-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ef2FVvi0uQnG8NM24auv8qzg5/srgmeHPeATonqSmyODNOteON4lOMLQaM6cJWVO SI4kNj+QQoz6Q4hc6y2A+w== 0000950144-99-002481.txt : 19990311 0000950144-99-002481.hdr.sgml : 19990311 ACCESSION NUMBER: 0000950144-99-002481 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990305 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANKERS INSURANCE GROUP INC CENTRAL INDEX KEY: 0000350571 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 591985922 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13137 FILM NUMBER: 99561226 BUSINESS ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 BUSINESS PHONE: 3052532244 MAIL ADDRESS: STREET 1: 11222 QUAIL ROOST DR CITY: MIAMI STATE: FL ZIP: 33157 8-K 1 AMERICAN BANKERS INSURANCE GROUP 8-K FOR 3/5/99 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of Earliest Event Reported) - March 5, 1999 --------------- AMERICAN BANKERS INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) FLORIDA 0-9633 59-1985922 --------- (State or other jurisdiction of (Commission File Number) (IRS Employer Incorporation) Identification No.) 11222 Quail Roost Drive, Miami, Florida 33157-6596 (Address of principal executive offices) (Zip Code)
(305) 253-2244 (Registrant's telephone number, including area code) --------------- Not applicable (Former name or address, if changed since last report) ================================================================================ 2 Item 5. Other Events. On March 5, 1999, American Bankers Insurance Group, Inc., a Florida corporation ("American Bankers"), Fortis, Inc., a Nevada corporation ("Fortis") and Greenland Acquisition Corp., a newly-formed Florida corporation and a wholly-owned subsidiary of Fortis ("Greenland"), entered into an Agreement and Plan of Merger (the "Merger Agreement") which provides that, subject to the satisfaction of the terms and conditions therein, including regulatory approval and approval by the common stockholders of American Bankers, Greenland will merge (the "Merger") with and into American Bankers. American Bankers will be the surviving corporation in the Merger. Each outstanding share of Common Stock, par value $1.00 per share, of American Bankers (the "American Bankers Common Stock") will be converted in the Merger into the right to receive $55.00 in cash. Each outstanding share of $3.125 Series B Cumulative Convertible Preferred Stock of American Bankers (the "American Bankers Preferred Stock") will be converted in the Merger into the right to receive $109.857 in cash. Under the terms of the Merger Agreement, Fortis is entitled, at its sole option, to cause Greenland to commence a tender offer (the "Tender Offer") to acquire up to 100% (but not less than a majority) of the outstanding American Bankers Common Stock (excluding any American Bankers Common Stock owned by Fortis pursuant to the Stock Option Agreement (as defined below)), together with all associated stock purchase rights issued pursuant to the Rights Agreement (as defined below), and up to 100% of the American Bankers Preferred Stock. Pursuant to a Stock Option Agreement, dated as of March 5, 1999 (the "Stock Option Agreement"), American Bankers has granted Fortis an option (the "Option") to purchase up to 8,406,559 shares (approximately 19.9 percent) of American Bankers Common Stock at an exercise price of $55.00 per share (or to obtain a specified cash value for the Option from American Bankers). The Option is exercisable upon the occurrence of certain events, including, without limitation, a third party's acquisition of beneficial ownership of 15 percent or more of the outstanding American Bankers Common Stock. The total profit to Fortis pursuant to the termination fee contemplated by the Merger Agreement and the exercise of the Option is limited to $100 million. In addition, certain stockholders of American Bankers holding approximately 7.5 percent of the outstanding American Bankers Common Stock have entered into a voting agreement with Fortis (the "Voting Agreement"), pursuant to which such stockholders agreed to vote their shares in favor of adoption of the Merger Agreement and approval of the Merger, subject to certain conditions. On March 4, 1999, American Bankers entered into Amendment Number Two ("Amendment Number Two") to the Rights Agreement (the "Rights Agreement") between American Bankers and ChaseMellon Shareholder Services, L.L.C. Amendment Number Two provides that Fortis, Greenland and their affiliates will not be deemed to be an Acquiring Person (as defined in the Rights Agreement), a Distribution Date (as defined in the Rights Agreement) will not be deemed to occur, and the rights issuable pursuant to the Rights Agreement will not separate from the Common Shares, solely as a result of Fortis or Greenland entering into the Merger Agreement, the Voting Agreement or the Stock Option Agreement or consummating the Tender Offer, the Merger and/or the other transactions contemplated thereby. A copy of Amendment Number Two is filed as Exhibit 10.3 hereto and is incorporated in its entirety herein by reference. On March 8, 1999, Fortis and American Bankers issued a joint press release announcing the execution of the Merger Agreement. The Merger Agreement, the Stock Option Agreement, the Voting Agreement, Amendment Number Two and the press release are filed as exhibits hereto and are incorporated by reference herein. 2 3 Item 7. Financial Statements and Exhibits (c) Exhibits. 2.1 Agreement and Plan of Merger dated as of March 5, 1999, among American Bankers Insurance Group, Inc., Fortis, Inc. and Greenland Acquisition Corp. 10.1 Stock Option Agreement, dated as of March 5, 1999, between American Bankers Insurance Group, Inc. and Fortis, Inc. 10.2 Voting Agreement, dated as of March 5, 1999, between certain stockholders of American Bankers Insurance Group, Inc. and Fortis, Inc. 10.3 Amendment Number Two to the Rights Agreement, dated as of March 4, 1999, between American Bankers Insurance Group, Inc. and ChaseMellon Shareholder Services, L.L.C. 99.1 Joint Press Release of Fortis, Inc. and American Bankers Insurance Group, Inc., dated March 8, 1999. 3 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended American Bankers Insurance Group, Inc. has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN BANKERS INSURANCE GROUP, INC. By: /s/ Floyd G. Denison ---------------------------------------- Name: Floyd G. Denison Title: Executive Vice President, Finance Dated: March 9, 1999 4 5 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 2.1 Agreement and Plan of Merger dated as of March 5, 1999, among American Bankers Insurance Group, Inc., Fortis, Inc. and Greenland Acquisition Corp. 10.1 Stock Option Agreement, dated as of March 5, 1999, between American Bankers Insurance Group, Inc. and Fortis, Inc. 10.2 Voting Agreement, dated as of March 5, 1999, between certain stockholders of American Bankers Insurance Group, Inc. and Fortis, Inc. 10.3 Amendment Number Two to the Rights Agreement, dated as of March 4, 1999, between American Bankers and ChaseMellon Shareholder Services, L.L.C. 99.1 Joint Press Release of Fortis, Inc. and American Bankers Insurance Group, Inc., dated March 8, 1999. 5 EX-2.1 2 AGREEMENT AND PLAN OF MERGER 1 EXHIBIT 2.1 CONFORMED COPY AGREEMENT AND PLAN OF MERGER AMONG AMERICAN BANKERS INSURANCE GROUP, INC., FORTIS, INC. AND GREENLAND ACQUISITION CORP. DATED AS OF MARCH 5, 1999 2 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of March 5, 1999 (this "Agreement"), among AMERICAN BANKERS INSURANCE GROUP, INC., a Florida corporation (the "Company"), FORTIS, INC., a Nevada corporation ("Parent"), and GREENLAND ACQUISITION CORP., a Florida corporation and a wholly owned subsidiary of Parent ("Merger Subsidiary") (the Company and Merger Subsidiary sometimes being hereinafter collectively referred to as the "Constituent Corporations"). Annex II to this Agreement sets forth an index of the defined terms used herein. RECITALS WHEREAS, the respective boards of directors of each of Parent, Merger Subsidiary and the Company have determined that the merger of Merger Subsidiary with and into the Company (the "Merger") upon the terms and subject to the conditions set forth in this Agreement is advisable and have approved the Merger; WHEREAS, concurrently with the execution and delivery of this Agreement and as a condition and inducement to Parent's willingness to enter into this Agreement, the Company and Parent have entered into that certain Stock Option Agreement dated as of the date of this Agreement and attached hereto as Exhibit A (the "Stock Option Agreement"), pursuant to which the Company has granted Parent an option to purchase shares of common stock of the Company under certain circumstances; WHEREAS, concurrently with the execution and delivery of this Agreement and as a condition and inducement to Parent's willingness to enter into this Agreement, Parent and certain stockholders of the Company have entered into a Voting Agreement, dated as of the date of this Agreement and attached hereto as Exhibit B (the "Voting Agreement"), pursuant to which such stockholders have agreed, among other things, to vote their shares of common stock of the Company in favor of the Merger; and WHEREAS, the Company, Parent and Merger Subsidiary desire to make certain representations, warranties, covenants and agreements as set forth in this Agreement. NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: 3 ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME; OPTIONAL TENDER OFFER 1.1. THE MERGER. Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time Merger Subsidiary shall be merged with and into the Company and the separate corporate existence of Merger Subsidiary shall thereupon cease. The Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation"), and the separate corporate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger, except as set forth in Article III. The Merger shall have the effects specified in the Florida Business Corporation Act, as amended (the "FBCA"). 1.2. CLOSING. The closing of the Merger (the "Closing") shall take place (i) at the offices of Alston & Bird LLP, 1201 West Peachtree St., Atlanta, Georgia at 9:00 A.M. on the business day designated by Parent, which shall not be earlier than the first business day on which, and not later than the fifth business day following the first business day on which, the last to be fulfilled or waived of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement or (ii) at such other place and time and/or on such other date as the Company and Parent may agree in writing (the "Closing Date"). 1.3. EFFECTIVE TIME. As soon as practicable following the Closing, the Company and Parent will cause Articles of Merger (the "Articles of Merger") to be filed with the Secretary of State of the State of Florida (the "Secretary") as provided in Section 607.1105 of the FBCA. The Merger shall become effective at the time the Secretary accepts for record the Articles of Merger or at such later time agreed by the parties and established under the Articles of Merger (the "Effective Time"). 1.4. OPTIONAL TENDER OFFER. Parent shall be entitled at any time after the date hereof, at its sole option, to cause Merger Subsidiary to commence a tender offer (the "Tender Offer") to acquire up to 100% (or such lesser percentage not less than a majority of the outstanding Common Shares as Parent shall specify in the Tender Offer) of the outstanding Common Shares (excluding for all purposes in calculating such applicable percentage any outstanding Common Shares owned by Parent or Merger Subsidiary pursuant to the exercise of Parent's rights under the Stock Option Agreement), together with all associated Rights issued pursuant to the Rights Agreement, and up to 100% (or such lesser percentage as Parent shall specify in the Tender Offer) of the outstanding Preferred Shares. If Parent determines to commence such Tender Offer after the date hereof, Parent shall notify the Company of its intention to do so in accordance with the notice requirements of Section 9.6. -2- 4 1.5. THE TENDER OFFER. (a) Conditions; Consideration; Schedule 14D-1. Parent and Merger Subsidiary shall within five business days of delivery of the notice described in Section 1.4 (i) commence (within the meaning of Rule 14d-2(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Tender Offer for (A) up to 100% (or such lesser percentage not less than a majority of the outstanding Common Shares as Parent shall specify in the Tender Offer) of the outstanding Common Shares (excluding for all purposes in calculating such applicable majority any outstanding Shares owned by Parent or Merger Subsidiary pursuant to the exercise of Parent's rights under the Stock Option Agreement), together with the associated Rights issued pursuant to the Rights Agreement, at a purchase price of not less than the Per Share Purchase Price per Common Share net to the seller in cash, without interest thereon, and (B) at Parent's election, up to 100% (or such lesser percentage as Parent shall specify in the Tender Offer) of the outstanding Preferred Shares at a purchase price equal to the Per Share Purchase Price multiplied by 1.9974 per Preferred Share, net to the seller in cash without interest thereon, with such Tender Offer being upon the terms and subject to the conditions set forth in Annex I to this Agreement and such further customary terms as may be set forth in an Offer to Purchase and Letter of Transmittal (the "Offer Documents") to be mailed by Merger Subsidiary in connection with the Tender Offer; and (ii) file with the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D- 1") with respect to the Tender Offer which will contain the Offer Documents as exhibits. The Company shall have the opportunity to review and comment on the Schedule 14D-1 prior to its being filed with the SEC. Without the prior written consent of the Company, Merger Subsidiary shall not decrease the price per Share or change the form of consideration payable in the Tender Offer, decrease the number of Common Shares sought, impose additional conditions to the Tender Offer or amend any other term of the Tender Offer in any manner adverse to the holders of Common Shares; it being understood that Parent can reduce the Minimum Tender Condition (as defined in Annex I) to a percentage not less than 35% of the outstanding Common Shares on a fully diluted basis (excluding for all purposes of such dilution calculation Common Shares purchased or subject to purchase by Parent pursuant to the exercise of Parent's rights under the Stock Option Agreement). Upon the terms and subject to the conditions of the Tender Offer, Merger Subsidiary will accept for payment and will purchase, as soon as permitted under the terms of the Tender Offer, all Shares validly tendered and not withdrawn prior to the expiration of the Tender Offer. (b) Expiration Date. Parent and Merger Subsidiary agree that, except as provided thereby, Merger Subsidiary shall not terminate or withdraw the Tender Offer prior to the expiration date thereof, which shall be a date at least 20 business days from the date of commencement thereof (the "Expiration Date"). If, at the Expiration Date, the conditions to the Tender Offer described in Annex I hereto shall not have been satisfied or earlier waived, Merger Subsidiary, at its sole option, may extend the Expiration Date on one or more occasions for an additional period or periods of time and, unless this Agreement has been terminated in accordance with its terms, shall extend it until the Termination Date (the "Extended Expiration Date"), if requested to do so by the Company, and Parent is otherwise going to let the Tender Offer expire without the purchase of Shares thereunder. Parent and Merger Subsidiary shall use their reasonable -3- 5 efforts to consummate the Tender Offer in accordance with the terms of this Agreement and the conditions to the Tender Offer set forth in Annex I. (c) Schedule 14D-9; Meetings of Stockholders. The Company agrees that it shall, on the same day that Merger Subsidiary and Parent file with the SEC the Schedule 14D-1, file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Tender Offer (including exhibits, and as amended from time to time, the "Schedule 14D-9"), which shall contain, subject to applicable Law regarding fiduciary duties, the recommendation of the Company's board of directors that the holders of Shares accept the Tender Offer. Parent and Merger Subsidiary shall have the opportunity to review and comment on the Schedule 14D-9 prior to its being filed with the SEC. Upon the filing of the Schedule l4D-1 and at the written request of Parent, the Company shall cancel the meetings of stockholders referred to in Section 6.4(a), unless such meetings shall have already occurred. (d) Mailing and Content of Offer Documents and Schedule 14D-9. The Company agrees that copies of the Schedule 14D-9 (excluding exhibits) shall be enclosed with the Offer Documents to be mailed by Merger Subsidiary to the stockholders of the Company in connection with the Tender Offer. In connection with the Tender Offer, the Company will furnish Parent and Merger Subsidiary with such information, including lists of the stockholders of the Company, mailing labels and lists of security positions, and such assistance as Parent or Merger Subsidiary or their agents may request in communicating the Tender Offer to the record and beneficial holders of the Shares. (e) Directors. (i) Promptly upon the purchase by Merger Subsidiary of Shares pursuant to the Tender Offer, and from time to time thereafter, Merger Subsidiary shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the board of directors of the Company as shall give Merger Subsidiary representation on such board of directors equal to the product of the total number of directors on such board (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent, Merger Subsidiary and any other Subsidiary of Parent bears to the total number of Shares then outstanding, and the Company shall, at such time, promptly take all action necessary to cause Merger Subsidiary's designees to be so elected, including either increasing the size of the board of directors or securing the resignations of incumbent directors or both. The Company will use its best efforts to cause directors designated by Merger Subsidiary to constitute the same percentage as is on the board of (i) each committee of the board of directors, (ii) each board of directors of each Subsidiary of the Company and (iii) each committee of each such Subsidiary board, in each case only to the extent permitted by Law. (ii) The Company shall promptly (subject to the prompt provision of information by Parent and Merger Subsidiary) take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder in order to fulfill its obligations under this Section 1.5(e) and shall include in the Schedule 14D-9 or a separate Rule 14f-1 information statement provided to stockholders such information -4- 6 with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill its obligations under this Section 1.5(e). Parent or Merger Subsidiary will promptly supply to the Company and be solely responsible for any information with respect to either of them and their nominees, officers and directors required by Section 14(f) and Rule 14f-1. (iii) Following the election or appointment of Merger Subsidiary's designees pursuant to this Section 1.5(e) and prior to the Effective Time, any amendment of this Agreement or the Governing Documents of the Company, any termination of this Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Merger Subsidiary, or any waiver of any of the Company's rights hereunder, will require the concurrence of a majority of the directors of the Company then in office who are not designated by Merger Subsidiary. ARTICLE II CHARTER AND BY-LAWS OF THE SURVIVING CORPORATION 2.1. THE CHARTER. The Articles of Incorporation of the Company as in effect immediately prior to the Effective Time shall be the charter of the Surviving Corporation (the "Charter"), until duly amended or repealed as provided therein or by applicable Law. 2.2. THE BY-LAWS. The by-laws of the Company in effect at the Effective Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until duly amended or repealed as provided therein or by applicable Law. ARTICLE III OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION 3.1. DIRECTORS. The directors of Merger Subsidiary at the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Charter and the By-Laws. 3.2. OFFICERS. The officers of the Company at the Effective Time shall, from and after the Closing, be the officers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Charter and the By-Laws. -5- 7 ARTICLE IV EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES 4.1. CONVERSION OF SHARES; CONSIDERATION. Subject to the provisions of this Article 4, at the Effective Time, by virtue of the Merger and without any action on the part of Parent, the Company, Merger Subsidiary or the stockholders of any of the foregoing, the shares of the Constituent Corporations shall be converted as follows: (a) Each share of Merger Subsidiary Common Stock issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be converted into one share of common stock of the Surviving Corporation. (b) Each share of Company common stock, par value $1.00 per share (a "Common Share" or, collectively, the "Common Shares") (including any associated Rights, but excluding shares held by the Company or any Subsidiary thereof or by Parent or any Subsidiary thereof (Parent and each of its Subsidiaries being referred to as "Parent Companies") and in each case not held on behalf of third parties ("Excluded Common Shares"), issued and outstanding immediately prior to the Effective Time shall cease to be outstanding and shall be converted into and exchanged for the right to receive from Parent a cash payment in the amount of Fifty-Five Dollars ($55.00) (the "Per Share Purchase Price"; the aggregate cash paid for all Common Shares being the "Common Merger Consideration"). (c) Each share of $3.125 Series B Convertible Preferred Stock, no par value, of the Company (a "Preferred Share" or, collectively, the "Preferred Shares" and, together with the Common Shares, the "Shares") issued and outstanding immediately prior to the Effective Time (other than Preferred Shares owned by Parent Companies or Preferred Shares that are owned by the Company or any Subsidiary thereof and in each case not held on behalf of third parties (collectively, "Excluded Preferred Shares" and, together with the Excluded Common Shares, the "Excluded Shares")) shall cease to be outstanding and shall be converted into and exchanged for the right to receive from Parent a cash payment equal to 1.9974 times the Per Share Purchase Price (the aggregate cash paid for all Preferred Shares being "Preferred Merger Consideration" and, together with the Common Merger Consideration, the "Merger Consideration"). (d) Each share of capital stock of Parent issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding from and after the Effective Time. 4.2. SHARES HELD BY THE COMPANY OR PARENT. Each Share held by the Company or its Subsidiaries or by any Parent Entity shall be canceled and retired at the Effective Time and no consideration shall be issued in exchange therefor. -6- 8 4.3. DISSENTING STOCKHOLDERS. In accordance with Section 607.1302(4) of the FBCA, no appraisal rights shall be available to holders of Shares in connection with the Merger. 4.4. CONVERSION OF COMPANY OPTIONS AND RESTRICTED SHARES. (a) Conversion of Company Options. At the Effective Time, each Company Option shall no longer represent the right to purchase or receive Common Shares, but in lieu thereof shall represent the right to receive the following applicable consideration: (i) Each 1998 Company Option (as defined below) that is outstanding and fully exercisable by its terms at the Effective Time (each an "Exercisable Option"), (A) shall be canceled at the Effective Time and (B) in consideration of such cancellation, Parent shall (or shall cause a Constituent Corporation to), at the Effective Time: (1) as to the "Primary Shares" (as defined in the 1998 Company Option) that would be acquirable upon exercise of the Exercisable Option (each a "Primary Share" and collectively "Primary Shares"), pay to the holder of such Exercisable Option an amount in cash equal to (x) the difference (if positive) between $55.00 and the price per Primary Share specified in the 1998 Company Option pursuant to which the holder of such Exercisable Option may purchase the Primary Shares to which such Exercisable Option relates, multiplied by (y) the number of Primary Shares subject to such Exercisable Option, less (z) any withholding of Taxes as may be required by applicable Law, provided, however, that as to the 1998 Company Option granted to Gary Bursevich, no amount shall be payable by or to Gary Bursevich in respect of any such Primary Share, and (2) as to the "Restricted Shares" (as defined in the 1998 Company Option) that would be acquirable upon exercise of the Exercisable Option (each a "Restricted Option Share" and collectively "Restricted Option Shares"), pay to the Company, to be held on behalf of the person or entity that held the Exercisable Option immediately prior to the Effective Time (the "Exercisable Option Holder"), an amount (the "Restricted Option Shares Amount") equal to (x) the difference (if positive) between $55.00 and the price, if any, per Restricted Option Share specified in the 1998 Company Option pursuant to which the holder of such Exercisable Option may acquire the Restricted Option Shares to which such Exercisable Option relates, multiplied by (y) the number of Restricted Option Shares subject to such Exercisable Option, provided, however, that the Restricted Option Shares Amount shall -7- 9 be subject to the same terms and conditions as are applicable, immediately prior to the Effective Time, to such Restricted Option Shares under the 1998 Company Option, and the Restricted Option Shares Amount shall be held by the Company and delivered to the Exercisable Option Holder upon the same terms and conditions as would have applied to the Restricted Option Shares under the 1998 Company Option. For purposes of this Agreement, "1998 Company Option" shall mean any Company Option issued pursuant to the 1997 Equity Incentive Plan that by its terms does not require the termination of the restrictions on transferability applicable to any shares of Common Stock issued pursuant to any "Award" (as defined in the 1997 Equity Incentive Plan) upon a "Change in Control" (as defined in the 1997 Equity Incentive Plan). (ii) Each 1998 Company Option that is outstanding but not fully exercisable by its terms at the Effective Time shall, at the Effective Time, (A) be deemed to be an Exercisable Option and (B) be canceled in accordance with, and in exchange for the consideration specified in, Section 4.4(a)(i) hereof. (iii) Each Company Option other than a 1998 Company Option (a "Pre-1998 Company Option") that is outstanding and fully exercisable by its terms at the Effective Time (each a "Pre-1998 Exercisable Option"), (A) shall be canceled at the Effective Time and (B) in consideration of such cancellation, Parent shall (or shall cause a Constituent Corporation to), at the Effective Time: (1) as to the "Primary Shares" (as defined in the Pre-1998 Company Option or applicable Company Stock Plan) that would be acquirable upon exercise of the Pre-1998 Exercisable Option (each a "Pre-1998 Primary Share" and collectively "Pre-1998 Primary Shares"), pay to the holder of such Pre-1998 Exercisable Option an amount in cash equal to (x) the difference (if positive) between $55.00 and the price per Pre-1998 Primary Share specified in the Pre-1998 Company Option pursuant to which the holder of such Pre-1998 Exercisable Option may purchase the Pre-1998 Primary Shares to which such Pre-1998 Exercisable Option relates, multiplied by (y) the number of Pre-1998 Primary Shares subject to such Pre-1998 Exercisable Option, less (z) any withholding of Taxes as may be required by applicable Law, and (2) as to each "Restricted Share" (as defined in the Pre-1998 Company Option or applicable Company Stock Plan) that would be acquirable upon exercise of the Pre-1998 Exercisable Option (each a "Pre-1998 Restricted Option Share" and collectively "Pre-1998 -8- 10 Restricted Option Shares"), pay to the holder of such Pre-1998 Exercisable Option an amount in cash equal to (x) $55.00, less (y) any withholding of Taxes as may be required by applicable Law. (b) Conversion of Restricted Shares. (i) Each Common Share that was issued pursuant to a 1998 Company Option or that was otherwise issued pursuant to the 1997 Equity Incentive Plan and that is subject to restrictions pursuant to such 1998 Company Option or other applicable agreement that do not lapse on a "Change in Control" (as defined in the 1997 Equity Incentive Plan) (each a "1998 Restricted Share"), (A) shall be canceled at the Effective Time and (B) in consideration of such cancellation, Parent shall (or shall cause a Constituent Corporation to), at the Effective Time: (1) pay to the holder of such 1998 Restricted Share (the "Restricted Share Holder"), if the holder of the 1998 Restricted Share paid any consideration upon the initial issuance of the 1998 Restricted Share (the amount so paid, the "Exercise Price"), in cash at the Effective Time the lesser of the Exercise Price or $55.00, provided, however, that if a portion of the Exercise Price was financed by a loan that was guaranteed by the Company, Parent shall (or shall cause a Constituent Corporation to) pay (x) to the lender the lesser of the amount of any outstanding obligation on such loan or the Exercise Price, and (y) to Restricted Share Holder the remainder of the Exercise Price, if any, reduced by any withholding of Taxes as may be required by applicable Law, and (2) pay to the Company, to be held on behalf of the Restricted Share Holder, an amount equal to the difference between $55.00 and any monies paid pursuant to clause (1) of this Section 4.4(b)(i)(B) (such difference, the "Remainder"), provided, however, that the Remainder shall be subject to the same terms and conditions as are applicable, immediately prior to the Effective Time, to such 1998 Restricted Share under the 1998 Company Option or other applicable agreement, and the Remainder shall be held by the Company and delivered to the Restricted Share Holder upon the same terms and conditions as would have applied to the 1998 Restricted Share under the 1998 Company Option or other applicable agreement. (ii) Each Common Share that was issued pursuant to a Company Stock Plan and that is subject to restrictions pursuant to such Company Stock Plan which lapse, pursuant to the requirements of such Company Stock Plan, as of the Effective Time (each a "Pre-1998 Restricted Share"), (A) shall be -9- 11 canceled at the Effective Time and (B) in consideration of such cancellation, Parent shall (or shall cause a Constituent Corporation to), at the Effective Time, pay to the holder of such Pre-1998 Restricted Share an amount in cash equal to (x) $55.00, less (y) any withholding of Taxes as may be required by applicable Law, provided, however, that if a portion of the purchase price for the Pre-1998 Restricted Share was financed by a loan that was guaranteed by the Company, Parent shall (or shall cause a Constituent Corporation to) pay to the lender the lesser of $55.00 or the amount of any outstanding obligation on such loan and to the holder of such Pre-1998 Restricted Share the remainder, if any, reduced by any withholding of Taxes as may be required by applicable Law. (c) Payment upon Certain Terminations of Employment. In the event that, within 36 months after the Effective Time, the Company (or any Subsidiary) terminates the employment of any employee of the Company (or any Subsidiary) as to whom a Restricted Option Shares Amount is held under Section 4.4(a)(i)(B)(2) or a Remainder is held under Section 4.4(b)(i)(B)(2), and such employment termination is due solely to a reduction in work force resulting from the Merger, Parent shall cause the Company to pay to the Exercisable Option Holder or the Restricted Share Holder (as the case may be) the full amount of the Restricted Option Shares Amount or the Remainder, in cash, promptly after such termination of employment, subject to withholding for Taxes as may be required by applicable Law. (d) Notices. Parent may, in its discretion, provide to and require each holder of Company Options and Restricted Shares to execute and deliver to Parent a written receipt confirming such holder's number of Company Options and Restricted Shares and the dollar amounts that such holder is entitled to receive pursuant to this Section 4.4. At or prior to the Effective Time, the Company shall take all actions necessary to provide notice of the provisions of this Section 4.4 to all holders of Company Options and Restricted Shares, with Parent's prior review and consent (not to be unreasonably withheld or delayed) to the form of such notice. 4.5. EXCHANGE PROCEDURES. (a) Exchange Agent. Promptly after the Effective Time, Parent shall deposit, or shall cause to be deposited, the Merger Consideration with an exchange agent selected by Parent with the Company's prior approval, which shall not be unreasonably withheld (the "Exchange Agent"), for the benefit of the holders of Shares (the "Exchange Fund"). (b) Exchange Procedures. Promptly after the Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail to each holder of record of a certificate which represented Shares immediately prior to the Effective Time (the "Certificates") (i) a letter of transmittal specifying that delivery shall be effected, and risk of loss and title to such Certificates shall pass, only upon proper delivery of such Certificates (or affidavits of loss in lieu thereof) to the Exchange Agent, such letter of -10- 12 transmittal to be in such form and have such other provisions as Parent shall reasonably determine, and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the consideration described in Section 4.1. The Certificates so delivered shall be duly endorsed as the Exchange Agent may require. In the event of a transfer of ownership of Shares represented by Certificates that are not registered in the transfer records of the Company, the consideration provided in Section 4.1 may be issued to a transferee if the Certificates representing such Shares are delivered to the Exchange Agent, accompanied by all documents required to evidence such transfer and by evidence reasonably satisfactory to the Exchange Agent and Parent that any applicable stock transfer Taxes have been paid. If any Certificate shall have been lost, stolen, mislaid or destroyed, upon receipt of (a) an affidavit of that fact from the holder claiming such Certificate to be lost, mislaid, stolen or destroyed, (b) such bond, security or indemnity as Parent and the Exchange Agent may reasonably require, and (c) any other documents reasonably necessary to evidence and effect the bona fide exchange thereof, the Exchange Agent shall issue to such holder the consideration into which the Shares represented by such lost, stolen, mislaid or destroyed Certificate shall have been converted. The Exchange Agent may establish such other reasonable and customary rules and procedures in connection with its duties as it may deem appropriate. After the Effective Time, each holder of Shares (other than shares to be canceled pursuant to Section 4.2) issued and outstanding at the Effective Time shall surrender the Certificates representing such Shares to the Exchange Agent and shall promptly upon surrender thereof receive in exchange therefor the consideration provided in Section 4.1, together with all undelivered dividends or distributions in respect of such Shares (without interest thereon) pursuant to Section 4.6, less any withholding of Taxes as may be required by applicable Law. Parent shall not be obligated to deliver the consideration to which any former holder of Shares is entitled as a result of the Merger until such holder surrenders such holder's Certificates for exchange as provided in this Section 4.5. Any other provision of this Agreement notwithstanding, neither Parent, the Surviving Corporation nor the Exchange Agent shall be liable to a holder of Shares for any amounts paid or property delivered in good faith to a public official pursuant to any applicable abandoned property, escheat or similar Law. Adoption of this Agreement by the stockholders of the Company shall constitute ratification of the appointment of the Exchange Agent. 4.6. RIGHTS OF FORMER COMPANY STOCKHOLDERS. At the Effective Time, the stock transfer books of the Company shall be closed as to holders of Shares immediately prior to the Effective Time and no transfer of Shares by any such holder shall thereafter be made or recognized. Until surrendered for exchange in accordance with the provisions of Section 4.5, each Certificate theretofore representing Shares (other than shares to be canceled pursuant to Section 4.2) shall from and after the Effective Time represent for all purposes only the right to receive the consideration provided in Section 4.1 in exchange therefor, subject, however, to the Surviving Corporation's obligation to pay any dividends or make any other distributions with a record date prior to the Effective Time which have been declared or made by the Company in respect of such Shares in accordance with the terms of this Agreement and which remain unpaid at the Effective Time. Upon surrender of such Certificate, any undelivered dividends and cash payments payable hereunder -11- 13 (without interest) shall be delivered and paid with respect to each Share represented by such Certificate. 4.7. ADJUSTMENTS TO PREVENT DILUTION. In the event that prior to the Effective Time the Company changes the number of Shares or securities convertible or exchangeable into or exercisable for Shares as a result of a reclassification, stock split (including a reverse split), stock dividend or distribution, recapitalization, merger, subdivision or other similar transaction, the Merger Consideration shall be equitably adjusted. ARTICLE V REPRESENTATIONS AND WARRANTIES 5.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in the corresponding sections or subsections of the disclosure letter delivered to Parent by the Company on or prior to entering into this Agreement (the "Company Disclosure Letter") or in any Company Report filed prior to the date hereof, the Company hereby represents and warrants to Parent and Merger Subsidiary that: (a) Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the Laws of the State of Florida and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization, and each of the Company and its Subsidiaries has all requisite corporate or similar power and authority to own and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing, when taken together with all other such failures, is not reasonably likely to have a Company Material Adverse Effect. The Company has made available to Parent a complete and correct copy of the articles or certificate of incorporation and by-laws or other similar governing documents as amended to date (collectively, "Governing Documents") of the Company and each of its Subsidiaries. The Company's and its Subsidiaries' Governing Documents so delivered are in full force and effect. As used in this Agreement, the term (i) "Subsidiary" means, with respect to the Company, Parent or Merger Subsidiary, as the case may be, any entity, whether incorporated or unincorporated, of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is directly or indirectly owned or controlled by such party or by one or more of its respective Subsidiaries or by such party and any one or more of its respective Subsidiaries, and (ii) "Company Material Adverse -12- 14 Effect" means a material adverse effect on the financial condition, properties, business or results of operations of the Company and its Subsidiaries taken as a whole. The Company conducts its insurance operations through the Subsidiaries set forth on Section 5.1(a) of the Company Disclosure Letter (collectively, the "Company Insurance Subsidiaries"). Each of the Company Insurance Subsidiaries is (i) duly licensed or authorized as an insurance company and, where applicable, a reinsurer in its jurisdiction of incorporation, (ii) duly licensed or authorized as an insurance company and, where applicable, a reinsurer in each other jurisdiction where it is required to be so licensed or authorized, and (iii) duly authorized in its jurisdiction of incorporation and each other applicable jurisdiction to write each line of business reported as being written in the Company SAP Statements, except, in any such case, where the failure to be so licensed or authorized is not reasonably likely to have a Company Material Adverse Effect. The Company has made all required filings under applicable insurance holding company statutes except where the failure to file is not reasonably likely to have a Company Material Adverse Effect. (b) Capital Structure. The authorized stock of the Company consists of 100,000,000 Common Shares, of which 42,243,082 Common Shares were issued and outstanding and 836,120 Common Shares were held by the Company in treasury as of the close of business on March 1, 1999, and 10,000,000 shares of Preferred Stock, no par value, of which (i) 350,000 shares have been authorized as Series A Participating Preferred Stock, none of which are outstanding, (ii) 1,000,000 shares have been authorized as Series C Participating Preferred Stock, none of which are outstanding and (ii) 2,300,000 shares have been authorized as Preferred Shares, of which 1,983,205 Preferred Shares were outstanding as of March 1, 1999. All of the outstanding Common Shares and Preferred Shares have been duly authorized and are validly issued, fully paid and nonassessable. The Company has no commitments to issue or deliver Common Shares, except that, as of March 1, 1999, there were approximately 609,000 (but no more than 610,000) Common Shares subject to issuance (i) pursuant to the Company's 1999 Non-Employee Director One-Time Award Plan, 1997 Equity Incentive Plan, 1994 Amended and Restated Directors' Deferred Compensation Plan, 1994 Non-Employee Directors' Stock Option Plan, 1994 Senior Management Stock Option Plan, 1991 Stock Option/Restricted Stock Plan, and 1991 Stock Incentive Plan (collectively, the "Company Stock Plans") and (ii) upon conversion of the Preferred Shares. The Company has no commitments to issue or deliver preferred shares, except that as of the date hereof, there were shares of Series C Participating Preferred Stock subject to issuance pursuant to the Rights Agreement, dated as of February 19, 1998, between the Company and ChaseMellon Shareholder Services, LLC, as Rights Agent (the "Rights Agreement"). The Company Disclosure Letter contains a correct and complete list, as of the date hereof, of each outstanding option to purchase or acquire Common Shares under each of the Company Stock Plans (each a "Company Option"), including the plan, the holder, date of grant, exercise price and number of Shares subject thereto. The Company Disclosure Letter also contains a correct and complete list, as of the date hereof, of each Common Share that is presently subject to restrictions pursuant to any of the Company Stock Plans (each a "Restricted Share"), including the plan, the holder, date of grant, -13- 15 number of Shares subject thereto, and date that the restrictions lapse. Each of the outstanding shares of capital stock or other securities of each of the Company's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by the Company or a wholly owned Subsidiary of the Company, free and clear of any lien, pledge, security interest, claim or other encumbrance. Except as set forth above and in the Stock Option Agreement, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements or commitments to issue or sell any shares of capital stock or other securities of the Company or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of the Company or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. For purposes of this Agreement, the term "Person" shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Entity or other entity of any kind or nature. (c) Corporate Authority; Approval and Fairness. (i) The Company has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and the Stock Option Agreement and to consummate the Merger, subject only to approval of the Merger by the holders of at least a majority of the outstanding Common Shares voting separately as a class (the "Company Common Stock Requisite Vote") and two-thirds of the outstanding Preferred Shares voting separately as a class (the "Company Preferred Stock Requisite Vote" and, together with the Company Common Stock Requisite Vote, the "Company Requisite Vote"). This Agreement and the Stock Option Agreement are the valid and binding agreements of the Company enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors' rights and to general equity principles (the "Bankruptcy and Equity Exception"). (ii) The board of directors of the Company (A) has declared that the Agreement, the Stock Option Agreement, the Tender Offer, the Merger and the other transactions contemplated hereby and thereby are advisable and in the best interests of the Company, (B) has authorized, approved and adopted in all respects the Agreement, the Stock Option Agreement, the Tender Offer, the Merger and the other transactions contemplated hereby and thereby, and (C) has received the opinion of its financial advisors, Salomon Smith Barney Inc., to the effect that the consideration to be received -14- 16 by the holders of the Shares in the Tender Offer and the Merger, taken together, is fair from a financial point of view to such holders. (d) Governmental Filings; No Violations. (i) Other than the filings and/or notices (A) pursuant to Section 1.3, (B) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Exchange Act and the Securities Act of 1933, as amended (the "Securities Act"), (C) to obtain an advance ruling certificate under The Competition Act of Canada, (D) required to be made with the New York Stock Exchange ("NYSE"), and (E) the filing of appropriate documents with, and approval of, the respective Commissioners of Insurance or similar regulatory authorities of Arizona, Florida, Georgia, Mississippi, New York, South Carolina, Texas, Puerto Rico, Cayman Islands, Denmark, Turks & Caicos, Netherlands Antilles and the United Kingdom and such notices and consents as may be required under the antitrust notification insurance Laws of any state in which the Company, Parent or any of their respective subsidiaries is domiciled or does business, no notices, reports or other filings are required to be made by the Company with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Company from, any governmental or regulatory authority, agency, commission, legislature, body or other governmental entity ("Governmental Entity"), in connection with the execution and delivery of this Agreement and the Stock Option Agreement by the Company and the consummation by the Company of the Merger and the other transactions contemplated hereby and thereby, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement or the Stock Option Agreement. (ii) The execution, delivery and performance of this Agreement and the Stock Option Agreement by the Company do not, and the consummation by the Company of the Merger and the other transactions contemplated hereby and thereby will not, constitute or result in (A) a breach or violation of, or a default under, any Governing Document of the Company or any of its Subsidiaries, (B) a breach or violation of, or a default under, the acceleration of any obligations or the creation of a lien, pledge, security interest or other encumbrance on the assets of the Company or any of its Subsidiaries (with or without notice, lapse of time or both) pursuant to any agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation ("Contract") binding upon the Company or any of its Subsidiaries or (provided, as to consummation, the filings and notices are made, and approvals are obtained, as referred to in Section 5.1(d)(i)), any Law (as defined in Section 5.1(i)) or governmental or non-governmental permit or license to which the Company or any of its Subsidiaries is subject or (C) any change in the rights or obligations of any party under any of the Contracts, except, in the case of clause (B) or (C) above, for any breach, violation, default, acceleration, creation or change that, individually or in the aggregate, is not reasonably likely to have a Company Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement or the Stock -15- 17 Option Agreement. Section 5.1(d) of the Company Disclosure Letter sets forth, to the knowledge of the Company, a correct and complete list of material Contracts of the Company and its Subsidiaries pursuant to which consents or waivers are or may be required prior to consummation of the transactions contemplated by this Agreement and the Stock Option Agreement (whether or not subject to the exception set forth with respect to clauses (B) and (C) above), except those the failure to obtain, individually or in the aggregate, is not reasonably likely to give rise to damage claims or other losses of $5,000,000 or more. (e) Company Reports; Financial Statements. (i) The Company has made available to Parent each registration statement, report, proxy statement or information statement prepared by it since December 31, 1996 including (A) the Company's Annual Report on Form 10-K for the year ended December 31, 1997 (the "Audit Date"), and (B) the Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1998, June 30, 1998 and September 30, 1998, each in the form (including exhibits, annexes and any amendments thereto) filed with the Securities and Exchange Commission (the "SEC") (collectively, including any such reports filed subsequent to the date hereof, the "Company Reports"). As of their respective dates, the Company Reports did not, and any Company Reports filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. Each of the consolidated balance sheets included in or incorporated by reference into the Company Reports (including the related notes and schedules) fairly presents, or will fairly present, the consolidated financial position of the Company and its Subsidiaries as of its date and each of the consolidated statements of income and of changes in financial position included in or incorporated by reference into the Company Reports (including any related notes and schedules) fairly presents, or will fairly present, the results of operations, retained earnings and changes in financial position, as the case may be, of the Company and its Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to the failure to include all required notes thereto and normal year-end audit adjustments that will not be material in amount or effect), in each case in accordance with generally accepted accounting principles ("GAAP") consistently applied during the periods involved, except as may be noted therein. (ii) The Company has made available to Parent true and complete copies of the annual statements of each of the Company Insurance Subsidiaries as filed with the applicable insurance regulatory authorities for the years ended December 31, 1996, 1997 and 1998, including all exhibits, interrogatories, notes, schedules and any actuarial opinions, affirmations or certifications or other supporting documents filed in connection therewith (collectively, including any such annual or quarterly statements filed subsequent to the date hereof, the "Company SAP Statements"). The Company SAP Statements were (or will be) prepared in conformity with statutory accounting practices prescribed or permitted by the applicable insurance regulatory authority ("SAP") consistently applied for the periods covered thereby and present (or will present) -16- 18 fairly the statutory financial position of such Company Insurance Subsidiaries as at the respective dates thereof and the results of operations of such Subsidiaries for the respective periods then ended. The Company SAP Statements complied (or will comply) in all material respects with all applicable Laws, rules and regulations when filed, and, to the knowledge of the Company, no material deficiency has been asserted with respect to any Company SAP Statements by the applicable insurance regulatory body or any other governmental agency or body. The statutory balance sheets and income statements included in the Company SAP Statements have been audited by PriceWaterhouseCoopers LLP, and the Company has made available to Parent true and complete copies of all audit opinions related thereto. The Company has made available to Parent true and complete copies of all examination reports of insurance departments and any insurance regulatory agencies since January 1, 1995 relating to the Company Insurance Subsidiaries. The term "knowledge" when used in this Agreement with respect to the Company shall mean the actual knowledge, after reasonable inquiry, of the following employees of the Company: Eugene Becker, Bruce Camacho, Floyd Denison, Leonardo Garcia, Gerald Gaston, Arthur Heggen, Jason Israel, Sanford Neubarth and Steve Spiegel. (f) Absence of Certain Changes. Except as disclosed in the Company Reports filed prior to the date hereof, since the Audit Date the Company and its Subsidiaries have conducted the businesses of the Company and its Subsidiaries, taken as a whole, only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such businesses and there has not been (i) any material adverse change in the financial condition, management, properties, prospects, business or results of operations of the Company and its Subsidiaries or, to the knowledge of the Company, any development or combination of developments which, individually or in the aggregate, has had or is reasonably likely to have a Company Material Adverse Effect; (ii) any material damage, destruction or other casualty loss with respect to any material asset or property owned, leased or otherwise used by the Company or any of its Subsidiaries, whether or not covered by insurance; (iii) any declaration, setting aside or payment of any dividend or other distribution in respect of the stock of the Company, except for regular quarterly cash dividends on its Common Shares publicly announced prior to the date hereof and regular quarterly cash dividends on its Preferred Shares paid in accordance with the Company's Governing Documents prior to the date hereof; (iv) any change by the Company in accounting principles, practices or methods other than those required by GAAP or SAP; (v) any material addition, or any development involving a prospective material addition, to the Company's consolidated reserves for future policy benefits or other policy claims and benefits; or (vi) any material change in the accounting, actuarial, investment, reserving, underwriting or claims administration policies, practices, procedures, methods, assumptions or principles of any Company Insurance Subsidiary. Since the Audit Date, except as provided for herein or as disclosed in the Company Reports filed prior to the date hereof, there has not been any increase in the compensation payable or that could become payable by the Company or any of its Subsidiaries to officers or key employees or any amendment of any of the Compensation and Benefit Plans (as hereinafter defined) other than increases or amendments in the ordinary course and increases or amendments approved by Parent. -17- 19 (g) Litigation and Liabilities. Except as disclosed in the Company Reports filed prior to the date hereof, there are no (i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries, directors or officers or (ii) obligations or liabilities of any nature, whether or not accrued, contingent or otherwise and whether or not required to be disclosed, including those relating to environmental and occupational safety and health matters, or any other facts or circumstances of which the Company has knowledge that could result in any claims against, or obligations or liabilities of, the Company or any of its affiliates, except for those that are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect or prevent or materially burden or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement or by the Stock Option Agreement. (h) Employee Benefits. (i) A copy of each bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, employment, termination, severance, change of control, compensation, medical, health or other plan, agreement, policy or arrangement that covers any employees, directors, former employees or former directors of the Company and its Subsidiaries (the "Compensation and Benefit Plans") and any trust agreement or insurance contract forming a part of such Compensation and Benefit Plans has been made available to Parent prior to the date hereof. The Compensation and Benefit Plans are listed in Section 5.1(h) of the Company Disclosure Letter and any "change of control" or similar provisions therein are specifically identified in Section 5.1(h) of the Company Disclosure Letter. (ii) All Compensation and Benefit Plans are in substantial compliance with all applicable Law, including the Internal Revenue Code of 1986, as amended (together with all regulations promulgated thereunder, the "Code"), and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Each Compensation and Benefit Plan that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service (the "IRS"), and the Company has no knowledge of any circumstances reasonably likely to result in revocation of any such favorable determination letter. There is no pending or, to the knowledge of the Company, threatened material litigation relating to the Compensation and Benefit Plans. Neither the Company nor any of its Subsidiaries has engaged in a transaction with respect to any Compensation and Benefit Plan that, assuming the taxable period of such transaction expired as of the date hereof, would subject the Company or any of its Subsidiaries to a material tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA. (iii) No liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by the Company or any Subsidiary with respect to any -18- 20 ongoing, frozen or terminated "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of any entity which is considered one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"). The Company and its Subsidiaries have not contributed, or been obligated to contribute, to a multi-employer plan under Subtitle E of Title IV of ERISA at any time since September 26, 1980. No notice of a "reportable event," within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the 12-month period ending on the date hereof. (iv) All contributions required to be made under the terms of any Compensation and Benefit Plan as of the date hereof have been timely made or have been reflected on the most recent consolidated balance sheet included or incorporated by reference in the Company Reports filed prior to the date hereof. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA. Neither the Company nor its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. (v) Under each Pension Plan which is a single-employer plan, as of the last day of the most recent plan year ended prior to the date hereof, the actuarially determined present value of all "benefit liabilities," within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the Pension Plan's most recent actuarial valuation), did not exceed the then current value of the assets of such Pension Plan, and there has been no material change in the financial condition of such Pension Plan since the last day of the most recent plan year. (vi) Neither the Company nor its Subsidiaries have any obligations for retiree health or life benefits under any Compensation and Benefit Plan, except as set forth in the Company Disclosure Letter. (vii) Except as described in Section 5.1(h)(vii) of the Company Disclosure Letter, the consummation of the Merger and the other transactions contemplated by this Agreement, either alone or in connection with a subsequent termination of employment, will not (x) entitle any employees of the Company or its Subsidiaries to severance pay, (y) accelerate the time of payment or vesting or trigger any payment of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Compensation and Benefit Plans or (z) result in any breach or violation of, or a default under, any of the Compensation and Benefit Plans. (viii) All Compensation and Benefit Plans covering current or former non-U.S. employees or former employees of the Company and its Subsidiaries comply in all material respects with applicable Law. The Company and its Subsidiaries have no -19- 21 material unfunded liabilities with respect to any employee benefit plan that covers such non-U.S. employees. (ix) Except as described in Section 5.1(h)(ix) of the Company Disclosure Letter, no amount that could be received (whether in cash or property or the vesting of property) as a result of any of the transactions contemplated by this Agreement by any employee, officer, director or independent contractor of the Company who is a "disqualified individual" (as such term is defined in proposed Treasury Regulation Section 1.28OG-1) under any employment arrangement would be treated as an "excess parachute payment" (as such term is defined in Section 28OG(b)(l) of the Code). Section 5.1(h)(ix) of the Company Disclosure Letter contains a true and complete list of each Person with whom the Company has an executive severance agreement. (i) Compliance with Laws; Permits. The business and operations of the Company, and the Company Insurance Subsidiaries, have been conducted in compliance with all applicable statutes, regulations and rules regulating the business of insurance and all applicable orders and directives of insurance regulatory authorities and market conduct recommendations resulting from market conduct examinations of insurance regulatory authorities (collectively, "Insurance Laws"), except where the failure to so conduct such business and operations is not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect. Notwithstanding the generality of the foregoing, except where the failure to do so would not, individually or in the aggregate, be reasonably likely to have a Company Material Adverse Effect, each Company Insurance Subsidiary and, to the knowledge of the Company, its agents have marketed, sold and issued insurance products in compliance, in all material respects, with Insurance Laws applicable to the business of such Company Insurance Subsidiary and in the respective jurisdictions in which such products have been sold, including, without limitation, in compliance with (i) all applicable prohibitions against "redlining" or withdrawal of business lines, (ii) all applicable requirements relating to the disclosure of the nature of insurance products as policies of insurance and (iii) all applicable requirements relating to insurance product projections and illustrations. In addition, (i) to the knowledge of the Company, there is no pending or threatened charge by any insurance regulatory authority that any of the Company Insurance Subsidiaries has violated, nor any pending or threatened investigation by any insurance regulatory authority with respect to possible violations of, any applicable Insurance Laws; (ii) to the knowledge of the Company, none of the Company Insurance Subsidiaries is subject to any order or decree of any insurance regulatory authority relating specifically to such Company Insurance Subsidiary (as opposed to insurance companies generally); and (iii) each of the Company Insurance Subsidiaries have filed all reports required to be filed with any insurance regulatory authority on or before the date hereof as to which the failure to file such reports is, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect. In addition to Insurance Laws, except as set forth in the Company Reports filed prior to the date hereof, the businesses of each of the Company and its Subsidiaries have not been, and are not being, conducted in violation of any federal, state, local or -20- 22 foreign law, statute, ordinance, rule, regulation, judgment, order, injunction, decree, arbitration award, agency requirement, license or permit of any Governmental Entity (collectively with Insurance Laws, "Laws"), except for violations or possible violations that are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect or prevent or materially burden or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement or the Stock Option Agreement. Except as set forth in the Company Reports filed prior to the date hereof, no investigation or review by any Governmental Entity with respect to the Company or any of its Subsidiaries is pending or, to the knowledge of the Company, threatened, nor, to the knowledge of the Company, has any Governmental Entity indicated an intention to conduct the same, except for those the outcome of which are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect or prevent or materially burden or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement or the Stock Option Agreement. To the knowledge of the Company, no material change is required in the Company's or any of its Subsidiaries' processes, properties or procedures in connection with any applicable Laws, and the Company has not received any notice or communication of any material noncompliance with any such Laws that has not been cured as of the date hereof. The Company and its Subsidiaries each has all permits, licenses, trademarks, patents, trade names, copyrights, service marks, franchises, variances, exemptions, orders and other governmental authorizations, consents and approvals necessary to conduct its business as presently conducted except those the absence of which are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect or prevent or materially burden or materially impair the ability of the Company to consummate the Merger and the other transactions contemplated by this Agreement or the Stock Option Agreement. (j) Takeover Statutes. The Company has taken all actions necessary such that no restrictive provision of any "fair price," "moratorium," "control share acquisition," "interested shareholder" or other similar anti-takeover statute or regulation (including, without limitation, Sections 607.0901 and 607.0902 of the FBCA) (each a "Takeover Statute") or restrictive provision of any applicable anti-takeover provision in the Governing Documents of the Company (including Article VIII of the Company's Third Amended and Restated Articles of Incorporation) is, or at the Effective Time will be, applicable to the Company, Parent, the Shares, the Tender Offer, the Merger or any other transaction contemplated by this Agreement, the Stock Option Agreement or the Voting Agreement. (k) Environmental Matters. Except as disclosed in the Company Reports filed prior to the date hereof and except for such matters as are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect: (i) the Company and its Subsidiaries have complied with all applicable Environmental Laws; (ii) the properties currently owned or operated by the Company (including soils, groundwater, surface water, buildings or other structures) are not contaminated with any Hazardous Substances; (iii) the properties formerly owned or operated by the Company or any of its Subsidiaries were not contaminated with Hazardous Substances during the -21- 23 period of ownership or operation by the Company or any of its Subsidiaries; (iv) neither the Company nor any of its Subsidiaries is subject to liability for any Hazardous Substance disposal or contamination on any third party property; (v) neither the Company nor any of its Subsidiaries has been associated with any release or threat of release of any Hazardous Substance; (vi) neither the Company nor any of its Subsidiaries has received any notice, demand, letter, claim or request for information alleging that the Company or any of its Subsidiaries may be in violation of or liable under any Environmental Law; (vii) neither the Company nor any of its Subsidiaries is subject to any orders, decrees, injunctions or other arrangements with any Governmental Entity (all of which to the knowledge of the Company are set out in Section 5.1(k) of the Company Disclosure Letter) or is subject to any indemnity or other agreement with any third party relating to liability under any Environmental Law or relating to Hazardous Substances; and (viii) there are no circumstances or conditions involving the Company or any of its Subsidiaries that could reasonably be expected to result in any claims, liability, investigations, costs or restrictions on the ownership, use, or transfer of any property of the Company or any of its Subsidiaries pursuant to any Environmental Law. As used herein, the term "Environmental Law" means any federal, state, local or foreign law, statute, ordinance, regulation, judgment, order, decree, arbitration award, agency requirement, license, permit, authorization or opinion, relating to: (A) the protection, investigation or restoration of the environment, health and safety, wildlife or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) noise, odor, wetlands, pollution, contamination or any injury or threat of injury to persons or property. As used herein, the term "Hazardous Substance" means any substance that is: (A) listed, classified or regulated pursuant to any Environmental Law; (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint, polychlorinated biphenyls, radioactive materials or radon; or (C) any other substance which may be the subject of regulatory action by any Government Entity pursuant to any Environmental Law. (l) Taxes. Except as provided in Section 5.1(l) of the Company Disclosure Letter and except for such matters as are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect: (i) the Company and each of its Subsidiaries have filed completely and correctly all Tax Returns (as defined below) that are required by all applicable Laws to be filed by them, and (x) have paid, or made adequate provision for the payment of, all Taxes (as defined below) which have or may become due and payable pursuant to those Tax Returns, have paid all estimated Taxes due and (y) have paid all other charges, claims and assessments received to date other than those charges, claims and assessments for Taxes being contested in good faith for which adequate provision has been made on the most recent balance sheet included in the Company Reports; -22- 24 (ii) all Taxes which the Company and its Subsidiaries are required by Law to withhold and collect have been duly withheld and collected, and have been paid over, in a timely manner, to the proper Taxing Authorities (as defined below) to the extent due and payable; (iii) neither the Company nor any of its Subsidiaries have executed any waiver to extend, or otherwise taken or failed to take any action that would have the effect of extending, the applicable statute of limitations in respect of any Tax liabilities of the Company or its Subsidiaries for the fiscal years prior to and including the most recent fiscal year; (iv) the Company and its Subsidiaries have never been members of any consolidated group for income tax purposes other than the consolidated group of which the Company is the common parent; and the Company and its Subsidiaries are not parties to any tax sharing agreement or arrangement, other than with each other; (v) no liens for Taxes exist with respect to any of the assets or properties of the Company or its Subsidiaries, except for statutory liens for Taxes not yet due or payable or that are being contested in good faith; (vi) all of the income Tax Returns filed by or on behalf of each of the Company and its Subsidiaries have been examined by and settled with the IRS or the statute of limitations with respect to the relevant Tax liability has expired, for all taxable periods through and including the period ending on December 31, 1994; (vii) all Taxes due with respect to any completed and settled audit, examination or deficiency litigation with any Taxing Authority have been paid in full; (viii) there is no audit, examination, deficiency, or refund litigation pending with respect to any Taxes and during the past three years no Taxing Authority has given written notice of the commencement of any audit, examination, deficiency or refund litigation, with respect to any Taxes; (ix) the Company is not bound by any currently effective private ruling, closing agreement or similar agreement with any Taxing Authority relating to a material amount of Taxes; (x) the Company shall not be required to include in a taxable period ending after the Effective Time, any taxable income attributable to income that economically accrued in a prior taxable period as a result of Section 481 of the Code, the installment method of accounting or any comparable provision of state or local Tax Law; (xi) (A) no material amount of property of the Company is "tax exempt property" within the meaning of Section 168(h) of the Code, (B) no material amount of assets of the Company is subject to a lease under Section 7701(h) of the Code, and (C) the Company is not a party to any material lease made pursuant to Section 168(f)(8) of -23- 25 the Internal Revenue Code of 1954, as amended and in effect prior to the date of enactment of the Tax Equity and Fiscal Responsibility Act of 1982; (xii) immediately following the Merger, the Company will not have any material amount of income or gain that has been deferred under Treasury Regulation Section 1.1502-13, or any material excess loss account in a Subsidiary under Treasury Regulation Section 1.1502-19; and (xiii) the Company is not a "consenting corporation" within the meaning of Section 341(f) of the Code. As used in this Agreement, (A) the term "Tax" (including, with correlative meaning, the terms "Taxes" and "Taxable") shall mean, with respect to any Person, (a) all taxes, domestic or foreign, including without limitation any income (net, gross or other, including recapture of any tax items such as investment tax credits), alternative or add-on minimum tax, gross income, gross receipts, premium, gains, sales, use, ad valorem, transfer, recording, franchise, profits, property (real or personal, tangible or intangible), fuel, license, withholding (whether on amounts paid to or by such Person), payroll, employment, unemployment, social security, excise, severance, stamp, occupation, or environmental tax, customs, duties, or other like assessments or governmental charges of any kind whatsoever, together with any interest, penalties, additions or additional amounts imposed with respect thereto (including, without limitation, penalties for failure to file Tax Returns), (b) any joint or several liability of such Person with any other Person for the payment of any amounts of the type described in clause (a) hereof, and (c) any liability of such Person for the payment of any amounts of the type described in (a) as a result of any express or implied obligation to indemnify any other Person; (B) the term "Tax Return(s)" shall mean all returns, consolidated or otherwise (including without limitation information returns), required to be filed with any Taxing Authority; and (C) the term "Taxing Authority" shall mean any authority responsible for the imposition, collection or administration of any Tax. (m) Labor Matters. Neither the Company nor any of its Subsidiaries is a party to or otherwise bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization. (n) Intellectual Property. (i) The Company and/or each of its Subsidiaries owns, or is licensed or otherwise possesses legally enforceable rights to use, all patents, trademarks, trade names, service marks, copyrights, and any applications therefor, technology, know-how, computer software programs or applications, and tangible or intangible proprietary information or materials that are used in the business of the Company and its Subsidiaries as currently conducted, except for any such failures to own, be licensed or possess that are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect, and to the knowledge of the Company all patents, trademarks, trade -24- 26 names, service marks and copyrights held by the Company and/or its Subsidiaries are valid and subsisting. (ii) Except as disclosed in Company Reports filed prior to the date hereof or as are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect: (A) neither the Company nor its Subsidiaries is, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations hereunder, in violation of any licenses, sublicenses or other agreements as to which the Company is a party and pursuant to which the Company or any of its Subsidiaries is authorized to use any third-party patents, trademarks, service marks, and copyrights ("Third-Party Intellectual Property Rights"); (B) no claims with respect to (I) the patents, registered and material unregistered trademarks and service marks, registered copyrights, trade names, and any applications therefor owned by the Company or any of its Subsidiaries (the "Company Intellectual Property Rights"); (II) any trade secret material to the Company; or (III) Third-Party Intellectual Property Rights are currently pending or, to the knowledge of the Company, are threatened by any Person; (C) the Company has no knowledge of any valid grounds for any bona fide claims (I) to the effect that the sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by the Company or any of its Subsidiaries, infringes on any copyright, patent, trademark, service mark or trade secret; (II) against the use by the Company or any of its Subsidiaries, of any trademarks, trade names, trade secrets, copyrights, patents, technology, know-how or computer software programs and applications used in the business of the Company or any of its Subsidiaries as currently conducted or as proposed to be conducted; (III) challenging the ownership, validity or effectiveness of any of the Company Intellectual Property Rights or other trade secret material to the Company; or (IV) challenging the license or legally enforceable right to use of the Third-Party Intellectual Rights by the Company or any of its Subsidiaries; and (D) to the knowledge of the Company, there is no unauthorized use, infringement or misappropriation of any of the Company Intellectual Property Rights by any third party, including any employee or former employee of the Company or any of its Subsidiaries. (o) Material Contracts. All of the material Contracts of the Company and its Subsidiaries that are required to be described in the Company Reports or to be filed as exhibits thereto are described in the Company Reports or filed as exhibits thereto and such Contracts are in full force and effect. True and complete copies of all such material Contracts have been delivered or have been made available by the Company to Parent. Neither the Company nor any of its Subsidiaries nor any other party is in breach of or in default under any such Contract except for such breaches and defaults as are not, -25- 27 individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries is party to any agreement containing any provision or covenant limiting in any material respect the ability of the Company or any of its Subsidiaries or, except as specifically identified on Section 5.1(o) of the Company Disclosure Letter, assuming the consummation of the transactions contemplated by this Agreement, Parent or any of its Subsidiaries to (i) sell any products or services of or to any other person, (ii) engage in any line of business or (iii) compete with or to obtain products or services from any Person or limiting the ability of any Person to provide products or services to the Company or any of its Subsidiaries. (p) Rights Plan. (i) The Company has taken all actions necessary such that, for all purposes under the Rights Agreement, Parent shall not be deemed an Acquiring Person (as defined in the Rights Agreement), the Distribution Date (as defined in the Rights Agreement) shall not be deemed to occur, and the rights issuable pursuant to the Rights Agreement (the "Rights") will not separate from the Common Shares, as a result of Parent's entering into this Agreement, the Voting Agreement or the Stock Option Agreement or consummating the Tender Offer, the Merger and/or the other transactions contemplated hereby or thereby. (ii) The Company has taken all necessary action with respect to all of the outstanding Rights so that, as of immediately prior to the Effective Time and immediately prior to the consummation of the Tender Offer, (A) neither the Company nor Parent will have any obligations under the Rights or the Rights Agreement and (B) the holders of Rights will have no rights under the Rights or the Rights Agreement. (q) Brokers and Finders. Neither the Company nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders fees in connection with the Merger or the other transactions contemplated in this Agreement except that the Company has employed Salomon Smith Barney Inc. as its financial advisor, the arrangements with which have been disclosed to Parent prior to the date hereof. (r) Insurance Matters. (i) Except as otherwise are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect, all policies, binders, slips, certificates, annuity contracts and participation agreements and other agreements of insurance, whether individual or group, in effect as of the date hereof (including all applications, supplements, endorsements, riders and ancillary agreements in connection therewith) that are issued by the Company Insurance Subsidiaries (the "Company Insurance Contracts") and any and all marketing materials, are, to the extent required under applicable Law, on forms approved by applicable insurance regulatory authorities or which have been filed and not objected to by such authorities within the period provided for objection, and such forms comply in all material respects with all Insurance -26- 28 Laws applicable thereto and, as to premium rates established by the Company or any Company Insurance Subsidiary which are required to be filed with or approved by insurance regulatory authorities, the rates have been so filed or approved, the premiums charged conform thereto in all material respects, and such premiums comply in all material respects with all Insurance Laws applicable thereto. (ii) All reinsurance and coinsurance treaties or agreements, including retrocessional agreements, to which the Company or any Company Insurance Subsidiary is a party or under which the Company or any Company Insurance Subsidiary has any existing rights, obligations or liabilities are in full force and effect, except for such treaties or agreements the failure to be in full force and effect of which are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect. Neither the Company nor any Company Insurance Subsidiary, nor, to the knowledge of the Company, any other party to a reinsurance or coinsurance treaty or agreement to which the Company or any Company Insurance Subsidiary is a party, is in default in any material respect as to 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. The Company has not 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 the Company and the Company Insurance Subsidiaries or the ceding by the Company and the Company Insurance Subsidiaries of insurance or reinsurance business in an aggregate amount equal to two percent or more of the consolidated gross premium income of the Company and the Company Insurance Subsidiaries for the year ended December 31, 1998. (iii) Prior to the date hereof, the Company has delivered or made available to Parent a true and complete copy of any actuarial reports prepared by actuaries, independent or otherwise, with respect to the Company of any Company Insurance Subsidiary since December 31, 1995, and all attachments, addenda, supplements and modifications thereto (the "Company Actuarial Analyses"). The information and data furnished by the Company or any Company Insurance Subsidiary to its independent actuaries in connection with the preparation of the Company Actuarial Analyses were accurate and complete in all material respects. Furthermore, to the knowledge of the Company, each Company Actuarial Analysis was based upon an accurate inventory of policies in force for the Company and the Company Insurance Subsidiaries, as the case may be, 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. (iv) None of Standard & Poor's Corporation, Moody's Investors Service, Inc. or A.M. Best Company has announced that it has under surveillance or review its rating of the financial strength or claims-paying ability of any Company -27- 29 Insurance Subsidiary, and the Company has no reason to believe that any rating presently held by the Company Insurance Subsidiaries is likely to be modified, qualified, lowered or placed under such surveillance for any reason, including as a result of the transactions contemplated hereby. (v) Except as would not reasonably be expected to have a Company Material Adverse Effect, all annuity contracts and life insurance policies issued by each Company Insurance Subsidiary to an annuityholder domiciled in the United States meet all definitional or other requirements for qualification under the Code section applicable (or intended to be applicable) to such annuity contracts or life insurance policies, including, without limitation, the following: (A) each life insurance policy meets the requirements of sections 101(f), 817(h) or 7702 of the Code, as applicable; (B) no life insurance contract issued by any Company Insurance Subsidiary is a "modified endowment contract" within the meaning of section 7702A of the Code unless and to the extent that the holders of the policies have been notified of their classification; (C) each annuity contract issued, entered into or sold by any Company Insurance Subsidiary qualifies as an annuity under federal Tax Law; (D) each annuity contract meets the requirements of, and has been administered consistent with section 817(h) and 72 of the Code including but not limited to section 72(s) of the Code (except for those contracts specifically excluded from such requirement pursuant to section 72(s)(5) of the Code); (E) each annuity contract intended to qualify under sections 130, 403(a), 403(b) or 408(b) of the Code contains all provisions required for qualification under such sections of the Code; (F) each annuity contract marketed as, or in connection with, plans that are intended to qualify under section 401, 403, 408 or 457 of the Code complies with the requirements of such section; and (G) none of the Company Insurance Subsidiaries have entered into any agreement or are involved in any discussions or negotiations and there are no audits, examinations, investigations or other proceedings with the IRS with respect to the failure of any life insurance policy under section 7702 or 817(h) of the Code or the failure of any annuity contract to meet the requirements of section 72(s) of the Code. There are no "hold harmless" indemnification agreements respecting the tax qualification or treatment of any product or plan sold, issued, entered into or administered by the Company Insurance Subsidiaries, and there have been no claims asserted by any Person under such "hold harmless" indemnification agreements so set forth. (s) Liabilities and Reserves. (i) The reserves carried on the Company SAP Statements of each Company Insurance Subsidiary for future insurance policy benefits, losses, claims and similar purposes were, as of the respective dates of such Company SAP Statements, in compliance in all material respects with the requirements for reserves established by the insurance departments of the state of domicile of such Company Insurance Subsidiary, were determined in all material respects in accordance with generally accepted actuarial standards and principles consistently applied, and were fairly stated in all material respects in accordance with sound actuarial and statutory accounting principles. Such reserves were adequate in the aggregate to cover the total amount of all reasonably anticipated liabilities of the Company and each Company Insurance Subsidiary under all -28- 30 outstanding insurance, reinsurance and other applicable agreements as of the respective dates of such Company SAP Statements. The admitted assets of each Company Insurance Subsidiary as determined under applicable Laws are in an amount at least equal to the minimum amounts required by applicable Laws. In addition, the Company has delivered or made available to Parent copies of all work papers used as the basis for establishing the reserves for the Company and the Company Insurance Subsidiaries at December 31, 1997 and December 31, 1998, respectively. (ii) Except for regular periodic assessments in the ordinary course of business or assessments based on developments which are publicly known within the insurance industry, to the knowledge of the Company, no claim or assessment is pending or threatened against any Company Insurance Subsidiary which is peculiar or unique to such Company Insurance Subsidiary by any state insurance guaranty association in connection with such association's fund relating to insolvent insurers which if determined adversely, would, individually or in the aggregate, be reasonably likely to have a Company Material Adverse Effect. (t) Investment Company. None of the Company Insurance Subsidiaries maintains any separate accounts. Neither the Company nor any of its Subsidiaries conducts activities of or is otherwise deemed under applicable Law to control an "investment advisor" as such term is defined in Section 2(a)(20) of the Investment Company Act of 1940, as amended (the "1940 Act"), whether or not registered under the Investment Advisers Act of 1940, as amended. Neither the Company nor any of its Subsidiaries is an "investment company" as defined under the 1940 Act, and neither the Company nor any of its Subsidiaries sponsors any Person that is such an investment company. 5.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY. Parent and Merger Subsidiary each hereby represent and warrant to the Company that: (a) Capitalization of Merger Subsidiary. The authorized stock of Merger Subsidiary consists of 50,000,000 shares of common Stock, par value $.01 per share ("Merger Subsidiary Common Stock"), 100 of which are duly authorized, validly issued and outstanding, fully paid and non-assessable. All of the issued and outstanding stock of Merger Subsidiary is, and at the Effective Time will be, owned by Parent or a wholly owned Subsidiary of Parent, and there are (i) no other shares of stock or voting securities of Merger Subsidiary, (ii) no securities of Merger Subsidiary convertible into or exchangeable for shares of stock or voting securities of Merger Subsidiary and (iii) no options or other rights to acquire from Merger Subsidiary, and no obligations of Merger Subsidiary to issue or deliver, any stock, voting securities or securities convertible into or exchangeable for stock or voting securities of Merger Subsidiary, except securities that may be delivered to Parent. Merger Subsidiary has not conducted any business prior to the date hereof and has no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the Merger and the other transactions contemplated by this Agreement. -29- 31 (b) Organization, Good Standing and Qualification. Each of Parent and Merger Subsidiary is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation and has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification, except where the failure to be so qualified or in such good standing, is not reasonably likely, individually or in the aggregate, to have a Parent Material Adverse Effect. Parent has made available to the Company a complete and correct copy of Parent's and Merger Subsidiary's Governing Documents, each as amended to the date hereof. Parent's and Merger Subsidiary's Governing Documents so delivered are in full force and effect. As used in this Agreement, the term "Parent Material Adverse Effect" means a material adverse effect that is reasonably likely to prevent, materially delay or materially impair the ability of Parent or Merger Subsidiary to consummate the transactions contemplated by this Agreement. (c) Corporate Authority. Each of the Parent and Merger Subsidiary has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Tender Offer and the Merger. This Agreement is a valid and binding agreement of Parent and Merger Subsidiary, enforceable against each of Parent and Merger Subsidiary in accordance with its terms, subject to the Bankruptcy and Equity Exception. (d) Governmental Filings; No Violations. (i) Other than the filings and/or notices (A) pursuant to Section 1.3, (B) under the HSR Act, the Securities Act and the Exchange Act, (C) to obtain an advance ruling certificate under The Competition Act of Canada, (D) required to be made with the NYSE, and (E) the filing of appropriate documents with, and approval of, the respective Commissioners of Insurance or similar regulatory authorities of Arizona, Florida, Georgia, Mississippi, New York, South Carolina, Texas, Puerto Rico, Cayman Islands, Denmark, Turks & Caicos, Netherlands Antilles and the United Kingdom, and such notices and consents as may be required under the antitrust notification insurance Laws of any state in which the Company, Parent or any of their respective subsidiaries is domiciled or does business, no notices, reports or other filings are required to be made by Parent or Merger Subsidiary with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by Parent or Merger Subsidiary from, any Governmental Entity, in connection with the execution and delivery of this Agreement by Parent and Merger Subsidiary and the consummation by Parent and Merger Subsidiary of the Merger and the other transactions contemplated hereby, except those that the failure to make or obtain are not, individually or in the aggregate, reasonably likely to have a Parent Material Adverse Effect. -30- 32 (ii) The execution, delivery and performance of this Agreement by Parent and Merger Subsidiary do not, and the consummation by Parent and Merger Subsidiary of the Merger and the other transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, the Governing Documents of Parent and Merger Subsidiary or the comparable governing instruments of any of its Subsidiaries, (B) a breach or violation of, or a default under, the acceleration of any obligations or the creation of a lien, pledge, security interest or other encumbrance on the assets of Parent or any of its Subsidiaries (with or without notice, lapse of time or both) pursuant to, any Contracts binding upon Parent or any of its Subsidiaries or (provided, as to consummation, the filings and notices are made, and approvals are obtained, as referred to in Section 5.2(d)(i)) or any Law or governmental or non-governmental permit or license to which Parent or any of its Subsidiaries is subject or (C) any change in the rights or obligations of any party under any of the Contracts, except, in the case of clause (B) or (C) above, for breach, violation, default, acceleration, creation or change that is not, individually or in the aggregate, reasonably likely to have a Parent Material Adverse Effect. (e) Financing. Parent has, or will have prior to the Closing Date, sufficient cash, available lines of credit or other sources of immediately available funds to enable it to make the aggregate cash payments required to be paid pursuant to Section 4.1 and any other amounts to be paid by it hereunder. ARTICLE VI COVENANTS 6.1. INTERIM OPERATIONS. The Company covenants and agrees as to itself and its Subsidiaries that, after the date hereof and prior to the Effective Time (unless Parent shall otherwise approve in writing, and except as otherwise expressly contemplated by this Agreement or the Stock Option Agreement or set forth in Section 6.1 of the Company Disclosure Letter): (a) its and its Subsidiaries' businesses shall be conducted only in the ordinary and usual course (it being understood and agreed that nothing contained herein shall permit the Company to enter into or engage in (through acquisition, product extension or otherwise) the business of selling any products or services materially different from existing products or services of the Company and its Subsidiaries or to enter into or engage in new lines of business without Parent's prior written approval); (b) to the extent consistent with (a) above, it and each of its Subsidiaries shall use its respective reasonable best efforts to preserve its business organization intact and maintain its existing relations and goodwill with customers, suppliers, reinsurers, distributors, creditors, lessors, employees and business associates; -31- 33 (c) it shall not (i) issue, sell, pledge, dispose of or encumber any capital stock owned by it in any of its Subsidiaries; (ii) amend any Governing Document or amend, modify or terminate the Rights Agreement; (iii) split, combine or reclassify its outstanding shares of capital stock; (iv) authorize, declare, set aside or pay any dividend payable in cash, stock or property in respect of any capital stock other than dividends from its wholly owned Subsidiaries and other than regular quarterly dividends paid by the Company on its Common Shares not in excess of $0.12 per share and regular quarterly dividends paid by the Company on its Preferred Shares in accordance with the Company's Governing Documents; or (v) repurchase, redeem or otherwise acquire, except in connection with any of the Company Stock Plans or pursuant to the American Bankers Insurance Group, Inc. 401(k) and Employee Stock Ownership Plan, or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of its stock or any securities convertible into or exchangeable or exercisable for any shares of its stock; (d) neither it nor any of its Subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire any shares, of its capital stock of any class or any other property or assets (other than exercise of the Rights and the Shares issuable pursuant to options outstanding on the date hereof under any of the Company Stock Plans or upon conversion of the Preferred Shares); (ii) other than in the ordinary and usual course of business, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any other property or assets (including capital stock of any of its Subsidiaries) or incur or modify any material indebtedness or other liability; or (iii) make or authorize or commit for any capital expenditures, including entering into capital lease obligations, other than in amounts not exceeding $5,000,000 in the aggregate or, by any means, make any acquisition of, or investment in, assets or stock of any other Person or entity, including by way of assumption reinsurance, in excess of $2,000,000 individually or $5,000,000 in the aggregate (other than in connection with ordinary course investment activities); (e) neither it nor any of its Subsidiaries shall terminate, establish, adopt, enter into, make any new grants or awards under, amend or otherwise modify, any Compensation and Benefit Plans, or increase the salary, wage, bonus or other compensation of any employees except increases occurring in the ordinary and usual course of business (which shall include normal periodic performance reviews and related compensation and benefit increases); provided, however, that the Company shall be entitled to (i) pay cash bonuses to sales personnel and the cash bonuses owed to employees pursuant to the Company's Management Incentive Plan for 1998 in an aggregate amount not to exceed $6,100,000, and (ii) extend for up to 12 months the expiration date of any Company Stock Options held by non-employee directors of the Company; (f) neither it nor any of its Subsidiaries shall pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of claims, liabilities or obligations legally due and payable and arising in the ordinary and usual course of -32- 34 business, claims arising under the terms of products, contracts or policies issued by the Company Insurance Subsidiaries in the ordinary and usual course of business and such other claims, liabilities or obligations as shall not exceed $5,000,000 in the aggregate; (g) neither it nor any of its Subsidiaries shall make or change any Tax election, settle any material audit, file any amended Tax Returns or permit any insurance policy naming it as a beneficiary or loss-payable payee to be canceled or terminated except in the ordinary and usual course of business; (h) neither it nor any of its Subsidiaries shall enter into any agreement containing any provision or covenant limiting in any material respect the ability of the Company or any Subsidiary or affiliate to (i) sell any products or services of or to any other Person, (ii) engage in any line of business or (iii) compete with or to obtain products or services from any Person or limiting the ability of any Person to provide products or services to the Company or any of its Subsidiaries or Affiliates; (i) neither it nor any of its Subsidiaries shall enter into any new quota share or other reinsurance transaction (i) which does not contain standard cancellation and termination provisions, (ii) which, except in the ordinary course of business, materially increases or reduces the Company Insurance Subsidiaries' consolidated ratio of net written premiums to gross written premiums or (iii) pursuant to which $10,000,000 or more in gross written premiums are ceded by the Company Insurance Subsidiaries to any Person other than the Company or any of its Subsidiaries; (j) neither it nor any of the Company Insurance Subsidiaries will alter or amend in any material respect their existing investment guidelines or policies; (k) neither it nor any of its Subsidiaries shall take any action or omit to take any action that would cause any of its representations and warranties herein to become untrue in any material respect; (l) neither it nor its Subsidiaries shall permit a material change in any of its underwriting, investment, actuarial, financial reporting or accounting practices or policies or in any material assumption underlying an actuarial practice or policy, except as may be required by any change in GAAP, statutory accounting principles or applicable Law; and (m) neither it nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing. 6.2. ACQUISITION PROPOSALS. The Company will not, and will not permit or cause any of its Subsidiaries or any of the officers and directors of it or its Subsidiaries to, and shall direct its and its Subsidiaries' Representatives not to, directly or indirectly, initiate, solicit, encourage or otherwise facilitate any inquiries or the making of any proposal or offer with respect to a merger, reorganization, share exchange, consolidation or similar transaction involving, or any purchase of 15% or more of the assets or any equity securities of, the Company or any of its Subsidiaries (any such proposal or offer -33- 35 being hereinafter referred to as an "Acquisition Proposal"). The Company will not, and will not permit or cause any of its Subsidiaries or any of the officers and directors of it or its Subsidiaries to and shall direct its and its Subsidiaries' Representatives (including any investment banker, attorney or accountant retained by it or any of its Subsidiaries) not to, directly or indirectly, engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to an Acquisition Proposal, whether made before or after the date of this Agreement, or otherwise facilitate any effort or attempt to make or implement an Acquisition Proposal (including, without limitation, by means of an amendment to the Rights Agreement); provided, however, that nothing contained in this Agreement shall prevent the Company or its board of directors from (i) complying with Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal or (ii) at any time prior to the approval of the Merger by the Company Common Stock Requisite Vote (A) providing information in response to a request therefor by a Person who has made an unsolicited bona fide written Acquisition Proposal if the board of directors receives from the Person so requesting such information an executed confidentiality agreement on terms substantially equivalent to those contained in the Confidentiality Agreement; (B) engaging in any negotiations or discussions with any Person who has made an unsolicited bona fide written Acquisition Proposal; or (C) recommending such an Acquisition Proposal to the stockholders of the Company, if and only to the extent that, (i) in each such case referred to in clause (A), (B) or (C) above, the board of directors of the Company determines in good faith after consultation with outside legal counsel that such action is necessary in order for its directors to comply with their respective fiduciary duties under applicable Law and (ii) in each case referred to in clause (B) or (C) above, the board of directors of the Company determines in good faith (after consultation with its financial advisor) that such Acquisition Proposal, if accepted, is reasonably likely to be consummated, taking into account all legal, financial and regulatory aspects of the proposal and the Person making the proposal, and would, if consummated, result in a more favorable transaction than the transaction contemplated by this Agreement, taking into account the long-term prospects and interests of the Company and its stockholders (any such more favorable Acquisition Proposal being referred to in this Agreement as a "Superior Proposal"). The Company will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. The Company agrees that it will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence hereof of the obligations undertaken in this Section 6.2 and in the Confidentiality Agreement. The Company will notify Parent immediately if any such inquiries, proposals or offers are received by, any such information is requested from, or any such discussions or negotiations are sought to be initiated or continued with, any of its Representatives indicating, in connection with such notice, the name of such Person and the material terms and conditions of any proposals or offers and thereafter shall keep Parent informed, on a current basis, of the status and terms of any such proposals or offers and the status of any such negotiations or discussions. The Company also will promptly request each Person that has heretofore executed a confidentiality agreement in connection with its consideration of an Acquisition Proposal to return all confidential information heretofore furnished to such Person by or on behalf of it or any of its Subsidiaries. -34- 36 6.3. INFORMATION SUPPLIED. The Company and Parent each agrees, as to itself and its Subsidiaries, that none of the information supplied or to be supplied by it or its Subsidiaries for inclusion or incorporation by reference in (i) the Offer Documents, the Schedule 14D-1 and the Schedule 14D-9 will, at the time of filing thereof and at the time of distribution thereof, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) the Proxy Statement and any amendment or supplement thereto will, at the date of mailing to stockholders and at the times of the Stockholders Meetings, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 6.4. STOCKHOLDERS MEETINGS. (a) The Company will take, in accordance with its Governing Documents, all action necessary to convene a meeting of holders of Common Shares (the "Common Stockholders Meeting") as promptly as practicable after the definitive Proxy Statement has been filed with the SEC, and a meeting of holders of Preferred Shares (the "Preferred Stockholders Meeting" and, together with the Common Stockholders Meeting, the "Stockholders Meetings") as promptly as practicable after the definitive Proxy Statement has been filed with the SEC to consider and vote upon the approval of the Merger. It is agreed that, except as provided in Section 1.5(c), the Company will not cancel, adjourn or postpone the Stockholders Meetings without the prior written consent of Parent. Subject to fiduciary obligations under applicable Law, the Company's board of directors shall recommend approval, shall not withdraw or modify such recommendation and shall take all lawful action to solicit such approval. Without limiting the generality of the foregoing, in the event that the Company's board of directors withdraws or modifies its recommendation, the Company nonetheless shall cause the Stockholders Meetings to be convened and votes taken with respect to the Merger and the board of directors shall communicate to the Company's stockholders its basis for such withdrawal or modification as contemplated by Section 607.1103(2)(a) of the FBCA. (b) In the event that the Stockholders Meetings contemplated by Section 6.4(a) are cancelled pursuant to Section 1.5(c) in connection with the commencement of the Tender Offer, the Company will take, in accordance with its Governing Documents, all action necessary to convene meetings of holders of Shares as promptly as practicable upon the written request of Parent. Subject to fiduciary obligations under applicable Law, the Company's board of directors shall recommend approval, shall not withdraw or modify such recommendation and shall take all lawful action to solicit such approval. Without limiting the generality of the foregoing, in the event that the Company's board of directors withdraws or modifies its recommendation, the Company nonetheless shall cause the Stockholders Meetings to be convened and a vote taken with respect to the Merger, and the board of directors shall communicate to the Company's stockholders its -35- 37 basis for such withdrawal or modification as contemplated by Section 607.1103(2)(a) of the FBCA. 6.5. FILINGS; OTHER ACTIONS; NOTIFICATION. (a) In connection with the Stockholders Meetings, the Company shall prepare and deliver to Parent as promptly as practicable after the date hereof a draft of a proxy statement (the "Proxy Statement"). Thereafter, the Company and Parent shall use their reasonable best efforts to cooperate fully to make such changes to the Proxy Statement as may be reasonably requested by Parent or otherwise may be appropriate, file the Proxy Statement with the SEC as soon as practicable, and respond promptly to any SEC comments. Upon filing the final, definitive Proxy Statement with the SEC, the Company shall mail such Proxy Statement to its stockholders. Notwithstanding the foregoing, if Merger Subsidiary obtains 80% or more of the Common Shares and 80% or more of the Preferred Shares through the Tender Offer, Merger Subsidiary may, at its election, use the short form merger provisions of Section 607.1104 of the FBCA. (b) The Company and Parent shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) all reasonable efforts (i) to cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Laws to consummate and make effective the Tender Offer (if applicable, per Section 1.4), the Merger and the other transactions contemplated by this Agreement and the Stock Option Agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings, and (ii) to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Entity in connection with, as a result of or in order to consummate the Tender Offer, the Merger or any of the other transactions contemplated by this Agreement or the Stock Option Agreement, including, without limitation, upon request of Parent, all material consents required in connection with the consummation of the Tender Offer and the Merger; provided, however, that nothing in this Section 6.5 shall require, or be construed to require, Parent, in connection with the receipt of any regulatory approval, to proffer to, or agree to (i) sell or hold separate and agree to sell or to discontinue to use or limit, before or after the Effective Time, any assets, businesses, or interest in any assets or businesses of Parent, the Company or any of their respective Subsidiaries (or to consent to any sale, or agreement to sell, or discontinuance or limitation by the Company of any of its assets or businesses) or (ii) any conditions relating to, or changes or restriction in, the operations of any such assets or businesses which, in either case, could, in the reasonable judgment of the board of directors of Parent, materially and adversely impact the economic or business benefits to Parent of the transactions contemplated by this Agreement. Subject to applicable Laws relating to the exchange of information, Parent and the Company shall have the right to review in advance, and to the extent practicable each will consult the other on, all the information relating to Parent or the Company, as the case may be, and any of their respective Subsidiaries, that appear in any filing made with, or written materials submitted to, any third party and/or any Governmental Entity in connection with the -36- 38 Tender Offer, the Merger and the other transactions contemplated by this Agreement. In exercising the foregoing right, each of the Company and Parent shall act reasonably and as promptly as practicable. (c) The Company and Parent each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with the Offer Documents, the Schedule 14D-1, the Schedule 14D-9, the Proxy Statement, or any other statement, filing, notice or application made by or on behalf of Parent, the Company or any of their respective Subsidiaries to any third party and/or any Governmental Entity in connection with the Tender Offer, the Merger and the other transactions contemplated by this Agreement. (d) The Company and Parent each shall keep the other apprised of the status of matters relating to completion of the transactions contemplated hereby, including promptly furnishing the other with copies of notices or other communications received by Parent or the Company, as the case may be, or any of its Subsidiaries, from any third party and/or any Governmental Entity with respect to the Tender Offer, the Merger and the other transactions contemplated by this Agreement. The Company and Parent each shall give prompt notice to the other of any change that is reasonably likely to result in a Company Material Adverse Effect or Parent Material Adverse Effect, respectively. (e) The Company shall use its best efforts to cause the Company and each of the individuals listed in Section 6.5(e) of the Company Disclosure Letter to enter into prior to the earlier of the consummation of the Tender Offer and the Effective Time an Amendment of Severance Agreement in the form attached hereto as Exhibit C. 6.6. ACCESS; TECHNOLOGY CONVERSIONS. (a) Upon reasonable notice, and except as may otherwise be required by applicable Law, the Company shall (and shall cause its Subsidiaries to) afford Parent's directors, officers, employees, counsel, accountants, financial advisors and other authorized agents and representatives ("Representatives") access, during normal business hours throughout the period prior to the earlier of the termination of this Agreement or the Effective Time, to the Company's and its Subsidiaries' management, properties, books, contracts, records and personnel (and will use commercially reasonable efforts to provide access to its auditors (including such auditors' work papers)) and, during such period, shall (and shall cause its Subsidiaries to) furnish promptly to Parent all information concerning the Company's and its Subsidiaries' business, properties and personnel as may reasonably be requested; provided that Parent and its Subsidiaries shall not be entitled to make copies of, or remove from the Company's premises the originals of, the Company's and its Subsidiaries' profit and loss statements by account and account contracts; and provided, further, that no investigation pursuant to this Section shall affect or be deemed to modify any representation or warranty made by the Company; and provided, further, that the foregoing shall not require the Company to permit any inspection, or to disclose any information, that in the reasonable judgment of the board of -37- 39 directors of the Company would result in the disclosure of any trade secrets of third parties or violate any of its obligations with respect to confidentiality if the Company shall have used all reasonable efforts to obtain the consent of such third party to such inspection or disclosure. All requests for information made pursuant to this Section 6.6(a) shall be directed to an executive officer of the Company or such Person as may be designated by the Company's officers. All such information shall be governed by the terms of the Confidentiality Agreement. The Company will provide, and will cause its Subsidiaries to provide, to Parent all information relating to financial and market conduct examinations or other investigations by any Governmental Entity of the Company and/or its Subsidiaries, including copies of all correspondence with any Governmental Entity. The Company and its Subsidiaries will notify Parent of any meetings or communications with any Governmental Entity relating to any material matter in connection with any market conduct, financial or similar examination or investigation and will permit Representatives of Parent to participate in all conference calls or meetings relating to such matters. In addition, the Company and its Subsidiaries will take all actions, including waiving any confidentiality restrictions, that may be necessary or required to allow any Governmental Entity to discuss all aspects of their examinations and/or investigations with Parent; provided, that a Representative of the Company shall be given the opportunity to be present during any such discussions. Prior to the Effective Time, the Company will use its best efforts to resolve in a manner reasonably acceptable to Parent any material regulatory compliance issues, including issues arising out of market conduct examinations. (b) From the date hereof through the earlier of termination of this Agreement or the Effective Time, to the extent not prohibited by applicable Law, the Company shall permit Parent to use an office within the Company's corporate headquarters offices to afford Parent's internal auditors and other Representatives reasonable access (without causing undue disruption of the conduct of the Company's business) to monitor the operations and financial activities of the Company and its Subsidiaries. In addition, the Company shall, and shall cause its Subsidiaries to, to the extent not prohibited by applicable Law, cooperate with Parent, upon Parent's reasonable request (without causing undue disruption of the conduct of the Company's business), to develop plans for the integration of the business of the Company and its Subsidiaries with that of the Parent and to permit Parent to discuss all such plans with employees of the Company and its Subsidiaries, including negotiating and confirming post-Closing employment terms with such employees. Parent shall coordinate all activities contemplated by this Section 6.6(b) through the Company's Chief Executive Officer, Chief Financial Officer or their designees. (c) From the date hereof through the earlier of termination of this Agreement or the Effective Time, the Company and its Subsidiaries shall provide Parent with the opportunity to conduct reasonable further due diligence about the Company's and its Subsidiaries' year 2000 compliance, including performing selected compliance audits and receiving from the Company reasonably detailed information about the year 2000 -38- 40 compliance of the Company and its Subsidiaries. In addition, from the date hereof through the earlier of termination of this Agreement or the Effective Time, the Company shall, and shall cause its Subsidiaries to, (i) permit Parent's Representatives to review and comment on the Company's and its Subsidiaries' plans to complete their efforts to become fully year 2000 compliant, and (ii) consider all reasonable requests of Parent made in writing to the Company's Chief Executive Officer or his designee concerning the year 2000 compliance of the Company and its Subsidiaries, and (iii) use reasonable efforts, as determined in the reasonable judgment of the Company's Chief Executive Officer, to correct any material aspect in which the Company or any of its Subsidiaries is not year 2000 compliant. Notwithstanding the foregoing, all final decisions with respect to such conversion design and implementation shall be made by the appropriate Company or Subsidiary. In the event that this Agreement is terminated and the Merger is not consummated for any reason, neither party shall have any liability to the other with respect to the involvement of Parent's Representatives in such conversion project. 6.7. CERTAIN REPLACEMENT BENEFITS. Promptly after the Effective Time, Parent shall use its reasonable best efforts to offer each Exercisable Option Holder and Restricted Share Holder, in exchange for their rights to the Restricted Option Shares Amount and the Remainder, alternative benefits that may include favorable adjustments to such Restricted Option Shares Amount and Remainder, options to acquire stock of Parent or an affiliate of Parent, stock appreciation rights or other contractual obligations of Parent or the Company that, in the reasonable judgment of Parent, will provide economic benefits for such Exercisable Option Holder and Restricted Share Holder that are, as of the Effective Time, comparable with (or, at the sole discretion of Parent, more favorable than) the economic benefits of such Restricted Option Shares Amount and Remainder, and that will contain comparable vesting arrangements, provided that Parent shall not be obligated to offer any benefits that may have to be registered under any securities Laws. Each Exercisable Option Holder and Restricted Share Holder shall be entitled, in his or his discretion, to accept any such alternative offer by Parent or retain the cash payment rights to the Restricted Option Shares Amount and the Remainder pursuant to Section 4.4 hereof. 6.8. PUBLICITY. The initial press release shall be a joint press release and thereafter the Company and Parent shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Tender Offer, the Merger and the other transactions contemplated by this Agreement and prior to making any filings with any third party and/or any Governmental Entity (including any national securities exchange) with respect thereto, except as may be required by Law or by obligations pursuant to any listing agreement with or rules of any national securities exchange. 6.9. BENEFITS; FACILITIES; FOUNDATION. (a) Benefits. Parent agrees that, during the period commencing at the Effective Time and ending on the first anniversary thereof, the employees of the Company and its Subsidiaries will continue to be provided with employee benefits (other -39- 41 than plans involving the issuance or award of Shares or rights to acquire Shares) that are no less favorable in the aggregate than those currently provided by the Company and its Subsidiaries to such employees. It is Parent's intent that the employees of the Company and its Subsidiaries will become participants in Parent's or its Subsidiaries' employee benefit plans as soon as practicable following the Effective Time. Such employees will receive credit under any plans of Parent or any of its Subsidiaries for service with the Company or any of its Subsidiaries or predecessors (to the extent service with such predecessors was credited under the Compensation and Benefit Plans disclosed in the Company Disclosure Letter) prior to the Effective Time for the purpose of determining eligibility, vesting and benefit accrual (except that no employee of the Company or any of its Subsidiaries shall be entitled to any benefit accrual under any pension or other defined benefit plan of Parent or any of its Subsidiaries other than the Company). In addition, Parent shall cause any and all pre-existing condition limitations (to the extent such limitations did not apply to a pre-existing condition under the Compensation and Benefit Plans) and eligibility waiting periods under group health plans of the Parent or any of its Subsidiaries to be waived with respect to the employees of the Company or its Subsidiaries and their eligible dependents. All discretionary awards and benefits under any employee benefit plans of Parent or any of its Subsidiaries shall be subject to the discretion of the Persons or committee administering such plans. (b) Facilities; Foundation. Parent intends to maintain, after the Effective Time, the office, day care and public school facilities at the Company's current Miami location, and Parent shall cause the Company to honor all of the Company's legal commitments regarding such facilities. In connection with The ABIG Foundation, Inc. (the "Foundation"), Parent agrees that after the Effective Time it will (i) cause the Company, together with its Subsidiaries, to make an annual contribution to the Foundation for each of calendar years 2000 and 2001 in an aggregate amount of not less than $1,200,000 per year, subject to the reasonable determination of the board of directors of the Company that such amount is reasonable at the time in light of the Company's then general economic performance and condition and budgetary constraints; (ii) cause the Company to continue providing to the Foundation the office space, that the Foundation is presently using in Coral Gables, Florida, pursuant to the lease presently in force for such office space, for the remaining initial term of 5 years, subject to the Company's being permitted to allow Gerald N. Gaston to also use some of such office space pursuant to a consulting agreement between Mr. Gaston and the Company; provided, however, that (A) the cost of the obligations set forth in item (ii) above shall not exceed $175,000 in any calendar year, (B) at all times that any of the obligations in items (i) or (ii) are in effect with respect to Parent or the Company, the Company shall be entitled to have at least one designee, initially Allen R. Freedman, serving as a director of the Foundation, (C) such contributed funds shall be used by the Foundation for charitable purposes on behalf of the Company in a manner similar to the charitable purposes for which contributed funds were used in calendar year 1998, and (D) if at any time during the initial term of the lease Messrs. Gaston and Landon are not using the above office space on behalf of the Foundation, the Company shall be entitled to use the office space for its corporate purposes. After calendar year 2001, Parent will cause the Company to -40- 42 continue supporting the community through charitable donations consistent with the Company's prior practices and with Parent's general guidelines for charitable donations. 6.10. EXPENSES. If the Merger or the Tender Offer is consummated, the Surviving Corporation shall pay all charges and expenses, including those of the Exchange Agent, in connection with the transactions contemplated in Article IV. Except as otherwise provided in Section 8.5(b), whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the Tender Offer, the Merger and the other transactions contemplated by this Agreement shall be paid by the party incurring such expense, except that expenses incurred in connection with the printing and mailing of the Offer Documents, the Schedule 14D-1, the Schedule 14D-9, and the Proxy Statement shall be shared equally by Parent and the Company. 6.11. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From and after the Effective Time, Parent agrees that it will cause the Company to continue to indemnify and hold harmless each present and former director and officer of the Company, (when acting in such capacity) determined as of the Effective Time (each, an "Indemnified Party" and, collectively, the "Indemnified Parties"), against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities (collectively, "Costs") incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time to the fullest extent that the Company was permitted under Florida Law and its Governing Documents in effect on the date hereof to indemnify such Person (and Company shall also advance expenses as incurred to the fullest extent permitted under applicable Law provided the Person to whom expenses are advanced provides a written affirmation of his or her good faith belief that the standard of conduct necessary for indemnification has been met), and an undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification). Parent agrees to guarantee Company's performance pursuant to this Section 6.11. Notwithstanding anything to the contrary contained in this Agreement, Parent and the Company shall be obligated to provide indemnification only to the extent that any directors' and officers' liability insurance policy of the Company or its Subsidiaries does not provide coverage and actual payment thereunder with respect to the matters that would otherwise be subject to indemnification hereunder. (b) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 6.11, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify Company and Parent thereof, but the failure to so notify shall not relieve Company of any liability it may have to such Indemnified Party if such failure does not materially prejudice the indemnifying party. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) the Company shall have the right to assume the defense thereof and Company shall not be liable to such Indemnified Parties for any legal expenses of other -41- 43 counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Company elects not to assume such defense, or if counsel for the Indemnified Parties advises that there are issues that raise conflicts of interest between Parent or Company and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and the Company shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, however, that Company shall be obligated pursuant to this paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in any jurisdiction unless the use of one counsel for such Indemnified Parties would present such counsel with a conflict of interest, (ii) the Indemnified Parties will cooperate in the defense of any such matter, and (iii) Company shall not be liable for any settlement effected without its prior written consent; and provided, further, that Company shall not have any obligation hereunder to any Indemnified Party if and when a court of competent jurisdiction shall ultimately determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable Law. (c) The Company shall continue to maintain the Company's existing officers' and directors' liability insurance ("D&O Insurance") or D&O Insurance that is substantially comparable to the Company's existing D&O Insurance for a period of two years after the Effective Time so long as the annual premium therefor is not in excess of 200% of the last annual premium paid prior to the date hereof (such last annual premium being hereinafter referred to as the "Current Premium"); provided, however, that if the existing D&O Insurance or substantially comparable D&O Insurance cannot be acquired during the two-year period for not in excess of 200% of the Current Premium, then the Company will obtain as much D&O Insurance as can be obtained for the remainder of such period for a premium not in excess (on an annualized basis) of 200% of the Current Premium. If the D&O Insurance is terminated prior to the end of the sixth anniversary of the Effective Time, the Company will purchase extended reporting coverage under D&O Insurance covering claims made during the remainder of such period with respect to acts which occurred prior to the Effective Time. (d) The provisions of this Section 6.11 are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties, their heirs and their representatives. 6.12. OTHER ACTIONS BY THE COMPANY AND PARENT. (a) Rights. If requested by Parent at least three business days prior to the Expiration Date or the Effective Time, as the case may be, the board of directors of the Company shall take all necessary action to terminate or redeem all of the outstanding Rights and to terminate the Rights Agreement, effective immediately prior to the Expiration Date or the Effective Time, as the case may be. Notwithstanding anything in this Agreement (including, without limitation, Section 6.1(c)) to the contrary, if Merger Subsidiary shall commence the Tender Offer, -42- 44 prior to the expiration of any other tender offer which (i) is made by any person to acquire not less than a majority of the outstanding Common Shares (including for all purposes of such calculation Common Shares purchased by Parent pursuant to the Stock Option Agreement) for not less than $55.00 in cash per Common Share and (ii) is proposed by such Person to be followed by a merger in which such Person will acquire all of the remaining outstanding Common Shares for cash or other consideration with a value per Common Share equal to not less than the value per Common Share paid by such Person pursuant to such tender offer (the value of such other consideration to be determined in the good faith judgment of the Company's board of directors after receipt of advice from its financial advisors), the Company shall be entitled, at its option, to amend or modify the Rights Agreement to provide, in a manner consistent with the amendments to the Rights Agreement made with respect to Parent and the Tender Offer, that the Person making such tender offer shall not be deemed an Acquiring Person (as defined in the Rights Agreement), the Distribution Date (as defined in the Rights Agreement) shall not be deemed to occur and the Rights will not separate from the Common Shares, as a result of such Person's consummating the tender offer. (b) Takeover Statute. If any Takeover Statute is or may become applicable to the Tender Offer, the Merger or the other transactions contemplated by this Agreement, the Stock Option Agreement or the Voting Agreement, each of Parent and the Company and its board of directors shall grant such approvals and take such actions as are necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement, the Stock Option Agreement or the Voting Agreement, as the case may be, or by the Tender Offer or the Merger and otherwise act to eliminate or minimize the effects of such statute or regulation on such transactions. The Company and its board of directors shall be entitled, at their election, to grant such approvals and take such actions as are necessary to eliminate or minimize the effects of any Takeover Statute on any tender offer with respect to which the Company has amended or modified the Rights Agreement in accordance with the second paragraph of Section 6.12(a). ARTICLE VII CONDITIONS 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. Except as provided in Section 7.4, the respective obligation of each party to effect the Merger is subject to the satisfaction or waiver (except that a waiver of a condition in Section 7.1(b) by Parent shall constitute a waiver by Company as well) at or prior to the Effective Time of each of the following conditions: (a) Stockholder Approval. The Merger shall have been duly approved by holders of Shares constituting the Company Common Stock Requisite Vote and shall -43- 45 have been duly approved by the sole stockholder of Merger Subsidiary in accordance with applicable Law. (b) Regulatory Consents. The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated and, other than the applicable filing provided for in Section 1.3, all notices, reports and other filings required to be made prior to the Effective Time by the Company or Parent or any of their respective Subsidiaries with, and all consents, registrations, approvals, permits and authorizations required to be obtained prior to the Effective Time by the Company or Parent or any of their respective Subsidiaries from, any Governmental Entity (collectively, "Governmental Consents"), in connection with the execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated hereby shall have been made or obtained (as the case may be). (c) Litigation. No court or Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law, statute, ordinance, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the Merger (collectively, an "Order"). 7.2. CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUBSIDIARY. Except as provided in Section 7.4, the obligations of Parent and Merger Subsidiary to effect the Merger are also subject to the satisfaction or waiver by Parent at or prior to the Effective Time of the following conditions: (a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement; and the representations and warranties of the Company set forth in this Agreement shall be true and correct as of the Closing Date as though made on and as of the Closing Date (except to the extent any such representation or warranty expressly speaks as of an earlier date) except where the failure of such representations and warranties to be so true and correct (without giving effect to any qualifications in the representations and warranties as to "Company Material Adverse Effect," "material" or similar qualifications) are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect, and Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect. (b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Parent shall have received a certificate signed on behalf of the Company by an executive officer of the Company to such effect. (c) Consents. The Company shall have obtained the consent or approval of each Person whose consent or approval shall be required under any Contract to which the Company or any of its Subsidiaries is a party, except those for which the failure to obtain such consents or approvals is not, individually or in the aggregate, reasonably likely to -44- 46 have a Company Material Adverse Effect or is not, individually or in the aggregate, reasonably likely to prevent or to materially burden or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement; and no such consent or approval, and no Governmental Consent, shall impose any condition or conditions relating to, or requiring changes or restrictions in, the operations of any asset or businesses of the Company, Parent or their respective Subsidiaries which could, in the reasonable judgment of the board of directors of Parent, individually or in the aggregate, materially and adversely impact the economic or business benefits to Parent and its Subsidiaries of the transactions contemplated by this Agreement. (d) Consulting Agreement. The Consulting Agreement entered into as of the date hereof between the Company and Gerald N. Gaston shall be in full force and effect. 7.3. CONDITIONS TO OBLIGATION OF THE COMPANY. Except as provided in Section 7.4, the obligation of the Company to effect the Merger is also subject to the satisfaction or waiver by the Company at or prior to the Effective Time of the following conditions: (a) Representations and Warranties. The representations and warranties of Parent and Merger Subsidiary set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement, and the representations and warranties of Parent and Merger Subsidiary set forth in this Agreement shall be true and correct as of the Closing Date as though made on and as of the Closing Date (except to the extent any such representation or warranty expressly speaks as of an earlier date) except where the failure of such representations and warranties to be so true and correct (without giving effect to any qualifications in the representations and warranties as to "Parent Material Adverse Effect," "material" or similar qualifications) are not, individually or in the aggregate, reasonably likely to have a Parent Material Adverse Effect, and the Company shall have received a certificate signed on behalf of Parent by an executive officer of Parent and on behalf of Merger Subsidiary by an executive officer of Merger Subsidiary to such effect. (b) Performance of Obligations of Parent and Merger Subsidiary. Each of Parent and Merger Subsidiary shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of Parent by an executive officer of Parent and on behalf of Merger Subsidiary by an executive officer of Merger Subsidiary to such effect. (c) Consents. Parent shall have obtained the consent or approval of each Person whose consent or approval shall be required in order to consummate the transactions contemplated by this Agreement under any Contract to which Parent or any of its Subsidiaries is a party, except those for which failure to obtain such consents or approvals is not, individually or in the aggregate, reasonably likely to have a Parent Material Adverse. -45- 47 7.4. WAIVER OF CONDITIONS FOLLOWING CONSUMMATION OF TENDER OFFER. Parent, Merger Subsidiary and the Company acknowledge and agree that if the Tender Offer shall be commenced and consummated, (i) the conditions to their respective obligations to effect the Merger contained in Section 7.1(a) and (b), Section 7.2(a), (c) and (d), and Section 7.3(a), (b), and (c) shall be deemed to be waived in all respects, and (ii) if at least a majority of the members of the board of directors of the Company are nominees or designees of Parent, the condition to Parent's and Merger Subsidiary's obligations to effect the Merger contained in Section 7.2(b) shall be deemed to be waived in all respects. ARTICLE VIII TERMINATION 8.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the approval by stockholders of the Company referred to in Section 7.1(a), by mutual written consent of the Company and Parent by action of their respective boards of directors. 8.2. TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may be terminated and the Merger may be abandoned (i) by action of the board of directors of either Parent or the Company if the Merger shall not have been consummated by September 30, 1999, whether such date is before or after the date of approval by the stockholders of the Company (provided, however, that if all conditions to Closing have been satisfied or waived on or before September 30, 1999, other than obtaining all Governmental Consents, such date shall be extended past September 30, 1999 for up to three additional one-month periods at the request of either Parent or the Company) (the "Termination Date"), (ii) by action of the board of directors of Parent if the Company Common Stock Requisite Vote shall not have been obtained at a meeting duly convened therefor or at any adjournment or postponement thereof, (iii) by action of the board of directors of the Company at any time if, at a meeting duly convened therefor or at any adjournment or postponement thereof, the Company Common Stock Requisite Vote shall not have been obtained and Section 8.3(a) is not applicable, or (iv) by action of the board of directors of either Parent or the Company if any Order permanently restraining, enjoining or otherwise prohibiting consummation of the Tender Offer or the Merger shall become final and non-appealable (whether before or after the approval by the stockholders of the Company); provided, that the right to terminate this Agreement pursuant to clause (i) above shall not be available to any party that has breached in any material respect its obligations under this Agreement in any manner that shall have proximately contributed to the occurrence of the failure of the Tender Offer or the Merger to be consummated. -46- 48 8.3. TERMINATION BY THE COMPANY. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, by action of the board of directors of the Company: (a) if (i) the Company is not in material breach of any of the terms of this Agreement, (ii) the Merger shall not have been approved by the Company Common Stock Requisite Vote, (iii) the board of directors of the Company authorizes the Company, subject to complying with the terms of this Agreement, to enter into a binding written agreement concerning a transaction that constitutes a Superior Proposal and the Company notifies Parent in writing that it intends to enter into such an agreement, attaching the most current version of such agreement to such notice, (iv) Parent does not make, prior to five business days after receipt of the Company's written notification of its intention to enter into a binding agreement for a Superior Proposal (the "Alternative Transaction Notice") an offer that the board of directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable, as the Superior Proposal, taking into account the long term prospects and interests of the Company and its stockholders, and (v) Parent receives in immediately available funds all amounts required to be paid pursuant to Section 8.5. Without limiting the generality of the foregoing the Company agrees and acknowledges (x) that it cannot terminate this Agreement pursuant to this Section 8.3(a) in order to enter into a binding agreement referred to in clause (iii) above until five business days after Parent's receipt of the Alternative Transaction Notice and until the payment required by Section 8.5 has been received by Parent, and (y) to notify Parent promptly if its intention to enter into a written agreement referred to in its Alternative Transaction Notice shall change at any time after giving such notification; or (b) if there has been a material breach by Parent or Merger Subsidiary of any representation, warranty, covenant or agreement contained in this Agreement that is not curable or, if curable, is not cured within 20 days after written notice of such breach is given by the Company to the party committing such breach. 8.4 TERMINATION BY PARENT. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time by action of the board of directors of Parent if (a) the Company enters into a binding agreement for, or recommends, a Superior Proposal or the board of directors of the Company shall have withdrawn or adversely modified its approval or recommendation of this Agreement or, after the mailing of the Proxy Statement or the Offer Documents, failed to reconfirm its recommendation of this Agreement within ten business days after a reasonable written request by Parent to do so, or (b) there has been a material breach by the Company of any representation, warranty, covenant or agreement contained in this Agreement that is not curable or, if curable, is not cured within 20 days after written notice of such breach is given by Parent to the party committing such breach. -47- 49 8.5. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article VIII, this Agreement (other than as set forth in Section 9.1) shall become void and of no effect with no liability (other than the liabilities arising under the provisions, including this Section 8.5, set forth in Section 9.1) on the part of any party hereto (or of any of its Representatives); provided, however, except as otherwise provided herein, no such termination shall relieve any party hereto of any liability or damages resulting from any breach of this Agreement. (b) In the event that this Agreement is terminated (i) by the Company pursuant to Section 8.2(iii) or 8.3(a), or (ii) by Parent pursuant to Section 8.2(ii) or Section 8.4(a), or (iii) by either Parent or the Company pursuant to Section 8.2(i) (and at the time of such termination pursuant to Section 8.2(i) any Person shall then be making or proposing an Acquisition Proposal to the Company or any of its Subsidiaries or any of its stockholders), then the Company shall, not later than immediately prior to the time of such termination or not later than immediately prior to the time of entering into an agreement concerning a transaction that constitutes an Acquisition Proposal, use reasonable efforts to cause the Person making the Acquisition Proposal to pay Parent a termination fee of $85,000,000 plus an amount equal to Parent's charges and expenses incurred in connection with the transactions contemplated by this Agreement ("Expenses"), up to a maximum of $5,000,000, except if Parent terminates this Agreement pursuant to Section 8.2(ii) or if Company terminates this Agreement pursuant to Section 8.2(iii), in which case the Company shall make the foregoing payments. In every case, such payments shall be made by wire transfer of same day funds. In order to facilitate the timely making of the foregoing payments, in the event that Parent elects to terminate this Agreement, Parent shall notify the Company thereof not later than 10:00 A.M. (New York City time) on the business day immediately preceding the date of such termination. In the event that Parent fails to provide such advance notice of its election to terminate this Agreement, the foregoing payments shall be made not later than 12:00 P.M. (New York City time) on the business day immediately following the date of such termination. The Company acknowledges that the agreements contained in this Section 8.5(b) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Parent and Merger Subsidiary would not have entered into this Agreement; accordingly, if the Company fails to cause the Person making the Acquisition Proposal to pay to Parent promptly all amounts due pursuant to this Section 8.5(b) or Section 8.5(c), then the Company shall be obligated to pay such amounts to Parent and, if in order to obtain such payments, Parent or Merger Subsidiary commences a suit that results in a judgment against the Company for the amounts set forth in this paragraph (b) or paragraph 8.5(c), the Company shall pay to Parent or Merger Subsidiary its costs and expenses (including attorneys' fees) in connection with such suit, together with interest from the date of termination of this Agreement on the amounts owed at the prime rate of The Chase Manhattan Bank, in effect from time to time during such period plus two percent. (c) In the event this Agreement is terminated by the Company or Parent pursuant to Section 8.2(i) and at the time of such termination no Person is then making or proposing an Acquisition Proposal to the Company or any of its Subsidiaries or any of its -48- 50 stockholders, then the Company shall promptly, but in no event later than two business days after Parent shall have requested payment of its Expenses, pay to Parent the amount of such Expenses up to a maximum of $5,000,000 and, if within 18 months of such termination, the Company enters into an agreement concerning a transaction that constitutes an Acquisition Proposal, the Company at the time of entering into such agreement, shall cause the Person making the Acquisition Proposal to pay to Parent the termination fee of $85,000,000, in each case payable by wire transfer of same day funds. (d) Parent will not, and will not permit or cause any of its Subsidiaries or any of its or any such Subsidiary's officers or directors to, and shall direct its and its Subsidiaries' Representatives not to, directly or indirectly, initiate, solicit, encourage, participate in or otherwise facilitate any discussion or negotiation with any Person that has made, or to Parent's knowledge is contemplating making, an Acquisition Proposal, with respect to any matter pertaining to the Company or its Subsidiaries or such Acquisition Proposal or any termination or other similar fee or payment referenced in this Agreement. ARTICLE IX MISCELLANEOUS AND GENERAL 9.1. SURVIVAL. This Article IX and the agreements of the Company, Parent and Merger Subsidiary contained in Sections 6.9 (Benefits) and 6.11 (Indemnification; Directors' and Officers' Insurance) shall survive the consummation of the Merger. This Article IX, the agreements of the Company, Parent and Merger Subsidiary contained in Section 6.6 (Access; Technology Conversion), insofar as it relates to the Company's and Parent's respective confidentiality obligations, Section 6.10 (Expenses) and Section 8.5 (Effect of Termination and Abandonment) shall survive the termination of this Agreement. All other representations, warranties, covenants and agreements in this Agreement shall not survive the consummation of the Merger or the termination of this Agreement. 9.2. MODIFICATION OR AMENDMENT. Subject to the provisions of applicable Law, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties. 9.3. WAIVER OF CONDITIONS. The conditions to each of the parties' obligations to consummate the Merger are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Law. 9.4. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. -49- 51 9.5. GOVERNING LAW; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED EXPRESSLY OR OTHERWISE THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.5. 9.6. NOTICES. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and shall be deemed delivered (i) on the date personally delivered, (ii) one business day after the date delivered by facsimile transmission with a confirmation copy sent by overnight courier or first-class mail, or (iii) three business days after the date sent by registered or certified mail, postage prepaid: if to Parent or Merger Subsidiary: Fortis, Inc. One Chase Manhattan Plaza New York, New York 10005 Attention: Jerome A. Atkinson, Senior Vice President and General Counsel fax: (212) 859-7034 phone: (212) 859-7285 -50- 52 with a copy to (which shall not constitute notice): B. Harvey Hill, Jr., Esq. Alston & Bird LLP 1201 W. Peachtree Street Atlanta, Georgia 30309 fax: (404) 881-4777 phone: (404) 881-7446 if to the Company: American Bankers Insurance Group, Inc. 11222 Quail Roost Drive Miami, Florida 33157-6596 Attention: Chief Executive Officer fax: (305) 256-7110 phone: (305) 252-6991 with a copy to (which shall not constitute notice): Josephine Cicchetti, Esq. Jordan Burt Boros Cicchetti Berenson & Johnson LLP 777 Brickell Avenue, Suite 500 Miami, Florida 33131 fax: (305) 372-9928 phone: (305) 371-2600 and Jonathan L. Freedman, Esq. Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 fax: (212) 259-6333 phone: (212) 259-6680 or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above. 9.7. ENTIRE AGREEMENT; NO OTHER REPRESENTATIONS. This Agreement (including any exhibits and annexes hereto), the Company Disclosure Letter, the Parent Disclosure Letter, and the Stock Option Agreement, and the Confidentiality Agreement between Parent and the Company dated October 23, 1998, as amended February 11, 1999 (the "Confidentiality Agreement"), constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof. -51- 53 9.8. NO THIRD PARTY BENEFICIARIES. Except as provided in Section 6.11 (Indemnification; Directors' and Officers' Insurance), this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies hereunder. 9.9 OBLIGATIONS OF PARENT AND OF THE COMPANY. Whenever this Agreement requires a Subsidiary of Parent to take any action, such requirement shall be deemed to include an undertaking on the part of Parent to cause such Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of the Company to take any action, such requirement shall be deemed to include an undertaking on the part of the Company to cause such Subsidiary to take such action and, after the Effective Time, on the part of the Surviving Corporation to cause such Subsidiary to take such action. 9.10. SEVERABILITY. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability or the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 9.11. INTERPRETATION. The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, Exhibit or Annex, such reference shall be to a Section of or Exhibit or Annex to this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." No uncertainty or ambiguity herein shall be construed or resolved against any party, whether under any rule of construction or otherwise. No party to this Agreement shall be considered the draftsman. The parties acknowledge and agree that this Agreement has been reviewed, negotiated, and accepted by all parties and their attorneys and shall be construed and interpreted according to the ordinary meaning of the words used so as fairly to accomplish the purposes and intentions of all parties hereto. 9.12. ASSIGNMENT. This Agreement shall not be assignable by any party hereto by operation of Law or otherwise, without the prior written consent of the other parties; provided, however, that Parent may designate, by written notice to the Company, another wholly owned direct or indirect Subsidiary to be a Constituent Corporation in lieu of Merger Subsidiary, in which event all references herein to Merger Subsidiary shall be deemed references to such other Subsidiary. Subject to the preceding sentence, this -52- 54 Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. 9.13. ALTERNATIVE PREFERRED STOCK ARRANGEMENT. Notwithstanding anything to the contrary in this Agreement, if the Company Preferred Stock Requisite Vote is not obtained at the Preferred Stockholders Meeting, or Parent reasonably determines that the Company Preferred Stock Requisite Vote is not likely to be obtained as contemplated by this Agreement, Parent shall, subject to the Company Common Stock Requisite Vote and the other terms and conditions of this Agreement, merge Merger Subsidiary with and into the Company as provided hereinbefore but the Preferred Shares shall remain outstanding after the Merger. In connection with the alternative for the Preferred Shares contemplated by the prior sentence, the Company shall take all actions reasonably requested by Parent and shall promptly amend this Agreement, as Parent may reasonably deem necessary or appropriate to provide, among other matters, that the Preferred Shares shall remain outstanding after the Merger pursuant to the same terms and conditions as are in effect on the date hereof (except that each Preferred Share shall be convertible as provided in the terms of the Preferred Shares set forth in the Company's Governing Documents). [Signatures on Next Page] -53- 55 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above. AMERICAN BANKERS INSURANCE GROUP, INC. By: /s/ Gerald N. Gaston ----------------------------------------- Name: Gerald N. Gaston --------------------------------------- Title: President, Chief Executive Officer -------------------------------------- and Vice Chairman of the Board FORTIS, INC. By: /s/ Jerome A. Atkinson ----------------------------------------- Name: Jerome A. Atkinson --------------------------------------- Title: Secretary / Senior VP -------------------------------------- GREENLAND ACQUISITION CORP. By: /s/ Jerome A. Atkinson ----------------------------------------- Name: Jerome A. Atkinson --------------------------------------- Title: Secretary / Senior VP -------------------------------------- -54- 56 ANNEX I CERTAIN CONDITIONS OF THE TENDER OFFER. The capitalized terms used in this Annex I have the meanings set forth in the attached Agreement. Notwithstanding any other provision of the Tender Offer, Merger Subsidiary shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating to Merger Subsidiary's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Tender Offer), pay for, or may delay the acceptance for payment of or payment for, any tendered Shares, or may, in its sole discretion, terminate or amend the Tender Offer as to any Shares not then paid for if (a) prior to the Expiration Date (i) there shall not have been tendered and not withdrawn at least that number of Common Shares that would represent at least a majority of all outstanding Common Shares on the date of purchase (excluding for all purposes in calculating such majority any outstanding Common Shares owned by Parent or Merger Subsidiary pursuant to the exercise of Parent's rights under the Stock Option Agreement) (the "Minimum Tender Condition"), (ii) any waiting period applicable to the consummation of the Tender Offer and the Merger under the HSR Act shall not have expired or been terminated, (iii) other than the filing provided for in Section 1.3 of the Agreement, any notices, reports and other filings required to be made prior to the Effective Time by the Company or Parent or any of their respective Subsidiaries with, and any consents, registrations, approvals, permits and authorizations required to be obtained prior to the Effective Time by the Company or Parent or any of their respective Subsidiaries from, any Governmental Entity, in connection with the execution and delivery of the Agreement and the consummation of the Tender Offer and the Merger and the other transactions contemplated by the Agreement shall not have been made or obtained (as the case may be), or (iv) the Company shall not have obtained the consent or approval of any Person whose consent or approval shall be required under any Contract to which the Company or any of its Subsidiaries is a party, except those for which the failure to obtain such consents or approvals is not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect or is not, individually or in the aggregate, reasonably likely to prevent or to materially burden or materially impair the ability of the Company to consummate the transactions contemplated by the Agreement; or any such consent or approval, or any Governmental Consent, imposes any condition or conditions relating to, or requires changes or restrictions in, the operations of any asset or businesses of the Company, Parent or their respective Subsidiaries which could, in the reasonable judgment of the board of directors of Parent, individually or in the aggregate, materially and adversely impact the economic or business benefits to Parent and its Subsidiaries of the transactions contemplated by the Agreement; or (b) at or before the time of payment for any of such Shares (whether or not any Shares have theretofore been accepted for payment), any of the following events shall occur: (i) any court or Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law, statute, ordinance, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or -55- 57 otherwise prohibits consummation of the Tender Offer or the Merger, or which makes the acceptance for payment of, or payment for, any Shares in the Tender Offer illegal; (ii) the representations and warranties of the Company set forth in the Agreement shall not be true and correct in all material respects as of the date of the Agreement; or such representations and warranties shall not be true and correct as of the Expiration Date as though made on and as of the Expiration Date (except to the extent any such representation or warranty expressly speaks as of an earlier date) except where the failure of such representations and warranties to be so true and correct (without giving effect to any qualifications in the representations and warranties as to "Company Material Adverse Effect," "material" or similar qualifications set forth in the Agreement) are not, individually or in the aggregate, reasonably likely to have a Company Material Adverse Effect, or Parent shall not have received a certificate on the Expiration Date signed on behalf of the Company by an executive officer of the Company to such effect; (iii) the Company shall not have performed in all material respects all obligations required to be performed by it under the Agreement at or prior to the Expiration Date; or (iv) the Agreement shall have been terminated in accordance with its terms prior to the Expiration Date; or Parent, Merger Subsidiary and the Company shall have otherwise agreed that Merger Subsidiary may amend, terminate or withdraw the Tender Offer; which, in the reasonable judgment of Parent and Merger Subsidiary, in any such case, and regardless of the circumstances (including any action or inaction by Parent or Merger Subsidiary) giving rise to any such conditions, makes it inadvisable to proceed with the Tender Offer and/or with such acceptance for payment of or payment for Shares. The foregoing conditions are for the sole benefit of Parent and Merger Subsidiary and may be asserted by Parent or Merger Subsidiary regardless of the circumstances (including any action or inaction by Parent or Merger Subsidiary) giving rise to such condition or may be waived by Parent or Merger Subsidiary, by express and specific action to that effect, in whole or in part at any time and from time to time in their sole discretion. Any determination by Parent and Merger Subsidiary concerning any event described in this Annex I shall be final and binding upon all holders of Shares. The failure by Merger Subsidiary at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. -56- 58 ANNEX II INDEX OF DEFINED TERMS
Section Term Containing Definition - ---- --------------------- Acquisition Proposal...................................................6.2 Agreement..............................................................1st Paragraph Alternative Transaction Notice.........................................8.3(a) Articles of Merger.....................................................1.3 Audit Date.............................................................5.1(e)(i) Bankruptcy and Equity Exception........................................5.1(c)(i) By-Laws................................................................2.2 Certificate............................................................4.5(b) Charter................................................................2.1 Closing................................................................1.2 Closing Date...........................................................1.2 Code...................................................................5.1(h)(ii) Common Share...........................................................4.1(b) Common Merger Consideration............................................4.1(b) Common Stockholders Meeting............................................6.4(a) Company................................................................1st Paragraph Company Actuarial Analyses.............................................5.1(r)(iii) Company Common Stock Requisite Vote....................................5.1(c)(i) Company Disclosure Letter..............................................5.1 Company Insurance Contracts............................................5.1(r)(i) Company Insurance Subsidiaries.........................................5.1(a) Company Intellectual Property Rights...................................5.1(n)(ii)(B) Company Material Adverse Effect........................................5.1(a) Company Option.........................................................5.1(b) Company Preferred Stock Requisite Vote.................................5.1(c)(i) Company Reports........................................................5.1(e)(i) Company Requisite Vote.................................................5.1(c)(i) Company SAP Statements.................................................5.1(e)(ii) Company Stock Plans....................................................5.1(b) Compensation and Benefit Plans.........................................5.1(h)(i) Confidentiality Agreement..............................................9.7 Constituent Corporations...............................................1st Paragraph Contract...............................................................5.1(d)(ii) Costs..................................................................6.11(a) Current Premium........................................................6.11(c) D&O Insurance..........................................................6.11(c) Effective Time.........................................................1.3
-57- 59
Section Term Containing Definition - ---- --------------------- Environmental Law......................................................5.1(k) ERISA..................................................................5.1(h)(ii) ERISA Affiliate........................................................5.1(h)(iii) Exchange Act...........................................................1.5(a) Exchange Agent.........................................................4.5(a) Exchange Fund..........................................................4.5(a) Excluded Common Shares.................................................4.1(b) Excluded Preferred Shares..............................................4.1(c) Excluded Shares........................................................4.1(c) Exercisable Option.....................................................4.4(a)(i) Exercisable Option Holder..............................................4.4(a)(i)(2) Exercise Price.........................................................4.4(b)(i)(1) Expenses...............................................................8.5(b) Expiration Date........................................................1.5(b) Extended Expiration Date...............................................1.5(b) FBCA...................................................................1.1 Foundation.............................................................6.9(b) GAAP...................................................................5.1(e)(i) Governing Documents....................................................5.1(a) Governmental Consents..................................................7.1(b) Governmental Entity....................................................5.1(d)(i) Hazardous Substance....................................................5.1(k) HSR Act................................................................5.1(d)(i) Indemnified Parties....................................................6.11(a) Insurance Laws.........................................................5.1(i) IRS....................................................................5.1(h)(ii) knowledge..............................................................5.1(e)(ii) Laws...................................................................5.1(i) Merger.................................................................1st Recital Merger Consideration...................................................4.1(c) Merger Subsidiary......................................................1st Paragraph Merger Subsidiary Common Stock.........................................5.2(a) Minimum Tender Condition...............................................Annex I NYSE...................................................................5.1(d) 1940 Act...............................................................5.1(t) 1998 Company Option....................................................4.4(a)(i) 1998 Restricted Share..................................................4.4(b)(i) Offer Documents........................................................1.5(a) Order..................................................................7.1(c) Parent.................................................................1st Paragraph Parent Companies.......................................................4.1(b) Parent Material Adverse Effect.........................................5.2(b) Pension Plan...........................................................5.1(h)(ii) Per Share Purchase Price...............................................4.1(b) Person.................................................................5.1(b) Pre-1998 Company Option................................................4.4(a)(iii)
-58- 60
Section Term Containing Definition - ---- --------------------- Pre-1998 Exercisable Option............................................4.4(a)(iii) Pre-1998 Primary Share.................................................4.4(a)(iii)(1) Pre-1998 Restricted Option Share.......................................4.4(a)(iii)(2) Pre-1998 Restricted Share..............................................4.4(b)(ii) Preferred Share........................................................4.1(c) Preferred Merger Consideration.........................................4.1(c) Preferred Stockholders Meeting.........................................6.4(a) Primary Share..........................................................4.4(a)(i)(1) Proxy Statement........................................................6.3 Remainder..............................................................4.4(b)(i)(2) Representatives........................................................6.6(a) Restricted Option Share................................................4.4(a)(i)(2) Restricted Option Shares Amount........................................4.4(a)(i)(2) Restricted Share.......................................................5.1(b) Restricted Share Holder................................................4.4(b)(i)(1) Rights.................................................................5.1(p) Rights Agreement.......................................................5.1(b) SAP....................................................................5.1(e)(ii) Schedule 14D-1.........................................................1.5(a) Schedule 14D-9.........................................................1.5(c) SEC....................................................................5.1(e)(i) Secretary..............................................................1.3 Securities Act.........................................................5.1(d) Senior Management Option...............................................4.4(a)(ii) Shares.................................................................4.1(c) Stock Option Agreement.................................................2nd Recital Subsidiary.............................................................5.1(a) Stockholders Meetings..................................................6.4(a) Superior Proposal......................................................6.2 Surviving Corporation..................................................1.1 Takeover Statute.......................................................5.1(j) Tax....................................................................5.1(l) Tax Return.............................................................5.1(l) Taxing Authority.......................................................5.1(l) Tender Offer...........................................................1.4 Termination Date.......................................................8.2 Third-Party Intellectual Property Rights...............................5.1(n)(ii)(A) Voting Agreement.......................................................3rd Recital
-59- 61 [EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED] -60- EX-10.1 3 STOCK OPTION AGREEMENT 1 EXHIBIT 10.1 CONFORMED COPY STOCK OPTION AGREEMENT STOCK OPTION AGREEMENT, dated as of March 5, 1999 (the "Agreement"), between FORTIS, INC., a Nevada corporation (the "Grantee"), and AMERICAN BANKERS INSURANCE GROUP, INC., a Florida corporation (the "Grantor"). WHEREAS, the Grantee, Greenland Acquisition Corp., a Florida corporation and a wholly owned subsidiary of the Grantee ("Merger Subsidiary"), and the Grantor are entering into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which provides, among other things, for the merger of Merger Subsidiary with and into the Grantor (the "Merger"); WHEREAS, as a condition to their willingness to enter into the Merger Agreement, the Grantee and Merger Subsidiary have requested that the Grantor grant to the Grantee an option to purchase up to 8,406,559 shares of Common Stock, par value $1.00 per share, of the Grantor (the "Common Stock"), upon the terms and subject to the conditions hereof; and WHEREAS, in order to induce the Grantee and Merger Subsidiary to enter into the Merger Agreement, the Grantor is willing to grant the Grantee the requested option. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereto agree as follows: 1. The Option; Exercise; Adjustments; Payment of Spread. (a) Contemporaneously herewith the Grantee, Merger Subsidiary and the Grantor are entering into the Merger Agreement. Subject to the other terms and conditions set forth herein, the Grantor hereby grants to the Grantee an irrevocable option (the "Option") to purchase up to 8,406,559 shares of Common Stock (the "Shares") at a cash purchase price equal to $55.00 per share (the "Purchase Price"). The Option may be exercised by the Grantee, in whole or in part, at any time, or from time to time, following the occurrence of one of the events set forth in Section 2(d) hereof, and prior to the termination of the Option in accordance with the terms of this Agreement. (b) In the event the Grantee wishes to exercise the Option, the Grantee shall send a written notice to the Grantor (the "Stock Exercise Notice") specifying a date (subject to the HSR Act (as defined below) and applicable insurance regulatory approvals) not later than 10 business days and not earlier than three business days following the date such notice is given for the closing of such purchase. In the event of any change in the number of issued and outstanding shares of Common Stock by reason of any stock dividend, stock split, split-up, recapitalization, merger or other change in the corporate or capital structure of the Grantor, the number of Shares subject to this Option 2 and the purchase price per Share shall be appropriately adjusted to restore the Grantee to its rights hereunder, including its right to purchase Shares representing 19.9% of the capital stock of the Grantor entitled to vote generally for the election of the directors of the Grantor which is issued and outstanding immediately prior to the exercise of the Option at an aggregate purchase price equal to the Purchase Price multiplied by 8,406,559. (c) If at any time the Option is then exercisable pursuant to the terms of Section l(a) hereof, the Grantee may elect, in lieu of exercising the option to purchase Shares provided in Section l(a) hereof, to send a written notice to the Grantor (the "Cash Exercise Notice") specifying a date not later than 20 business days and not earlier than 10 business days following the date such notice is given on which date the Grantor shall pay to the Grantee an amount in cash equal to the Spread (as hereinafter defined) multiplied by all or such portion of the Shares subject to the Option as Grantee shall specify. As used herein "Spread" shall mean the excess, if any, over the Purchase Price of the higher of (x) if applicable, the highest price per share of Common Stock (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid or proposed to be paid by any person pursuant to one of the transactions enumerated in Section 2(d) hereof (the "Alternative Purchase Price") or (y) the closing price of the shares of Common Stock on the NYSE Composite Tape on the last trading day immediately prior to the date of the Cash Exercise Notice (the "Closing Price") or, if Section l(d) is applicable, on the last trading day immediately prior to termination of the Merger Agreement. If, in the case of clause (x) above, the Alternative Purchase Price can be calculated by reference to an all cash amount paid or proposed to be paid for any shares of Common Stock outstanding, such cash amount shall be deemed to be the Alternative Purchase Price; if, in the case of clause (x) above, no shares of Common Stock will be purchased for all cash, the Alternative Purchase Price shall be the sum of (i) the fixed cash amount, if any, included in the Alternative Purchase Price plus (ii) the fair market value of such property other than cash included in the Alternative Purchase Price. If such other property consists of securities with an existing public trading market, the average of the closing prices (or the average of the closing bid and asked prices if closing prices are unavailable) for such securities in their principal public trading market on the five trading days ending five days prior to the date of the Cash Exercise Notice or, if Section l(d) is applicable, ending on the last trading day immediately prior to termination of the Merger Agreement, shall be used to calculate the fair market value of such property. If such other property consists of something other than cash or securities with an existing public trading market and, as of the payment date for the Spread, agreement on the value of such other property has not been reached, the Alternative Purchase Price shall be deemed to equal the Closing Price. Upon exercise of its right to receive cash pursuant to this Section 1(c), the obligations of the Grantor to deliver Shares pursuant to Section 3 shall be terminated with respect to such number of Shares for which the Grantee shall have elected to be paid the Spread. (d) Notwithstanding anything in the foregoing to the contrary, it is agreed that if after the delivery by Grantee of the Stock Exercise Notice but prior to the receipt of all regulatory approvals required for the consummation of the purchase of the Shares subject to such Stock Exercise Notice, Grantor or Grantee intends to terminate the -2- 3 Merger Agreement pursuant to the terms thereof, the party intending to so terminate the Merger Agreement shall provide at least one full business days' notice of such intention to the other party and, if requested to do so by Grantee, Grantor shall take such steps as may be necessary so as to pay to Grantee, not later than immediately prior to such termination, cash by wire transfer in immediately available funds in an aggregate amount equal to the Spread (as defined in Section l(c) above) multiplied by the number of Shares subject to the Stock Exercise Notice (subject to Section 20 hereof). 2. Conditions to Delivery of Shares. The Grantor's obligation to deliver Shares upon exercise of the Option is subject only to the conditions that: (a) No preliminary or permanent injunction or other order issued by any federal or state court of competent jurisdiction in the United States prohibiting the delivery of the Shares shall be in effect; and (b) Any applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") shall have expired or been terminated; and (c) Any approval required to be obtained prior to the delivery of the Shares under the insurance laws of any state or foreign jurisdiction shall have been obtained and be in full force and effect; and (d) (i) any person (other than Grantee or any of its subsidiaries) shall have commenced (as such term is defined in Rule 14d-2 under the Securities Exchange Act of 1934 (the "Exchange Act")) a tender offer, or shall have filed a registration statement under the Securities Act of 1933 (the "Securities Act") with respect to an exchange offer, to purchase any shares of Common Stock such that, upon consummation of such offer, such person or a "group" (as such term is defined under the Exchange Act) of which such person is a member shall have acquired beneficial ownership (as such term is defined in rule 13d-3 of the Exchange Act), or the right to acquire beneficial ownership, of 15 percent or more of the then outstanding Common Stock; (ii) any person (other than Grantee or any of its subsidiaries) shall have publicly announced or delivered to Grantor a proposal, or disclosed publicly or to Grantor an intention to make a proposal, to purchase 15 percent or more of the assets or any equity securities of, or to engage in a merger, reorganization, tender offer, share exchange, consolidation or similar transaction involving the Grantor or any of its subsidiaries (an "Acquisition Transaction"); (iii) Grantor or any of its subsidiaries shall have authorized, recommended, proposed or publicly announced an intention to authorize, recommend or propose, or entered into, an agreement, including without limitation, an agreement in principle, with any person (other than Grantee or any of its subsidiaries) to effect or provide for an Acquisition Transaction; (iv) any person shall solicit proxies or consents or announce a bona fide intention to solicit proxies or consents from Grantor's stockholders (x) relating to directors, (y) in opposition to the Merger, the Merger Agreement or any related transactions or (z) relating to an Acquisition Transaction (other than solicitations of stockholders seeking approval of the Merger, the Merger Agreement or any related transactions); or (v) any person (other than Grantee or any of its subsidiaries) shall have -3- 4 acquired beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act) or the right to acquire beneficial ownership of, or any "group" (as such term is defined under the Exchange Act) shall have been formed which beneficially owns or has the right to acquire beneficial ownership of, shares of Common Stock (other than trust account shares) aggregating 15 percent or more of the then outstanding Common Stock. As used in this Agreement, "person" shall have the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act. 3. The Closing. (a) Except as otherwise provided in Section l(d), any closing hereunder shall take place on the date specified by the Grantee in its Stock Exercise Notice or Cash Exercise Notice, as the case may be, at 9:00 A.M., local time, at the offices of Alston & Bird LLP, 1201 West Peachtree Street, Atlanta, Georgia, or if the conditions set forth in Section 2(a), (b) or (c) have not then been satisfied, on the second business day following the satisfaction of such conditions, or at such other time and place as the parties hereto may agree (the "Closing Date"). On the Closing Date, (i) in the event of a closing pursuant to Section l(b) hereof, the Grantor will deliver to the Grantee a certificate or certificates, representing the Shares in the denominations designated by the Grantee in its Stock Exercise Notice and the Grantee will purchase such Shares from the Grantor at the price per Share equal to the Purchase Price, or (ii) in the event of a closing pursuant to Section l(c) or Section l(d) hereof, as the case may be, the Grantor will deliver to the Grantee cash in an amount determined pursuant to Section l(c) or Section l(d) hereof, as the case may be. Except as otherwise provided in Section l(d), any payment made by the Grantee to the Grantor, or by the Grantor to the Grantee, pursuant to this Agreement shall be made by certified or official bank check or by wire transfer of federal funds to a bank designated by the party receiving such funds. (b) The certificates representing the Shares shall bear an appropriate legend relating to the fact that such Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"). 4. Representations and Warranties of the Grantor. The Grantor represents and warrants to the Grantee that: (a) Grantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has the requisite corporate power and authority to enter into and perform this Agreement; (b) the execution and delivery of this Agreement by the Grantor and the consummation by it of the transactions contemplated hereby have been duly authorized by the Board of Directors of the Grantor and this Agreement has been duly executed and delivered by a duly authorized officer of the Grantor and constitutes a valid and binding obligation of the Grantor, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles; -4- 5 (c) the Grantor has taken all necessary corporate action to authorize and reserve the Shares issuable upon exercise of the Option and the Shares, when issued and delivered by the Grantor upon exercise of the Option and paid for by Grantee as contemplated hereby will be duly authorized, validly issued, fully paid and non-assessable and free of preemptive rights; (d) except as otherwise required by the HSR Act and applicable insurance laws, the execution and delivery of this Agreement by the Grantor and the consummation by it of the transactions contemplated hereby do not require the consent, waiver, approval or authorization of or any filing with any person or public authority and will not violate, result in a breach of or the acceleration of any obligation under, or constitute a default under, any provision of Grantor's charter or by-laws, or any material indenture, mortgage, lien, lease, agreement, contract, instrument, order, law, rule, regulation, judgment, ordinance, or decree, or restriction by which the Grantor or any of its subsidiaries or any of their respective properties or assets is bound; (e) no "fair price", "moratorium", "control share acquisition," "interested shareholder" or other form of antitakeover statute or regulation, including without limitation, Sections 607.0901 or 607.0902 of the Florida Business Corporation Act, or similar provision contained in the charter or by-laws of Grantor, including without limitation, Article VIII of Grantor's Third Amended and Restated Articles of Incorporation, is or shall be applicable to the acquisition of Shares pursuant to this Agreement; and (f) the Grantor has taken all corporate action necessary so that any Shares acquired pursuant to this Agreement shall not be counted for purposes of determining the number of shares of Common Stock beneficially owned by the Grantee or any of its Affiliates or Associates (as defined in the Rights Agreement) pursuant to the Rights Agreement, dated as of February 19, 1998, between the Grantor and ChaseMellon Shareholder Services, LLC, as Rights Agent (the "Rights Agreement"). 5. Representations and Warranties of the Grantee. The Grantee represents and warrants to the Grantor that: (a) the execution and delivery of this Agreement by the Grantee and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Grantee and this Agreement has been duly executed and delivered by a duly authorized officer of the Grantee and constitutes a valid and binding obligation of Grantee; and (b) the Grantee is acquiring the Option and, if and when it exercises the Option, will be acquiring the Shares issuable upon the exercise thereof for its own account and not with a view to distribution or resale in any manner which would be in violation of the Securities Act. 6. Listing of Shares; Filings; Governmental Consents. Subject to applicable law and the rules and regulations of the New York Stock Exchange, Inc. (the "NYSE"), -5- 6 the Grantor will promptly file an application to list the Shares on the NYSE and will use its reasonable best efforts to obtain approval of such listing and to effect all necessary filings by the Grantor under the HSR Act and the applicable insurance laws of each state and foreign jurisdiction; provided, however, that if the Grantor is unable to effect such listing on the NYSE by the Closing Date, the Grantor will nevertheless be obligated to deliver the Shares on the Closing Date. Each of the parties hereto will use its reasonable best efforts to obtain consents of all third parties and governmental authorities, if any, necessary for the consummation of the transactions contemplated. 7. Repurchase of Shares. If by the first anniversary of the date the Merger Agreement was terminated (the "Merger Termination Date") pursuant to the terms thereof, neither the Grantee nor any other Person has acquired more than fifty percent (excluding the Shares) of the shares of outstanding Common Stock, then the Grantor has the right to purchase (the "Repurchase Right") all, but not less than all, of the Shares at the greater of (i) the Purchase Price or (ii) the average of the last sales prices for shares of Common Stock on the five trading days ending five days prior to the date the Grantor gives written notice of its intention to exercise the Repurchase Right. If the Grantor does not exercise the Repurchase Right within thirty days following the end of the one year period after the Merger Termination Date, the Repurchase Right lapses. In the event the Grantor wishes to exercise the Repurchase Right, the Grantor shall send a written notice to the Grantee specifying a date (not later than 20 business days and not earlier than 10 business days following the date such notice is given) for the closing of such purchase. 8. Sale of Shares. At any time prior to the first anniversary of the Merger Termination Date, the Grantee shall have the right to sell (the "Sale Right") to the Grantor all, but not less than all, of the Shares at the greater of (i) the Purchase Price, or (ii) the average of the last sales prices for shares of Common Stock on the five trading days ending five days prior to the date the Grantee gives written notice of its intention to exercise the Sale Right. If the Grantee does not exercise the Sale Right prior to the first anniversary of the Merger Termination Date, the Sale Right terminates. In the event the Grantee wishes to exercise the Sale Right, the Grantee shall send a written notice to the Grantor specifying a date (not later than 20 business days and not earlier than 10 business days following the date such notice is given) for the closing of such sale. 9. Registration Rights. (a) In the event that the Grantee shall desire to sell any of the Shares within three years after the purchase of such Shares pursuant hereto, and such sale requires, in the opinion of counsel to the Grantee, which opinion shall be reasonably satisfactory to the Grantor and its counsel, registration of such Shares under the Securities Act, the Grantor will cooperate with the Grantee and any underwriters in registering such Shares for resale, including, without limitation, promptly filing a registration statement which complies with the requirements of applicable federal and state securities laws, and entering into an underwriting agreement with such underwriters upon such terms and conditions as are customarily contained in underwriting agreements with respect to secondary distributions; provided that the Grantor shall not be required to have declared effective more than two registration statements hereunder and shall be entitled to delay -6- 7 the filing or effectiveness of any registration statement for up to 60 days if the offering would, in the judgment of the Board of Directors of the Grantor, require premature disclosure of any material corporate development or material transaction involving the Grantor or interfere with any previously planned securities offering by the Company. (b) If the Common Stock is registered pursuant to the provisions of this Section 9, the Grantor agrees (i) to furnish copies of the registration statement and the prospectus relating to the Shares covered thereby in such numbers as the Grantee may from time to time reasonably request, and (ii) if any event shall occur as a result of which it becomes necessary to amend or supplement any registration statement or prospectus, to prepare and file under the applicable securities laws such amendments and supplements as may be necessary to keep available for at least 45 days a prospectus covering the Common Stock meeting the requirements of such securities laws, and to furnish the Grantee such numbers of copies of the registration statement and prospectus as amended or supplemented as may reasonably be requested. The Grantor shall bear the cost of the registration, including, but not limited to, all registration and filing fees, printing expenses, and fees and disbursements of counsel and accountants for the Grantor, except that the Grantee shall pay the fees and disbursements of its counsel, and the underwriting fees and selling commissions applicable to the shares of Common Stock sold by the Grantee. The Grantor shall indemnify and hold harmless (i) Grantee, its affiliates and its officers and directors, and (ii) each underwriter and each person who controls any underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (collectively, the "Underwriters") ((i) and (ii) being referred to as "Indemnified Parties") against any losses, claims, damages, liabilities or expenses, to which the Indemnified Parties may become subject, insofar as such losses, claims, damages, liabilities (or actions in respect thereof) and expenses arise out of or are based upon any untrue statement or alleged untrue statement, of any material fact contained or incorporated by reference in any registration statement filed pursuant to this paragraph, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Grantor will not be liable in any such case to the extent that any such loss, liability, claim, damage or expense arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any such documents in reliance upon and in conformity with written information furnished to the Grantor by the Indemnified Parties expressly for use or incorporation by reference therein. (c) The Grantee and the Underwriters shall indemnify and hold harmless the Grantor, its affiliates and its officers and directors against any losses, claims, damages, liabilities or expenses to which the Grantor, its affiliates and its officers and directors may become subject, insofar as such losses, claims, damages, liabilities (or actions in respect thereof) and expenses arise out of or are based upon any untrue statement of any material fact contained or incorporated by reference in any registration statement filed pursuant to this paragraph, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission -7- 8 was made in reliance upon and in conformity with written information furnished to the Grantor by the Grantee or the Underwriters, as applicable, specifically for use or incorporation by reference therein. 10. Expenses. Each party hereto shall pay its own expenses incurred in connection with this Agreement, except as otherwise specifically provided herein. 11. Specific Performance. The Grantor acknowledges that if the Grantor fails to perform any of its obligations under this Agreement immediate and irreparable harm or injury will be caused to the Grantee for which money damages would not be an adequate remedy. In such event, the Grantor agrees that the Grantee shall have the right, in addition to any other rights it may have, to specific performance of this Agreement. Accordingly, if the Grantee should institute an action or proceeding seeking specific enforcement of the provisions hereof, the Grantor hereby waives the claim or defense that the Grantee has an adequate remedy at law and hereby agrees not to assert in any such action or proceeding the claim or defense that such a remedy at law exists. The Grantor further agrees to waive any requirements for the securing or posting of any bond in connection with obtaining any such equitable relief. 12. Notice. All notices, requests, demands and other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended or delivered by registered or certified mail, return receipt requested, or if sent by facsimile transmission, upon receipt of oral confirmation that such transmission has been received, to the person at the address set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person: If to the Grantee: Fortis, Inc. One Chase Manhattan Plaza New York, New York 10005 Attention: Jerome A. Atkinson, Senior Vice President and General Counsel fax: (212) 859-7034 phone: (212) 859-7285 with a copy to (which shall not constitute notice): B. Harvey Hill, Jr., Esq. Alston & Bird LLP 1201 W. Peachtree Street Atlanta, Georgia 30309 fax: (404) 881-4777 phone: (404) 881-7446 -8- 9 If to the Grantor: American Bankers Insurance Group, Inc. 11222 Quail Roost Drive Miami, Florida 33157-6596 Attention: Chief Executive Officer fax: (305) 256-7110 phone: (305) 252-6991 with a copy to (which shall not constitute notice): Josephine Cicchetti, Esq. Jordan Burt Boros Cicchetti Berenson & Johnson LLP 777 Brickell Avenue, Suite 500 Miami, Florida 33131 fax: (305) 372-9928 phone: (305) 371-2600 and Jonathan L. Freedman, Esq. Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 fax: (212) 259-6333 phone: (212) 259-6680 13. Parties in Interest. This Agreement shall inure to the benefit of and be binding upon the parties named herein and their respective successors and assigns; provided, however, that such successor in interest or assigns shall agree to be bound by the provisions of this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the Grantor or the Grantee or their successors or assigns, any rights or remedies under or by reason of this Agreement. 14. Entire Agreement; Amendments. This Agreement, together with the Merger Agreement and the other documents referred to therein, contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, oral or written, with respect to such transactions. This Agreement may not be changed, amended or modified orally, but may be changed only by an agreement in writing signed by the party against whom any waiver, change, amendment, modification or discharge may be sought. 15. Assignment. No party to this Agreement may assign any of its rights or obligations under this Agreement without the prior written consent of the other party hereto, except that the Grantee may assign its rights and obligations hereunder to any of its direct or indirect wholly owned subsidiaries (including Merger Subsidiary) or direct or -9- 10 indirect parent companies, but no such transfer shall relieve the Grantee of its obligations hereunder if such transferee does not perform such obligations. 16. Headings. The section headings herein are for convenience only and shall not affect the construction of this Agreement. 17. Counterparts. This Agreement may be executed in any number of counterparts, each of which, when executed, shall be deemed to be an original and all of which together shall constitute one and the same document. 18. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida (regardless of the laws that might otherwise govern under applicable Florida principles of conflicts of law). 19. Termination. The right to exercise the Option granted pursuant to this Agreement shall terminate at the earlier of (i) the Effective Time (as defined in the Merger Agreement); (ii) 90 days after the Merger Termination Date (the date referred to in clause (ii) being hereinafter referred to as the "Option Termination Date"), or (iii) 18 months after the date hereof; provided that, if the Option cannot be exercised or the Shares cannot be delivered to Grantee upon such exercise because the conditions set forth in Section 2(a), (b) or (c) hereof have not yet been satisfied, the Option Termination Date shall be extended until thirty days after such impediment to exercise or delivery has been removed. All representations and warranties contained in this Agreement shall survive delivery of and payment for the Shares. 20. Profit Limitation. Notwithstanding any other provision of this Agreement, in no event shall the Grantee's Total Profit (as hereinafter defined) exceed $100 million and, if it otherwise would exceed such amount, the Grantee, at its sole election, shall either (a) reduce the number of shares of Common Stock required to be delivered by Grantor pursuant to the Stock Exercise Notice, (b) deliver to the Grantor for cancellation Shares previously purchased by Grantee, (c) reduce the cash payable to Grantee pursuant to Section l(c) or l(d) hereof, (d) pay cash or other consideration to the Grantor, or (e) undertake any combination thereof, so that Grantee's Total Profit shall not exceed $100 million after taking into account the foregoing actions. Notwithstanding any other provision of this Agreement, this Option may not be exercised for a number of Shares as would, as of the date of the Stock Exercise Notice, result in a Notional Total Profit (as defined below) of more than $100 million and, if exercise of the Option otherwise would exceed such amount, the Grantee, at its discretion, may increase the Purchase Price for that number of Shares set forth in the Stock Exercise Notice so that the Notional Total Profit shall not exceed $100 million; provided, that nothing in this sentence shall restrict any exercise of the Option permitted hereby on any subsequent date at the Purchase Price set forth in Section 1(a) hereof. As used herein, the term "Total Profit" shall mean the aggregate amount (before taxes) of the following: (i) the amount of cash received by Grantee pursuant to Section -10- 11 8.5 of the Merger Agreement and Section l(c) and Section l(d) hereof, (ii) the amount of (x) cash received by Grantee pursuant to the Grantor's repurchase of Shares pursuant to Sections 7 or 8 hereof, less (y) the Grantee's purchase price for such Shares, and (iii) (x) the net cash amounts received by Grantee pursuant to the sale of Shares (or any other securities into which such Shares are converted or exchanged) to any unaffiliated party prior to the first anniversary of the Merger Termination Date, less (y) the Grantee's purchase price for such Shares. As used herein, the term "Notional Total Profit" with respect to any number of Shares as to which Grantee may propose to exercise this Option shall be the Total Profit determined as of the date of the Stock Exercise Notice assuming that this Option were exercised on such date for such number of Shares and assuming that such Shares, together with all other Shares held by Grantee and its affiliates as of such date, were sold for cash at the closing market price for the Common Stock as of the close of business on the preceding trading day (less customary brokerage commissions). 21. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 22. Public Announcement. The Grantee will consult with the Grantor and the Grantor will consult with the Grantee before issuing any press release with respect to the initial announcement of this Agreement, the Option or the transactions contemplated hereby and neither party shall issue any such press release prior to such consultation except as may be required by law or the applicable rules and regulations of the NYSE. [Signatures on Next Page] -11- 12 IN WITNESS WHEREOF, the Grantee and the Grantor have caused this Agreement to be duly executed and delivered on the day and year first above written. AMERICAN BANKERS INSURANCE GROUP, INC. By: /s/ Gerald N. Gaston --------------------------------------- Name: Gerald N. Gaston ------------------------------------- Title: President, Chief Executive Officer ------------------------------------ and Vice Chairman of the Board FORTIS, INC. By: /s/ Jerome A. Atkinson --------------------------------------- Name: Jerome A. Atkinson ------------------------------------- Title: Secretary / Senior VP ------------------------------------ -12- EX-10.2 4 VOTING AGREEMENT 1 EXHIBIT 10.2 CONFORMED COPY VOTING AGREEMENT THIS VOTING AGREEMENT (the "Agreement") is entered into as of March 5, 1999, between the undersigned stockholders (each a "Stockholder" and collectively, the "Stockholders") of AMERICAN BANKERS INSURANCE GROUP, INC., a Florida corporation (the "Company"), and FORTIS, INC., a Nevada corporation ("Parent"). WHEREAS, concurrently with the execution and delivery of this Agreement, Greenland Acquisition Corp., a Florida corporation and a wholly owned subsidiary of Parent ("Merger Subsidiary"), Parent and the Company have entered into an Agreement and Plan of Merger dated as of March 5, 1999 (the "Merger Agreement"), providing for the merger of the Company with and into Merger Subsidiary (the "Merger") pursuant to the terms and conditions of the Merger Agreement, and setting forth certain representations, warranties, covenants and agreements of the parties thereto in connection with the Merger; and WHEREAS, as an inducement and a condition to Parent entering into the Merger Agreement, pursuant to which each Stockholder will receive the Merger Consideration (as defined in the Merger Agreement) in exchange for each share of Common Stock, par value $1.00 per share, of the Company ("Company Common Stock") owned by such Stockholder, the Stockholders each have agreed to enter into this Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt, sufficiency and adequacy of which is hereby acknowledged, the parties hereto agree as follows: 1. Representations of Stockholders. Each of the Stockholders severally represents as to himself or herself that such Stockholder: (a) is the holder in the capacity set forth on Exhibit A hereto of that number of shares of Company Common Stock set forth opposite such Stockholder's name on Exhibit A (such Stockholder's "Shares"); (b) does not beneficially own (as such term is defined in the Securities Exchange Act of 1934, as amended (the "1934 Act")) any shares of Company Common Stock other than his or her Shares, and other than any shares of Company Common Stock that such Stockholder has the right to obtain upon the exercise of Company Stock Options (as defined in the Merger Agreement) outstanding on the date hereof; (c) has the right, power and authority to execute and deliver this Agreement and to perform his obligations under this Agreement, and this Agreement has been duly executed and delivered by such Stockholder and constitutes a valid and legally binding agreement of such Stockholder, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar 2 laws of general applicability relating to or affecting creditors' rights and to general equity principles; and such execution, delivery and performance by Shareholder of this Agreement will not (i) conflict with, require a consent, waiver or approval under, or result in a breach of or default under, any of the terms of any contract, commitment or other obligation (written or oral) to which such Stockholder is a party or by which such Stockholder is bound; (ii) violate any order, writ, injunction decree or statute, or any rule or regulation, applicable to Stockholder or any of the properties or assets of Stockholder; or (iii) result in the creation of, or impose any obligation on such Stockholder to create, any lien, charge or other encumbrance of any nature whatsoever upon the Shares; and (d) the Shares are now and will at all times during the term of this Agreement be held by such Stockholder, or by a nominee or custodian for the account of such Stockholder, free and clear of all pledges, liens, proxies, claims, charges, security interests, preemptive rights and any other encumbrances whatsoever with respect to the ownership, transfer or voting of such Shares; and there are no outstanding options, warrants or rights to purchase or acquire, or other agreements relating to, such Shares other than this Agreement, except, in the case of Mr. Landon for 40,000 Shares subject to an option granted prior to the date hereof to a third party. The representations and warranties contained herein shall be made as of the date hereof and as of each date from the date hereof through and including the date that the Merger is consummated. 2. Agreement to Vote Shares. Each of the Stockholders severally agrees to vote his or her Shares and any New Shares (as defined in Section 7 hereof), and shall cause any holder of record of his or her Shares or New Shares to vote, (a) in favor of adoption and approval of the Merger Agreement and the Merger (and each other action and transaction, contemplated by the Merger Agreement and this Agreement) at every meeting of the stockholders of the Company at which such matters are considered and at every adjournment thereof, and (b) against any action or proposal that would compete with or could serve to materially interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Merger or Tender Offer. Any such vote shall be cast or consent shall be given in accordance with such procedures relating thereto as shall ensure that it is duly counted for purposes of determining that a quorum is present and for purposes of recording the results of such vote or consent. Each Stockholder severally agrees to deliver to Parent upon request a proxy substantially in the form attached hereto as Exhibit B, which proxy shall be coupled with an interest and irrevocable to the extent permitted under Florida law, with the total number of such Stockholder's Shares and any New Shares correctly indicated thereon. Each Stockholder also agrees to use his or her reasonable efforts to take, or cause to be taken, all action, and do, or cause to be done, all things necessary or advisable in order to consummate and make effective the transactions contemplated by this Agreement. 3. No Voting Trusts. After the date hereof, the Stockholders severally agree that they will not, nor will they permit any entity under their control to, deposit any of their Shares in a voting trust or subject any of their Shares to any arrangement with -2- 3 respect to the voting of such Shares other than agreements entered into with Parent or Merger Subsidiary. 4. No Proxy Solicitations. Each of the Stockholders severally agrees that such Stockholder will not, nor will such Stockholder permit any entity under their control to, (a) solicit proxies or become a "participant" in a "solicitation" (as such terms are defined in Regulation 14A under the 1934 Act) in opposition to or competition with the consummation of the Merger or otherwise encourage or assist any party in taking or planning any action which would compete with or otherwise could serve to materially interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Merger or the Tender Offer in accordance with the terms of the Merger Agreement, (b) directly or indirectly encourage, initiate or cooperate in a stockholders' vote or action by consent of the Company's stockholders in opposition to or in competition with the consummation of the Merger or the Tender Offer, or (c) become a member of a "group" (as such term is used in Section 13(d) of the 1934 Act) with respect to any voting securities of the Company for the purpose of opposing or competing with the consummation of the Merger or the Tender Offer; provided, that the foregoing shall not restrict any director of the Company from taking any action such director believes is necessary to satisfy such director's fiduciary duty to stockholders of the Company. 5. Transfer and Encumbrance. On or after the date hereof, each of the Stockholders severally agrees not to voluntarily transfer, sell, offer, pledge or otherwise dispose of or encumber ("Transfer") any of his or her Shares or New Shares prior to the earlier of (a) the effective date of the Merger or (b) the date this Agreement shall be terminated in accordance with its terms. Notwithstanding anything to the contrary in this Agreement, (A) Mr. Landon shall be permitted to Transfer (i) Shares or New Shares Transferred for net after-tax proceeds of not in excess of $10,000,000 and (ii) Shares or New Shares Transferred pursuant to any decision by a court or alternative dispute resolution entity, or in settlement of any legal proceeding and (B) Mr. Gaston shall be permitted to Transfer Shares or New Shares Transferred for net after-tax proceeds of not in excess of $2,000,000. 6. Legend. As soon as practicable after the execution of this Agreement, each Stockholder shall surrender to the Company the certificates representing the Shares in his or her possession (and within 30 days the Shares not in his or her possession), shall cause the following legend to be placed on the certificates representing such Shares and shall request that such legend remain thereon until the earlier of (i) expiration or termination of the Agreement or (ii) the consummation of the Merger: The shares of capital stock represented by this certificate are subject to a Voting Agreement, dated as of March 5, 1999 among the Stockholders named therein and Fortis, Inc., which, among other things, (a) restricts the sale or transfer of such shares except in accordance therewith, and (b) restricts the voting of such shares except in accordance therewith. -3- 4 In the event that Parent requests that a proxy be executed and delivered by Stockholder to it pursuant to Section 2 hereof, Stockholder shall promptly surrender to the Company the certificates representing the Shares covered by the proxy and cause the foregoing legend to be revised to add to the end of such legend the following words: , and such shares are also subject to an irrevocable proxy under Section 607.0722 of the Florida Business Corporation Act. Stockholder shall provide Parent with reasonably satisfactory evidence of its compliance with this Section 6 on or prior to the date five business days after the execution hereof with respect to Shares in his possession (or within 30 days with respect to Shares not in his possession) or of the request relating to Stockholder's proxy, as the case may be. 7. Additional Purchases. Each of the Stockholders severally agrees that in the event (i) of any stock dividend, stock split, recapitalization, reclassification, combination or exchange of shares of capital stock of the Company on, of or affecting the Shares of a Stockholder, (ii) such Stockholder purchases or otherwise acquires beneficial ownership of any shares of Company Common Stock after the execution of this Agreement, or (iii) such Stockholder voluntarily acquires the right to vote or share in the voting of any shares of Company Common Stock other than the Shares (collectively, "New Shares"), such Stockholder agrees to deliver promptly to Parent upon request of Parent an irrevocable proxy substantially in the form attached hereto as Exhibit B with respect to such New Shares. Each of the Stockholders also severally agrees that any New Shares acquired or purchased by him or her shall be subject to the terms of this Agreement to the same extent as if they constituted Shares. 8. Specific Performance. Each party hereto severally acknowledges that it will be impossible to measure in money the damage to the other party if the party hereto fails to comply with any of the obligations imposed by this Agreement, that every such obligation is material and that, in the event of any such failure, the other party will not have an adequate remedy at law or damages. Accordingly, each party hereto severally agrees that injunctive relief or other equitable remedy, in addition to remedies at law or damages, is the appropriate remedy for any such failure and will not oppose the granting of such relief on the basis that the other party has an adequate remedy at law. Each party hereto severally agrees that it will not seek, and agrees to waive any requirement for, the securing or posting of a bond in connection with any other party's seeking or obtaining such equitable relief. 9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall not be assignable without the written consent of all other parties hereto. 10. Entire Agreement. This Agreement supersedes all prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof and contains the entire agreement among the parties with respect to the subject matter hereof. This Agreement may not be amended, supplemented or modified, and no provisions -4- 5 hereof may be modified or waived, except by an instrument in writing signed by all the parties hereto. No waiver of any provisions hereof by any party shall be deemed a waiver of any other provisions hereof by any such party, nor shall any such waiver be deemed a continuing waiver of any provision hereof by such party. 11. Miscellaneous. (a) This Agreement shall be deemed a contract made under, and for all purposes shall be construed in accordance with, the laws of the State of Florida. (b) If any provision of this Agreement or the application of such provision to any person or circumstances shall be held invalid by a court of competent jurisdiction, the remainder of the provision held invalid and the application of such provision to persons or circumstances, other than the party as to which it is held invalid, shall not be affected. (c) This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. (d) This Agreement shall terminate upon the earliest to occur of (i) the Effective Time of the Merger, (ii) termination of the Merger Agreement or (iii) the Termination Date (as defined in the Merger Agreement). (e) All Section headings herein are for convenience of reference only and are not part of this Agreement, and no construction or reference shall be derived therefrom. (f) The obligations of the Stockholders set forth in this Agreement shall not be effective or binding upon any Stockholder until after such time as the Merger Agreement is executed and delivered by the Company, Parent and Merger Subsidiary, and the parties agree that there is not and has not been any other agreement, arrangement or understanding between the parties hereto with respect to the matters set forth herein. [Signatures on Next Page] -5- 6 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first written above. FORTIS, INC. By: /s/ Jerome A. Atkinson --------------------------------------- Name: Jerome A. Atkinson ------------------------------------- Title: Secretary / Senior VP ------------------------------------ THE STOCKHOLDERS: /s/ Gerald N. Gaston ------------------------------------------- Name: Gerald N. Gaston /s/ R. Kirk Landon ------------------------------------------- Name: R. Kirk Landon R. KIRK LANDON / B. LANDON FOUNDATION /s/ R. Kirk Landon ------------------------------------------- By: R. Kirk Landon R. KIRK LANDON REVOCABLE TRUST /s/ R. Kirk Landon ------------------------------------------- Name: R. Kirk Landon, Trustee LANDON CORPORATION /s/ R. Kirk Landon ------------------------------------------- Name: R. Kirk Landon -6- 7 [EXHIBITS INTENTIONALLY OMITTED] -7- EX-10.3 5 AMENDMENT #2 TO THE RIGHTS AGREEMENT 1 EXHIBIT 10.3 AMENDMENT NUMBER TWO TO THE RIGHTS AGREEMENT Amendment Number Two, dated as of March 4, 1999 ("Amendment Number Two"), by and between American Bankers Insurance Group, Inc., a Florida corporation (the "Company") and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), to the Rights Agreement, dated as of February 19, 1998, as amended by Amendment Number One thereto (the "Rights Agreement"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Rights Agreement. RECITALS WHEREAS, the Company and the Rights Agent entered into and executed the Rights Agreement; and WHEREAS, the Company and the Rights Agent have agreed to and hereby desire to supplement and amend the Rights Agreement in the manner set forth herein; and WHEREAS, except as otherwise stated herein, the Rights Agreement remains in full force and effect; NOW, THEREFORE, in consideration of the mutual agreements and covenants hereinafter set forth, the Company and the Rights Agent hereby agree to amend and supplement the Rights Agreement as follows: SECTION 1, CERTAIN DEFINITIONS, IS HEREBY AMENDED BY DELETING THE CURRENT DEFINITION OF "ACQUIRING PERSON" IN ITS ENTIRETY AND REPLACING SUCH DEFINITION WITH THE FOLLOWING DEFINITION: (a) "Acquiring Person" shall mean any person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the 2 Company for or pursuant to the terms of any such plan. Notwithstanding anything to the contrary contained herein, Fortis, Inc., a Nevada Corporation ("Fortis"), Greenland Acquisition Corp., a Florida corporation and wholly-owned subsidiary of Fortis ("Greenland"), or any of their Affiliates may not be deemed to be an Acquiring Person for any purpose of this Agreement solely by reason of the execution, delivery or consummation of, or the consummation of the transactions contemplated by, the Agreement and Plan of Merger, dated as of March 5, 1999, by and among Fortis, Greenland and the Company (the "Fortis Merger Agreement"), the Stock Option Agreement dated as of March 5, 1999, between the Company and Fortis (the "Stock Option Agreement") and the Voting Agreement dated as of March 5, 1999, among Fortis and certain stockholders of the Company (the "Voting Agreement," and together with the Fortis Merger Agreement and the Stock Option Agreement, the "Fortis Agreements"), including without limitation the Tender Offer (as defined in the Fortis Merger Agreement) and the granting of an irrevocable proxy pursuant to the Stock Option Agreement; PROVIDED, HOWEVER, that Fortis, Greenland or any of their Affiliates shall be deemed to be an Acquiring Person if any of them acquire Beneficial Ownership of any shares of Common Stock other than pursuant to the Fortis Agreements and the transactions contemplated thereby. SECTION 1 OF THE RIGHTS AGREEMENT IS HEREBY FURTHER AMENDED BY ADDING THE FOLLOWING SECTION TO THE END OF SUBSECTION (c), THE DEFINITION OF "BENEFICIAL OWNER:" (v) notwithstanding anything herein to the contrary, Fortis, Greenland or any of their Affiliates shall not be deemed to be a Beneficial Owner for any purpose of this Agreement of any shares of Common Stock acquired or to be acquired pursuant to the execution, delivery or consummation of the Fortis Agreements or the consummation of the transactions contemplated thereby, including without limitation the Tender Offer and the granting of an 2 3 irrevocable proxy pursuant to the Stock Option Agreement, but shall be deemed to be the Beneficial Owner of any shares of Common Stock acquired other than pursuant to the Fortis Agreements and the transactions contemplated thereby. SECTION 3(a) OF THE RIGHTS AGREEMENT IS AMENDED TO READ, IN ITS ENTIRETY, AS FOLLOWS: (a) Until the Close of Business on the day (or such later date as may be determined by action of the Board of Directors, upon approval by a majority of the Continuing Directors) which is the earlier of (i) the tenth (10th) day after the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such (or, if the tenth (10th) day after such date occurs before the Record Date, the Close of Business on the Record Date), or (ii) the tenth (10th) Business Day after the date that a tender or exchange offer by any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan) is first published or sent or given within the meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon consummation thereof, such Person would be the Beneficial Owner of fifteen percent (15%) or more of the shares of Common Stock then outstanding (the earlier of such dates being herein referred to as the "Distribution Date"), (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be certificates for Rights) and not by separate certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying shares of Common Stock (including a transfer to the 3 4 Company). As soon as practicable after the Distribution Date, the Rights Agent will send by first-class, insured, postage prepaid mail, to each record holder of the Common Stock as of the Close of Business on the Distribution Date, at the address of such holder shown on the records of the Company, one or more rights certificates, in substantially the form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per share of Common Stock has been made pursuant to Section 11(p) hereof, at the time of distribution of the Right Certificates, the Company shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates representing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by the Rights Certificates. Notwithstanding anything herein to the contrary, the date of execution, delivery or consummation of the Fortis Agreements shall not be deemed to be a Distribution Date for any purpose of this Agreement solely by reason of such execution, delivery or consummation; PROVIDED, HOWEVER, that any other acquisition of Beneficial Ownership of Common Stock by Fortis, Greenland or any of their Affiliates other than pursuant to the Fortis Agreements shall give rise to a Distribution Date. This Amendment Number Two may be executed in any number of counterparts with the same effect as if the signatures thereunto and hereto were upon the same instrument. 4 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment Number Two to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first written above. ATTEST: AMERICAN BANKERS INSURANCE GROUP, INC. By: /s/ Arthur W. Heggen By: /s/ Gerald N. Gaston --------------------------------- ------------------------------- Name: Arthur W. Heggen Name: Gerald N. Gaston Title: Executive Vice President Title: Chief Executive Officer and Secretary and President ATTEST: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By: /s/ Robert Kavanagh By: /s/ Donald P. Messmer --------------------------------- ------------------------------- Name: Robert Kavanagh Name: Donald P. Messmer, AVP Title: Vice President Title: Relationship Manager 5 EX-99.1 6 PRESS RELEASE 1 EXHIBIT 99.1 Fortis to Acquire American Bankers Insurance Group for US$2.6 Billion UTRECHT, The Netherlands & BRUSSELS, Belgium & MIAMI, Florida, March 8, 1999 - --- Fortis, the international insurance, banking and investment group, and American Bankers Insurance Group, Inc., one of the two leading U.S. credit-related insurers, today announced that they have entered into a definitive agreement for Fortis to acquire 100 percent of the outstanding common and preferred shares of American Bankers Insurance Group, Inc. (NYSE:ABI - - news). For each share of American Bankers Insurance Group ("ABI") common stock, Fortis will pay US$55 in cash, representing a 19 percent premium to the closing price of common stock on March 5, 1999, and for each share of preferred stock, Fortis will pay US$109.857 in cash, valuing ABI at US$2.6 billion. Fortis will also assume US$194 million of outstanding debt of ABI. The transaction is expected to be immediately accretive to Fortis' earnings per share on an unleveraged basis and will enhance its overall earnings growth rate. The transaction will create a leading specialty insurer in the U.S. by combining ABI with American Security Group ("ASG"), Fortis' credit insurance subsidiary based in Atlanta. Similar to ASG, ABI specializes in providing credit-related insurance products in the U.S. and Canada. ABI is also active in Latin America, the Caribbean and the United Kingdom. The combined company will have annual gross premium earned of US$3.6 billion. The acquisition of ABI adds complementary products and distribution channels, particularly through the credit operations of major retailers and consumer-oriented financial institutions. Increased earnings stability in these businesses will be achieved from diversity of channels, products and customers. Furthermore, significant synergies will result from the integration of both organizations' operating and corporate structures and cross selling over their combined distribution network. Allen Freedman, Chief Executive Officer of Fortis, Inc., Fortis' U.S. holding company, said, "The combination of American Bankers Insurance Group and American Security Group strengthens our leadership position in a well-defined, attractive specialty market that both companies know well and in which we have separately made major strides. Our businesses are highly complementary, have similar business processes and share a common, customer-centered focus." "The combination will allow us to increase the number of channels through which we market our credit insurance products. It will broaden product lines, enhance cross-selling opportunities and promote the application of database marketing capabilities to a broader range of customers and array of channels. In Europe and Asia, Fortis will be able to open new growth opportunities for the combined company. For these reasons, this is a winning transaction for both organizations, and we look forward to working closely together to serve our customers in the U.S. and abroad," Freedman said. 2 Henjo Hielkema, Vice Chairman of Fortis' Executive Committee and Chairman of Fortis' Insurance Group, said "This transaction will double the size of Fortis' insurance operations in the United States and significantly enhance the scope of our insurance operations worldwide. It is also consistent with Fortis' strategy to concentrate on a limited number of highly profitable and growing specialty businesses in the United States. Not only is the transaction immediately accretive to earnings per share, but we expect it will generate more than US$100 million of pre-tax annual synergies from operating efficiencies and scale economies within three to five years." Gerald N. Gaston, President and Chief Executive Officer of American Bankers Insurance Group, Inc., said, "The combination will benefit American Bankers Insurance Group through the global scale, depth of resources and new growth opportunities from our combined operations. This transaction is a positive outcome for our employees, customers and shareholders. We look forward to concluding it as quickly as possible and joining with Fortis to better meet our customers' needs." Mr. Freedman will continue as Chairman of Fortis' U.S. operations. The combined business will report to Edward J. O'Hare, Executive Vice President of Fortis, Inc. and former Chairman of ASG. Mr. O'Hare will become President and Chief Executive Officer of the combined entity and remain a member of the Fortis, Inc. Executive Committee. Mr. Gaston will work with Mr. Freedman and other senior Fortis, Inc. executives through the transition, after which he will retire. Mr. Gaston will, however, continue on a consulting basis with Fortis, Inc. The transaction has been approved by the Boards of Directors of both companies, and is subject to customary closing conditions, including regulatory approvals, as well as the approval of ABI's shareholders. The transaction is not subject to financing. Fortis has sufficient resources to complete the transaction, and expects to refinance it with a combination of internally generated funds and capital raised in the international financial markets. Closing of the transaction is expected to take place in the third quarter of 1999. Certain officers and directors of ABI holding approximately 7.5 percent of the outstanding common stock have agreed to vote in favor of the merger. Furthermore, the Merger Agreement provides under certain circumstances for Fortis to receive up to US$100 million, pursuant to a breakup fee and an option to purchase 19.9 percent of ABI common stock. Fortis has been advised by Donaldson, Lufkin & Jenrette and Warburg Dillon Read. American Bankers has been advised by Salomon Smith Barney. 3 Contact: American Bankers Insurance Group, Inc., Miami Press Contacts: Fortis Robin Boon 31 (0) 30 257 6552 31 (0) 6 53 43 06 47 Corneel Maes 32 (0) 2 220 75 39 32 (0) 75 23 79 49 Investor Relations: Annegien Blokpoel 31 (0) 30 257 65 46 Patrick Verelst 32 (0) 2 220 78 02 Frank Dausy 32 (0) 2 220 79 95 Fortis/US Meril Joseph (01) 212 859 7118 American Bankers Insurance Group, Inc. P. Bruce Camacho (01) 305 252 7060 4 BACKGROUND INFORMATION Profile of Fortis Overview Fortis is an international group operating in the fields of insurance, banking and investment. In its home market, the Benelux, Fortis is one of the largest financial service providers, offering a broad range of financial services through various distribution channels. In other countries of Europe, the United States and Asia, Fortis focuses on specialist market sectors. At year-end 1997 Fortis had assets in excess of EUR 298 billion (US$328 billion) and total revenue for the year amounted to EUR 33 billion (US$37 billion). Investment in Fortis is possible through the shares of Fortis (B) in Belgium and Fortis (NL) in the Netherlands. Fortis B is listed on the stock exchanges of Brussels, London and Luxembourg. Fortis (NL) is listed in Amsterdam, London and Luxembourg and has a sponsored ADR program in the United States. On March 5, 1998 the combined market capitalization was EUR 38.9 billion (US$42.2 billion), ranking Fortis as one of Europe's ten largest financial institutions. Insurance Fortis offers a comprehensive range of life and non-life insurance products in Belgium and The Netherlands. The Fortis group's Belgian insurance companies are the leading group of insurance companies in Belgium based on 1997 gross premiums written. Fortis also offers a range of life and non-life products in the United States with an emphasis on specialty niche areas. In addition, Fortis offers life and non-life products in a number of other countries around the world, including Spain, the United Kingdom, Luxembourg, France, Australia and Singapore. Banking Fortis offers a wide range of retail banking, corporate banking, private banking, investment banking and investment management services in Belgium and The Netherlands. Fortis' Belgian banking operations consist principally of Generale Bank, Belgium's largest bank, acquired in June 1998, and ASLK-CGER Bank, Belgium's fifth largest bank, in each case measured in terms of total assets as of December 31, 1997. Fortis' banking operations in The Netherlands consist mainly of the retail banking operations of VSB Bank, the retail and corporate banking operations of Generale Bank Nederland and the specialized investment, corporate and private banking and investment management operations of MeesPierson. 5 Following the business combination with Generale Bank, Fortis is in the process of integrating all its banking activities into one banking group, Fortis Bank, which will be organized around five business lines: individuals, self-employed and small enterprises; medium-sized and large enterprises and public sector; private banking; asset management; and investment bank and financial markets. Investment management Within its banking group's asset management line of business, Fortis manages most of the investments and funds of its insurance and banking operations and offers a wide range of investment management services to third parties in Belgium, The Netherlands, the United States and Asia. Strategy Since its formation in 1990, the prime objective of the Fortis has been the creation of sustainable high value for Fortis shareholders. Fortis is a leading international services group, active in banking, insurance and investment management, with strong Benelux roots. Fortis intends to seek further expansion, developing its strong Benelux platform, on a selective basis, into a European one, while also building a more significant presence, particularly in the U.S. and Asia. In the Benelux, Fortis intends to position itself as a leading provider of integrated financial services, offering retail, corporate and institutional clients a full range of insurance, banking and investment products through a variety of distribution channels. In its other markets, Fortis intends to focus on selective customer segments, product lines and distribution channels. Profile of Fortis, Inc. Fortis, Inc., established in 1978, is the holding company through which Fortis provides specialty insurance and investment products to businesses, associations, financial service organizations and individuals in the United States. It owns or manages approximately US$15 billion in assets and had revenues of more than US$3.2 billion in 1997. Fortis' U.S. strategy is to concentrate operations in specialized market segments with leading market positions. Such segments include variable life and annuities, specialized credit insurance, group long term disability insurance and individual and small group insurance. Since 1997, Fortis has invested nearly US$1 billion in acquisitions in the U.S. to strengthen specific market positions. It acquired ACSIA and AdultCare in the long term care market; Insureco, which provides services to financial institutions; Pierce National Life Insurance Company, one of the largest suppliers of pre-need funeral services in the U.S. and Canada; and John Alden Financial Corporation, which through its John Alden Life Insurance Company subsidiary, is a leading provider of small group health and managed care services. 6 Profile of American Bankers Insurance Group, Inc. American Bankers Insurance Group, Inc. (ABI) concentrates on marketing affordable, specialty insurance products and services through financial institutions, retailers and other entities offering consumer financing as a regular part of their business. ABI, through its insurance subsidiaries, operates in the United States, Canada, the Caribbean, Latin America and the United Kingdom. -----END PRIVACY-ENHANCED MESSAGE-----