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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 29, 1998
SUMMIT HOLDING SOUTHEAST, INC.
(Exact Name of Registrant as Specified in Charter)
FLORIDA 0-21933 59-3409855
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
2310 A-Z PARK ROAD
LAKELAND, FLORIDA 33801
(Address of Principal Executive Offices)
(941) 665-6060
(Registrant's telephone number, including area code)
NOT APPLICABLE.
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On June 29, 1998, Summit Holding Southeast, Inc., a Florida corporation
(the "Company"), Liberty Mutual Insurance Company, a Massachusetts mutual
insurance company ("Liberty"), and Space Mountain Acquisition Corp., a Florida
corporation and a wholly owned subsidiary of Liberty ("Acquisition Sub"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant
to which Liberty will purchase all of the outstanding shares of common stock,
par value $.01 per share (the "Common Stock"), of the Company at a price of
$33.00 per share, in cash (the "Merger Consideration"), upon the terms and
subject to the conditions set forth in the Merger Agreement.
Pursuant to the terms of the Merger Agreement, as soon as practicable
after the satisfaction of the terms and conditions set forth therein,
Acquisition Sub will be merged with and into the Company (the "Merger") with the
Company surviving the Merger as a wholly owned subsidiary of Liberty. At the
time at which the Merger is consummated, each then outstanding share of Common
Stock (other than shares of Common Stock held as treasury stock of the Company)
will be converted into the right to receive the Merger Consideration. In
addition, in connection with the Merger, all outstanding options to purchase
Common Stock will be canceled for a cash payment equal to the difference between
$33.00 per share and the applicable option exercise price, and each of the
outstanding shares of the Company's Series A Preferred Stock will be redeemed in
accordance with its terms.
The Merger is conditioned upon, among other things, the approval of the
Merger Agreement by the holders of at least a majority of the issued and
outstanding shares of Common Stock.
In accordance with the terms of the Merger Agreement, each of the
executive officers and directors of the Company have entered into agreements
with Liberty whereby they have agreed to vote the shares of Common Stock
beneficially owned by them, an aggregate amount of approximately 1,028,000
shares or 16.3% of the total outstanding shares of the Company, in favor of the
Merger and against any competing transaction. In addition, Greg C. Branch,
Chairman of the Board of the Company, William B. Bull, President, Chief
Executive Officer and a director of the Company, Russell L. Wall, Chief
Financial Officer of the Company, and C.C. Dockery, a director of the Company,
have each granted Liberty an option to purchase the shares of Common Stock
beneficially owned by such individual (an aggregate of approximately 863,000
shares) for $33.00 per share through December 31, 1998 (or, under certain
circumstances, if a competing transaction is commenced, through December 31,
1999).
A press release announcing the execution of the Merger Agreement was
released by the Company on June 30, 1998 (the "Press Release").
The Merger Agreement and the Press Release are attached hereto as
Exhibits 99.1 and 99.2, respectively, and each is incorporated herein by
reference in its entirety. The foregoing summary does not purport to be complete
and is qualified in its entirety by reference to such Exhibits.
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<TABLE>
<CAPTION>
ITEM 7. EXHIBITS
<S> <C>
99.1 Agreement and Plan of Merger, dated June 29, 1998, among Liberty Mutual
Insurance Company, Space Mountain Acquisition Corp. and Summit Holding
Southeast, Inc.
99.2 Press Release, dated June 30, 1998, issued by Summit Holding Southeast,
Inc.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUMMIT HOLDING SOUTHEAST, INC.
(Registrant)
Date: July 7, 1998 By /S/ RUSSELL L. WALL
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Russell L. Wall
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
99.1 Agreement and Plan of Merger, dated June 29, 1998, among Liberty
Mutual Insurance Company, Space Mountain Acquisition Corp. and
Summit Holding Southeast, Inc.
99.2 Press Release, dated June 30, 1998, issued by Summit Holding
Southeast, Inc.
</TABLE>
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EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
AMONG
LIBERTY MUTUAL INSURANCE COMPANY,
SPACE MOUNTAIN ACQUISITION CORP.
AND
SUMMIT HOLDING SOUTHEAST, INC.
DATED JUNE 29, 1998
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is entered into on June 29, 1998, by
and among Liberty Mutual Insurance Company, a Massachusetts mutual insurance
company ("Liberty"), Space Mountain Acquisition Corp., a Florida corporation and
a wholly-owned subsidiary of Liberty (the "Acquisition Sub"), and Summit Holding
Southeast, Inc., a Florida corporation ("Summit"). Liberty, the Acquisition Sub,
and Summit are referred to collectively herein as the "Parties."
Preliminary Statement
The respective Boards of Directors of Liberty, Acquisition Sub and
Summit have approved the merger of the Acquisition Sub with and into Summit,
pursuant to which (i) Summit would become a wholly-owned subsidiary of Liberty
and (ii) the holders of the Common Stock, $.01 par value, of Summit ("Summit
Common Stock") would receive, in exchange for each of their shares of Summit
Common Stock, the Merger Consideration described below, all on the terms of and
subject to the conditions set forth in this Agreement. The Board of Directors of
Summit has (a) determined that this Agreement and the transactions contemplated
hereby, including the Merger (as defined herein), are fair to and in the best
interests of the shareholders of Summit, (b) determined that the Merger
Consideration to be paid in the Merger to the shareholders of Summit is fair to
and in the best interests of such shareholders, and (c) approved this Agreement
and the transactions contemplated hereby, including the Merger.
Now, therefore, in consideration of the premises and the mutual
representations, warranties and covenants herein contained, the Parties agree as
follows.
1. Definitions. Certain capitalized terms are used in this
Agreement as specifically defined in Appendix 1 hereto.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, the Acquisition Sub will merge into Summit (the "Merger") at the
Effective Time in accordance with the provisions of the 1989 Florida Business
Corporation Act (the "Florida Business Act"). Summit will be the corporation
surviving the Merger (the "Surviving Corporation").
(b) Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to ss.
8(a), and subject to the satisfaction or waiver of the conditions set forth in
ss. 7, the closing of the Merger (the "Closing") will take place at 11:00 p.m.
on the third business day following the date on which the last of the conditions
in ss. 7(a) shall have been fulfilled or waived in accordance with this
Agreement (the "Closing Date"), at the offices of Choate, Hall & Stewart,
Exchange Place, 53 State Street, Boston, Massachusetts, unless another date,
time or place is agreed to in writing by the Parties.
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(c) Effect of Merger.
(i) General. Summit and the Acquisition Sub will file
with the Florida Department of State on the Closing Date (or on such
other date as the Parties may agree) duly prepared and executed
Articles of Merger in a form prescribed by Liberty (the "Articles of
Merger"). The Merger shall become effective at the time (the "Effective
Time") Summit and the Acquisition Sub file the Articles of Merger with
the Florida Department of State. The Merger shall have the effect set
forth in the Florida Business Act. The Surviving Corporation may, at
any time after the Effective Time, take any action (including executing
and delivering any document) in the name and on behalf of either Summit
or the Acquisition Sub in order to carry out and effectuate the
transactions contemplated by this Agreement.
(ii) Articles of Incorporation. The Articles of
Incorporation of the Acquisition Sub immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving
Corporation, except that the name of the Surviving Corporation shall
continue to be Summit Holding Southeast, Inc.
(iii) By-Laws. The By-Laws of Acquisition Sub immediately
prior to the Effective Time shall be the By-Laws of the Surviving
Corporation.
(iv) Directors and Officers. The directors and officers of
the Acquisition Sub immediately prior to the Effective Time shall
become the directors and officers of the Surviving Corporation at and
as of the Effective Time (retaining their respective positions and
terms of office).
(v) Conversion of Summit Common Stock. At and as of the
Effective Time, by virtue of the Merger and without any action on the
part of any holder of any capital stock of Summit, each share of Summit
Common Stock outstanding at the Effective Time shall automatically be
cancelled and retired and cease to exist, and each holder of a
certificate representing Summit Common Stock shall cease to have any
right with respect thereto, except to receive and become exchangeable
for an amount in cash equal to $33.00 per share (the "Merger
Consideration") in accordance with the provisions of ss. 2(d) below.
(vi) Conversion of Acquisition Sub Shares. At and as of
the Effective Time, by virtue of the Merger and without any action on
the part of any holder of any capital stock of the Acquisition Sub,
each share of Common Stock of the Acquisition Sub outstanding at the
Effective Time shall be converted into one share of Common Stock of the
Surviving Corporation.
(vii) Cancellation of Treasury Stock. Each share of Summit
Common Stock issued and outstanding immediately prior to the Effective
Time that is owned by Summit or by any Subsidiary of Summit shall
automatically be cancelled and retired and shall cease
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to exist, and no Merger Consideration or other consideration shall be
delivered or deliverable in exchange therefor.
(viii) Conversion of Stock Options. At the Effective Time,
(A) each option to purchase shares of Summit Common Stock pursuant to
stock options granted by Summit under the Summit Holding Southeast,
Inc. 1996 Long-Term Incentive Plan (the "Incentive Plan") and
outstanding at the Effective Time (collectively, the "Summit Options"),
all of which are fully exercisable and vested, shall be cancelled and
(B) in consideration of such cancellation, Liberty shall pay to each
such holder of Summit Options an amount in cash equal to the product of
(1) the difference between the Merger Consideration and the price per
share of Summit Common Stock pursuant to which the holder of such
Summit Option may purchase the shares of Summit Common Stock to which
such Summit Option relates (and less any withholding of Taxes as may be
required by applicable law) and (2) the number of shares of Summit
Common Stock subject thereto. At the Effective Time, each such Summit
Option shall no longer represent the right to purchase or receive
shares of Summit Common Stock, but in lieu thereof shall represent the
right to receive the cash payment referred to above in this ss.
2(c)(viii). At or prior to the Effective Time, Summit shall take all
actions necessary to provide notice of the provisions of this ss.
2(c)(viii) to all holders of Summit Options and to cause the
cancellation of the Summit Options in accordance herewith at the
Effective Time.
(d) Exchange of Certificates.
(i) Paying Agent. At the Effective Time, Liberty shall
deposit, or shall cause to be deposited, with or for the account of
Chase Mellon (the "Paying Agent"), for the benefit of the holders of
shares of Summit Common Stock, cash in an aggregate amount sufficient
to pay the aggregate Merger Consideration (the "Payment Fund"). As soon
as practicable after the Effective Time, Liberty will cause the Paying
Agent to mail transmittal instructions and a form of letter of
transmittal in a customary form to each Person who was a holder of
Common Stock of Summit immediately prior to the Effective Time.
(ii) Exchange Procedures. As soon as practicable after the
Effective Time, each holder of an outstanding certificate or
certificates which prior thereto represented shares of Summit Common
Stock shall, upon surrender to the Paying Agent of such certificate or
certificates and acceptance thereof by the Paying Agent, be entitled to
receive with respect to each such share of Summit Common Stock the
amount of cash equal to the Merger Consideration. The Paying Agent
shall accept certificates previously representing Summit Common Stock
upon compliance with such terms and conditions as the Paying Agent may
impose to effect an orderly exchange thereof in accordance with normal
exchange practices. If any Merger Consideration to be paid (or any
portion thereof) is to be delivered to any Person other than the Person
in whose name the certificate representing shares of Summit Common
Stock surrendered in exchange therefor is registered, it shall be a
condition to such exchange that the certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that
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the Person requesting such exchange shall pay to the Paying Agent any
transfer or other taxes required by reason of the payment of Merger
Consideration to a Person other than the registered holder of the
certificate surrendered, or shall establish to the satisfaction of the
Paying Agent that such tax has been paid or is not applicable.
After the Effective Time, there shall be no further transfer
on the records of Summit or its transfer agent of certificates
representing shares of Summit Common Stock and if such certificates are
presented to Summit for transfer, they shall be cancelled against
delivery of the Merger Consideration as hereinabove provided. Until
surrender as contemplated by this ss. 2(d), each certificate
representing shares of Summit Common Stock shall be deemed at any time
after the Effective Time to represent only the right to receive upon
such surrender Merger Consideration with respect to each such share,
without any interest thereon. No interest will be paid or will accrue
on any Merger Consideration payable.
(iii) No Further Ownership Rights in Summit Common Stock.
The Merger Consideration with respect to each share of Summit Common
Stock paid upon the surrender of each certificate representing shares
of Summit Common Stock in accordance with the terms of this Agreement
shall be deemed to have been issued and paid in full satisfaction of
all rights pertaining to the shares of Summit Common Stock theretofore
represented by such certificates.
(iv) Termination of Payment Fund. Any portion of the
Payment Fund that remains undistributed to the holders of the
certificates representing shares of Summit Common Stock for six months
after the Effective Time shall be delivered to Liberty, upon demand,
and any holders of shares of Summit Common Stock who have not
theretofore complied with this ss. 2(d) shall thereafter look only to
Liberty for payment of their claim for any Merger Consideration.
(v) No Liability. None of Liberty, the Surviving
Corporation or the Paying Agent shall be liable to any Person in
respect of any cash, shares, dividends or distributions payable from
the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any
certificates representing shares of Summit Common Stock shall not have
been surrendered prior to five years after the Effective Time (or
immediately prior to such earlier date on which any Merger
Consideration in respect of such certificate would otherwise escheat to
or become the property of any governmental agency or regulatory
authority (a "Governmental Entity")), any Merger Consideration payable
in respect of such certificate shall, to the extent permitted by
applicable law, become the property of Liberty, free and clear of all
claims or interest of any Person previously entitled thereto.
(vi) Investment of Payment Fund. The Paying Agent shall
invest the Payment Fund, as directed by Liberty, in (A) direct
obligations of the United States of America, (B) obligations for which
the full faith and credit of the United States of America is pledged to
provide for the payment of principal and interest or (C) commercial
paper rated, at the
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time of purchase, in either of the two highest quality categories by
Moody's Investors Services, Inc. or Standard & Poor's Corporation, and
any net earnings with respect thereto shall be paid to Liberty as and
when requested by Liberty. In the event the Payment Fund shall realize
a loss on any such investment, Liberty shall promptly thereafter
deposit in such Payment Fund cash in an amount sufficient to enable
such Payment Fund to satisfy all remaining obligations originally
contemplated to be paid out of such Payment Fund.
3. Representations and Warranties of Summit. Summit represents
and warrants to Liberty that the statements contained in this ss. 3 are correct
and complete on the date hereof, except as set forth in the disclosure schedule
attached hereto (the "Disclosure Schedule"). The Disclosure Schedule is arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss. 3.
(a) Organization; Qualification; Corporate Power. Each of Summit
and its Subsidiaries is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of its incorporation and is
duly qualified to conduct business in and in good standing under the laws of
each jurisdiction where such qualification is required except where the failure
to so qualify would not have a Summit Material Adverse Effect. Each of Summit
and its Subsidiaries has full corporate power and authority and all material
licenses, permits, and authorizations necessary to carry on the business in
which it is engaged and in which it currently proposes to engage and to own and
use the properties owned and used by it. Set forth in ss. 3(a) of the Disclosure
Schedule is a list of the direct and indirect Subsidiaries of Summit and the
directors and executive officers of Summit and each of its Subsidiaries. Each of
Summit and its Subsidiaries has delivered to Liberty correct and complete copies
of its charter and by-laws, as amended to date. The minute books (containing the
records of meetings of the stockholders, the boards of directors, and any
committees of the boards of directors) and the stock record books of Summit and
its Subsidiaries are correct and complete. Neither Summit nor any of its
Subsidiaries is in default under or in violation of any provision of its charter
or by-laws.
(b) Capitalization. The entire authorized capital stock of Summit
consists of 25,000,000 shares, of which 20,000,000 are shares of Summit Common
Stock and of which 5,000,000 are shares of the Series A Preferred Stock of
Summit ("Series A Preferred Stock" and, together with shares of Summit Common
Stock, the "Summit Shares"). Of the Summit Common Stock, 5,791,600 shares are
issued and outstanding and none are held in treasury, and of the Series A
Preferred Stock, 1,639,701 shares are issued and outstanding and none are held
in treasury. Except as set forth above, as of the date hereof and except for
500,000 shares of Summit Common Stock reserved for issuance pursuant to the
Incentive Plan, no shares of capital stock or other equity securities of Summit
were issued, reserved for issuance, or outstanding. All of the outstanding
Summit Shares have been duly authorized, are validly issued, fully paid, and
nonassessable and are not subject to any preemptive rights. All shares of Summit
Common Stock which may be issued pursuant to the Incentive Plan, when issued,
will have been duly authorized, validly issued, fully paid and nonassessable.
Set forth on ss. 3(b) of the Disclosure Schedule is a list of the holders of
options under the Incentive Plan, the number of shares of Summit Common Stock
issuable upon the exercise of each such option, and the exercise price thereof.
There are no
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outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Summit. No bonds, debentures,
notes or other indebtedness of Summit or any of its Subsidiaries are issued or
outstanding that are convertible into, or exchangeable for, securities having
the right to vote on any matters on which the shareholders of Summit are
entitled to vote. Except as set forth in ss. 3(b) of the Disclosure Schedule,
all of the outstanding shares of capital stock of each of Summit's Subsidiaries
are validly issued, fully paid and nonassessable, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"). Except as set forth on ss. 3(b) of
the Disclosure Schedule, all of the outstanding shares of capital stock of each
of Summit's Subsidiaries are owned by Summit or by one or more of its
Subsidiaries. Except as set forth in ss. 3(b) of the Disclosure Schedule, none
of Summit or any of its Subsidiaries has any outstanding option, warrant,
subscription or other right, agreement or commitment that either (i) obligates
Summit or any of its Subsidiaries to issue, sell or transfer, repurchase, redeem
or otherwise acquire or vote any shares of the capital stock of Summit or any of
its Subsidiaries or (ii) restricts the transfer of Summit Common Stock.
(c) Authority; Noncontravention. Summit has the requisite
corporate power and authority to enter into this Agreement and, subject to the
approval of its shareholders with respect to this Agreement and the Merger, to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Summit and the consummation by Summit of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Summit, subject to the approval of its
shareholders. This Agreement has been duly executed and delivered by Summit and
constitutes the valid and binding obligation of Summit, enforceable against
Summit in accordance with its terms. Except as set forth in ss. 3(c) of the
Disclosure Schedule, the execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this Agreement and
compliance with the terms and provisions hereof will not, (i) conflict with any
of the provisions of the charter or by-laws of Summit or any of its
Subsidiaries, (ii) subject to the governmental filings and other matters
referred to in the following paragraph, conflict with, result in a breach of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a material benefit under, or require the consent of any Person under,
any indenture or other material agreement, permit, concession, franchise,
license or similar instrument or undertaking to which Summit or any of its
Subsidiaries is a party or by which Summit or any of its Subsidiaries or any of
their assets are bound or affected, or (iii) subject to the governmental filings
and other matters referred to in the following paragraph, contravene in any
material respect any law, rule or regulation of any state or of the United
States or political subdivision thereof or therein, or any order, writ,
judgment, injunction, decree, ruling, determination or award currently in
effect.
No consent, approval or authorization of, or declaration or filing
with, or notice to, any Governmental Entity that has not been received or made,
is required by or with respect to Summit or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Summit or the
consummation by Summit of the transactions contemplated hereby, except for (i)
the filing of premerger notification and report forms under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), with respect to the transactions
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contemplated by this Agreement, (ii) the filing with the Securities and Exchange
Commission (the "SEC") of (x) a proxy statement and related materials relating
to the approval by the shareholders of Summit of this Agreement and the Merger
(such proxy statement and related materials, as amended or supplemented from
time to time, the "Proxy Statement"), and (y) such reports under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement and the transactions contemplated by this
Agreement, (iii) the filing of the Articles of Merger with the Florida
Department of State and appropriate documents with the relevant authorities of
other states in which Summit is qualified to do business, (iv) the filings,
approvals and/or consents required under the insurance laws and regulations of
the jurisdictions set forth in ss. 3(c) of the Disclosure Schedule, and (v) such
other consents, approvals, authorizations, filings or notices as are set forth
in ss. 3(c) of the Disclosure Schedule. Summit is not required to make any
filings or take any other action not taken prior to the execution hereof in
order for restrictions imposed by Section 607.902 of the Florida Business Act or
any other anti-takeover statute not to apply to the Merger, this Agreement or
any of the transactions contemplated hereunder.
(d) SEC Documents. (i) Summit has filed all required reports,
schedules, forms, statements and other documents with the SEC since May 21, 1997
(such reports, schedules, forms, statements and other documents are hereinafter
referred to as the "SEC Documents"); (ii) as of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such SEC Documents, and none of the SEC Documents as of
such dates contained any untrue statement of a material fact or omitted to state
a 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 (iii) the consolidated financial statements of Summit
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with GAAP
(except, in the case of unaudited consolidated quarterly statements, as
permitted by Form 10-Q of SEC) applied on a consistent basis during the period
involved (except as may be indicated in the notes thereto) and fairly presented
in all material respects the consolidated financial position of Summit and its
Subsidiaries as of the dates thereof and the consolidated results of their
operation and cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year-end adjustments).
(e) Information Supplied. None of the information supplied or to
be supplied by Summit specifically for inclusion or incorporation by reference
in the Proxy Statement will, at the date it is first mailed to Summit's
shareholders or at the time of the shareholders meeting in connection therewith
(the "Shareholders' Meeting") 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 are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and rules and
regulations thereunder.
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(f) Brokers' Fees. Except as set forth in ss. 3(f) of the
Disclosure Schedule, Summit does not have any Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(g) Title to Assets. Except as set forth in ss. 3(g) of the
Disclosure Schedule, each of Summit and its Subsidiaries has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
it, located on its premises, or shown on the most recent audited financial
statements (the "Audited Financial Statements") included in the SEC Documents or
acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of Business
since the date of the Audited Financial Statements.
(h) Absence of Certain Changes or Events; No Undisclosed
Liabilities. Except as disclosed in ss. 3(h) of the Disclosure Schedule, since
the date of the Audited Financial Statements, Summit and its Subsidiaries have
conducted their business only in the Ordinary Course of Business, and there has
not been (i) any change that would have a Summit Material Adverse Effect, (ii)
any declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of Summit's outstanding
capital stock, (iii) any split, combination or reclassification of any of its
outstanding capital stock or any issuance or the authorization of any issuance
of any other securities in respect of, in lieu of or in substitution for shares
of its outstanding capital stock, (iv) (A) any granting by Summit or any of its
Subsidiaries to any executive officer or other employee of Summit or any of its
Subsidiaries of any increase in compensation, except in the Ordinary Course of
Business, (B) any granting by Summit or any of its Subsidiaries to any such
executive officer of any increase in severance or termination pay, except in the
Ordinary Course of Business, or (C) any entry by Summit or any of its
Subsidiaries into any employment, severance or termination agreement with any
such executive officer, (v) any material change in accounting methods,
principles or practices by Summit or any of its Subsidiaries, except insofar as
may have been required by a change in GAAP, (vi) any amendment or restatement to
the charter or by-laws of Summit or any of its Subsidiaries, (vii) any damage or
destruction or loss of property (whether or not covered by insurance) that
individually or in the aggregate exceeds $50,000, (viii) any sale, lease,
transfer or assignment of any material portion of the assets of Summit or any of
its Subsidiaries other than in the Ordinary Course of Business, or (ix) any
action that would have been prohibited under ss. 5(a) below had this Agreement
been in effect.
Except as and to the extent (i) reflected and reserved against in the
Audited Financial Statements and (ii) for current liabilities (other than for
borrowed money) incurred in the Ordinary Course of Business after the date of
the Audited Financial Statements, neither Summit nor any of its Subsidiaries has
or will have as of the Effective Time any liability or obligation, secured or
unsecured, whether absolute, accrued, fixed, contingent, liquidated or
unliquidated or otherwise.
(i) Compliance with Applicable Laws. Each of Summit and its
Subsidiaries has in effect all material federal, state, local and foreign
governmental approvals, authorizations, certifications, filings and franchises,
licenses, notices, permits and rights ("Licenses") necessary for it to own,
lease or operate its properties and to carry on its business as now conducted,
and
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there has occurred no default under any such License. Summit and its
Subsidiaries are in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Entity, except for possible
noncompliance that individually or in the aggregate would not have a Summit
Material Adverse Effect. No investigation by any Governmental Entity with
respect to Summit or any of its Subsidiaries is pending, or to the Knowledge of
Summit, threatened. Each of Bridgefield Employers Insurance Company and
Bridgefield Casualty Insurance Company (together, the "Insurance Subsidiaries")
(i) is an authorized insurer in each state in which it currently writes
insurance for the type of insurance it currently writes in such states and (ii)
meets in all material respects all statutory and regulatory requirements of all
Governmental Entities that have jurisdiction over it to be an authorized insurer
on either an admitted or nonadmitted basis. All insurance policies issued by the
Insurance Subsidiaries as now in force are, to the extent required under
applicable law, in a form acceptable to applicable regulatory authorities or
have been filed and not objected to (or such objection has been withdrawn or
resolved) by such authorities within the period provided for objection. Neither
Summit nor any of its Subsidiaries that is not an Insurance Subsidiary has
issued any insurance policies. Except as set forth in ss. 3(i) of the Disclosure
Schedule, (i) all material reports, statements, documents, registrations,
filings and submissions to state insurance regulatory authorities complied with
applicable law in effect when filed and (ii) no deficiencies have been asserted
by any such regulatory authority with respect to such reports, statements,
documents, registrations, filings or submissions that have not been satisfied.
All premium rates established by the Insurance Subsidiaries that are required to
be filed or approved have been filed or approved, and the premiums charged
conform to the premiums so filed or approved and comply (or complied at the
relevant time) with the insurance laws applicable thereto.
(j) Tax Matters.
(i) All Tax Returns required to be filed by Summit or any
of its Subsidiaries have been timely filed or requests for extensions
have been timely filed, granted and have not expired for periods ended
on or before the more recent of December 31, 1997 and the most recent
fiscal year end immediately preceding the Effective Time. All such Tax
Returns are correct and complete in all material respects. All Taxes
shown on filed Tax Returns have been paid. No claim has ever been made
by an authority in a jurisdiction where Summit or any of its
Subsidiaries does not file Tax Returns that it is subject to taxation
by that jurisdiction. There are no Security Interests on any of the
assets of Summit or any of its Subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) Each of Summit and its Subsidiaries has withheld and
deposited with the Internal Revenue Service all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, shareholder, or other third party.
(iii) Set forth in ss. 3(j) of the Disclosure Schedule is a
list of all federal, state, local, and foreign income Tax Returns filed
with respect to Summit and its Subsidiaries for taxable periods ended
on or after December 31, 1993. Summit and its Subsidiaries have
delivered to Liberty correct and complete copies of all federal income
Tax Returns that
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have been filed for periods ending on or after December 31, 1995.
Except as set forth in ss. 3(j) of the Disclosure Schedule, there are
no audit examinations, deficiencies or refund litigation with respect
to any Taxes
(iv) Except as set forth in ss. 3(j) of the Disclosure
Schedule, neither Summit nor any of its Subsidiaries have executed an
extension or waiver of any statute of limitations, which extension or
waiver currently is in effect, on the assessment or collection of any
Taxes for any period ending on or before the Effective Time.
(v) Neither Summit nor any of its Subsidiaries has made
any payments, is obligated to make any payments or is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Code ss. 280G or, if any
such payments have been made or are obligated to be made by Summit or
any of its Subsidiaries, the payor has complied with the shareholder
approval requirements of Code ss. 280G(b)(5).
(vi) Except as set forth in ss. 3(j) of the Disclosure
Schedule, neither Summit nor any of its Subsidiaries is a party to any
Tax allocation or sharing agreement, and neither Summit nor any of its
Subsidiaries (A) has been a member of an Affiliated Group filing a
consolidated federal income Tax Return (other than a group the common
parent of which was Summit) or (B) has any Liability for the Taxes of
any Person (other than Summit and its Subsidiaries) under Treas. Reg.
ss. 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise. Copies
of all Tax allocation or sharing agreements to which Summit or any of
its Subsidiaries is a party have been delivered to Liberty.
(vii) The provision for any Taxes due or to become due for
Summit or any of its Subsidiaries for the period or periods through and
including the date of Audited Financial Statements that has been made
and is reflected on such Audited Financial Statements is materially
sufficient to cover all such Taxes.
(viii) The Escrow Agreement by and among Employers Self
Insurers Fund, Summit Acquisition Corporation, Summit Holding
Corporation, William B. Bull as the Shareholders' Representative and
First Union National Bank of Florida, dated as of January 16, 1996 (the
"Escrow Agreement"), is legal, valid, binding, enforceable and in full
force and effect and the transactions contemplated hereby will not
cause the Escrow Agreement not to be in full force and effect for the
benefit of the Surviving Corporation on identical terms immediately
subsequent to the Effective Time and the consummation of the
transactions contemplated hereby.
(k) Real Property.
(i) Summit owns no real property.
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(ii) Set forth in ss. 3(k)(ii) of the Disclosure Schedule
are the addresses of all parcels of real property leased or subleased
to Summit. Summit has delivered to Liberty correct and complete copies
of the leases and subleases (as amended to date) listed in ss. 3(k)(ii)
of the Disclosure Schedule. With respect to each lease and sublease
listed in ss. 3(k)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) except as set forth in ss. 3(k)(ii) of the
Disclosure Schedule, the transactions contemplated hereby will
not cause the lease or sublease to be illegal, invalid,
non-binding, non-enforceable and to not be in full force and
effect on identical terms immediately subsequent to the
Effective Time of the Merger and consummation of such
transactions contemplated hereby;
(C) neither Summit, nor any of its Subsidiaries, nor,
to Summit's Knowledge, any other party to the lease or
sublease, is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach
or default or permit termination, modification, or
acceleration thereunder;
(D) no party to the lease or sublease has repudiated
any provision thereof;
(E) there are no disputes, oral agreements or
forbearance programs in effect as to the lease or sublease;
(F) with respect to each sublease, the
representations and warranties set forth in subsections (A)
through (E) above are true and correct with respect to the
underlying lease;
(G) Summit has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(H) to the Knowledge of Summit, all facilities leased
or subleased thereunder have received all approvals of
Governmental Entities (including licenses and permits)
required in connection with the operation thereof and have
been operated and maintained in accordance with applicable
laws, rules, and regulations; and
(I) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities.
(l) Intangible Property Rights. Each of Summit and its
Subsidiaries has good and marketable title to, or valid and continuing licenses
to use, all trademarks, service marks, trade names, copyrights, franchises,
logos, trade secrets, patents, know-how, and all rights to the foregoing, which
are used in the operation of its business as currently conducted (collectively,
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<PAGE> 13
with any application with respect to the issuance or granting of any of the
foregoing, the "Intangible Property"). Set forth in ss. 3(l) of the Disclosure
Schedule is a true, correct and complete list of all Intangible Property owned
or used by Summit and each of its Subsidiaries (including all registrations and
applications with respect to the issuance or granting of any right). To Summit's
Knowledge, none of the Intangible Property infringes on any rights of others.
(m) Tangible Assets. Summit or its Subsidiaries owns or leases all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of the business of Summit and its Subsidiaries as currently conducted
and proposed to be conducted. Each such tangible asset is free from defects
(patent and latent) has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it currently is used and
proposed to be used.
(n) Contracts. Except as set forth in the SEC Documents or ss.
3(n) of the Disclosure Schedule, neither Summit nor any of its Subsidiaries is a
party to:
(i) any agreement (or group of related agreements) for
the lease of personal property to or from any Person providing for
lease payments in excess of $50,000 per annum;
(ii) any agreement concerning a partnership or joint
venture;
(iii) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$50,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(iv) any agreement concerning confidentiality or
noncompetition;
(v) to Summit's Knowledge, any agreement with any holder
(or Affiliate thereof) of 5% or more of any class of securities of
Summit or any of its Subsidiaries;
(vi) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other material
plan or arrangement for the benefit of its current or former directors,
officers, employees or consultants that is not listed in ss. 3(s) of
the Disclosure Schedule;
(vii) any collective bargaining agreement;
(viii) any agreement for the employment (other than at-will
employment) of any individual on a full-time, part-time, consulting, or
other basis providing annual compensation in excess of $50,000 or
providing severance benefits;
(ix) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, employees or consultants;
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<PAGE> 14
(x) any agreement or license relating in whole or in part
to the Intangible Property of Summit (including, without limitation,
any agreement or license under which Summit has the right to use any
Intangible Property owned or held by a third party) which is material
to the business, financial condition or results of operations of Summit
(other than standard licenses for software that is commercially
available to the public in the Ordinary Course of Business);
(xi) any agreement under which the consequences of a
default or termination could have a Summit Material Adverse Effect;
(xii) any agreement pursuant to which material benefits
accrue to the other party or parties to such contract as a result of
the transactions contemplated by this Agreement, including, without
limitation, rights of termination or modification of such agreements;
(xiii) any agreement (or group of related agreements) the
performance of which involves payment to or by Summit or any of its
Subsidiaries (individually or collectively) in excess of $50,000 per
annum, except for insurance policies issued by the Insurance
Subsidiaries in the Ordinary Course of Business; or
(xiv) any other material agreement not made in the Ordinary
Course of Business.
Summit has delivered to Liberty a correct and complete copy of each
written agreement listed in ss. 3(n) of the Disclosure Schedule and a brief
written summary setting forth the terms and conditions of each oral agreement
referred to in ss. 3(n) of the Disclosure Schedule. With respect to each such
agreement and each agreement filed as a material contract with any SEC
Documents: (A) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) the transactions contemplated hereby will not cause the
agreement, to be illegal, invalid, non-binding, non-enforceable or not to be in
full force and effect for the benefit of the Surviving Corporation on identical
terms immediately subsequent to the Effective Time and consummation of such
transactions contemplated hereby; (C) neither Summit, nor any of its
Subsidiaries, nor, to Summit's Knowledge, any other party, is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; (D) neither Summit nor any of its
Subsidiaries has delivered or received notice of a cancellation of or an intent
to cancel such agreement; and (E) no party has repudiated any provision of the
agreement.
(o) Banking Relations; Powers of Attorney. Set forth in ss. 3(o)
of the Disclosure Schedule is an accurate and complete list of all credit
agreements and deposit accounts which Summit or any of its Subsidiaries has with
any banking institution. Except as set forth in ss. 3(o) of the Disclosure
Schedule, neither Summit nor any of its Subsidiaries has any outstanding powers
of attorney of any nature and has no obligation or liability (whether actual,
accrued, accruing, contingent or otherwise) as guarantor, surety, co-signor,
endorser, co-maker, indemnitor or otherwise in respect of the obligation to any
Person, except as endorser or maker of checks or letters of credit in the
Ordinary Course of Business.
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<PAGE> 15
(p) Insurance. Set forth in ss. 3(p) of the Disclosure Schedule is
a true and complete list, as of the date hereof, of all policies of insurance
maintained by or for the benefit of Summit or any of its Subsidiaries relating
to its or their assets, properties, business, operations, employees, officers or
directors. Prior to the Effective Time, each of Summit and its Subsidiaries has
maintained insurance relating to such assets, properties, business and
operations (including, without limitation, errors and omissions insurance with
respect to its employees, officers and directors) that is reasonable for a
company of its size that is engaged in the insurance business and that is a
member of a comparable affiliated group of companies.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) neither Summit,
nor its Subsidiaries, nor, to Summit's Knowledge, any other party to the policy,
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (C) no party to the policy
has repudiated any provision thereof. Set forth in ss. 3(p) of the Disclosure
Schedule is a description of any self-insurance arrangements maintained by
Summit or any of its Subsidiaries.
(q) Litigation. Set forth in ss. 3(q) of the Disclosure Schedule
is each instance in which Summit or any of its Subsidiaries (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or, to Summit's Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator, other than such actions and suits
related solely to the denial of coverage under insurance policies (none of which
actions or suits seeks punitive damages against Summit and/or any of its
Subsidiaries in excess of $250,000).
(r) Employees.
(i) Summit and its Subsidiaries are in compliance in all
material respects with all applicable federal, state and local laws and
regulations respecting employment and employment practices, and the
terms and conditions of employment and wages and hours. Neither Summit
nor any of its Subsidiaries is a party to or bound by any collective
bargaining agreement, nor have they experienced any strikes,
grievances, claims of unfair labor practices, or other collective
bargaining disputes within the past year. There is no labor strike,
dispute, arbitration, grievance, slowdown, stoppage, organizational
effort, dispute or proceeding by or with any employee or former
employee of Summit or any of its Subsidiaries or any labor union
pending, or to Summit's Knowledge, threatened against Summit or any of
its Subsidiaries. Neither Summit nor any of its Subsidiaries is the
subject of any pending claim asserting that such entity has committed
any unfair labor practice.
(ii) Except as described in ss. 3(r) of the Disclosure
Schedule, no employee of Summit or any of its Subsidiaries has any
employment contract or other agreement or
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<PAGE> 16
arrangement by which such employee is employed on any basis other than
as an "at will" employee or by which Summit or its Subsidiaries are
restricted in any manner from terminating the services of such employee
at any time without penalty or payment, subject only to the provisions
of employee benefit plans described in ss. 3(s).
(s) Employee Benefits.
(i) Except as set forth in ss. 3(s)(i) of the Disclosure
Schedule, Summit and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except
for such instances of noncompliance which have not resulted in, and
could not reasonably be expected to result in, a Summit Material
Adverse Effect. Set forth in ss. 3(s)(i) of the Disclosure Schedule is
a list of each Plan of Summit and each ERISA Affiliate. Neither Summit
nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in section 3 of ERISA),
and no event, transaction or condition has occurred that could
reasonably be expected to result in the incurrence of any such
liability by Summit or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of Summit or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such
penalty or excise tax provisions or to section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not individually or
in the aggregate result in a Summit Material Adverse Effect.
(ii) No Plan is subject to Title IV of ERISA.
(iii) Each Plan intended to qualify under Section 401(a) or
Section 403(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination
letter from the Internal Revenue Service, and nothing has occurred
which may reasonably be expected to impair such determination or
otherwise adversely affect the tax-qualified status of the Plan.
(iv) No contributions are required to be made to any Plan
pursuant to Section 412 of the Code, or the terms of the Plan or any
collective bargaining agreement.
(v) There has been no amendment to or announcement
(whether or not written) by Summit or any ERISA Affiliate relating to,
or change in employee participation, coverage or benefits under, any
Plan that would increase materially the expense of maintaining such
Plan above the level of the expense incurred in respect thereof for the
fiscal year ended prior to the date hereof.
(vi) No employee, former employee, director or agent of
Summit will become entitled to any bonus, retirement, severance or
similar benefit or enhanced or accelerated benefit under any Plan as a
result of the transactions contemplated hereby (either alone or upon
the occurrence of any additional or subsequent events).
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<PAGE> 17
(vii) Subject to the applicable requirements of ERISA and
the Code, neither any provision of any Plan nor any agreement with any
employee nor any representation or course of conduct by or on behalf of
Summit or any ERISA Affiliate would prevent the amendment, termination
or merger after the Closing Date of any Plan without liability to
Summit, Liberty or their respective affiliates.
(viii) Except as set forth in ss. 3(s)(viii) of the
Disclosure Schedule, there is no suit, action, dispute, claim,
arbitration or legal, administrative, or other proceeding or
governmental investigation pending, or, to Summit's Knowledge,
threatened, alleging any breach of the terms of any Plan or of any
fiduciary duties thereunder or violation of any applicable law with
respect to any such Plan.
(ix) Except as set forth in ss. 3(s)(ix) of the Disclosure
Schedule, no Plan constitutes a "multiple employer welfare arrangement"
within the meaning of Section 3(40) of ERISA.
(x) Except as set forth in ss. 3(s)(x) of the Disclosure
Schedule, with respect to any Plan that is self-funded (in whole or in
part), no material claims have been made that have not yet been paid
other than as a result of routine processing of claims and, to Summit's
Knowledge, no injury, sickness, or other medical condition has occurred
with respect to which material claims may be made pursuant to such
Plan.
(xi) Summit does not maintain or have any obligation to
contribute to any "voluntary employees' beneficiary association"
(within the meaning of Section 501(c)(9) of the Code) or other funding
arrangement for the provision of welfare benefits.
(xii) Summit and the ERISA Affiliates do not, and have not
within the past six years had any obligation to, contribute to any
Multi-Employer Plan.
(xiii) Summit and its Subsidiaries have no expected
post-retirement benefit obligation (determined as of the last day of
the most recently ended fiscal year of the Company in accordance with
Financial Accounting Standards Board Statement No. 106), without regard
to liabilities attributable to continuation coverage mandated by
section 4980B of the Code.
(xiv) Summit has delivered to Liberty correct and complete
copies of all Plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service
for Plans intended to be qualified under section 701(a) or 703(a) of
the Code, the two most recent Form 5500 Annual Reports, two most recent
audited financial statements, and all related trust agreements,
insurance contracts, and other funding agreements which implement each
Plan. In addition, Summit has listed on ss. 3(s)(xiv) of the Disclosure
Schedule and delivered to Liberty correct and complete copies of each
other plan, arrangement and policy (written or oral) relating to stock
options, stock purchase, compensation, deferred compensation,
severance, fringe benefits or other employee benefits, in each case
maintained or contributed to, or required to be maintained
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<PAGE> 18
or contributed to, by Summit or any of its Subsidiaries for the benefit
of any present or former officers, employees, agents, directors, or
independent contractors of Summit or any of its Subsidiaries (all of
the foregoing being referred to as "Benefit Arrangements"). Except as
set forth in ss. 3(s)(xiv) of the Disclosure Schedule, all Benefit
Arrangements have been administered in accordance with their terms,
except for such instances of non-compliance that have not resulted in
or are not reasonably likely to result in a Summit Material Adverse
Effect.
(t) Reinsurance and Retrocessions. Set forth in ss. 3(t) of the
Disclosure Schedule is a list of all treaty reinsurance or retrocession treaties
and agreements in force (whether written or oral) to which Summit or any of its
Subsidiaries is a party (including any terminated or expired treaty or agreement
under which there remains any outstanding liability with respect to paid or
unpaid case reserves in excess of $100,000) (collectively, the "Treaties"), the
effective date of each such Treaty, and the termination date of any Treaty that
has a definite termination date. Neither Summit nor any of its Subsidiaries is
in material default in any respect as to any provision of any reinsurance or
retrocession Treaty or has failed to meet the underwriting standards required
for any reinsurance coverage thereunder. Certain material terms (including,
without limitation, percentages and businesses covered, term, ceding
commissions, exclusions to coverage, single loss limits and termination
provisions) of the oral reinsurance agreement with Reliance Insurance Company
are set forth in ss. 3(t) of the Disclosure Schedule.
(u) Environment, Health, and Safety.
(i) Summit and each of its Subsidiaries has complied in
all material respects with all Environmental, Health, and Safety Laws,
and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against
Summit or any of its Subsidiaries alleging any failure so to comply.
Without limiting the generality of the preceding sentence, Summit and
each of its Subsidiaries has obtained and been in compliance with all
of the terms and conditions of all material permits, licenses, and
other authorizations which are required under, and has complied in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and
Safety Laws.
(ii) Neither Summit nor any of its Subsidiaries has any
Liability (and has not handled or disposed of any substance, arranged
for the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated any
property or facility in any manner that could form the basis for any
present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against Summit giving rise to any
Liability) for damage to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health,
and Safety Law.
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<PAGE> 19
(iii) All properties and equipment used in the business of
Summit and its Subsidiaries are free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1,2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(v) Transactions with Affiliates. Except as set forth in ss. 3(v)
of the Disclosure Schedule, no executive officer or director of Summit or any of
its Subsidiaries or, to Summit's Knowledge, any employee of Summit, any holder
of 5% of more of any class of equity securities of Summit or any of its
Subsidiaries, or any agent of or consultant to Summit or any of its Subsidiaries
or any of their respective Affiliates owned within the past two years, directly
or indirectly, any material interest in, or serves or served as an officer,
employee or director of, any customer, competitor or supplier of Summit or any
of its Subsidiaries, or any organization that had or has a material agreement or
arrangement with Summit or any of its Subsidiaries. Except as set forth in ss.
3(v) of the Disclosure Schedule, no executive officer or director of Summit or,
to Summit's Knowledge, any employee of Summit, any holder of 5% of more of any
class of equity securities of Summit or any of its Subsidiaries, or any agent of
or consultant to Summit or any of its Subsidiaries or any of their respective
Affiliates owns directly or indirectly any material asset or property used in or
necessary to the business of Summit or any of its Subsidiaries.
(w) Voting Requirements. The affirmative vote of a majority of the
votes cast by the holders of the shares of Summit Common Stock is the only vote
of the holders of any class or series of Summit's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
(x) Opinion of Financial Advisor. Summit has received the opinion
of ABN AMRO Incorporated, dated the date hereof, to the effect that, as of the
date hereof, the consideration to be received in the Merger by the holders of
shares of Summit Common Stock was fair from a financial point of view to such
shareholders.
(y) Option Agreements; Voting Agreements. Each of William B. Bull,
Gregory C. Branch, C. C. Dockery and Russell L. Wall has duly executed and
delivered to Liberty an Option Agreement substantially in the form of Exhibit
A-1 hereto with respect to all of his shares of Summit Common Stock. Each of
William B. Bull, Russell L. Wall, Gregory C. Branch, C. C. Dockery, John A.
Gray, Robert J. Noojin, Thomas S. Petcoff and Robert Siegel has duly executed
and delivered to Liberty a Voting Agreement substantially in the form of Exhibit
A-2 hereto with respect to, among other things, the voting of his shares of
Summit Common Stock in favor of the Merger and this Agreement.
(z) Portfolio Investments. Summit has previously delivered to
Liberty true, correct and complete lists as of March 31, 1998 of all assets held
in the investment portfolios of the Insurance Subsidiaries as of such date. The
Insurance Subsidiaries have good and marketable title to the investments in
their respective investment portfolios.
(aa) Reserves. Summit has delivered to Liberty true, correct and
complete copies of all actuarial reports or actuarial certificates dated January
1, 1995 or later in the possession or
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<PAGE> 20
control of Summit or its Subsidiaries relating to the adequacy of the claims
reserves of any of the Insurance Subsidiaries.
(bb) Insurance Subsidiaries' Statutory Financial Statements. Summit
has previously furnished to Liberty copies of audited statutory financial
statements of (i) Bridgefield Employers Insurance Company as of and for the
fiscal years ended March 31, 1996 and 1997, and as of and for the nine-month
period ended December 31, 1997, and (ii) Bridgefield Casualty Insurance Company
as of and for the fiscal years ended December 31, 1996 and 1997, in each
instance prepared in conformity with accounting practices prescribed or
permitted by the Florida Department of Insurance (collectively, the "Statutory
Financial Statements"). Each of the balance sheets included in the Statutory
Financial Statements fairly presents in all material respects the financial
position of the Insurance Subsidiaries as of its date and each of the statements
of operation included in the Statutory Financial Statements fairly presents in
all material respects the results of operations of the Insurance Subsidiaries
for the periods therein set forth, in each case in accordance with accounting
practices prescribed or permitted by the Florida Department of Insurance (as in
effect at the time of the respective statements) consistently applied.
(cc) Employment Agreement. Summit has entered into an Employment
Agreement with William B. Bull substantially in the form of Exhibit B attached
hereto (the "Bull Employment Agreement").
(dd) Special Disability Trust Fund. All claims of Summit and its
Subsidiaries for amounts recoverable from the Special Disability Trust Fund
operated by the State of Florida have been or will be timely submitted, and
Summit shall, and shall cause its Subsidiaries to, use all reasonable efforts to
cause all such claims to be validly perfected and collectible.
(ee) Disclosure. The representations and warranties contained in
this ss. 3, when taken together, do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained in this ss. 3 not misleading in light of
the circumstances in which they were made.
4. Representations and Warranties of Liberty and the Acquisition
Sub. Each of Liberty and the Acquisition Sub represents and warrants to Summit
that the statements contained in this ss. 4 are correct and complete in all
material respects as of the date of this Agreement.
(a) Organization. Liberty is an insurance company duly
established, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts. The Acquisition Sub is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Florida. Each of Liberty and the Acquisition Sub has full corporate power and
authority and all licenses, permits and authorizations necessary to carry on the
business in which it is engaged.
(b) Authority; Noncontravention. Each of Liberty and the
Acquisition Sub has the requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by each of
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Liberty and the Acquisition Sub and the consummation by each of Liberty and the
Acquisition Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Liberty or the
Acquisition Sub, as the case may be. This Agreement has been duly executed and
delivered by each of Liberty and the Acquisition Sub and constitutes the valid
and binding obligation of each of Liberty and the Acquisition Sub, enforceable
against it in accordance with its terms.
No consent, approval or authorization of, or declaration or filing
with, or notice to, any Governmental Entity that has not been received or made,
is required by or with respect to Liberty or the Acquisition Sub in connection
with the execution and delivery of this Agreement by Liberty or the Acquisition
Sub or the consummation by Liberty or the Acquisition Sub of the transactions
contemplated hereby, except for (i) the filing of premerger notification and
report forms under the HSR Act, with respect to the transactions contemplated by
this Agreement, (ii) the filings, approvals and/or consents as required under
the applicable insurance laws and regulations of the jurisdictions set forth in
ss. 3(c) of the Disclosure Schedule, and (iii) the filing of the Articles of
Merger with the Florida Department of State and appropriate documents with the
relevant authorities of other states in which the Acquisition Sub is qualified
to do business.
(c) Ownership of the Acquisition Sub. The Acquisition Sub has been
formed solely for the purpose of engaging in the transactions contemplated by
this Agreement. Liberty owns all of the outstanding shares of capital stock of
the Acquisition Sub.
(d) Litigation. There is no action, suit, proceeding, hearing or
investigation instituted or pending or, to the Knowledge of Liberty, threatened
against Liberty or the Acquisition Sub or any of their executive officers or
directors, nor are there any orders, writs, judgments, injunctions, decrees,
rulings, determinations or awards currently in effect of any Governmental
Entities or arbitrators outstanding against Liberty or the Acquisition Sub or
any of their executive officers or directors that are, individually or in the
aggregate, reasonably likely to prevent, materially delay or materially impair
the ability of Liberty or the Acquisition Sub to consummate the transactions
contemplated by this Agreement.
(e) Financing. Liberty has, or will have prior to the Effective
Time, 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 ss.ss. 2 and 6(o) of this Agreement.
5. Covenants Relating to Conduct of Business Prior to Merger.
Except as contemplated hereby, during the period from the date of this Agreement
to the Effective Time, Summit shall, and shall cause its Subsidiaries to, act
and carry on their respective businesses in the Ordinary Course of Business and,
to the extent consistent therewith, use reasonable efforts to preserve intact
their business organizations, keep available the services of their key officers
and employees and preserve the goodwill of those engaged in material business
relationships with them. Without limiting the generality of the foregoing,
except as otherwise expressly contemplated by this Agreement, during the period
from the date hereof to the Effective Time, Summit shall not, and shall not
permit any of its Subsidiaries to, without the prior consent of
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Liberty (which consent shall be given or withheld based on Liberty's reasonable
business judgment):
(a) (i) declare, set aside or pay any dividends on, or
make any other distributions (whether in cash, stock or property) in
respect of, any of Summit's outstanding capital stock, (ii) split,
combine or reclassify any of its outstanding capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its outstanding capital stock, or
(iii) purchase, redeem or otherwise acquire any shares of outstanding
capital stock or any rights, warrants or options to acquire any such
shares (other than shares of Summit Common Stock purchased as employee
investments under the Summit Holding Southeast, Inc. Amended and
Restated Retirement Plan dated September 1, 1997);
(b) issue, sell, grant, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
except for the issuance of shares of Summit Common Stock upon exercise
of options to purchase shares of Summit Common Stock outstanding on the
date hereof;
(c) amend its charter, by-laws or other comparable
charter or organizational documents;
(d) acquire any business or any corporation, limited
liability company, partnership, joint venture, association or other
business organization or division thereof;
(e) sell, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets that
are material to Summit and its Subsidiaries taken as a whole, except in
the Ordinary Course of Business;
(f) (i) incur any indebtedness for borrowed money (other
than incurred in the Ordinary Course of Business pursuant to Summit's
existing line of credit with SunTrust Bank, Tampa Bay) or guarantee any
such indebtedness of another Person or (ii) make any loans or advances
to any other Person, other than to any direct or indirect wholly-owned
Subsidiary of Summit and other than routine advances to employees;
(g) make any tax election (other than elections required
by law and made in the Ordinary Course of Business not giving rise to
additional material tax liabilities) or settle or compromise any tax
liability that could reasonably be expected to be material to Summit
and its Subsidiaries taken as a whole;
(h) 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, in the Ordinary Course of Business or in accordance with
their terms (or on terms more favorable to Summit), of liabilities
reflected or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the
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notes thereto) of Summit included in the SEC Documents or incurred
since the date of such financial statements in the Ordinary Course of
Business;
(i) except in the Ordinary Course of Business, modify,
amend or terminate any material agreement, permit, concession,
franchise, License or similar instrument to which Summit or any
Subsidiary is a party or waive, release or assign any material rights
or claims thereunder; or
(j) authorize any of, or commit or agree to take any of,
the foregoing actions.
6. Additional Agreements.
(a) Preparation of the Proxy Statement. As soon as practicable
following the date of this Agreement, Summit shall complete and file with the
SEC the Proxy Statement. Summit will use all reasonable efforts to cause the
Proxy Statement to be mailed to Summit's shareholders, as promptly as
practicable.
(b) Meeting of Shareholders. Summit will take all action necessary
in accordance with applicable law and its Articles of Incorporation and by-laws
to convene the Shareholders' Meeting to consider and vote upon the approval of
the Merger and this Agreement. Subject to ss. 6(g) below, Summit will, through
its Board of Directors, recommend to its shareholders approval of the foregoing
matters. Without limiting the generality of the foregoing, Summit agrees that,
subject to its rights pursuant to ss. 6(g) below, its obligations pursuant to
the first sentence of this ss. 6(b) shall not be affected by (i) the
commencement, public proposal, public disclosure or communication to Summit of
any Acquisition Proposal (as defined in paragraph (g) below) or (ii) the
withdrawal or modification by the Board of Directors of Summit of its approval
or recommendation of this Agreement or the Merger. Summit will use all
reasonable efforts to hold the Shareholders' Meeting as soon as practicable
after the date hereof.
(c) Access to Information; Cooperation; Confidentiality. Summit
shall, and shall cause each of its Subsidiaries to, afford to Liberty and to the
officers, employees, counsel, financial advisors and other representatives of
Liberty reasonable access during normal business hours during the period prior
to the Effective Time to all its properties, books, contracts, commitments,
personnel, employees and records, and, during such period, Summit shall, and
shall cause each of its Subsidiaries to, furnish as promptly as practicable to
Liberty such information concerning its business, properties, financial
condition, operations and personnel as Liberty may from time to time reasonably
request. Summit shall, and shall cause each of its Subsidiaries to, provide all
reasonable cooperation necessary to permit Liberty to communicate with the
agents and customers of Summit and its Subsidiaries, provided, however, that
Liberty shall not engage in any such communication without the prior consent of
Summit, which shall not be unreasonably withheld or delayed. Except as required
by law, Liberty will hold, and will cause its respective directors, officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information obtained from Summit in
confidence to the extent required by, and in accordance with, the provisions of
the letter dated April 23, 1998, between Summit and Liberty (the
"Confidentiality Agreement") and will otherwise comply with the
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Confidentiality Agreement. Except as required by law, Summit will hold, and will
cause its directors, officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any nonpublic
information obtained from Liberty in confidence to the extent required by, and
in accordance with, the provisions of the Confidentiality Agreement and will
otherwise comply with the Confidentiality Agreement.
(d) Reasonable Efforts. Upon the terms and subject to the
conditions and other agreements set forth in this Agreement, each of the Parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
Parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Merger and the
other transactions contemplated by this Agreement, and the Parties shall, and
the Parties shall cause their respective subsidiaries to, use reasonable efforts
to avoid any action that would, or could reasonably be expected to, result in
any of the representations or warranties of such Party set forth in this
Agreement becoming untrue in any material respect or any of the conditions of
the Merger set forth in ss. 7 not being satisfied. Neither of the Parties shall,
nor shall either of the Parties permit any of their respective subsidiaries to,
take any action that would, or could reasonably be expected to, result in any of
the representations or warranties of such Party set forth in this Agreement not
satisfying the conditions set forth in ss. 7 (b)(i) or ss. 7 (c)(i), as
applicable. Each of the Parties shall execute such documents and other papers
and perform such further acts as may be reasonably required to carry out the
provisions hereof and the transactions contemplated hereby.
(e) Public Announcements. Liberty and Summit will consult with
each other before issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Merger, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as may be required by applicable law or court process.
(f) Acquisition Proposals. From the date hereof until the earlier
of the Effective Time or termination of this Agreement pursuant to ss. 8(a),
Summit shall not, nor shall it permit any of its Subsidiaries to, nor shall it
authorize or permit any officer, director, employee, or any investment banker,
attorney or other advisor or representative, of Summit or any of its
Subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage the
submission of any Acquisition Proposal (as hereinafter defined) or (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or take any other action to facilitate
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Acquisition Proposal, provided, however, that on or
after the date hereof, Summit, any of its Subsidiaries or any officer, director
or employee of, or any investment banker, attorney or other advisor or
representative of, Summit or any of its Subsidiaries may, following the receipt
of an Acquisition Proposal by Summit that the Board of Directors of Summit
determines in good faith, following consultation with outside counsel, would
permit the Board of Directors to take any of the actions referred to in the
first sentence of ss. 6(g), furnish information with respect to and participate
in negotiations regarding such Acquisition Proposal. Summit shall promptly
advise Liberty orally and in writing of the receipt by it (or any of the other
Persons
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referred to above) after the date hereof of any Acquisition Proposal, or any
inquiry which could reasonably be expected to lead to any Acquisition Proposal,
the material terms and conditions of such Acquisition Proposal or inquiry, and
the identity of the person making any such Acquisition Proposal or inquiry.
Summit will keep Liberty fully informed of the status and details of any such
Acquisition Proposal or inquiry. Without limiting the foregoing, it is
understood that any violation of the restrictions set forth in the first
sentence of this ss. 6(g) by any officer, director or employee of Summit or any
of its Subsidiaries or any investment banker, attorney or other advisor or
representative of Summit or any of its Subsidiaries, whether or not such Person
is purporting to act on behalf of Summit or any of its Subsidiaries or
otherwise, shall be deemed to be a breach of this ss. 6(f) by Summit. For
purposes of this Agreement, "Acquisition Proposal" means any proposal (as such
proposal may be amended, modified or supplemented from time to time) with
respect to a merger, consolidation, share exchange or similar transaction
involving Summit or any Subsidiary of Summit, or any purchase of all or any
significant portion of the assets of Summit or any Subsidiary of Summit, or any
equity interest in Summit or any Subsidiary of Summit, other than the
transactions contemplated hereby or any other similar transaction with Liberty
or any of its Affiliates.
(g) Fiduciary Duties. The Board of Directors of Summit shall not
(i) withdraw or modify in a manner adverse to Liberty or the Acquisition Sub,
the approval or recommendation by such Board of Directors of this Agreement or
the Merger, (ii) approve or recommend any Acquisition Proposal, or (iii) enter
into any agreement with respect to any Acquisition Proposal, unless Summit
receives an Acquisition Proposal and the Board of Directors of Summit determines
in good faith, following consultation with outside counsel, that in order to
comply with its fiduciary duties to shareholders under applicable law it is
necessary for the Board of Directors to withdraw or modify its approval or
recommendation of this Agreement or the Merger, approve or recommend such
Acquisition Proposal, enter into an agreement with respect to such Acquisition
Proposal or terminate this Agreement. In the event the Board of Directors of
Summit takes any of the foregoing actions, Summit shall comply with its
obligations pursuant to ss. 6(i) below. Nothing contained in this ss. 6(g) shall
prohibit Summit from taking and disclosing to its shareholders a position
contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act
or from making any disclosure to Summit's shareholders which, in the good faith
judgment of the Board of Directors of Summit based on the advice of outside
counsel, is required under applicable law, provided that Summit complies with
the first two sentences of this ss. 6(g).
(h) Consents, Approval and Filings.
(i) Summit and Liberty will make and cause their
respective subsidiaries to make all necessary filings, as soon as
practicable, including, without limitation, those required under the
HSR Act, the Securities Act, the Exchange Act and applicable state
insurance and securities laws in order to facilitate prompt
consummation of the Merger and the other transactions contemplated by
this Agreement. In addition, Summit and Liberty will each use all
reasonable efforts, and will cooperate fully with each other (A) to
comply as promptly as practicable with all governmental requirements
applicable to the Merger and the other transactions contemplated by
this Agreement and (B) to obtain as promptly as practicable all
necessary permits, orders or other consents of Governmental
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Entities and consents of all third parties necessary for the
consummation of the Merger and the other transactions contemplated by
this Agreement, including, without limitation, any consents required
under any relevant insurance laws or regulations. Each of Summit and
Liberty shall use reasonable efforts to provide such information and
communications to Governmental Entities as such Governmental Entities
may reasonably request.
(ii) Each of the Parties shall provide to the other Party
copies of all applications in advance of filing or submission of such
applications to Governmental Entities in connection with this
Agreement.
(i) Certain Fees and Expenses.
(i) If an Acquisition Proposal is commenced, publicly
proposed, publicly disclosed or communicated to Summit (or the
willingness of any Person to make an Acquisition Proposal is publicly
disclosed or communicated to Summit) on or before December 31, 1998 and
(A) the Board of Directors of Summit withdraws or modifies its approval
or recommendation of this Agreement or the Merger or approves or
recommends such Acquisition Proposal, (B) Summit or any of its
Subsidiaries enters into an agreement with respect to, or consummates,
such Acquisition Proposal, or (C) following the commencement, public
proposal, public disclosure or communication of an Acquisition Proposal
to Summit (or the public disclosure or communication to Summit of the
willingness of any Person to make an Acquisition Proposal), the
requisite approval of Summit's shareholders for the Merger is not
obtained at the Shareholders' Meeting, Summit shall (X) reimburse
Liberty for all Expenses (as defined below) upon demand and (Y) in the
event any Acquisition Proposal is consummated on or before December 31,
1999, pay immediately to Liberty $10,000,000 (the "Section 6(i) Fee").
(ii) For purposes of this ss. 6(i), "Expenses" shall mean
all reasonable fees and expenses incurred or paid by or on behalf of
Liberty in connection with the Merger or the consummation of any of the
transactions contemplated by this Agreement, including all reasonable
printing costs and reasonable fees and expenses of counsel, investment
banking firms, accountants, experts and consultants to Liberty.
(j) Shareholder Litigation. Summit shall give Liberty, at
Liberty's expense, the opportunity to participate in the defense or settlement
of any shareholder litigation against Summit and its directors relating to the
transactions contemplated by this Agreement, provided, however, that no such
settlement shall be agreed to without Liberty's consent, which consent shall not
be unreasonably withheld or delayed.
(k) Employment Agreement. The Surviving Corporation shall enter
into and perform the Bull Employment Agreement in the form attached as Exhibit B
hereto.
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(l) Indemnification and Insurance.
(i) Upon and following consummation of the Merger, except
to the extent prohibited by law, Liberty and the Surviving Corporation
jointly and severally shall indemnify, defend and hold harmless Russell
L. Wall, the Chief Executive Officer of Summit, and each Person who is
now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, a director (whether elected or appointed),
of Summit or any of its predecessor entities against any and all
claims, damages, liabilities, losses, costs, charges, expenses
(including, without limitation, reasonable costs of investigation, and
the reasonable fees and disbursements of legal counsel and other
advisers and experts as incurred (including, without limitation,
incurred in connection with enforcing the provisions of this ss.
6(l))), judgments, fines, penalties and amounts paid in settlement,
asserted against, incurred by or imposed upon Mr. Wall or any such
director, in connection with, arising out of or relating to any
threatened, pending or completed claim, action, suit or proceeding,
whether asserted or claimed prior to, at or after the Effective Time
(whether civil, criminal, administrative or investigative, including,
without limitation any and all claims, actions, suits, proceedings or
investigations by or on behalf of or in the right of or against Summit
or any Subsidiary of Summit or their Affiliates, or by any present or
former shareholder of Summit (collectively, "Claims")), including,
without limitation, Mr. Wall's service as Chief Financial Officer and
the director's service as a member of Summit's Board of Directors, the
events leading up to the execution of this Agreement or any breach of
any duty in connection with any of the foregoing. Liberty or the
Surviving Corporation shall, before final disposition of a proceeding,
advance funds to pay for or reimburse reasonable expenses incurred by a
Person covered by this ss. 6(l).
(ii) Upon the consummation of the Merger, and from and
after the Effective Time, to the fullest extent permitted by law, the
Surviving Corporation shall assume and honor any obligation of Summit
immediately prior to the Effective Time with respect to the
indemnification of any director (whether elected or appointed), officer
or employee of Summit or any Subsidiary or predecessor of Summit
(collectively, the "indemnities") arising out of Summit's Articles of
Incorporation or By-Laws as if such obligations were pursuant to a
contract or arrangement between the Surviving Corporation and such
indemnities. In addition, Liberty acknowledges and agrees that the
Indemnity Agreements shall continue in full force and effect as
obligations of the Surviving Corporation following the Effective Time.
(iii) Liberty shall cause Summit's current officers' and
directors' liability insurance to be continuously maintained in full
force and effect without reduction of coverage for a period of six
years after the Effective Time, provided that Liberty may substitute
therefor policies of at least the same coverage and amounts containing
terms and conditions which are not materially less advantageous to the
indemnitees, and each of which is issued by an insurer having a
claims-paying rating at least as good as the rating of the issuer of
Summit's existing policy.
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(m) Investment Portfolio.
(i) From the date hereof through the Closing Date, the
Insurance Subsidiaries shall manage the investment portfolios for the
Insurance Subsidiaries in accordance with their respective investment
guidelines as in place on the date hereof.
(ii) No more than three days prior to the Closing Date,
Summit shall deliver to Liberty a list of all investments in the
investment portfolios for Summit and its Subsidiaries as of a date not
more than three business days prior to the date such list is delivered
to Liberty.
(n) Reinsurance Agreements. From the date hereof through the
Closing Date, Summit and each of its Subsidiaries shall not, without the prior
written approval of Liberty, except in the Ordinary Course of Business (i) amend
any reinsurance or retrocession agreement, (ii) enter into or commit to enter
into any loss portfolio transfer or other similar transaction, agreement or
arrangement or series of related transactions, agreements or arrangements
involving any ceded reinsurance of Summit or any of its Subsidiaries, (iii)
enter into or commit to enter into any reinsurance or retrocession contract or
treaty except to replace, renew or extend existing reinsurance and retrocession
agreements and treaties on terms which are not different in any material respect
from the terms of the agreement or treaty being replaced, renewed or extended,
as the case may be, or (iv) commute or terminate any contract of reinsurance,
which at the time of commutation or termination is legally carried on the books
of Summit and its Subsidiaries in an amount of $1,000,000 or more. All
reinsurance or retrocession agreements or treaties permitted by this ss. 6(n)
shall not have a change of control or similar provision which would require
Summit or any of its Subsidiaries to obtain a consent to consummate the
transactions contemplated hereby (unless such provisions shall have been waived
prior to Closing).
(o) Redemption of Series A Preferred Stock. At least three days
prior to the Effective Time, Summit shall provide in writing to Liberty the
aggregate amount required to redeem all of the outstanding shares of Series A
Preferred Stock at the Effective Time, which shall be the aggregate Liquidation
Preference (as defined in Summit's Articles of Incorporation) plus all cumulated
and unpaid dividends (the "Series A Amount"). On or prior to the Effective Time,
Liberty shall deposit with Chase Mellon an amount in cash equal to the Series A
Amount. Summit shall take, or cause to be taken, all such actions and give such
notice and take all such other actions as required pursuant to Summit's Articles
of Incorporation so that the Series A Preferred Stock will be redeemed
simultaneously with the Effective Time.
7. Conditions Precedent.
(a) Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
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(i) Shareholder Approval. This Agreement and the Merger
shall have been approved and adopted by the shareholders of Summit in
the manner contemplated by ss. 3(y) and in compliance with the Florida
Business Act and other applicable law.
(ii) Governmental and Regulatory Consents. All filings
required to be made prior to the Effective Time with, and all consents,
approvals, permits and authorizations required to be obtained prior to
the Effective Time from Governmental Entities, including, without
limitation, those set forth in ss. 3(c) of the Disclosure Schedule, in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by Liberty, the
Acquisition Sub and Summit, will have been made or obtained (as the
case may be), provided, however, that such consents, approvals, permits
and authorizations may be subject to conditions customarily imposed by
state Governmental Entities charged with the supervision of insurance
companies.
(iii) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have otherwise expired.
(iv) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger shall be in
effect, provided, however, that Liberty and Summit shall use reasonable
efforts to have any such order or injunction vacated.
(b) Conditions to Obligations of Liberty and the Acquisition Sub.
The obligations of Liberty and the Acquisition Sub to effect the Merger are
further subject to the following conditions:
(i) Representations and Warranties. The representations
and warranties of Summit set forth in this Agreement shall be assessed
as of the date of this Agreement and as of the Effective Time with the
same effect as though all such representations and warranties had been
made on and as of the Effective Time (provided that representations and
warranties that speak of an earlier date shall speak only of such
date). The representations and warranties set forth in ss. 3(b) shall
be true and correct (except for inaccuracies that are de minimus in
amount). The representations and warranties set forth in ss. 3(c) shall
be true and correct in all material respects. There shall not exist
inaccuracies in the other representations and warranties of Summit set
forth in this Agreement such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Summit Material
Adverse Effect, provided that, for purposes of this sentence only,
those representations and warranties that are qualified by reference to
"material" or are measured in terms of a Summit Material Adverse Effect
shall be deemed not to include such qualification. Liberty shall have
received a certificate signed on behalf of Summit by the chief
executive officer and the chief financial officer of Summit to the
effect set forth in this ss. 7(b)(i).
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(ii) Performance of Obligations of Summit. Summit 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 Liberty shall have received a certificate signed on behalf of
Summit by the chief executive officer and the chief financial officer
of Summit to such effect.
(iii) Receipt of Legal Opinion. Liberty shall have received
an opinion, dated the Closing Date, from Alston & Bird LLP, counsel to
Summit, addressing the matters set forth on Exhibit C hereto.
(c) Conditions to Obligation of Summit. The obligation of Summit
to effect the Merger is further subject to the following conditions:
(i) Representations and Warranties. The representations
and warranties of Liberty and the Acquisition Sub set forth in ss. 4
shall be true and correct in all material respects, in each case as of
the date hereof and as of the Closing Date as though made on and as of
the Closing Date, except to the extent such representations and
warranties speak as of an earlier date, and Summit shall have received
a certificate signed on behalf of Liberty by two executive officers of
Liberty to the effect set forth in this ss. 7(c)(i).
(ii) Performance of Obligations of Liberty and Acquisition
Sub. Liberty and Acquisition Sub shall have performed in all material
aspects all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and Summit shall have
received a certificate signed on behalf of Liberty by two executive
officers of Liberty to such effect.
(iii) Receipt of Legal Opinion. Summit shall have received
an opinion, dated the Closing Date, from Choate, Hall & Stewart,
counsel to Liberty, addressing the matters set forth on Exhibit D
hereto.
8. Termination, Amendment and Waiver.
(a) Termination. This Agreement may be terminated and abandoned at
any time prior to the Effective Time, whether before or after approval of
matters presented in connection with the Merger by the shareholders of Summit:
(i) by mutual written consent of Liberty and Summit; or
(ii) by either Liberty or Summit (by notice to the other):
(A) if any required approval of the shareholders of
Summit, upon a vote at a duly held Shareholders' Meeting or
any adjournment thereof, shall not have been obtained; or
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(B) if the Merger shall not have been consummated on
or before December 31, 1998, unless the failure to consummate
the Merger is the result of a willful and material breach of
this Agreement by the party seeking to terminate this
Agreement; or
(C) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become
final and nonappealable; or
(D) if the Board of Directors of Summit shall have
taken any action specified in clauses (i) through (iii) of the
first sentence of ss. 6(g).
(b) Effect of Termination. In the event of termination of this
Agreement by either Summit or Liberty as provided in ss. 8(a), this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Liberty, the Acquisition Sub or Summit, other than the
last two sentences of ss. 6(c), ss.ss. 6(i), 8(b) and ss.ss. 9(b) through (i).
Nothing contained in this ss. 8(b) shall relieve any party from any liability
resulting from any willful and material breach of the representations,
warranties, covenants or agreements set forth in this Agreement.
(c) Amendment. Subject to the applicable provisions of the Florida
Business Act, 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, provided, however, that
after approval of the Merger by the shareholders of Summit, no amendment shall
be made which reduces the consideration payable in the Merger or adversely
affects the rights of Summit's shareholders hereunder without the approval of
such shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the Parties.
(d) Extension; Waiver. At any time prior to the Effective Time,
the Parties may (i) extend the time for the performance of any of the
obligations or other acts of the other Parties, (ii) waive any inaccuracies in
the representations and warranties of the other Parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (iii)
subject to ss. 8(c), waive compliance with any of the agreements or conditions
of the other Parties contained in this Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
(e) Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to ss. 8(a), an amendment of this
Agreement pursuant to ss. 8(c) or an extension or waiver pursuant to ss. 8(d)
shall, in order to be effective, require in the case of Liberty, the Acquisition
Sub or Summit, action by its Board of Directors or the duly authorized designee
of its Board of Directors.
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<PAGE> 32
9. General Provisions.
(a) Survival of Representations and Warranties. The
representations and warranties in this Agreement shall not survive the Closing.
This ss. 9(a) shall not limit any covenant or agreement of the Parties which by
its terms contemplates performance after the Effective Time.
(b) Fees and Expenses. Except as provided otherwise in ss. 6(i),
whether or not the Merger shall be consummated, each party hereto shall pay its
own expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
(c) Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given and effective (i) if delivered personally, (ii) if sent by overnight
courier (providing proof of delivery) or (iii) upon the third business day
following mailing by registered mail, postage prepaid, to the Parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Liberty or Acquisition Sub, to
Liberty Mutual Insurance Company
175 Berkeley Street
Boston, Massachusetts 02117-0140
Attn: General Counsel
with copies (which shall not constitute notice) to:
Fred G. Marziano
Liberty Mutual Insurance Company
175 Berkeley Street
Boston, Massachusetts 02117-0140
Choate, Hall & Stewart
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attn: Stephen K. Fogg, Esq.
(ii) if to Summit, to
Summit Holding Southeast, Inc.
2310 A-Z Park Road
Lakeland, Florida 33801
Attn: William B. Bull
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<PAGE> 33
with copies (which shall not constitute notice) to:
Alston & Bird LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attn: Sidney J. Nurkin, Esq.
(d) Interpretation. When a reference is made in this Agreement to
a Section (ss.), Exhibit or Schedule, such reference shall be to a Section (ss.)
of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
(e) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the Parties and delivered to the other Parties.
(f) Entire Agreement; Third-Party Beneficiaries. This Agreement
and the other agreements referred to herein, including without limitation the
Confidentiality Agreement, constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the Parties
with respect to the subject matter of this Agreement. This Agreement is not
intended to confer upon any Person other than the Parties hereto and the third
party beneficiaries referred to in the following sentence any rights or
remedies. The Parties hereto expressly intend the provisions of ss. 6(l) to
confer a benefit upon and be enforceable by, as third party beneficiaries of
this Agreement, the third Persons referred to in, or intended to be benefitted
by, such provisions and such Person's heirs and legal representatives.
(g) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the domestic substantive laws of The Commonwealth
of Massachusetts, without giving effect to any choice or conflicts of laws rule
or provision that would result in the application of the domestic substantive
laws of any other jurisdiction.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the Parties without the prior
written consent of the other Parties, and any such assignment that is not
consented to shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the Parties and their respective successors and permitted assigns.
(i) Enforcement. The Parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the Parties shall be entitled to an
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<PAGE> 34
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement.
[The remainder of this page is left blank intentionally.]
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<PAGE> 35
IN WITNESS WHEREOF, Liberty, the Acquisition Sub and Summit have
executed this Agreement under seal as of the date first above written.
LIBERTY MUTUAL INSURANCE COMPANY
/s/ Geoffrey E. Hunt
----------------------------------------------
By: Geoffrey E. Hunt
Title: Vice President and
Director of Corporate Finance
SPACE MOUNTAIN ACQUISITION CORP.
/s/ Geoffrey E. Hunt
----------------------------------------------
By: Geoffrey E. Hunt
Title: Vice President and
Director of Corporate Finance
SUMMIT HOLDING SOUTHEAST, INC.
/s/ William B. Bull
----------------------------------------------
By: William B. Bull
Title: President and Chief Executive Officer
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<PAGE> 36
APPENDIX I
Certain Defined Terms
"Acquisition Sub" has the meaning set forth in the preface.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code ss. 1504(a).
"Acquisition Proposal" has the meaning set forth in ss. 6(f).
"Articles of Merger" has the meaning set forth in ss. 2(c)(i).
"Audited Financial Statements" has the meaning set forth in ss. 3(g).
"Benefit Arrangements" has the meaning set forth in ss. 3(s).
"Bull Employment Agreement" has the meaning set forth in ss. 3(cc).
"Claims" has the meaning set forth in ss. 6(l).
"Closing" has the meaning set forth in ss. 2(b).
"Closing Date" has the meaning set forth in ss. 2(b).
"Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"Confidentiality Agreement" has the meaning set forth in ss. 6(c).
"Disclosure Schedule" has the meaning set forth in ss. 3.
"Effective Time" has the meaning set forth in ss. 2(c)(i).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic
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<PAGE> 37
materials or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) that, together with Summit, would be treated as a single employer
under Section 4001(b) of ERISA, or that is a member of a group of which Summit
is a member and that is controlled within the meaning of Section 4971(e)(2)(B)
of the Code.
"Exchange Act" has the meaning set forth in ss. 3(c).
"Expenses" has the meaning set forth in ss. 6(i).
"Extremely Hazardous Substance" has the meaning set forth in ss. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Florida Business Act" has the meaning set forth in ss. 2(a).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Entity" has the meaning set forth in ss. 2(d)(v).
"HSR Act" has the meaning set forth in ss. 3(c).
"Incentive Plan" has the meaning set forth in ss. 2(c)(viii).
"Indemnity Agreements" means collectively the eight Indemnity
Agreements entered into on May 28, 1997, between Summit and each of Greg C.
Branch, William B. Bull, C. C. Dockery, John Gray, Robert L. Noojin, Sr., Thomas
S. Petcoff, Robert Siegel and Russell L. Wall.
"Insurance Subsidiaries" has the meaning set forth in ss. 3(i).
"Intangible Property" has the meaning set forth in ss. 3(l).
"Knowledge" means actual knowledge after reasonable investigation.
Knowledge of Persons that are not individuals shall be deemed to include
Knowledge of such Persons' directors and executive officers.
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<PAGE> 38
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Liberty" has the meaning set forth in the preface.
"Licenses" has the meaning set forth in ss. 3(i).
"Liens" has the meaning set forth in ss. 3(b).
"Merger" has the meaning set forth in ss. 2(a).
"Merger Consideration" has the meaning set forth in ss. 2(c)(v).
"Multiemployer Plan" shall mean any Plan that is a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface.
"Paying Agent" has the meaning set forth in ss. 2(d)(i).
"Payment Fund" has the meaning set forth in ss. 2(d)(i).
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a Governmental Entity.
"Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by Summit or any ERISA Affiliate or with
respect to which Summit or any ERISA Affiliate may have any liability.
"Proxy Statement" has the meaning set forth in ss. 3(c).
"SEC" has the meaning set forth in ss. 3(c).
"Section 6(i) Fee" has the meaning set forth in ss. 6(i).
"SEC Documents" has the meaning set forth in ss. 3(d).
"Securities Act" has the meaning set forth in ss. 3(d).
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"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialman's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Series A Amount" has the meaning set forth in ss. 6(o).
"Series A Preferred Stock" has the meaning set forth in ss. 3(b).
"Shareholders' Meeting" has the meaning set forth in ss. 3(e).
"Statutory Financial Statements" has the meaning set forth in ss.
3(bb).
"Subsidiary" means any of the direct or indirect, partially- or
wholly-owned, subsidiaries of Summit, but not including any entity of which
Summit owns, directly or indirectly, 5% or less of the equity, so owned by
Summit solely as an investment portfolio asset, and "Subsidiaries" means all of
such subsidiaries.
"Summit" has the meaning set forth in the preface.
"Summit Common Stock" means any share of the Common Stock, $.01 par
value per share, of Summit.
"Summit Material Adverse Effect" means an event, change or occurrence
that, individually or together with any other events, changes or occurrences,
has a material adverse effect on (a) the financial condition, business or
results of operations of Summit and its Subsidiaries taken as a whole, or (b)
the ability of Summit to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this Agreement,
provided, however, that a Summit Material Adverse Effect shall not include the
effect of any regulatory or statutory matter that has or may have an
industry-wide effect on the workers' compensation insurance industry in Florida.
"Summit Options" has the meaning set forth in ss. 2(c)(viii).
"Summit Shares" has the meaning set forth in ss. 3(b).
"Surviving Corporation" has the meaning set forth in ss. 2(a).
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use,
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transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Treasury Regulation" means those regulations promulgated from time to
time under the Code.
"Treaties" has the meaning set forth in ss. 3(t).
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EXHIBIT A-1
TO AGREEMENT AND PLAN OF MERGER
OPTION AGREEMENT
THIS OPTION AGREEMENT dated June 29, 1998, is by and among
______________________________ ("Holder"), Summit Holding Southeast, Inc., a
Florida corporation (the "Company"), and Liberty Mutual Insurance Company
("Liberty"). Certain other terms are defined in section 1.
On the date hereof, Liberty has entered into an Agreement and Plan of
Merger dated as of the date hereof (the "Merger Agreement") pursuant to which
Space Mountain Acquisition Corp., a wholly-owned subsidiary of Liberty, would be
merged with and into the Company. Holder agrees that the transactions
contemplated by the Merger Agreement are of value to him. In consideration of
the premises and other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged by the parties hereto, and in order to induce
Liberty to enter into the Merger Agreement, the parties hereby agree as follows:
1. Certain Definitions. Capitalized terms used in this Agreement without
definition have the respective meanings ascribed hereto in the Merger Agreement.
In addition, the following terms have the following respective meanings:
"Common Stock" shall mean the common stock, $.01 par value, of the
Company and any Shares into which such Common Stock shall have been
changed or any Shares resulting from a reclassification of the Common
Stock.
"Exercise Price" shall have the meaning specified in section 2.1.
"Option" shall have the meaning specified in section 2.
"Option Exercise Period" shall mean the period of time beginning on the
date that an Acquisition Proposal is commenced and ending on the
Termination Date.
"Option Notice" shall mean a notice, substantially in the form of
Exhibit 2.3 attached hereto, by which Liberty notifies Holder that it
is exercising all or part of the Option.
"Option Shares" shall mean the shares of Common Stock (and/or any other
securities) purchasable from time to time upon exercise of the Option,
including, without limitation, any shares of Common Stock (and/or other
securities) issued or issuable with respect thereto by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, amalgamation, consolidation, other
reorganization or otherwise.
<PAGE> 42
"Person" shall mean an individual, a corporation, an association, a
joint-stock company, a business trust or other similar organization, a
partnership, a limited liability company, a joint venture, a trust, an
unincorporated organization or a government or any agency,
instrumentality or political subdivision thereof.
"Shares" of any Person shall include any and all shares of capital
stock, partnership interests, membership interests, or other shares,
interests, participations or other equivalents (however designated and
of any class) in the capital of, or other ownership interests in, such
Person, and, as applied to the Company, includes shares of Common
Stock.
"transfer" shall mean any issue, sale, pledge, gift, assignment or
other transfer.
2. Option.
2.1. Grant. Holder hereby grants to Liberty an irrevocable option (the
"Option") to purchase during the Option Exercise Period all or any part of
certain shares of Common Stock beneficially owned by Holder (including all
shares of Common Stock issuable to Holder upon the exercise of options to
purchase shares of Common Stock, whether or not currently vested or exercisable,
as of the date hereof), as set forth below Holder's name on the signature page
hereof, and any Common Stock of the Company that the Holder shall hereafter
acquire or be entitled to acquire (collectively, the "Option Shares"). As set
forth below Holder's name on the signature page hereof, certain shares of Common
Stock that are beneficially owned by Holder are not subject to this Agreement.
The Option may be exercised in whole or in part during the Option Exercise
Period at a per share option price equal to $33.00 per share, subject to
adjustment as set forth in section 3 hereof (the "Exercise Price").
2.2. Term and Exercisability. The Option is exercisable with respect to
all of the Option Shares at any time prior to the "Termination Date", which
shall be the first to occur of: (a) the Effective Time of the Merger or the date
upon which any other merger, share exchange, consolidation, recapitalization,
significant asset sale or similar business combination of Summit is consummated;
(b) the date upon which the Merger Agreement is terminated in accordance with
either Section 8(a)(i), 8(a)(ii)(A), 8(a)(ii)(B) or 8(a)(ii)(C) thereof,
provided, however, that if the Merger Agreement is terminated pursuant to
Section 8(a)(ii)(A) following the commencement, public proposal, public
disclosure or communication of an Acquisition Proposal (as defined in the Merger
Agreement) to the Company (or the public disclosure or communication to the
Company of the willingness of any Person to make an Acquisition Proposal), then
clause (c) of this Section 2.2, rather than this clause (b), shall apply; or (c)
if an Acquisition Proposal (as defined in the Merger Agreement) is commenced on
or before December 31, 1998, at the close of business on December 31, 1999. The
Option shall, to the extent not theretofore exercised, expire and become void at
5:00 p.m. (Boston time) on the Termination Date.
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2.3. Method of Exercise.
(a) To exercise the Option (in whole or in part), Liberty
shall deliver to Holder (with a copy to the Company) (i) an Option
Notice (substantially in the form of Exhibit 2.3 attached hereto) duly
executed by Liberty and specifying the number of Option Shares to be
purchased and (ii) an amount equal to the aggregate Exercise Price for
all Option Shares as to which the Option is then being exercised. At
the option of Liberty, payment of the Exercise Price shall be made (i)
by wire transfer of immediately available funds (in U.S. dollars) to an
account in a bank located in the United States designated by Holder for
such purpose, (ii) by certified check payable to the order of Holder,
or (iii) by any combination of such methods.
(b) As promptly as practicable, and in any event within
10 Business Days after receipt of the copy of the Option Notice
delivered pursuant to section 2.3(a), Holder shall deliver to the
Company all certificates representing the number of Option Shares
specified in the Option Notice endorsed by Holder for surrender to and
cancellation by the Company, and the Company shall issue and deliver to
Liberty, a certificate or certificates representing the number of
Option Shares specified in the Option Notice. The Company shall, upon
submission by Holder of a stock certificate or certificates
representing the aggregate number of Shares issued upon such exercise,
cancel such old certificate or certificates and issue a new certificate
representing the remaining Option Shares.
(c) Unless otherwise requested by Liberty, an Option
shall be deemed to have been exercised and to be effective and the
certificate or certificates representing Option Shares shall be deemed
to have been issued, and Liberty shall be deemed to have become the
holder of record of such Option Shares for all purposes, as of the
close of business on the date on which the last of the Option Notice
and payment of the Exercise Price shall have been received by Holder.
2.4. Termination. This Agreement, and the option rights granted
hereunder, shall terminate upon the earliest to occur of: (a) the exercise of
the Option in whole in accordance with the terms of this Agreement and the
payment (or the making of provisions satisfactory to Holder for the payment) of
all other sums payable hereunder; (b) the Effective Time (as defined in the
Merger Agreement); or (c) the Termination Date.
3. Adjustments to Number of Shares. If the Company shall subdivide or
combine its Common Stock, the Exercise Price and the number of Option Shares
issuable upon exercise of the Option shall be equitably adjusted.
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<PAGE> 44
4. Representations, Warranties and Covenants of Holder.
4.1 Representations and Warranties. Holder represents and warrants
that:
(a) This Agreement constitutes the valid and legally
binding obligation of Holder, enforceable against him in accordance
with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles).
(b) Holder is not in violation of or in default under any
term of any agreement, document, instrument, judgment, decree, order,
law, statute, rule or regulation applicable to him or any of his
properties and assets, in any way which has resulted in, or could
reasonably be expected to result in, a material adverse effect upon his
ability to comply with the terms of this Agreement applicable to him.
(c) The execution, delivery and performance of and the
consummation of the transactions contemplated by this Agreement will
not violate or constitute a default under any term of any agreement,
document, instrument, judgment, decree, order, law, statute, rule or
regulation applicable to Holder or to any of his properties and assets.
(d) Holder, as of the date of this Agreement, (i) has
good and marketable title to the Option Shares and (ii) is the sole
record and beneficial owner of such Option Shares. As of the date of
this Agreement, (x) all of the Option Shares are free and clear of all
liens and other encumbrances, (y) no other Person has any interest,
right or claim (contingent or otherwise) relating thereto and (z) none
of the Option Shares are subject to (A) redemption, purchase or
acquisition by any Person, (B) any rights with respect to registration,
or qualification under applicable securities laws, (C) any preemptive
or similar rights on the part of any other Person or (D) any lien,
encumbrance, proxy, voting agreement, voting trust, stockholders
agreement or similar agreement or restriction.
(e) Holder beneficially owns no Common Stock or options
to purchase Common Stock as of the date hereof other than as set forth
in section 2.1.
4.2 Covenants. From and after the date hereof and thereafter so
long as the Option is outstanding and exercisable, Holder agrees to duly perform
and observe for the benefit of Liberty each and all of the covenants and
agreements hereinafter set forth:
(a) If any shares of Common Stock (and/or any securities)
are issued or issuable or any other property (including, without
limitation, any regularly scheduled cash dividend) or asset is
distributed with respect to any Option Share by way of dividend or
distribution (including any stock dividend), stock split or in
connection with a combination of shares, recapitalization, merger,
amalgamation, consolidation, other reorganization, or otherwise, Holder
agrees that the same shall, without further action, constitute a part
of the Option Shares in respect of which the same was issued, paid or
otherwise distributed
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<PAGE> 45
and Holder shall hold the same (including all certificates and other
instruments evidencing the same, together with all necessary stock
powers and endorsements), in trust pursuant to this Agreement for the
benefit of Liberty and to be delivered upon exercise of the Option but
without additional consideration or increase in the aggregate Exercise
Price on account thereof.
(b) Holder shall not, directly or indirectly, transfer,
grant any interest in or create or suffer to exist any lien or any
other encumbrance in respect of, the Option Shares (or any other
shares, securities, properties or assets issued or issuable in respect
thereof) or any right, title or interest therein or thereto.
(c) From time to time hereafter, Holder shall execute and
deliver, or shall cause to be executed and delivered, such additional
agreements, documents and instruments and shall take all such other
actions as Liberty may reasonably request for the purpose of
implementing or effectuating the provisions of this Agreement.
(d) To the extent that the exercise (in whole or in part)
of the Option shall require the exercise of options held by Holder in
order that there be available a sufficient number of shares for
transfer to Liberty pursuant hereto, Holder shall exercise such options
contemporaneously with the payment by Liberty to Holder of the Exercise
Price hereunder with respect to such shares and cause such Common Stock
to be issued.
5. Covenants of the Company. From and after the date hereof and thereafter
so long as the Option is outstanding and exercisable, the Company will execute
and deliver, or will cause to be executed and delivered, such additional
agreements, documents and instruments and will take all such other actions as
Holder or Liberty may reasonably request for the purpose of implementing or
effectuating the provisions of this Agreement.
6. Assignment This Agreement shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns, provided that
(a) Holder shall not be permitted to assign any of his rights or obligations
hereunder and (b) Liberty may assign any or all of its rights and obligations
hereunder to one or more wholly-owned subsidiaries of Liberty
7. Amendments and Waivers. This Agreement may not be amended except by a
written instrument signed by (a) the Company, (b) Holder and (c) Liberty. No
course of dealing between any parties hereto and no delay by any party in
exercising its rights hereunder shall operate as a waiver of any fights of any
party. No waiver shall be deemed to be made by any party of its rights hereunder
unless the same shall be in writing signed on behalf of such party, and each
waiver, if any, shall be a waiver only with respect to the specific instance
involved and shall in no way impair the rights or obligations of any other party
in any other respect at any other time.
8. Notices. Any notices, requests, claims, demands and other communication
under this Agreement shall be in writing and shall be deemed given (a) if
delivered personally, (b) if sent by overnight courier (providing proof of
delivery), or (c) upon the third business day following
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<PAGE> 46
mailing by registered mail, postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to Liberty, to:
Liberty Mutual Insurance Company
175 Berkeley Street
Boston, Massachusetts 02117-0140
Attn.: General Counsel
(ii) if to the Company, to:
Summit Holding Southeast, Inc.
2310 A-Z Park Road
Lakeland, Florida 33801
Attn.: William B. Bull
(iii) if to Holder, to:
----------------------------
----------------------------
----------------------------
----------------------------
9. Specific Performance. The parties hereto stipulate that the remedies at
law of any party hereto in the event of any default or threatened default by any
other party hereto in the performance of or compliance with the terms hereof are
not and will not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance
hereof whether by injunction against violation or otherwise.
10. Survival of Agreements, Representations and Warranties, etc. All
agreements, representations and warranties contained herein shall be deemed to
have been relied upon by Liberty and shall survive the execution and delivery of
this Agreement, the issue, sale and delivery of the Option and payment therefor
and any disposition of the Option by Liberty, whether or not any investigation
at any time is made by Liberty or on its behalf.
11. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement,
including the validity hereof and the rights and obligations of the parties
hereunder, and all amendments and supplements hereof and all waivers and
consents hereunder, shall be construed in accordance with and governed by the
domestic substantive laws of the State of Florida without giving effect to any
choice of law or conflicts of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction. Each of
the parties hereto (a) consents to submit such party to the personal
jurisdiction of any federal court located in the State of Florida or any Florida
state court in the event any dispute arises out of this Agreement or any of the
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transactions contemplated hereby, (b) agrees that such party will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court, and (c) agrees that such party will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a federal court sitting in the State of Florida or a Florida
state court.
12. Miscellaneous. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof or
thereof. This Agreement embodies the entire agreement and understanding between
the parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof. Each covenant contained herein shall be
construed (absent an express provision to the contrary) as being independent of
each other covenant contained herein and therein, so that compliance with any
one covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. If any provision in this Agreement
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable, whether such action
is taken directly or indirectly by such Person. In case any provision in this
Agreement shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby. This Agreement may be executed in any number of counterparts
and by the parties hereto or thereto, as the case may be, on separate
counterparts but all such counterparts shall together constitute but one and the
same instrument.
[The remainder of this page is intentionally left blank.]
7
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written
SUMMIT HOLDING SOUTHEAST, INC.
By:
--------------------------------------
(Title)
LIBERTY MUTUAL INSURANCE COMPANY
By:
--------------------------------------
(Title)
------------------------------------------
Number of Shares
Beneficially Owned that are
Subject to this Agreement:
---------
Number of Shares Beneficially
Owned that are Not Subject to
this Agreement:
---------
Total Number of Shares
Beneficially Owned:
-------------
Exhibit 2.4 to Option Agreement
-------------------------------
FORM OF OPTION NOTICE
(To be executed only upon partial or full exercise
of the Option)
8
<PAGE> 49
The undersigned registered holder of the Option (as defined in the
Option Agreement (the "Option Agreement") by and among Liberty Mutual Insurance
Company, Summit Holding Southeast, Inc. and ___________________) irrevocably
exercises such Option for and purchases ______ shares of Common Stock of SUMMIT
HOLDING SOUTHEAST, INC. and herewith makes payment therefor in the amount of
$_______, all at the price, in the manner and on the terms and conditions
specified in the Option Agreement, and requests that a certificate (or ____
certificates in denominations of _______ shares) for such shares hereby
purchased be issued in the name of and delivered to (choose one) (a) the
undersigned or (b) ________________, whose address is __________________________
Dated: _____________ __, ____
LIBERTY MUTUAL INSURANCE COMPANY
By:___________________________________
9
<PAGE> 50
EXHIBIT A-2
TO AGREEMENT AND PLAN OF MERGER
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is made and entered into as of
June 29, 1998, by and between Liberty Mutual Insurance Company, a Massachusetts
mutual insurance company ("Liberty"), Summit Holding Southeast, Inc., a Florida
corporation ("Summit"), and the undersigned (the "Shareholder").
WHEREAS, the Shareholder desires that Liberty, Space Mountain Acquisition
Corp., a wholly owned subsidiary of Liberty ("Acquisition Sub"), and Summit
enter into an Agreement and Plan of Merger dated the date hereof (as the same
may be amended or supplemented, the "Merger Agreement") with respect to the
merger of Acquisition Sub with and into Summit (the "Merger"); and
WHEREAS, the Shareholder is executing this Agreement as an inducement to
Liberty to enter into and execute, and to cause Acquisition Sub to enter into
and execute, the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by Liberty
and Acquisition Sub of the Merger Agreement and the mutual covenants, conditions
and agreements contained herein and therein, the parties agree as follows:
1. Representations and Warranties. The Shareholder represents and
warrants to Liberty as follows:
(a) The Shareholder is the record and beneficial owner of the number
of shares of common stock, $.01 par value per share, of Summit ("Summit Stock")
set forth below such Shareholder's name on the signature page hereof, which
number includes, without limitation, all shares of Summit Stock issuable to
Shareholder pursuant to options that have been granted to Shareholder pursuant
to the Summit Holding Southeast, Inc. 1996 Long-Term Incentive Plan. As set
forth below the Shareholder's name on the signature page hereof, (i) certain of
the shares of Summit Stock that are beneficially owned by the Shareholder are
subject to this Agreement (the "Shareholder's Shares"), and (ii) certain of the
shares of Summit Stock that are beneficially owned by the Shareholder are not
subject to this Agreement (the "Excluded Shares"). Except for the Shareholder's
Shares and the Excluded Shares, the Shareholder is not the record or beneficial
owner of any shares of Summit Stock and holds no warrants, options or other
rights to acquire Summit Stock. This Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of, the
Shareholder, enforceable in accordance with its terms.
<PAGE> 51
(b) Neither the execution and delivery of this Agreement nor the
consummation by the Shareholder of the transactions contemplated hereby will
result in a violation of, or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which the Shareholder is a party or bound or to which the Shareholder's
Shares are subject. Consummation by the Shareholder of the transactions
contemplated hereby will not violate, or require any consent, approval, or
notice under, any provision of any judgment, order, decree, statute, law, rule
or regulation applicable to the Shareholder or the Shareholder's Shares.
(c) The Shareholder's Shares and the certificates representing such
Shares are now, and at all times during the term hereof will be, held by the
Shareholder, or by a nominee or custodian for the benefit of such Shareholder,
free and clear of all liens, claims, security interests, proxies, voting trusts
or agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any such encumbrances or proxies arising hereunder.
(d) The Shareholder understands and acknowledges that Liberty is
entering into, and causing Acquisition Sub to enter into, the Merger Agreement
in reliance upon the Shareholder's execution and delivery of this Agreement. The
Shareholder acknowledges that the irrevocable proxy set forth in Section 4 is
granted in consideration for the execution and delivery of the Merger Agreement
by Liberty and Acquisition Sub.
2. Voting Agreements. The Shareholder agrees with, and covenants to,
Liberty as follows:
(a) At any meeting of shareholders of Summit called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval with respect to the
Merger and the Merger Agreement is sought (the "Shareholders' Meeting"), the
Shareholder shall vote (or cause to be voted) the Shareholder's Shares in favor
of the Merger, the execution and delivery by Summit of the Merger Agreement, and
the approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement, provided that the terms of the Merger
Agreement shall not have been amended to reduce the consideration payable in the
Merger to less than $33.00 per share or otherwise to impair materially and
adversely the Shareholder's rights or increase the Shareholder's obligations
thereunder.
(b) At any meeting of shareholders of Summit or at any adjournment
thereof or in any other circumstances upon which their vote, consent or other
approval is sought, the Shareholder shall vote (or cause to be voted) such
Shareholder's Shares against (i) any merger agreement or merger (other than the
Merger Agreement and the Merger), consolidation, combination, sale of
substantial assets, reorganization, recapitalization, dissolution, liquidation
or winding up of or by Summit or (ii) any amendment of Summit's Articles of
Incorporation or Bylaws or other proposal or transaction involving Summit or any
of its subsidiaries which amendment or other proposal or transaction would in
any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger Agreement
(each of the foregoing in clause (i) or (ii) above, a "Competing Transaction").
2
<PAGE> 52
3. Transfers.
(a) The Shareholder shall not (i) transfer (which term shall include,
without limitation, for the purposes of this Agreement, any sale, gift, pledge
or other disposition), or consent to any transfer of, any or all of the
Shareholder's Shares or any interest therein, except pursuant to the Merger;
(ii) enter into any contract, option or other agreement or understanding with
respect to any transfer of any or all of such Shares or any interest therein,
(iii) grant any proxy, power of attorney or other authorization in or with
respect to such Shares, except for this Agreement, or (iv) deposit such Shares
into a voting trust or enter into a voting agreement or arrangement with respect
to such Shares; provided, that the Shareholder may transfer (as defined above)
any of the Shareholder's Shares to any other person who is on the date hereof,
or to any family member of a person or charitable institution which prior to the
Shareholders' Meeting and prior to such transfer becomes, a party to this
Agreement bound by all the obligations of the "Shareholder" hereunder.
(b) Nothing in this Agreement shall affect the Shareholder's economic
or financial interest in the Shareholder's Shares and, without limiting the
foregoing, the parties acknowledge and agree that, in the event that the Merger
or any Competing Transaction is consummated, the Shareholder shall be entitled
to any and all consideration in exchange for the Shareholder's Shares.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) The Shareholder hereby irrevocably grants to and appoints J. Paul
Condrin, III, Chief Financial Officer of Liberty, Geoffrey E. Hunt, Vice
President and Director of Corporate Finance of Liberty, and Laurance H.S. Yahia,
Vice President and Assistant General Counsel of Liberty, in their respective
capacities as officers of Liberty, and any individual who shall hereafter
succeed to any such office of Liberty, and each of them individually, the
Shareholder's proxy and attorney-in-fact (with full power of substitution), for
and in the name, place and stead of the Shareholder, to vote the Shareholder's
Shares, or grant a consent or approval in respect of such Shares (i) in favor of
the Merger, the execution and delivery of the Merger Agreement and approval of
the terms thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not have been
amended to reduce the consideration payable in the Merger to less than $33.00
per share or otherwise to impair materially and adversely the Shareholder's
rights or increase the Shareholder's obligations thereunder, and (ii) against
any Competing Transaction.
(b) The Shareholder represents that any proxies heretofore given in
respect of the Shareholder's shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) The Shareholder hereby affirms that the irrevocable proxy set
forth in this Section 4 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of the Shareholder under this Agreement. The Shareholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked. The Shareholder hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable
3
<PAGE> 53
proxy is executed and intended to be irrevocable in accordance with the
provisions of Section 607.0722 of the 1989 Florida Business Corporation Act.
5. Certain Events. The Shareholder agrees that this Agreement and the
obligations hereunder shall attach to the Shareholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including without
limitation the Shareholder's successors or assigns. In the event of any stock
split, stock dividend, merger, reorganization, recapitalization or other change
in the capital structure of Summit affecting the Summit Stock, or the
acquisition of additional shares of Summit Stock or other voting securities of
Summit by any Shareholder, the number of Shares subject to the terms of this
Agreement shall be adjusted appropriately and this Agreement and the obligations
hereunder shall attach to any additional shares of Summit Stock or other voting
securities of Summit issued to or acquired by the Shareholder.
6. Legends. The Shareholder agrees that the Shareholder will tender
to Summit, within five business days after the date hereof, any and all
certificates representing such Shareholder's Shares and Summit will inscribe
upon such certificates the following legend: "The shares of Common Stock, $.01
par value per share, of Summit Southeast Holding, Inc. represented by this
certificate are subject to a Voting Agreement dated as of June 29, 1998, and may
not be sold or otherwise transferred, except in accordance therewith. Copies of
such Voting Agreement may be obtained at the principal executive offices of
Summit Holding Southeast, Inc."
7. Further Assurances. The Shareholder shall, upon the request and at
the expense of Liberty, execute and deliver any additional documents and take
such further actions as Liberty may reasonably deem necessary or appropriate to
carry out the provisions hereof and to vest the power to vote such Shareholder's
Shares in the irrevocable proxies as described in Section 4.
8. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the first to occur of: (a) the Effective
Time of the Merger or the date upon which any other merger, share exchange,
consolidation, recapitalization, significant asset sale or similar business
combination of Summit is consummated; (b) the date upon which the Merger
Agreement is terminated in accordance with either Section 8(a)(i), 8(a)(ii)(A),
8(a)(ii)(B) or 8(a)(ii)(C) thereof, provided, however, that if the Merger
Agreement is terminated in accordance with such Section 8(a)(ii)(A) following
the communication, public proposal, public disclosure or communication of an
Acquisition Proposal (as defined in the Merger Agreement) to Summit (or the
public disclosure or communication to Summit of the willingness of any Person to
make an Acquisition Proposal), then clause (c) of this Section 8, rather than
this clause (b), shall apply; or (c) if an Acquisition Proposal (as defined in
the Merger Agreement) is commenced on or before December 31, 1998, at close of
business on December 31, 1999.
9. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this Agreement
shall have the respective meanings assigned to them in the Merger Agreement.
4
<PAGE> 54
(b) All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given and effective
if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to Liberty, to the
address provided in the Merger Agreement; and (ii) if to the Shareholder; to his
address shown below his signature on the last page hereof.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement.
(e) This Agreement (including the documents and instruments referred
to herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(f) 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 principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except as expressly contemplated by Section 3. Any
assignment in violation of the foregoing shall be void.
(h) The Shareholder agrees that irreparable damage would occur and
that Liberty would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that Liberty
shall be entitled to an injunction or injunctions to prevent breaches by the
Shareholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Florida or in Florida state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction of
any federal court located in the State of Florida or any Florida state court in
the event any dispute arises out of this Agreement or any of the transactions
contemplated hereby, (ii) agrees that such party will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court and (iii) agrees that such party will not bring any action relating
to this Agreement or any of the transactions contemplated hereby in any court
other than a federal court sitting in the State of Florida or a Florida state
court.
(i) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall
5
<PAGE> 55
not in any way be affected, impaired or invalidated, and shall be enforced to
the fullest extent permitted by law.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
IN WITNESS WHEREOF, the undersigned parties have executed and delivered
this Voting Agreement as of the day and year first above written.
LIBERTY MUTUAL INSURANCE COMPANY
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
SUMMIT HOLDING SOUTHEAST, INC.
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
SHAREHOLDER
---------------------------------------
Printed Name:
-------------------------
Address:
-------------------------------
-------------------------------
Number of Shares
Beneficially Owned That are
Subject to this Agreement:
-------------
Number of Shares Beneficially
Owned That are Not Subject to this
Agreement:
-----------------------------
Total Number of Shares
Beneficially Owned:
---------------------
6
<PAGE> 56
EXHIBIT B TO
AGREEMENT AND PLAN OF MERGER
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of June
29, 1998, by and between Summit Holding Southeast, Inc., a Florida corporation
("Summit" and, collectively with its current and future subsidiaries and
parents, the "Company"), and William B. Bull (the "Employee").
Introduction
Liberty Mutual Insurance Company ("Liberty"), Space Mountain Acquisition
Corp., a wholly owned subsidiary of Liberty (the "Acquisition Sub"), and Summit
have entered into an Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement") pursuant to which Summit would be merged with and into
the Acquisition Sub.
In contemplation of the transactions contemplated by the Merger
Agreement, Summit desires to retain the services of the Employee up to and
following the closing thereof (the "Closing"), and the Employee wishes to be
employed by Summit. The Employee has detailed knowledge of various aspects of
the business of the Company and is in possession of proprietary and confidential
information concerning such business. The parties agree that the Employee's
disclosure of such information or his engagement in competitive activities would
cause substantial harm to the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Section 1. Term. Summit shall employ the Employee for a term commencing
on the Effective Time (as defined in the Merger Agreement) and continuing until
(a) Summit has hired a chief operating officer or executive vice president who
is intended to become the chief executive officer upon the retirement of the
Employee and (b) such additional period of time following such hiring (not to
exceed 12 months) as is determined in the sole discretion of the Board of
Directors of Summit, unless earlier terminated pursuant to Section 7, but in no
event shall the total term exceed 36 months (the "Employment Period"). That
certain Employment and Confidentiality Agreement dated as of May 28, 1997
between Summit and the Employee (the "Original Employment Agreement") will
terminate and be of no further force and effect as of the first day of the
Employment Period, except to the extent reflected in Section 4 hereof.
Section 2. Duties. The Employee shall serve as the Chief Executive
Officer of Summit and shall have such duties consistent with such position and
as the Board of Directors of Summit (the "Board") shall from time to time
determine. Following the Closing, the Employee will report to
<PAGE> 57
the Chief Executive Officer of Liberty or his designee. The Employee shall
receive no additional compensation for any services rendered in the event he
serves as a director of the Company.
Section 3. Full Time; Best Efforts. During the term of this Agreement,
the Employee shall use his best efforts to promote the interests of the Company,
shall devote his full business time and efforts to its business and affairs and
shall actively assist the Company in locating, hiring and retaining a qualified
chief operating officer or executive vice president who is intended to become
the chief executive officer upon the Employee's retirement. The Employee shall
not engage in any other activity which could reasonably be expected to interfere
with the performance of his duties, services and responsibilities hereunder.
Section 4. Compensation. During the term of his employment with the
Company, the Employee shall be entitled to receive a salary at the rate of
$250,000 annually (the "Salary"), payable not less than monthly in arrears. The
Company may withhold from compensation payable to the Employee all applicable
federal, state and local withholding taxes. The Employee shall be entitled to an
annual bonus (the "Bonus") of up to 100% of the Salary in accordance with the
plan attached hereto as Exhibit A, plus the bonus to which the Employee would
have been entitled to under section 3(b) of the Original Employment Agreement
for 1998, pro-rated to reflect that portion of the year transpired between
January 1, 1998 and the Effective Time (as defined in the Merger Agreement).
Section 5. Benefits. The Employee will be entitled to such reasonable
and customary fringe benefits as are generally and regularly available to
employees of the Company and its subsidiaries, including, without limitation,
health insurance and four weeks of paid vacation per year. The Employee will be
entitled to reimbursement of all reasonable and necessary business expenses
incurred by him in the ordinary course of business on behalf of the Company,
subject to presentation by the Employee of appropriate documentation in
accordance with the Company's customary policies.
Section 6. Confidentiality, Ownership and Noncompetition. In
consideration of the other mutual promises contained herein, and to preserve the
goodwill of the Company, the Employee agrees as follows:
(a) The Employee will not at any time, directly or indirectly,
disclose or divulge, except as required in connection with the performance of
his duties for the Company and except to legal counsel of the Company or as
required or requested by any governmental agency or pursuant to or in response
to any threat of legal process, any Confidential Information (as hereinafter
defined) acquired by him during or in connection with his affiliation with or
employment by the Company. As used herein, "Confidential Information" means all
trade secrets and all other information of a business, financial, marketing,
technical or other nature pertaining to the Company, including but not limited
to (i) all financial information on agents, lists of agents and agent leads,
(ii) all information on agreements with suppliers, vendors, agents and
reinsurers of the Company, including information of others that the Company has
agreed to keep confidential; and (iii) all information concerning the customers,
suppliers, products, pricing strategies of the Company, personnel assignments
and policies of the Company, and matters
2
<PAGE> 58
concerning the financial affairs and management of the Company; provided,
however, that Confidential Information shall not include any information that
has entered or enters the public domain through no fault of the Employee or
which the Employee is required to disclose by legal process or to defend himself
in a legal proceeding.
(b) The Employee shall make no use whatsoever, directly or
indirectly, of any Confidential Information, except as required in connection
with the performance of his duties for the Company.
(c) The Employee acknowledges and agrees that all Confidential
Information, and all physical embodiments thereof, shall be and remain the sole
and exclusive property of the Company and that any Confidential Information
produced by the Employee during the period of Employee's employment by the
Company shall be considered "work for hire" as such term is defined in 17 U.S.C.
Section 101, the ownership and copyright of which shall be vested solely in the
Company. Employee agrees (i) immediately to disclose to the Company upon the
Company's request all Confidential Information developed in whole or part by
Employee during the Employment Period, and (ii) at the request and expense of
the Company, to perform such actions and sign such documents or instruments as
are reasonably necessary in the opinion of the Company to eliminate any
ambiguity as to the rights of the Company in such Confidential Information
including, without limitation, providing to the Company Employee's full
cooperation in any litigation or other proceeding to establish, protect, or
obtain such rights.
(d) Upon the Company's request at any time and for any reason,
the Employee shall immediately deliver to the Company all property belonging to
the Company, including, without limitation, all Confidential Information (and
all embodiments thereof) in Employee's custody, control or possession.
(e) During the term of this Agreement, and for three years
after such termination for any reason, the Employee will not directly or
indirectly, individually or as a consultant to, or employee, officer, director,
stockholder, manager or partner of, or other owner of or participant in any
business entity other than the Company, engage in or assist any other person to
engage in the property and casualty insurance business within the states of
Florida, Kentucky and Louisiana; provided, however, that the Employee shall be
permitted to participate in any activity or business that is not reasonably
expected to compete with the Company or its subsidiaries if the Employee
receives the prior written approval of the Company's Board of Directors, which
consent shall not be unreasonably withheld.
(f) During the term of this Agreement, and for three years
after such termination for any reason, the Employee will not directly or
indirectly, individually or as a consultant to, or employee, officer, director,
stockholder, manager or partner of, or other owner of or participant in any
business entity other than the Company, solicit or endeavor to entice away from
the Company or any of its subsidiaries, or otherwise materially interfere with
the business relationship of the Company or any subsidiary of the Company with,
(i) any person who is, or was within the one-year period immediately prior to
the termination of the Employee's employment with the Company, employed by or
associated with the Company or any subsidiary or (ii) any
3
<PAGE> 59
person or entity who is, or was within the one-year period immediately prior to
the termination of the Employee's employment with the Company, a customer or
agent of, or other party having material business relations with, the Company.
(g) Without limiting the remedies available to the Company,
the Employee acknowledges that a breach of any of the covenants contained in
this Section 6 could result in irreparable injury to the Company for which there
might be no adequate remedy at law, and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain, as applicable, a
temporary restraining order, a preliminary injunction and a permanent injunction
restraining him from engaging in any activities prohibited by this Section 6 and
such other equitable relief as may be required to enforce specifically any of
the covenants of this Section 6. The foregoing provisions of this Section 6
shall survive the termination of this Agreement and shall continue thereafter
indefinitely in full force and effect in accordance with the terms of this
Section 6. The existence of any claim, demand, action or cause of action of
Employee against the Company shall not constitute a defense to the enforcement
by the Company of any of the covenants or agreements herein whether predicated
upon this Agreement or otherwise, and shall not constitute a defense to the
enforcement by the Company of any of its rights hereunder.
(h) The Employee represents and warrants to the Company that
the execution and delivery of this Agreement, and the performance of his
obligations hereunder, will not violate any agreement, obligation or commitment,
including without limitation any obligation to any former employer not to
compete or not to disclose or use confidential information, to which he is a
party or by which he is bound.
(i) Each party hereto acknowledges that (i) there are
legitimate business interests justifying the covenants contained in this Section
6, including without limitation that the Employee has and will have trade
secrets, valuable confidential business and professional information,
substantial relationships with existing and prospective agents and others and
agent goodwill, and (ii) the terms of this Section 6 are reasonably necessary to
protect such legitimate business interests.
Section 7. Termination. The Employee's employment with the Company may
be terminated at any time by the Company with or without cause. As used herein,
"cause" shall mean the reasonable and good faith determination by the Board,
after at least 20 days' notice to the Employee and after the Employee has had an
opportunity to present his view of the relevant facts and circumstances to the
Board, that the Employee has (a) breached any material term of this Agreement,
which breach has not been cured to the reasonable satisfaction of the Board by
the Employee within fifteen (15) days after notice of breach is given to the
Employee, (b) engaged in criminal acts or gross or persistent misconduct
relative to the affairs of the Company, including a conviction or plea of guilty
or nolo contendere to a felony or a crime involving dishonesty against the
Company, or (c) engaged in acts materially injurious to the Company or its
reputation or acts of dishonesty affecting the Company. The Employee's
employment with the Company may also be terminated by the Company upon the
Employee's disability or death. As used herein, "disability" shall mean (x) the
inability of Employee to perform his duties for six weeks during any
twelve-month period as a result of physical or mental incapacity or illness, as
determined
4
<PAGE> 60
reasonably and in good faith by the Board based on the report of a reputable
physician; or (y) the Employee's entitlement to (i) disability retirement
benefits under the federal Social Security Act or (ii) benefits under any
long-term disability plan or policy maintained by the Company.
If the Employee's employment is terminated for any reason, the Company
shall have no further obligation to make any payments or provide any benefits to
the Employee hereunder except for (i) payments of Salary, Bonus and vacation
that had accrued but had not been paid prior to the date of termination of his
employment and (ii) if the Employee's employment is terminated by the Company
without cause (as defined above), additional payments of Salary for 12 months,
payable in a lump sum payment within fifteen (15) days after the effective date
of termination (subject to applicable withholdings). Nothing contained herein
shall limit the Employee's right following the termination of the Employee's
employment for any reason to receive such medical benefits as to which he may be
entitled under the Consolidated Omnibus Budget Reconciliation Act (COBRA) or any
other benefits that the Employee is entitled to under applicable law.
Section 8. Enforceability, etc. This Agreement shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision hereof shall be prohibited or invalid under any such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating or nullifying the remainder of such provision or any other
provisions of this Agreement. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, each such provision shall be
construed by limiting and reducing it so as to be enforceable to the maximum
extent permitted by applicable law.
Section 9. Notices. Any notices, requests, claims, demands and other
communication under this Agreement shall be in writing and shall be deemed given
(a) if delivered personally, (b) if sent by overnight courier (providing proof
of delivery), or (c) upon the third business day following mailing by registered
mail, postage prepaid, to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(i) if to the Company, to:
Summit Holding Southeast, Inc.
c/o Liberty Mutual Insurance Company
175 Berkeley Street
Boston, MA 02117
5
<PAGE> 61
(ii) if to the Employee, to:
William B. Bull
2310 A-Z Park Road
Lakeland, Florida 33801
Section 10. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida, without
regard to any choice of law provisions.
Section 11. Amendments and Waivers. No amendment or waiver of this
Agreement or any provision hereof shall be binding upon the party against whom
enforcement of such amendment or waiver is sought unless it is made in writing
and signed by or on behalf of such party. The waiver by either party of a breach
of any provision of this Agreement by the other party shall not operate and be
construed as a waiver or a continuing waiver by that party of the same or any
subsequent breach of any provision of this Agreement by the other party.
Section 12. Binding Effect. This Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective heirs, executors and
administrators, successors and assigns, except that it may not be assigned by
either party without the other party's consent, provided, however, that the
Company may assign this Agreement to the Surviving Corporation (as defined in
the Merger Agreement).
Section 13. Entire Agreement. This Agreement constitutes the final and
entire agreement of the parties with respect to the matters covered hereby and
replaces and supersedes all other agreements and understandings relating hereto.
Section 14. Counterparts. This Agreement may be executed in any number of
counterparts, and with counterpart signature pages, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
[The remainder of this page is left blank intentionally.]
6
<PAGE> 62
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument as of the date first above written.
SUMMIT HOLDING SOUTHEAST, INC.
By:
-------------------------------
(Title)
---------------------------------
William B. Bull
7
<PAGE> 63
Exhibit A Annual Incentive Plan
Employee is eligible to receive up to 100% of annual salary.
Plan is based on the attainment of the business plan that is approved annually
by the Board of Directors.
75% of the Employee's award is based on the attainment of quantitative results.
25% of the Employee's award is based on the attainment of qualitative results.
Award for 1998 is based on quantitative results only and is calculated pro rata
from the Effective Time.
Payout Schedule:
<TABLE>
<CAPTION>
% Attainment of Plan % of Salary Awarded
- -------------------- -------------------
<S> <C>
130% 100%
125% 90%
115% 80%
100% 50%
90% 35%
80% 15%
75% 0%
</TABLE>
Results within the stated ranges will be scaled.
8
<PAGE> 1
EXHIBIT 99.2
CONTACT: William Bull or Russell Wall
Summit Holding Southeast
(941) 665-6060
Glenn A. Greenberg
Liberty Mutual Group
(617) 574-5874
DATE: June 30, 1998
SUMMIT HOLDING SOUTHEAST INC. TO BE ACQUIRED BY
BOSTON-BASED LIBERTY MUTUAL GROUP
LAKELAND, Fla. -- Summit Holding Southeast, Inc. (Nasdaq: SHSE) today
announced it has signed an agreement to be acquired by Boston-based Liberty
Mutual Group. According to Summit's Chief Executive Officer William B. Bull,
complete ownership of all operating entities of the holding company will be
transferred to Liberty Mutual.
Pursuant to the terms of the agreement, Liberty Mutual will pay $33.00
for each of approximately 5.8 million outstanding shares of Summit's common
stock. In addition, upon consummation of the transaction, the outstanding shares
of Series A Preferred Stock of Summit will be redeemed. The acquisition is
subject to the approval of Summit Holding Southeast stockholders, the Securities
and Exchange Commission, the Department of Justice and the Florida Department of
Insurance. It is expected to be finalized during the third quarter of 1998. Once
completed, Summit will become a wholly owned subsidiary of Liberty Mutual, and
will be included in the Liberty Mutual pool, which is currently rated "A+,"
Superior by the A.M. Best Company.
Summit Holding Southeast provides a variety of managed care workers
compensation products and services to employers and self-insured groups,
including the Florida Retail Federation Self-Insurance Fund, the largest
self-insurance fund in Florida. Including the self-insurance funds, Summit is
the third-largest workers compensation carrier in Florida, representing
approximately 7 percent of the state market. Total annualized premiums under
management were more than $202 million, as of March 31, 1998. Summit and its
subsidiaries have 437 employees, and distribute products and
<PAGE> 2
services to more than 18,000 customers through a network of more than 1,800
independent agencies.
Summit was formed in November 1996 as the holding company for its
administrative and insurance subsidiaries. Its primary administrative
subsidiaries include Summit Consulting, Inc., the Company's original business
unit formed in 1977, which administers three state-wide retail association
self-insurance funds in Florida, Louisiana and Kentucky; and TurnKey Resources,
Inc., a Clearwater, Fla. based service company that provides consulting services
to Summit's independent agents. Additional administrative subsidiaries provide
claims management, loss control services and managed care services. Summit's two
insurance subsidiaries, Bridgefield Employers and Bridgefield Casualty Insurance
Companies, provide workers compensation insurance for Florida businesses,
primarily in the construction, manufacturing, wholesale, retail and service
industries.
"This merger will be a win-win for both companies," said Mr. Bull. "It
will provide Liberty Mutual a quality operation in Florida, dedicated to the
agent community, while giving Summit the financial strength to secure its
future. There are no plans to change Summit's method of operating which has
proven so successful over the past 20 years, and I look forward to leading
Summit under its new ownership."
Edmund F. Kelly, president and chief executive officer of Liberty Mutual
Group, said, "We are very pleased to have Summit join the Liberty Mutual Group.
Summit's reputation for high quality service, its knowledge of the Florida
marketplace, its exceptional management team, and the strength of its agency and
brokerage distribution system position it well for continued success.
"As part of the Liberty Mutual Group, Summit's management and employees
will have the autonomy and responsibility to enlarge and strengthen Summit's
franchise in the Florida commercial market," Mr. Kelly added. "Liberty Mutual
will provide the capital base and other resources to enable Summit to carry out
its mission."
Boston-based Liberty Mutual Group is a diversified financial services
company with more than $45 billion in consolidated assets and $51 billion in
assets under management. With $10 billion in consolidated revenue, it ranks
132nd among Fortune 500 companies. Liberty Mutual is one of the largest
multi-line insurers in the property and casualty field and has been the leading
provider of workers compensation insurance, programs and services in the United
States for more than 60 years. The company employs 29,000 people in more than
5000 offices throughout the world.
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