockholder from performing his obligations under this Agreement or any of the Operative Documents, or would result in a default by the Company or its subsidiaries under the provisions of this Agreement or any of the Operative Documents. Each Stockholder further agrees that such Stockholder's ability to transfer Securities is subject to the limitations, restrictions and conditions of the Stockholder Agreement and the other Operative Documents.
(d) Such Stockholder will complete, execute and file a form of election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with the Internal Revenue Service within thirty (30) days of the execution of this Agreement and the purchase of the Securities.
(e) Such Stockholder has no pending or threatened claim, complaint, action, suit, proceeding, hearing or investigation against the Company or its subsidiaries for any period prior to the date hereof, nor does said Stockholder intend to bring or file any claim, complaint, action, suit, proceeding, hearing or investigation against the Company or its subsidiaries for any period prior to the date hereof.
(f) The Company has afforded such Stockholder and such Stockholder's advisors, if any, the opportunity to discuss an investment in the Securities and to ask questions of representatives of the Company concerning the terms and conditions of the offering of the Securities and the Operative Documents, and such representatives have provided answers to all such questions concerning the offering of the Securities and the Operative Documents. Such Stockholder has consulted its own financial, tax, accounting and legal advisors, if any, as to such
Stockholder's investment in the Securities and with the Operative Documents and the consequences thereof and risks associated therewith. Such Stockholder and such Stockholder's advisors, if any, have examined or have had the opportunity to examine before the date hereof the Operative Documents and all information that such Stockholder deems to be material to an understanding of the Company and its subsidiaries, the proposed business of the Company and its subsidiaries, and the offering of the Securities. Such Stockholder also acknowledges that to such Stockholder's knowledge there have been no general or public solicitations or advertisements or other broadly disseminated disclosures (including, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or internet, or any seminar or meeting whose attendees have been invited by any general solicitation or advertising) by or on behalf of the Company regarding an investment in the Securities.
4. RISK FACTORS. Each Stockholder acknowledges to the Company and the other Stockholders that:
(a) (i) such Stockholder knows and understands that the Company's
subsidiaries are the Company's only material assets, and that the Company and
certain of its subsidiaries have borrowed a substantial portion of the funds
used to effect the purchase by the Company of the shares listed in the Merger
Agreement; (ii) it is unlikely that dividends will be paid on the Securities;
(iii) there is no legal requirement or promise made by the Company to declare or
pay such dividends and such dividends may not in any event be paid if such
payment would violate any term of the Operative Documents; (iv) certain of the
Operative Documents severely restrict the ability of the Company to make any
dividend or redemption payments in any case and such payment may be further
restricted by future agreements or instruments binding on the Company or its
subsidiaries; (v) if a Stockholder ceases to be an employee of the Company's
subsidiaries such Stockholder's Securities may be subject to certain rights of
the Company to repurchase such Securities under this Agreement, the Restricted
Stock Plan or the Stockholder's employment agreement with the Company's
subsidiaries; and (vi) under the repurchase payment terms, such Stockholders may
not receive full cash payment in return for the Stockholder's Securities for
several years.
(b) (i) Such Stockholder has pledged, pursuant to the Pledge Agreement, certain of the Securities held by such Stockholder for the benefit of the Company to secure payment of the amounts due under the Note of such Stockholder, if any; and (ii) under the terms of the Pledge Agreements, each Stockholder may forfeit to the Company such Stockholder's pledged Securities upon certain defaults under the Note or Pledge Agreement executed by such Stockholder.
(c) Any financial projections or forecasts with respect to the Company and its subsidiaries are only forecasts prepared by management, which are subject to many assumptions and factors beyond the Company's and its subsidiaries' control, and that there can be no assurances that these forecasts will be realized.
5. SECURITIES LAW AND OTHER MATTERS. Each Stockholder represents and warrants to the Company and the other Stockholders that:
(a) (i) such Stockholder used no "purchaser's representative" (as that term is used in Regulation D as promulgated by the Securities and Exchange Commission) in connection with the transactions contemplated by the Operative Documents; (ii) neither The Jordan Company, LLC ("JORDAN"), nor any of its respective partners, members, principals, directors, officers, representatives, attorneys, agents, employees or affiliates has acted as a representative of said Stockholder in the subject transaction; (iii) such Stockholder has substantial knowledge and experience in financial, investment and business matters, and specifically in the business of the Company and its subsidiaries, and has the requisite knowledge and experience to evaluate the risks and merits of this investment; (iv) the decision of such Stockholder to purchase the Securities hereunder has been made by such Stockholder independent of any other Stockholder and independent of any statements, disclosures or judgments as to the properties, business, prospects or condition (financial or otherwise) of the Company and its subsidiaries which may have been made or given by any Stockholder or other person.
(b) (i) the Securities being purchased by such Stockholder hereunder have not been registered under the Securities Act of 1933, as amended, (the "SECURITIES ACT") on the ground that the sales of Securities pursuant to this Agreement are exempt under Section 4(2) of the Securities Act as not constituting a distribution, and that the Company's reliance on such exemption is predicated in part on each Stockholder's representation which such Stockholder herewith makes that the Securities have been acquired solely by and for the account of such Stockholder for investment purposes only, and are not being purchased for subdivision, fractionalization, resale or distribution and other than as expressly set forth in the Operative Documents, such Stockholder has no contract, undertaking, agreement or arrangement with any other Stockholder to sell, transfer or pledge to such other Stockholder or anyone else the Securities (or any part thereof) which such Stockholder has purchased hereunder, and such Stockholder has no present plans or intentions to enter into any such contract, undertaking, agreement or arrangement; (ii) the Securities being sold to said Stockholder must be held indefinitely unless they are subsequently registered under the Securities Act or a transfer is made pursuant to an exemption from such registration, including, for example, pursuant to Rule 144 thereunder and that except as set forth in the Stockholders Agreement, the Company has no agreements in respect of registering the Securities under Federal or state law; and (iii) such Stockholder's financial condition is such that Stockholder is not under any present necessity or constraint, and does not foresee in the future any necessity or constraint, to dispose of these shares to satisfy any existing or contemplated debt or undertaking.
(c) In the event that in the future the Company engages in any negotiation or transaction (including a merger or consolidation or other reorganization by or of the Company) in which Regulation D promulgated by the Securities and Exchange Commission may or will be available to the Company, each of the Stockholders who is not then a professional investor agrees irrevocably (and with the knowledge and intention that the other holders of the Company's stock of all classes will rely thereon in making their respective present investment decisions) that such Stockholder will, within 5 business days of notice from the Company, which notice may be given in the sole discretion of the Company, appoint a purchaser's representative or representatives who shall be qualified and acceptable to the Company and any other person(s) who is (are) involved in the proposed transaction so that the maximum benefits of Regulation D shall be available to the Company and all of its Stockholders. Any Stockholder who does not
perform this covenant shall be liable to the Company and all of the other Stockholders for any damage or loss that may or might be incurred thereby.
(d) Such Stockholder hereby releases Jordan, JZEP, Jordan/Zalaznick Advisers Inc. and TJC Management and each of their respective partners, members, principals, directors, officers, representatives, attorneys, agents, employees and affiliates from and against any claims in respect of each Stockholder's subscription for the Securities and any related transaction hereunder or under the Operative Documents.
6. LEGEND. All certificates representing shares of Securities shall be endorsed as follows:
"THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A STOCKHOLDERS AGREEMENT, DATED OCTOBER 16, 2001, AMONG THE COMPANY AND ITS STOCKHOLDERS AND SUBSCRIPTION AGREEMENTS, DATED OCTOBER 16, 2001, AMONG THE COMPANY AND CERTAIN INVESTORS THEREIN. REFERENCE ALSO IS MADE TO THE RESTRICTIVE PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE COMPANY. A COPY OF THE ABOVE REFERENCED AGREEMENTS ARE ON FILE AT THE OFFICE OF THE COMPANY, C/O THE JORDAN COMPANY, LLC, 767 FIFTH AVENUE, 48TH FLOOR, NEW YORK, NEW YORK 10153.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT."
Each Stockholder acknowledges to the Company and the other Stockholders that (i) the effect of such legend, among other things, is or may be to limit or destroy the value of the certificate for purposes of sale or for use as loan collateral and that "stop transfer" instructions may be noted against the Securities sold to such Stockholder hereunder; and (ii) any transfere e of such Stockholder is required to become a party to the Stockholders Agreement, dated as of the date hereof, by and among the Company and the Company's stockholders (the "STOCKHOLDERS AGREEMENT") as a condition to acquiring the Securities hereunder.
7. REPURCHASE PROVISIONS.
(a) CALL UPON TERMINATION. If the employment by the Company or its subsidiaries of any Stockholder is terminated at any time then, all or any portion of the Securities owned by such Stockholder and such Stockholder's Permitted Transferees under the Stockholders Agreement may be repurchased by the Company, at the Call Price for the Securities, payable in cash, or, if such cash payment would constitute a violation, breach or default under any agreement relating to the indebtedness of the Company or any of its subsidiaries, in Three Year Junior Notes. The "Call Price" means a price per share determined as of the date of termination of such Stockholder's employment by the Company or its subsidiaries by reference to the table below, on the basis of why such Stockholder's employment was
terminated and how much time has elapsed between the date of this Agreement and the termination of such Stockholder's employment.
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TERMINATION EVENT
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Column I Column II Column III Column IV
---------------------------------------------------------------------------------------------
By the Company or By the Company or its By the Company or By the Stockholder
its subsidiaries or subsidiaries for its subsidiaries voluntarily, due to
the Stockholder Cause, Material for any reason not Retirement, or for
upon death, or Breach or referred to in any reason not
Disability of the Unsatisfactory Columns I and II, referred to in
Stockholder Performance for no reason or by Columns I, II and
the Stockholder for III
Good Reason
Before 1st Fair Market Value Cost Cost Cost
anniversary hereof
On or after 1st Fair Market Value Cost 30% X Adjusted Fair Cost
anniversary, but Market Value + 70%
before second X Cost
anniversary hereof
On or after 2nd Fair Market Value Cost 60% X Adjusted Fair Cost
anniversary, but Market Value + 40%
before 3rd X Cost
anniversary hereof
On or after 3rd Fair Market Value Cost Adjusted Fair Fair Market Value
anniversary hereof Market Value
|
To exercise the foregoing call rights, the Company must notify such
Stockholder of its exercise of such call rights in writing within six months of
the date of termination of such Stockholder. In the event that the termination
of such Stockholder relates to circumstances involving Cause, Material Breach or
Unsatisfactory Performance, then the Company's call rights under SECTION 7(a)
will take precedence over and supersede any Stockholder put rights pursuant to
SECTION 7(b) hereunder.
(b) STOCKHOLDER PUT RIGHTS. If the employment by the Company or its subsidiaries of any Stockholder is terminated at any time, then the Stockholder (or, solely in the case of death, the person or persons to whom such Stockholder's rights with respect to the Securities shall have lawfully passed by will or by applicable law) may, cause the Company to repurchase any or all of the Securities owned by such Stockholder and by all of the Stockholder's Permitted Transferees under the Stockholders Agreement at the Put Price for the Securities, payable in cash, or, if such cash payment would constitute a violation, breach or default under any agreement relating to the indebtedness of the Company or any of its subsidiaries, in Three Year Junior Notes. The "Put Price" means a price per share determined as of the date of termination of such Stockholder's employment by the Company or its subsidiaries by reference
to the table below, on the basis of why such Stockholder's employment was terminated and how much time has elapsed between the date of this Agreement and the date of the termination of such Stockholder's employment.
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TERMINATION EVENT
--------------------------------------------------------------------------------------------------------------------
Column I Column II Column III Column IV
-----------------------------------------------------------------------------------------------
By the Company or its By the Company or its By the Company or its By the Stockholder
subsidiaries or by subsidiaries for subsidiaries due to voluntarily, due to
the Stockholder upon Cause, Material any reason not Retirement, for any
death, or Disability Breach or referred to in Column reason not referred
of the Stockholder Unsatisfactory I other than for to in Columns I and
Performance Cause, Material III or for no reason
Breach or and the Company or
Unsatisfactory its subsidiaries
Performance or by the would not otherwise
Stockholder for Good have a right to
Reason terminate the
Stockholder's
employment for Cause,
Material Breach or
Unsatisfactory
Performance
Before 1st Fair Market Value Cost Cost Cost
anniversary hereof
On or after 1st Fair Market Value Cost 30% x Adjusted Fair Cost
anniversary, but Market Value + 70% x
before second Cost
anniversary hereof
On or after 2nd Fair Market Value Cost 60% X Adjusted Fair Cost
anniversary, but Market Value + 40% X
before 3rd Cost
anniversary hereof
On or after 3rd Fair Market Value Cost Adjusted Fair Market Fair Market Value
anniversary hereof Value
|
To exercise the foregoing put rights, the Stockholder or such persons who may exercise the put must notify the Company of its or their exercise of such put rights within six months following termination. In the event that the termination of the Stockholder relates to circumstances involving Cause, Material Breach or Unsatisfactory Performance, then the Company's call rights under SECTION 7(a) will take precedence over and supersede any Stockholder put rights hereunder.
(c) PAYMENT OF NOTES; RIGHT OF SET-OFF. The Company, in addition to any other rights or remedies available to the Company, shall be entitled to set-off and reduce any amounts payable to a Stockholder upon the repurchase of Securities pursuant to this SECTION 7 for (i) any obligations or liabilities of such Stockholder to the Company or its subsidiaries or (ii) any claims by the Company against such Stockholder under this Agreement or any other agreement, written or oral, between the Company and such Stockholder, in each case, after such obligation, liability or claim becomes a final decision of a court of competent jurisdiction which is not subject to appeal.
(d) EXPIRATION OF REPURCHASE OPTION. If the repurchase call rights set forth in SECTIONS 7(a) or the repurchase put rights set forth in SECTIONS 7(b) are not exercised within six months of termination of employment of a Stockholder, such call rights and put rights will expire. This SECTION 7 shall terminate upon (i) the effectiveness of an initial bona fide, firm commitment underwritten public offering of any shares of Securities for which the aggregate purchase price of the Securities sold is in excess of $25 million or (ii) the consummation of a Change of Control.
(e) RESTRICTIONS ON PAYMENTS BY THE COMPANY. Notwithstanding anything
to the contrary contained in this Agreement, all repurchases pursuant to this
SECTION 7, including issuances of and payments by the Company on, the Three Year
Junior Notes, shall be subject to (i) applicable restrictions contained in any
applicable law, (ii) restrictions contained in the Company's and its
subsidiaries' debt and equity financing agreements, including the Credit
Agreement, as amended and in effect from time to time, and any Senior
Indebtedness (as defined in the Three Year Junior Notes) and (iii) the
availability of cash to make any lump sum cash payments. If any such
restrictions or unavailability prohibit the repurchase of Securities or other
capital stock of the Company hereunder which the Company is otherwise entitled
or required to make, the Company may make such repurchases as soon as it is
permitted to do so under such restrictions.
(f) In the event the Company makes payments in cash pursuant to the provisions of SECTION 7, such payments will be made within 90 days of the date of the put or call, as the case may be. In the event that the Company makes payments in Three Year Junior Notes, such notes will be executed and delivered within 90 days of the date of the put or call, as the case may be.
8. NON-COMPETITION/NON-DISCLOSURE PROVISIONS.
(a) NON-COMPETITION. In consideration of this Agreement, each Stockholder covenants and agrees that during the Restricted Period, if requested by the Company in writing, such Stockholder shall not, without the express written approval of the Board of Directors of the Company, directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, whether as a proprietor, partner, stockholder, member, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, member, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, any business which competes, directly or indirectly, with the Business in the Market ("COMPETITIVE BUSINESS") without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the activities of the Stockholder referred to above occur or are performed within or without the Market or (C) whether the Stockholder resides, or reports to an office, within or without the Market; PROVIDED, HOWEVER, that (x) the Stockholder may, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) such Stockholder may accept employment with a successor company to the Company.
(b) In consideration of this Agreement, each Stockholder covenants and agrees that during the period such Stockholder is an officer, director or employee of the Company or its subsidiaries and for the Restricted Period, such Stockholder shall not (A) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, member, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, agent, representative or any other person which has a business relationship with the Company or its subsidiaries or had a business relationship with the Company or its subsidiaries within the twenty-four (24) month period preceding the date of the incident in question, to discontinue, reduce or modify such employment, agency or business relationship with the Company or its subsidiaries, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within six (6) months prior to the date such Stockholder or the Competitive Business employs or seeks to employ such person) employed or retained by the Company or its subsidiaries. Notwithstanding the foregoing, nothing herein shall prevent such Stockholder from providing a letter of recommendation to an employee with respect to a future employment opportunity.
(c) NON-DISCLOSURE. Each Stockholder further agrees that such Stockholder will not, directly or indirectly in one or a series of transactions disclose to any person or use or otherwise exploit for such Stockholder's own benefit or for the benefit of anyone other than the Company or its subsidiaries any Confidential Information (as defined below) whether prepared by such Stockholder or not provided, however, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Company or its subsidiaries who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business. Each Stockholder shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Company or its subsidiaries, except as required in his normal course of employment by the Company or its subsidiaries. Each Stockholder shall use such Stockholder's commercially reasonable efforts to cause all persons or entities to whom Confidential Information shall be disclosed by such Stockholder hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Each Stockholder shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure of any thereof is specifically required by law; PROVIDED, HOWEVER, that in the event disclosure is required by applicable law, such Stockholder shall provide the Company with prompt notice of such requirement, prior to making any disclosure, so that the Company may seek an appropriate protective order. At the request of the Company, each Stockholder agrees to deliver to the Company all Confidential Information which such Stockholder may possess or control. Each Stockholder agrees that all Confidential Information of the Company and its subsidiaries (whether now or hereafter existing) conceived, discovered or made by him during his employment with the Company or its subsidiaries exclusively belongs to the Company and its subsidiaries (and not to such Stockholder). Each Stockholder will promptly disclose such Confidential Information to the Company and its subsidiaries and perform all actions reasonably requested by the Company and its subsidiaries to establish and confirm such exclusive ownership. As used herein, the term "Confidential Information" means any confidential information including, without limitation, any study, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service name, "know-how", trade secrets, customer lists, details of client or
consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, formulas, improvements or other proprietary or intellectual property of the Company or its subsidiaries, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans, reports, records, documents and other evidence thereof. The term "CONFIDENTIAL INFORMATION" does not include, and there shall be no obligation hereunder with respect to, information that becomes generally available to the public other than as a result of a disclosure by such Stockholder not permissible hereunder.
(d) NON-DISPARAGEMENT. During and after each Stockholder's employment with the Company or its subsidiaries, each Stockholder agrees that he shall not make any false, defamatory or disparaging statements about the Company or its subsidiaries or the officers or directors of the Company or its subsidiaries. During and after each Stockholder's employment with the Company or its subsidiaries, the Company agrees on behalf of itself and its subsidiaries that neither the officers nor the directors of the Company or its subsidiaries shall make any false, defamatory or disparaging statements about such Stockholder.
(e) SPECIFIC PERFORMANCE. All the parties hereto agree that their rights under this SECTION 8 are special and unique and that violation thereof would not be adequately compensated by money damages and each grants the others the right to specifically enforce (including injunctive relief where appropriate) the terms of this Agreement.
9. DEFINITIONS. Capitalized terms used in this Agreement and not otherwise defined shall have the meanings set forth below, unless the context requires otherwise:
(a) "ADJUSTED FAIR MARKET VALUE" means for each share of the Securities, the greater of (A) an amount equal to Cost; or (B) an amount equal to (y) (i) eighty percent (80%) of the Statutory Surplus of Safety Insurance Company as of the end of the Company's prior fiscal quarter LESS (ii) the aggregate amount of all indebtedness or capitalized leases of the Company and its subsidiaries (including, without limitation, the Credit Agreement) immediately prior to the call or put date (including, without limitation, interest accrued but unpaid immediately prior to the call date, all determined in accordance with GAAP LESS (iii) the aggregate amount of the liquidation value of all preferred stock of the Company outstanding immediately prior to the call or put date, including accrued but unpaid dividends, all determined in accordance with GAAP; divided by (z) the aggregate number of shares of Securities issued and outstanding on a fully-diluted basis as of the date the Stockholder's employment with the Company or its subsidiaries is terminated. For this purpose, "FULLY-DILUTED BASIS" shall assume the full exercise of all options, warrants, calls and other similar securities and the full conversion (if dilutive) of all convertible stock, notes or other convertible securities, among other things.
(b) "BUSINESS" means any business conducted by or engaged in by the Company or its subsidiaries, or proposed to be conducted by or engaged in by the Company or its subsidiaries on or prior to the date hereof or at any time while a Stockholder is a stockholder of the Company.
(c) "CAUSE" means any of the following:
(i) a Stockholder's commission or conviction of any crime or criminal offense involving monies or other property, or felony;
(ii) a Stockholder's commission or conviction of fraud or embezzlement;
(iii) a Stockholder's material and knowing violation of any obligations imposed upon such Stockholder, personally, as opposed to upon the Company or its subsidiaries, whether as a stockholder or otherwise, under this Agreement, his employment agreement or the Operative Documents; PROVIDED, that such Stockholder has been given written notice describing any such violation in reasonable detail and fails to cure the violation within 90 days from such notice; or
(iv) a Stockholder engages in egregious misconduct involving serious moral turpitude to the extent that such Stockholder's credibility and reputation no longer conform to the standard of the Company's or its subsidiaries executives.
(d) "CHANGE OF CONTROL" means any of the following: (i) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, of a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing, (ii) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings, or (iii) the closing of any sale by the holders of Common Stock of an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
(e) "COST" means (i) prior to the first anniversary of this Agreement, the initial subscription price per share for the shares of Common Stock at the time of subscription under this Agreement; (ii) on or after the first anniversary, but prior to the second anniversary of this Agreement, a price per share equal to the quotient of (x) $12.75 million divided by (y) the aggregate number of shares of Securities (other than the Restricted Shares) issued and outstanding on a fully-diluted basis as of the date hereof; (iii) on or after the second anniversary, but prior to the third anniversary of this Agreement, a price per share equal to the quotient of (x) $25.50 million divided by (y) the aggregate number of shares of Securities (other than the Restricted Shares) issued and outstanding on a fully-diluted basis as of the date hereof; and (iv) on or after the third anniversary of this Agreement, or (notwithstanding the foregoing subsections (i), (ii), and (iii)) at any time after the initial subscription under this Agreement if the employment of the Stockholder by the Company is terminated upon the death or Disability of the Stockholder, by the Company or its subsidiaries for any reason other than Cause, Material Breach, or Unsatisfactory Performance, or by the Stockholder for Good Reason, a price per share
equal to the quotient of (x) $42.50 million divided by (y) the aggregate number of shares of Securities (other than the Restricted Shares) issued and outstanding on a fully-diluted basis as of the date hereof. For this purpose, "FULLY-DILUTED BASIS" shall assume the full exercise of all options, warrants, calls and other similar securities and the full conversion (if dilutive) of all convertible stock, notes or other convertible securities, among other things. Notwithstanding the foregoing, the "Cost" of the Restricted Shares shall at all times be zero (0).
(f) "DISABILITY" means due to physical or mental disability any Stockholder is unable to perform, and does not perform, such Stockholder's duties as an employee of the Company and its subsidiaries (i) for a continuous period of 180 days or (ii) at such earlier time as such Stockholder submits satisfactory medical evidence that such Stockholder has a physical or mental disability which will likely prevent him from returning to work within 180 days. Determination of Disability shall be made in the reasonable judgment of the Board of Directors. In the event of any inconsistency between the definition of disability herein and the definition of such term in any employment agreement between the Stockholder and the Company then in effect, the definition of such term in such employment agreement shall control for purposes of this Agreement.
(g) "EXECUTIVE MANAGEMENT GROUP" shall mean the management signatories to this Agreement (including by execution of a counterpart to this Agreement) or a restricted stock agreement issued pursuant to the Restricted Stock Plan.
(h) "FAIR MARKET VALUE" means for each share of the Securities, the
greater of (A) an amount equal to Cost; or (B) an amount equal to (y) (i) sixty
percent (60%) of the Statutory Surplus of Safety Insurance Company as of the end
of the Company's prior fiscal quarter LESS (ii) the aggregate amount of all
indebtedness or capitalized leases of the Company and its subsidiaries
(including, without limitation, the Credit Agreement) immediately prior to the
call or put date (including, without limitation, interest accrued but unpaid
immediately prior to the call date, all determined in accordance with GAAP LESS
(iii) the aggregate amount of the liquidation value of all preferred stock of
the Company outstanding immediately prior to the call or put date, including
accrued but unpaid dividends, all determined in accordance with GAAP; divided by
(z) the aggregate number of shares of Securities issued and outstanding on a
fully-diluted basis as of the date the Stockholder's employment with the Company
or its subsidiaries is terminated. For this purpose, "FULLY-DILUTED BASIS" shall
assume the full exercise of all options, warrants, calls and other similar
securities and the full conversion (if dilutive) of all convertible stock, notes
or other convertible securities, among other things.
(i) "GAAP" means the generally accepted accounting principles in the United States of America in effect from time to time, applied on a consistent basis both as to classification of items and amounts.
(j) "GOOD REASON" means as a result of material reduction in Stockholder's perquisites, position or responsibilities (other than such a reduction in perquisites which affects all of the Company's or its subsidiaries' senior executives on a substantially equal or proportionate basis), the relocation of the Company's or its Subsidiaries' primary place of business or the relocation of the Stockholder by the Company or its subsidiaries to another Company or subsidiary office more than 75 miles from Boston, Massachusetts, or the
Company's willful, material violation of its obligations under this Agreement, in each case, after 60 days' prior written notice to the Company and its Board of Directors and the Company's failure thereafter to cure such reduction or violation.
(k) "MARKET" means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted by or engaged in by the Company or its subsidiaries on or prior to the date hereof or is conducted or engaged in, or in which the Company or its subsidiaries is seeking authorization to conduct Business, at any time during the Stockholders employment by the Company or its subsidiaries.
(l) "MATERIAL BREACH" means:
(i) Stockholder's breach of any of such Stockholder's fiduciary duties to the Company, its subsidiaries or its stockholders or making of a willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company or its subsidiaries;
(ii) Stockholder's willful, continual and material neglect or failure to discharge such Stockholder's duties, responsibilities or obligations prescribed by this Agreement or of any other agreement between the Company or its subsidiaries or by the Company (other than arising solely due to physical or mental disability);
(iii) Stockholder's habitual drunkenness or substance abuse which materially interferes with such Stockholder's ability to discharge such Stockholder's duties, responsibilities or obligations prescribed by the Company or its subsidiaries;
(iv) Stockholder's violation of any non-competition, non-disparagement or confidentiality agreement with the Company or its subsidiaries, including without limitation, those set forth in SECTION 8 of this Agreement, or any other agreements with the Company or its subsidiaries; and
(v) Stockholder's gross neglect of such Stockholder's duties and responsibilities, as determined by the Company's Board of Directors;
in each case, for purposes of clauses (i) through (v), after the Company or the Board of Directors has provided such Stockholder with 60 days' written notice of such circumstances and the possibility of a Material Breach in reasonable detail, and such Stockholder fails to cure such circumstances and Material Breach within those 60 days. No act or omission shall be deemed gross neglect if done, or omitted to be done, in good faith by such Stockholder based upon a resolution duly adopted by the Company's Board of Directors.
(m) "RESTRICTED PERIOD" means, with respect to any Stockholder, the Restricted Period under and as defined in such Stockholder's employment agreement with Safety Insurance Company.
(n) "RETIREMENT" shall mean any voluntary termination of employment by a Stockholder for any reason other than Death, Disability, Cause, Material Breach or Unsatisfactory Performance after such Stockholder reaches age 65.
(o) "SALE", "SELL", "TRANSFER" and the like shall include any disposition by way of transfer, with or without consideration, to any person for any purpose and shall include, but shall not be limited in any way to, redemption by the issuer, private or public sale or exchanges of securities or any other similar transaction involving stock.
(p) "STATUTORY SURPLUS" means the surplus as regards policyholders as reflected in the Statutory Financial Statements of Safety Insurance Company, Inc.
(q) "THREE YEAR JUNIOR NOTES" means a promissory note of the Company in the form attached hereto as EXHIBIT 5.
(r) "UNSATISFACTORY PERFORMANCE" means a Stockholder's failure to perform Stockholder's duties to the standards set by the Board of Directors (such determination to be made in the good faith by the Board of Directors); PROVIDED, that Stockholder has been given notice and 30 days from such notice fails to cure such unsatisfactory performance.
10. MISCELLANEOUS.
(a) Subject to the conditions of transfer of Securities hereunder and in the Stockholders Agreement, this Agreement shall be binding upon and shall inure to the benefit of each individual Stockholder and such Stockholder's respective heirs, executors, administrators, assigns and legal representatives and to the Company and its respective successors and assigns, by way of merger, consolidation or operation of law or otherwise. Once a Stockholder is no longer a stockholder of the Company all rights and benefits (but not the obligations) previously enjoyed by such party pursuant to the terms of this Agreement shall automatically terminate with respect to such party.
(b) Prior to consummation of any transfer of Securities held by a Stockholder permitted under the Stockholders Agreement, except for transfers pursuant to a public offering, such party shall cause the transferee to execute an agreement in which the transferee agrees to be bound by the terms of this Agreement and the Stockholders Agreement.
(c) Each Stockholder acknowledges that the Company may purchase, at its sole expense, a life insurance policy, the proceeds of which will be used to purchase Stockholder's Securities in the event of Stockholder's death and each Stockholder hereby agrees to cooperate with the Company in obtaining such insurance.
(d) Nothing in this Agreement shall constitute an agreement by, or shall impose any obligation upon, the Company or its subsidiaries to employ, or to continue to employ, any Stockholder, or shall constitute an agreement by, or shall impose any obligation upon, the Company or its subsidiaries with respect to the terms and conditions of employment of any Stockholder, and will not limit or restrict, in any manner, the Company's or its subsidiaries' right or ability to terminate any Stockholder.
(e) The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person.
(f) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. EACH OF THE
PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS
AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE
MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO
SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES
THAT JURISDICTION AND VENUE MAY BE IN THE SOUTHERN DISTRICT OF NEW YORK AND
WAIVES ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. EACH PARTY WAIVES
PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING
AN ACTION OR PROCEEDING SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE PARTY AT THE
ADDRESS SET FORTH IN THIS AGREEMENT, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE
STATE OF DELAWARE OR THE UNITED STATES. THE CHOICE OF FORUM SET FORTH IN THIS
SECTION 11(g) SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
(g) Each of the Stockholders agrees and acknowledges that the Operative Documents and any other agreement or instrument that may restrict the ability of the Company to make any dividend or redemption payments may be created, amended, modified or supplemented, from time to time, and may be refinanced, extended or substituted, from time to time, without notice to, or the consent or approval of, the Stockholders.
(h) All personal pronouns used in this Agreement, whether used in masculine, feminine or neuter gender, shall include all other genders if the context so requires; the singular shall include the plural, and vice versa.
(i) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. If the requirements of this Agreement have otherwise been met, new Stockholders may become parties to this Agreement by executing a counterpart to this Agreement at which time the Company shall revise the Exhibits as may be necessary or appropriate.
(j) In case any one or more of the provisions or parts of a provision contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid or illegal or
unenforceable provision or part of a provision had never been contained herein and such provision or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction.
(k) This Agreement constitutes the entire agreement by and among the parties with respect to the subject matter hereof and may not be modified orally, but only by a writing subscribed by the party charged therewith.
(l) Each of the parties hereto agrees to execute all such further instruments and documents and to take all such further action as are necessary to effectuate the terms and purposes of this Agreement.
(m) Whenever notice is required to be given by any party hereunder, such notice shall be deemed sufficient when delivered to the Company at its address above and to each of the other Stockholders at such Stockholder's address below or to such other address as the Stockholder shall have furnished to the Company.
(n) Each party shall be entitled to rely conclusively upon any notice received, or the failure to receive any notice, from any other party with respect to rights and obligations under this Agreement.
11. RECEIPT OF STOCK CERTIFICATES.
Each Stockholder herewith acknowledges receipt of the certificate(s) evidencing the Securities purchased by Stockholder.
IN WITNESS WHEREOF, each of the undersigned has signed this Agreement as of the date first above written.
SAFETY HOLDINGS, INC.
By: /s/A. Richard Caputo, Jr.
----------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
|
MANAGEMENT STOCKHOLDERS:
/s/David F. Brussard --------------------------------------- David F. Brussard /s/Edward J. Patrick, Jr. --------------------------------------- Edward J. Patrick, Jr. /s/William J. Begley, Jr. --------------------------------------- William J. Begley, Jr. /s/Daniel F. Crimmins --------------------------------------- Daniel F. Crimmins /s/Robert J. Kerton --------------------------------------- Robert J. Kerton /s/David E. Krupa --------------------------------------- David E. Krupa /s/Daniel D. Loranger --------------------------------------- Daniel D. Loranger |
EXHIBIT 10.5
SAFETY HOLDINGS, INC.
JORDAN INVESTORS SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of October 16, 2001 (this "AGREEMENT"), is made by and among Safety Holdings, Inc., a Delaware corporation (the "COMPANY"), whose address is c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, and the persons and entities whose names are set forth at the end of this Agreement (collectively the "STOCKHOLDERS").
1. STOCK SUBSCRIPTIONS.
(a) Each Stockholder herewith subscribes for the number of shares set forth opposite such Stockholder's name in EXHIBIT 1 hereto of the Common Stock, par value $.01 per share (the "COMMON STOCK"), at a purchase price of $10.00 per share and tenders cash in consideration of the subscription for such Common Stock.
(b) Each Stockholder acknowledges to the Company and the other Stockholders that such Stockholder understands and agrees, as follows:
THE COMMON STOCK HAS NOT BEEN REGISTERED UNDER FEDERAL OR STATE SECURITIES LAWS. THE COMMON STOCK IS VERY SPECULATIVE AND RISKY. THERE IS NO PUBLIC OR OTHER MARKET FOR THE COMMON STOCK NOR IS ANY LIKELY TO DEVELOP. THE COMPANY AND ITS SUBSIDIARIES HAVE BORROWED A SUBSTANTIAL PORTION OF THE FUNDS USED TO OPERATE ITS BUSINESS. EACH STOCKHOLDER ACKNOWLEDGES THAT SUCH STOCKHOLDER MAY AND CAN AFFORD TO LOSE SUCH STOCKHOLDER'S ENTIRE INVESTMENT AND THAT SUCH STOCKHOLDER UNDERSTANDS SUCH STOCKHOLDER MAY HAVE TO HOLD THIS INVESTMENT INDEFINITELY.
2. PROPOSED TRANSACTIONS.
(a) This Agreement references certain pertinent documents as well as applicable laws and regulations. Each Stockholder acknowledges to the Company and the other Stockholders that such references are not summaries or complete and are qualified in their entirety by the complete texts of the documents, laws and regulations so summarized.
(b) Each Stockholder acknowledges to the Company and the other Stockholders that such Stockholder has had access to and has had ample opportunity to review and understand each of the following documents:
(i) Restated Certificate of Incorporation of the Company.
(ii) By-laws of the Company.
(iii) Merger Agreement, dated as of May 31, 2001, by and among the Company and the other parties signatory thereto, including all exhibits and schedules thereto.
(iv) Amendment No. 1 to the Merger Agreement, dated as of July 17, 2001, by and among the Company and the other parties signatory thereto.
(v) Stockholders Agreement, including all exhibits and schedules thereto.
(vi) Management Subscription Agreement, dated as of the date hereof, by and among the Company and the management stockholders named therein, including all exhibits and schedules thereto.
(vii) Management Consulting Agreement, dated as of the date hereof, by and among the Company and TJC Management Corp. ("TJC MANAGEMENT", including all exhibits and schedules thereto (the "MANAGEMENT CONSULTING AGREEMENT").
(viii) Revolving Credit and Term Loan Agreement, dated as of the date hereof (the "CREDIT AGREEMENT"), among Thomas Black Corporation, Fleet National Bank ("FLEET"), the other lenders party thereto, and Fleet, as agent for itself and such other lenders, including all exhibits and schedules thereto.
(ix) Purchase Agreement, dated as of the date hereof (the "PURCHASE AGREEMENT"), by and among the Company and JZ Equity Partners PLC ("JZEP"). pursuant to which JZEP will purchase $30 million of the Company's 13.00% Subordinated Notes.
(x) This Agreement and all exhibits and schedules hereto.
The documents referred to in (i) through (x) are hereinafter collectively referred to as the "OPERATIVE DOCUMENTS", except that, for purposes of SECTION 7(e) only, this Agreement will not be considered an Operative Document.
3. STOCKHOLDER REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Stockholder represents, warrants and covenants to the Company and each other Stockholder that:
(a) Such Stockholder has the legal capacity, power and authority to enter into and perform all of its obligations under this Agreement. The execution, delivery and performance of this Agreement by such Stockholder will not violate any other agreement to which such Stockholder is a party including, without limitation, any voting agreement, stockholders agreement or voting trust, other than the Stockholders Agreement. This Agreement has been duly and validly authorized, executed and delivered by such Stockholder and constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of creditors' rights generally and (ii) is subject to general principles of equity.
(b) Such Stockholder (i) will not transfer any Common Stock if such
transfer would result in a default by the Company or its subsidiaries under any
of the provisions of the Operative Documents, (ii) except as required by the
Operative Documents, grant any proxies, deposit any Common Stock into a voting
trust or enter into a voting agreement with respect to any Common Stock, or
(iii) take any action that would make any representation or warranty of
such Stockholder contained herein untrue or incorrect or have the effect of preventing or disabling such Stockholder from performing his obligations under this Agreement or any of the Operative Documents, or would result in a default by the Company or its subsidiaries under the provisions of this Agreement or any of the Operative Documents. Each Stockholder further agrees that such Stockholder's ability to transfer Common Stock is subject to the limitations, restrictions and conditions of the Stockholder Agreement and the other Operative Documents.
(c) Such Stockholder has no pending or threatened claim, complaint, action, suit, proceeding, hearing or investigation against the Company or its subsidiaries for any period prior to the date hereof, nor does said Stockholder intend to bring or file any claim, complaint, action, suit, proceeding, hearing or investigation against the Company or its subsidiaries for any period prior to the date hereof.
(d) The Company has afforded such Stockholder and such Stockholder's advisors, if any, the opportunity to discuss an investment in the Common Stock and to ask questions of representatives of the Company concerning the terms and conditions of the offering of the Common Stock and the Operative Documents, and such representatives have provided answers to all such questions concerning the offering of the Common Stock and the Operative Documents. Such Stockholder has consulted its own financial, tax, accounting and legal advisors, if any, as to such Stockholder's investment in the Common Stock and with the Operative Documents and the consequences thereof and risks associated therewith. Such Stockholder and such Stockholder's advisors, if any, have examined or have had the opportunity to examine before the date hereof the Operative Documents and all information that such Stockholder deems to be material to an understanding of the Company and its subsidiaries, the proposed business of the Company and its subsidiaries, and the offering of the Common Stock. Such Stockholder also acknowledges that to such Stockholder's knowledge there have been no general or public solicitations or advertisements or other broadly disseminated disclosures (including, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television, radio or internet, or any seminar or meeting whose attendees have been invited by any general solicitation or advertising) by or on behalf of the Company regarding an investment in the Common Stock.
4. RISK FACTORS. Each Stockholder acknowledges to the Company and the other Stockholders that:
(a) (i) such Stockholder knows and understands that the Company's
subsidiaries are the Company's only material assets, and that the Company and
certain of its subsidiaries have borrowed a substantial portion of the funds
used to effect the purchase by the Company of the shares listed in the Merger
Agreement; (ii) it is unlikely that dividends will be paid on the Common Stock;
(iii) there is no legal requirement or promise made by the Company to declare or
pay such dividends and such dividends may not in any event be paid if such
payment would violate any term of the Operative Documents; and (iv) certain of
the Operative Documents severely restrict the ability of the Company to make any
dividend or redemption payments in any case and such payment may be further
restricted by future agreements or instruments binding on the Company or its
subsidiaries.
(b) Any financial projections or forecasts with respect to the Company and its subsidiaries are only forecasts prepared by management, which are subject to many assumptions and factors beyond the Company's and its subsidiaries' control, and that there can be no assurances that these forecasts will be realized.
5. SECURITIES LAW AND OTHER MATTERS. Each Stockholder represents and warrants to the Company and the other Stockholders that:
(a) (i) such Stockholder used no "purchaser's representative" (as that term is used in Regulation D as promulgated by the Securities and Exchange Commission) in connection with the transactions contemplated by the Operative Documents; (ii) neither The Jordan Company, LLC ("JORDAN"), nor any of its respective partners, members, principals, directors, officers, representatives, attorneys, agents, employees or affiliates has acted as a representative of said Stockholder in the subject transaction; (iii) such Stockholder has substantial knowledge and experience in financial, investment and business matters, and specifically in the business of the Company and its subsidiaries, and has the requisite knowledge and experience to evaluate the risks and merits of this investment; (iv) the decision of such Stockholder to purchase the Common Stock hereunder has been made by such Stockholder independent of any other Stockholder and independent of any statements, disclosures or judgments as to the properties, business, prospects or condition (financial or otherwise) of the Company and its subsidiaries which may have been made or given by any Stockholder or other person.
(b) (i) the Common Stock being purchased by such Stockholder hereunder has not been registered under the Securities Act of 1933, as amended, (the "SECURITIES ACT") on the ground that the sales of Common Stock pursuant to this Agreement are exempt under Section 4(2) of the Securities Act as not constituting a distribution, and that the Company's reliance on such exemption is predicated in part on each Stockholder's representation which such Stockholder herewith makes that the Common Stock has been acquired solely by and for the account of such Stockholder for investment purposes only, and are not being purchased for subdivision, fractionalization, resale or distribution and other than as expressly set forth in the Operative Documents, such Stockholder has no contract, undertaking, agreement or arrangement with any other Stockholder to sell, transfer or pledge to such other Stockholder or anyone else the Common Stock (or any part thereof) which such Stockholder has purchased hereunder, and such Stockholder has no present plans or intentions to enter into any such contract, undertaking, agreement or arrangement; (ii) the Common Stock being sold to said Stockholder must be held indefinitely unless they are subsequently registered under the Securities Act or a transfer is made pursuant to an exemption from such registration, including, for example, pursuant to Rule 144 thereunder and that except as set forth in the Stockholders Agreement, the Company has no agreements in respect of registering the Common Stock under Federal or state law; and (iii) such Stockholder's financial condition is such that such Stockholder is not under any present necessity or constraint, and does not foresee in the future any necessity or constraint, to dispose of these shares to satisfy any existing or contemplated debt or undertaking.
(c) In the event that in the future the Company engages in any negotiation or transaction (including a merger or consolidation or other reorganization by or of the Company) in which Regulation D promulgated by the Securities and Exchange Commission may or will be available to the Company, each of the Stockholders who is not then a professional investor
agrees irrevocably (and with the knowledge and intention that the other holders of the Company's stock of all classes will rely thereon in making their respective present investment decisions) that such Stockholder will, within 5 business days of notice from the Company, which notice may be given in the sole discretion of the Company, appoint a purchaser's representative or representatives who shall be qualified and acceptable to the Company and any other person(s) who is (are) involved in the proposed transaction so that the maximum benefits of Regulation D shall be available to the Company and all of its Stockholders. Any Stockholder who does not perform this covenant shall be liable to the Company and all of the other Stockholders for any damage or loss that may or might be incurred thereby.
(d) Such Stockholder hereby releases Jordan, JZEP, Jordan/Zalaznick Advisors Inc. and TJC Management and each of their respective partners, members, principals, directors, officers, representatives, attorneys, agents, employees and affiliates from and against any claims in respect of each Stockholder's subscription for the Common Stock and any related transaction hereunder or under the Operative Documents.
6. LEGEND. All certificates representing shares of Common Stock shall be endorsed as follows:
"THIS CERTIFICATE IS SUBJECT TO, AND IS TRANSFERABLE ONLY UPON COMPLIANCE WITH, THE PROVISIONS OF A STOCKHOLDERS AGREEMENT, DATED OCTOBER __, 2001, AMONG THE COMPANY AND ITS STOCKHOLDERS AND SUBSCRIPTION AGREEMENTS, DATED OCTOBER __, 2001, AMONG THE COMPANY AND CERTAIN INVESTORS THEREIN. REFERENCE ALSO IS MADE TO THE RESTRICTIVE PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE COMPANY. A COPY OF THE ABOVE REFERENCED AGREEMENTS ARE ON FILE AT THE OFFICE OF THE COMPANY, C/O THE JORDAN COMPANY, LLC, 767 FIFTH AVENUE, 48TH FLOOR, NEW YORK, NEW YORK 10153.
THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SAID ACT."
Each Stockholder acknowledges to the Company and the other Stockholders that (i) the effect of such legend, among other things, is or may be to limit or destroy the value of the certificate for purposes of sale or for use as loan collateral and that "stop transfer" instructions may be noted against the Common Stock sold to such Stockholder hereunder; and (ii) any transferee of such Stockholder is required to become a party to the Stockholders Agreement, dated as of the date hereof, by and among the Company and the Company's stockholders (the "STOCKHOLDERS AGREEMENT") as a condition to acquiring the Common Stock hereunder.
7. MISCELLANEOUS.
(a) Subject to the conditions of transfer of Common Stock hereunder and in the Stockholders Agreement, this Agreement shall be binding upon and shall inure to the benefit of each individual Stockholder and such Stockholder's respective heirs, executors,
administrators, assigns and legal representatives and to the Company and its respective successors and assigns, by way of merger, consolidation or operation of law or otherwise. Once a Stockholder is no longer a stockholder of the Company all rights and benefits (but not the obligations) previously enjoyed by such party pursuant to the terms of this Agreement shall automatically terminate with respect to such party.
(b) Prior to consummation of any transfer of Common Stock held by a Stockholder permitted under the Stockholders Agreement, except for transfers pursuant to a public offering, such party shall cause the transferee to execute an agreement in which the transferee agrees to be bound by the terms of this Agreement and the Stockholders Agreement.
(c) The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any person.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. EACH OF THE
PARTIES HERETO ACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS
AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE
MADE WHOLE BY MONETARY DAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY MAY BE ENTITLED AT LAW OR IN EQUITY, THE PARTIES SHALL BE ENTITLED TO
SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BE APPROPRIATE. EACH PARTY AGREES
THAT JURISDICTION AND VENUE MAY BE IN THE SOUTHERN DISTRICT OF NEW YORK AND
WAIVES ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. EACH PARTY WAIVES
PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING
AN ACTION OR PROCEEDING SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE PARTY AT THE
ADDRESS SET FORTH IN THIS AGREEMENT, OR AS OTHERWISE PROVIDED BY THE LAWS OF THE
STATE OF DELAWARE OR THE UNITED STATES. THE CHOICE OF FORUM SET FORTH IN THIS
SECTION 7(d) SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN ANY OTHER FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE SAME IN ANY OTHER APPROPRIATE JURISDICTION.
(e) Each of the Stockholders agrees and acknowledges that the Operative Documents and any other agreement or instrument that may restrict the ability of the Company to make any dividend or redemption payments may be created, amended, modified or supplemented, from time to time, and may be refinanced, extended or substituted, from time to time, without notice to, or the consent or approval of, the Stockholders.
(f) All personal pronouns used in this Agreement, whether used in masculine, feminine or neuter gender, shall include all other genders if the context so requires; the singular shall include the plural, and vice versa.
(g) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. If the requirements of this Agreement have otherwise been met, new Stockholders may become parties to this Agreement by executing a counterpart to this Agreement at which time the Company shall revise the Exhibits as may be necessary or appropriate.
(h) The words "sale," "sell," "transfer" and the like shall include any disposition by way of transfer, with or without consideration to any person for any purpose and shall include, but shall not be limited in any way to, redemption (of other than its preferred stock) by the issuer, private or public sale or exchanges of securities or any other similar transaction involving the Common Stock.
(i) In case any one or more of the provisions or parts of a provision contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid or illegal or unenforceable provision or part of a provision had never been contained herein and such provision or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction.
(j) This Agreement constitutes the entire agreement by and among the parties with respect to the subject matter hereof and may not be modified orally, but only by a writing subscribed by the party charged therewith.
(k) Each of the parties hereto agrees to execute all such further instruments and documents and to take all such further action as are necessary to effectuate the terms and purposes of this Agreement.
(l) Whenever notice is required to be given by any party hereunder, such notice shall be deemed sufficient when delivered to the Company at its address above and to each of the other Stockholders at such Stockholder's address below or to such other address as the Stockholder shall have furnished to the Company.
(m) Each party shall be entitled to rely conclusively upon any notice received, or the failure to receive any notice, from any other party with respect to rights and obligations under this Agreement.
8. RECEIPT OF STOCK CERTIFICATES.
Each Stockholder herewith acknowledges receipt of the certificate(s) evidencing the Common Stock purchased by such Stockholder.
IN WITNESS WHEREOF, each of the undersigned has signed this Agreement as of the date first above written.
SAFETY HOLDINGS, INC.
By: /s/A. Richard Caputo, Jr.
-------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
|
STOCKHOLDERS:
JOHN W. JORDAN II REVOCABLE TRUST
By: /s/John W. Jordan II
-------------------------------
Name: John W. Jordan II
Title: Trustee
|
LEUCADIA INVESTORS, INC.
By: /s/Joseph Orlando
--------------------------------
Name: Joseph Orlando
Title:
/s/David W. Zalaznick
------------------------------------
David W. Zalaznick
/s/Jonathan F. Boucher
------------------------------------
Jonathan F. Boucher
/s/Adam E. Max
------------------------------------
Adam E. Max
/s/A. Richard Caputo, Jr.
------------------------------------
A. Richard Caputo, Jr.
/s/Paul Rodzevik
------------------------------------
Paul Rodzevik
|
/s/Brian Higgins ------------------------------------ Brian Higgins /s/Douglas J. Zych ------------------------------------ Douglas J. Zych /s/Robert D. Mann ------------------------------------ Robert D. Mann |
EXHIBIT 10.6
[COPY]
RECOURSE PROMISSORY NOTE
$144,875.00 OCTOBER 16, 2001
FOR VALUE RECEIVED, the undersigned, David F. Brussard (the "BORROWER"), promises to pay to the order of Safety Holdings, Inc., a Delaware corporation (the "HOLDER" or "COMPANY"), or any successor thereof, the sum of ONE HUNDRED FORTY-FOUR THOUSAND EIGHT HUNDRED SEVENTY-FIVE DOLLARS ($144,875.00) with interest from the date hereof on the unpaid principal sum from time to time outstanding accruing at the rate of 5% per annum compounded annually on December 31 of each year, commencing with December 31, 2001 (the "NON-DEFAULT INTEREST RATE"). The principal of, and all accrued and unpaid interest on, this Note will be paid upon the earlier of December 31, 2011 or within ninety (90) days after Borrower ceases to be an employee (for any reason or no reason) of Holder, or any of its subsidiaries.
All payments of principal and interest on this Note are payable at Holder's office at c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, or at such other place as Holder shall notify Borrower in writing. Principal and interest shall be payable in United States currency that at the time is legal tender for the payment of public and private debts.
This Note is executed and delivered together with a certain Pledge Agreement, dated as of even date herewith, (the "PLEDGE AGREEMENT") between Borrower and Holder which, among other things, secures payment of this Note. In the event of a Default (as hereinafter defined) under this Note, Holder shall be entitled to enforce his rights against the Pledged Collateral (as defined in the Pledge Agreement) with respect to the amount due under the Note upon such Default.
So long as any amounts remain outstanding under this Note, or any shares of Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"), or any other capital stock of the Company (collectively, the "STOCK"), owned by Borrower shall be subject to the Pledge Agreement, Borrower shall not sell or transfer such Stock; HOWEVER, in the event that at any time Borrower shall, in violation of the terms of this Note, sell or transfer any of the Stock, any interest in the Stock or other equity interest of the Company, of which he is the owner, Borrower shall apply, from time to time, upon, and only to the extent of receipt, the net cash proceeds of such sale or transfer (after allowance for any federal, state and local income taxes payable with respect to such sale) to the prepayment of this Note; such prepayment shall be charged first against accrued interest and then against principal, and then against any other obligations in respect of this Note, PROVIDED, such prepayment shall not affect Holder's right to declare a Default (as hereinafter defined) under this Note. In addition, this Note shall be prepaid to the extent provided in the Pledge Agreement. Borrower may prepay this Note in whole or in part,
without penalty, at any time, provided that at the time of any such prepayment, Borrower shall also pay all accrued interest on the amount of the principal sum so prepaid.
Upon the happening of any Default of the type specified in paragraphs (a) through (f) below or upon the happening of any Change of Control, Holder at its option may declare the entire unpaid balance of the amount owed by Borrower under this Note, together with interest accrued thereon, to be immediately due and payable, and upon the happening of the Default specified in paragraph (g) below, Holder at its option may declare the entire unpaid balance of the amount owed by Borrower under this Note, together with interest accrued thereon, to be due and payable within 90 days after such declaration.
Each of the following shall constitute a "Default":
(a) failure to make any payment of principal or interest within 10 days of when due hereunder and the same shall have not been cured within 45 days after written notice thereof has been given to the Borrower;
(b) any representation or warranty of Borrower contained in the Pledge Agreement shall prove to have been false or misleading in any material respect as of the time made;
(c) Borrower shall default in the performance or observance of any covenant or provision contained herein or in the Pledge Agreement and the same shall not have been cured within 60 days after written notice thereof has been given to the Borrower;
(d) Borrower assigns any of his obligations under this Note to any person or entity other than in connection with his death, or by operation of law in connection with his death;
(e) Borrower (i) generally is not paying his debts as they become
due; (ii) shall admit in writing his inability to pay his debts generally;
(iii) shall make a general assignment for the benefit of creditors; or (iv)
commences any proceeding relating to him under any other bankruptcy,
reorganization, arrangement, readjustment of debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction,
whether now or hereafter in effect, or any other procedure for the relief
of financially distressed debtors;
(f) there is commenced by or against Borrower any proceeding under any other applicable bankruptcy, insolvency, reorganization or other similar law seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, or seeking the entry of an order for relief or the appointment of a receiver, liquidator, assignee, trustee, sequestrator, agent or custodian (or other similar official) for him or any substantial part of his property, and relief against him is ordered in such proceeding or such proceeding remains undismissed for a period of 60 days or more.
(g) Borrower's employment by the Company or its subsidiaries is terminated for any reason.
Each of the following shall constitute a "Change of Control:"
a) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, or a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing;
b) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings; or
c) the closing of any sale by the holders of Common Stock or an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
Upon the occurrence of any Default of Borrower, interest on the outstanding amount of Borrower's debt to Holder hereunder shall accrue, in lieu of the aforementioned rate, at a per annum rate equal to two percent over the Non-Default Interest Rate. All payments received by Holder from Borrower on this Note after such Default shall be applied by Holder to Borrower's debt hereunder as follows: first, to accrued and unpaid interest; second, to the reduction of principal; and third, to any other obligations in respect of this Note.
THIS NOTE AND ALL OBLIGATIONS OF BORROWER HEREUNDER SHALL BE RECOURSE TO BORROWER PERSONALLY, AND BORROWER SHALL BE PERSONALLY OBLIGATED AND LIABLE UNDER THIS NOTE AND FOR SUCH OBLIGATIONS.
In the event this Note is turned over to any attorney at law for collection after any Default of Borrower, in addition to principal and interest, Holder shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees and costs incurred in connection with any of Holder's collection efforts, whether or not suit on this Note is filed, and all such principal, interest, costs and expenses shall be payable by Borrower on demand and also shall be secured by all other collateral at any time held by Holder as security for Borrower's obligations to Holder, it being understood, without limiting the generality of the foregoing, that Borrower shall have personal liability for an amount equal to all of the principal and interest then owing hereunder, and any and all such costs and expenses of collection.
No failure on the part of Holder or other holder hereof to exercise any right or remedy hereunder with respect to Borrower, whether before or after the happening of a Default of Borrower, shall constitute waiver of any future Default or of any other Default of Borrower. No failure to accelerate the debt of Borrower evidenced hereby by reason of a Default of Borrower or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or a
reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right Holder may have, whether by the laws of the state governing this Note, by agreement or otherwise, and Borrower hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. This Note may not be modified orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower, for himself and his heirs, successors and assigns, hereby waives presentment, protest, demand, diligence, notice of dishonor and of nonpayment, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, or exemption now provided or that hereafter may be provided by any applicable federal or state statute, both as to himself personally and as to all of his property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
Each of the Holder and Borrower intends that the obligations evidenced by this Note conform strictly to the applicable usury laws as are from time to time in force. All agreements between Borrower and Holder, whether now existing or hereafter arising and whether oral or written, hereby are expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Holder, or collected by Holder, by or on behalf of Borrower for the use, forbearance or detention of the money to be loaned to Borrower hereunder or otherwise; or for the payment or performance of any covenant or obligation contained herein of Borrower to Holder, or in any other document evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed the maximum amount permissible under applicable usury law. If under any circumstances whatsoever fulfillment of any provision hereof or any other document, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then, the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Holder ever shall receive from or on behalf of Borrower an amount deemed interest, which would exceed the highest lawful rate under applicable law, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of Borrower's principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf.
This Note is binding upon Borrower's successors and heirs, shall inure to the benefit of Holder, its successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws. The Borrower hereby irrevocably submits on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of New York and any courts competent to hear appeals therefrom.
IN WITNESS WHEREOF, Borrower has executed this instrument on the date first above written.
BORROWER:
/s/David F. Brussard ------------------------------------------- David F. Brussard Print Home Address: |
WITNESS:
/s/Peter S. Rice --------------------------- Name: Peter S. Rice |
EXHIBIT 10.7
[COPY]
RECOURSE PROMISSORY NOTE
$100,00.00 OCTOBER 16, 2001
FOR VALUE RECEIVED, the undersigned, David F. Brussard (the "BORROWER"), promises to pay to the order of Safety Holdings, Inc., a Delaware corporation (the "HOLDER" or "COMPANY"), or any successor thereof, the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) with interest from the date hereof on the unpaid principal sum from time to time outstanding accruing at the rate of 5% per annum compounded annually on December 31 of each year, commencing with December 31, 2001 (the "NON-DEFAULT INTEREST RATE"). The principal of, and all accrued and unpaid interest on, this Note will be paid upon the earlier of December 31, 2011 or within ninety (90) days after Borrower ceases to be an employee (for any reason or no reason) of Holder, or any of its subsidiaries.
All payments of principal and interest on this Note are payable at Holder's office at c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, or at such other place as Holder shall notify Borrower in writing. Principal and interest shall be payable in United States currency that at the time is legal tender for the payment of public and private debts.
This Note is executed and delivered together with a certain Pledge Agreement, dated as of even date herewith, (the "PLEDGE AGREEMENT") between Borrower and Holder which, among other things, secures payment of this Note. In the event of a Default (as hereinafter defined) under this Note, Holder shall be entitled to enforce his rights against the Pledged Collateral (as defined in the Pledge Agreement) with respect to the amount due under the Note upon such Default.
So long as any amounts remain outstanding under this Note, or any shares of Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"), or any other capital stock of the Company (collectively, the "STOCK"), owned by Borrower shall be subject to the Pledge Agreement, Borrower shall not sell or transfer such Stock; HOWEVER, in the event that at any time Borrower shall, in violation of the terms of this Note, sell or transfer any of the Stock, any interest in the Stock or other equity interest of the Company, of which he is the owner, Borrower shall apply, from time to time, upon, and only to the extent of receipt, the net cash proceeds of such sale or transfer (after allowance for any federal, state and local income taxes payable with respect to such sale) to the prepayment of this Note; such prepayment shall be charged first against accrued interest and then against principal, and then against any other obligations in respect of this Note, PROVIDED, such prepayment shall not affect Holder's right to declare a Default (as hereinafter defined) under this Note. In addition, this Note shall be prepaid to the extent provided in the Pledge Agreement. Borrower may prepay this Note in whole or in part, without penalty, at any time, provided that at the time of any such prepayment, Borrower shall also pay all accrued interest on the amount of the principal sum so prepaid.
Upon the happening of any Default of the type specified in paragraphs
(a) through (f) below or upon the happening of any Change of Control, Holder at
its option may declare the entire unpaid balance of the amount owed by Borrower
under this Note, together with interest accrued thereon, to be immediately due
and payable, and upon the happening of the Default specified in paragraph
(g) below, Holder at its option may declare the entire unpaid balance of the
amount owed by Borrower under this Note, together with interest accrued thereon,
to be due and payable within 90 days after such declaration.
Each of the following shall constitute a "Default":
(a) failure to make any payment of principal or interest within 10 days of when due hereunder and the same shall have not been cured within 45 days after written notice thereof has been given to the Borrower;
(b) any representation or warranty of Borrower contained in the Pledge Agreement shall prove to have been false or misleading in any material respect as of the time made;
(c) Borrower shall default in the performance or observance of any covenant or provision contained herein or in the Pledge Agreement and the same shall not have been cured within 60 days after written notice thereof has been given to the Borrower;
(d) Borrower assigns any of his obligations under this Note to any person or entity other than in connection with his death, or by operation of law in connection with his death;
(e) Borrower (i) generally is not paying his debts as they become
due; (ii) shall admit in writing his inability to pay his debts generally;
(iii) shall make a general assignment for the benefit of creditors; or
(iv) commences any proceeding relating to him under any other bankruptcy,
reorganization, arrangement, readjustment of debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction,
whether now or hereafter in effect, or any other procedure for the relief
of financially distressed debtors;
(f) there is commenced by or against Borrower any proceeding under any other applicable bankruptcy, insolvency, reorganization or other similar law seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, or seeking the entry of an order for relief or the appointment of a receiver, liquidator, assignee, trustee, sequestrator, agent or custodian (or other similar official) for him or any substantial part of his property, and relief against him is ordered in such proceeding or such proceeding remains undismissed for a period of 60 days or more.
(g) Borrower's employment by the Company or its subsidiaries is terminated for any reason.
Each of the following shall constitute a "Change of Control:"
a) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, or a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing;
b) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings; or
c) the closing of any sale by the holders of Common Stock or an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
Upon the occurrence of any Default of Borrower, interest on the outstanding amount of Borrower's debt to Holder hereunder shall accrue, in lieu of the aforementioned rate, at a per annum rate equal to two percent over the Non-Default Interest Rate. All payments received by Holder from Borrower on this Note after such Default shall be applied by Holder to Borrower's debt hereunder as follows: first, to accrued and unpaid interest; second, to the reduction of principal; and third, to any other obligations in respect of this Note.
THIS NOTE AND ALL OBLIGATIONS OF BORROWER HEREUNDER SHALL BE RECOURSE TO BORROWER PERSONALLY, AND BORROWER SHALL BE PERSONALLY OBLIGATED AND LIABLE UNDER THIS NOTE AND FOR SUCH OBLIGATIONS.
In the event this Note is turned over to any attorney at law for collection after any Default of Borrower, in addition to principal and interest, Holder shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees and costs incurred in connection with any of Holder's collection efforts, whether or not suit on this Note is filed, and all such principal, interest, costs and expenses shall be payable by Borrower on demand and also shall be secured by all other collateral at any time held by Holder as security for Borrower's obligations to Holder, it being understood, without limiting the generality of the foregoing, that Borrower shall have personal liability for an amount equal to all of the principal and interest then owing hereunder, and any and all such costs and expenses of collection.
No failure on the part of Holder or other holder hereof to exercise any right or remedy hereunder with respect to Borrower, whether before or after the happening of a Default of Borrower, shall constitute waiver of any future Default or of any other Default of Borrower. No failure to accelerate the debt of Borrower evidenced hereby by reason of a Default of Borrower or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or a reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right Holder may have, whether
by the laws of the state governing this Note, by agreement or otherwise, and Borrower hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. This Note may not be modified orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower, for himself and his heirs, successors and assigns, hereby waives presentment, protest, demand, diligence, notice of dishonor and of nonpayment, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, or exemption now provided or that hereafter may be provided by any applicable federal or state statute, both as to himself personally and as to all of his property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
Each of the Holder and Borrower intends that the obligations evidenced by this Note conform strictly to the applicable usury laws as are from time to time in force. All agreements between Borrower and Holder, whether now existing or hereafter arising and whether oral or written, hereby are expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Holder, or collected by Holder, by or on behalf of Borrower for the use, forbearance or detention of the money to be loaned to Borrower hereunder or otherwise; or for the payment or performance of any covenant or obligation contained herein of Borrower to Holder, or in any other document evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed the maximum amount permissible under applicable usury law. If under any circumstances whatsoever fulfillment of any provision hereof or any other document, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then, the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Holder ever shall receive from or on behalf of Borrower an amount deemed interest, which would exceed the highest lawful rate under applicable law, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of Borrower's principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf.
This Note is binding upon Borrower's successors and heirs, shall inure to the benefit of Holder, its successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws. The Borrower hereby irrevocably submits on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of New York and any courts competent to hear appeals therefrom.
IN WITNESS WHEREOF, Borrower has executed this instrument on the date first above written.
BORROWER:
/s/David F. Brussard --------------------------------- David F. Brussard Print Home Address: |
WITNESS:
/s/Peter S. Rice --------------------------- Name: Peter S. Rice |
EXHIBIT 10.8
[COPY]
RECOURSE PROMISSORY NOTE
$66,500.00 OCTOBER 16, 2001
FOR VALUE RECEIVED, the undersigned, Daniel F. Crimmins (the "BORROWER"), promises to pay to the order of Safety Holdings, Inc., a Delaware corporation (the "HOLDER" or "COMPANY"), or any successor thereof, the sum of SIXTY-SIX THOUSAND FIVE HUNDRED DOLLARS ($66,500.00) with interest from the date hereof on the unpaid principal sum from time to time outstanding accruing at the rate of 5% per annum compounded annually on December 31 of each year, commencing with December 31, 2001 (the "NON-DEFAULT INTEREST RATE"). The principal of, and all accrued and unpaid interest on, this Note will be paid upon the earlier of December 31, 2011 or within ninety (90) days after Borrower ceases to be an employee (for any reason or no reason) of Holder, or any of its subsidiaries.
All payments of principal and interest on this Note are payable at Holder's office at c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, or at such other place as Holder shall notify Borrower in writing. Principal and interest shall be payable in United States currency that at the time is legal tender for the payment of public and private debts.
This Note is executed and delivered together with a certain Pledge Agreement, dated as of even date herewith, (the "PLEDGE AGREEMENT") between Borrower and Holder which, among other things, secures payment of this Note. In the event of a Default (as hereinafter defined) under this Note, Holder shall be entitled to enforce his rights against the Pledged Collateral (as defined in the Pledge Agreement) with respect to the amount due under the Note upon such Default.
So long as any amounts remain outstanding under this Note, or any shares of Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"), or any other capital stock of the Company (collectively, the "STOCK"), owned by Borrower shall be subject to the Pledge Agreement, Borrower shall not sell or transfer such Stock; HOWEVER, in the event that at any time Borrower shall, in violation of the terms of this Note, sell or transfer any of the Stock, any interest in the Stock or other equity interest of the Company, of which he is the owner, Borrower shall apply, from time to time, upon, and only to the extent of receipt, the net cash proceeds of such sale or transfer (after allowance for any federal, state and local income taxes payable with respect to such sale) to the prepayment of this Note; such prepayment shall be charged first against accrued interest and then against principal, and then against any other obligations in respect of this Note, PROVIDED, such prepayment shall not affect Holder's right to declare a Default (as hereinafter defined) under this Note. In addition, this Note shall be prepaid to the extent provided in the Pledge Agreement. Borrower may prepay this Note in whole or in part, without penalty, at any time, provided that at the time of any such prepayment, Borrower shall also pay all accrued interest on the amount of the principal sum so prepaid.
Upon the happening of any Default of the type specified in paragraphs
(a) through (f) below or upon the happening of any Change of Control, Holder at
its option may declare the entire unpaid balance of the amount owed by Borrower
under this Note, together with interest accrued thereon, to be immediately due
and payable, and upon the happening of the Default specified in paragraph
(g) below, Holder at its option may declare the entire unpaid balance of the
amount owed by Borrower under this Note, together with interest accrued thereon,
to be due and payable within 90 days after such declaration.
Each of the following shall constitute a "Default":
(a) failure to make any payment of principal or interest within 10 days of when due hereunder and the same shall have not been cured within 45 days after written notice thereof has been given to the Borrower;
(b) any representation or warranty of Borrower contained in the Pledge Agreement shall prove to have been false or misleading in any material respect as of the time made;
(c) Borrower shall default in the performance or observance of any covenant or provision contained herein or in the Pledge Agreement and the same shall not have been cured within 60 days after written notice thereof has been given to the Borrower;
(d) Borrower assigns any of his obligations under this Note to any person or entity other than in connection with his death, or by operation of law in connection with his death;
(e) Borrower (i) generally is not paying his debts as they become
due; (ii) shall admit in writing his inability to pay his debts generally;
(iii) shall make a general assignment for the benefit of creditors; or
(iv) commences any proceeding relating to him under any other bankruptcy,
reorganization, arrangement, readjustment of debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction,
whether now or hereafter in effect, or any other procedure for the relief
of financially distressed debtors;
(f) there is commenced by or against Borrower any proceeding under any other applicable bankruptcy, insolvency, reorganization or other similar law seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, or seeking the entry of an order for relief or the appointment of a receiver, liquidator, assignee, trustee, sequestrator, agent or custodian (or other similar official) for him or any substantial part of his property, and relief against him is ordered in such proceeding or such proceeding remains undismissed for a period of 60 days or more.
(g) Borrower's employment by the Company or its subsidiaries is terminated for any reason.
Each of the following shall constitute a "Change of Control:"
a) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, or a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing;
b) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings; or
c) the closing of any sale by the holders of Common Stock or an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
Upon the occurrence of any Default of Borrower, interest on the outstanding amount of Borrower's debt to Holder hereunder shall accrue, in lieu of the aforementioned rate, at a per annum rate equal to two percent over the Non-Default Interest Rate. All payments received by Holder from Borrower on this Note after such Default shall be applied by Holder to Borrower's debt hereunder as follows: first, to accrued and unpaid interest; second, to the reduction of principal; and third, to any other obligations in respect of this Note.
THIS NOTE AND ALL OBLIGATIONS OF BORROWER HEREUNDER SHALL BE RECOURSE TO BORROWER PERSONALLY, AND BORROWER SHALL BE PERSONALLY OBLIGATED AND LIABLE UNDER THIS NOTE AND FOR SUCH OBLIGATIONS.
In the event this Note is turned over to any attorney at law for collection after any Default of Borrower, in addition to principal and interest, Holder shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees and costs incurred in connection with any of Holder's collection efforts, whether or not suit on this Note is filed, and all such principal, interest, costs and expenses shall be payable by Borrower on demand and also shall be secured by all other collateral at any time held by Holder as security for Borrower's obligations to Holder, it being understood, without limiting the generality of the foregoing, that Borrower shall have personal liability for an amount equal to all of the principal and interest then owing hereunder, and any and all such costs and expenses of collection.
No failure on the part of Holder or other holder hereof to exercise any right or remedy hereunder with respect to Borrower, whether before or after the happening of a Default of Borrower, shall constitute waiver of any future Default or of any other Default of Borrower. No failure to accelerate the debt of Borrower evidenced hereby by reason of a Default of Borrower or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or a reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right Holder may have, whether
by the laws of the state governing this Note, by agreement or otherwise, and Borrower hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. This Note may not be modified orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower, for himself and his heirs, successors and assigns, hereby waives presentment, protest, demand, diligence, notice of dishonor and of nonpayment, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, or exemption now provided or that hereafter may be provided by any applicable federal or state statute, both as to himself personally and as to all of his property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
Each of the Holder and Borrower intends that the obligations evidenced by this Note conform strictly to the applicable usury laws as are from time to time in force. All agreements between Borrower and Holder, whether now existing or hereafter arising and whether oral or written, hereby are expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Holder, or collected by Holder, by or on behalf of Borrower for the use, forbearance or detention of the money to be loaned to Borrower hereunder or otherwise; or for the payment or performance of any covenant or obligation contained herein of Borrower to Holder, or in any other document evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed the maximum amount permissible under applicable usury law. If under any circumstances whatsoever fulfillment of any provision hereof or any other document, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then, the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Holder ever shall receive from or on behalf of Borrower an amount deemed interest, which would exceed the highest lawful rate under applicable law, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of Borrower's principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf.
This Note is binding upon Borrower's successors and heirs, shall inure to the benefit of Holder, its successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws. The Borrower hereby irrevocably submits on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of New York and any courts competent to hear appeals therefrom.
IN WITNESS WHEREOF, Borrower has executed this instrument on the date first above written.
BORROWER:
/s/Daniel F. Crimmins ------------------------------------- Daniel F. Crimmins Print Home Address: |
WITNESS:
/s/Peter S. Rice ------------------------ Name: Peter S. Rice |
EXHIBIT 10.9
[COPY]
RECOURSE PROMISSORY NOTE
$64,125.00 OCTOBER 16, 2001
FOR VALUE RECEIVED, the undersigned, Robert J. Kerton (the "BORROWER"), promises to pay to the order of Safety Holdings, Inc., a Delaware corporation (the "HOLDER" or "COMPANY"), or any successor thereof, the sum of SIXTY-FOUR THOUSAND ONE HUNDRED TWENTY-FIVE DOLLARS ($64,125.00) with interest from the date hereof on the unpaid principal sum from time to time outstanding accruing at the rate of 5% per annum compounded annually on December 31 of each year, commencing with December 31, 2001 (the "NON-DEFAULT INTEREST RATE"). The principal of, and all accrued and unpaid interest on, this Note will be paid upon the earlier of December 31, 2011 or within ninety (90) days after Borrower ceases to be an employee (for any reason or no reason) of Holder, or any of its subsidiaries.
All payments of principal and interest on this Note are payable at Holder's office at c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, or at such other place as Holder shall notify Borrower in writing. Principal and interest shall be payable in United States currency that at the time is legal tender for the payment of public and private debts.
This Note is executed and delivered together with a certain Pledge Agreement, dated as of even date herewith, (the "PLEDGE AGREEMENT") between Borrower and Holder which, among other things, secures payment of this Note. In the event of a Default (as hereinafter defined) under this Note, Holder shall be entitled to enforce his rights against the Pledged Collateral (as defined in the Pledge Agreement) with respect to the amount due under the Note upon such Default.
So long as any amounts remain outstanding under this Note, or any shares of Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"), or any other capital stock of the Company (collectively, the "STOCK"), owned by Borrower shall be subject to the Pledge Agreement, Borrower shall not sell or transfer such Stock; HOWEVER, in the event that at any time Borrower shall, in violation of the terms of this Note, sell or transfer any of the Stock, any interest in the Stock or other equity interest of the Company, of which he is the owner, Borrower shall apply, from time to time, upon, and only to the extent of receipt, the net cash proceeds of such sale or transfer (after allowance for any federal, state and local income taxes payable with respect to such sale) to the prepayment of this Note; such prepayment shall be charged first against accrued interest and then against principal, and then against any other obligations in respect of this Note, PROVIDED, such prepayment shall not affect Holder's right to declare a Default (as hereinafter defined) under this Note. In addition, this Note shall be prepaid to the extent provided in the Pledge Agreement. Borrower may prepay this Note in whole or in part, without penalty, at any time, provided that at the time of any such prepayment, Borrower shall also pay all accrued interest on the amount of the principal sum so prepaid.
Upon the happening of any Default of the type specified in paragraphs
(a) through (f) below or upon the happening of any Change of Control, Holder at
its option may declare the entire unpaid balance of the amount owed by Borrower
under this Note, together with interest accrued thereon, to be immediately due
and payable, and upon the happening of the Default specified in paragraph
(g) below, Holder at its option may declare the entire unpaid balance of the
amount owed by Borrower under this Note, together with interest accrued thereon,
to be due and payable within 90 days after such declaration.
Each of the following shall constitute a "Default":
(a) failure to make any payment of principal or interest within 10 days of when due hereunder and the same shall have not been cured within 45 days after written notice thereof has been given to the Borrower;
(b) any representation or warranty of Borrower contained in the Pledge Agreement shall prove to have been false or misleading in any material respect as of the time made;
(c) Borrower shall default in the performance or observance of any covenant or provision contained herein or in the Pledge Agreement and the same shall not have been cured within 60 days after written notice thereof has been given to the Borrower;
(d) Borrower assigns any of his obligations under this Note to any person or entity other than in connection with his death, or by operation of law in connection with his death;
(e) Borrower (i) generally is not paying his debts as they become
due; (ii) shall admit in writing his inability to pay his debts generally;
(iii) shall make a general assignment for the benefit of creditors; or
(iv) commences any proceeding relating to him under any other bankruptcy,
reorganization, arrangement, readjustment of debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction,
whether now or hereafter in effect, or any other procedure for the relief
of financially distressed debtors;
(f) there is commenced by or against Borrower any proceeding under any other applicable bankruptcy, insolvency, reorganization or other similar law seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, or seeking the entry of an order for relief or the appointment of a receiver, liquidator, assignee, trustee, sequestrator, agent or custodian (or other similar official) for him or any substantial part of his property, and relief against him is ordered in such proceeding or such proceeding remains undismissed for a period of 60 days or more.
(g) Borrower's employment by the Company or its subsidiaries is terminated for any reason.
Each of the following shall constitute a "Change of Control:"
a) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, or a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing;
b) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings; or
c) the closing of any sale by the holders of Common Stock or an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
Upon the occurrence of any Default of Borrower, interest on the outstanding amount of Borrower's debt to Holder hereunder shall accrue, in lieu of the aforementioned rate, at a per annum rate equal to two percent over the Non-Default Interest Rate. All payments received by Holder from Borrower on this Note after such Default shall be applied by Holder to Borrower's debt hereunder as follows: first, to accrued and unpaid interest; second, to the reduction of principal; and third, to any other obligations in respect of this Note.
THIS NOTE AND ALL OBLIGATIONS OF BORROWER HEREUNDER SHALL BE RECOURSE TO BORROWER PERSONALLY, AND BORROWER SHALL BE PERSONALLY OBLIGATED AND LIABLE UNDER THIS NOTE AND FOR SUCH OBLIGATIONS.
In the event this Note is turned over to any attorney at law for collection after any Default of Borrower, in addition to principal and interest, Holder shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees and costs incurred in connection with any of Holder's collection efforts, whether or not suit on this Note is filed, and all such principal, interest, costs and expenses shall be payable by Borrower on demand and also shall be secured by all other collateral at any time held by Holder as security for Borrower's obligations to Holder, it being understood, without limiting the generality of the foregoing, that Borrower shall have personal liability for an amount equal to all of the principal and interest then owing hereunder, and any and all such costs and expenses of collection.
No failure on the part of Holder or other holder hereof to exercise any right or remedy hereunder with respect to Borrower, whether before or after the happening of a Default of Borrower, shall constitute waiver of any future Default or of any other Default of Borrower. No failure to accelerate the debt of Borrower evidenced hereby by reason of a Default of Borrower or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or a reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right Holder may have, whether
by the laws of the state governing this Note, by agreement or otherwise, and Borrower hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. This Note may not be modified orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower, for himself and his heirs, successors and assigns, hereby waives presentment, protest, demand, diligence, notice of dishonor and of nonpayment, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, or exemption now provided or that hereafter may be provided by any applicable federal or state statute, both as to himself personally and as to all of his property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
Each of the Holder and Borrower intends that the obligations evidenced by this Note conform strictly to the applicable usury laws as are from time to time in force. All agreements between Borrower and Holder, whether now existing or hereafter arising and whether oral or written, hereby are expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Holder, or collected by Holder, by or on behalf of Borrower for the use, forbearance or detention of the money to be loaned to Borrower hereunder or otherwise; or for the payment or performance of any covenant or obligation contained herein of Borrower to Holder, or in any other document evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed the maximum amount permissible under applicable usury law. If under any circumstances whatsoever fulfillment of any provision hereof or any other document, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then, the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Holder ever shall receive from or on behalf of Borrower an amount deemed interest, which would exceed the highest lawful rate under applicable law, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of Borrower's principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf.
This Note is binding upon Borrower's successors and heirs, shall inure to the benefit of Holder, its successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws. The Borrower hereby irrevocably submits on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of New York and any courts competent to hear appeals therefrom.
IN WITNESS WHEREOF, Borrower has executed this instrument on the date first above written.
BORROWER:
/s/Robert J. Kerton ------------------------------------- Robert J. Kerton Print Home Address: |
WITNESS:
/s/Peter S. Rice ------------------------ Name: Peter S. Rice |
EXHIBIT 10.10
[COPY]
RECOURSE PROMISSORY NOTE
$97,375.00 OCTOBER 16, 2001
FOR VALUE RECEIVED, the undersigned, Daniel D. Loranger (the "BORROWER"), promises to pay to the order of Safety Holdings, Inc., a Delaware corporation (the "HOLDER" or "COMPANY"), or any successor thereof, the sum of NINETY-SEVEN THOUSAND THREE HUNDRED SEVENTY-FIVE DOLLARS ($97,375.00) with interest from the date hereof on the unpaid principal sum from time to time outstanding accruing at the rate of 5% per annum compounded annually on December 31 of each year, commencing with December 31, 2001 (the "NON-DEFAULT INTEREST RATE"). The principal of, and all accrued and unpaid interest on, this Note will be paid upon the earlier of December 31, 2011 or within ninety (90) days after Borrower ceases to be an employee (for any reason or no reason) of Holder, or any of its subsidiaries.
All payments of principal and interest on this Note are payable at Holder's office at c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, or at such other place as Holder shall notify Borrower in writing. Principal and interest shall be payable in United States currency that at the time is legal tender for the payment of public and private debts.
This Note is executed and delivered together with a certain Pledge Agreement, dated as of even date herewith, (the "PLEDGE AGREEMENT") between Borrower and Holder which, among other things, secures payment of this Note. In the event of a Default (as hereinafter defined) under this Note, Holder shall be entitled to enforce his rights against the Pledged Collateral (as defined in the Pledge Agreement) with respect to the amount due under the Note upon such Default.
So long as any amounts remain outstanding under this Note, or any shares of Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"), or any other capital stock of the Company (collectively, the "STOCK"), owned by Borrower shall be subject to the Pledge Agreement, Borrower shall not sell or transfer such Stock; HOWEVER, in the event that at any time Borrower shall, in violation of the terms of this Note, sell or transfer any of the Stock, any interest in the Stock or other equity interest of the Company, of which he is the owner, Borrower shall apply, from time to time, upon, and only to the extent of receipt, the net cash proceeds of such sale or transfer (after allowance for any federal, state and local income taxes payable with respect to such sale) to the prepayment of this Note; such prepayment shall be charged first against accrued interest and then against principal, and then against any other obligations in respect of this Note, PROVIDED, such prepayment shall not affect Holder's right to declare a Default (as hereinafter defined) under this Note. In addition, this Note shall be prepaid to the extent provided in the Pledge Agreement. Borrower may prepay this Note in whole or in part, without penalty, at any time, provided that at the time of any such prepayment, Borrower shall also pay all accrued interest on the amount of the principal sum so prepaid.
Upon the happening of any Default of the type specified in paragraphs
(a) through (f) below or upon the happening of any Change of Control, Holder at
its option may declare the entire unpaid balance of the amount owed by Borrower
under this Note, together with interest accrued thereon, to be immediately due
and payable, and upon the happening of the Default specified in paragraph
(g) below, Holder at its option may declare the entire unpaid balance of the
amount owed by Borrower under this Note, together with interest accrued thereon,
to be due and payable within 90 days after such declaration.
Each of the following shall constitute a "Default":
(a) failure to make any payment of principal or interest within 10 days of when due hereunder and the same shall have not been cured within 45 days after written notice thereof has been given to the Borrower;
(b) any representation or warranty of Borrower contained in the Pledge Agreement shall prove to have been false or misleading in any material respect as of the time made;
(c) Borrower shall default in the performance or observance of any covenant or provision contained herein or in the Pledge Agreement and the same shall not have been cured within 60 days after written notice thereof has been given to the Borrower;
(d) Borrower assigns any of his obligations under this Note to any person or entity other than in connection with his death, or by operation of law in connection with his death;
(e) Borrower (i) generally is not paying his debts as they become
due; (ii) shall admit in writing his inability to pay his debts generally;
(iii) shall make a general assignment for the benefit of creditors; or
(iv) commences any proceeding relating to him under any other bankruptcy,
reorganization, arrangement, readjustment of debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction,
whether now or hereafter in effect, or any other procedure for the relief
of financially distressed debtors;
(f) there is commenced by or against Borrower any proceeding under any other applicable bankruptcy, insolvency, reorganization or other similar law seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, or seeking the entry of an order for relief or the appointment of a receiver, liquidator, assignee, trustee, sequestrator, agent or custodian (or other similar official) for him or any substantial part of his property, and relief against him is ordered in such proceeding or such proceeding remains undismissed for a period of 60 days or more.
(g) Borrower's employment by the Company or its subsidiaries is terminated for any reason.
Each of the following shall constitute a "Change of Control:"
a) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, or a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing;
b) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings; or
c) the closing of any sale by the holders of Common Stock or an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
Upon the occurrence of any Default of Borrower, interest on the outstanding amount of Borrower's debt to Holder hereunder shall accrue, in lieu of the aforementioned rate, at a per annum rate equal to two percent over the Non-Default Interest Rate. All payments received by Holder from Borrower on this Note after such Default shall be applied by Holder to Borrower's debt hereunder as follows: first, to accrued and unpaid interest; second, to the reduction of principal; and third, to any other obligations in respect of this Note.
THIS NOTE AND ALL OBLIGATIONS OF BORROWER HEREUNDER SHALL BE RECOURSE TO BORROWER PERSONALLY, AND BORROWER SHALL BE PERSONALLY OBLIGATED AND LIABLE UNDER THIS NOTE AND FOR SUCH OBLIGATIONS.
In the event this Note is turned over to any attorney at law for collection after any Default of Borrower, in addition to principal and interest, Holder shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees and costs incurred in connection with any of Holder's collection efforts, whether or not suit on this Note is filed, and all such principal, interest, costs and expenses shall be payable by Borrower on demand and also shall be secured by all other collateral at any time held by Holder as security for Borrower's obligations to Holder, it being understood, without limiting the generality of the foregoing, that Borrower shall have personal liability for an amount equal to all of the principal and interest then owing hereunder, and any and all such costs and expenses of collection.
No failure on the part of Holder or other holder hereof to exercise any right or remedy hereunder with respect to Borrower, whether before or after the happening of a Default of Borrower, shall constitute waiver of any future Default or of any other Default of Borrower. No failure to accelerate the debt of Borrower evidenced hereby by reason of a Default of Borrower or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or a reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right Holder may have, whether
by the laws of the state governing this Note, by agreement or otherwise, and Borrower hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. This Note may not be modified orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower, for himself and his heirs, successors and assigns, hereby waives presentment, protest, demand, diligence, notice of dishonor and of nonpayment, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, or exemption now provided or that hereafter may be provided by any applicable federal or state statute, both as to himself personally and as to all of his property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
Each of the Holder and Borrower intends that the obligations evidenced by this Note conform strictly to the applicable usury laws as are from time to time in force. All agreements between Borrower and Holder, whether now existing or hereafter arising and whether oral or written, hereby are expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Holder, or collected by Holder, by or on behalf of Borrower for the use, forbearance or detention of the money to be loaned to Borrower hereunder or otherwise; or for the payment or performance of any covenant or obligation contained herein of Borrower to Holder, or in any other document evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed the maximum amount permissible under applicable usury law. If under any circumstances whatsoever fulfillment of any provision hereof or any other document, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then, the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Holder ever shall receive from or on behalf of Borrower an amount deemed interest, which would exceed the highest lawful rate under applicable law, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of Borrower's principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf.
This Note is binding upon Borrower's successors and heirs, shall inure to the benefit of Holder, its successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws. The Borrower hereby irrevocably submits on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of New York and any courts competent to hear appeals therefrom.
IN WITNESS WHEREOF, Borrower has executed this instrument on the date first above written.
BORROWER:
/s/Daniel D. Loranger ------------------------------------- Daniel D. Loranger Print Home Address: |
WITNESS:
/s/Peter S. Rice ------------------------- Name: Peter S. Rice |
EXHIBIT 10.11
[COPY]
RECOURSE PROMISSORY NOTE
$25,00.00 OCTOBER 16, 2001
FOR VALUE RECEIVED, the undersigned, Daniel D. Loranger (the "BORROWER"), promises to pay to the order of Safety Holdings, Inc., a Delaware corporation (the "HOLDER" or "COMPANY"), or any successor thereof, the sum of TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) with interest from the date hereof on the unpaid principal sum from time to time outstanding accruing at the rate of 5% per annum compounded annually on December 31 of each year, commencing with December 31, 2001 (the "NON-DEFAULT INTEREST RATE"). The principal of, and all accrued and unpaid interest on, this Note will be paid upon the earlier of December 31, 2011 or within ninety (90) days after Borrower ceases to be an employee (for any reason or no reason) of Holder, or any of its subsidiaries.
All payments of principal and interest on this Note are payable at Holder's office at c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, or at such other place as Holder shall notify Borrower in writing. Principal and interest shall be payable in United States currency that at the time is legal tender for the payment of public and private debts.
This Note is executed and delivered together with a certain Pledge Agreement, dated as of even date herewith, (the "PLEDGE AGREEMENT") between Borrower and Holder which, among other things, secures payment of this Note. In the event of a Default (as hereinafter defined) under this Note, Holder shall be entitled to enforce his rights against the Pledged Collateral (as defined in the Pledge Agreement) with respect to the amount due under the Note upon such Default.
So long as any amounts remain outstanding under this Note, or any shares of Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"), or any other capital stock of the Company (collectively, the "STOCK"), owned by Borrower shall be subject to the Pledge Agreement, Borrower shall not sell or transfer such Stock; HOWEVER, in the event that at any time Borrower shall, in violation of the terms of this Note, sell or transfer any of the Stock, any interest in the Stock or other equity interest of the Company, of which he is the owner, Borrower shall apply, from time to time, upon, and only to the extent of receipt, the net cash proceeds of such sale or transfer (after allowance for any federal, state and local income taxes payable with respect to such sale) to the prepayment of this Note; such prepayment shall be charged first against accrued interest and then against principal, and then against any other obligations in respect of this Note, PROVIDED, such prepayment shall not affect Holder's right to declare a Default (as hereinafter defined) under this Note. In addition, this Note shall be prepaid to the extent provided in the Pledge Agreement. Borrower may prepay this Note in whole or in part, without penalty, at any time, provided that at the time of any such prepayment, Borrower shall also pay all accrued interest on the amount of the principal sum so prepaid.
Upon the happening of any Default of the type specified in paragraphs
(a) through (f) below or upon the happening of any Change of Control, Holder at
its option may declare the entire unpaid balance of the amount owed by Borrower
under this Note, together with interest accrued thereon, to be immediately due
and payable, and upon the happening of the Default specified in paragraph
(g) below, Holder at its option may declare the entire unpaid balance of the
amount owed by Borrower under this Note, together with interest accrued thereon,
to be due and payable within 90 days after such declaration.
Each of the following shall constitute a "Default":
(a) failure to make any payment of principal or interest within 10 days of when due hereunder and the same shall have not been cured within 45 days after written notice thereof has been given to the Borrower;
(b) any representation or warranty of Borrower contained in the Pledge Agreement shall prove to have been false or misleading in any material respect as of the time made;
(c) Borrower shall default in the performance or observance of any covenant or provision contained herein or in the Pledge Agreement and the same shall not have been cured within 60 days after written notice thereof has been given to the Borrower;
(d) Borrower assigns any of his obligations under this Note to any person or entity other than in connection with his death, or by operation of law in connection with his death;
(e) Borrower (i) generally is not paying his debts as they become
due; (ii) shall admit in writing his inability to pay his debts generally;
(iii) shall make a general assignment for the benefit of creditors; or
(iv) commences any proceeding relating to him under any other bankruptcy,
reorganization, arrangement, readjustment of debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction,
whether now or hereafter in effect, or any other procedure for the relief
of financially distressed debtors;
(f) there is commenced by or against Borrower any proceeding under any other applicable bankruptcy, insolvency, reorganization or other similar law seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, or seeking the entry of an order for relief or the appointment of a receiver, liquidator, assignee, trustee, sequestrator, agent or custodian (or other similar official) for him or any substantial part of his property, and relief against him is ordered in such proceeding or such proceeding remains undismissed for a period of 60 days or more.
(g) Borrower's employment by the Company or its subsidiaries is terminated for any reason.
Each of the following shall constitute a "Change of Control:"
a) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, or a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing;
b) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings; or
c) the closing of any sale by the holders of Common Stock or an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
Upon the occurrence of any Default of Borrower, interest on the outstanding amount of Borrower's debt to Holder hereunder shall accrue, in lieu of the aforementioned rate, at a per annum rate equal to two percent over the Non-Default Interest Rate. All payments received by Holder from Borrower on this Note after such Default shall be applied by Holder to Borrower's debt hereunder as follows: first, to accrued and unpaid interest; second, to the reduction of principal; and third, to any other obligations in respect of this Note.
THIS NOTE AND ALL OBLIGATIONS OF BORROWER HEREUNDER SHALL BE RECOURSE TO BORROWER PERSONALLY, AND BORROWER SHALL BE PERSONALLY OBLIGATED AND LIABLE UNDER THIS NOTE AND FOR SUCH OBLIGATIONS.
In the event this Note is turned over to any attorney at law for collection after any Default of Borrower, in addition to principal and interest, Holder shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees and costs incurred in connection with any of Holder's collection efforts, whether or not suit on this Note is filed, and all such principal, interest, costs and expenses shall be payable by Borrower on demand and also shall be secured by all other collateral at any time held by Holder as security for Borrower's obligations to Holder, it being understood, without limiting the generality of the foregoing, that Borrower shall have personal liability for an amount equal to all of the principal and interest then owing hereunder, and any and all such costs and expenses of collection.
No failure on the part of Holder or other holder hereof to exercise any right or remedy hereunder with respect to Borrower, whether before or after the happening of a Default of Borrower, shall constitute waiver of any future Default or of any other Default of Borrower. No failure to accelerate the debt of Borrower evidenced hereby by reason of a Default of Borrower or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or a reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right Holder may have, whether
by the laws of the state governing this Note, by agreement or otherwise, and Borrower hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. This Note may not be modified orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower, for himself and his heirs, successors and assigns, hereby waives presentment, protest, demand, diligence, notice of dishonor and of nonpayment, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, or exemption now provided or that hereafter may be provided by any applicable federal or state statute, both as to himself personally and as to all of his property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
Each of the Holder and Borrower intends that the obligations evidenced by this Note conform strictly to the applicable usury laws as are from time to time in force. All agreements between Borrower and Holder, whether now existing or hereafter arising and whether oral or written, hereby are expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Holder, or collected by Holder, by or on behalf of Borrower for the use, forbearance or detention of the money to be loaned to Borrower hereunder or otherwise; or for the payment or performance of any covenant or obligation contained herein of Borrower to Holder, or in any other document evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed the maximum amount permissible under applicable usury law. If under any circumstances whatsoever fulfillment of any provision hereof or any other document, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then, the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Holder ever shall receive from or on behalf of Borrower an amount deemed interest, which would exceed the highest lawful rate under applicable law, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of Borrower's principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf.
This Note is binding upon Borrower's successors and heirs, shall inure to the benefit of Holder, its successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws. The Borrower hereby irrevocably submits on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of New York and any courts competent to hear appeals therefrom.
IN WITNESS WHEREOF, Borrower has executed this instrument on the date first above written.
BORROWER:
/s/Daniel D. Loranger ------------------------------------- Daniel D. Loranger Print Home Address: |
WITNESS:
/s/David F. Brussard --------------------------- Name: David F. Brussard |
EXHIBIT 10.12
[COPY]
RECOURSE PROMISSORY NOTE
$95,000.00 OCTOBER 16, 2001
FOR VALUE RECEIVED, the undersigned, Edward N. Patrick, Jr. (the "BORROWER"), promises to pay to the order of Safety Holdings, Inc., a Delaware corporation (the "HOLDER" or "COMPANY"), or any successor thereof, the sum of NINETY-FIVE THOUSAND DOLLARS ($95,000.00) with interest from the date hereof on the unpaid principal sum from time to time outstanding accruing at the rate of 5% per annum compounded annually on December 31 of each year, commencing with December 31, 2001 (the "NON-DEFAULT INTEREST RATE"). The principal of, and all accrued and unpaid interest on, this Note will be paid upon the earlier of December 31, 2011 or within ninety (90) days after Borrower ceases to be an employee (for any reason or no reason) of Holder, or any of its subsidiaries.
All payments of principal and interest on this Note are payable at Holder's office at c/o The Jordan Company, LLC, 767 Fifth Avenue, 48th Floor, New York, New York 10153, or at such other place as Holder shall notify Borrower in writing. Principal and interest shall be payable in United States currency that at the time is legal tender for the payment of public and private debts.
This Note is executed and delivered together with a certain Pledge Agreement, dated as of even date herewith, (the "PLEDGE AGREEMENT") between Borrower and Holder which, among other things, secures payment of this Note. In the event of a Default (as hereinafter defined) under this Note, Holder shall be entitled to enforce his rights against the Pledged Collateral (as defined in the Pledge Agreement) with respect to the amount due under the Note upon such Default.
So long as any amounts remain outstanding under this Note, or any shares of Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"), or any other capital stock of the Company (collectively, the "STOCK"), owned by Borrower shall be subject to the Pledge Agreement, Borrower shall not sell or transfer such Stock; HOWEVER, in the event that at any time Borrower shall, in violation of the terms of this Note, sell or transfer any of the Stock, any interest in the Stock or other equity interest of the Company, of which he is the owner, Borrower shall apply, from time to time, upon, and only to the extent of receipt, the net cash proceeds of such sale or transfer (after allowance for any federal, state and local income taxes payable with respect to such sale) to the prepayment of this Note; such prepayment shall be charged first against accrued interest and then against principal, and then against any other obligations in respect of this Note, PROVIDED, such prepayment shall not affect Holder's right to declare a Default (as hereinafter defined) under this Note. In addition, this Note shall be prepaid to the extent provided in the Pledge Agreement. Borrower may prepay this Note in whole or in part, without penalty, at any time, provided that at the time of any such prepayment, Borrower shall also pay all accrued interest on the amount of the principal sum so prepaid.
Upon the happening of any Default of the type specified in paragraphs
(a) through (f) below or upon the happening of any Change of Control, Holder at
its option may declare the entire unpaid balance of the amount owed by Borrower
under this Note, together with interest accrued thereon, to be immediately due
and payable, and upon the happening of the Default specified in paragraph
(g) below, Holder at its option may declare the entire unpaid balance of the
amount owed by Borrower under this Note, together with interest accrued thereon,
to be due and payable within 90 days after such declaration.
Each of the following shall constitute a "Default":
(a) failure to make any payment of principal or interest within 10 days of when due hereunder and the same shall have not been cured within 45 days after written notice thereof has been given to the Borrower;
(b) any representation or warranty of Borrower contained in the Pledge Agreement shall prove to have been false or misleading in any material respect as of the time made;
(c) Borrower shall default in the performance or observance of any covenant or provision contained herein or in the Pledge Agreement and the same shall not have been cured within 60 days after written notice thereof has been given to the Borrower;
(d) Borrower assigns any of his obligations under this Note to any person or entity other than in connection with his death, or by operation of law in connection with his death;
(e) Borrower (i) generally is not paying his debts as they become
due; (ii) shall admit in writing his inability to pay his debts generally;
(iii) shall make a general assignment for the benefit of creditors; or
(iv) commences any proceeding relating to him under any other bankruptcy,
reorganization, arrangement, readjustment of debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction,
whether now or hereafter in effect, or any other procedure for the relief
of financially distressed debtors;
(f) there is commenced by or against Borrower any proceeding under any other applicable bankruptcy, insolvency, reorganization or other similar law seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts, or seeking the entry of an order for relief or the appointment of a receiver, liquidator, assignee, trustee, sequestrator, agent or custodian (or other similar official) for him or any substantial part of his property, and relief against him is ordered in such proceeding or such proceeding remains undismissed for a period of 60 days or more.
(g) Borrower's employment by the Company or its subsidiaries is terminated for any reason.
Each of the following shall constitute a "Change of Control:"
a) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Common Stock immediately prior to such closing are not the holders, directly or indirectly, or a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing;
b) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings; or
c) the closing of any sale by the holders of Common Stock or an amount of Common Stock that equals or exceeds a majority of the shares of Common Stock immediately prior to such closing to a person in which the holders of the Common Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
Upon the occurrence of any Default of Borrower, interest on the outstanding amount of Borrower's debt to Holder hereunder shall accrue, in lieu of the aforementioned rate, at a per annum rate equal to two percent over the Non-Default Interest Rate. All payments received by Holder from Borrower on this Note after such Default shall be applied by Holder to Borrower's debt hereunder as follows: first, to accrued and unpaid interest; second, to the reduction of principal; and third, to any other obligations in respect of this Note.
THIS NOTE AND ALL OBLIGATIONS OF BORROWER HEREUNDER SHALL BE RECOURSE TO BORROWER PERSONALLY, AND BORROWER SHALL BE PERSONALLY OBLIGATED AND LIABLE UNDER THIS NOTE AND FOR SUCH OBLIGATIONS.
In the event this Note is turned over to any attorney at law for collection after any Default of Borrower, in addition to principal and interest, Holder shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees and costs incurred in connection with any of Holder's collection efforts, whether or not suit on this Note is filed, and all such principal, interest, costs and expenses shall be payable by Borrower on demand and also shall be secured by all other collateral at any time held by Holder as security for Borrower's obligations to Holder, it being understood, without limiting the generality of the foregoing, that Borrower shall have personal liability for an amount equal to all of the principal and interest then owing hereunder, and any and all such costs and expenses of collection.
No failure on the part of Holder or other holder hereof to exercise any right or remedy hereunder with respect to Borrower, whether before or after the happening of a Default of Borrower, shall constitute waiver of any future Default or of any other Default of Borrower. No failure to accelerate the debt of Borrower evidenced hereby by reason of a Default of Borrower or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or a reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right Holder may have, whether
by the laws of the state governing this Note, by agreement or otherwise, and Borrower hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. This Note may not be modified orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower, for himself and his heirs, successors and assigns, hereby waives presentment, protest, demand, diligence, notice of dishonor and of nonpayment, and waives and renounces all rights to the benefits of any statute of limitations or any moratorium, appraisement, or exemption now provided or that hereafter may be provided by any applicable federal or state statute, both as to himself personally and as to all of his property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all extensions, renewals, and modifications hereof.
Each of the Holder and Borrower intends that the obligations evidenced by this Note conform strictly to the applicable usury laws as are from time to time in force. All agreements between Borrower and Holder, whether now existing or hereafter arising and whether oral or written, hereby are expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Holder, or collected by Holder, by or on behalf of Borrower for the use, forbearance or detention of the money to be loaned to Borrower hereunder or otherwise; or for the payment or performance of any covenant or obligation contained herein of Borrower to Holder, or in any other document evidencing, securing or pertaining to such indebtedness evidenced hereby, exceed the maximum amount permissible under applicable usury law. If under any circumstances whatsoever fulfillment of any provision hereof or any other document, at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law, then, the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Holder ever shall receive from or on behalf of Borrower an amount deemed interest, which would exceed the highest lawful rate under applicable law, such amount that would be excessive interest under applicable usury laws shall be applied to the reduction of Borrower's principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf.
This Note is binding upon Borrower's successors and heirs, shall inure to the benefit of Holder, its successors and assigns and shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws. The Borrower hereby irrevocably submits on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of New York and any courts competent to hear appeals therefrom.
IN WITNESS WHEREOF, Borrower has executed this instrument on the date first above written.
BORROWER:
/s/Edward N. Patrick, Jr. ------------------------------------- Edward N. Patrick, Jr. Print Home Address: |
WITNESS:
/s/Peter S. Rice ------------------------ Name: Peter S. Rice |
EXHIBIT 10.13
PLEDGE AGREEMENT
AGREEMENT made as of October 16 2001, between David F. Brussard ("PLEDGOR") and SAFETY HOLDINGS, INC., a Delaware corporation ("PLEDGEE" or the "COMPANY").
WHEREAS, at the time of the execution of this Agreement the Pledgor is indebted to the Pledgee in the principal amount of ONE HUNDRED FORTY-FOUR THOUSAND EIGHT HUNDRED SEVENTY-FIVE DOLLARS ($144,875.00), as evidenced by the Recourse Promissory Note for such amount executed in favor of the Pledgee by the Pledgor of even date herewith (the "NOTE") a copy of which is attached hereto; and
WHEREAS, to induce the Pledgee to make the loan evidenced by the Note, the Pledgor has agreed to pledge certain securities in favor of Pledgee as security for the repayment of the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. PLEDGE. In consideration of the sum of $144,875.00 loaned to the
Pledgor by the Pledgee, receipt of which hereby is acknowledged, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee a security interest in,
all of his right, title and interest in and to the following (the "PLEDGED
COLLATERAL"): (i) 14,487.500 shares of Common Stock of the Company, par value
$0.01 per share, presently owned by the Pledgor (the "COMMON STOCK"), (ii) any
other capital stock of the Company hereafter required by Pledgor, including any
shares of Common Stock acquired by Pledgor pursuant to the Company's 2001
Restricted Stock Plan, and (iii) all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the stock referred to in clauses
(i), (ii) and (iii) to the extent not included above, all proceeds (as such term
is defined in the Uniform Commercial Code as in effect in the State of New York)
of the foregoing collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under the Note, whether for principal, interest, fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter existing under this Agreement (the "OBLIGATIONS").
3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE, TRANSFER, ETC. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledgee shall have the right, at any time and without notice to the Pledgor, to transfer to, or to register in the name of the Pledgee or any of its nominees, any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor specified in SECTION 5 hereof.
4. DIVIDENDS. During the term of this Agreement, within ten (10) days after any payment of a dividend with respect to the Common Stock, such dividend payment shall be applied to the payment first of accrued interest, then of principal and then other Obligations under or in respect of the Note.
5. VOTING RIGHTS. Subject to the restrictions imposed upon the Pledgor by the Management Subscription Agreement, dated as of October__, 2001, by and among the Company and the management signatories thereto, and the Stockholder's Agreement, dated as of October__, 2001, among the Company and its stockholders (collectively, the "COMPANY STOCK AGREEMENTS"), during the term of this Agreement, and so long as the Pledgor is not in default in the performance of any of the terms of this Agreement or of the Note, the Pledgor shall be entitled to exercise all of his voting and other consensual rights pertaining to the Pledged Collateral or any part thereof, provided that the exercise of said rights shall in no way jeopardize the Pledgee's security hereunder. To this end, the Pledgee shall execute and deliver to the Pledgor all proxies and other instruments as the Pledgor may reasonably request. Upon the occurrence and during the continuance of a default under this Agreement or the Note, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to this SECTION 5 shall cease, and all such rights shall thereupon become vested in the Pledgee, who shall thereupon have the sole right to exercise such voting and other consensual rights, subject to the restrictions imposed upon the Pledgee by the Company Stock Agreements.
6. PAYMENT OF OBLIGATIONS; RELEASE OF COLLATERAL. Upon payment in full of the Obligations, the Pledgee shall, upon the request of the Pledgor and at his expense, cause the Company to make such entries upon its share register as are necessary to vest in the Pledgor full right, title and interest in such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof.
7. PROTECTION OF PLEDGED COLLATERAL. The Pledgor shall pay all taxes, charges and assessments against the Pledged Collateral and do all acts necessary and appropriate to preserve and maintain the value thereof. Without limiting the generality of the foregoing, the Pledgor shall not grant a security interest in the Pledged Collateral to any other person or entity without the prior written consent of the Pledgee thereto. Upon the failure of the Pledgor to comply with any of the foregoing, the Pledgee may make such payments and take such actions on account thereof as it, in its discretion, deems desirable. The Pledgor shall reimburse the Pledgee immediately on demand for each and all such payments and any costs so incurred.
8. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents and warrants that as of the date hereof:
(a) The Pledgor is the legal, record and beneficial owner of and has good and marketable title to the Pledged Collateral;
(b) This Agreement constitutes a valid, legal and binding obligation of the Pledgor enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by the Pledgor are not in contravention of any prior obligation of the Pledgor or of any obligation with respect to the Pledged Collateral;
(c) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement creates a valid lien and a security interest in the Pledged Collateral;
(d) No material statement made by the Pledgor in this Agreement or any document delivered hereunder is untrue as of the date hereof or omits to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and
(e) There are no restrictions upon the transfer of any of the Common Stock other than those imposed pursuant to federal and state securities laws and by the terms of the Company Stock Agreements and the Note.
9. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that he will defend the Pledgee's right, title and security interest in and to the Pledged Collateral and the proceeds thereof against the claims of all persons.
10. DEFAULT. In the event that the Pledgor defaults in the performance of any of the terms of this Agreement or of the Note, the Pledgee shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of New York at the date of this Agreement; PROVIDED, HOWEVER, that if the Pledgee decides to foreclose on the Pledged Collateral, it shall be governed by and do so pursuant to the terms of the Company Stock Agreements. Out of the proceeds of any sale the Pledgee may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.
11. WAIVERS. The Pledgor assents to any extension or waiver of any obligation of the Pledgor secured hereby. The Pledgee shall have no duty with respect to the preservation or protection of the Pledged Collateral or any income thereof or the preservation or protection of any rights against other parties with respect thereto. The Pledgee may exercise any rights it may have hereunder against the Pledgor or the Pledged Collateral, after having given notice to the Pledgor, whether or not it has given any other party any notice or otherwise taken any action against any other party or assets for the enforcement of such rights.
No waiver or modification of any of the provisions hereof shall be binding upon the Pledgee unless in writing and signed by a duly authorized representative thereof, and no waiver by the Pledgee of any right it may have hereunder shall be deemed a waiver of any other rights it may have. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly or concurrently.
12. ASSIGNMENT. The Pledgor shall not pledge, assign or otherwise transfer any or all of its rights in the Pledged Collateral or hereunder, without the prior written consent of the Pledgee.
13. COSTS. The Pledgor shall pay all costs, including without limitation, reasonable attorneys' fees, incurred by the Pledgee in protecting, enforcing or releasing any of the Pledgee's rights hereunder.
14. ADDITIONAL DOCUMENTS. Upon the request of the Pledgee, the Pledgor will execute and deliver such further documents and take such further action as the Pledgee may reasonably request in order to give full effect to the purposes of this Agreement.
15. MISCELLANEOUS. This Agreement shall be interpreted under and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. The parties hereby irrevocably submit on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of the State of New York and any courts competent to hear appeals therefrom. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the last known address of the addressee.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and permitted assigns, and may not be changed or modified except by an instrument in writing, executed by both parties.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first written above.
PLEDGOR:
/s/David F. Brussard ------------------------------------- David F. Brussard |
HOME ADDRESS:
PLEDGEE: SAFETY HOLDINGS, INC.
/s/A. Richard Caputo, Jr. ------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
WITNESS:
/s/Peter S. Rice ----------------------- Name: Peter S. Rice |
EXHIBIT 10.14
PLEDGE AGREEMENT
AGREEMENT made as of October 16, 2001, between David F. Brussard ("PLEDGOR") and SAFETY HOLDINGS, INC., a Delaware corporation ("PLEDGEE" or the "COMPANY").
WHEREAS, at the time of the execution of this Agreement the Pledgor is indebted to the Pledgee in the principal amount of ONE HUNDRED THOUSAND DOLLARS ($100.000.00), as evidenced by the Recourse Promissory Note for such amount executed in favor of the Pledgee by the Pledgor of even date herewith (the "NOTE") a copy of which is attached hereto; and
WHEREAS, to induce the Pledgee to make the loan evidenced by the Note, the Pledgor has agreed to pledge certain securities in favor of Pledgee as security for the repayment of the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. PLEDGE. In consideration of the sum of $100.000.00 loaned to the
Pledgor by the Pledgee, receipt of which hereby is acknowledged, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee a security interest in,
all of his right, title and interest in and to the following (the "PLEDGED
COLLATERAL"): (i) 10,000.000 shares of Common Stock of the Company, par value
$0.01 per share, presently owned by the Pledgor (the "COMMON STOCK"), (ii) any
other capital stock of the Company hereafter required by Pledgor, including any
shares of Common Stock acquired by Pledgor pursuant to the Company's 2001
Restricted Stock Plan, and (iii) all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the stock referred to in clauses
(i), (ii) and (iii) to the extent not included above, all proceeds (as such term
is defined in the Uniform Commercial Code as in effect in the State of New York)
of the foregoing collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under the Note, whether for principal, interest, fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter existing under this Agreement (the "OBLIGATIONS").
3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE, TRANSFER, ETC. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledgee shall have the right, at any time and without notice to the Pledgor, to transfer to, or to register in the name of the Pledgee or any of its nominees, any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor specified in SECTION 5 hereof.
4. DIVIDENDS. During the term of this Agreement, within ten (10) days after any payment of a dividend with respect to the Common Stock, such dividend payment shall be applied to the payment first of accrued interest, then of principal and then other Obligations under or in respect of the Note.
5. VOTING RIGHTS. Subject to the restrictions imposed upon the Pledgor by the Management Subscription Agreement, dated as of October__, 2001, by and among the Company and the management signatories thereto, and the Stockholder's Agreement, dated as of October__, 2001, among the Company and its stockholders, the Company's 2001 Restricted Stock Plan and the Executive Restricted Stock Award Agreement, dated as of October __, 2001 by and between the Company and Pledgor (collectively, the "COMPANY STOCK AGREEMENTS"), during the term of this Agreement, and so long as the Pledgor is not in default in the performance of any of the terms of this Agreement or of the Note, the Pledgor shall be entitled to exercise all of his voting and other consensual rights pertaining to the Pledged Collateral or any part thereof, provided that the exercise of said rights shall in no way jeopardize the Pledgee's security hereunder. To this end, the Pledgee shall execute and deliver to the Pledgor all proxies and other instruments as the Pledgor may reasonably request. Upon the occurrence and during the continuance of a default under this Agreement or the Note, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to this SECTION 5 shall cease, and all such rights shall thereupon become vested in the Pledgee, who shall thereupon have the sole right to exercise such voting and other consensual rights, subject to the restrictions imposed upon the Pledgee by the Company Stock Agreements.
6. PAYMENT OF OBLIGATIONS; RELEASE OF COLLATERAL. Upon payment in full of the Obligations, the Pledgee shall, upon the request of the Pledgor and at his expense, cause the Company to make such entries upon its share register as are necessary to vest in the Pledgor full right, title and interest in such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof.
7. PROTECTION OF PLEDGED COLLATERAL. The Pledgor shall pay all taxes, charges and assessments against the Pledged Collateral and do all acts necessary and appropriate to preserve and maintain the value thereof. Without limiting the generality of the foregoing, the Pledgor shall not grant a security interest in the Pledged Collateral to any other person or entity without the prior written consent of the Pledgee thereto. Upon the failure of the Pledgor to comply with any of the foregoing, the Pledgee may make such payments and take such actions on account thereof as it, in its discretion, deems desirable. The Pledgor shall reimburse the Pledgee immediately on demand for each and all such payments and any costs so incurred.
8. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents and warrants that as of the date hereof:
(a) The Pledgor is the legal, record and beneficial owner of and has good and marketable title to the Pledged Collateral;
(b) This Agreement constitutes a valid, legal and binding obligation of the Pledgor enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by the Pledgor are not in contravention of any prior obligation of the Pledgor or of any obligation with respect to the Pledged Collateral;
(c) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement creates a valid lien and a security interest in the Pledged Collateral;
(d) No material statement made by the Pledgor in this Agreement or any document delivered hereunder is untrue as of the date hereof or omits to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and
(e) There are no restrictions upon the transfer of any of the Common Stock other than those imposed pursuant to federal and state securities laws and by the terms of the Company Stock Agreements and the Note.
9. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that he will defend the Pledgee's right, title and security interest in and to the Pledged Collateral and the proceeds thereof against the claims of all persons.
10. DEFAULT. In the event that the Pledgor defaults in the performance of any of the terms of this Agreement or of the Note, the Pledgee shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of New York at the date of this Agreement; PROVIDED, HOWEVER, that if the Pledgee decides to foreclose on the Pledged Collateral, it shall be governed by and do so pursuant to the terms of the Company Stock Agreements. Out of the proceeds of any sale the Pledgee may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.
11. WAIVERS. The Pledgor assents to any extension or waiver of any obligation of the Pledgor secured hereby. The Pledgee shall have no duty with respect to the preservation or protection of the Pledged Collateral or any income thereof or the preservation or protection of any rights against other parties with respect thereto. The Pledgee may exercise any rights it may have hereunder against the Pledgor or the Pledged Collateral, after having given notice to the Pledgor, whether or not it has given any other party any notice or otherwise taken any action against any other party or assets for the enforcement of such rights.
No waiver or modification of any of the provisions hereof shall be binding upon the Pledgee unless in writing and signed by a duly authorized representative thereof, and no waiver by the Pledgee of any right it may have hereunder shall be deemed a waiver of any other rights it may have. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly or concurrently.
12. ASSIGNMENT. The Pledgor shall not pledge, assign or otherwise transfer any or all of its rights in the Pledged Collateral or hereunder, without the prior written consent of the Pledgee.
13. COSTS. The Pledgor shall pay all costs, including without limitation, reasonable attorneys' fees, incurred by the Pledgee in protecting, enforcing or releasing any of the Pledgee's rights hereunder.
14. ADDITIONAL DOCUMENTS. Upon the request of the Pledgee, the Pledgor will execute and deliver such further documents and take such further action as the Pledgee may reasonably request in order to give full effect to the purposes of this Agreement.
15. MISCELLANEOUS. This Agreement shall be interpreted under and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. The parties hereby irrevocably submit on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of the State of New York and any courts competent to hear appeals therefrom. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the last known address of the addressee.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and permitted assigns, and may not be changed or modified except by an instrument in writing, executed by both parties.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first written above.
PLEDGOR:
/s/David F. Brussard ------------------------------------- David F. Brussard |
HOME ADDRESS:
PLEDGEE: SAFETY HOLDINGS, INC.
/s/A. Richard Caputo, Jr. ------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
WITNESS:
/s/Peter S. Rice ----------------------- Name: Peter S. Rice |
EXHIBIT 10.15
PLEDGE AGREEMENT
AGREEMENT made as of October 16, 2001, between Daniel F. Crimmins ("PLEDGOR") and SAFETY HOLDINGS, INC., a Delaware corporation ("PLEDGEE" or the "COMPANY").
WHEREAS, at the time of the execution of this Agreement the Pledgor is indebted to the Pledgee in the principal amount of SIXTY-SIX THOUSAND FIVE HUNDRED DOLLARS ($66,500.00), as evidenced by the Recourse Promissory Note for such amount executed in favor of the Pledgee by the Pledgor of even date herewith (the "NOTE") a copy of which is attached hereto; and
WHEREAS, to induce the Pledgee to make the loan evidenced by the Note, the Pledgor has agreed to pledge certain securities in favor of Pledgee as security for the repayment of the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. PLEDGE. In consideration of the sum of $66,500.00 loaned to the
Pledgor by the Pledgee, receipt of which hereby is acknowledged, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee a security interest in,
all of his right, title and interest in and to the following (the "PLEDGED
COLLATERAL"): (i) 6,650.000 shares of Common Stock of the Company, par value
$0.01 per share, presently owned by the Pledgor (the "COMMON STOCK"), (ii) any
other capital stock of the Company hereafter required by Pledgor, including any
shares of Common Stock acquired by Pledgor pursuant to the Company's 2001
Restricted Stock Plan, and (iii) all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the stock referred to in clauses
(i), (ii) and (iii) to the extent not included above, all proceeds (as such term
is defined in the Uniform Commercial Code as in effect in the State of New York)
of the foregoing collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under the Note, whether for principal, interest, fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter existing under this Agreement (the "OBLIGATIONS").
3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE, TRANSFER, ETC. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledgee shall have the right, at any time and without notice to the Pledgor, to transfer to, or to register in the name of the Pledgee or any of its nominees, any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor specified in SECTION 5 hereof.
4. DIVIDENDS. During the term of this Agreement, within ten (10) days after any payment of a dividend with respect to the Common Stock, such dividend payment shall be applied to the payment first of accrued interest, then of principal and then other Obligations under or in respect of the Note.
5. VOTING RIGHTS. Subject to the restrictions imposed upon the Pledgor by the Management Subscription Agreement, dated as of October__, 2001, by and among the Company and the management signatories thereto, and the Stockholder's Agreement, dated as of October__, 2001, among the Company and its stockholders (collectively, the "COMPANY STOCK AGREEMENTS"), during the term of this Agreement, and so long as the Pledgor is not in default in the performance of any of the terms of this Agreement or of the Note, the Pledgor shall be entitled to exercise all of his voting and other consensual rights pertaining to the Pledged Collateral or any part thereof, provided that the exercise of said rights shall in no way jeopardize the Pledgee's security hereunder. To this end, the Pledgee shall execute and deliver to the Pledgor all proxies and other instruments as the Pledgor may reasonably request. Upon the occurrence and during the continuance of a default under this Agreement or the Note, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to this SECTION 5 shall cease, and all such rights shall thereupon become vested in the Pledgee, who shall thereupon have the sole right to exercise such voting and other consensual rights, subject to the restrictions imposed upon the Pledgee by the Company Stock Agreements.
6. PAYMENT OF OBLIGATIONS; RELEASE OF COLLATERAL. Upon payment in full of the Obligations, the Pledgee shall, upon the request of the Pledgor and at his expense, cause the Company to make such entries upon its share register as are necessary to vest in the Pledgor full right, title and interest in such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof.
7. PROTECTION OF PLEDGED COLLATERAL. The Pledgor shall pay all taxes, charges and assessments against the Pledged Collateral and do all acts necessary and appropriate to preserve and maintain the value thereof. Without limiting the generality of the foregoing, the Pledgor shall not grant a security interest in the Pledged Collateral to any other person or entity without the prior written consent of the Pledgee thereto. Upon the failure of the Pledgor to comply with any of the foregoing, the Pledgee may make such payments and take such actions on account thereof as it, in its discretion, deems desirable. The Pledgor shall reimburse the Pledgee immediately on demand for each and all such payments and any costs so incurred.
8. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents and warrants that as of the date hereof:
(a) The Pledgor is the legal, record and beneficial owner of and has good and marketable title to the Pledged Collateral;
(b) This Agreement constitutes a valid, legal and binding obligation of the Pledgor enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by the Pledgor are not in contravention of any prior obligation of the Pledgor or of any obligation with respect to the Pledged Collateral;
(c) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement creates a valid lien and a security interest in the Pledged Collateral;
(d) No material statement made by the Pledgor in this Agreement or any document delivered hereunder is untrue as of the date hereof or omits to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and
(e) There are no restrictions upon the transfer of any of the Common Stock other than those imposed pursuant to federal and state securities laws and by the terms of the Company Stock Agreements and the Note.
9. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that he will defend the Pledgee's right, title and security interest in and to the Pledged Collateral and the proceeds thereof against the claims of all persons.
10. DEFAULT. In the event that the Pledgor defaults in the performance of any of the terms of this Agreement or of the Note, the Pledgee shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of New York at the date of this Agreement; PROVIDED, HOWEVER, that if the Pledgee decides to foreclose on the Pledged Collateral, it shall be governed by and do so pursuant to the terms of the Company Stock Agreements. Out of the proceeds of any sale the Pledgee may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.
11. WAIVERS. The Pledgor assents to any extension or waiver of any obligation of the Pledgor secured hereby. The Pledgee shall have no duty with respect to the preservation or protection of the Pledged Collateral or any income thereof or the preservation or protection of any rights against other parties with respect thereto. The Pledgee may exercise any rights it may have hereunder against the Pledgor or the Pledged Collateral, after having given notice to the Pledgor, whether or not it has given any other party any notice or otherwise taken any action against any other party or assets for the enforcement of such rights.
No waiver or modification of any of the provisions hereof shall be binding upon the Pledgee unless in writing and signed by a duly authorized representative thereof, and no waiver by the Pledgee of any right it may have hereunder shall be deemed a waiver of any other rights it may have. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly or concurrently.
12. ASSIGNMENT. The Pledgor shall not pledge, assign or otherwise transfer any or all of its rights in the Pledged Collateral or hereunder, without the prior written consent of the Pledgee.
13. COSTS. The Pledgor shall pay all costs, including without limitation, reasonable attorneys' fees, incurred by the Pledgee in protecting, enforcing or releasing any of the Pledgee's rights hereunder.
14. ADDITIONAL DOCUMENTS. Upon the request of the Pledgee, the Pledgor will execute and deliver such further documents and take such further action as the Pledgee may reasonably request in order to give full effect to the purposes of this Agreement.
15. MISCELLANEOUS. This Agreement shall be interpreted under and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. The parties hereby irrevocably submit on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of the State of New York and any courts competent to hear appeals therefrom. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the last known address of the addressee.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and permitted assigns, and may not be changed or modified except by an instrument in writing, executed by both parties.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first written above.
PLEDGOR:
/s/Daniel F. Crimmins ------------------------------------- Daniel F. Crimmins |
HOME ADDRESS:
PLEDGEE: SAFETY HOLDINGS, INC.
/s/A. Richard Caputo, Jr. ------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
WITNESS:
/s/Peter S. Rice ----------------------- Name: Peter S. Rice |
EXHIBIT 10.16
PLEDGE AGREEMENT
AGREEMENT made as of October 16, 2001, between Robert J. Kerton ("PLEDGOR") and SAFETY HOLDINGS, INC., a Delaware corporation ("PLEDGEE" or the "COMPANY").
WHEREAS, at the time of the execution of this Agreement the Pledgor is indebted to the Pledgee in the principal amount of SIXTY-FOUR THOUSAND ONE HUNDRED TWENTY-FIVE DOLLARS ($64,125.00), as evidenced by the Recourse Promissory Note for such amount executed in favor of the Pledgee by the Pledgor of even date herewith (the "NOTE") a copy of which is attached hereto; and
WHEREAS, to induce the Pledgee to make the loan evidenced by the Note, the Pledgor has agreed to pledge certain securities in favor of Pledgee as security for the repayment of the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. PLEDGE. In consideration of the sum of $64,125.00 loaned to the
Pledgor by the Pledgee, receipt of which hereby is acknowledged, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee a security interest in,
all of his right, title and interest in and to the following (the "PLEDGED
COLLATERAL"): (i) 6,412.500 shares of Common Stock of the Company, par value
$0.01 per share, presently owned by the Pledgor (the "COMMON STOCK"), (ii) any
other capital stock of the Company hereafter required by Pledgor, including any
shares of Common Stock acquired by Pledgor pursuant to the Company's 2001
Restricted Stock Plan, and (iii) all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the stock referred to in clauses
(i), (ii) and (iii) to the extent not included above, all proceeds (as such term
is defined in the Uniform Commercial Code as in effect in the State of New York)
of the foregoing collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under the Note, whether for principal, interest, fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter existing under this Agreement (the "OBLIGATIONS").
3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE, TRANSFER, ETC. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledgee shall have the right, at any time and without notice to the Pledgor, to transfer to, or to register in the name of the Pledgee or any of its nominees, any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor specified in SECTION 5 hereof.
4. DIVIDENDS. During the term of this Agreement, within ten (10) days after any payment of a dividend with respect to the Common Stock, such dividend payment shall be applied to the payment first of accrued interest, then of principal and then other Obligations under or in respect of the Note.
5. VOTING RIGHTS. Subject to the restrictions imposed upon the Pledgor by the Management Subscription Agreement, dated as of October__, 2001, by and among the Company and the management signatories thereto, and the Stockholder's Agreement, dated as of October__, 2001, among the Company and its stockholders (collectively, the "COMPANY STOCK AGREEMENTS"), during the term of this Agreement, and so long as the Pledgor is not in default in the performance of any of the terms of this Agreement or of the Note, the Pledgor shall be entitled to exercise all of his voting and other consensual rights pertaining to the Pledged Collateral or any part thereof, provided that the exercise of said rights shall in no way jeopardize the Pledgee's security hereunder. To this end, the Pledgee shall execute and deliver to the Pledgor all proxies and other instruments as the Pledgor may reasonably request. Upon the occurrence and during the continuance of a default under this Agreement or the Note, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to this SECTION 5 shall cease, and all such rights shall thereupon become vested in the Pledgee, who shall thereupon have the sole right to exercise such voting and other consensual rights, subject to the restrictions imposed upon the Pledgee by the Company Stock Agreements.
6. PAYMENT OF OBLIGATIONS; RELEASE OF COLLATERAL. Upon payment in full of the Obligations, the Pledgee shall, upon the request of the Pledgor and at his expense, cause the Company to make such entries upon its share register as are necessary to vest in the Pledgor full right, title and interest in such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof.
7. PROTECTION OF PLEDGED COLLATERAL. The Pledgor shall pay all taxes, charges and assessments against the Pledged Collateral and do all acts necessary and appropriate to preserve and maintain the value thereof. Without limiting the generality of the foregoing, the Pledgor shall not grant a security interest in the Pledged Collateral to any other person or entity without the prior written consent of the Pledgee thereto. Upon the failure of the Pledgor to comply with any of the foregoing, the Pledgee may make such payments and take such actions on account thereof as it, in its discretion, deems desirable. The Pledgor shall reimburse the Pledgee immediately on demand for each and all such payments and any costs so incurred.
8. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents and warrants that as of the date hereof:
(a) The Pledgor is the legal, record and beneficial owner of and has good and marketable title to the Pledged Collateral;
(b) This Agreement constitutes a valid, legal and binding obligation of the Pledgor enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by the Pledgor are not in contravention of any prior obligation of the Pledgor or of any obligation with respect to the Pledged Collateral;
(c) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement creates a valid lien and a security interest in the Pledged Collateral;
(d) No material statement made by the Pledgor in this Agreement or any document delivered hereunder is untrue as of the date hereof or omits to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and
(e) There are no restrictions upon the transfer of any of the Common Stock other than those imposed pursuant to federal and state securities laws and by the terms of the Company Stock Agreements and the Note.
9. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that he will defend the Pledgee's right, title and security interest in and to the Pledged Collateral and the proceeds thereof against the claims of all persons.
10. DEFAULT. In the event that the Pledgor defaults in the performance of any of the terms of this Agreement or of the Note, the Pledgee shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of New York at the date of this Agreement; PROVIDED, HOWEVER, that if the Pledgee decides to foreclose on the Pledged Collateral, it shall be governed by and do so pursuant to the terms of the Company Stock Agreements. Out of the proceeds of any sale the Pledgee may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.
11. WAIVERS. The Pledgor assents to any extension or waiver of any obligation of the Pledgor secured hereby. The Pledgee shall have no duty with respect to the preservation or protection of the Pledged Collateral or any income thereof or the preservation or protection of any rights against other parties with respect thereto. The Pledgee may exercise any rights it may have hereunder against the Pledgor or the Pledged Collateral, after having given notice to the Pledgor, whether or not it has given any other party any notice or otherwise taken any action against any other party or assets for the enforcement of such rights.
No waiver or modification of any of the provisions hereof shall be binding upon the Pledgee unless in writing and signed by a duly authorized representative thereof, and no waiver by the Pledgee of any right it may have hereunder shall be deemed a waiver of any other rights it may have. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly or concurrently.
12. ASSIGNMENT. The Pledgor shall not pledge, assign or otherwise transfer any or all of its rights in the Pledged Collateral or hereunder, without the prior written consent of the Pledgee.
13. COSTS. The Pledgor shall pay all costs, including without limitation, reasonable attorneys' fees, incurred by the Pledgee in protecting, enforcing or releasing any of the Pledgee's rights hereunder.
14. ADDITIONAL DOCUMENTS. Upon the request of the Pledgee, the Pledgor will execute and deliver such further documents and take such further action as the Pledgee may reasonably request in order to give full effect to the purposes of this Agreement.
15. MISCELLANEOUS. This Agreement shall be interpreted under and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. The parties hereby irrevocably submit on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of the State of New York and any courts competent to hear appeals therefrom. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the last known address of the addressee.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and permitted assigns, and may not be changed or modified except by an instrument in writing, executed by both parties.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first written above.
PLEDGOR:
/s/Robert J. Kerton ------------------------------------- Robert J. Kerton |
HOME ADDRESS:
PLEDGEE: SAFETY HOLDINGS, INC.
/s/A. Richard Caputo, Jr. ------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
WITNESS:
/s/Peter S. Rice ----------------------- Name: Peter S. Rice |
EXHIBIT 10.17
PLEDGE AGREEMENT
AGREEMENT made as of October 16, 2001, between Daniel D. Loranger ("PLEDGOR") and SAFETY HOLDINGS, INC., a Delaware corporation ("PLEDGEE" or the "COMPANY").
WHEREAS, at the time of the execution of this Agreement the Pledgor is indebted to the Pledgee in the principal amount of NINETY-SEVEN THOUSAND THREE HUNDRED SEVENTY-FIVE DOLLARS ($97,375.00), as evidenced by the Recourse Promissory Note for such amount executed in favor of the Pledgee by the Pledgor of even date herewith (the "NOTE") a copy of which is attached hereto; and
WHEREAS, to induce the Pledgee to make the loan evidenced by the Note, the Pledgor has agreed to pledge certain securities in favor of Pledgee as security for the repayment of the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. PLEDGE. In consideration of the sum of $97,375.00 loaned to the
Pledgor by the Pledgee, receipt of which hereby is acknowledged, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee a security interest in,
all of his right, title and interest in and to the following (the "PLEDGED
COLLATERAL"): (i) 9,737.500 shares of Common Stock of the Company, par value
$0.01 per share, presently owned by the Pledgor (the "COMMON STOCK"), (ii) any
other capital stock of the Company hereafter required by Pledgor, including any
shares of Common Stock acquired by Pledgor pursuant to the Company's 2001
Restricted Stock Plan, and (iii) all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the stock referred to in clauses
(i), (ii) and (iii) to the extent not included above, all proceeds (as such term
is defined in the Uniform Commercial Code as in effect in the State of New York)
of the foregoing collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under the Note, whether for principal, interest, fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter existing under this Agreement (the "OBLIGATIONS").
3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE, TRANSFER, ETC. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledgee shall have the right, at any time and without notice to the Pledgor, to transfer to, or to register in the name of the Pledgee or any of its nominees, any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor specified in SECTION 5 hereof.
4. DIVIDENDS. During the term of this Agreement, within ten (10) days after any payment of a dividend with respect to the Common Stock, such dividend payment shall be applied to the payment first of accrued interest, then of principal and then other Obligations under or in respect of the Note.
5. VOTING RIGHTS. Subject to the restrictions imposed upon the Pledgor by the Management Subscription Agreement, dated as of October__, 2001, by and among the Company and the management signatories thereto, and the Stockholder's Agreement, dated as of October__, 2001, among the Company and its stockholders (collectively, the "COMPANY STOCK AGREEMENTS"), during the term of this Agreement, and so long as the Pledgor is not in default in the performance of any of the terms of this Agreement or of the Note, the Pledgor shall be entitled to exercise all of his voting and other consensual rights pertaining to the Pledged Collateral or any part thereof, provided that the exercise of said rights shall in no way jeopardize the Pledgee's security hereunder. To this end, the Pledgee shall execute and deliver to the Pledgor all proxies and other instruments as the Pledgor may reasonably request. Upon the occurrence and during the continuance of a default under this Agreement or the Note, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to this SECTION 5 shall cease, and all such rights shall thereupon become vested in the Pledgee, who shall thereupon have the sole right to exercise such voting and other consensual rights, subject to the restrictions imposed upon the Pledgee by the Company Stock Agreements.
6. PAYMENT OF OBLIGATIONS; RELEASE OF COLLATERAL. Upon payment in full of the Obligations, the Pledgee shall, upon the request of the Pledgor and at his expense, cause the Company to make such entries upon its share register as are necessary to vest in the Pledgor full right, title and interest in such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof.
7. PROTECTION OF PLEDGED COLLATERAL. The Pledgor shall pay all taxes, charges and assessments against the Pledged Collateral and do all acts necessary and appropriate to preserve and maintain the value thereof. Without limiting the generality of the foregoing, the Pledgor shall not grant a security interest in the Pledged Collateral to any other person or entity without the prior written consent of the Pledgee thereto. Upon the failure of the Pledgor to comply with any of the foregoing, the Pledgee may make such payments and take such actions on account thereof as it, in its discretion, deems desirable. The Pledgor shall reimburse the Pledgee immediately on demand for each and all such payments and any costs so incurred.
8. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents and warrants that as of the date hereof:
(a) The Pledgor is the legal, record and beneficial owner of and has good and marketable title to the Pledged Collateral;
(b) This Agreement constitutes a valid, legal and binding obligation of the Pledgor enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by the Pledgor are not in contravention of any prior obligation of the Pledgor or of any obligation with respect to the Pledged Collateral;
(c) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement creates a valid lien and a security interest in the Pledged Collateral;
(d) No material statement made by the Pledgor in this Agreement or any document delivered hereunder is untrue as of the date hereof or omits to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and
(e) There are no restrictions upon the transfer of any of the Common Stock other than those imposed pursuant to federal and state securities laws and by the terms of the Company Stock Agreements and the Note.
9. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that he will defend the Pledgee's right, title and security interest in and to the Pledged Collateral and the proceeds thereof against the claims of all persons.
10. DEFAULT. In the event that the Pledgor defaults in the performance of any of the terms of this Agreement or of the Note, the Pledgee shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of New York at the date of this Agreement; PROVIDED, HOWEVER, that if the Pledgee decides to foreclose on the Pledged Collateral, it shall be governed by and do so pursuant to the terms of the Company Stock Agreements. Out of the proceeds of any sale the Pledgee may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.
11. WAIVERS. The Pledgor assents to any extension or waiver of any obligation of the Pledgor secured hereby. The Pledgee shall have no duty with respect to the preservation or protection of the Pledged Collateral or any income thereof or the preservation or protection of any rights against other parties with respect thereto. The Pledgee may exercise any rights it may have hereunder against the Pledgor or the Pledged Collateral, after having given notice to the Pledgor, whether or not it has given any other party any notice or otherwise taken any action against any other party or assets for the enforcement of such rights.
No waiver or modification of any of the provisions hereof shall be binding upon the Pledgee unless in writing and signed by a duly authorized representative thereof, and no waiver by the Pledgee of any right it may have hereunder shall be deemed a waiver of any other rights it may have. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly or concurrently.
12. ASSIGNMENT. The Pledgor shall not pledge, assign or otherwise transfer any or all of its rights in the Pledged Collateral or hereunder, without the prior written consent of the Pledgee.
13. COSTS. The Pledgor shall pay all costs, including without limitation, reasonable attorneys' fees, incurred by the Pledgee in protecting, enforcing or releasing any of the Pledgee's rights hereunder.
14. ADDITIONAL DOCUMENTS. Upon the request of the Pledgee, the Pledgor will execute and deliver such further documents and take such further action as the Pledgee may reasonably request in order to give full effect to the purposes of this Agreement.
15. MISCELLANEOUS. This Agreement shall be interpreted under and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. The parties hereby irrevocably submit on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of the State of New York and any courts competent to hear appeals therefrom. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the last known address of the addressee.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and permitted assigns, and may not be changed or modified except by an instrument in writing, executed by both parties.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first written above.
PLEDGOR:
/s/Daniel D. Loranger ------------------------------------- Daniel D. Loranger |
HOME ADDRESS:
PLEDGEE: SAFETY HOLDINGS, INC.
/s/A. Richard Caputo, Jr. ------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
WITNESS:
/s/Peter S. Rice ----------------------- Name: Peter S. Rice |
EXHIBIT 10.18
PLEDGE AGREEMENT
AGREEMENT made as of October 16, 2001, between Daniel D. Loranger ("PLEDGOR") and SAFETY HOLDINGS, INC., a Delaware corporation ("PLEDGEE" or the "COMPANY").
WHEREAS, at the time of the execution of this Agreement the Pledgor is indebted to the Pledgee in the principal amount of TWENTY-FIVE THOUSAND DOLLARS ($25.000.00), as evidenced by the Recourse Promissory Note for such amount executed in favor of the Pledgee by the Pledgor of even date herewith (the "NOTE") a copy of which is attached hereto; and
WHEREAS, to induce the Pledgee to make the loan evidenced by the Note, the Pledgor has agreed to pledge certain securities in favor of Pledgee as security for the repayment of the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. PLEDGE. In consideration of the sum of $25.000.00 loaned to the
Pledgor by the Pledgee, receipt of which hereby is acknowledged, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee a security interest in,
all of his right, title and interest in and to the following (the "PLEDGED
COLLATERAL"): (i) 2,500.000 shares of Common Stock of the Company, par value
$0.01 per share, presently owned by the Pledgor (the "COMMON STOCK"), (ii) any
other capital stock of the Company hereafter required by Pledgor, including any
shares of Common Stock acquired by Pledgor pursuant to the Company's 2001
Restricted Stock Plan, and (iii) all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the stock referred to in clauses
(i), (ii) and (iii) to the extent not included above, all proceeds (as such term
is defined in the Uniform Commercial Code as in effect in the State of New York)
of the foregoing collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under the Note, whether for principal, interest, fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter existing under this Agreement (the "OBLIGATIONS").
3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE, TRANSFER, ETC. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledgee shall have the right, at any time and without notice to the Pledgor, to transfer to, or to register in the name of the Pledgee or any of its nominees, any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor specified in SECTION 5 hereof.
4. DIVIDENDS. During the term of this Agreement, within ten (10) days after any payment of a dividend with respect to the Common Stock, such dividend payment shall be applied to the payment first of accrued interest, then of principal and then other Obligations under or in respect of the Note.
5. VOTING RIGHTS. Subject to the restrictions imposed upon the Pledgor by the Management Subscription Agreement, dated as of October__, 2001, by and among the Company and the management signatories thereto, the Stockholder's Agreement, dated as of October__, 2001, among the Company and its stockholders, the Company's 2001 Restricted Stock Plan and the Executive Restricted Stock Award Agreement, dated as of October __ 2001 by and between the Company and the Pledgor (collectively, the "COMPANY STOCK AGREEMENTS"), during the term of this Agreement, and so long as the Pledgor is not in default in the performance of any of the terms of this Agreement or of the Note, the Pledgor shall be entitled to exercise all of his voting and other consensual rights pertaining to the Pledged Collateral or any part thereof, provided that the exercise of said rights shall in no way jeopardize the Pledgee's security hereunder. To this end, the Pledgee shall execute and deliver to the Pledgor all proxies and other instruments as the Pledgor may reasonably request. Upon the occurrence and during the continuance of a default under this Agreement or the Note, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to this SECTION 5 shall cease, and all such rights shall thereupon become vested in the Pledgee, who shall thereupon have the sole right to exercise such voting and other consensual rights, subject to the restrictions imposed upon the Pledgee by the Company Stock Agreements.
6. PAYMENT OF OBLIGATIONS; RELEASE OF COLLATERAL. Upon payment in full of the Obligations, the Pledgee shall, upon the request of the Pledgor and at his expense, cause the Company to make such entries upon its share register as are necessary to vest in the Pledgor full right, title and interest in such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof.
7. PROTECTION OF PLEDGED COLLATERAL. The Pledgor shall pay all taxes, charges and assessments against the Pledged Collateral and do all acts necessary and appropriate to preserve and maintain the value thereof. Without limiting the generality of the foregoing, the Pledgor shall not grant a security interest in the Pledged Collateral to any other person or entity without the prior written consent of the Pledgee thereto. Upon the failure of the Pledgor to comply with any of the foregoing, the Pledgee may make such payments and take such actions on account thereof as it, in its discretion, deems desirable. The Pledgor shall reimburse the Pledgee immediately on demand for each and all such payments and any costs so incurred.
8. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents and warrants that as of the date hereof:
(a) The Pledgor is the legal, record and beneficial owner of and has good and marketable title to the Pledged Collateral;
(b) This Agreement constitutes a valid, legal and binding obligation of the Pledgor enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by the Pledgor are not in contravention of any prior obligation of the Pledgor or of any obligation with respect to the Pledged Collateral;
(c) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement creates a valid lien and a security interest in the Pledged Collateral;
(d) No material statement made by the Pledgor in this Agreement or any document delivered hereunder is untrue as of the date hereof or omits to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and
(e) There are no restrictions upon the transfer of any of the Common Stock other than those imposed pursuant to federal and state securities laws and by the terms of the Company Stock Agreements and the Note.
9. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that he will defend the Pledgee's right, title and security interest in and to the Pledged Collateral and the proceeds thereof against the claims of all persons.
10. DEFAULT. In the event that the Pledgor defaults in the performance of any of the terms of this Agreement or of the Note, the Pledgee shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of New York at the date of this Agreement; PROVIDED, HOWEVER, that if the Pledgee decides to foreclose on the Pledged Collateral, it shall be governed by and do so pursuant to the terms of the Company Stock Agreements. Out of the proceeds of any sale the Pledgee may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.
11. WAIVERS. The Pledgor assents to any extension or waiver of any obligation of the Pledgor secured hereby. The Pledgee shall have no duty with respect to the preservation or protection of the Pledged Collateral or any income thereof or the preservation or protection of any rights against other parties with respect thereto. The Pledgee may exercise any rights it may have hereunder against the Pledgor or the Pledged Collateral, after having given notice to the Pledgor, whether or not it has given any other party any notice or otherwise taken any action against any other party or assets for the enforcement of such rights.
No waiver or modification of any of the provisions hereof shall be binding upon the Pledgee unless in writing and signed by a duly authorized representative thereof, and no waiver by the Pledgee of any right it may have hereunder shall be deemed a waiver of any other rights it may have. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly or concurrently.
12. ASSIGNMENT. The Pledgor shall not pledge, assign or otherwise transfer any or all of its rights in the Pledged Collateral or hereunder, without the prior written consent of the Pledgee.
13. COSTS. The Pledgor shall pay all costs, including without limitation, reasonable attorneys' fees, incurred by the Pledgee in protecting, enforcing or releasing any of the Pledgee's rights hereunder.
14. ADDITIONAL DOCUMENTS. Upon the request of the Pledgee, the Pledgor will execute and deliver such further documents and take such further action as the Pledgee may reasonably request in order to give full effect to the purposes of this Agreement.
15. MISCELLANEOUS. This Agreement shall be interpreted under and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. The parties hereby irrevocably submit on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of the State of New York and any courts competent to hear appeals therefrom. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the last known address of the addressee.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and permitted assigns, and may not be changed or modified except by an instrument in writing, executed by both parties.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first written above.
PLEDGOR:
/s/Daniel D. Loranger ------------------------------------- Daniel D. Loranger |
HOME ADDRESS:
PLEDGEE: SAFETY HOLDINGS, INC.
/s/A. Richard Caputo, Jr. ------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
WITNESS:
/s/David F. Brussard ---------------------------- Name: David F. Brussard |
EXHIBIT 10.19
PLEDGE AGREEMENT
AGREEMENT made as of October 16, 2001, between Edward N. Patrick, Jr. ("PLEDGOR") and SAFETY HOLDINGS, INC., a Delaware corporation ("PLEDGEE" or the "COMPANY").
WHEREAS, at the time of the execution of this Agreement the Pledgor is indebted to the Pledgee in the principal amount of NINETY-FIVE THOUSAND DOLLARS ($95,000.00), as evidenced by the Recourse Promissory Note for such amount executed in favor of the Pledgee by the Pledgor of even date herewith (the "NOTE") a copy of which is attached hereto; and
WHEREAS, to induce the Pledgee to make the loan evidenced by the Note, the Pledgor has agreed to pledge certain securities in favor of Pledgee as security for the repayment of the Note.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
1. PLEDGE. In consideration of the sum of $95,000.00 loaned to the
Pledgor by the Pledgee, receipt of which hereby is acknowledged, the Pledgor
hereby pledges to the Pledgee, and grants to the Pledgee a security interest in,
all of his right, title and interest in and to the following (the "PLEDGED
COLLATERAL"): (i) 9,500.000 shares of Common Stock of the Company, par value
$0.01 per share, presently owned by the Pledgor (the "COMMON STOCK"), (ii) any
other capital stock of the Company hereafter required by Pledgor, including any
shares of Common Stock acquired by Pledgor pursuant to the Company's 2001
Restricted Stock Plan, and (iii) all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the stock referred to in clauses
(i), (ii) and (iii) to the extent not included above, all proceeds (as such term
is defined in the Uniform Commercial Code as in effect in the State of New York)
of the foregoing collateral.
2. SECURITY FOR OBLIGATIONS. This Agreement secures the payment of all obligations of the Pledgor now or hereafter existing under the Note, whether for principal, interest, fees, expenses or otherwise, and all obligations of the Pledgor now or hereafter existing under this Agreement (the "OBLIGATIONS").
3. DELIVERY OF PLEDGED PROPERTY; REGISTRATION OF PLEDGE, TRANSFER, ETC. All certificates or instruments representing or evidencing the Pledged Collateral shall be delivered to and held by or on behalf of the Pledgee pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary instruments of transfer or assignment, duly executed in blank. The Pledgee shall have the right, at any time and without notice to the Pledgor, to transfer to, or to register in the name of the Pledgee or any of its nominees, any or all of the Pledged Collateral, subject only to the revocable rights of the Pledgor specified in SECTION 5 hereof.
4. DIVIDENDS. During the term of this Agreement, within ten (10) days after any payment of a dividend with respect to the Common Stock, such dividend payment shall be applied to the payment first of accrued interest, then of principal and then other Obligations under or in respect of the Note.
5. VOTING RIGHTS. Subject to the restrictions imposed upon the Pledgor by the Management Subscription Agreement, dated as of October__, 2001, by and among the Company and the management signatories thereto, and the Stockholder's Agreement, dated as of October__, 2001, among the Company and its stockholders (collectively, the "COMPANY STOCK AGREEMENTS"), during the term of this Agreement, and so long as the Pledgor is not in default in the performance of any of the terms of this Agreement or of the Note, the Pledgor shall be entitled to exercise all of his voting and other consensual rights pertaining to the Pledged Collateral or any part thereof, provided that the exercise of said rights shall in no way jeopardize the Pledgee's security hereunder. To this end, the Pledgee shall execute and deliver to the Pledgor all proxies and other instruments as the Pledgor may reasonably request. Upon the occurrence and during the continuance of a default under this Agreement or the Note, all rights of the Pledgor to exercise the voting and other consensual rights which he would otherwise be entitled to exercise pursuant to this SECTION 5 shall cease, and all such rights shall thereupon become vested in the Pledgee, who shall thereupon have the sole right to exercise such voting and other consensual rights, subject to the restrictions imposed upon the Pledgee by the Company Stock Agreements.
6. PAYMENT OF OBLIGATIONS; RELEASE OF COLLATERAL. Upon payment in full of the Obligations, the Pledgee shall, upon the request of the Pledgor and at his expense, cause the Company to make such entries upon its share register as are necessary to vest in the Pledgor full right, title and interest in such of the Pledged Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof.
7. PROTECTION OF PLEDGED COLLATERAL. The Pledgor shall pay all taxes, charges and assessments against the Pledged Collateral and do all acts necessary and appropriate to preserve and maintain the value thereof. Without limiting the generality of the foregoing, the Pledgor shall not grant a security interest in the Pledged Collateral to any other person or entity without the prior written consent of the Pledgee thereto. Upon the failure of the Pledgor to comply with any of the foregoing, the Pledgee may make such payments and take such actions on account thereof as it, in its discretion, deems desirable. The Pledgor shall reimburse the Pledgee immediately on demand for each and all such payments and any costs so incurred.
8. REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR. The Pledgor represents and warrants that as of the date hereof:
(a) The Pledgor is the legal, record and beneficial owner of and has good and marketable title to the Pledged Collateral;
(b) This Agreement constitutes a valid, legal and binding obligation of the Pledgor enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by the Pledgor are not in contravention of any prior obligation of the Pledgor or of any obligation with respect to the Pledged Collateral;
(c) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement creates a valid lien and a security interest in the Pledged Collateral;
(d) No material statement made by the Pledgor in this Agreement or any document delivered hereunder is untrue as of the date hereof or omits to state a material fact, necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; and
(e) There are no restrictions upon the transfer of any of the Common Stock other than those imposed pursuant to federal and state securities laws and by the terms of the Company Stock Agreements and the Note.
9. COVENANTS OF THE PLEDGOR. The Pledgor covenants and agrees that he will defend the Pledgee's right, title and security interest in and to the Pledged Collateral and the proceeds thereof against the claims of all persons.
10. DEFAULT. In the event that the Pledgor defaults in the performance of any of the terms of this Agreement or of the Note, the Pledgee shall have the rights and remedies provided in the Uniform Commercial Code in force in the State of New York at the date of this Agreement; PROVIDED, HOWEVER, that if the Pledgee decides to foreclose on the Pledged Collateral, it shall be governed by and do so pursuant to the terms of the Company Stock Agreements. Out of the proceeds of any sale the Pledgee may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of the sale, and shall pay any balance of such proceeds to the Pledgor.
11. WAIVERS. The Pledgor assents to any extension or waiver of any obligation of the Pledgor secured hereby. The Pledgee shall have no duty with respect to the preservation or protection of the Pledged Collateral or any income thereof or the preservation or protection of any rights against other parties with respect thereto. The Pledgee may exercise any rights it may have hereunder against the Pledgor or the Pledged Collateral, after having given notice to the Pledgor, whether or not it has given any other party any notice or otherwise taken any action against any other party or assets for the enforcement of such rights.
No waiver or modification of any of the provisions hereof shall be binding upon the Pledgee unless in writing and signed by a duly authorized representative thereof, and no waiver by the Pledgee of any right it may have hereunder shall be deemed a waiver of any other rights it may have. All rights and remedies of the Pledgee shall be cumulative and may be exercised singly or concurrently.
12. ASSIGNMENT. The Pledgor shall not pledge, assign or otherwise transfer any or all of its rights in the Pledged Collateral or hereunder, without the prior written consent of the Pledgee.
13. COSTS. The Pledgor shall pay all costs, including without limitation, reasonable attorneys' fees, incurred by the Pledgee in protecting, enforcing or releasing any of the Pledgee's rights hereunder.
14. ADDITIONAL DOCUMENTS. Upon the request of the Pledgee, the Pledgor will execute and deliver such further documents and take such further action as the Pledgee may reasonably request in order to give full effect to the purposes of this Agreement.
15. MISCELLANEOUS. This Agreement shall be interpreted under and construed in accordance with the laws of the State of New York, without regard to the principles of conflicts of laws. The parties hereby irrevocably submit on a non-exclusive basis to the jurisdiction of the federal courts of the United States of America, the courts of the State of New York and any courts competent to hear appeals therefrom. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the last known address of the addressee.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors and permitted assigns, and may not be changed or modified except by an instrument in writing, executed by both parties.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement on the date first written above.
PLEDGOR:
/s/Edward N. Patrick, Jr. ------------------------------------- Edward N. Patrick, Jr. |
HOME ADDRESS:
PLEDGEE: SAFETY HOLDINGS, INC.
/s/A. Richard Caputo, Jr. ------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
WITNESS:
/s/Peter S. Rice ----------------------- Name: Peter S. Rice |
EXHIBIT 10.20
SAFETY HOLDINGS, INC.
October 16, 2001
To the Persons listed on
Schedule A attached hereto
Re: TAX INDEMNITY
Ladies and Gentlemen:
As you know, Safety Holdings, Inc. (the "COMPANY") and the persons and entities whose names are set forth on Exhibit A hereto (collectively, the "MANAGEMENT STOCKHOLDERS" or "INDEMNITEES") propose to enter into that certain Management Subscription Agreement (the "SUBSCRIPTION AGREEMENT") dated as of October __, 2001, pursuant to which each Stockholder will (i) subscribe for a certain number of shares of the Company's Common Stock, par value $0.01 per share (the "COMMON STOCK"), (ii) tender in consideration of the subscription for such Common Stock a promissory note executed and delivered by the Stockholder in favor of the Company (the "NOTES") and/or cash and (iii) enter into a Stock Pledge Agreement (the "PLEDGE AGREEMENTS") in favor of the Company in order to secure the payment of amounts due under the Notes. As a condition precedent to each Stockholder's acquisition of the Common Stock, the Company agrees to the matters set forth in this letter agreement (the "LETTER AGREEMENT").
1. DEFINED TERMS. As used in this Letter Agreement, the following terms shall have the following respective meanings:
"After-Tax Basis" means, with respect to any payment to be received (to the extent the receipt of such payment constitutes taxable income to such recipient), the amount of such payment increased so that, after deduction of the amount of all Taxes (taking into account any related credits or deductions claimed in the same or a prior period for which such Taxes are imposed ) with respect to the receipt by the recipient of such amounts, such increased payment is equal to the payment otherwise required to be made.
"Code" means the Internal Revenue Code of 1986, as amended.
"Final Determination" means the earliest to occur of the following: (i) the entering of a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final (I.E., when
all appeals allowable hereby and by law have been exhausted by either party to the action or the time for filing such appeals has expired), (ii) the execution of a closing agreement under Section 7121 of the Code or similar provision of state or local law, or any other binding settlement agreement in connection with an administrative or judicial proceeding, (iii) the expiration of the time for instituting an initial suit with respect to a claimed deficiency or (iv) the point in time at which the contest of a proposed adjustment otherwise ends and payment with respect to such adjustment is required to be made.
"IRS" means the United States Internal Revenue Service.
"Required Tax Return Positions" mean the positions that for U.S. federal income Tax purposes (i) the Common Stock purchased by each Indemnitee constitutes property transferred to such Indemnitee in connection with the performance of services pursuant to Section 83(a) of the Code and (ii) the price paid by each Indemnitee for the Common Stock purchased pursuant to the Subscription Agreement was equal to the fair market value of the Common Stock on the date of purchase and, accordingly, each Indemnitee is not required to recognize any income or gain in connection with the filing by such Indemnitee of an election under Section 83(b) of the Code. Any one of the above positions shall be referred to herein as a "Required Tax Return Position."
"Tax" or "Taxes" means all U.S. federal, state or local taxes, levies, imposts, deductions, charges and withholdings of any kind and any related interest and penalties.
"Tax Loss" means any Final Determination with respect to an Indemnitee resulting in an increase in the U.S. federal, state or local income Tax imposed on such Indemnitee to the extent such Final Determination arises from the determination of the IRS that the value of the Common Stock received by such Indemnitee pursuant to the Subscription Agreement was higher than the purchase price agreed upon by the Company and the Indemnitees as set forth in the Subscription Agreement, assuming that (i) each Indemnitee has properly completed, executed and filed a form of election under Section 83(b) of the Code with the IRS within thirty (30) days of the purchase of the Common Stock as required under the Subscription Agreement and (ii) pursuant to such election, such Indemnitee has, for U.S. federal, state and local income Tax purposes, included in taxable income for the taxable year in which the Common Stock was purchased the excess of the fair market value of the Common Stock over the consideration paid for such Common Stock.
2. TAX INDEMNIFICATION. If any Indemnitee incurs a Tax Loss, the Company shall be liable for and shall indemnify, defend and hold harmless such Indemnitee with respect to such Tax Loss as follows:
(a) The Company shall pay to such Indemnitee on an After-Tax Basis an amount equal to the sum of (i) (A) the excess of the value of the Common Stock as determined by the IRS over the value of the Common Stock as determined by the parties under the Subscription Agreement (the "INCREASE AMOUNT") multiplied by (B) a percentage that is equal to the excess of (1) the combined U.S. federal, state and local tax rate on ordinary income (the "COMBINED ORDINARY INCOME RATE"), taking into account the
state of residence of such Indemnitee and the deductibility, to the extent actually allowed to such Indemnitee, of state taxes for U.S. federal income tax purposes, over (2) the combined U.S. federal, state and local tax rate on long-term capital gains (the "COMBINED CAPITAL GAINS RATE"), taking into account the state of residence of such Indemnitee and the deductibility, to the extent actually allowed to such Indemnitee, of state taxes for U.S. federal income tax purposes, plus (ii) any interest, penalties or additions relating to such Tax Loss, plus (iii) such Indemnitee's portion of FICA taxes, if any, applicable to the Increase Amount.
(b) The Company shall loan to such Indemnitee (the "LOAN"), on an
interest-free basis, an amount equal to the Increase Amount multiplied by the
Combined Capital Gains Rate. Such Loan shall be secured by all of the Common
Stock owned by such Indemnitee. In connection with such Loan, the Company shall
pay to such Indemnitee on an After-Tax Basis an amount equal to the U.S. federal
tax imposed on such Indemnitee pursuant to Section 7872 of the Code due to the
Loan having a below market rate of interest. When the Indemnitee disposes of the
Common Stock, the Indemnitee will be required to repay to the Company the amount
of such Loan; PROVIDED, HOWEVER, that if the Combined Capital Gains Rate in
effect at the time of disposition of the Common Stock is less than the Combined
Capital Gains Rate in effect on the date hereof, the Indemnitee's obligation to
repay the Loan is limited to (i) the product of (A) the Increase Amount and
(B) the Combined Capital Gains Rate at the time of disposition reduced by
(ii) the amount equal to any U.S. federal, state or local Tax imposed on such
Indemnitee as a result of the partial forgiveness of the Loan.
(c) The Company shall not be liable for and shall not indemnify, defend and hold harmless any Indemnitee with respect to a Tax Loss or portion thereof if it can be clearly established that (i) such Tax Loss would not have occurred but for such Indemnitee's failure to comply with Section 5 or such Indemnitee's intentional or grossly negligent failure to mitigate such Tax Loss, (ii) such Tax Loss or portion thereof arose as a result of a recharacterization of the Notes or otherwise in connection with the financing of the Indemnitee's purchase of the Common Stock or (iii) such Indemnitee has taken a position on any U.S. federal, state or local Tax return that is inconsistent with any Required Tax Return Position.
(d) Upon the occurrence of any event that could result in indemnification pursuant to this Section 2 (including the delivery in writing by the IRS of a proposed adjustment with respect to any Indemnitee that, if sustained, would result in a Tax Loss for which the Company may be required to indemnify such Indemnitee), an Indemnitee shall, within 30 days of notice of such event, give written notice (the "TAX NOTICE") to the Company setting forth in reasonable detail the computations and methods used in computing the indemnity amounts under this Letter Agreement. Any such Tax Notice shall (i) be signed by such Indemnitee, (ii) state in reasonable detail the basis upon which such amount or adjustment has been determined and (iii) certify that such amount or adjustment has been determined in compliance with this Letter Agreement.
(e) Payments of the indemnity amounts under this Letter Agreement shall be made commencing on the later of (i) 30 days after the date of an Indemnitee's Tax Notice
described above, (ii) 15 day before the due date for the payment of any amount by the Indemnitee on account of the Tax Loss and (iii) if any such payment is contested pursuant to Section 4, 30 days after the date of a final determination with respect to such Tax Loss; PROVIDED, HOWEVER, that in connection with payments of indemnity amounts with respect to Taxes imposed under Section 7872 of the Code as referred to in Section 2(b) hereof, payments of such indemnity amounts shall be made within 30 days of the end of each taxable year in which an Indemnitee must include in income any amounts pursuant to Section 7872 of the Code.
3. TAX SAVINGS. If any Indemnitee, as a result of a Tax Loss for which the
Company has indemnified such Indemnitee, realizes any U.S. federal, state or
local income Tax savings that it would not have realized but for such Tax Loss
(or the event or circumstance giving rise thereto), which Tax savings have not
previously been taken into account in computing the amount of an indemnity
payable hereunder, then such Indemnitee shall pay to the Company an amount equal
to the sum of (i) such net U.S. federal, state or local income Tax savings and
(ii) any interest received or credited in respect of such Tax savings; PROVIDED,
HOWEVER, that such Indemnitee shall not be required to make any payment pursuant
to this Section 3 to the extent that the amount of such payment would exceed the
amount of all prior payments by the Company to such Indemnitee pursuant to
Section 2 less the amount of all prior payments by such Indemnitee pursuant to
this Section; PROVIDED, FURTHER, that the amount of any excess described in the
preceding proviso shall reduce PRO TANTO any amount that the Company is
subsequently obligated to pay pursuant to Section 2. Any payment due to the
Company pursuant to this Section 3 shall be paid promptly and, in any event,
within 30 days after such Indemnitee shall take such Tax savings into account in
determining its estimated tax liability.
4. CONTESTS. If, within 30 days of receipt of a Tax Notice from an Indemnitee (or such shorter period as such Indemnitee has notified the Company is required by law or regulation for such Indemnitee to contest such Tax Loss), the Company shall request in writing that such Indemnitee contest such Tax Loss, such Indemnitee shall, at the Company's expense, in good faith conduct and control such contest (including, without limitation, by pursuit of appeals) by, in the sole discretion of the Company, (i) resisting payment thereof, (ii) not paying the same except under protest, if protest is necessary and proper, (iii) if the payment be made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings, or (iv) taking such other action as is reasonably requested by the Company from time to time; PROVIDED, HOWEVER, that (x) if such contest can be pursued independently from any other proceeding involving a Tax liability of such Indemnitee, such Indemnitee, at the Company's request, shall allow the Company to conduct and control such contest and (y) in the case of any contest that the Company is not entitled to control, the Indemnitee may request the Company to conduct and control such contest if possible or permissible under applicable law or regulation.
Notwithstanding the foregoing provisions of this Section 4, such Indemnitee
shall not be required to take any action and the Company shall not be able to
contest such claim or Tax in its own name or that of such Indemnitee unless
(i) the Company shall have agreed to pay, and shall pay, to such Indemnitee on
demand all reasonable out-of-
pocket third party costs and expenses that such Indemnitee may incur in
connection with contesting such claim or Taxes, including all reasonable legal
(including non-duplicative internal counsel), accounting and investigatory fees
and disbursements, (ii) the amount of the potential indemnity exceeds $50,000,
(iii) the action to be taken will not result in any material risk of criminal
penalties and (iv) if such contest shall involve the payment of the Tax prior to
the contest, the Company shall, at its option (and notwithstanding anything
herein to the contrary), either (A) pay such Indemnitee for such Taxes or (B)
provide to such Indemnitee an interest-free advance in an amount equal to the
Tax which such Indemnitee is required to pay (with no additional net after-tax
cost to such Indemnitee). In no event shall an Indemnitee be required to appeal
an adverse judicial determination to the United States Supreme Court.
Any Indemnitee shall consult in good faith with the Company regarding the conduct of any contest controlled by such Indemnitee, shall keep the Company fully informed as to the status of the contest and shall consider in good faith all suggestions made by the Company regarding the conduct of any such contest, subject to preserving counsel privilege in the Indemnitee's reasonable judgment. An Indemnitee shall not have the right to settle or compromise a contest without the prior written consent of the Company, such consent not to be unreasonably withheld. If an Indemnitee agrees to a settlement or compromise of such contest without the prior written consent of the Company, such Indemnitee shall waive its rights to any indemnity from the Company that otherwise would be payable in respect of such claim and shall pay to the Company any amount previously paid or advanced by the Company pursuant to this Section 4 with respect to such Taxes other than contest costs paid by the Company pursuant to this Section 4 as it relates to such contest.
5. COOPERATION AND EXCHANGE OF INFORMATION. Each party hereto agrees to provide to the other party such information as such other party shall reasonably request in connection with the preparation of filing of any Tax return not inconsistent with this Letter Agreement or in conducting any audit or other proceeding in respect of Taxes or to carry out the provisions of this Letter Agreement.
6. COUNTERPARTS. This Letter Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument, and all signatures need not appear on any one counterpart.
7. TERMINATION. This Letter Agreement may be terminated only by a written instrument executed by each party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Letter Agreement as of the date first written above.
SAFETY HOLDINGS, INC.
By: /s/A. Richard Caputo, Jr.
---------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
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Acknowledged and Agreed:
/s/David F. Brussard ---------------------------- Name: David F. Brussard /s/William J. Begley, Jr. ---------------------------- Name: William J. Begley, Jr. /s/Daniel F. Crimmins ---------------------------- Name: Daniel F. Crimmins /s/Robert J. Kerton ---------------------------- Name: Robert J. Kerton /s/David E. Krupa ---------------------------- Name: David E. Krupa /s/Daniel D. Loranger ---------------------------- Name: Daniel D. Loranger /s/Edward N. Patrick, Jr. ---------------------------- Name: Edward N. Patrick, Jr. |
SCHEDULE A
David F. Brussard
William J. Begley, Jr.
Daniel F. Crimmins
Robert J. Kerton
David E. Krupa
Daniel D. Loranger
Edward N. Patrick, Jr.
EXHIBIT 10.21
MANAGEMENT CONSULTING AGREEMENT
THIS MANAGEMENT CONSULTING AGREEMENT ("Agreement"), is executed as of the 16th day of October, 2001, by and among TJC MANAGEMENT CORPORATION, a Delaware corporation (the "Consultant") and SAFETY HOLDINGS, INC., a Delaware corporation ("Holdings"), and its direct and indirect subsidiaries (collectively, the "Company").
WHEREAS, the Consultant has and/or has access to personnel who are highly skilled in the field of rendering consulting services and financial advice to businesses; and
WHEREAS, the Company desires to retain Consultant to provide consulting services and financial advice to the Company;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, the parties hereto do hereby agree as follows:
1. The Company hereby retains the Consultant, through the Consultant's own personnel or through personnel available to the Consultant, to render consulting services from time to time to the Company and its subsidiaries (whether now existing or hereafter acquired), in connection with their financial and business affairs, their relationships with their lenders, stockholders and other third-party associates or affiliates, and the expansion of their businesses. The term of this Agreement shall commence the date hereof and continue until December 31, 2011, unless extended, or sooner terminated, as provided in SECTION 5 below. The Consultant's personnel shall be reasonably available to the Company's managers, auditors and other personnel for consultation and advice, subject to Consultant's reasonable convenience and scheduling. Services may be rendered at the Consultant's offices or at such other locations selected by the Consultant as the Company and the Consultant shall from time to time agree.
2. a. The Company shall pay the Consultant a management fee equal to, on a per annum basis, $1,000,000. The Company shall pay the Consultant such management fee in quarterly installments equal to $250,000 on each of March 31, June 30, September 30 and December 31 of each year, commencing September 30, 2001.
b. In addition to the above quarterly payments, the Company shall pay to the Consultant, (i) an investment banking and sponsorship fee of up to two percent (2%) of the aggregate consideration paid (including assumed or refinanced indebtedness, non-competition, earnout, contingent purchase price, incentive arrangements and similar payments) (A) by the Company in connection with the acquisition by the Company of all or substantially all of the outstanding capital
stock, warrants, options or other rights to acquire or sell capital stock, or all or substantially all of the business or assets of another individual, corporation, partnership or other business entity or (B) to the Company in connection with the sale by the Company of all or substantially all of the Company's outstanding capital stock, warrants, options, or other rights to acquire or sell stock, or all or substantially all of the business or assets of the Company or one of its subsidiaries (each of the transactions described in clauses (A) and (B), a "Transaction"), including, but not limited to, any Transaction negotiated for the Company involving any affiliate of the Company or the Consultant, including, but not limited to, any Transaction involving, The Jordan Company, LLC, Jordan/Zalaznick Capital Company or any affiliates of any of the foregoing (collectively, the "Jordan Affiliates"); and (ii) a financial consulting fee of up to one percent (1%) of the amount obtained or made available pursuant to any debt, equity or other financing (including without limitation, any refinancing) by the Company with the assistance of Consultant, including, but not limited to, any financing obtained for the Company from one or more of the Jordan Affiliates, PROVIDED, that in no event shall a fee be payable under SECTION 2(b)(ii) hereunder (x) with respect to borrowings under the Credit Agreement or (y) with respect to financings referred to in SECTION 2(B)(II) made in connection with the consummation of a Transaction. In addition, prior to paying any fee pursuant to this paragraph (b) the Board of Directors of the Company (including the disinterested directors) must approve the applicable Transaction or financing as in the best interests of the Corporation.
c. In addition, the Company shall pay to the Consultant a closing fee of $2.50 million upon the consummation of the merger of Safety Merger Co. Inc. and Thomas Black Corporation in lieu of any fee otherwise payable under SECTION 2(b).
3. The Company shall reimburse Consultant for reasonable out-of-pocket expenses and any reasonable, direct, allocable costs incurred by the Consultant and its personnel in performing services hereunder to the Company and its subsidiaries upon the Consultant's rendering of a statement therefor, together with supporting data as the Company shall reasonably require.
4. Notwithstanding the foregoing, the Company shall not pay the fees
under SECTION 2 and such fees shall accrue pursuant to the second sentence of
this SECTION 4, (a) if any payment or financial covenant default under either
(i) the Revolving Credit and Term Loan Agreement, of even date herewith, by and
among Thomas Black Corporation, Fleet National Bank the other lenders party
thereof, and Fleet National Bank, as administrative agent for itself and such
other lenders or (ii) the Purchase Agreement, of even date herewith, by and
between the Company and JZ Equity Partners PLC, has occurred and is continuing
(regardless of whether such agreements are then in effect), (b) if and to the
extent expressly prohibited by the provisions of any credit, stock, financing or
other agreements or instruments binding upon the Company, its subsidiaries or
properties, (c) if the Company has not paid interest on any interest payment
date or has postponed or not made any
principal payments with respect to any of their indebtedness on any scheduled payment dates, or (d) if the Company has not paid dividends on any dividend payment date as set forth in its certificate of incorporation or as declared by its Board of Directors, or has postponed or not made any redemptions on any redemption date as set forth in its certificate of incorporation or any certificate of designation with respect to its preferred stock, if any. Any payments otherwise owed hereunder, which are not made for any of the above-mentioned reasons, shall not be cancelled but rather shall accrue, without interest, and shall be payable by the Company promptly when, and to the extent, that the Company is no longer prohibited from making such payments and when the Company has become current with respect to such principal or interest payments, has become current with respect to such dividends and has made such redemptions with respect to such preferred stock, if any. This SECTION 4 will not, in any event, restrict or limit the Company's obligations under SECTION 3, 8 and 9, which will be absolute and not subject to set-off.
5. This Agreement shall be automatically renewed for successive one-year terms starting December 31, 2011 unless either party hereto, within sixty (60) days prior to the scheduled renewal date, notifies the other party as to its election to terminate this Agreement. Notwithstanding the foregoing, this Agreement may be terminated by not less than ninety (90) days' prior written notice from the Company to the Consultant at any time after (a) substantially all of the stock or substantially all of the assets of the Company are sold to any entity unaffiliated with the Consultant and/or a majority of the Company's stockholders immediately prior to such sale or (b) the Company is merged or consolidated into another entity unaffiliated with the Consultant and/or a majority of the Company's stockholders immediately prior to such merger and the Company is not the survivor of such transaction.
6. The Consultant shall have no liability to the Company on account of
(a) any advice which it renders to the Company, provided the Consultant believed
in good faith that such advice was useful or beneficial to the Company at the
time it was rendered, or (b) the Consultant's inability to obtain financing or
achieve other results desired by the Company or Consultant's failure to render
services to the Company at any particular time or from time to time, or (c) the
failure of any transaction to meet the financial, operating or other
expectations of the Company. The Company's sole remedy for any claim under this
Agreement shall be termination of this Agreement.
7. Notwithstanding anything contained in this Agreement to the contrary, the Company agrees and acknowledges that the Consultant, the Jordan Affiliates and their shareholders, members, employees, directors and affiliates intend to engage and participate in acquisitions and business transactions outside of the scope of the relationship created by this Agreement and neither the Consultant, any of the Jordan Affiliates nor any of their shareholders, members, employees, directors or affiliates shall be under any obligation whatsoever (except to the extent that fiduciary duty
principles under Delaware corporate law may be applicable to individual directors and officers of the Company) to make such acquisitions, business transactions or other opportunities through the Company or offer such acquisitions, business transactions or other opportunities to the Company.
8. The Company will, to the fullest extent permitted by applicable law, indemnify and hold harmless the Consultant, its affiliates and associates, each of the Jordan Affiliates, and each of the respective owners, partners, members, officers, directors, employees and agents of each of the foregoing, from and against any loss, liability, damage, claim or expenses (including the fees and expenses of counsel) arising as a result or in connection with this Agreement or the Consultant's services hereunder.
9. Any payments paid by the Company under this Agreement shall not be subject to set-off and shall be increased by the amount, if any, of any taxes (other than income taxes) or other governmental charges levied in respect of such payments, so that the Consultant is made whole for such taxes or charges.
10. a. This Agreement sets forth the entire understanding of the parties with respect to the Consultant's rendering of services to the Company. This Agreement may not be modified, waived, terminated or amended except expressly by an instrument in writing signed by the Consultant and the Company.
b. This Agreement may be assigned by either party hereto without the consent of the other party, provided, however, such assignment shall not relieve such party from its obligations hereunder. Any assignment of this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.
c. In the event that any provision of this Agreement shall be held to be void or unenforceable in whole or in part, the remaining provisions of this Agreement and the remaining portion of any provision held void or unenforceable in part shall continue in full force and effect.
d. Except as otherwise specifically provided herein, all notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the address of the party for whom intended at the principal executive offices of such party, or at such other address as such party may hereinafter specify by written notice to the other party.
e. The Company's subsidiaries will be jointly and severally liable and obligated hereunder with respect to each obligation, responsibility and liability of the Company, as if a direct obligation of the subsidiaries.
f. No waiver by either party of any breach of any provision of this Agreement shall be deemed a continuing waiver or a waiver of any preceding or succeeding breach of such provision or of any other provision herein contained.
g. The Consultant and its personnel shall, for purposes of this Agreement, be independent contractors with respect to the Company.
h. This Agreement shall be governed by the internal laws (and not the law of conflicts) of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
TJC MANAGEMENT CORPORATION
By: /s/David W. Zalaznick
----------------------
Name: David W. Zalaznick
Title:
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SAFETY HOLDINGS, INC.
By:/s/ A. Richard Caputo, Jr. --------------------------- Name: A. Richard Caputo, Jr. Title: |
EXHIBIT 10.23
SAFETY HOLDINGS, INC.
2001 RESTRICTED STOCK PLAN
SECTION 1
GENERAL
1.1 PURPOSE. The Safety Holdings, Inc. 2001 Restricted Stock Plan (the "PLAN") has been established by Safety Holdings, Inc. (the "COMPANY") to attract and retain employees and other persons providing services to the Company and the Related Companies (as defined below) through compensation that is based on the Company's shares of common stock (the "STOCK"), thereby further identifying Participants' interests with those of the Company's stockholders and promoting the long-term financial interest of the Company and the Related Companies. The term "RELATED COMPANY" means any company during any period in which it is a "subsidiary corporation" (as that term is defined in section 424(f) of the Internal Revenue Code of 1986, as amended (the "CODE")) with respect to the Company.
1.2 ADMINISTRATION. The authority to manage and control the operation and
administration of the Plan shall be vested in the "ADMINISTRATOR." The
Administrator shall be the full Board of Directors of the Company (the "BOARD"),
or a duly authorized committee thereof. The Administrator shall have the
authority and discretion to (a) manage and control the operation of the Plan,
(b) interpret and construe the provisions of the Plan, and prescribe, amend and
rescind rules and regulations relating to the Plan, (c) grant Restricted Stock
Awards (as defined in SECTION 2.1) under SECTION 2 of the Plan, in such amounts
and subject to such restrictions, limitations and conditions as it deems
appropriate, (d) subject to the provisions of SECTION 4, modify the terms of,
cancel or suspend Restricted Stock Awards, (e) prescribe the form of agreement,
certificate or other instrument evidencing any Restricted Stock Award under the
Plan, (f) correct any defect or omission and reconcile any inconsistency in the
Plan or in any award of Stock hereunder, and (g) make all other determinations
and take all other actions as it deems necessary or desirable for the
implementation and administration of the Plan. The determination of the
Administrator on matters within its authority shall be conclusive and binding on
the Company and all other persons.
1.3 PARTICIPATION. Subject to the terms and conditions of the Plan, the Administrator shall determine and designate from among the Eligible Individuals, those persons who will be granted Restricted Stock Awards under the Plan and thereby become "PARTICIPANTS" in the Plan. For purposes of the Plan, the term "ELIGIBLE INDIVIDUAL" shall mean any employee of the Company or Related Companies or such employee's designee.
SECTION 2
2.1 DEFINITION. Subject to the terms of this SECTION 2, a "Restricted Stock Award" under the Plan is a grant of shares of Stock to a Participant, the vesting of which is subject to one or more conditions established by the Administrator. Such conditions may relate to events (such as performance or continued employment) occurring before or after the date the Restricted Stock Award is granted, or the date the Stock is vested in the Participant. If the vesting of Restricted
Stock Awards is subject to conditions occurring after the date of grant, the period beginning on the date of grant of a Restricted Stock Award and ending on the vesting or forfeiture of such Stock (as applicable) is referred to as the "Restricted Period". Restricted Stock Awards may provide for delivery of the shares of Stock at the time of grant, or may provide for a deferred delivery date.
2.2 ELIGIBILITY. The Administrator shall designate the Participants to whom Restricted Stock Awards are to be granted, and the number of shares of Stock that are subject to each such Award.
2.3 TERMS AND CONDITIONS OF AWARDS. Except as otherwise provided in the applicable Award Agreement (as defined herein), Restricted Stock Awards granted to Participants under the Plan shall be subject to the following terms and conditions:
(a) Beginning on the date of grant (or, if later, the date of distribution) of shares of Stock comprising a Restricted Stock Award, and including any applicable Restricted Period, the Participant as owner of such shares shall have the right to vote such shares; PROVIDED, HOWEVER, that, if requested by the Administrator, the Participant agrees to place such shares in a voting trust until the Stock has vested.
(b) Any Participant who is not a signatory to the Stockholders Agreement, dated October __, 2001, by and among all of the Stockholders of the Company shall, on or prior to the date of grant, become a signatory to the Stockholders Agreement.
(c) Any Participant who is not a signatory to the Management Subscription Agreement, dated October __, 2001, by and among the Company and the signatories thereto, shall, on or prior to the date of grant become a signatory to the Management Subscription Agreement.
(d) Payment of dividends with respect to Restricted Stock Awards shall be subject to the following:
(i) On and after the date that a Participant has a fully vested right to the shares comprising a Restricted Stock Award, and the shares have been distributed to the Participant, the Participant shall have all Dividend Rights (and other rights) of a stockholder with respect to such shares.
(ii) Prior to the date that a Participant has a fully vested right to the shares comprising a Restricted Stock Award, the Administrator, in its sole discretion, may award Dividend Rights (and any other rights) with respect to such shares.
(iii) A "DIVIDEND RIGHT" with respect to shares comprising a Restricted Stock Award shall entitle the Participant, as of each dividend payment date, to an amount equal to the dividends payable with respect to a share of Stock multiplied by the number of such shares. Dividend Rights shall be settled in cash or in shares of Stock, as determined by the Administrator, shall be payable at the time and in the form determined by the Administrator, and shall be subject to such other terms and conditions as the Administrator may determine.
2.4 VESTING. Unless provided otherwise by the Administrator or in the applicable Award Agreement, Restricted Stock Awards granted to any Participant before January 1, 2002 shall initially be non-vested and shall not become vested until the last day of each calendar year commencing with 2002 as set forth below. Restricted Stock Awards granted to Participants on or after January 1, 2002 shall become vested in accordance with the terms established by the Administrator at the time the Restricted Stock Award is granted.
Percentage of total
shares awarded
which become
Year Ended: vested on such date:
----------- -------------------
December 31, 2002 0.0%
December 31, 2003 0.0%
December 31, 2004 60.0%
December 31, 2005 80.0%
December 31, 2006 100.0%
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Notwithstanding the foregoing provisions of this SECTION 2.4 and, except as otherwise provided in the applicable Award Agreement, (i) a Participant must remain in the employ of the Company or the Related Companies as of the last day of any year in order to become vested in the portion of the shares that first become vested as of the last day of that year, and (ii) if a Participant terminates employment with the Company or the Related Companies for any reason prior to December 31, 2006, any shares under his Restricted Stock Award which have not become vested on or before his termination date shall be deemed forfeited.
SECTION 3
OPERATION AND ADMINISTRATION
3.1 EFFECTIVE DATE. The Plan became effective as of October __, 2001, the date it was adopted by the Board.
3.2 SHARES SUBJECT TO PLAN. The shares of Stock with respect to which Restricted Stock Awards may be made under the Plan shall be shares currently authorized but unissued or currently held or subsequently acquired by the Company as treasury shares, including shares purchased in the open market or in private transactions. The number of shares of Stock which may be issued with respect to Restricted Stock Awards under the Plan shall not exceed 12,500 shares of Stock as of the date the Plan is adopted by the Board, subject to adjustment in accordance with SECTION 3.3. Any shares of Stock granted under a Restricted Stock Award which are forfeited for any reason shall again become available for Restricted Stock Awards under the Plan.
3.3 ADJUSTMENTS TO SHARES RESERVED. In the event of any merger, consolidation, reorganization, recapitalization, spinoff, stock dividend, stock split, reverse stock split, exchange or other distribution with respect to shares of Stock or other change in the corporate structure or capitalization affecting the Stock (each an "EXTRAORDINARY EVENT"), the type and number of shares
of stock which are or may be subject to Restricted Stock Awards under the Plan and the terms of any outstanding Restricted Stock Awards shall be equitably adjusted by the Administrator, in its reasonable discretion, to preserve the value of benefits awarded or to be awarded to Participants under the Plan. Notwithstanding the foregoing: (i) unvested shares of stock under a Restricted Stock Award that have been issued prior to the Extraordinary Event and not forfeited pursuant to SECTION 2.4 prior to the Extraordinary Event shall be entitled, in connection with the Extraordinary Event, to receive the same distributions or consideration per share, and otherwise to be treated in all respects the same, as other then issued and outstanding shares of Stock not covered by the Plan, and (ii) the aggregate purchase price and forfeiture price for shares of Stock covered by a Restricted Stock Award (including any securities received in connection with the Extraordinary Event in respect of such shares) shall not be changed.
3.4 LIMITATIONS ON DISTRIBUTIONS. Distribution of shares of Stock or other amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any shares of Stock under the Plan unless such delivery or distribution would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity.
(b) In the case of a Participant who is or becomes subject to Section 16(a) and 16(b) of the Securities Exchange Act of 1934, as amended, the Administrator may, at any time, add such conditions and limitations to any Restricted Stock Award granted to such Participant, or any feature of any such Restricted Stock Award, as the Administrator, in its reasonable discretion, deems necessary to comply with Section 16(a) or 16(b) and the rules and regulations thereunder or to obtain any exemption therefrom.
(c) To the extent that the Plan provides for issuance of certificates to reflect the transfer of shares of Stock, the transfer of such shares may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.
3.5 WITHHOLDING. All Restricted Stock Awards and other payments under the Plan are subject to withholding of all applicable taxes, if any, which withholding obligations may be satisfied, with the consent of the Administrator, through the surrender of shares of Stock which the Participant already owns, or to which the Participant is otherwise entitled under the Plan.
3.6 TRANSFERABILITY. Other than as set forth in any other agreement to which the Company is a party, non-vested shares of Stock may not be sold, assigned, transferred, pledged or otherwise encumbered during the Restricted Period applicable to such shares. Each certificate issued with respect to shares of Stock granted under the Plan which are distributed prior to the lapse of the Restricted Period may, at the discretion of the Administrator, be deposited in a bank designated by the Administrator. Each such certificate shall bear the following (or a similar) legend:
"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) CONTAINED IN THE SAFETY HOLDINGS, INC. 2001 RESTRICTED STOCK PLAN AND THE STOCKHOLDERS AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND SAFETY HOLDINGS, INC. A COPY OF SUCH PLAN AND AGREEMENT IS ON FILE IN THE OFFICE OF THE SECRETARY OF SAFETY HOLDINGS, INC.; C/O THE JORDAN COMPANY; 767 FIFTH AVENUE, 48TH FLOOR; NEW YORK, NEW YORK 10153; ATTENTION: A. RICHARD CAPUTO, JR."
3.7 NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (postage prepaid, return receipt requested) to the Administrator, in care of the Company, at its principal executive offices.
3.8 AGREEMENT WITH COMPANY. At the time a Restricted Stock Award is granted to a Participant under the Plan, the Administrator may require the Participant to enter into an agreement with the Company (the "AWARD AGREEMENT") in a form specified by the Administrator, agreeing to the terms and conditions of the Plan and to such additional terms and conditions, not inconsistent with the Plan, as the Administrator may, in its reasonable discretion, prescribe.
3.9 NO CONTRACT OF EMPLOYMENT. The Plan does not constitute a contract of employment, and selection as a Participant will not give any employee the right to be retained in the employ of the Company or any Related Company, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan or in any award, no award under the Plan shall confer upon the holder thereof any right as a stockholder of the Company prior to the date on which he fulfills all requirements and other conditions for receipt of such rights.
3.10 EVIDENCE. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it reasonably considers pertinent and reliable, and signed, made or presented by the proper party or parties.
3.11 GENDER AND NUMBER. Where the context admits, words in one gender shall include the other gender, words in the singular shall include the plural and the plural shall include the singular.
3.12 EFFECT OF VESTING. Shares of Stock that become vested shall, upon such vesting, cease to be subject to the terms of this Plan but shall remain subject to the terms of the Stockholders Agreement and Management Subscription Agreement.
SECTION 4
AMENDMENT AND TERMINATION
4.1 The Board may, at any time, amend or terminate the Plan; PROVIDED that subject to SECTION 3.3 (relating to certain adjustments to shares), no amendment or termination may adversely affect the rights of any Participant under any Restricted Stock Award granted under the Plan prior to the date such amendment is adopted by the Board.
EXHIBIT 10.24
SAFETY INSURANCE COMPANY
EXECUTIVE INCENTIVE COMPENSATION PLAN
SECTION 1 GENERAL
1.1. PURPOSE. The Safety Insurance Company Executive Incentive Compensation Plan (the "Plan") has been established by Safety Insurance Company (the "Company") so each of the Employers may provide its eligible executive and management employees with an opportunity to build additional financial security, thereby aiding such companies in attracting and retaining employees of exceptional ability.
1.2. PARTICIPATION. Subject to the terms and conditions of the Plan, the Board shall determine and designate, from time to time, from among those individuals who are executive and management employees of the Company and any Related Company during any Plan Year, those individuals who shall be eligible to participate in the allocation of the bonus pool for the year.
1.3. OPERATION, ADMINISTRATION, AND DEFINITIONS. The operation and
administration of the Plan shall be subject to the provisions of Section 5
(relating to operation and administration). Capitalized terms in the Plan shall
be defined as set forth in the Plan (including the definition provisions of
Section 9).
SECTION 2 BONUS AMOUNT
2.1. ALLOCATION TO BONUS POOL. As of the last day of each Plan Year, beginning with calendar year 2002, and ending with the Plan Year that ends before the Plan Year in which a Change in Control occurs, an annual Allocation Amount (if any) shall be allocated to the bonus pool for the year. The annual "Allocation Amount" for each year shall be equal to the product of (i) the Allocation Percentage for the year MULTIPLIED BY (ii) the Net Income for the year. However, there shall be no Allocation Amount for a year if, during such year, an Event of Default occurs, and there shall be no Allocation Amount for a year if any such default would result from the allocation of the Allocation Amount.
2.2. ALLOCATION OF BONUS POOL TO EMPLOYEES. After the end of each Plan Year, the Board will review the performance of the individuals who are designated as eligible to participate in the allocation of the bonus pool for the year described in subsection 2.1, and the Board, in its sole discretion, will allocate the entire amount in the bonus pool among such individuals. Except as otherwise expressly provided by the Board, no bonus shall be payable with respect to any individual for any year if the individual's Date of Termination occurs prior to the last day of the year. The Board will not be required to establish the method for allocation of the bonus pool in advance.
2.3. CREDITING OF BONUS AMOUNT TO ACCOUNT. The portion of the bonus pool
allocated to an individual for any year in accordance with subsection 2.2 shall
be credited to an Account established for the individual in accordance with
Section 3. Such amounts shall be credited to
the individual's Account as soon as practicable after the amount to be allocated for the individual has been determined.
SECTION 3 PLAN ACCOUNTS
3.1. ACCOUNTS. To the extent provided in subsection 2.3, the Company shall
credit amounts to an Account established on the Company's books for each
individual for whom amounts are to be credited in accordance with subsection
2.3. During the period in which amounts are allocated to an individual's
Account, such amounts shall not accrue interest or earn income of any kind.
3.2. STATEMENT OF ACCOUNTS. As soon as practicable after the end of each Plan Year, the Company shall provide each Participant having an Account with a statement of the transactions in his Account during that year and his Account balance as of the end of the year.
SECTION 4 DISTRIBUTIONS
4.1. GENERAL. Subject to this Section 4, the balance of a Participant's Account shall be distributed to the Participant in a lump sum as soon as practicable after the Participant's Date of Termination, regardless of the reason for such termination.
4.2. DISTRIBUTIONS TO DISABLED PERSONS. Notwithstanding the provisions of this Section 4, if, in the opinion of the Board, a Participant or beneficiary is under a legal disability or is in any way incapacitated so as to be unable to manage his financial affairs, the Board may direct that payment be made to a relative or friend of such person for his benefit until claim is made by a conservator or other person legally charged with the care of his person or his estate, and such payment shall be in lieu of any such payment to such Participant or beneficiary. Thereafter, any benefits under the Plan to which such Participant or beneficiary is entitled shall be paid to such conservator or other person legally charged with the care of his person or his estate.
SECTION 5 OPERATION AND ADMINISTRATION
5.1. EFFECTIVE DATE. The "Effective Date" of the Plan shall be the Effective Time as that term is defined in the Merger Agreement.
5.2. BENEFITS MAY NOT BE ASSIGNED. The interests of a Participant under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary. The Participant's rights under the Plan are not transferable other than as designated by the Participant by will or by the laws of descent and distribution.
5.3. BENEFITS UNDER OTHER PLANS. Amounts allocated to the Account of any Participant under the Plan, and benefits payable under the Plan, shall be disregarded for purposes of determining the benefits under any plan that is intended to be qualified under section 401(a) of the Internal Revenue Code of 1986 and any other plan or arrangement maintained by the
Company or any Related Company, except as otherwise specifically provided to the contrary in such other plan or arrangement.
5.4. PLAN NOT CONTRACT OF EMPLOYMENT. The Plan does not constitute a contract of employment, and participation in the Plan will not give any employee the right to be retained in the employ of any Employer nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan.
5.5. HEIRS AND SUCCESSORS. The Plan shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. If any benefits deliverable to a Participant under the Plan have not been delivered at the time of the Participant's death, such benefits shall be delivered to the Designated Beneficiary in accordance with the provisions of the Plan. The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by a Participant in a writing filed with the Board in such form and at such time as the Board shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under the Plan, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
5.6. APPLICABLE LAWS. Except to the extent that not preempted by the laws of the United States of America, the Plan shall be construed and administered with the laws of the state of New York; provided that no doctrine of choice of law shall be used to apply any law other than that of New York, and no defense, counterclaim or right of set-off given or allowed by the laws of any other state or jurisdiction, or arising out of the enactment, modification or repeal of any law, regulation, ordinance or decree of any foreign jurisdiction, shall be interposed in any action hereon.
5.7. GENDER AND NUMBER. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.
5.8. EVIDENCE. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
SECTION 6 SOURCE OF BENEFIT PAYMENTS
6.1. LIABILITY FOR BENEFIT PAYMENTS. Subject to the provisions of this
Section 6, an Employer shall be liable for payment of benefits under the Plan
with respect to any Participant to the extent that such benefits are
attributable to services rendered by the Participant to that Employer. Any
disputes relating to liability of Employers for benefit payments shall be
resolved by the Board.
6.2. NO GUARANTEE. Neither a Participant nor any other person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Employers whatsoever, including, without limitation, any specific funds, assets, or other property which the Employers, in their sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of the Employers. Nothing contained in the Plan shall constitute a guarantee by any of the Employers that the assets of the Employers shall be sufficient to pay any benefits to any person.
SECTION 7 BOARD
7.1. ADMINISTRATION. The authority to control and manage the operation and
administration of the Plan shall be vested in the Board in accordance with this
Section 7.
7.2. POWERS OF BOARD. The Board's administration of the Plan shall be subject to the following:
(a) Subject to the provisions of the Plan, the Board will have the authority and discretion to select from among the executive and management employees of the Company and any Related Company those persons who shall be eligible to participate in the bonus pool.
(b) The Board will have the authority and discretion to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan.
(c) Any interpretation of the Plan by the Board and any decision made by it under the Plan is final and binding on all persons.
7.3. DELEGATION BY BOARD. Except to the extent prohibited by applicable law, the Board may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Board at any time.
7.4. INFORMATION TO BE FURNISHED TO BOARD. The Company and Related Companies shall furnish the Board with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Related Companies as to an employee's or Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Board such evidence, data or information as the Board considers desirable to carry out the terms of the Plan.
SECTION 8 AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that no amendment or termination may materially adversely affect the rights of any Participant or beneficiary under the
Plan with respect to Plan Years that have ended prior to the date on which such amendment or termination is adopted by the Board.
SECTION 9 DEFINED TERMS
In addition to the other definitions contained herein, the following definitions shall apply:
(a) ALLOCATION PERCENTAGE. The "Allocation Percentage" as of the Effective Date shall be 1.75%.
(b) BOARD. The term "Board" means the Board of Directors of the Company.
(c) CHANGE OF CONTROL. The term "Change of Control" means any of the following:
(i) the closing of any merger, combination, consolidation or similar
business transaction involving Holdings in which the holders of Stock
immediately prior to such closing are not the holders, directly or
indirectly, of a majority of the ordinary voting securities of the
surviving person in such transaction immediately after such closing, (ii)
the closing of any sale or transfer by Holdings of all or substantially all
of its assets to an acquiring person in which the holders of Stock
immediately prior to such closing are not the holders of a majority of the
ordinary voting securities of the acquiring person immediately after such
closings, or (iii) the closing of any sale by the holders of Stock of an
amount of Stock that equals or exceeds a majority of the shares of Stock
immediately prior to such closing to a person in which the holders of the
Stock immediately prior to such closing are not the holders of a majority
of the ordinary voting securities of such person immediately after such
closing.
(d) DATE OF TERMINATION. A Participant's "Date of Termination" means the first day on which the Participant is not employed by the Company or any Related Company, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and further provided that the Participant's employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Related Company approved by the Participant's employer. If, as a result of a sale or other transaction, the Participant's employer ceases to be a Related Company (and the Participant's employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Related Company, then the occurrence of such transaction shall be treated as the Date of Termination.
(e) EMPLOYER. The term "Employer" means the Company and each of the Related Companies that adopts the Plan.
(f) EVENT OF DEFAULT. The term "Event of Default" means a financial covenant or payment default in any agreement, instrument or commitment, whether now existing or hereafter in effect, relating to the indebtedness of Holdings or its subsidiaries.
(g) HOLDINGS. "Holdings" means Safety Holdings, Inc.
(h) INSURANCE SUBSIDIARIES. The term "Insurance Subsidiaries" shall mean the Company and Safety Indemnity Insurance Company.
(i) MERGER AGREEMENT. The "Merger Agreement" shall mean the Merger Agreement by and among Safety Holdings, Inc., Safety Acquisition, Inc., Thomas Black Corporation, and the shareholders of Thomas Black Corporation dated as of May 31, 2001 as amended, restated or otherwise modified from time to time.
(j) NET INCOME. The term "Net Income" means the combined statutory net income from the Insurance Subsidiaries before distributions to Thomas Black Corporation or other payments made by the Insurance Subsidiaries in connection with Thomas Black Corporation's debt service or the annual management fee under the Management Consulting Agreement, dated as of the date hereof, between TJC Management Corp. and Holdings, as amended, restated or otherwise modified from time to time.
(k) PARTICIPANT. The term "Participant" means an individual for whom an Account has been established, or who has been designated as eligible to participate in the bonus pool.
(l) PLAN YEAR. The term "Plan Year" means the calendar year.
(m) RELATED COMPANIES. The term "Related Company" means Holdings and any corporation, partnership, joint venture or other entity during any period in which at least fifty percent of the voting power of all classes entitled to vote with respect to such entity is owned, directly or indirectly, by Holdings.
(n) STOCK. The term "Stock" means the common stock of Holdings.
EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of October 16, 2001 (this "AGREEMENT"), is by and between David F. Brussard (the "EXECUTIVE") and Safety Insurance Company, a Massachusetts corporation (the "COMPANY");
W I T N E S S E T H:
WHEREAS, the Company wishes to obtain the future services of the Executive for the Company;
WHEREAS, the Executive is willing upon the terms and conditions herein set forth, to provide services hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference, upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. NATURE OF EMPLOYMENT
Subject to SECTION 3 and effective as of the Closing Date, the Company hereby employs Executive, and Executive agrees to accept such employment, during the Term of Employment (as defined in SECTION 3(a)), as President and Chief Executive Officer of the Company to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Board of Directors of the Company.
2. EXTENT OF EMPLOYMENT
(a) During the Term of Employment, the Executive shall perform his obligations hereunder faithfully and to the best of his ability at the principal executive offices of the Company, under the direction of the Board of Directors of the Company, and shall abide by the rules, customs and usages from time to time established by the Company.
(b) During the Term of Employment, the Executive shall devote all of his business time, energy and skill as may be reasonably necessary for the performance of his duties, responsibilities and obligations hereunder (except for vacation periods and reasonable periods of illness or other incapacity), consistent with past practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority (collectively, the "REGULATIONS"). Executive shall act in good faith in accordance with all Regulations.
3. TERM OF EMPLOYMENT; TERMINATION
(a) The "TERM OF EMPLOYMENT" shall commence on the date hereof and shall continue until December 31, 2006 (the "INITIAL TERM"); PROVIDED, that, (i) such term shall continue for the twelve month period following such Initial Term, and for each twelve month period thereafter (each, an "ADDITIONAL TERM"), unless at least 180 days prior to the scheduled expiration date of the Initial Term or any Additional Term, either the Executive or the Company notifies the other of its decision not to continue such term and (ii) should the Executive's employment by the Company be earlier terminated pursuant to SECTION 3(b) or by the Executive pursuant to SECTION 3(c), the Term of Employment shall end on the date of such earlier termination.
(b) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability Executive is unable to perform, and does not perform, in the view of the Company and as certified in writing by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in SECTION 3(d)) or Material Breach (as defined in SECTION 3(e));
(iv) upon the continuous poor or unacceptable performance of the Executive's duties to the Company (other than due to a physical or mental disability), which has remained uncured for a period of 90 days after delivery of notice by the Company to the Executive of such dissatisfaction with Executive's performance, which notice shall describe in reasonable detail the areas of dissatisfaction; or
(v) for any other reason or no reason, it being understood that no reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., SECTION
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the Executive is unable to perform, and does not perform, in the view of the Company, and as certified by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) as a result of a material reduction in Executive's authority, perquisites, position or responsibilities (other than such a reduction in perquisites which affects all of the Company's senior executives on a substantially equal or proportionate basis), the relocation of the Company's primary place of business or the relocation of Executive by the Company to another Company office more than 75 miles from Boston, Massachusetts, or the Company's willful, material violation of its obligations under this Agreement, in each case, after 60 days' prior written notice to the Company and its Board of Directors and the Company's failure thereafter to cure such reduction or violation; or
(iv) as a result of the Company's willful and material violation of this Agreement, the Management Subscription Agreement, the Stockholders Agreement, the 2001 Restricted Stock Plan or the Restricted Stock Award Agreement.
(d) For the purposes of this SECTION 3, "CAUSE" shall mean any of the following:
(i) Executive's commission or conviction of any crime or criminal offense involving monies or other property, or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
(iii) Executive's material and knowing violation of any obligations imposed upon Executive, personally, as opposed to upon the Company, whether as a stockholder or otherwise, under this Agreement, the Merger Agreement, the Management Subscription Agreement, the Stockholders Agreement, the Pledge Agreement, the Recourse Promissory Note, any other agreement between the Executive, on the one hand, and the Company or its affiliates, on the other hand, the Certificate of Incorporation or By-Laws of the Company; PROVIDED, that the Executive has been given written notice describing any such violation in reasonable detail and fails to cure the violation within 90 days from such notice; or
(iv) Executive engages in egregious misconduct involving serious moral turpitude to the extent that Executive's credibility and reputation no longer conform to the standard of the Company's executives.
(e) For the purposes of this SECTION 3, "MATERIAL BREACH" shall mean any of the following:
(i) Executive's breach of any of his fiduciary duties to the Company or its stockholders or making of a willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by this Agreement, any other agreement between the Executive and the Company (other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which materially interferes with Executive's ability to discharge his duties, responsibilities or obligations prescribed by this Agreement or any other agreement between the Executive and the Company; and
(iv) Executive's willful and material violation of any non-competition, non-disparagement, or confidentiality agreement with the Company, including without limitation, those set forth in SECTIONS 7, 8 and 9 of this Agreement, or any other agreements with the Company.
in each case, for purposes of clauses (i) through (iv), after the Company or the Board of Directors has provided Executive with 60 days' written notice describing such circumstances and the possibility of a Material Breach in reasonable detail, and Executive fails to cure such circumstances and Material Breach within those 60 days. No act or omission shall be deemed willful if done, or omitted to be done, in good faith by the Executive based upon a resolution duly adopted by the Company's Board of Directors.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b(v) or by Executive under the
circumstances described in SECTION 3(c)(iii) or (iv), the Company will pay to
Executive the full amounts to which he would be entitled as base compensation
under SECTION 4(a) and customary benefits through the Term of Employment prior
to the application of any early termination provision of Sections 3(b) or (c).
In the event Executive's employment is terminated by the Company under the
circumstances described in SECTION 3(b)(iv), the Company will pay to Executive
(i) the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and (ii) customary benefits, in each case for the period from the
effectiveness of termination through the date six months after the date of such
termination. In the event Executive's employment is terminated by the Company
under the circumstances described in SECTION 3(b)(i) or (ii) or by the Executive
under SECTION 3(c)(i) OR (ii), the Company will pay to the Executive the full
amounts to which he would be entitled as base compensation under SECTION 4(a)
and customary benefits for the period from the effectiveness of termination
through (y) the first anniversary of the date of such termination, or (z) the
third anniversary of the date of this Agreement, whichever is greater. In the
event Executive's employment is terminated by the Company under any
circumstances described in SECTION 3(b)(iii) or by Executive as a result of
resignation or voluntary termination due to any circumstance other than the
material reductions, violations or relocation described in SECTION 3(c)(iii)
above, there will be no amounts owing by the Company to the Executive, under
SECTION 4 or any other part of this Agreement, from and after the effectiveness
of termination. If the Company makes the payments required by this SECTION 3(f),
such payments will constitute severance and liquidated damages, and the Company
will not be obligated to pay any further amounts to Executive under this
Agreement or otherwise be liable to Executive in connection with any
termination.
(g) All determinations pursuant to this SECTION 3 shall be made by the Company's Board of Directors (not including Executive) in good faith.
(h) Termination of the Term of Employment will not terminate SECTIONS 7 through 9 and 11 through 21, or any other provisions not associated specifically with the Term of Employment.
(i) In the event the Term of Employment is terminated, the Executive will not be required to seek or obtain alternative employment or to mitigate damages under this agreement. Payments from, or benefits in connection with, alternative employment shall not reduce any payment or benefit obligations hereunder; PROVIDED, HOWEVER, if Executive obtains alternative employment and is provided medical coverage in connection therewith, the medical coverage the Company provides pursuant to Section 3(f), shall be secondary to the medical coverage provided in connection with the alternative employment; and, PROVIDED, FURTHER, that, any provision herein to the contrary notwithstanding, if Executive is employed by or engaged in a Competitive Business then from and after the date of such employment or engagement, the Company shall have no further payment or benefit obligations hereunder.
(j) In the event the Term of Employment is terminated and the Company is obligated to make payments pursuant to SECTION 3(f), Executive hereby waives any and all claims against the Company, and its officers, directors, employees, agents, or representatives, stockholders and affiliates relating to this Agreement and to his employment during the term hereof other than any payments to be made pursuant to SECTION 3(f), the Management Subscription Agreement, the Company's 2001 Restricted Stock Plan, and any Company employee benefit plan.
4. COMPENSATION. The Company shall pay compensation to Executive as follows:
(a) During the Term of Employment, the Company shall pay to Executive as base compensation for his services hereunder, in monthly installments, a base salary at a rate of $500,460 per annum, as increased on an annual basis to reflect the increase in the United States Cost of Living Index for All Urban Consumer (CPI-U) for the Boston, Massachusetts area (the "CPI-U INDEX"). The January 2001 CPI-U Index shall provide the basis for calculations of such increases. Notwithstanding the minimum increase set forth above, the Board of Directors, in its sole discretion, may establish a higher compensation level.
(b) During the Term of Employment, the Company shall pay to Executive an annual bonus based on the performance of the Company and Executive based on performance targets, as determined and approved by the Board of Directors in its sole discretion; provided that, for any year as to which such bonus is paid, such bonus shall not be less than 35% of the total amount of bonuses paid for such year to the officers of the Company who, on the date hereof, hold the position of vice president or higher. Except as set forth in the proviso to the preceding sentence, such bonus will be at the full discretion of the Board of Directors, and may not be paid at all. Any bonus will be paid within 30 days after the issuance of audited financial statements for the Company. The Board of Directors in its sole discretion may establish a higher bonus level based on the performance of Executive.
(c) Contingent upon the consummation of the transactions contemplated by the Merger Agreement, on March 31, 2002, the Company shall pay Executive a transaction bonus of $217,863, and, on March 31, 2003, the Company shall pay Executive a further transaction bonus of $200,000.
5. REIMBURSEMENT OF EXPENSES
During the Term of Employment, the Company shall reimburse Executive for documented travel, entertainment and other expenses reasonably incurred by Executive in connection with the performance of his duties hereunder and, in each case, in accordance with the rules, customs and usages promulgated by the Company from time to time in effect.
6. BENEFITS
(a) During the Term of Employment, the Executive shall be entitled to perquisites, paid vacations and benefits (including health, short and long term disability, pension and life insurance benefits consistent with past practice, or as increased from time to time) established from time to time, by the Board of Directors for executives of the Company, subject to the policies and procedures in effect regarding participation in such benefits.
(b) In recognition of the use of an automobile for the efficient and expeditious performance of the Executive's duties and obligations on behalf of the Company, the Company, at its cost, shall supply to the Executive for such use an automobile of such make and model and upon such terms and conditions as the Board of Directors shall determine from time to time.
(c) Executive shall receive an award of common stock of the Company equal
to 4% of the Company's common stock on a fully-diluted basis as of the date
hereof under the Company's 2001 Restricted Stock Plan. Shares awarded under this
SECTION 6(c) shall be subject to the terms and conditions, including, without
limitation, vesting and buy-back rights, set forth in the 2001 Restricted Stock
Plan.
7. CONFIDENTIAL INFORMATION
(a) During and after the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for the Executive's own benefit or for the benefit of anyone other than the Companies, any Confidential Information, whether prepared by Executive or not; PROVIDED, HOWEVER, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Companies who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business. Executive shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use commercially reasonable efforts to cause all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure of any thereof is specifically required by law; PROVIDED, HOWEVER, that in the event disclosure is required by applicable law, the Executive shall provide the Companies with
prompt notice of such requirement, prior to making any disclosure, so that the Companies may seek an appropriate protective order. At the request of the Companies, Executive agrees to deliver to the Companies, at any time during the Term of Employment, or thereafter, all Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs to the Companies (and not to Executive). Executive will promptly disclose such Confidential Information to the Companies and perform all actions reasonably requested by the Companies to establish and confirm such exclusive ownership.
(b) The terms of this SECTION 7 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. NON-INTERFERENCE
(a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Companies and their Confidential Information and the capabilities of individuals employed by or affiliated with the Companies and that interference in these relationships would cause irreparable injury to the Companies. In consideration of this Agreement, Executive covenants and agrees that:
(i) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, in any business which competes, directly or indirectly, with the Business in the Market ("COMPETITIVE BUSINESS") without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the activities of the Executive referred to above occur or are performed within or without the Market or (C) whether the Executive resides, or reports to an office, within or without the Market; PROVIDED, HOWEVER, that (x) the Executive may, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may accept employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any other person which has a
business relationship with the Companies or had a business relationship with the Companies within the 24 month period preceding the date of the incident in question, to discontinue, reduce or modify such employment, agency or business relationship with the Companies, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within 24 months prior to the date the Executive or the Competitive Business employs or seeks to employ such person) employed or retained by the Companies. Notwithstanding the foregoing, nothing herein shall prevent the Executive from providing a letter of recommendation to an employee with respect to a future employment opportunity.
(iii) The scope and term of this SECTION 8 would not preclude Executive from earning a living with an entity that is not a Competitive Business.
(b) In the event that Executive breaches his obligations in any material respect under SECTION 7, this SECTION 8 or SECTION 9, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to the Executive under this Agreement or any other agreement.
(c) The terms of this SECTION 8 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. NON-DISPARAGEMENT. During and after the Term of Employment, the Executive agrees that he shall not make any false, defamatory or disparaging statements about the Companies or the officers or directors of the Companies. During and after the Term of Employment, the Company agrees, on behalf of the Companies that neither the officers nor the directors of the Companies shall make any false, defamatory or disparaging statements about the Executive.
10. DEFINITIONS. Capitalized terms used in this Agreement but not otherwise defined shall have the meanings set forth below:
"BUSINESS" means any business conducted, or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment.
"CAUSE" is defined in SECTION 3(c).
"CLOSING DATE" means the Closing Date, under and as defined in the Merger Agreement.
"COMPANIES" means the Company and its successors or any of its direct or indirect parents or direct or indirect subsidiaries, now or hereafter existing.
"COMPANY" is defined in the introduction.
"COMPETITIVE BUSINESS" is defined in Section 8(a)(i).
"CONFIDENTIAL INFORMATION" means any confidential information including, without limitation, any study, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service
name, "know-how", trade secrets, customer lists, details of client or consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, formulas, improvements or other proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans, reports, records, documents and other evidence thereof. The term "CONFIDENTIAL INFORMATION" does not include, and there shall be no obligation hereunder with respect to, information that becomes generally available to the public other than as a result of a disclosure by the Executive not permissible hereunder.
"EXECUTIVE" means David F. Brussard or his estate, if deceased.
"MANAGEMENT SUBSCRIPTION AGREEMENT" means the Management Subscription Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the management investors signatory thereto.
"MARKET" means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted by or engaged in by the Companies prior to the date hereof or is conducted or engaged in, or in which the Companies are seeking authorization to conduct Business at any time during the Term of Employment.
"MERGER AGREEMENT" means the Merger Agreement, dated as of May 31, 2001, by and among Safety Holdings, Inc., Safety Merger Co., Inc., Thomas Black Corporation and the shareholders of Thomas Black Corporation, as amended, restated or otherwise modified from time to time.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc.
"RECOURSE PROMISSORY NOTE" means the Recourse Promissory Note, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc. in the principal amount of $144,875.00.
"REGULATIONS" is defined in Section 2(c).
"RESTRICTED PERIOD" means the date commencing on the date of this Agreement and ending on the later of (x) the date of termination of the Term of Employment or (y) the end of any severance period provided under SECTION 3(f); PROVIDED, HOWEVER, that the "Restricted Period" may be extended, in the sole discretion of the Company, for an additional period of up to twenty-four (24) months if the Company continues to pay to the Executive (i) the full amounts to which he would be entitled as base compensation under SECTION 4(a) and (ii) customary benefits, in each case during such extended period.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the stockholders signatory thereto.
"TERM OF EMPLOYMENT" is defined in Section 3(a).
11. NOTICE
Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be given in writing and if delivered personally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner):
If to Executive: David F. Brussard
c/o Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
If to Company: Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
Attention: David F. Brussard
and a copy to: Safety Holdings, Inc.
c/o The Jordan Company LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: A. Richard Caputo, Jr.
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Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued.
12. EXECUTIVE'S REPRESENTATION
Executive hereby warrants and represents to the Company that Executive has carefully reviewed this Agreement and has consulted with such advisors as Executive considers appropriate in connection with this Agreement, and is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive's prior employment which would be breached or violated by Executive's execution of this Agreement or by Executive's performance of his duties hereunder.
13. OTHER MATTERS
Executive agrees and acknowledges that the obligations owed to Executive under this Agreement are solely the obligations of the Company, and that none of the Companies' stockholders, directors, officers, affiliates, representatives, agents or lenders will have any obligations or liabilities in respect of this Agreement and the subject matter hereof.
14. VALIDITY
If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.
15. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of SECTION 8 or any other provision hereof is unenforceable and therefore acts to reduce the scope or duration of such provision, the provision in its reduced form shall then be enforceable.
16. WAIVER OF BREACH; SPECIFIC PERFORMANCE
The waiver by the Company or Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its respective rights under this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of SECTIONS 7, 8 and 9 of this Agreement and that any party (and third party beneficiaries) may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. In the event either party takes legal action to enforce any of the terms or provisions of this Agreement, the nonprevailing party shall pay the successful party's costs and expenses, including but not limited to, attorneys' fees, incurred in such action.
17. ASSIGNMENT; THIRD PARTIES
Neither the Executive nor the Company may assign, transfer, pledge, hypothecate, encumber or otherwise dispose of this Agreement or any of his or its respective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and investors therein are intended to be third party beneficiaries of, and have rights and interests in respect of, Executive's agreements set forth in SECTIONS 7, 8 and 9.
18. AMENDMENT; ENTIRE AGREEMENT
This Agreement may not be changed orally but only by an agreement in writing agreed to by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersedes and replaces all prior Agreements, understandings and commitments with respect to such subject matter.
19. LITIGATION
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS LOCATED IN BOSTON, MASSACHUSETTS OR THE UNITED STATES DISTRICT COURTS IN BOSTON, MASSACHUSETTS. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 19 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
20. FURTHER ACTION
Executive and the Company agree to perform any further acts and to execute and deliver any documents which may be reasonable to carry out the provisions hereof.
21. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
22. EFFECTIVENESS
Any provision to the contrary herein notwithstanding, this Agreement shall become effective on the Closing Date and shall impose no obligations upon Executive at any time prior to the Closing Date. If for any reason the Merger Agreement shall terminate prior to Closing Date, this Agreement shall automatically terminate and be without any further force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
EXECUTIVE:
/s/ David F. Brussard
--------------------------------------------
Name: David F. Brussard
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SAFETY INSURANCE COMPANY
By /s/ A. Richard Caputo, Jr. ----------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.27
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of October 16, 2001 (this "AGREEMENT"), is by and between Edward N. Patrick, Jr. (the "EXECUTIVE") and Safety Insurance Company, a Massachusetts corporation (the "COMPANY");
WHEREAS, the Company wishes to obtain the future services of the Executive;
WHEREAS, the Executive is willing upon the terms and conditions herein set forth, to provide services to the Company hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference with the Company's business, upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. NATURE OF EMPLOYMENT
Subject to SECTION 3 and effective as of the Closing Date, the Company hereby employs Executive, and Executive agrees to accept such employment, during the Term of Employment (as defined in SECTION 3(a)), as Vice President and Clerk of the Company to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Board of Directors of the Company.
2. EXTENT OF EMPLOYMENT
(a) During the Term of Employment, the Executive shall perform his obligations hereunder faithfully and to the best of his ability at the principal executive offices of the Company, under the direction of the President and Chief Executive Officer of the Company, and shall abide by the rules, customs and usages from time to time established by the Company.
(b) During the Term of Employment, the Executive shall devote all of his business time, energy and skill as may be reasonably necessary for the performance of his duties, responsibilities and obligations hereunder (except for vacation periods and reasonable periods of illness or other incapacity), consistent with past practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority (collectively, the "REGULATIONS"). Executive shall act in good faith in accordance with all Regulations.
3. TERM OF EMPLOYMENT; TERMINATION
(a) The "TERM OF EMPLOYMENT" shall commence on the date hereof and shall continue until December 31, 2004 (the "INITIAL TERM"); PROVIDED, that, (i) such term shall continue for the twelve month period following such Initial Term, and for each twelve month period thereafter (each, an "ADDITIONAL TERM"), unless at least 180 days prior to the scheduled expiration date of the Initial Term or any Additional Term, either the Executive or the Company notifies the other of its decision not to continue such term and (ii) should the Executive's employment by the Company be earlier terminated pursuant to SECTION 3(b) or by the Executive pursuant to SECTION 3(c), the Term of Employment shall end on the date of such earlier termination.
(b) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability Executive is unable to perform, and does not perform, in the view of the Company and as certified in writing by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in SECTION 3(d)) or Material Breach (as defined in SECTION 3(e));
(iv) upon the continuous poor or unacceptable performance of the Executive's duties to the Company (other than due to a physical or mental disability), which has remained uncured for a period of 90 days after delivery of notice by the Company to the Executive of such dissatisfaction with Executive's performance, which notice shall describe in reasonable detail the areas of dissatisfaction; or
(v) for any other reason or no reason, it being understood that no reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., SECTION
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the Executive is unable to perform, and does not perform, in the view of the Company, and as certified by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) as a result of a material reduction in Executive's authority, perquisites, position or responsibilities (other than such a reduction in perquisites which affects all of the Company's senior executives on a substantially equal or proportionate basis), the relocation of the Company's primary place of business or the relocation of Executive by the Company to another Company office more than 75 miles from Boston, Massachusetts, or the Company's willful, material violation of its obligations under this Agreement, in each case, after 60 days' prior written notice to the Company and its Board of Directors and the Company's failure thereafter to cure such reduction or violation; or
(iv) as a result of the Company's willful and material violation of this Agreement, the Management Subscription Agreement or the Stockholders Agreement.
(d) For the purposes of this SECTION 3, "CAUSE" shall mean any of the following:
(i) Executive's commission or conviction of any crime or criminal offense involving monies or other property or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
(iii) Executive's material and knowing violation of any obligations imposed upon Executive, personally, as opposed to upon the Company, whether as a stockholder or otherwise, under this Agreement, the Merger Agreement, the Management Subscription Agreement, the Stockholders Agreement, the Pledge Agreement, the Recourse Promissory Note, any other agreement between the Executive, on the one hand, and the Company or its affiliates, on the other hand, the Certificate of Incorporation or By-Laws of the Company; PROVIDED, that the Executive has been given written notice describing any such violation in reasonable detail and fails to cure the violation within 90 days from such notice; or
(iv) Executive engages in egregious misconduct involving serious moral turpitude to the extent that Executive's credibility and reputation no longer conform to the standard of the Company's executives.
(e) For the purposes of this SECTION 3, "MATERIAL BREACH" shall mean any of the following:
(i) Executive's breach of any of his fiduciary duties to the Company or its stockholders or making of a willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by this Agreement, any other agreement between the Executive and the Company (other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which materially interferes with Executive's ability to discharge his duties, responsibilities or obligations prescribed by this Agreement or any other agreement between the Executive and the Company; and
(iv) Executive's willful and material violation of any non-competition, non-disparagement, or confidentiality agreement with the Company, including without limitation, those set forth in SECTIONS 7, 8 and 9 of this Agreement, or any other agreements with the Company.
in each case, for purposes of clauses (i) through (iv), after the Company or the Board of Directors has provided Executive with 60 days' written notice describing such circumstances and the possibility of a Material Breach in reasonable detail, and Executive fails to cure such circumstances and Material Breach within those 60 days. No act or omission shall be deemed willful if done, or omitted to be done, in good faith by the Executive based upon a resolution duly adopted by the Company's Board of Directors.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(v) or by Executive under the
circumstances described in SECTION 3(c)(iii) or (iv), the Company will pay to
Executive the full amounts to which he would be entitled as base compensation
under SECTION 4(a) and customary benefits through the Term of Employment prior
to the application of any early termination provision of SECTION 3(b) or (c). In
the event Executive's employment is terminated by the Company under the
circumstances described in SECTION 3(b)(iv), the Company will pay to Executive
(i) the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and (ii) customary benefits, in each case for the period from the
effectiveness of termination through the date three months after the date of
such termination. In the event Executive's employment is terminated by the
Company under the circumstances described in SECTION 3(b)(i) or (ii) or by the
Executive under SECTION 3(c)(i) or (ii), the Company will pay to the Executive
the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and customary benefits for the period from the effectiveness of
termination through (y) the first anniversary of the date of such termination,
or (z) the third anniversary of the date of this Agreement, whichever is
greater. In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(iii) or by Executive as a result of
resignation or voluntary termination due to any circumstance other than the
material reductions or violations described in SECTION 3(c)(iii) above, there
will be no amounts owing by the Company to the Executive, under SECTION 4 or any
other part of this Agreement, from and after the effectiveness of termination.
If the Company makes the payments required by this SECTION 3(f), such payments
will constitute severance and liquidated damages, and the Company will not be
obligated to pay any further amounts to Executive under this Agreement or
otherwise be liable to Executive in connection with any termination.
(g) All determinations pursuant to this SECTION 3 shall be made by the Company's Board of Directors (not including Executive) in good faith.
(h) Termination of the Term of Employment will not terminate SECTIONS 7, through 9 and 11 through 21, or any other provisions not associated specifically with the Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to SECTION 3(f), the Executive will use his
reasonable efforts to seek and obtain alternative employment; PROVIDED, HOWEVER,
that the Executive shall not be required to accept a position of a substantially
different character than the position held by him with the Company; and PROVIDED
FURTHER, if the Executive shall become physically or mentally disabled, he will
not be under such duty. If Executive thereafter obtains alternative employment,
then if and to the extent Executive obtains such employment, the Company's
payment obligations under SECTION 3(f), including its obligation to provide
insurance coverage, if any, will be mitigated and reduced by and to the extent
of Executive's compensation under such alternative employment during the period
for which payments are owed by the Company pursuant to SECTION 3(f). Moreover,
in the event that after the Restricted Period pursuant to SECTION 8(a),
Executive is employed by or engaged in a Competitive Business as contemplated by
SECTION 8(a)(i), then the Company will thereupon cease, and will be no longer
obligated, to make payments under SECTION 3(f).
(j) In the event the Term of Employment is terminated and the Company is obligated to make payments pursuant to SECTION 3(f), Executive hereby waives any and all claims against the Company, and its officers, directors, employees, agents, or representatives, stockholders and affiliates relating to this Agreement and to his employment during the term hereof other than any payments to be made pursuant to SECTION 3(f), the Management Subscription Agreement, and any Company employee benefit plan.
4. COMPENSATION. The Company shall pay compensation to Executive as follows:
(a) During the Term of Employment, the Company shall pay to Executive as base compensation for his services hereunder, in monthly installments, a base salary at a rate of $225,756 per annum, as increased on an annual basis to reflect the increase in the United States Cost of Living Index for All Urban Consumer (CPI-U) for the Boston, Massachusetts area (the "CPI-U INDEX"). The January 2001 CPI-U Index shall provide the basis for calculations of such increases. Notwithstanding the minimum increase set forth above, the Board of Directors, in its sole discretion, may establish a higher compensation level.
(b) During the Term of Employment, the Company shall pay to Executive an annual bonus based on Executive's performance, as determined and approved by the Board of Directors in its sole discretion. Such bonus will be at the full discretion of the Board of Directors, and may not be paid at all. Executive acknowledges that no bonus has been agreed upon or promised. If the Board of Directors decides to pay a bonus, it is to be paid within 30 days after the issuance of audited financial statements for the Company. The Board of Directors in its sole discretion may establish a higher bonus level based on the performance of Executive.
(c) Contingent upon the consummation of the transactions contemplated by the Merger Agreement, on March 31, 2002, the Company shall pay Executive a transaction bonus of $80,634.
5. REIMBURSEMENT OF EXPENSES
During the Term of Employment, the Company shall reimburse Executive for documented travel, entertainment and other expenses reasonably incurred by Executive in connection with the performance of his duties hereunder and, in each case, in accordance with the rules, customs and usages promulgated by the Company from time to time in effect.
6. BENEFITS. During the Term of Employment, the Executive shall be entitled to perquisites, paid vacations and benefits (including health, short and long term disability, pension and life insurance benefits consistent with past practice, or as increased from time to time) established from time to time, by the Board of Directors for executives of the Company, subject to the policies and procedures in effect regarding participation in such benefits.
7. CONFIDENTIAL INFORMATION
(a) During and after the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for the Executive's own benefit or for the benefit of anyone other than the Companies, any Confidential Information, whether prepared by Executive or not; PROVIDED, HOWEVER, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Companies who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business (as defined in SECTION 10). Executive shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use commercially reasonable efforts to cause all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure of any thereof is specifically required by law; PROVIDED, HOWEVER, that in the event disclosure is required by applicable law, the Executive shall provide the Companies with prompt notice of such requirement, prior to making any disclosure, so that the Companies may seek an appropriate protective order. At the request of the Companies, Executive agrees to deliver to the Companies, at any time during the Term of Employment, or thereafter, all Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs to the Companies (and not to Executive). Executive will promptly disclose such Confidential Information to the Companies and perform all actions reasonably requested by the Companies to establish and confirm such exclusive ownership.
(b) The terms of this SECTION 7 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. NON-INTERFERENCE
(a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Companies and their Confidential Information and the capabilities of individuals employed by or affiliated with the Companies and that interference in these relationships would cause irreparable injury to the Companies. In consideration of this Agreement, Executive covenants and agrees that:
(i) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, in any business which competes, directly or indirectly, with the Business in the Market ("COMPETITIVE BUSINESS") without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the activities of the Executive referred to above occur or are performed within or without the Market or (C) whether the Executive resides, or reports to an office, within or without the Market; PROVIDED, HOWEVER, that (x) the Executive may, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may accept employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any other person which has a business relationship with the Companies or had a business relationship with the Companies within the 24 month period preceding the date of the incident in question, to discontinue, reduce or modify such employment, agency or business relationship with the Companies, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within 24 months prior to the date the Executive or the Competitive Business employs or seeks to employ such person) employed or retained by the Companies. Notwithstanding the foregoing, nothing herein shall prevent the Executive from providing a letter of recommendation to an employee with respect to a future employment opportunity.
(iii) The scope and term of this SECTION 8 would not preclude Executive from earning a living with an entity that is not a Competitive Business.
(b) In the event that Executive breaches his obligations in any material respect under SECTION 7, this SECTION 8 or SECTION 9, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to the Executive under this Agreement or any other agreement.
(c) The terms of this SECTION 8 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. NON-DISPARAGEMENT. During and after the Term of Employment, the Executive agrees that he shall not make any false, defamatory or disparaging statements about the Companies or the officers or directors of the Companies. During and after the Term of Employment, the Company agrees, on behalf of the Companies that neither the officers nor the directors of the Companies shall make any false, defamatory or disparaging statements about the Executive.
10. DEFINITIONS Capitalized terms used in this Agreement but not otherwise defined shall have the meanings set forth below:
"BUSINESS" means any business conducted, or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment.
"CAUSE" is defined in SECTION 3(c).
"CLOSING DATE" means the Closing Date, under and as defined in the Merger Agreement.
"COMPANIES" means the Company and its successors or any of its direct or indirect parents or direct or indirect subsidiaries, now or hereafter existing.
"COMPANY" is defined in the introduction.
"COMPETITIVE BUSINESS" is defined in Section 8(a)(i).
"CONFIDENTIAL INFORMATION" means any confidential information including, without limitation, any study, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service name, "know-how", trade secrets, customer lists, details of client or consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, formulas, improvements or other proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans, reports, records, documents and other evidence thereof. The term "CONFIDENTIAL INFORMATION" does not include, and there shall be no obligation hereunder with respect to, information that becomes generally available to the public other than as a result of a disclosure by the Executive not permissible hereunder.
"EXECUTIVE" means Edward N. Patrick, Jr. or his estate, if deceased.
"MANAGEMENT SUBSCRIPTION AGREEMENT" means the Management Subscription Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the management investors signatory thereto.
"MARKET" means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted by or engaged in by the Companies prior to the date hereof or is conducted or engaged in, or in which the Companies are seeking authorization to conduct Business at any time during the Term of Employment.
"MERGER AGREEMENT" means the Merger Agreement, dated as of May 31, 2001, by and among Safety Holdings, Inc., Safety Merger Co., Inc., Thomas Black Corporation and the shareholders of Thomas Black Corporation, as amended, restated or otherwise modified from time to time.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc.
"RECOURSE PROMISSORY NOTE" means the Recourse Promissory Note, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc. in the principal amount of $95,000.00.
"REGULATIONS" is defined in Section 2(c).
"RESTRICTED PERIOD" means the date commencing on the date of this Agreement and ending on the later of (x) the date of termination of the Term of Employment or (y) the end of any severance period provided under SECTION 3(f); PROVIDED, HOWEVER, that the "Restricted Period" may be extended, in the sole discretion of the Company, for an additional period of up to twenty-four (24) months if the Company continues to pay to the Executive (i) the full amounts to which he would be entitled as base compensation under SECTION 4(a) and (ii) customary benefits, in each case during such extended period.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the stockholders signatory thereto.
"TERM OF EMPLOYMENT" is defined in Section 3(a).
11. NOTICE
Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be given in writing and if delivered personally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner):
If to Executive: Edward N. Patrick, Jr.
c/o Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
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If to Company: Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
Attention: David F. Brussard
and a copy to: Safety Holdings, Inc.
c/o The Jordan Company LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: A. Richard Caputo, Jr.
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Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued.
12. EXECUTIVE'S REPRESENTATION
Executive hereby warrants and represents to the Company that Executive has carefully reviewed this Agreement and has consulted with such advisors as Executive considers appropriate in connection with this Agreement, and is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive's prior employment which would be breached or violated by Executive's execution of this Agreement or by Executive's performance of his duties hereunder.
13. OTHER MATTERS
Executive agrees and acknowledges that the obligations owed to Executive under this Agreement are solely the obligations of the Company, and that none of the Companies' stockholders, directors, officers, affiliates, representatives, agents or lenders will have any obligations or liabilities in respect of this Agreement and the subject matter hereof.
14. VALIDITY
If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.
15. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of SECTION 8 or any other provision hereof is unenforceable and therefore acts to reduce the scope or duration of such provision, the provision in its reduced form shall then be enforceable.
16. WAIVER OF BREACH; SPECIFIC PERFORMANCE
The waiver by the Company or Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its respective rights under this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of SECTIONS 7, 8 and 9 of this Agreement and that any party (and third party beneficiaries) may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. In the event either party takes legal action to enforce any of the terms or provisions of this Agreement, the nonprevailing party shall pay the successful party's costs and expenses, including but not limited to, attorneys' fees, incurred in such action.
17. ASSIGNMENT; THIRD PARTIES
Neither the Executive nor the Company may assign, transfer, pledge, hypothecate, encumber or otherwise dispose of this Agreement or any of his or its respective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and investors therein are intended to be third party beneficiaries of, and have rights and interests in respect of, Executive's agreements set forth in SECTIONS 7, 8 and 9.
18. AMENDMENT; ENTIRE AGREEMENT
This Agreement may not be changed orally but only by an agreement in writing agreed to by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersedes and replaces all prior agreements, understandings and commitments with respect to such subject matter, including, without limitation, that certain Employment Agreement, dated August 7, 2000, between Executive and the Company.
19. LITIGATION
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS LOCATED IN BOSTON, MASSACHUSETTS OR THE UNITED STATES DISTRICT COURTS IN BOSTON, MASSACHUSETTS. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 19 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
20. FURTHER ACTION
Executive and the Company agree to perform any further acts and to execute and deliver any documents which may be reasonable to carry out the provisions hereof.
21. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
22. EFFECTIVENESS
Any provision to the contrary herein notwithstanding, this Agreement shall become effective on the Closing Date and shall impose no obligations upon Executive at anytime prior to the Closing Date. If for any reason the Merger Agreement shall terminate prior to Closing Date, this Agreement shall automatically terminate and be without any further force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
EXECUTIVE:
/s/ Edward N. Patrick, Jr.
--------------------------------------------
Name: Edward N. Patrick, Jr.
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SAFETY INSURANCE COMPANY
By /s/ A. Richard Caputo, Jr.
-----------------------------------------
Name: A. Richard Caputo, Jr.
Title: Vice President
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EXHIBIT 10.28
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of October 16, 2001 (this "AGREEMENT"), is by and between Daniel F. Crimmins (the "EXECUTIVE") and Safety Insurance Company, a Massachusetts corporation (the "COMPANY");
W I T N E S S E T H:
WHEREAS, the Company wishes to obtain the future services of the Executive;
WHEREAS, the Executive is willing upon the terms and conditions herein set forth, to provide services to the Company hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference with the Company's business, upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. NATURE OF EMPLOYMENT
Subject to SECTION 3 and effective as of the Closing Date, the Company hereby employs Executive, and Executive agrees to accept such employment, during the Term of Employment (as defined in SECTION 3(a)), as Vice President of the Company to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Board of Directors of the Company.
2. EXTENT OF EMPLOYMENT
(a) During the Term of Employment, the Executive shall perform his obligations hereunder faithfully and to the best of his ability at the principal executive offices of the Company, under the direction of the President and Chief Executive Officer of the Company, and shall abide by the rules, customs and usages from time to time established by the Company.
(b) During the Term of Employment, the Executive shall devote all of his business time, energy and skill as may be reasonably necessary for the performance of his duties, responsibilities and obligations hereunder (except for vacation periods and reasonable periods of illness or other incapacity), consistent with past practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority (collectively, the "REGULATIONS"). Executive shall act in good faith in accordance with all Regulations.
3. TERM OF EMPLOYMENT; TERMINATION
(a) The "TERM OF EMPLOYMENT" shall commence on the date hereof and shall continue until December 31, 2004 (the "INITIAL TERM"); PROVIDED, that, (i) such term shall continue for the twelve month period following such Initial Term, and for each twelve month period thereafter (each, an "ADDITIONAL TERM"), unless at least 180 days prior to the scheduled expiration date of the Initial Term or any Additional Term, either the Executive or the Company notifies the other of its decision not to continue such term and (ii) should the Executive's employment by the Company be earlier terminated pursuant to SECTION 3(b) or by the Executive pursuant to SECTION 3(c), the Term of Employment shall end on the date of such earlier termination.
(b) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability Executive is unable to perform, and does not perform, in the view of the Company and as certified in writing by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in SECTION 3(d)) or Material Breach (as defined in SECTION 3(e));
(iv) upon the continuous poor or unacceptable performance of the Executive's duties to the Company (other than due to a physical or mental disability), which has remained uncured for a period of 90 days after delivery of notice by the Company to the Executive of such dissatisfaction with Executive's performance, which notice shall describe in reasonable detail the areas of dissatisfaction; or
(v) for any other reason or no reason, it being understood that no reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., SECTION
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the Executive is unable to perform, and does not perform, in the view of the Company, and as certified by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) as a result of a material reduction in Executive's authority, perquisites, position or responsibilities (other than such a reduction in perquisites which affects all of the Company's senior executives on a substantially equal or proportionate basis), the relocation of the Company's primary place of business or the relocation of Executive by the Company to another Company office more than 75 miles from Boston, Massachusetts, or the Company's willful, material violation of its obligations under this Agreement, in each case, after 60 days' prior written notice to the Company and its Board of Directors and the Company's failure thereafter to cure such reduction or violation; or
(iv) as a result of the Company's willful and material violation of this Agreement, the Management Subscription Agreement or the Stockholders Agreement.
(d) For the purposes of this SECTION 3, "CAUSE" shall mean any of the following:
(i) Executive's commission or conviction of any crime or criminal offense involving monies or other property or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
(iii) Executive's material and knowing violation of any obligations imposed upon Executive, personally, as opposed to upon the Company, whether as a stockholder or otherwise, under this Agreement, the Merger Agreement, the Management Subscription Agreement, the Stockholders Agreement, the Pledge Agreement, the Recourse Promissory Note, any other agreement between the Executive, on the one hand, and the Company or its affiliates, on the other hand, the Certificate of Incorporation or By-Laws of the Company; PROVIDED, that the Executive has been given written notice describing any such violation in reasonable detail and fails to cure the violation within 90 days from such notice; or
(iv) Executive engages in egregious misconduct involving serious moral turpitude to the extent that Executive's credibility and reputation no longer conform to the standard of the Company's executives.
(e) For the purposes of this SECTION 3, "MATERIAL BREACH" shall mean any of the following:
(i) Executive's breach of any of his fiduciary duties to the Company or its stockholders or making of a willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by this Agreement, any other agreement between the Executive and the Company (other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which materially interferes with Executive's ability to discharge his duties, responsibilities or obligations prescribed by this Agreement or any other agreement between the Executive and the Company; and
(iv) Executive's willful and material violation of any non-competition, non-disparagement, or confidentiality agreement with the Company, including without limitation, those set forth in SECTIONS 7, 8 and 9 of this Agreement, or any other agreements with the Company.
in each case, for purposes of clauses (i) through (iv), after the Company or the Board of Directors has provided Executive with 60 days' written notice describing such circumstances and the possibility of a Material Breach in reasonable detail, and Executive fails to cure such circumstances and Material Breach within those 60 days. No act or omission shall be deemed willful if done, or omitted to be done, in good faith by the Executive based upon a resolution duly adopted by the Company's Board of Directors.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(v) or by Executive under the
circumstances described in SECTION 3(c)(iii) or (iv), the Company will pay to
Executive the full amounts to which he would be entitled as base compensation
under SECTION 4(a) and customary benefits through the Term of Employment prior
to the application of any early termination provision of SECTION 3(b) or (c). In
the event Executive's employment is terminated by the Company under the
circumstances described in SECTION 3(b)(iv), the Company will pay to Executive
(i) the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and (ii) customary benefits, in each case for the period from the
effectiveness of termination through the date three months after the date of
such termination. In the event Executive's employment is terminated by the
Company under the circumstances described in SECTION 3(b)(i) or (ii) or by the
Executive under SECTION 3(c)(i) or (ii), the Company will pay to the Executive
the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and customary benefits for the period from the effectiveness of
termination through (y) the first anniversary of the date of such termination,
or (z) the third anniversary of the date of this Agreement, whichever is
greater. In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(iii) or by Executive as a result of
resignation or voluntary termination due to any circumstance other than the
material reductions or violations described in SECTION 3(c)(iii) above, there
will be no amounts owing by the Company to the Executive, under SECTION 4 or any
other part of this Agreement, from and after the effectiveness of termination.
If the Company makes the payments required by this SECTION 3(f), such payments
will constitute severance and liquidated damages, and the Company will not be
obligated to pay any further amounts to Executive under this Agreement or
otherwise be liable to Executive in connection with any termination.
(g) All determinations pursuant to this SECTION 3 shall be made by the Company's Board of Directors (not including Executive) in good faith.
(h) Termination of the Term of Employment will not terminate SECTIONS 7, through 9 and 11 through 21, or any other provisions not associated specifically with the Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to SECTION 3(f), the Executive will use his
reasonable efforts to seek and obtain alternative employment; PROVIDED, HOWEVER,
that the Executive shall not be required to accept a position of a substantially
different character than the position held by him with the Company; and PROVIDED
FURTHER, if the Executive shall become physically or mentally disabled, he will
not be under such duty. If Executive thereafter obtains alternative employment,
then if and to the extent Executive obtains such employment, the Company's
payment obligations under SECTION 3(f), including its obligation to provide
insurance coverage, if any, will be mitigated and reduced by and to the extent
of Executive's compensation under such alternative employment during the period
for which payments are owed by the Company pursuant to SECTION 3(f). Moreover,
in the event that after the Restricted Period pursuant to SECTION 8(a),
Executive is employed by or engaged in a Competitive Business as contemplated by
SECTION 8(a)(i), then the Company will thereupon cease, and will be no longer
obligated, to make payments under SECTION 3(f).
(j) In the event the Term of Employment is terminated and the Company is obligated to make payments pursuant to Section 3(f), Executive hereby waives any and all claims against the Company, and its officers, directors, employees, agents, or representatives, stockholders and affiliates relating to this Agreement and to his employment during the term hereof other than any payments to be made pursuant to SECTION 3(f), the Management Subscription Agreement, and any Company employee benefit plan.
4. COMPENSATION. The Company shall pay compensation to Executive as follows:
(a) During the Term of Employment, the Company shall pay to Executive as base compensation for his services hereunder, in monthly installments, a base salary at a rate of $162,756 per annum, as increased on an annual basis to reflect the increase in the United States Cost of Living Index for All Urban Consumer (CPI-U) for the Boston, Massachusetts area (the "CPI-U INDEX"). The January 2001 CPI-U Index shall provide the basis for calculations of such increases. Notwithstanding the minimum increase set forth above, the Board of Directors, in its sole discretion, may establish a higher compensation level.
(b) During the Term of Employment, the Company shall pay to Executive an annual bonus based on Executive's performance, as determined and approved by the Board of Directors in its sole discretion. Such bonus will be at the full discretion of the Board of Directors, and may not be paid at all. Executive acknowledges that no bonus has been agreed upon or promised. If the Board of Directors decides to pay a bonus, it is to be paid within 30 days after the issuance of audited financial statements for the Company. The Board of Directors in its sole discretion may establish a higher bonus level based on the performance of Executive.
(c) Contingent upon the consummation of the transactions contemplated by the Merger Agreement, on March 31, 2002, the Company shall pay Executive a transaction bonus of $53,699.
5. REIMBURSEMENT OF EXPENSES
During the Term of Employment, the Company shall reimburse Executive for documented travel, entertainment and other expenses reasonably incurred by Executive in connection with the performance of his duties hereunder and, in each case, in accordance with the rules, customs and usages promulgated by the Company from time to time in effect.
6. BENEFITS. During the Term of Employment, the Executive shall be entitled to perquisites, paid vacations and benefits (including health, short and long term disability, pension and life insurance benefits consistent with past practice, or as increased from time to time) established from time to time, by the Board of Directors for executives of the Company, subject to the policies and procedures in effect regarding participation in such benefits.
In recognition of the use of an automobile for the efficient and expeditious performance of the Executive's duties and obligations on behalf of the Company, the Company, at its cost, shall supply to the Executive for such use an automobile of such make and model and upon such terms and conditions as the Board of Directors shall determine from time to time.
7. CONFIDENTIAL INFORMATION
(a) During and after the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for the Executive's own benefit or for the benefit of anyone other than the Companies, any Confidential Information, whether prepared by Executive or not; PROVIDED, HOWEVER, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Companies who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business (as defined in SECTION 10). Executive shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use commercially reasonable efforts to cause all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure of any thereof is specifically required by law; PROVIDED, HOWEVER, that in the event disclosure is required by applicable law, the Executive shall provide the Companies with prompt notice of such requirement, prior to making any disclosure, so that the Companies may seek an appropriate protective order. At the request of the Companies, Executive agrees to deliver to the Companies, at any time during the Term of Employment, or thereafter, all Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs to the Companies (and not to Executive). Executive will promptly disclose such Confidential
Information to the Companies and perform all actions reasonably requested by the Companies to establish and confirm such exclusive ownership.
(b) The terms of this SECTION 7 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. NON-INTERFERENCE
(a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Companies and their Confidential Information and the capabilities of individuals employed by or affiliated with the Companies and that interference in these relationships would cause irreparable injury to the Companies. In consideration of this Agreement, Executive covenants and agrees that:
(i) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, in any business which competes, directly or indirectly, with the Business in the Market ("COMPETITIVE BUSINESS") without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the activities of the Executive referred to above occur or are performed within or without the Market or (C) whether the Executive resides, or reports to an office, within or without the Market; PROVIDED, HOWEVER, that (x) the Executive may, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may accept employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any other person which has a business relationship with the Companies or had a business relationship with the Companies within the 24 month period preceding the date of the incident in question, to discontinue, reduce or modify such employment, agency or business relationship with the Companies, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within 24 months prior to the date the Executive or the Competitive Business employs or seeks to employ such person) employed or retained by the Companies. Notwithstanding the
foregoing, nothing herein shall prevent the Executive from providing a letter of recommendation to an employee with respect to a future employment opportunity.
(iii) The scope and term of this SECTION 8 would not preclude Executive from earning a living with an entity that is not a Competitive Business.
(b) In the event that Executive breaches his obligations in any material respect under SECTION 7, this SECTION 8 or SECTION 9, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to the Executive under this Agreement or any other agreement.
(c) The terms of this SECTION 8 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. NON-DISPARAGEMENT. During and after the Term of Employment, the Executive agrees that he shall not make any false, defamatory or disparaging statements about the Companies or the officers or directors of the Companies. During and after the Term of Employment, the Company agrees, on behalf of the Companies that neither the officers nor the directors of the Companies shall make any false, defamatory or disparaging statements about the Executive.
10. DEFINITIONS Capitalized terms used in this Agreement but not otherwise defined shall have the meanings set forth below:
"BUSINESS" means any business conducted, or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment.
"CAUSE" is defined in Section 3(c).
"CLOSING DATE" means the Closing Date, under and as defined in the Merger Agreement.
"COMPANIES" means the Company and its successors or any of its direct or indirect parents or direct or indirect subsidiaries, now or hereafter existing.
"COMPANY" is defined in the introduction.
"COMPETITIVE BUSINESS" is defined in Section 8(a)(i).
"CONFIDENTIAL INFORMATION" means any confidential information including, without limitation, any study, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service name, "know-how", trade secrets, customer lists, details of client or consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, formulas, improvements or other proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans,
reports, records, documents and other evidence thereof. The term "CONFIDENTIAL INFORMATION" does not include, and there shall be no obligation hereunder with respect to, information that becomes generally available to the public other than as a result of a disclosure by the Executive not permissible hereunder.
"EXECUTIVE" means Daniel F. Crimmins or his estate, if deceased.
"MANAGEMENT SUBSCRIPTION AGREEMENT" means the Management Subscription Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the management investors signatory thereto.
"MARKET" means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted by or engaged in by the Companies prior to the date hereof or is conducted or engaged in, or in which the Companies are seeking authorization to conduct Business at any time during the Term of Employment.
"MERGER AGREEMENT" means the Merger Agreement, dated as of May 31, 2001, by and among Safety Holdings, Inc., Safety Merger Co., Inc., Thomas Black Corporation and the shareholders of Thomas Black Corporation, as amended, restated or otherwise modified from time to time.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc.
"RECOURSE PROMISSORY NOTE" means the Recourse Promissory Note, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc. in the principal amount of $66,500.00.
"REGULATIONS" is defined in Section 2(c).
"RESTRICTED PERIOD" means the date commencing on the date of this Agreement and ending on the later of (x) the date of termination of the Term of Employment or (y) the end of any severance period provided under SECTION 3(f); PROVIDED, HOWEVER, that the "Restricted Period" may be extended, in the sole discretion of the Company, for an additional period of up to twenty-four (24) months if the Company continues to pay to the Executive (i) the full amounts to which he would be entitled as base compensation under SECTION 4(a) and (ii) customary benefits, in each case during such extended period.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the stockholders signatory thereto.
"TERM OF EMPLOYMENT" is defined in Section 3(a).
11. NOTICE
Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be given in writing and if delivered personally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner):
If to Executive: Daniel F. Crimmins
c/o 20 Custom House Street
Boston, Massachusetts 02110
If to Company: Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
Attention: David F. Brussard
and a copy to: Safety Holdings, Inc.
c/o The Jordan Company LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: A. Richard Caputo, Jr.
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Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued.
12. EXECUTIVE'S REPRESENTATION
Executive hereby warrants and represents to the Company that Executive has carefully reviewed this Agreement and has consulted with such advisors as Executive considers appropriate in connection with this Agreement, and is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive's prior employment which would be breached or violated by Executive's execution of this Agreement or by Executive's performance of his duties hereunder.
13. OTHER MATTERS
Executive agrees and acknowledges that the obligations owed to Executive under this Agreement are solely the obligations of the Company, and that none of the Companies' stockholders, directors, officers, affiliates, representatives, agents or lenders will have any obligations or liabilities in respect of this Agreement and the subject matter hereof.
14. VALIDITY
If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.
15. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of SECTION 8 or any other provision hereof is
unenforceable and therefore acts to reduce the scope or duration of such provision, the provision in its reduced form shall then be enforceable.
16. WAIVER OF BREACH; SPECIFIC PERFORMANCE
The waiver by the Company or Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its respective rights under this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of SECTIONS 7, 8 and 9 of this Agreement and that any party (and third party beneficiaries) may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. In the event either party takes legal action to enforce any of the terms or provisions of this Agreement, the nonprevailing party shall pay the successful party's costs and expenses, including but not limited to, attorneys' fees, incurred in such action.
17. ASSIGNMENT; THIRD PARTIES
Neither the Executive nor the Company may assign, transfer, pledge, hypothecate, encumber or otherwise dispose of this Agreement or any of his or its respective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and investors therein are intended to be third party beneficiaries of, and have rights and interests in respect of, Executive's agreements set forth in SECTIONS 7, 8 and 9.
18. AMENDMENT; ENTIRE AGREEMENT
This Agreement may not be changed orally but only by an agreement in writing agreed to by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersedes and replaces all prior agreements, understandings and commitments with respect to such subject matter, including, without limitation, that certain Employment Agreement, dated August 7, 2000, between Executive and the Company.
19. LITIGATION
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. EXECUTIVE AND THE
COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS LOCATED IN BOSTON, MASSACHUSETTS OR THE UNITED STATES DISTRICT COURTS IN BOSTON, MASSACHUSETTS. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 19 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
20. FURTHER ACTION
Executive and the Company agree to perform any further acts and to execute and deliver any documents which may be reasonable to carry out the provisions hereof.
21. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
22. EFFECTIVENESS
Any provision to the contrary herein notwithstanding, this Agreement shall become effective on the Closing Date and shall impose no obligations upon Executive at anytime prior to the Closing Date. If for any reason the Merger Agreement shall terminate prior to Closing Date, this Agreement shall automatically terminate and be without any further force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
EXECUTIVE:
/s/Daniel F. Crimmins
--------------------------------------------
Name: Daniel F. Crimmins
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SAFETY INSURANCE COMPANY
By /s/A. Richard Caputo, Jr. ----------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.29
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of October 16, 2001 (this "AGREEMENT"), is by and between Daniel D. Loranger (the "EXECUTIVE") and Safety Insurance Company, a Massachusetts corporation (the "COMPANY");
W I T N E S S E T H:
WHEREAS, the Company wishes to obtain the future services of the Executive;
WHEREAS, the Executive is willing upon the terms and conditions herein set forth, to provide services to the Company hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference with the Company's business, upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. NATURE OF EMPLOYMENT
Subject to SECTION 3 and effective as of the Closing Date, the Company hereby employs Executive, and Executive agrees to accept such employment, during the Term of Employment (as defined in SECTION 3(a)), as Vice President of the Company to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Board of Directors of the Company.
2. EXTENT OF EMPLOYMENT
(a) During the Term of Employment, the Executive shall perform his obligations hereunder faithfully and to the best of his ability at the principal executive offices of the Company, under the direction of the President and Chief Executive Officer of the Company, and shall abide by the rules, customs and usages from time to time established by the Company.
(b) During the Term of Employment, the Executive shall devote all of his business time, energy and skill as may be reasonably necessary for the performance of his duties, responsibilities and obligations hereunder (except for vacation periods and reasonable periods of illness or other incapacity), consistent with past practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority (collectively, the "REGULATIONS"). Executive shall act in good faith in accordance with all Regulations.
3. TERM OF EMPLOYMENT; TERMINATION
(a) The "TERM OF EMPLOYMENT" shall commence on the date hereof and shall continue until December 31, 2004 (the "INITIAL TERM"); PROVIDED, that, (i) such term shall continue for the twelve month period following such Initial Term, and for each twelve month period thereafter (each, an "ADDITIONAL TERM"), unless at least 180 days prior to the scheduled expiration date of the Initial Term or any Additional Term, either the Executive or the Company notifies the other of its decision not to continue such term and (ii) should the Executive's employment by the Company be earlier terminated pursuant to SECTION 3(b) or by the Executive pursuant to SECTION 3(c), the Term of Employment shall end on the date of such earlier termination.
(b) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability Executive is unable to perform, and does not perform, in the view of the Company and as certified in writing by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in SECTION 3(d)) or Material Breach (as defined in SECTION 3(e));
(iv) upon the continuous poor or unacceptable performance of the Executive's duties to the Company (other than due to a physical or mental disability), which has remained uncured for a period of 90 days after delivery of notice by the Company to the Executive of such dissatisfaction with Executive's performance, which notice shall describe in reasonable detail the areas of dissatisfaction; or
(v) for any other reason or no reason, it being understood that no reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., SECTION
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the Executive is unable to perform, and does not perform, in the view of the Company, and as certified by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) as a result of a material reduction in Executive's authority, perquisites, position or responsibilities (other than such a reduction in perquisites which affects all of the Company's senior executives on a substantially equal or proportionate basis), the relocation of the Company's primary place of business or the relocation of Executive by the Company to another Company office more than 75 miles from Boston, Massachusetts, or the Company's willful, material violation of its obligations under this Agreement, in each case, after 60 days' prior written notice to the Company and its Board of Directors and the Company's failure thereafter to cure such reduction or violation; or
(iv) as a result of the Company's willful and material violation of this Agreement, the Management Subscription Agreement, the Stockholders Agreement or the 2001 Restricted Stock Plan and Restricted Stock Award Agreement.
(d) For the purposes of this SECTION 3, "CAUSE" shall mean any of the following:
(i) Executive's commission or conviction of any crime or criminal offense involving monies or other property or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
(iii) Executive's material and knowing violation of any obligations imposed upon Executive, personally, as opposed to upon the Company, whether as a stockholder or otherwise, under this Agreement, the Merger Agreement, the Management Subscription Agreement, the Stockholders Agreement, the Pledge Agreement, the Recourse Promissory Note, any other agreement between the Executive, on the one hand, and the Company or its affiliates, on the other hand, the Certificate of Incorporation or By-Laws of the Company; PROVIDED, that the Executive has been given written notice describing any such violation in reasonable detail and fails to cure the violation within 90 days from such notice; or
(iv) Executive engages in egregious misconduct involving serious moral turpitude to the extent that Executive's credibility and reputation no longer conform to the standard of the Company's executives.
(e) For the purposes of this SECTION 3, "MATERIAL BREACH" shall mean any of the following:
(i) Executive's breach of any of his fiduciary duties to the Company or its stockholders or making of a willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by this Agreement, any other agreement between the Executive and the Company (other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which materially interferes with Executive's ability to discharge his duties, responsibilities or obligations prescribed by this Agreement or any other agreement between the Executive and the Company; and
(iv) Executive's willful and material violation of any non-competition, non-disparagement, or confidentiality agreement with the Company, including without limitation, those set forth in SECTIONS 7, 8 and 9 of this Agreement, or any other agreements with the Company.
in each case, for purposes of clauses (i) through (iv), after the Company or the Board of Directors has provided Executive with 60 days' written notice describing such circumstances and the possibility of a Material Breach in reasonable detail, and Executive fails to cure such circumstances and Material Breach within those 60 days. No act or omission shall be deemed willful if done, or omitted to be done, in good faith by the Executive based upon a resolution duly adopted by the Company's Board of Directors.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(v) or by Executive under the
circumstances described in SECTION 3(c)(iii) or(iv), the Company will pay to
Executive the full amounts to which he would be entitled as base compensation
under SECTION 4(a) and customary benefits through the Term of Employment prior
to the application of any early termination provision of SECTION 3(b) or (c). In
the event Executive's employment is terminated by the Company under the
circumstances described in SECTION 3(b)(iv), the Company will pay to Executive
(i) the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and (ii) customary benefits, in each case for the period from the
effectiveness of termination through the date three months after the date of
such termination. In the event Executive's employment is terminated by the
Company under the circumstances described in SECTION 3(b)(i) or (ii) or by the
Executive under SECTION 3(c)(i) or (ii), the Company will pay to the Executive
the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and customary benefits for the period from the effectiveness of
termination through (y) the first anniversary of the date of such termination,
or (z) the third anniversary of the date of this Agreement, whichever is
greater. In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(iii) or by Executive as a result of
resignation or voluntary termination due to any circumstance other than the
material reductions or violations described in SECTION 3(c)(iii) above, there
will be no amounts owing by the Company to the Executive, under SECTION 4 or any
other part of this Agreement, from and after the effectiveness of termination.
If the Company makes the payments required by this SECTION 3(f), such payments
will constitute severance and liquidated damages, and the Company will not be
obligated to pay any further amounts to Executive under this Agreement or
otherwise be liable to Executive in connection with any termination.
(g) All determinations pursuant to this SECTION 3 shall be made by the Company's Board of Directors (not including Executive) in good faith.
(h) Termination of the Term of Employment will not terminate SECTIONS 7, through 9 and 11 through 21, or any other provisions not associated specifically with the Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to SECTION 3(f), the Executive will use his
reasonable efforts to seek and obtain alternative employment; PROVIDED, HOWEVER,
that the Executive shall not be required to accept a position of a substantially
different character than the position held by him with the Company; and PROVIDED
FURTHER, if the Executive shall become physically or mentally disabled, he will
not be under such duty. If Executive thereafter obtains alternative employment,
then if and to the extent Executive obtains such employment, the Company's
payment obligations under SECTION 3(f), including its obligation to provide
insurance coverage, if any, will be mitigated and reduced by and to the extent
of Executive's compensation under such alternative employment during the period
for which payments are owed by the Company pursuant to SECTION 3(f). Moreover,
in the event that after the Restricted Period pursuant to SECTION 8(a),
Executive is employed by or engaged in a Competitive Business as contemplated by
SECTION 8(a)(i), then the Company will thereupon cease, and will be no longer
obligated, to make payments under SECTION 3(f).
(j) In the event the Term of Employment is terminated and the Company is obligated to make payments pursuant to SECTION 3(f), Executive hereby waives any and all claims against the Company, and its officers, directors, employees, agents, or representatives, stockholders and affiliates relating to this Agreement and to his employment during the term hereof other than any payments to be made pursuant to SECTION 3(f), the Management Subscription Agreement, the Company's 2001 Restricted Stock Plan, and any Company employee benefit plan.
4. COMPENSATION. The Company shall pay compensation to Executive as follows:
(a) During the Term of Employment, the Company shall pay to Executive as base compensation for his services hereunder, in monthly installments, a base salary at a rate of $236,256 per annum, as increased on an annual basis to reflect the increase in the United States Cost of Living Index for All Urban Consumer (CPI-U) for the Boston, Massachusetts area (the "CPI-U INDEX"). The January 2001 CPI-U Index shall provide the basis for calculations of such increases. Notwithstanding the minimum increase set forth above, the Board of Directors, in its sole discretion, may establish a higher compensation level.
(b) During the Term of Employment, the Company shall pay to Executive an annual bonus based on Executive's performance, as determined and approved by the Board of Directors in its sole discretion. Such bonus will be at the full discretion of the Board of Directors, and may not be paid at all. Executive acknowledges that no bonus has been agreed upon or promised. If the Board of Directors decides to pay a bonus, it is to be paid within 30 days after the issuance of audited financial statements for the Company. The Board of Directors in its sole discretion may establish a higher bonus level based on the performance of Executive.
(c) Contingent upon the consummation of the transactions contemplated by the Merger Agreement, on March 31, 2002, the Company shall pay Executive a transaction bonus of $80,634.
5. REIMBURSEMENT OF EXPENSES
During the Term of Employment, the Company shall reimburse Executive for documented travel, entertainment and other expenses reasonably incurred by Executive in connection with the performance of his duties hereunder and, in each case, in accordance with the rules, customs and usages promulgated by the Company from time to time in effect.
6. BENEFITS. During the Term of Employment, the Executive shall be entitled to perquisites, paid vacations and benefits (including health, short and long term disability, pension and life insurance benefits consistent with past practice, or as increased from time to time) established from time to time, by the Board of Directors for executives of the Company, subject to the policies and procedures in effect regarding participation in such benefits.
Executive shall receive an award of common stock of the Company equal to 1%
of the Company's common stock on a fully diluted basis as of the date hereof
under the Company's 2001 Restricted Stock Plan. Shares awarded under this
SECTION 6(c) shall be subject to the terms and conditions, including, without
limitation, vesting and buy back rights, set forth in the 2001 Restricted Stock
Plan.
7. CONFIDENTIAL INFORMATION
(a) During and after the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for the Executive's own benefit or for the benefit of anyone other than the Companies, any Confidential Information, whether prepared by Executive or not; PROVIDED, HOWEVER, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Companies who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business (as defined in SECTION 10). Executive shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use commercially reasonable efforts to cause all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure of any thereof is specifically required by law; PROVIDED, HOWEVER, that in the event disclosure is required by applicable law, the Executive shall provide the Companies with prompt notice of such requirement, prior to making any disclosure, so that the Companies may seek an appropriate protective order. At the request of the Companies, Executive agrees to deliver to the Companies, at any time during the Term of Employment, or thereafter, all Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs to the Companies (and not to Executive). Executive will promptly disclose such Confidential
Information to the Companies and perform all actions reasonably requested by the Companies to establish and confirm such exclusive ownership.
(b) The terms of this SECTION 7 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. NON-INTERFERENCE
(a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Companies and their Confidential Information and the capabilities of individuals employed by or affiliated with the Companies and that interference in these relationships would cause irreparable injury to the Companies. In consideration of this Agreement, Executive covenants and agrees that:
(i) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, in any business which competes, directly or indirectly, with the Business in the Market ("COMPETITIVE BUSINESS") without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the activities of the Executive referred to above occur or are performed within or without the Market or (C) whether the Executive resides, or reports to an office, within or without the Market; PROVIDED, HOWEVER, that (x) the Executive may, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may accept employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any other person which has a business relationship with the Companies or had a business relationship with the Companies within the 24 month period preceding the date of the incident in question, to discontinue, reduce or modify such employment, agency or business relationship with the Companies, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within 24 months prior to the date the Executive or the Competitive Business employs or seeks to employ such person) employed or retained by the Companies. Notwithstanding the
foregoing, nothing herein shall prevent the Executive from providing a letter of recommendation to an employee with respect to a future employment opportunity.
(iii) The scope and term of this SECTION 8 would not preclude Executive from earning a living with an entity that is not a Competitive Business.
(b) In the event that Executive breaches his obligations in any material respect under SECTION 7, this SECTION 8 or SECTION 9, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to the Executive under this Agreement or any other agreement.
(c) The terms of this SECTION 8 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. NON-DISPARAGEMENT. During and after the Term of Employment, the Executive agrees that he shall not make any false, defamatory or disparaging statements about the Companies or the officers or directors of the Companies. During and after the Term of Employment, the Company agrees, on behalf of the Companies that neither the officers nor the directors of the Companies shall make any false, defamatory or disparaging statements about the Executive.
10. DEFINITIONS Capitalized terms used in this Agreement but not otherwise defined shall have the meanings set forth below:
"BUSINESS" means any business conducted, or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment.
"CAUSE" is defined in SECTION 3(c).
"CLOSING DATE" means the Closing Date, under and as defined in the Merger Agreement.
"COMPANIES" means the Company and its successors or any of its direct or indirect parents or direct or indirect subsidiaries, now or hereafter existing.
"COMPANY" is defined in the introduction.
"COMPETITIVE BUSINESS" is defined in Section 8(a)(i).
"CONFIDENTIAL INFORMATION" means any confidential information including, without limitation, any study, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service name, "know-how", trade secrets, customer lists, details of client or consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, formulas, improvements or other proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans,
reports, records, documents and other evidence thereof. The term "CONFIDENTIAL INFORMATION" does not include, and there shall be no obligation hereunder with respect to, information that becomes generally available to the public other than as a result of a disclosure by the Executive not permissible hereunder.
"EXECUTIVE" means Daniel D. Loranger or his estate, if deceased.
"MANAGEMENT SUBSCRIPTION AGREEMENT" means the Management Subscription Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the management investors signatory thereto.
"MARKET" means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted by or engaged in by the Companies prior to the date hereof or is conducted or engaged in, or in which the Companies are seeking authorization to conduct Business at any time during the Term of Employment.
"MERGER AGREEMENT" means the Merger Agreement, dated as of May 31, 2001, by and among Safety Holdings, Inc., Safety Merger Co., Inc., Thomas Black Corporation and the shareholders of Thomas Black Corporation, as amended, restated or otherwise modified from time to time.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc.
"RECOURSE PROMISSORY NOTE" means the Recourse Promissory Note, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc. in the principal amount of $97,375.00.
"REGULATIONS" is defined in Section 2(c).
"RESTRICTED PERIOD" means the date commencing on the date of this Agreement and ending on the later of (x) the date of termination of the Term of Employment or (y) the end of any severance period provided under SECTION 3(f); PROVIDED, HOWEVER, that the "Restricted Period" may be extended, in the sole discretion of the Company, for an additional period of up to twenty-four (24) months if the Company continues to pay to the Executive (i) the full amounts to which he would be entitled as base compensation under SECTION 4(a) and (ii) customary benefits, in each case during such extended period.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the stockholders signatory thereto.
"TERM OF EMPLOYMENT" is defined in Section 3(a).
11. NOTICE
Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be given in writing and if delivered personally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner):
If to Executive: Daniel D. Loranger
c/o Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
If to Company: Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
Attention: David F. Brussard
and a copy to: Safety Holdings, Inc.
c/o The Jordan Company LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: A. Richard Caputo, Jr.
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Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued.
12. EXECUTIVE'S REPRESENTATION
Executive hereby warrants and represents to the Company that Executive has carefully reviewed this Agreement and has consulted with such advisors as Executive considers appropriate in connection with this Agreement, and is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive's prior employment which would be breached or violated by Executive's execution of this Agreement or by Executive's performance of his duties hereunder.
13. OTHER MATTERS
Executive agrees and acknowledges that the obligations owed to Executive under this Agreement are solely the obligations of the Company, and that none of the Companies' stockholders, directors, officers, affiliates, representatives, agents or lenders will have any obligations or liabilities in respect of this Agreement and the subject matter hereof.
14. VALIDITY
If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.
15. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained
herein. If any court determines that any provision of SECTION 8 or any other provision hereof is unenforceable and therefore acts to reduce the scope or duration of such provision, the provision in its reduced form shall then be enforceable.
16. WAIVER OF BREACH; SPECIFIC PERFORMANCE
The waiver by the Company or Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its respective rights under this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of SECTIONS 7, 8 and 9 of this Agreement and that any party (and third party beneficiaries) may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. In the event either party takes legal action to enforce any of the terms or provisions of this Agreement, the nonprevailing party shall pay the successful party's costs and expenses, including but not limited to, attorneys' fees, incurred in such action.
17. ASSIGNMENT; THIRD PARTIES
Neither the Executive nor the Company may assign, transfer, pledge, hypothecate, encumber or otherwise dispose of this Agreement or any of his or its respective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and investors therein are intended to be third party beneficiaries of, and have rights and interests in respect of, Executive's agreements set forth in SECTIONS 7, 8 and 9.
18. AMENDMENT; ENTIRE AGREEMENT
This Agreement may not be changed orally but only by an agreement in writing agreed to by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersedes and replaces all prior agreements, understandings and commitments with respect to such subject matter, including, without limitation, that certain Employment Agreement, dated August 7, 2000, between Executive and the Company.
19. LITIGATION
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN
JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS LOCATED IN BOSTON, MASSACHUSETTS OR THE UNITED STATES DISTRICT COURTS IN BOSTON, MASSACHUSETTS. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 19 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
20. FURTHER ACTION
Executive and the Company agree to perform any further acts and to execute and deliver any documents which may be reasonable to carry out the provisions hereof.
21. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
22. EFFECTIVENESS
Any provision to the contrary herein notwithstanding, this Agreement shall become effective on the Closing Date and shall impose no obligations upon Executive at anytime prior to the Closing Date. If for any reason the Merger Agreement shall terminate prior to Closing Date, this Agreement shall automatically terminate and be without any further force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
EXECUTIVE:
/s/Daniel D. Loranger
-----------------------------------------------
Name: Daniel D. Loranger
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SAFETY INSURANCE COMPANY
By /s/A. Richard Caputo, Jr. -------------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.30
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of October 16, 2001 (this "AGREEMENT"), is by and between Robert J. Kerton (the "EXECUTIVE") and Safety Insurance Company, a Massachusetts corporation (the "COMPANY");
W I T N E S S E T H:
WHEREAS, the Company wishes to obtain the future services of the Executive;
WHEREAS, the Executive is willing upon the terms and conditions herein set forth, to provide services to the Company hereunder; and
WHEREAS, the Company wishes to secure the Executive's non-interference with the Company's business, upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:
1. NATURE OF EMPLOYMENT
Subject to SECTION 3 and effective as of the Closing Date, the Company hereby employs Executive, and Executive agrees to accept such employment, during the Term of Employment (as defined in SECTION 3(a)), as Vice President of the Company to undertake such duties and responsibilities as may be reasonably assigned to Executive from time to time by the Board of Directors of the Company.
2. EXTENT OF EMPLOYMENT
(a) During the Term of Employment, the Executive shall perform his obligations hereunder faithfully and to the best of his ability at the principal executive offices of the Company, under the direction of the President and Chief Executive Officer of the Company, and shall abide by the rules, customs and usages from time to time established by the Company.
(b) During the Term of Employment, the Executive shall devote all of his business time, energy and skill as may be reasonably necessary for the performance of his duties, responsibilities and obligations hereunder (except for vacation periods and reasonable periods of illness or other incapacity), consistent with past practices and norms in similar positions.
(c) Nothing contained herein shall require Executive to follow any directive or to perform any act which would violate any laws, ordinances, regulations or rules of any governmental, regulatory or administrative body, agent or authority, any court or judicial authority, or any public, private or industry regulatory authority (collectively, the "REGULATIONS"). Executive shall act in good faith in accordance with all Regulations.
3. TERM OF EMPLOYMENT; TERMINATION
(a) The "TERM OF EMPLOYMENT" shall commence on the date hereof and shall continue until December 31, 2004 (the "INITIAL TERM"); PROVIDED, that, (i) such term shall continue for the twelve month period following such Initial Term, and for each twelve month period thereafter (each, an "ADDITIONAL TERM"), unless at least 180 days prior to the scheduled expiration date of the Initial Term or any Additional Term, either the Executive or the Company notifies the other of its decision not to continue such term and (ii) should the Executive's employment by the Company be earlier terminated pursuant to SECTION 3(b) or by the Executive pursuant to SECTION 3(c), the Term of Employment shall end on the date of such earlier termination.
(b) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Company:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability Executive is unable to perform, and does not perform, in the view of the Company and as certified in writing by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) for Cause (as defined in SECTION 3(d)) or Material Breach (as defined in SECTION 3(e));
(iv) upon the continuous poor or unacceptable performance of the Executive's duties to the Company (other than due to a physical or mental disability), which has remained uncured for a period of 90 days after delivery of notice by the Company to the Executive of such dissatisfaction with Executive's performance, which notice shall describe in reasonable detail the areas of dissatisfaction; or
(v) for any other reason or no reason, it being understood that no reason is required.
Executive acknowledges that no representations or promises have been made
concerning the grounds for termination or the future operation of the Company's
business, and that nothing contained herein or otherwise stated by or on behalf
of the Company modifies or amends the right of the Company to terminate
Executive at any time, with or without Material Breach or Cause. Termination
shall become effective upon the delivery by the Company to the Executive of
notice specifying such termination and the reasons therefor (i.e., SECTION
3(b)(i)-(v)), subject to the requirements for advance notice and an opportunity
to cure provided in this Agreement, if and to the extent applicable.
(c) Subject to the payments contemplated by SECTION 3(f), the Term of Employment may be terminated at any time by the Executive:
(i) upon the death of Executive;
(ii) in the event that because of physical or mental disability the Executive is unable to perform, and does not perform, in the view of the Company, and as certified by a competent medical physician, his duties hereunder for a continuous period of three consecutive months or any sixty working days out of any consecutive six month period;
(iii) as a result of a material reduction in Executive's authority, perquisites, position or responsibilities (other than such a reduction in perquisites which affects all of the Company's senior executives on a substantially equal or proportionate basis), the relocation of the Company's primary place of business or the relocation of Executive by the Company to another Company office more than 75 miles from Boston, Massachusetts, or the Company's willful, material violation of its obligations under this Agreement, in each case, after 60 days' prior written notice to the Company and its Board of Directors and the Company's failure thereafter to cure such reduction or violation; or
(iv) as a result of the Company's willful and material violation of this Agreement, the Management Subscription Agreement or the Stockholders Agreement.
(d) For the purposes of this SECTION 3, "CAUSE" shall mean any of the following:
(i) Executive's commission or conviction of any crime or criminal offense involving monies or other property or any felony;
(ii) Executive's commission or conviction of fraud or embezzlement;
(iii) Executive's material and knowing violation of any obligations imposed upon Executive, personally, as opposed to upon the Company, whether as a stockholder or otherwise, under this Agreement, the Merger Agreement, the Management Subscription Agreement, the Stockholders Agreement, the Pledge Agreement, the Recourse Promissory Note, any other agreement between the Executive, on the one hand, and the Company or its affiliates, on the other hand, the Certificate of Incorporation or By-Laws of the Company; PROVIDED, that the Executive has been given written notice describing any such violation in reasonable detail and fails to cure the violation within 90 days from such notice; or
(iv) Executive engages in egregious misconduct involving serious moral turpitude to the extent that Executive's credibility and reputation no longer conform to the standard of the Company's executives.
(e) For the purposes of this SECTION 3, "MATERIAL BREACH" shall mean any of the following:
(i) Executive's breach of any of his fiduciary duties to the Company or its stockholders or making of a willful misrepresentation or omission which breach, misrepresentation or omission would reasonably be expected to materially adversely affect the business, properties, assets, condition (financial or other) or prospects of the Company;
(ii) Executive's willful, continual and material neglect or failure to discharge his duties, responsibilities or obligations prescribed by this Agreement, any other agreement between the Executive and the Company (other than arising solely due to physical or mental disability);
(iii) Executive's habitual drunkenness or substance abuse which materially interferes with Executive's ability to discharge his duties, responsibilities or obligations prescribed by this Agreement or any other agreement between the Executive and the Company; and
(iv) Executive's willful and material violation of any non-competition, non-disparagement, or confidentiality agreement with the Company, including without limitation, those set forth in SECTIONS 7, 8 and 9 of this Agreement, or any other agreements with the Company.
in each case, for purposes of clauses (i) through (iv), after the Company or the Board of Directors has provided Executive with 60 days' written notice describing such circumstances and the possibility of a Material Breach in reasonable detail, and Executive fails to cure such circumstances and Material Breach within those 60 days. No act or omission shall be deemed willful if done, or omitted to be done, in good faith by the Executive based upon a resolution duly adopted by the Company's Board of Directors.
(f) In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(v) or by Executive under the
circumstances described in SECTION 3(c)(iii) or(iv), the Company will pay to
Executive the full amounts to which he would be entitled as base compensation
under SECTION 4(a) and customary benefits through the Term of Employment prior
to the application of any early termination provision of SECTION 3(b) or (c). In
the event Executive's employment is terminated by the Company under the
circumstances described in SECTION 3(b)(iv), the Company will pay to Executive
(i) the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and (ii) customary benefits, in each case for the period from the
effectiveness of termination through the date three months after the date of
such termination. In the event Executive's employment is terminated by the
Company under the circumstances described in SECTION 3(b)(i) or (ii) or by the
Executive under SECTION 3(c)(i) or (ii), the Company will pay to the Executive
the full amounts to which he would be entitled as base compensation under
SECTION 4(a) and customary benefits for the period from the effectiveness of
termination through (y) the first anniversary of the date of such termination,
or (z) the third anniversary of the date of this Agreement, whichever is
greater. In the event Executive's employment is terminated by the Company under
any circumstances described in SECTION 3(b)(iii) or by Executive as a result of
resignation or voluntary termination due to any circumstance other than the
material reductions or violations described in SECTION 3(c)(iii) above, there
will be no amounts owing by the Company to the Executive, under SECTION 4 or any
other part of this Agreement, from and after the effectiveness of termination.
If the Company makes the payments required by this SECTION 3(f), such payments
will constitute severance and liquidated damages, and the Company will not be
obligated to pay any further amounts to Executive under this Agreement or
otherwise be liable to Executive in connection with any termination.
(g) All determinations pursuant to this SECTION 3 shall be made by the Company's Board of Directors (not including Executive) in good faith.
(h) Termination of the Term of Employment will not terminate SECTIONS 7, through 9 and 11 through 21, or any other provisions not associated specifically with the Term of Employment.
(i) In the event the Term of Employment is terminated and the Company is
obligated to make payments pursuant to SECTION 3(f), the Executive will use his
reasonable efforts to seek and obtain alternative employment; PROVIDED, HOWEVER,
that the Executive shall not be required to accept a position of a substantially
different character than the position held by him with the Company; and PROVIDED
FURTHER, if the Executive shall become physically or mentally disabled, he will
not be under such duty. If Executive thereafter obtains alternative employment,
then if and to the extent Executive obtains such employment, the Company's
payment obligations under SECTION 3(f), including its obligation to provide
insurance coverage, if any, will be mitigated and reduced by and to the extent
of Executive's compensation under such alternative employment during the period
for which payments are owed by the Company pursuant to SECTION 3(f). Moreover,
in the event that after the Restricted Period pursuant to SECTION 8(a),
Executive is employed by or engaged in a Competitive Business as contemplated by
SECTION 8(a)(i), then the Company will thereupon cease, and will be no longer
obligated, to make payments under SECTION 3(f).
(j) In the event the Term of Employment is terminated and the Company is obligated to make payments pursuant to SECTION 3(f), Executive hereby waives any and all claims against the Company, and its officers, directors, employees, agents, or representatives, stockholders and affiliates relating to this Agreement and to his employment during the term hereof other than any payments to be made pursuant to SECTION 3(f), the Management Subscription Agreement, and any Company employee benefit plan.
4. COMPENSATION. The Company shall pay compensation to Executive as follows:
(a) During the Term of Employment, the Company shall pay to Executive as base compensation for his services hereunder, in monthly installments, a base salary at a rate of $181,656 per annum, as increased on an annual basis to reflect the increase in the United States Cost of Living Index for All Urban Consumer (CPI-U) for the Boston, Massachusetts area (the "CPI-U INDEX"). The January 2001 CPI-U Index shall provide the basis for calculations of such increases. Notwithstanding the minimum increase set forth above, the Board of Directors, in its sole discretion, may establish a higher compensation level.
(b) During the Term of Employment, the Company shall pay to Executive an annual bonus based on Executive's performance, as determined and approved by the Board of Directors in its sole discretion. Such bonus will be at the full discretion of the Board of Directors, and may not be paid at all. Executive acknowledges that no bonus has been agreed upon or promised. If the Board of Directors decides to pay a bonus, it is to be paid within 30 days after the issuance of audited financial statements for the Company. The Board of Directors in its sole discretion may establish a higher bonus level based on the performance of Executive.
(c) Contingent upon the consummation of the transactions contemplated by the Merger Agreement, on March 31, 2002, the Company shall pay Executive a transaction bonus of $45,785.
5. REIMBURSEMENT OF EXPENSES
During the Term of Employment, the Company shall reimburse Executive for documented travel, entertainment and other expenses reasonably incurred by Executive in connection with the performance of his duties hereunder and, in each case, in accordance with the rules, customs and usages promulgated by the Company from time to time in effect.
6. BENEFITS. During the Term of Employment, the Executive shall be entitled to perquisites, paid vacations and benefits (including health, short and long term disability, pension and life insurance benefits consistent with past practice, or as increased from time to time) established from time to time, by the Board of Directors for executives of the Company, subject to the policies and procedures in effect regarding participation in such benefits.
7. CONFIDENTIAL INFORMATION
(a) During and after the Term of Employment, Executive will not, directly or indirectly in one or a series of transactions, disclose to any person, or use or otherwise exploit for the Executive's own benefit or for the benefit of anyone other than the Companies, any Confidential Information, whether prepared by Executive or not; PROVIDED, HOWEVER, that any Confidential Information may be disclosed to officers, representatives, employees and agents of the Companies who need to know such Confidential Information in order to perform the services or conduct the operations required or expected of them in the Business (as defined in SECTION 10). Executive shall use his best efforts to prevent the removal of any Confidential Information from the premises of the Companies, except as required in his normal course of employment by the Company. Executive shall use commercially reasonable efforts to cause all persons or entities to whom any Confidential Information shall be disclosed by him hereunder to observe the terms and conditions set forth herein as though each such person or entity was bound hereby. Executive shall have no obligation hereunder to keep confidential any Confidential Information if and to the extent disclosure of any thereof is specifically required by law; PROVIDED, HOWEVER, that in the event disclosure is required by applicable law, the Executive shall provide the Companies with prompt notice of such requirement, prior to making any disclosure, so that the Companies may seek an appropriate protective order. At the request of the Companies, Executive agrees to deliver to the Companies, at any time during the Term of Employment, or thereafter, all Confidential Information which he may possess or control. Executive agrees that all Confidential Information of the Companies (whether now or hereafter existing) conceived, discovered or made by him during the Term of Employment exclusively belongs to the Companies (and not to Executive). Executive will promptly disclose such Confidential Information to the Companies and perform all actions reasonably requested by the Companies to establish and confirm such exclusive ownership.
(b) The terms of this SECTION 7 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
8. NON-INTERFERENCE
(a) Executive acknowledges that the services to be provided give him the opportunity to have special knowledge of the Companies and their Confidential Information and the capabilities of individuals employed by or affiliated with the Companies and that interference in these relationships would cause irreparable injury to the Companies. In consideration of this Agreement, Executive covenants and agrees that:
(i) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not, without the express written approval of the Board of Directors of the Company, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, manage, operate, control, invest or acquire an interest in, or otherwise engage or participate in, whether as a proprietor, partner, stockholder, lender, director, officer, employee, joint venturer, investor, lessor, supplier, customer, agent, representative or other participant, in any business which competes, directly or indirectly, with the Business in the Market ("COMPETITIVE BUSINESS") without regard to (A) whether the Competitive Business has its office, manufacturing or other business facilities within or without the Market, (B) whether any of the activities of the Executive referred to above occur or are performed within or without the Market or (C) whether the Executive resides, or reports to an office, within or without the Market; PROVIDED, HOWEVER, that (x) the Executive may, anywhere in the Market, directly or indirectly, in one or a series of transactions, own, invest or acquire an interest in up to five percent (5%) of the capital stock of a corporation whose capital stock is traded publicly, or that (y) Executive may accept employment with a successor company to the Company.
(ii) During the Restricted Period (which shall not be reduced by any period of violation of this Agreement by Executive or period which is required for litigation to enforce the rights hereunder), Executive will not without the express prior written approval of the Board of Directors of the Company (A) directly or indirectly, in one or a series of transactions, recruit, solicit or otherwise induce or influence any proprietor, partner, stockholder, lender, director, officer, employee, sales agent, joint venturer, investor, lessor, supplier, customer, agent, representative or any other person which has a business relationship with the Companies or had a business relationship with the Companies within the 24 month period preceding the date of the incident in question, to discontinue, reduce or modify such employment, agency or business relationship with the Companies, or (B) employ or seek to employ or cause any Competitive Business to employ or seek to employ any person or agent who is then (or was at any time within 24 months prior to the date the Executive or the Competitive Business employs or seeks to employ such person) employed or retained by the Companies. Notwithstanding the foregoing, nothing herein shall prevent the Executive from providing a letter of recommendation to an employee with respect to a future employment opportunity.
(iii) The scope and term of this SECTION 8 would not preclude Executive from earning a living with an entity that is not a Competitive Business.
(b) In the event that Executive breaches his obligations in any material respect under SECTION 7, this SECTION 8 or SECTION 9, the Company, in addition to pursuing all available remedies under this Agreement, at law or otherwise, and without limiting its right to pursue the same shall cease all payments to the Executive under this Agreement or any other agreement.
(c) The terms of this SECTION 8 shall survive the termination of this Agreement regardless of who terminates this Agreement, or the reasons therefor.
9. NON-DISPARAGEMENT. During and after the Term of Employment, the Executive agrees that he shall not make any false, defamatory or disparaging statements about the Companies or the officers or directors of the Companies. During and after the Term of Employment, the Company agrees, on behalf of the Companies that neither the officers nor the directors of the Companies shall make any false, defamatory or disparaging statements about the Executive.
10. DEFINITIONS Capitalized terms used in this Agreement but not otherwise defined shall have the meanings set forth below:
"BUSINESS" means any business conducted, or engaged in, by the Companies prior to the date hereof or at any time during the Term of Employment.
"CAUSE" is defined in SECTION 3(c).
"CLOSING DATE" means the Closing Date, under and as defined in the Merger Agreement.
"COMPANIES" means the Company and its successors or any of its direct or indirect parents or direct or indirect subsidiaries, now or hereafter existing.
"COMPANY" is defined in the introduction.
"COMPETITIVE BUSINESS" is defined in Section 8(a)(i).
"CONFIDENTIAL INFORMATION" means any confidential information including, without limitation, any study, data, calculations, software storage media or other compilation of information, patent, patent application, copyright, trademark, trade name, service mark, service name, "know-how", trade secrets, customer lists, details of client or consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans or any portion or phase of any scientific or technical information, ideas, discoveries, designs, computer programs (including source of object codes), processes, procedures, formulas, improvements or other proprietary or intellectual property of the Companies, whether or not in written or tangible form, and whether or not registered, and including all files, records, manuals, books, catalogues, memoranda, notes, summaries, plans, reports, records, documents and other evidence thereof. The term "CONFIDENTIAL INFORMATION" does not include, and there shall be no obligation hereunder with respect to, information that becomes generally available to the public other than as a result of a disclosure by the Executive not permissible hereunder.
"EXECUTIVE" means Robert J. Kerton or his estate, if deceased.
"MANAGEMENT SUBSCRIPTION AGREEMENT" means the Management Subscription Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the management investors signatory thereto.
"MARKET" means any county in the United States of America and each similar jurisdiction in any other country in which the Business was conducted by or engaged in by the Companies prior to the date hereof or is conducted or engaged in, or in which the Companies are seeking authorization to conduct Business at any time during the Term of Employment.
"MERGER AGREEMENT" means the Merger Agreement, dated as of May 31, 2001, by and among Safety Holdings, Inc., Safety Merger Co., Inc., Thomas Black Corporation and the shareholders of Thomas Black Corporation, as amended, restated or otherwise modified from time to time.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc.
"RECOURSE PROMISSORY NOTE" means the Recourse Promissory Note, dated as of the date hereof, by the Executive in favor of Safety Holdings, Inc. in the principal amount of $64,125.
"REGULATIONS" is defined in Section 2(c).
"RESTRICTED PERIOD" means the date commencing on the date of this Agreement and ending on the later of (x) the date of termination of the Term of Employment or (y) the end of any severance period provided under SECTION 3(f); PROVIDED, HOWEVER, that the "Restricted Period" may be extended, in the sole discretion of the Company, for an additional period of up to twenty-four (24) months if the Company continues to pay to the Executive (i) the full amounts to which he would be entitled as base compensation under SECTION 4(a) and (ii) customary benefits, in each case during such extended period.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement, dated as of the date hereof, by and between Safety Holdings, Inc. and the stockholders signatory thereto.
"TERM OF EMPLOYMENT" is defined in Section 3(a).
11. NOTICE
Any notice, request, demand or other communication required or permitted to be given under this Agreement shall be given in writing and if delivered personally, or sent by certified or registered mail, return receipt requested, as follows (or to such other addressee or address as shall be set forth in a notice given in the same manner):
If to Executive: Robert J. Kerton
c/o Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
- 9 -
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If to Company: Safety Insurance Company
20 Custom House Street
Boston, Massachusetts 02110
Attention: David F. Brussard
and a copy to: Safety Holdings, Inc.
c/o The Jordan Company LLC
767 Fifth Avenue, 48th Floor
New York, New York 10153
Attention: A. Richard Caputo, Jr.
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Any such notices shall be deemed to be given on the date personally delivered or such return receipt is issued.
12. EXECUTIVE'S REPRESENTATION
Executive hereby warrants and represents to the Company that Executive has carefully reviewed this Agreement and has consulted with such advisors as Executive considers appropriate in connection with this Agreement, and is not subject to any covenants, agreements or restrictions, including without limitation any covenants, agreements or restrictions arising out of Executive's prior employment which would be breached or violated by Executive's execution of this Agreement or by Executive's performance of his duties hereunder.
13. OTHER MATTERS
Executive agrees and acknowledges that the obligations owed to Executive under this Agreement are solely the obligations of the Company, and that none of the Companies' stockholders, directors, officers, affiliates, representatives, agents or lenders will have any obligations or liabilities in respect of this Agreement and the subject matter hereof.
14. VALIDITY
If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby.
15. SEVERABILITY
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of SECTION 8 or any other provision hereof is unenforceable and therefore acts to reduce the scope or duration of such provision, the provision in its reduced form shall then be enforceable.
16. WAIVER OF BREACH; SPECIFIC PERFORMANCE
The waiver by the Company or Executive of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any other breach of such other party. Each of the parties (and third party beneficiaries) to this Agreement will be entitled to enforce its respective rights under this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of SECTIONS 7, 8 and 9 of this Agreement and that any party (and third party beneficiaries) may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions in order to enforce or prevent any violations of the provisions of this Agreement. In the event either party takes legal action to enforce any of the terms or provisions of this Agreement, the nonprevailing party shall pay the successful party's costs and expenses, including but not limited to, attorneys' fees, incurred in such action.
17. ASSIGNMENT; THIRD PARTIES
Neither the Executive nor the Company may assign, transfer, pledge, hypothecate, encumber or otherwise dispose of this Agreement or any of his or its respective rights or obligations hereunder, without the prior written consent of the other. The parties agree and acknowledge that each of the Companies and the stockholders and investors therein are intended to be third party beneficiaries of, and have rights and interests in respect of, Executive's agreements set forth in SECTIONS 7, 8 and 9.
18. AMENDMENT; ENTIRE AGREEMENT
This Agreement may not be changed orally but only by an agreement in writing agreed to by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the subject matter of this Agreement, and supersedes and replaces all prior agreements, understandings and commitments with respect to such subject matter, including, without limitation, that certain Employment Agreement, dated August 7, 2000, between Executive and the Company.
19. LITIGATION
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT THAT NO DOCTRINE OF CHOICE OF LAW SHALL BE USED TO APPLY ANY LAW OTHER THAN THAT OF NEW YORK, AND NO DEFENSE, COUNTERCLAIM OR RIGHT OF SET-OFF GIVEN OR ALLOWED BY THE LAWS OF ANY OTHER STATE OR JURISDICTION, OR ARISING OUT OF THE ENACTMENT, MODIFICATION OR REPEAL OF ANY LAW, REGULATION, ORDINANCE OR DECREE OF ANY FOREIGN JURISDICTION, BE INTERPOSED IN ANY ACTION HEREON. EXECUTIVE AND THE COMPANY AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT SHALL BE COMMENCED IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS LOCATED IN BOSTON, MASSACHUSETTS OR THE UNITED STATES DISTRICT COURTS IN BOSTON, MASSACHUSETTS. EXECUTIVE AND THE COMPANY CONSENT TO SUCH JURISDICTION, AGREE THAT VENUE WILL BE PROPER IN SUCH COURTS AND WAIVE ANY OBJECTIONS BASED UPON FORUM NON CONVENIENS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION 19 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER JURISDICTION.
20. FURTHER ACTION
Executive and the Company agree to perform any further acts and to execute and deliver any documents which may be reasonable to carry out the provisions hereof.
21. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
22. EFFECTIVENESS
Any provision to the contrary herein notwithstanding, this Agreement shall become effective on the Closing Date and shall impose no obligations upon Executive at anytime prior to the Closing Date. If for any reason the Merger Agreement shall terminate prior to Closing Date, this Agreement shall automatically terminate and be without any further force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
EXECUTIVE:
/s/Robert J. Kerton
--------------------------------------------
Name: Robert J. Kerton
|
SAFETY INSURANCE COMPANY
By /s/A. Richard Caputo, Jr. ----------------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.31
SAFETY HOLDINGS, INC.
SAR AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date, by and between the Participant and Safety Holdings, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company and the Participant have agreed upon the grant of the stock appreciation rights as set forth in this Agreement;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
TERMS OF AWARD. This Agreement specifies the terms of the stock appreciation right with respect to the number of Covered Shares (the "SAR"). The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:
The "Participant" is David F. Brussard.
The "Grant Date" is the Effective Time as that term is defined in the Merger Agreement by and among the Company, Safety Acquisition, Inc., Thomas Black Corporation, and the shareholders of Thomas Black Corporation dated as of May 31, 2001.
The number of "Covered Shares" is 1,568.962 shares of Stock.
The "Exercise Price" is $160.00 per share.
Other terms used in this Agreement are defined pursuant to paragraph 17 or elsewhere in this Agreement.
VESTING. Subject to the limitations of this Agreement, each Installment of Covered Shares of the SAR shall be vested on and after the Vesting Date for such Installment as described in the following schedule (but only if the Date of Termination has not occurred before the Vesting Date):
-------------------------------------------------------------------------------
INSTALLMENT VESTING DATE
APPLICABLE TO
INSTALLMENT
-------------------------------------------------------------------------------
20% of the Covered Shares One-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Two-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Three-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Four-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Five-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
|
The vesting of the SAR shall be subject to the following:
Notwithstanding the foregoing schedule, but subject to paragraph (b) below, the SAR shall become fully vested upon the date of a Public Offering or Change of Control that occurs on or before the Date of Termination. The vesting described in this paragraph (a) shall be deemed to occur immediately before the exercise of the SAR described in paragraph 3.
If, during any Vesting Period, an Event of Default occurs, then the number of Covered Shares that would otherwise vest on the last day of that Vesting Period shall instead be forfeited, and in no event shall the Participant be entitled to any amounts with respect to such Covered Shares by reason of exercise of the SAR, by reason of paragraph (a) above, or for any other reason.
If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs for reasons other than a Material Breach or Cause, or voluntary termination then all rights under the SAR that are not vested on the Date of Termination shall expire and all rights under the SAR that have vested prior to the Date of Termination shall be subject to repurchase by the Company under Section 7(a) of the Management Subscription Agreement, dated as of the date hereof, among the Company and certain employees of the Company or its subsidiaries. If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs by reason of a Material Breach, Cause or voluntary termination, then all rights under the SAR shall be forfeited on the Date of Termination.
EXERCISE OF SAR. The SAR shall be exercised with respect to the vested portion of the Covered Shares on the first to occur of a Public Offering or a Change of Control. (For the avoidance of doubt, it is recited here that the SAR shall not be exercised except as provided in the preceding sentence.) As soon as practicable after the exercise of the SAR with respect to a share of Stock, the Participant shall receive a cash payment from the Company which is equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the Exercise Price of one share of Stock. Notwithstanding the foregoing provisions of this paragraph 3, if the SAR would otherwise become exercisable in accordance with this paragraph 3 by reason of a Public Offering, and the Participant's Date of Termination has not occurred prior to the date of the Public Offering, then, in the sole discretion of the Board, the SAR may be canceled, provided that, at the time of the Public Offering, the Participant will be granted an option to purchase shares of Stock equal to the number of Covered Shares. Such option (i) shall be fully exercisable at and after the granting of the option (until expiration described in clause (iii) below) with respect to all of the Covered Shares, (ii) shall have a per-share exercise price equal to the exercise price of the SAR; and (iii) shall expire on the earlier of the ten-year anniversary of the Grant Date (as defined in this Agreement), but not event later than the 90-day anniversary of the Participant's Date of Termination (or, in the case of a Date of Termination occurring by reason of the Participant's Death or Disability, not later than the one-year anniversary following the Date of Termination).
ADJUSTMENTS. If the Board determines that, after the Effective Date, one or more transactions (including, without limitation, a stock split or combination) have occurred in which stock of the Company is issued, exchanged, or modified without receipt of additional
consideration by the Company of money or property (but excluding consideration in the form of services), the Board shall adjust the number of shares of Stock subject to the SAR and shall adjust the Exercise Price to reflect such transaction.
WITHHOLDING. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes.
BENEFITS MAY NOT BE ASSIGNED. The interests of a Participant under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary. The SAR is not transferable other than as designated by the Participant by will or by the laws of descent and distribution.
BENEFITS UNDER OTHER PLANS. Amounts payable to the Participant under this Agreement shall be disregarded for purposes of determining the benefits under any plan that is intended to be qualified under section 401(a) of the Internal Revenue Code of 1986 and any other plan or arrangement maintained by the Company or any Related Company, except as otherwise specifically provided to the contrary in such other plan or arrangement.
SAR NOT CONTRACT OF EMPLOYMENT. Neither this Agreement nor the SAR constitutes a contract of employment, and will not give the Participant the right to be retained in the employ of the Company or Related Company nor any right or claim to any benefit under the SAR, unless such right or claim has specifically accrued under the terms of this Agreement and the SAR.
NO RIGHTS AS STOCKHOLDER. Except in the case of this SAR being converted to an option (and then only with respect to shares acquired upon the exercise of the option), the Participant shall not have any rights of a stockholder with respect to the shares subject to the SAR.
NO GUARANTEE. Neither the Participant nor any other person shall, by reason of this Agreement, acquire any right in or title to any assets, funds or property of the Company or any Related Company whatsoever, including, without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under this Agreement. The Participant shall have only a contractual right to the amounts, if any, payable under this Agreement, unsecured by any assets of the Company or any Related Company. Nothing contained in this Agreement shall constitute a guarantee by the Company that the assets of the Company shall be sufficient to pay any benefits to any person.
HEIRS AND SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant's death, such benefits shall be delivered to the Designated Beneficiary in accordance with the provisions of this Agreement. The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Board in such form and at such
time as the Board shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
DISTRIBUTIONS TO DISABLED PERSONS. Notwithstanding the provisions of this Agreement to the contrary, if, in the opinion of the Board, the Participant or beneficiary is under a legal disability or is in any way incapacitated so as to be unable to manage his financial affairs, the Board may direct that payment be made to a relative or friend of such person for his benefit until claim is made by a conservator or other person legally charged with the care of his person or his estate, and such payment shall be in lieu of any such payment to the Participant or beneficiary. Thereafter, any benefits under this Agreement to which such Participant or beneficiary is entitled shall be paid to such conservator or other person legally charged with the care of his person or his estate.
APPLICABLE LAW. Except to the extent that not preempted by the laws of the United States of America, this Agreement shall be construed and administered with the laws of the state of New York; provided that no doctrine of choice of law shall be used to apply any law other than that of New York, and no defense, counterclaim or right of set-off given or allowed by the laws of any other state or jurisdiction, or arising out of the enactment, modification or repeal of any law, regulation, ordinance or decree of any foreign jurisdiction, shall be interposed in any action hereon.
AMENDMENT. This Agreement may be amended by written agreement of the Participant and the Company without the consent of any other person.
ADMINISTRATION. The authority to control and manage the operation and administration of this Agreement and the arrangement specified by this Agreement shall be vested in the Board. The Board will have the authority and discretion to interpret this Agreement, to establish, amend, and rescind any rules and regulations relating to this Agreement, and to make all other determinations that may be necessary or advisable for the administration of this Agreement. Any interpretation of this Agreement by the Board and any decision made by it under this Agreement is final and binding on all persons. Except to the extent prohibited by applicable law, the Board may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Board at any time. The Company and Related Companies shall furnish the Board with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Related Companies as to the Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. The Participant and other persons entitled to benefits
under this Agreement must furnish the Board such evidence, data or information as the Board considers desirable to carry out the terms of this Agreement.
EVIDENCE. Evidence required of anyone under this Agreement may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
DEFINITIONS. In addition to the other definitions contained herein, the following definitions shall apply:
BOARD. The term "Board" means the Board of Directors of the Company.
CAUSE. The term "Cause" shall have the meaning ascribed to it in the Employment Agreement.
CHANGE OF CONTROL. The term "Change of Control" means any of the following: (i) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Stock immediately prior to such closing are not the holders, directly or indirectly, of a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing, (ii) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings, or (iii) the closing of any sale by the holders of Stock of an amount of Stock that equals or exceeds a majority of the shares of Stock immediately prior to such closing to a person in which the holders of the Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
DATE OF TERMINATION. A Participant's "Date of Termination" means the first day on which the Participant is not employed by the Company or any Related Company, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and further provided that the Participant's employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Related Company approved by the Participant's employer. If, as a result of a sale or other transaction, the Participant's employer ceases to be a Related Company (and the Participant's employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Related Company, then the occurrence of such transaction shall be treated as the Date of Termination.
EMPLOYMENT AGREEMENT. The term " Employment Agreement" means the employment agreement between Safety Insurance Company, a Massachusetts corporation and indirect subsidiary of the Company, and the Participant dated as of the Effective Date.
EVENT OF DEFAULT. The term "Event of Default" means a financial covenant or payment default in any of the debt instruments of Holdings or Thomas Black Corporation.
FAIR MARKET VALUE. If the SAR is exercised by reason of a Public Offering, the "Fair Market Value" of the Stock shall be the public offering price for such Stock. If the SAR is exercised by reason of a Change of Control, the "Fair Market Value" of the Stock shall be equal to the net consideration received by the holders of the Company's Common Stock in connection with a Change of Control
MATERIAL BREACH. The term "Material Breach" shall have the meaning ascribed to it in the Employment Agreement.
PUBLIC OFFERING. The term "Public Offering" means a bona fide underwritten public offering and sale of equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended.
RELATED COMPANIES. The term "Related Company" means the Company and any corporation, partnership, joint venture or other entity during any period in which at least fifty percent of the voting power of all classes entitled to vote with respect to such entity is owned, directly or indirectly, by the Company.
STOCK. The term "Stock" means the common stock of the Company.
VESTING PERIOD. The term "Vesting Period" means the period beginning on the Effective Date and ending on December 31, 2002, and each of the calendar years 2003, 2004, 2005, and 2006.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.
Participant
/s/David F. Brussard ------------------------------------- David F. Brussard |
Safety Holdings, Inc.
By: /s/A. Richard Caputo, Jr.
--------------------------------
Name: A. Richard Caputo, Jr.
Its: Vice President
|
EXHIBIT 10.32
SAFETY HOLDINGS, INC.
SAR AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date, by and between the Participant and Safety Holdings, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company and the Participant have agreed upon the grant of the stock appreciation rights as set forth in this Agreement;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
TERMS OF AWARD. This Agreement specifies the terms of the stock appreciation right with respect to the number of Covered Shares (the "SAR"). The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:
The "Participant" is Daniel F. Crimmins.
The "Grant Date" is the Effective Time as that term is defined in the Merger Agreement by and among the Company, Safety Acquisition, Inc., Thomas Black Corporation, and the shareholders of Thomas Black Corporation dated as of May 31, 2001.
The number of "Covered Shares" is 426.078 shares of Stock.
The "Exercise Price" is $160.00 per share.
Other terms used in this Agreement are defined pursuant to paragraph 17 or elsewhere in this Agreement.
VESTING. Subject to the limitations of this Agreement, each Installment of Covered Shares of the SAR shall be vested on and after the Vesting Date for such Installment as described in the following schedule (but only if the Date of Termination has not occurred before the Vesting Date):
--------------------------------------------------------------------------------
INSTALLMENT VESTING DATE
APPLICABLE TO
INSTALLMENT
--------------------------------------------------------------------------------
20% of the Covered Shares One-year anniversary of December 31, 2001
--------------------------------------------------------------------------------
20% of the Covered Shares Two-year anniversary of December 31, 2001
--------------------------------------------------------------------------------
20% of the Covered Shares Three-year anniversary of December 31, 2001
--------------------------------------------------------------------------------
20% of the Covered Shares Four-year anniversary of December 31, 2001
--------------------------------------------------------------------------------
20% of the Covered Shares Five-year anniversary of December 31, 2001
--------------------------------------------------------------------------------
|
The vesting of the SAR shall be subject to the following:
Notwithstanding the foregoing schedule, but subject to paragraph (b) below, the SAR shall become fully vested upon the date of a Public Offering or Change of Control that occurs on or before the Date of Termination. The vesting described in this paragraph (a) shall be deemed to occur immediately before the exercise of the SAR described in paragraph 3.
If, during any Vesting Period, an Event of Default occurs, then the number of Covered Shares that would otherwise vest on the last day of that Vesting Period shall instead be forfeited, and in no event shall the Participant be entitled to any amounts with respect to such Covered Shares by reason of exercise of the SAR, by reason of paragraph (a) above, or for any other reason.
If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs for reasons other than a Material Breach or Cause, or voluntary termination then all rights under the SAR that are not vested on the Date of Termination shall expire and all rights under the SAR that have vested prior to the Date of Termination shall be subject to repurchase by the Company under Section 7(a) of the Management Subscription Agreement, dated as of the date hereof, among the Company and certain employees of the Company or its subsidiaries. If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs by reason of a Material Breach, Cause or voluntary termination, then all rights under the SAR shall be forfeited on the Date of Termination.
EXERCISE OF SAR. The SAR shall be exercised with respect to the vested portion of the Covered Shares on the first to occur of a Public Offering or a Change of Control. (For the avoidance of doubt, it is recited here that the SAR shall not be exercised except as provided in the preceding sentence.) As soon as practicable after the exercise of the SAR with respect to a share of Stock, the Participant shall receive a cash payment from the Company which is equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the Exercise Price of one share of Stock. Notwithstanding the foregoing provisions of this paragraph 3, if the SAR would otherwise become exercisable in accordance with this paragraph 3 by reason of a Public Offering, and the Participant's Date of Termination has not occurred prior to the date of the Public Offering, then, in the sole discretion of the Board, the SAR may be canceled, provided that, at the time of the Public Offering, the Participant will be granted an option to purchase shares of Stock equal to the number of Covered Shares. Such option (i) shall be fully exercisable at and after the granting of the option (until expiration described in clause (iii) below) with respect to all of the Covered Shares, (ii) shall have a per-share exercise price equal to the exercise price of the SAR; and (iii) shall expire on the earlier of the ten-year anniversary of the Grant Date (as defined in this Agreement), but not event later than the 90-day anniversary of the Participant's Date of Termination (or, in the case of a Date of Termination occurring by reason of the Participant's Death or Disability, not later than the one-year anniversary following the Date of Termination).
ADJUSTMENTS. If the Board determines that, after the Effective Date, one or more transactions (including, without limitation, a stock split or combination) have occurred in which stock of the Company is issued, exchanged, or modified without receipt of additional
consideration by the Company of money or property (but excluding consideration in the form of services), the Board shall adjust the number of shares of Stock subject to the SAR and shall adjust the Exercise Price to reflect such transaction.
WITHHOLDING. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes.
BENEFITS MAY NOT BE ASSIGNED. The interests of a Participant under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary. The SAR is not transferable other than as designated by the Participant by will or by the laws of descent and distribution.
BENEFITS UNDER OTHER PLANS. Amounts payable to the Participant under this Agreement shall be disregarded for purposes of determining the benefits under any plan that is intended to be qualified under section 401(a) of the Internal Revenue Code of 1986 and any other plan or arrangement maintained by the Company or any Related Company, except as otherwise specifically provided to the contrary in such other plan or arrangement.
SAR NOT CONTRACT OF EMPLOYMENT. Neither this Agreement nor the SAR constitutes a contract of employment, and will not give the Participant the right to be retained in the employ of the Company or Related Company nor any right or claim to any benefit under the SAR, unless such right or claim has specifically accrued under the terms of this Agreement and the SAR.
NO RIGHTS AS STOCKHOLDER. Except in the case of this SAR being converted to an option (and then only with respect to shares acquired upon the exercise of the option), the Participant shall not have any rights of a stockholder with respect to the shares subject to the SAR.
NO GUARANTEE. Neither the Participant nor any other person shall, by reason of this Agreement, acquire any right in or title to any assets, funds or property of the Company or any Related Company whatsoever, including, without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under this Agreement. The Participant shall have only a contractual right to the amounts, if any, payable under this Agreement, unsecured by any assets of the Company or any Related Company. Nothing contained in this Agreement shall constitute a guarantee by the Company that the assets of the Company shall be sufficient to pay any benefits to any person.
HEIRS AND SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant's death, such benefits shall be delivered to the Designated Beneficiary in accordance with the provisions of this Agreement. The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Board in such form and at such
time as the Board shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
DISTRIBUTIONS TO DISABLED PERSONS. Notwithstanding the provisions of this Agreement to the contrary, if, in the opinion of the Board, the Participant or beneficiary is under a legal disability or is in any way incapacitated so as to be unable to manage his financial affairs, the Board may direct that payment be made to a relative or friend of such person for his benefit until claim is made by a conservator or other person legally charged with the care of his person or his estate, and such payment shall be in lieu of any such payment to the Participant or beneficiary. Thereafter, any benefits under this Agreement to which such Participant or beneficiary is entitled shall be paid to such conservator or other person legally charged with the care of his person or his estate.
APPLICABLE LAW. Except to the extent that not preempted by the laws of the United States of America, this Agreement shall be construed and administered with the laws of the state of New York; provided that no doctrine of choice of law shall be used to apply any law other than that of New York, and no defense, counterclaim or right of set-off given or allowed by the laws of any other state or jurisdiction, or arising out of the enactment, modification or repeal of any law, regulation, ordinance or decree of any foreign jurisdiction, shall be interposed in any action hereon.
AMENDMENT. This Agreement may be amended by written agreement of the Participant and the Company without the consent of any other person.
ADMINISTRATION. The authority to control and manage the operation and administration of this Agreement and the arrangement specified by this Agreement shall be vested in the Board. The Board will have the authority and discretion to interpret this Agreement, to establish, amend, and rescind any rules and regulations relating to this Agreement, and to make all other determinations that may be necessary or advisable for the administration of this Agreement. Any interpretation of this Agreement by the Board and any decision made by it under this Agreement is final and binding on all persons. Except to the extent prohibited by applicable law, the Board may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Board at any time. The Company and Related Companies shall furnish the Board with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Related Companies as to the Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. The Participant and other persons entitled to benefits
under this Agreement must furnish the Board such evidence, data or information as the Board considers desirable to carry out the terms of this Agreement.
EVIDENCE. Evidence required of anyone under this Agreement may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
DEFINITIONS. In addition to the other definitions contained herein, the following definitions shall apply:
BOARD. The term "Board" means the Board of Directors of the Company.
CAUSE. The term "Cause" shall have the meaning ascribed to it in the Employment Agreement.
CHANGE OF CONTROL. The term "Change of Control" means any of the following:
(i) the closing of any merger, combination, consolidation or similar
business transaction involving the Company in which the holders of Stock
immediately prior to such closing are not the holders, directly or
indirectly, of a majority of the ordinary voting securities of the
surviving person in such transaction immediately after such closing,
(ii) the closing of any sale or transfer by the Company of all or
substantially all of its assets to an acquiring person in which the
holders of Stock immediately prior to such closing are not the holders of
a majority of the ordinary voting securities of the acquiring person
immediately after such closings, or (iii) the closing of any sale by the
holders of Stock of an amount of Stock that equals or exceeds a majority
of the shares of Stock immediately prior to such closing to a person in
which the holders of the Stock immediately prior to such closing are not
the holders of a majority of the ordinary voting securities of such
person immediately after such closing.
DATE OF TERMINATION. A Participant's "Date of Termination" means the first day on which the Participant is not employed by the Company or any Related Company, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and further provided that the Participant's employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Related Company approved by the Participant's employer. If, as a result of a sale or other transaction, the Participant's employer ceases to be a Related Company (and the Participant's employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Related Company, then the occurrence of such transaction shall be treated as the Date of Termination.
EMPLOYMENT AGREEMENT. The term " Employment Agreement" means the employment agreement between Safety Insurance Company, a Massachusetts corporation and indirect subsidiary of the Company, and the Participant dated as of the Effective Date.
EVENT OF DEFAULT. The term "Event of Default" means a financial covenant or payment default in any of the debt instruments of Holdings or Thomas Black Corporation
FAIR MARKET VALUE. If the SAR is exercised by reason of a Public Offering, the "Fair Market Value" of the Stock shall be the public offering price for such Stock. If the SAR is exercised by reason of a Change of Control, the "Fair Market Value" of the Stock shall be equal to the net consideration received by the holders of the Company's Common Stock in connection with a Change of Control
MATERIAL BREACH. The term "Material Breach" shall have the meaning ascribed to it in the Employment Agreement.
PUBLIC OFFERING. The term "Public Offering" means a bona fide underwritten public offering and sale of equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended.
RELATED COMPANIES. The term "Related Company" means the Company and any corporation, partnership, joint venture or other entity during any period in which at least fifty percent of the voting power of all classes entitled to vote with respect to such entity is owned, directly or indirectly, by the Company.
STOCK. The term "Stock" means the common stock of the Company.
VESTING PERIOD. The term "Vesting Period" means the period beginning on the Effective Date and ending on December 31, 2002, and each of the calendar years 2003, 2004, 2005, and 2006.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.
Participant
/s/Daniel F. Crimmins -------------------------------------- Daniel F. Crimmins |
Safety Holdings, Inc.
By: /s/A. Richard Caputo, Jr.
----------------------------------
Name: A. Richard Caputo, Jr.
Its: Vice President
|
EXHIBIT 10.33
SAFETY HOLDINGS, INC.
SAR AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date, by and between the Participant and Safety Holdings, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company and the Participant have agreed upon the grant of the stock appreciation rights as set forth in this Agreement;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
TERMS OF AWARD. This Agreement specifies the terms of the stock appreciation right with respect to the number of Covered Shares (the "SAR"). The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:
The "Participant" is Daniel D. Loranger.
The "Grant Date" is the Effective Time as that term is defined in the Merger Agreement by and among the Company, Safety Acquisition, Inc., Thomas Black Corporation, and the shareholders of Thomas Black Corporation dated as of May 31, 2001.
The number of "Covered Shares" is 784.080 shares of Stock.
The "Exercise Price" is $160.00 per share.
Other terms used in this Agreement are defined pursuant to paragraph 17 or elsewhere in this Agreement.
VESTING. Subject to the limitations of this Agreement, each Installment of Covered Shares of the SAR shall be vested on and after the Vesting Date for such Installment as described in the following schedule (but only if the Date of Termination has not occurred before the Vesting Date):
-------------------------------------------------------------------------------
INSTALLMENT VESTING DATE
APPLICABLE TO
INSTALLMENT
-------------------------------------------------------------------------------
20% of the Covered Shares One-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Two-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Three-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Four-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Five-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
|
The vesting of the SAR shall be subject to the following:
Notwithstanding the foregoing schedule, but subject to paragraph (b) below, the SAR shall become fully vested upon the date of a Public Offering or Change of Control that occurs on or before the Date of Termination. The vesting described in this paragraph (a) shall be deemed to occur immediately before the exercise of the SAR described in paragraph 3.
If, during any Vesting Period, an Event of Default occurs, then the number of Covered Shares that would otherwise vest on the last day of that Vesting Period shall instead be forfeited, and in no event shall the Participant be entitled to any amounts with respect to such Covered Shares by reason of exercise of the SAR, by reason of paragraph (a) above, or for any other reason.
If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs for reasons other than a Material Breach or Cause, or voluntary termination then all rights under the SAR that are not vested on the Date of Termination shall expire and all rights under the SAR that have vested prior to the Date of Termination shall be subject to repurchase by the Company under Section 7(a) of the Management Subscription Agreement, dated as of the date hereof, among the Company and certain employees of the Company or its subsidiaries. If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs by reason of a Material Breach, Cause or voluntary termination, then all rights under the SAR shall be forfeited on the Date of Termination.
EXERCISE OF SAR. The SAR shall be exercised with respect to the vested portion of the Covered Shares on the first to occur of a Public Offering or a Change of Control. (For the avoidance of doubt, it is recited here that the SAR shall not be exercised except as provided in the preceding sentence.) As soon as practicable after the exercise of the SAR with respect to a share of Stock, the Participant shall receive a cash payment from the Company which is equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the Exercise Price of one share of Stock. Notwithstanding the foregoing provisions of this paragraph 3, if the SAR would otherwise become exercisable in accordance with this paragraph 3 by reason of a Public Offering, and the Participant's Date of Termination has not occurred prior to the date of the Public Offering, then, in the sole discretion of the Board, the SAR may be canceled, provided that, at the time of the Public Offering, the Participant will be granted an option to purchase shares of Stock equal to the number of Covered Shares. Such option (i) shall be fully exercisable at and after the granting of the option (until expiration described in clause (iii) below) with respect to all of the Covered Shares, (ii) shall have a per-share exercise price equal to the exercise price of the SAR; and (iii) shall expire on the earlier of the ten-year anniversary of the Grant Date (as defined in this Agreement), but not event later than the 90-day anniversary of the Participant's Date of Termination (or, in the case of a Date of Termination occurring by reason of the Participant's Death or Disability, not later than the one-year anniversary following the Date of Termination).
ADJUSTMENTS. If the Board determines that, after the Effective Date, one or more transactions (including, without limitation, a stock split or combination) have occurred in which stock of the Company is issued, exchanged, or modified without receipt of additional
consideration by the Company of money or property (but excluding consideration in the form of services), the Board shall adjust the number of shares of Stock subject to the SAR and shall adjust the Exercise Price to reflect such transaction.
WITHHOLDING. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes.
BENEFITS MAY NOT BE ASSIGNED. The interests of a Participant under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary. The SAR is not transferable other than as designated by the Participant by will or by the laws of descent and distribution.
BENEFITS UNDER OTHER PLANS. Amounts payable to the Participant under this Agreement shall be disregarded for purposes of determining the benefits under any plan that is intended to be qualified under section 401(a) of the Internal Revenue Code of 1986 and any other plan or arrangement maintained by the Company or any Related Company, except as otherwise specifically provided to the contrary in such other plan or arrangement.
SAR NOT CONTRACT OF EMPLOYMENT. Neither this Agreement nor the SAR constitutes a contract of employment, and will not give the Participant the right to be retained in the employ of the Company or Related Company nor any right or claim to any benefit under the SAR, unless such right or claim has specifically accrued under the terms of this Agreement and the SAR.
NO RIGHTS AS STOCKHOLDER. Except in the case of this SAR being converted to an option (and then only with respect to shares acquired upon the exercise of the option), the Participant shall not have any rights of a stockholder with respect to the shares subject to the SAR.
NO GUARANTEE. Neither the Participant nor any other person shall, by reason of this Agreement, acquire any right in or title to any assets, funds or property of the Company or any Related Company whatsoever, including, without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under this Agreement. The Participant shall have only a contractual right to the amounts, if any, payable under this Agreement, unsecured by any assets of the Company or any Related Company. Nothing contained in this Agreement shall constitute a guarantee by the Company that the assets of the Company shall be sufficient to pay any benefits to any person.
HEIRS AND SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant's death, such benefits shall be delivered to the Designated Beneficiary in accordance with the provisions of this Agreement. The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Board in such form and at such
time as the Board shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
DISTRIBUTIONS TO DISABLED PERSONS. Notwithstanding the provisions of this Agreement to the contrary, if, in the opinion of the Board, the Participant or beneficiary is under a legal disability or is in any way incapacitated so as to be unable to manage his financial affairs, the Board may direct that payment be made to a relative or friend of such person for his benefit until claim is made by a conservator or other person legally charged with the care of his person or his estate, and such payment shall be in lieu of any such payment to the Participant or beneficiary. Thereafter, any benefits under this Agreement to which such Participant or beneficiary is entitled shall be paid to such conservator or other person legally charged with the care of his person or his estate.
APPLICABLE LAW. Except to the extent that not preempted by the laws of the United States of America, this Agreement shall be construed and administered with the laws of the state of New York; provided that no doctrine of choice of law shall be used to apply any law other than that of New York, and no defense, counterclaim or right of set-off given or allowed by the laws of any other state or jurisdiction, or arising out of the enactment, modification or repeal of any law, regulation, ordinance or decree of any foreign jurisdiction, shall be interposed in any action hereon.
AMENDMENT. This Agreement may be amended by written agreement of the Participant and the Company without the consent of any other person.
ADMINISTRATION. The authority to control and manage the operation and administration of this Agreement and the arrangement specified by this Agreement shall be vested in the Board. The Board will have the authority and discretion to interpret this Agreement, to establish, amend, and rescind any rules and regulations relating to this Agreement, and to make all other determinations that may be necessary or advisable for the administration of this Agreement. Any interpretation of this Agreement by the Board and any decision made by it under this Agreement is final and binding on all persons. Except to the extent prohibited by applicable law, the Board may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Board at any time. The Company and Related Companies shall furnish the Board with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Related Companies as to the Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. The Participant and other persons entitled to benefits
under this Agreement must furnish the Board such evidence, data or information as the Board considers desirable to carry out the terms of this Agreement.
EVIDENCE. Evidence required of anyone under this Agreement may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
DEFINITIONS. In addition to the other definitions contained herein, the following definitions shall apply:
BOARD. The term "Board" means the Board of Directors of the Company.
CAUSE. The term "Cause" shall have the meaning ascribed to it in the Employment Agreement.
CHANGE OF CONTROL. The term "Change of Control" means any of the following: (i) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Stock immediately prior to such closing are not the holders, directly or indirectly, of a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing, (ii) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings, or (iii) the closing of any sale by the holders of Stock of an amount of Stock that equals or exceeds a majority of the shares of Stock immediately prior to such closing to a person in which the holders of the Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
DATE OF TERMINATION. A Participant's "Date of Termination" means the first day on which the Participant is not employed by the Company or any Related Company, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and further provided that the Participant's employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Related Company approved by the Participant's employer. If, as a result of a sale or other transaction, the Participant's employer ceases to be a Related Company (and the Participant's employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Related Company, then the occurrence of such transaction shall be treated as the Date of Termination.
EMPLOYMENT AGREEMENT. The term " Employment Agreement" means the employment agreement between Safety Insurance Company, a Massachusetts corporation and indirect subsidiary of the Company, and the Participant dated as of the Effective Date.
EVENT OF DEFAULT. The term "Event of Default" means a financial covenant or payment default in any of the debt instruments of Holdings or Thomas Black Corporation.
FAIR MARKET VALUE. If the SAR is exercised by reason of a Public Offering, the "Fair Market Value" of the Stock shall be the public offering price for such Stock. If the SAR is exercised by reason of a Change of Control, the "Fair Market Value" of the Stock shall be equal to the net consideration received by the holders of the Company's Common Stock in connection with a Change of Control
MATERIAL BREACH. The term "Material Breach" shall have the meaning ascribed to it in the Employment Agreement.
PUBLIC OFFERING. The term "Public Offering" means a bona fide underwritten public offering and sale of equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended.
RELATED COMPANIES. The term "Related Company" means the Company and any corporation, partnership, joint venture or other entity during any period in which at least fifty percent of the voting power of all classes entitled to vote with respect to such entity is owned, directly or indirectly, by the Company.
STOCK. The term "Stock" means the common stock of the Company.
VESTING PERIOD. The term "Vesting Period" means the period beginning on the Effective Date and ending on December 31, 2002, and each of the calendar years 2003, 2004, 2005, and 2006.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.
Participant
/s/Daniel D. Loranger -------------------------------------- Daniel D. Loranger |
Safety Holdings, Inc.
By: /s/A. Richard Caputo, Jr.
---------------------------------
Name: A. Richard Caputo, Jr.
Its: Vice President
|
EXHIBIT 10.34
SAFETY HOLDINGS, INC.
SAR AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date, by and between the Participant and Safety Holdings, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company and the Participant have agreed upon the grant of the stock appreciation rights as set forth in this Agreement;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
TERMS OF AWARD. This Agreement specifies the terms of the stock appreciation right with respect to the number of Covered Shares (the "SAR"). The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:
The "Participant" is Robert J. Kerton.
The "Grant Date" is the Effective Time as that term is defined in the Merger Agreement by and among the Company, Safety Acquisition, Inc., Thomas Black Corporation, and the shareholders of Thomas Black Corporation dated as of May 31, 2001.
The number of "Covered Shares" is 410.861 shares of Stock.
The "Exercise Price" is $160.00 per share.
Other terms used in this Agreement are defined pursuant to paragraph 17 or elsewhere in this Agreement.
VESTING. Subject to the limitations of this Agreement, each Installment of Covered Shares of the SAR shall be vested on and after the Vesting Date for such Installment as described in the following schedule (but only if the Date of Termination has not occurred before the Vesting Date):
-------------------------------------------------------------------------------
INSTALLMENT VESTING DATE
APPLICABLE TO
INSTALLMENT
-------------------------------------------------------------------------------
20% of the Covered Shares One-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Two-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Three-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Four-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Five-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
|
The vesting of the SAR shall be subject to the following:
Notwithstanding the foregoing schedule, but subject to paragraph (b) below, the SAR shall become fully vested upon the date of a Public Offering or Change of Control that occurs on or before the Date of Termination. The vesting described in this paragraph (a) shall be deemed to occur immediately before the exercise of the SAR described in paragraph 3.
If, during any Vesting Period, an Event of Default occurs, then the number of Covered Shares that would otherwise vest on the last day of that Vesting Period shall instead be forfeited, and in no event shall the Participant be entitled to any amounts with respect to such Covered Shares by reason of exercise of the SAR, by reason of paragraph (a) above, or for any other reason.
If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs for reasons other than a Material Breach or Cause, or voluntary termination then all rights under the SAR that are not vested on the Date of Termination shall expire and all rights under the SAR that have vested prior to the Date of Termination shall be subject to repurchase by the Company under Section 7(a) of the Management Subscription Agreement, dated as of the date hereof, among the Company and certain employees of the Company or its subsidiaries. If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs by reason of a Material Breach, Cause or voluntary termination, then all rights under the SAR shall be forfeited on the Date of Termination.
EXERCISE OF SAR. The SAR shall be exercised with respect to the vested portion of the Covered Shares on the first to occur of a Public Offering or a Change of Control. (For the avoidance of doubt, it is recited here that the SAR shall not be exercised except as provided in the preceding sentence.) As soon as practicable after the exercise of the SAR with respect to a share of Stock, the Participant shall receive a cash payment from the Company which is equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the Exercise Price of one share of Stock. Notwithstanding the foregoing provisions of this paragraph 3, if the SAR would otherwise become exercisable in accordance with this paragraph 3 by reason of a Public Offering, and the Participant's Date of Termination has not occurred prior to the date of the Public Offering, then, in the sole discretion of the Board, the SAR may be canceled, provided that, at the time of the Public Offering, the Participant will be granted an option to purchase shares of Stock equal to the number of Covered Shares. Such option (i) shall be fully exercisable at and after the granting of the option (until expiration described in clause (iii) below) with respect to all of the Covered Shares, (ii) shall have a per-share exercise price equal to the exercise price of the SAR; and (iii) shall expire on the earlier of the ten-year anniversary of the Grant Date (as defined in this Agreement), but not event later than the 90-day anniversary of the Participant's Date of Termination (or, in the case of a Date of Termination occurring by reason of the Participant's Death or Disability, not later than the one-year anniversary following the Date of Termination).
ADJUSTMENTS. If the Board determines that, after the Effective Date, one or more transactions (including, without limitation, a stock split or combination) have occurred in which stock of the Company is issued, exchanged, or modified without receipt of additional
consideration by the Company of money or property (but excluding consideration in the form of services), the Board shall adjust the number of shares of Stock subject to the SAR and shall adjust the Exercise Price to reflect such transaction.
WITHHOLDING. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes.
BENEFITS MAY NOT BE ASSIGNED. The interests of a Participant under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary. The SAR is not transferable other than as designated by the Participant by will or by the laws of descent and distribution.
BENEFITS UNDER OTHER PLANS. Amounts payable to the Participant under this Agreement shall be disregarded for purposes of determining the benefits under any plan that is intended to be qualified under section 401(a) of the Internal Revenue Code of 1986 and any other plan or arrangement maintained by the Company or any Related Company, except as otherwise specifically provided to the contrary in such other plan or arrangement.
SAR NOT CONTRACT OF EMPLOYMENT. Neither this Agreement nor the SAR constitutes a contract of employment, and will not give the Participant the right to be retained in the employ of the Company or Related Company nor any right or claim to any benefit under the SAR, unless such right or claim has specifically accrued under the terms of this Agreement and the SAR.
NO RIGHTS AS STOCKHOLDER. Except in the case of this SAR being converted to an option (and then only with respect to shares acquired upon the exercise of the option), the Participant shall not have any rights of a stockholder with respect to the shares subject to the SAR.
NO GUARANTEE. Neither the Participant nor any other person shall, by reason of this Agreement, acquire any right in or title to any assets, funds or property of the Company or any Related Company whatsoever, including, without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under this Agreement. The Participant shall have only a contractual right to the amounts, if any, payable under this Agreement, unsecured by any assets of the Company or any Related Company. Nothing contained in this Agreement shall constitute a guarantee by the Company that the assets of the Company shall be sufficient to pay any benefits to any person.
HEIRS AND SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant's death, such benefits shall be delivered to the Designated Beneficiary in accordance with the provisions of this Agreement. The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Board in such form and at such
time as the Board shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
DISTRIBUTIONS TO DISABLED PERSONS. Notwithstanding the provisions of this Agreement to the contrary, if, in the opinion of the Board, the Participant or beneficiary is under a legal disability or is in any way incapacitated so as to be unable to manage his financial affairs, the Board may direct that payment be made to a relative or friend of such person for his benefit until claim is made by a conservator or other person legally charged with the care of his person or his estate, and such payment shall be in lieu of any such payment to the Participant or beneficiary. Thereafter, any benefits under this Agreement to which such Participant or beneficiary is entitled shall be paid to such conservator or other person legally charged with the care of his person or his estate.
APPLICABLE LAW. Except to the extent that not preempted by the laws of the United States of America, this Agreement shall be construed and administered with the laws of the state of New York; provided that no doctrine of choice of law shall be used to apply any law other than that of New York, and no defense, counterclaim or right of set-off given or allowed by the laws of any other state or jurisdiction, or arising out of the enactment, modification or repeal of any law, regulation, ordinance or decree of any foreign jurisdiction, shall be interposed in any action hereon.
AMENDMENT. This Agreement may be amended by written agreement of the Participant and the Company without the consent of any other person.
ADMINISTRATION. The authority to control and manage the operation and administration of this Agreement and the arrangement specified by this Agreement shall be vested in the Board. The Board will have the authority and discretion to interpret this Agreement, to establish, amend, and rescind any rules and regulations relating to this Agreement, and to make all other determinations that may be necessary or advisable for the administration of this Agreement. Any interpretation of this Agreement by the Board and any decision made by it under this Agreement is final and binding on all persons. Except to the extent prohibited by applicable law, the Board may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Board at any time. The Company and Related Companies shall furnish the Board with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Related Companies as to the Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. The Participant and other persons entitled to benefits
under this Agreement must furnish the Board such evidence, data or information as the Board considers desirable to carry out the terms of this Agreement.
EVIDENCE. Evidence required of anyone under this Agreement may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
DEFINITIONS. In addition to the other definitions contained herein, the following definitions shall apply:
BOARD. The term "Board" means the Board of Directors of the Company.
CAUSE. The term "Cause" shall have the meaning ascribed to it in the Employment Agreement.
CHANGE OF CONTROL. The term "Change of Control" means any of the following: (i) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Stock immediately prior to such closing are not the holders, directly or indirectly, of a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing, (ii) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings, or (iii) the closing of any sale by the holders of Stock of an amount of Stock that equals or exceeds a majority of the shares of Stock immediately prior to such closing to a person in which the holders of the Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
DATE OF TERMINATION. A Participant's "Date of Termination" means the first day on which the Participant is not employed by the Company or any Related Company, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and further provided that the Participant's employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Related Company approved by the Participant's employer. If, as a result of a sale or other transaction, the Participant's employer ceases to be a Related Company (and the Participant's employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Related Company, then the occurrence of such transaction shall be treated as the Date of Termination.
EMPLOYMENT AGREEMENT. The term " Employment Agreement" means the employment agreement between Safety Insurance Company, a Massachusetts corporation and indirect subsidiary of the Company, and the Participant dated as of the Effective Date.
EVENT OF DEFAULT. The term "Event of Default" means a financial covenant or payment default in any of the debt instruments of Holdings or Thomas Black Corporation
FAIR MARKET VALUE. If the SAR is exercised by reason of a Public Offering, the "Fair Market Value" of the Stock shall be the public offering price for such Stock. If the SAR is exercised by reason of a Change of Control, the "Fair Market Value" of the Stock shall be equal to the net consideration received by the holders of the Company's Common Stock in connection with a Change of Control
MATERIAL BREACH. The term "Material Breach" shall have the meaning ascribed to it in the Employment Agreement.
PUBLIC OFFERING. The term "Public Offering" means a bona fide underwritten public offering and sale of equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended.
RELATED COMPANIES. The term "Related Company" means the Company and any corporation, partnership, joint venture or other entity during any period in which at least fifty percent of the voting power of all classes entitled to vote with respect to such entity is owned, directly or indirectly, by the Company.
STOCK. The term "Stock" means the common stock of the Company.
VESTING PERIOD. The term "Vesting Period" means the period beginning on the Effective Date and ending on December 31, 2002, and each of the calendar years 2003, 2004, 2005, and 2006.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.
Participant
/s/Robert J. Kerton -------------------------------------- Robert J. Kerton |
Safety Holdings, Inc.
By: /s/A. Richard Caputo, Jr.
---------------------------------
Name: A. Richard Caputo, Jr.
Its: Vice President
|
EXHIBIT 10.35
SAFETY HOLDINGS, INC.
SAR AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date, by and between the Participant and Safety Holdings, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company and the Participant have agreed upon the grant of the stock appreciation rights as set forth in this Agreement;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
TERMS OF AWARD. This Agreement specifies the terms of the stock appreciation right with respect to the number of Covered Shares (the "SAR"). The following terms used in this Agreement shall have the meanings set forth in this paragraph 1:
The "Participant" is Edward N. Patrick, Jr.
The "Grant Date" is the Effective Time as that term is defined in the Merger Agreement by and among the Company, Safety Acquisition, Inc., Thomas Black Corporation, and the shareholders of Thomas Black Corporation dated as of May 31, 2001.
The number of "Covered Shares" is 608.683 shares of Stock.
The "Exercise Price" is $160.00 per share.
Other terms used in this Agreement are defined pursuant to paragraph 17 or elsewhere in this Agreement.
VESTING. Subject to the limitations of this Agreement, each Installment of Covered Shares of the SAR shall be vested on and after the Vesting Date for such Installment as described in the following schedule (but only if the Date of Termination has not occurred before the Vesting Date):
-------------------------------------------------------------------------------
INSTALLMENT VESTING DATE
APPLICABLE TO
INSTALLMENT
-------------------------------------------------------------------------------
20% of the Covered Shares One-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Two-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Three-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Four-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
20% of the Covered Shares Five-year anniversary of December 31, 2001
-------------------------------------------------------------------------------
|
The vesting of the SAR shall be subject to the following:
Notwithstanding the foregoing schedule, but subject to paragraph (b) below, the SAR shall become fully vested upon the date of a Public Offering or Change of Control that occurs on or before the Date of Termination. The vesting described in this paragraph (a) shall be deemed to occur immediately before the exercise of the SAR described in paragraph 3.
If, during any Vesting Period, an Event of Default occurs, then the number of Covered Shares that would otherwise vest on the last day of that Vesting Period shall instead be forfeited, and in no event shall the Participant be entitled to any amounts with respect to such Covered Shares by reason of exercise of the SAR, by reason of paragraph (a) above, or for any other reason.
If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs for reasons other than a Material Breach or Cause, or voluntary termination then all rights under the SAR that are not vested on the Date of Termination shall expire and all rights under the SAR that have vested prior to the Date of Termination shall be subject to repurchase by the Company under Section 7(a) of the Management Subscription Agreement, dated as of the date hereof, among the Company and certain employees of the Company or its subsidiaries. If a Public Offering or Change of Control does not occur on or before the Participant's Date of Termination, and such Date of Termination occurs by reason of a Material Breach, Cause or voluntary termination, then all rights under the SAR shall be forfeited on the Date of Termination.
EXERCISE OF SAR. The SAR shall be exercised with respect to the vested portion of the Covered Shares on the first to occur of a Public Offering or a Change of Control. (For the avoidance of doubt, it is recited here that the SAR shall not be exercised except as provided in the preceding sentence.) As soon as practicable after the exercise of the SAR with respect to a share of Stock, the Participant shall receive a cash payment from the Company which is equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the Exercise Price of one share of Stock. Notwithstanding the foregoing provisions of this paragraph 3, if the SAR would otherwise become exercisable in accordance with this paragraph 3 by reason of a Public Offering, and the Participant's Date of Termination has not occurred prior to the date of the Public Offering, then, in the sole discretion of the Board, the SAR may be canceled, provided that, at the time of the Public Offering, the Participant will be granted an option to purchase shares of Stock equal to the number of Covered Shares. Such option (i) shall be fully exercisable at and after the granting of the option (until expiration described in clause (iii) below) with respect to all of the Covered Shares, (ii) shall have a per-share exercise price equal to the exercise price of the SAR; and (iii) shall expire on the earlier of the ten-year anniversary of the Grant Date (as defined in this Agreement), but not event later than the 90-day anniversary of the Participant's Date of Termination (or, in the case of a Date of Termination occurring by reason of the Participant's Death or Disability, not later than the one-year anniversary following the Date of Termination).
ADJUSTMENTS. If the Board determines that, after the Effective Date, one or more transactions (including, without limitation, a stock split or combination) have occurred in which stock of the Company is issued, exchanged, or modified without receipt of additional
consideration by the Company of money or property (but excluding consideration in the form of services), the Board shall adjust the number of shares of Stock subject to the SAR and shall adjust the Exercise Price to reflect such transaction.
WITHHOLDING. All deliveries and distributions under this Agreement are subject to withholding of all applicable taxes.
BENEFITS MAY NOT BE ASSIGNED. The interests of a Participant under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or the Participant's beneficiary. The SAR is not transferable other than as designated by the Participant by will or by the laws of descent and distribution.
BENEFITS UNDER OTHER PLANS. Amounts payable to the Participant under this Agreement shall be disregarded for purposes of determining the benefits under any plan that is intended to be qualified under section 401(a) of the Internal Revenue Code of 1986 and any other plan or arrangement maintained by the Company or any Related Company, except as otherwise specifically provided to the contrary in such other plan or arrangement.
SAR NOT CONTRACT OF EMPLOYMENT. Neither this Agreement nor the SAR constitutes a contract of employment, and will not give the Participant the right to be retained in the employ of the Company or Related Company nor any right or claim to any benefit under the SAR, unless such right or claim has specifically accrued under the terms of this Agreement and the SAR.
NO RIGHTS AS STOCKHOLDER. Except in the case of this SAR being converted to an option (and then only with respect to shares acquired upon the exercise of the option), the Participant shall not have any rights of a stockholder with respect to the shares subject to the SAR.
NO GUARANTEE. Neither the Participant nor any other person shall, by reason of this Agreement, acquire any right in or title to any assets, funds or property of the Company or any Related Company whatsoever, including, without limitation, any specific funds, assets, or other property which the Company, in its sole discretion, may set aside in anticipation of a liability under this Agreement. The Participant shall have only a contractual right to the amounts, if any, payable under this Agreement, unsecured by any assets of the Company or any Related Company. Nothing contained in this Agreement shall constitute a guarantee by the Company that the assets of the Company shall be sufficient to pay any benefits to any person.
HEIRS AND SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company's assets and business. If any benefits deliverable to the Participant under this Agreement have not been delivered at the time of the Participant's death, such benefits shall be delivered to the Designated Beneficiary in accordance with the provisions of this Agreement. The "Designated Beneficiary" shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Board in such form and at such
time as the Board shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any benefits distributable to the Participant shall be distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.
DISTRIBUTIONS TO DISABLED PERSONS. Notwithstanding the provisions of this Agreement to the contrary, if, in the opinion of the Board, the Participant or beneficiary is under a legal disability or is in any way incapacitated so as to be unable to manage his financial affairs, the Board may direct that payment be made to a relative or friend of such person for his benefit until claim is made by a conservator or other person legally charged with the care of his person or his estate, and such payment shall be in lieu of any such payment to the Participant or beneficiary. Thereafter, any benefits under this Agreement to which such Participant or beneficiary is entitled shall be paid to such conservator or other person legally charged with the care of his person or his estate.
APPLICABLE LAW. Except to the extent that not preempted by the laws of the United States of America, this Agreement shall be construed and administered with the laws of the state of New York; provided that no doctrine of choice of law shall be used to apply any law other than that of New York, and no defense, counterclaim or right of set-off given or allowed by the laws of any other state or jurisdiction, or arising out of the enactment, modification or repeal of any law, regulation, ordinance or decree of any foreign jurisdiction, shall be interposed in any action hereon.
AMENDMENT. This Agreement may be amended by written agreement of the Participant and the Company without the consent of any other person.
ADMINISTRATION. The authority to control and manage the operation and administration of this Agreement and the arrangement specified by this Agreement shall be vested in the Board. The Board will have the authority and discretion to interpret this Agreement, to establish, amend, and rescind any rules and regulations relating to this Agreement, and to make all other determinations that may be necessary or advisable for the administration of this Agreement. Any interpretation of this Agreement by the Board and any decision made by it under this Agreement is final and binding on all persons. Except to the extent prohibited by applicable law, the Board may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Board at any time. The Company and Related Companies shall furnish the Board with such data and information as it determines may be required for it to discharge its duties. The records of the Company and Related Companies as to the Participant's employment, termination of employment, leave of absence, reemployment and compensation shall be conclusive on all persons unless determined to be incorrect. The Participant and other persons entitled to benefits
under this Agreement must furnish the Board such evidence, data or information as the Board considers desirable to carry out the terms of this Agreement.
EVIDENCE. Evidence required of anyone under this Agreement may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
DEFINITIONS. In addition to the other definitions contained herein, the following definitions shall apply:
BOARD. The term "Board" means the Board of Directors of the Company.
CAUSE. The term "Cause" shall have the meaning ascribed to it in the Employment Agreement.
CHANGE OF CONTROL. The term "Change of Control" means any of the following: (i) the closing of any merger, combination, consolidation or similar business transaction involving the Company in which the holders of Stock immediately prior to such closing are not the holders, directly or indirectly, of a majority of the ordinary voting securities of the surviving person in such transaction immediately after such closing, (ii) the closing of any sale or transfer by the Company of all or substantially all of its assets to an acquiring person in which the holders of Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of the acquiring person immediately after such closings, or (iii) the closing of any sale by the holders of Stock of an amount of Stock that equals or exceeds a majority of the shares of Stock immediately prior to such closing to a person in which the holders of the Stock immediately prior to such closing are not the holders of a majority of the ordinary voting securities of such person immediately after such closing.
DATE OF TERMINATION. A Participant's "Date of Termination" means the first day on which the Participant is not employed by the Company or any Related Company, regardless of the reason for the termination of employment; provided that a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and further provided that the Participant's employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Related Company approved by the Participant's employer. If, as a result of a sale or other transaction, the Participant's employer ceases to be a Related Company (and the Participant's employer is or becomes an entity that is separate from the Company), and the Participant is not, at the end of the 30-day period following the transaction, employed by the Company or an entity that is then a Related Company, then the occurrence of such transaction shall be treated as the Date of Termination.
EMPLOYMENT AGREEMENT. The term " Employment Agreement" means the employment
agreement between Safety Insurance Company, a Massachusetts corporation
and indirect subsidiary of the Company, and the Participant dated as of
the Effective Date.
EVENT OF DEFAULT. The term "Event of Default" means a financial covenant or
payment default in any of the debt instruments of Holdings or Thomas
Black Corporation
|
FAIR MARKET VALUE. If the SAR is exercised by reason of a Public Offering, the "Fair Market Value" of the Stock shall be the public offering price for such Stock. If the SAR is exercised by reason of a Change of Control, the "Fair Market Value" of the Stock shall be equal to the net consideration received by the holders of the Company's Common Stock in connection with a Change of Control
MATERIAL BREACH. The term "Material Breach" shall have the meaning ascribed to it in the Employment Agreement.
PUBLIC OFFERING. The term "Public Offering" means a bona fide underwritten public offering and sale of equity securities of the Company pursuant to an effective registration statement under the Securities Act of 1933, as amended.
RELATED COMPANIES. The term "Related Company" means the Company and any corporation, partnership, joint venture or other entity during any period in which at least fifty percent of the voting power of all classes entitled to vote with respect to such entity is owned, directly or indirectly, by the Company.
STOCK. The term "Stock" means the common stock of the Company.
VESTING PERIOD. The term "Vesting Period" means the period beginning on the Effective Date and ending on December 31, 2002, and each of the calendar years 2003, 2004, 2005, and 2006.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.
Participant
/s/Edward N. Patrick, Jr. -------------------------------------- Edward N. Patrick, Jr. |
Safety Holdings, Inc.
By: /s/A. Richard Caputo, Jr.
----------------------------------
Name: A. Richard Caputo, Jr.
Its: Vice President
|
EXHIBIT 10.36
[COPY]
THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON OCTOBER 16, 2001 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH SECURITY IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT, DATED AS OF OCTOBER 15, 2001, BETWEEN THE ISSUER HEREOF AND JZ EQUITY PARTNERS PLC, AND THE ISSUER HEREOF RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER HEREOF TO THE HOLDER HEREOF WITHOUT CHARGE.
SAFETY HOLDINGS, INC.
13.0% NOTE
DUE OCTOBER 31, 2011
No. R-002 New York, New York $6,750,000 October 26, 2001
SAFETY HOLDINGS, INC., a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to the order of FAIRHOLME PARTNERS, L.P. ("FAIRHOLME"), or registered assigns, on October 31, 2011, the principal amount of $6,750,000, with interest (computed on the basis of a 360-day year of twelve 30-day months) from the date hereof on the unpaid balance of such principal amount at the rate of 13.0% PER ANNUM, payable semi-annually on each April 30 and October 31 or, if such day is not a Business Day, the next succeeding Business Day (each, an "INTEREST PAYMENT DATE") after the date hereof, commencing April 30, 2002, until such unpaid principal shall become due and payable (whether at maturity or at a date fixed for prepayment or by declaration or otherwise), and with interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) on any overdue interest at the rate of 15% PER ANNUM, payable semi-annually as aforesaid or, at the option of the registered holder hereof, on demand.
Payments of principal and interest on this Note shall be made in lawful money of the United States of America at the principal office of Fairholme Partners, L.P., at 51 John F. Kennedy Parkway, Short Hills, New Jersey, 07078 or at such other office or agency in Short Hills, New Jersey as the registered holder of this Note shall have designated by written notice to the Company as provided in the Purchase Agreement referred to below. The Company may treat the Person in whose name this Note is registered on the register kept by the Company as provided in such Purchase Agreement as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.
This Note is one of the Company's 13.0% Notes due October 31, 2011 (the "NOTES"), originally issued in the aggregate principal amount of $30,000,000 pursuant to a purchase agreement, dated as of October 15, 2001 (together with all amendments and other modifications, if any, from time to time thereafter made thereto, the "PURCHASE AGREEMENT"), between the Company and JZEP. The registered holder of this Note is entitled to the benefits of the Purchase Agreement and may enforce the agreements of the Company contained therein and exercise the remedies provided for thereby or otherwise available in respect thereof. Reference is made to ARTICLE VIII of the Purchase Agreement for the subordination provisions applicable hereto for the benefit of the holders of "Senior Indebtedness" in the event of a substantive consolidation of the estate of the Company with the estate of its wholly-owned subsidiary Thomas Black Corporation.
The Notes are subject to optional prepayment, in whole or in part and without premium or penalty, and are entitled to mandatory redemption, all as specified in the Purchase Agreement. The Notes are also subject, under certain circumstances, by the terms of the Purchase Agreement to the payment, on not more than two Interest Payment Dates, of accrued interest then due hereon by the delivery to the holder, IN LIEU of cash, of an additional note in the amount of such accrued interest, bearing interest at a rate of 15.0% PER ANNUM and otherwise in the form of this Note. In case an Event of Default, as defined in the Purchase Agreement, shall occur and be continuing, the unpaid balance of the principal of this Note may be declared and become due and payable in the manner and with the effect provided in the Purchase Agreement. By acceptance of this Note, each holder authorizes the Representative Noteholder (as defined in the Purchase Agreement), to act on behalf of such holder for all purposes for which the Representative Noteholder is permitted to act pursuant to the Purchase Agreement and each other Purchase Document (as defined in the Purchase Agreement) and agrees to reimburse, exculpate and indemnify the Representative Noteholder and otherwise agrees to be bound as a Noteholder in accordance with SECTION 4.11 of the Purchase Agreement.
This Note is a registered Note and, as provided in the Purchase Agreement, is transferable only upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or his attorney duly authorized in writing.
This promissory note is the subject of an irrevocable proxy, dated October 26, 2001 (the "PROXY"), granted by the holder to JZ Equity Partners PLC ("JZEP") appointing JZEP as the holder's attorney-in-fact, with full power of substitution, with full authority to take any and all actions and to deliver any and all documents and instruments which JZEP in its sole and absolute discretion may deem necessary, appropriate or desirable for purposes of the Purchase Agreement or as permitted by law, including in any bankruptcy, insolvency, liquidation or similar proceduring of Safety Holdings, Inc. The Proxy will terminate upon the occurrence of certain events described therein.
This Note is made and delivered in New York, New York and shall be governed by the internal laws of the State of New York.
SAFETY HOLDINGS, INC.
By: /s/ A. Richard Caputo, Jr. ------------------------------------ Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.37
[COPY]
THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON OCTOBER 16, 2001 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH SECURITY IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT, DATED AS OF OCTOBER 15, 2001, BETWEEN THE ISSUER HEREOF AND JZ EQUITY PARTNERS PLC, AND THE ISSUER HEREOF RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER HEREOF TO THE HOLDER HEREOF WITHOUT CHARGE.
SAFETY HOLDINGS, INC.
13.0% NOTE
DUE OCTOBER 31, 2011
No. R-007 New York, New York $1,054,539.00 October 16, 2001
SAFETY HOLDINGS, INC., a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to the order of TCW/CRESCENT MEZZANINE TRUST III L.P. ("TCW TRUST"), or registered assigns, on October 31, 2011, the principal amount of $1,054,539.00, with interest (computed on the basis of a 360-day year of twelve 30-day months) from the date hereof on the unpaid balance of such principal amount at the rate of 13.0% PER ANNUM, payable semi-annually on each April 30 and October 31 or, if such day is not a Business Day, the next succeeding Business Day (each, an "INTEREST PAYMENT DATE") after the date hereof, commencing April 30, 2002, until such unpaid principal shall become due and payable (whether at maturity or at a date fixed for prepayment or by declaration or otherwise), and with interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) on any overdue interest at the rate of 15% PER ANNUM, payable semi-annually as aforesaid or, at the option of the registered holder hereof, on demand.
Payments of principal and interest on this Note shall be made in lawful money of the United States of America at the principal office of The Bank of New York at 700 South Flower Street, 2nd Floor, Los Angeles, California 90017 or at such other office or agency in Los Angeles, California as the registered holder of this Note shall have designated by written notice to the Company as provided in the Purchase Agreement referred to below. The Company may treat the Person in whose name this Note is registered on the register kept by the Company as provided in such Purchase Agreement as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.
This Note is one of the Company's 13.0% Notes due October 31, 2011 (the "NOTES"), originally issued in the aggregate principal amount of $30,000,000 pursuant to a purchase
agreement, dated as of October 15, 2001 (together with all amendments and other modifications, if any, from time to time thereafter made thereto, the "PURCHASE AGREEMENT"), between the Company and JZEP. The registered holder of this Note is entitled to the benefits of the Purchase Agreement and may enforce the agreements of the Company contained therein and exercise the remedies provided for thereby or otherwise available in respect thereof. Reference is made to ARTICLE VIII of the Purchase Agreement for the subordination provisions applicable hereto for the benefit of the holders of "Senior Indebtedness" in the event of a substantive consolidation of the estate of the Company with the estate of its wholly-owned subsidiary Thomas Black Corporation.
The Notes are subject to optional prepayment, in whole or in part and without premium or penalty, and are entitled to mandatory redemption, all as specified in the Purchase Agreement. The Notes are also subject, under certain circumstances, by the terms of the Purchase Agreement to the payment, on not more than two Interest Payment Dates, of accrued interest then due hereon by the delivery to the holder, IN LIEU of cash, of an additional note in the amount of such accrued interest, bearing interest at a rate of 15.0% PER ANNUM and otherwise in the form of this Note. In case an Event of Default, as defined in the Purchase Agreement, shall occur and be continuing, the unpaid balance of the principal of this Note may be declared and become due and payable in the manner and with the effect provided in the Purchase Agreement. By acceptance of this Note, each holder authorizes the Representative Noteholder (as defined in the Purchase Agreement), to act on behalf of such holder for all purposes for which the Representative Noteholder is permitted to act pursuant to the Purchase Agreement and each other Purchase Document (as defined in the Purchase Agreement) and agrees to reimburse, exculpate and indemnify the Representative Noteholder and otherwise agrees to be bound as a Noteholder in accordance with SECTION 4.11 of the Purchase Agreement.
This Note is a registered Note and, as provided in the Purchase Agreement, is transferable only upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or his attorney duly authorized in writing.
This Note is made and delivered in New York, New York and shall be governed by the internal laws of the State of New York.
SAFETY HOLDINGS, INC.
By: /s/ A. Richard Caputo, Jr. ------------------------------------ Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.38
[COPY]
THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON OCTOBER 16, 2001 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH SECURITY IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT, DATED AS OF OCTOBER 15, 2001, BETWEEN THE ISSUER HEREOF AND JZ EQUITY PARTNERS PLC, AND THE ISSUER HEREOF RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER HEREOF TO THE HOLDER HEREOF WITHOUT CHARGE.
SAFETY HOLDINGS, INC.
13.0% NOTE
DUE OCTOBER 31, 2011
No. R-008 New York, New York $6,768,902.70 October 16, 2001
SAFETY HOLDINGS, INC., a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to the order of TCW/CRESCENT MEZZANINE PARTNERS III, L.P. ("TCW PARTNERS"), or registered assigns, on October 31, 2011, the principal amount of $6,768,902.70, with interest (computed on the basis of a 360-day year of twelve 30-day months) from the date hereof on the unpaid balance of such principal amount at the rate of 13.0% PER ANNUM, payable semi-annually on each April 30 and October 31 or, if such day is not a Business Day, the next succeeding Business Day (each, an "INTEREST PAYMENT DATE") after the date hereof, commencing April 30, 2002, until such unpaid principal shall become due and payable (whether at maturity or at a date fixed for prepayment or by declaration or otherwise), and with interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) on any overdue interest at the rate of 15% PER ANNUM, payable semi-annually as aforesaid or, at the option of the registered holder hereof, on demand.
Payments of principal and interest on this Note shall be made in lawful money of the United States of America at the principal office of The Bank of New York at 700 South Flower Street, 2nd Floor, Los Angeles, California 90017 or at such other office or agency in Los Angeles, California as the registered holder of this Note shall have designated by written notice to the Company as provided in the Purchase Agreement referred to below. The Company may treat the Person in whose name this Note is registered on the register kept by the Company as provided in such Purchase Agreement as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.
This Note is one of the Company's 13.0% Notes due October 31, 2011 (the "NOTES"), originally issued in the aggregate principal amount of $30,000,000 pursuant to a purchase
agreement, dated as of October 15, 2001 (together with all amendments and other modifications, if any, from time to time thereafter made thereto, the "PURCHASE AGREEMENT"), between the Company and JZEP. The registered holder of this Note is entitled to the benefits of the Purchase Agreement and may enforce the agreements of the Company contained therein and exercise the remedies provided for thereby or otherwise available in respect thereof. Reference is made to ARTICLE VIII of the Purchase Agreement for the subordination provisions applicable hereto for the benefit of the holders of "Senior Indebtedness" in the event of a substantive consolidation of the estate of the Company with the estate of its wholly-owned subsidiary Thomas Black Corporation.
The Notes are subject to optional prepayment, in whole or in part and without premium or penalty, and are entitled to mandatory redemption, all as specified in the Purchase Agreement. The Notes are also subject, under certain circumstances, by the terms of the Purchase Agreement to the payment, on not more than two Interest Payment Dates, of accrued interest then due hereon by the delivery to the holder, IN LIEU of cash, of an additional note in the amount of such accrued interest, bearing interest at a rate of 15.0% PER ANNUM and otherwise in the form of this Note. In case an Event of Default, as defined in the Purchase Agreement, shall occur and be continuing, the unpaid balance of the principal of this Note may be declared and become due and payable in the manner and with the effect provided in the Purchase Agreement. By acceptance of this Note, each holder authorizes the Representative Noteholder (as defined in the Purchase Agreement), to act on behalf of such holder for all purposes for which the Representative Noteholder is permitted to act pursuant to the Purchase Agreement and each other Purchase Document (as defined in the Purchase Agreement) and agrees to reimburse, exculpate and indemnify the Representative Noteholder and otherwise agrees to be bound as a Noteholder in accordance with SECTION 4.11 of the Purchase Agreement.
This Note is a registered Note and, as provided in the Purchase Agreement, is transferable only upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or his attorney duly authorized in writing.
This Note is made and delivered in New York, New York and shall be governed by the internal laws of the State of New York.
SAFETY HOLDINGS, INC.
By: /s/ A. Richard Caputo, Jr. ---------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.39
[COPY]
THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON OCTOBER 16, 2001 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH SECURITY IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT, DATED AS OF OCTOBER 15, 2001, BETWEEN THE ISSUER HEREOF AND JZ EQUITY PARTNERS PLC, AND THE ISSUER HEREOF RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER HEREOF TO THE HOLDER HEREOF WITHOUT CHARGE.
SAFETY HOLDINGS, INC.
13.0% NOTE
DUE OCTOBER 31, 2011
No. R-006 New York, New York $276,558.30 October 16, 2001
SAFETY HOLDINGS, INC., a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to the order of TCW/CRESCENT MEZZANINE PARTNERS NETHERLANDS III, L.P. ("TCW PARTNERS NETHERLANDS"), or registered assigns, on October 31, 2011, the principal amount of $276,558.30, with interest (computed on the basis of a 360-day year of twelve 30-day months) from the date hereof on the unpaid balance of such principal amount at the rate of 13.0% PER ANNUM, payable semi-annually on each April 30 and October 31 or, if such day is not a Business Day, the next succeeding Business Day (each, an "INTEREST PAYMENT DATE") after the date hereof, commencing April 30, 2002, until such unpaid principal shall become due and payable (whether at maturity or at a date fixed for prepayment or by declaration or otherwise), and with interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) on any overdue interest at the rate of 15% PER ANNUM, payable semi-annually as aforesaid or, at the option of the registered holder hereof, on demand.
Payments of principal and interest on this Note shall be made in lawful money of the United States of America at the principal office of The Bank of New York at 700 South Flower Street, 2nd Floor, Los Angeles, California 90017 or at such other office or agency in Los Angeles, California as the registered holder of this Note shall have designated by written notice to the Company as provided in the Purchase Agreement referred to below. The Company may treat the Person in whose name this Note is registered on the register kept by the Company as provided in such Purchase Agreement as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.
This Note is one of the Company's 13.0% Notes due October 31, 2011 (the "NOTES"), originally issued in the aggregate principal amount of $30,000,000 pursuant to a purchase
agreement, dated as of October 15, 2001 (together with all amendments and other modifications, if any, from time to time thereafter made thereto, the "PURCHASE AGREEMENT"), between the Company and JZEP. The registered holder of this Note is entitled to the benefits of the Purchase Agreement and may enforce the agreements of the Company contained therein and exercise the remedies provided for thereby or otherwise available in respect thereof. Reference is made to ARTICLE VIII of the Purchase Agreement for the subordination provisions applicable hereto for the benefit of the holders of "Senior Indebtedness" in the event of a substantive consolidation of the estate of the Company with the estate of its wholly-owned subsidiary Thomas Black Corporation.
The Notes are subject to optional prepayment, in whole or in part and without premium or penalty, and are entitled to mandatory redemption, all as specified in the Purchase Agreement. The Notes are also subject, under certain circumstances, by the terms of the Purchase Agreement to the payment, on not more than two Interest Payment Dates, of accrued interest then due hereon by the delivery to the holder, IN LIEU of cash, of an additional note in the amount of such accrued interest, bearing interest at a rate of 15.0% PER ANNUM and otherwise in the form of this Note. In case an Event of Default, as defined in the Purchase Agreement, shall occur and be continuing, the unpaid balance of the principal of this Note may be declared and become due and payable in the manner and with the effect provided in the Purchase Agreement. By acceptance of this Note, each holder authorizes the Representative Noteholder (as defined in the Purchase Agreement), to act on behalf of such holder for all purposes for which the Representative Noteholder is permitted to act pursuant to the Purchase Agreement and each other Purchase Document (as defined in the Purchase Agreement) and agrees to reimburse, exculpate and indemnify the Representative Noteholder and otherwise agrees to be bound as a Noteholder in accordance with SECTION 4.11 of the Purchase Agreement.
This Note is a registered Note and, as provided in the Purchase Agreement, is transferable only upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or his attorney duly authorized in writing.
This Note is made and delivered in New York, New York and shall be governed by the internal laws of the State of New York.
SAFETY HOLDINGS, INC.
By: /s/ A. Richard Caputo, Jr. ----------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.40
[COPY]
THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON OCTOBER 16, 2001 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH SECURITY IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT, DATED AS OF OCTOBER 15, 2001, BETWEEN THE ISSUER HEREOF AND JZ EQUITY PARTNERS PLC, AND THE ISSUER HEREOF RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER HEREOF TO THE HOLDER HEREOF WITHOUT CHARGE.
SAFETY HOLDINGS, INC.
13.0% NOTE
DUE OCTOBER 31, 2011
No. R-009 New York, New York $5,000,000 October 16, 2001
SAFETY HOLDINGS, INC., a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to the order of J/Z CBO (DELAWARE), LLC ("J/Z CBO"), or registered assigns, on October 31, 2011, the principal amount of $5,000,000, with interest (computed on the basis of a 360-day year of twelve 30-day months) from the date hereof on the unpaid balance of such principal amount at the rate of 13.0% PER ANNUM, payable semi-annually on each April 30 and October 31 or, if such day is not a Business Day, the next succeeding Business Day (each, an "INTEREST PAYMENT DATE") after the date hereof, commencing April 30, 2002, until such unpaid principal shall become due and payable (whether at maturity or at a date fixed for prepayment or by declaration or otherwise), and with interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) on any overdue interest at the rate of 15% PER ANNUM, payable semi-annually as aforesaid or, at the option of the registered holder hereof, on demand.
Payments of principal and interest on this Note shall be made in lawful money of the United States of America at the principal office of Hare & Co. c/o The Bank of New York, P.O. Box 11203, New York, NY 10249 or at such other office or agency in New York, New York as the registered holder of this Note shall have designated by written notice to the Company as provided in the Purchase Agreement referred to below. The Company may treat the Person in whose name this Note is registered on the register kept by the Company as provided in such Purchase Agreement as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.
This Note is one of the Company's 13.0% Notes due October 31, 2011 (the "NOTES"), originally issued in the aggregate principal amount of $30,000,000 pursuant to a purchase agreement, dated as of October 15, 2001 (together with all amendments and other modifications, if any, from time to time thereafter made thereto, the "PURCHASE AGREEMENT"), between the
Company and JZEP. The registered holder of this Note is entitled to the benefits of the Purchase Agreement and may enforce the agreements of the Company contained therein and exercise the remedies provided for thereby or otherwise available in respect thereof. Reference is made to ARTICLE VIII of the Purchase Agreement for the subordination provisions applicable hereto for the benefit of the holders of "Senior Indebtedness" in the event of a substantive consolidation of the estate of the Company with the estate of its wholly-owned subsidiary Thomas Black Corporation.
The Notes are subject to optional prepayment, in whole or in part and without premium or penalty, and are entitled to mandatory redemption, all as specified in the Purchase Agreement. The Notes are also subject, under certain circumstances, by the terms of the Purchase Agreement to the payment, on not more than two Interest Payment Dates, of accrued interest then due hereon by the delivery to the holder, IN LIEU of cash, of an additional note in the amount of such accrued interest, bearing interest at a rate of 15.0% PER ANNUM and otherwise in the form of this Note. In case an Event of Default, as defined in the Purchase Agreement, shall occur and be continuing, the unpaid balance of the principal of this Note may be declared and become due and payable in the manner and with the effect provided in the Purchase Agreement. By acceptance of this Note, each holder authorizes the Representative Noteholder (as defined in the Purchase Agreement), to act on behalf of such holder for all purposes for which the Representative Noteholder is permitted to act pursuant to the Purchase Agreement and each other Purchase Document (as defined in the Purchase Agreement) and agrees to reimburse, exculpate and indemnify the Representative Noteholder and otherwise agrees to be bound as a Noteholder in accordance with SECTION 4.11 of the Purchase Agreement.
This Note is a registered Note and, as provided in the Purchase Agreement, is transferable only upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or his attorney duly authorized in writing.
This Note is made and delivered in New York, New York and shall be governed by the internal laws of the State of New York.
SAFETY HOLDINGS, INC.
By: /s/ A. Richard Caputo, Jr. ------------------------------------ Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 10.41
[COPY]
THE SECURITY REPRESENTED BY THIS INSTRUMENT WAS ORIGINALLY ISSUED ON OCTOBER 16, 2001 AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH SECURITY IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE PURCHASE AGREEMENT, DATED AS OF OCTOBER 15, 2001, BETWEEN THE ISSUER HEREOF AND JZ EQUITY PARTNERS PLC, AND THE ISSUER HEREOF RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITY UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE ISSUER HEREOF TO THE HOLDER HEREOF WITHOUT CHARGE.
SAFETY HOLDINGS, INC.
13.0% NOTE
DUE OCTOBER 31, 2011
No. R-010 New York, New York $10,150,000 October 16, 2001
SAFETY HOLDINGS, INC., a Delaware corporation (the "COMPANY"), for value received, hereby promises to pay to the order of JZ EQUITY PARTNERS PLC ("JZEP"), or registered assigns, on October 31, 2011, the principal amount of $10,150,000, with interest (computed on the basis of a 360-day year of twelve 30-day months) from the date hereof on the unpaid balance of such principal amount at the rate of 13.0% PER ANNUM, payable semi-annually on each April 30 and October 31 or, if such day is not a Business Day, the next succeeding Business Day (each, an "INTEREST PAYMENT DATE") after the date hereof, commencing April 30, 2002, until such unpaid principal shall become due and payable (whether at maturity or at a date fixed for prepayment or by declaration or otherwise), and with interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) on any overdue interest at the rate of 15% PER ANNUM, payable semi-annually as aforesaid or, at the option of the registered holder hereof, on demand.
Payments of principal and interest on this Note shall be made in lawful money of the United States of America at the principal office of HSBC Bank USA (f/k/a Republic National Bank of New York) at 452 Fifth Avenue, New York, New York or at such other office or agency in New York, New York as the registered holder of this Note shall have designated by written notice to the Company as provided in the Purchase Agreement referred to below. The Company may treat the Person in whose name this Note is registered on the register kept by the Company as provided in such Purchase Agreement as the owner of this Note for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary.
This Note is one of the Company's 13.0% Notes due October 31, 2011 (the "NOTES"), originally issued in the aggregate principal amount of $30,000,000 pursuant to a purchase agreement, dated as of October 15, 2001 (together with all amendments and other modifications,
if any, from time to time thereafter made thereto, the "PURCHASE AGREEMENT"), between the Company and JZEP. The registered holder of this Note is entitled to the benefits of the Purchase Agreement and may enforce the agreements of the Company contained therein and exercise the remedies provided for thereby or otherwise available in respect thereof. Reference is made to ARTICLE VIII of the Purchase Agreement for the subordination provisions applicable hereto for the benefit of the holders of "Senior Indebtedness" in the event of a substantive consolidation of the estate of the Company with the estate of its wholly-owned subsidiary Thomas Black Corporation.
The Notes are subject to optional prepayment, in whole or in part and without premium or penalty, and are entitled to mandatory redemption, all as specified in the Purchase Agreement. The Notes are also subject, under certain circumstances, by the terms of the Purchase Agreement to the payment, on not more than two Interest Payment Dates, of accrued interest then due hereon by the delivery to the holder, IN LIEU of cash, of an additional note in the amount of such accrued interest, bearing interest at a rate of 15.0% PER ANNUM and otherwise in the form of this Note. In case an Event of Default, as defined in the Purchase Agreement, shall occur and be continuing, the unpaid balance of the principal of this Note may be declared and become due and payable in the manner and with the effect provided in the Purchase Agreement. By acceptance of this Note, each holder authorizes the Representative Noteholder (as defined in the Purchase Agreement), to act on behalf of such holder for all purposes for which the Representative Noteholder is permitted to act pursuant to the Purchase Agreement and each other Purchase Document (as defined in the Purchase Agreement) and agrees to reimburse, exculpate and indemnify the Representative Noteholder and otherwise agrees to be bound as a Noteholder in accordance with SECTION 4.11 of the Purchase Agreement.
This Note is a registered Note and, as provided in the Purchase Agreement, is transferable only upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or his attorney duly authorized in writing.
This Note is made and delivered in New York, New York and shall be governed by the internal laws of the State of New York.
SAFETY HOLDINGS, INC.
By: /s/ A. Richard Caputo, Jr. ----------------------------------- Name: A. Richard Caputo, Jr. Title: Vice President |
EXHIBIT 21
LIST OF SUBSIDIARIES OF SAFETY INSURANCE GROUP, INC.
Thomas Black Corporation
Safety Insurance Company, Inc.
Safety Indemnity Insurance Company
RBS, Inc.
Thomas Black Insurance Agency, Inc.