SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 1, 1996
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Warner Insurance Services, Inc.
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(Exact name or registrant as specified in its charter)
Delaware 0-13124 13-2698053
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
17-01 Pollitt Drive, Fair Lawn, New Jersey 07410
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 794-4800
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N/A
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(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
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On March 1, 1996, Warner Insurance Services, Inc.
("Warner"), in connection with a series of agreements relating to its
Insurance Services Group ("ISG") (the "Restructuring Transactions"),
entered into a Restructuring Agreement among Warner, Atlantic Employers
Insurance Company, a New Jersey corporation ("AEIC"), Pacific Employers
Insurance Company, a California corporation ("PEIC"), Electric
Insurance Company, a Massachusetts corporation ("Electric"), The Robert
Plan Corporation, a Delaware corporation ("Robert Plan"), Material
Damage Adjustment Corporation, a New York corporation ("MDA"), Lion
Insurance Company, a New Jersey corporation ("LIC") and National
Consumer Insurance Company, a New Jersey corporation ("NCIC") (all
parties other than Warner sometimes referred to individually as a
"Releasee" and collectively as "Releasees") (the "Restructuring
Agreement") as well as several Related Agreements (as such term is
defined in the Restructuring Agreement).
Pursuant to the Restructuring Transactions, Warner and Robert
Plan settled two lawsuits between them entitled (i) Material Damage
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Adjustment Corporation v. Warner Insurance Services, Inc. v. The
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Robert Plan Corporation (Docket No. MID-C-64-94: Superior Court of New
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Jersey, Chancery Division, Middlesex County) and (ii) Warner Insurance
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Services, Inc. v. Lion Insurance Company, National Consumer Insurance
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Company and The Robert Plan Corporation v. Harvey Krieger
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(Docket No. BER-L-5047-94, Superior Court of New Jersey, Law Division,
Bergen County). Additionally, Warner obtained general releases from
AEIC, PEIC and Electric relating to insurance processing services
contracts which had been causing losses for Warner and under which
Warner had projected significant future losses.
In connection with the Restructuring Agreement, Warner issued
an aggregate of 3,256,201 shares of common stock, par value $.01 per
share, of Warner ("Common Stock") (the "Settlement Shares")
representing 27.55% of the outstanding shares of Common Stock after
such issuance. AEIC, a CIGNA company, received 2,476,547 Settlement
Shares, which is approximately 20% of the currently outstanding shares
of Common Stock. Electric received 137,586 Settlement Shares. Robert
Plan received 642,068 Settlement Shares. Warner also issued to these
three Releasees five-year warrants (the "Warrants") to acquire an
aggregate of 1,553,125 shares of Common Stock at $2.00 per share.
AEIC, Electric and Robert Plan received Warrants to purchase 1,181,250,
65,625 and 306,250 shares of Common Stock respectively. Warner has the
option, exercisable for a period of six months, to (i) purchase 50% of
the Settlement Shares at a cash price equal to the greater of $3.00 or
50% of the then market price of a share of Warner Common Stock and (ii)
acquire 50% of the Warrants at a cash price of $1.00 per Warrant. The
recipients of the Settlement Shares have the right to designate one
director to the Board of Directors of Warner. James R. Stallard, the
Vice President of CIGNA Property and Casualty, age 43, will be the
designee.
In connection with the Restructuring Transactions, Warner
also paid AEIC, Electric and Robert Plan $675,000, $37,500 and $175,000
respectively, or an aggregate of $887,500, and agreed to pay certain
currently due expenses of ISG, which as of the date hereof are
approximately $1.3 million.
As part of the consideration for entering into the
Restructuring Transactions, Warner transferred certain employees,
leased premises, assets, contracts and other liabilities relating to
ISG to MDA Services, Inc., a New Jersey corporation ("MDAS"), a
subsidiary of Robert Plan. MDAS thus succeeds Warner as the servicing
processor to AEIC, PEIC, Electric and other ISG customers. Warner
continues to retain certain leases for premises formerly occupied by
ISG and has not yet settled with one customer, Clarendon National
Insurance Company.
Warner will now focus on the software operations of its
COVER-ALL Systems, Inc. subsidiary ("COVER-ALL"). COVER-ALL is a
provider of state-of-the-art computer products for the property
casualty insurance industry specializing in strategic insurance
software solutions and development tools for rating, coding, and
issuing policies, as well as administering clients, claims, direct
billing, agency billing, client billing, agencies, general ledger, and
statistical and financial reporting utilizing the latest client-server,
relational database technology.
In a press release dated March 4, 1996, which is annexed
hereto as Exhibit 99, Warner announced the Restructuring Transactions,
the decision of the New York Stock Exchange to delist the shares of
Warner Common Stock and Warner's efforts to provide for a market for
the continued trading of its shares.
Item 7. Financial Statements and Exhibits.
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The following exhibits are filed as a part of this report.
(c) Exhibits:
10.1 Restructuring Agreement
10.2 Form of Warrant
10.3 Asset Purchase Agreement
99. Press Release of Warner, dated March 4, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
WARNER INSURANCE SERVICES, INC.
Dated: March 7, 1996 By: /s/ Alfred J. Moccia
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Name: Alfred J. Moccia
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit Description
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10.1 Restructuring Agreement
10.2 Form of Warrant
10.3 Asset Purchase Agreement
99. Press Release of Warner, dated March 4, 1996
Exhibit 10.1
RESTRUCTURING AGREEMENT
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RESTRUCTURING AGREEMENT dated as of the 1st day of
March, 1996 by and among WARNER INSURANCE SERVICES, INC., a
Delaware corporation ("Warner"), ATLANTIC EMPLOYERS INSURANCE
COMPANY ("AEIC"), a New Jersey corporation, PACIFIC EMPLOYERS
INSURANCE COMPANY ("PEIC"), a California corporation, ELECTRIC
INSURANCE COMPANY ("Electric"), a Massachusetts corporation,
(each of AEIC, PEIC and Electric are sometimes individually
herein referred to as a "Customer" or collectively as the
"Customers"), THE ROBERT PLAN CORPORATION ("RPC"), a Delaware
corporation, MATERIAL DAMAGE ADJUSTMENT CORPORATION ("MDA"), a
New York corporation, LION INSURANCE COMPANY ("LIC"), a New
Jersey corporation and NATIONAL CONSUMER INSURANCE COMPANY
("NCIC"), a New Jersey corporation (all parties hereto, other
than Warner, are sometimes herein individually called a
"Releasee" or collectively the "Releasees")
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Warner is a party to certain insurance
services contracts with certain of the Customers as listed on
SCHEDULE 1 hereto (collectively, the "Services Contracts") and
Warner and the Customers wish to restructure their arrangements
under the Services Contracts on the terms herein set forth; and
WHEREAS, Warner, RPC, MDA, LIC and NCIC are parties to
the lawsuits described on SCHEDULE 2 annexed hereto (the "RPC
Lawsuits") and wish to settle the RPC Lawsuits on the terms
herein set forth; and
WHEREAS, Warner has performed insurance services
pursuant to the Services Contracts, and as part of the
transactions contemplated hereby and to induce the Customers to
release Warner from its obligations under the Services Contracts,
Warner is entering into an Asset Purchase Agreement (the "Asset
Purchase Agreement") of even date herewith with MDA Services,
Inc., a New Jersey corporation ("Newco") pursuant to which Warner
will transfer to Newco the assets of Warner relating to the
insurance services business and Newco will enter into new
insurance services contracts with the Customers on revised terms
and the Customers will release Warner from its obligations under
the Services Contracts as herein set forth; and
WHEREAS, to further induce the Customers to release
Warner from its obligations under the Services Contracts, to
induce the Customers to enter into new contracts with Newco and
to settle the RPC Lawsuits, Warner will (i) issue an aggregate of
3,256,201 shares of common stock, par value $.01 per share, of
Warner ("Common Stock") (the "Settlement Shares") to the
Releasees which shall represent 27.55% of the outstanding shares
of Common Stock of Warner after the issuance thereof, (ii) issue
to the Releasees five-year warrants (the "Warrants") to acquire
an aggregate of 1,553,125 shares of Common Stock at $2.00 per
share (the Warrants being in the form annexed hereto as Exhibit
A), and (iii) assign to the Releasees the cash collateral (the
"Cash Collateral") described on SCHEDULE 3 annexed hereto
securing the Letter of Credit also described on SCHEDULE 3
annexed hereto.
NOW, THEREFORE, in consideration of the mutual premises
and the representations, warranties and covenants herein
contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as
follows:
1. Description of Transaction.
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1.1 Issuance of Settlement Shares and Warrants. On
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the Closing Date, Warner shall issue and deliver certificates
representing all of the Settlement Shares and the Warrants to the
Releasees in the amounts indicated next to the name of each
Releasee as set forth on SCHEDULE 4 annexed hereto.
1.2 Cash Collateral. Upon the expiration of the
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Letter of Credit described in SCHEDULE 3 annexed hereto and the
termination by Chase Manhattan Bank, N.A. of all of its right,
title and interest in the Cash Collateral also described in said
SCHEDULE 3, Warner shall deposit $887,500 of the Cash Collateral
into an escrow account with Reid & Priest LLP, as escrow agent.
On the Closing Date, the Cash Collateral shall be released from
escrow to the Releasees listed on SCHEDULE 5 annexed hereto, in
the percentage amounts indicated next to the name of each
Releasee on said SCHEDULE 5.
2. Services Contract Releases. On the Closing Date,
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in consideration of the issuance by Warner of the Settlement
Shares, the Warrants and the payment of the Cash Collateral
pursuant to Section 1 hereof, each Customer shall separately
release Warner from its obligations under the Services Contract
with such Customer (collectively, the "Services Contract
Releases"), such release to be substantially in the form annexed
hereto as Exhibit B, and each such Customer shall enter into a
new services contract (the "Revised Newco Service Agreements")
with Newco.
3. Robert Plan Corporation Lawsuits. On the Closing
--------------------------------
Date, the RPC Lawsuits shall be settled and dismissed with
prejudice, such settlement and dismissal to be pursuant to the
Stipulation in the form annexed hereto as Exhibit C (the
"Stipulation"), the Mutual General Release (the "Mutual General
Release") in the form annexed hereto as Exhibit D and the CWP
Assignment Agreement (the "CWP Assignment") in the form annexed
hereto as Exhibit E.
4. Closing Date. The closing of the transactions
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herein contemplated (the "Closing") will take place on March 1st,
1996 at 10:00 A.M. at the offices of Reid & Priest LLP, 40 West
57th Street, New York, New York 10019 or such other date and time
as the parties may mutually agree upon (the "Closing Date").
5. Representations and Warranties of Warner. In
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order to induce each Releasee to enter into this Agreement and to
consummate the transactions contemplated hereunder, Warner hereby
represents and warrants to each Releasee as follows:
5.1 Corporate Existence and Qualification. Warner is
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a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to carry on its business
as now being conducted and to own, lease and operate its
properties as and in the places where such business is now
conducted and such properties are now owned, leased or operated.
Warner has all requisite corporate power to execute and deliver
this Agreement, the Asset Purchase Agreement, the Services
Contract Releases, the Warrants, the Stipulation, the Mutual
General Release and the CWP Assignment (the Asset Purchase
Agreement, the Services Contract Releases, the Warrants, the
Stipulation, the Mutual General Release and the CWP Assignment
are sometimes collectively called the "Related Agreements"), and
to perform its obligations under each such agreement.
5.2 Capitalization. The authorized capital stock of
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Warner consists of 20,000,000 shares of Common Stock, $.01 par
value. As of the date hereof, 8,560,904 shares of Common Stock
are issued and outstanding, and such shares have been duly
authorized, and are validly issued, fully paid and non-
assessable. On the date hereof and with the contemporaneous
public announcement of the transactions contemplated by this
Agreement and the Related Agreements, the shares of Common Stock
of Warner shall be suspended from trading on the New York Stock
Exchange ("NYSE") and Warner has been advised by the NYSE that
its shares will subsequently be delisted by and from the NYSE.
Except as set forth on SCHEDULE 6 hereto, there are no other
shares of capital stock or other equity securities of Warner
issued or issuable. All Settlement Shares to be issued by Warner
hereunder shall, upon issuance thereof, be duly authorized,
validly issued, fully paid and non-assessable shares of Common
Stock of Warner. The Warrants have been duly authorized for
issuance and the shares of Common Stock to be issued upon the
exercise thereof in accordance with the terms thereof will be
duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock of Warner.
5.3 Authorization of Agreements; Validity. The
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execution and delivery by Warner of this Agreement, and the
Related Agreements and the consummation by Warner of the
transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on behalf of Warner.
Except as set forth on SCHEDULE 7 hereto, this Agreement has been
duly executed and delivered by Warner, and this Agreement
constitutes, and, when executed, the Related Agreements will
constitute, the legal, valid and binding obligations of Warner,
enforceable against Warner in accordance with their respective
terms, except to the extent that such validity, binding effect
and enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and by
general equitable principles.
5.4 Effect of Agreements. Except as set forth on
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SCHEDULE 8 hereto, neither the execution and delivery of this
Agreement, or any of the Related Agreements by Warner, nor the
consummation of the transactions contemplated hereby and thereby
nor compliance by Warner with the provisions of this Agreement or
any of the Related Agreements by Warner (i) violates or will
violate, conflicts or will conflict with, or results or will
result in a breach of any provision, term or condition of, or
constitutes or will constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of a Lien upon any
of the properties or assets of Warner or any subsidiary of Warner
under the terms, conditions or provisions of (x) the Certificate
of Incorporation, as amended, the By-Laws, as amended, of Warner,
or of any of its subsidiaries, or (y) any other agreement or
instrument to which Warner or any subsidiary of Warner is a
party, or by which any of them is bound, or any of their
respective properties or assets, may be subject, or (ii) violates
any judgment, ruling, order, writ, injunction, decree, law,
statute, ordinance, rule or regulation, domestic or foreign
(collectively, "Law"), applicable to Warner or any other
subsidiary of Warner or any of their respective properties or
assets, except in the case of each of clauses (i) and (ii) above,
for such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of Liens, which, in the aggregate,
would not have any material adverse effect on the condition
(financial or otherwise) or the operations of Warner and its
subsidiaries taken as a whole, the business or on the ability of
the parties to consummate the transactions contemplated hereby.
5.5 Private Sale. Warner has not, either directly or
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through any agent, offered the Settlement Shares or the Warrants
to or solicited any offer to acquire the Settlement Shares or the
Warrants from, or otherwise approached, negotiated or
communicated in respect of the Settlement Shares or the Warrants
with, any person so as to require that the Settlement Shares or
the Warrants be registered pursuant to the provisions of
Section 5 of the Securities Act of 1933, as amended (the
"Securities Act") or any applicable state securities law.
5.6 Filings, Notices, Consents and Approvals. Except
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as set forth on SCHEDULE 9 annexed hereto, no notice to, filing
with, or authorization, consent or approval of, any domestic or
foreign governmental or public body, agency or authority or any
person not a party to this Agreement, is necessary in connection
with the execution, delivery and performance of this Agreement or
any of the Related Agreements by Warner or the consummation by
Warner of the transactions contemplated, except where failure to
give such notice, make such filings, or obtain such
authorizations, consents or approvals would, in the aggregate,
not have a material adverse effect on the condition (financial or
otherwise) or operations of Warner and its subsidiaries taken as
a whole, or on the ability of the parties to consummate the
transactions contemplated hereby.
5.7 Performance Representation. Except as set forth
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on SCHEDULE 10 annexed hereto, Warner represents and warrants
that as of the date hereof and through the Closing Date, it has
performed and will perform its obligations incurred in the
ordinary course of business in all material respects, including
all obligations under the Services Contracts in all material
respects.
5.8 Solvency Representation. Warner represents and
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warrants that it is receiving fair and adequate consideration, as
a result of arms length negotiations, for the transfer of the
assets pursuant to the Asset Purchase Agreement and other assets
being transferred and issued pursuant to this Agreement in that
the RPC Lawsuits are being settled and the Services Contract
Releases are being executed. Warner further represents and
warrants that its current net worth deficit should be decreased
as a result of the consummation of the transactions contemplated
by this Agreement and the Asset Purchase Agreement and that
Warner currently intends to pay its retained liabilities in
accordance with their terms as they mature.
6. Representations and Warranties of the Releasees.
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In order to induce Warner to enter into this Agreement and to
consummate the transactions contemplated hereunder, each Releasee
hereby represents and warrants to Warner severally as to itself
as follows:
6.1 Corporate Existence and Qualification. Such
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Releasee is a corporation duly incorporated, validly existing and
in good standing under the laws of its respective state of
incorporation and has all requisite corporate power and authority
to carry on its business as now being conducted and to own, lease
and operate its properties as and in the places where such
business is now conducted and such properties are now owned,
leased or operated. Such Releasee has all requisite power to
execute and deliver this Agreement and to perform its obligations
hereunder.
6.2 Authorization of Agreements. The execution and
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delivery by such Releasee of this Agreement, any Related
Agreement, and the Revised Newco Service Agreement and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate
action on behalf of such Releasee. This Agreement has been duly
executed and delivered by such Releasee, and this Agreement
constitutes, and when executed, each of the Related Agreements
and the Revised Newco Service Agreements will constitute the
legal, valid and binding obligation of such Releasee, enforceable
against such Releasee in accordance with their respective terms,
except to the extent that such validity, binding effect and
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and by
general equitable principles.
6.3 Securities Laws. (a) Each Releasee acknowledges
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and understands that the Settlement Shares and the Warrants have
not been registered under the Securities Act, or the securities
laws of any state, and that such Settlement Shares and the
Warrants may not be offered or sold unless first registered under
the Securities Act and any applicable state securities laws, or
unless such offer or sale is exempt from registration.
(b) Except to the extent contemplated by the Customers
pursuant to Section 7.2, each Releasee is purchasing the
Settlement Shares and the Warrants for investment purposes, has
no current intention to sell the Settlement Shares or the
Warrants and will not sell or dispose of the Settlement Shares
and the Warrants in violation of applicable United States federal
and state securities laws.
(c) Each Releasee has received a copy of the most
recent annual report on Form 10-K and the three most recent
quarterly reports on Form 10-Q, and is aware that Warner has
suffered significant losses, will report additional losses in the
fourth quarter and has serious cash flow problems.
(d) Each Releasee agrees that the following legend may
be placed on any certificates evidencing the Settlement Shares
and on any other securities issued in respect of the Settlement
Shares:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
PURSUANT TO ANY STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL TO THE COMPANY OR OF
COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED."
Each Releasee understands that, so long as the above legend
remains on the certificates representing the Settlement Shares,
Warner may maintain appropriate "stop transfer" orders with
respect to the Settlement Shares on its books and records and
with its registrar and transfer agent. Each Releasee agrees that
prior to any proposed transfer of the Settlement Shares and as a
condition thereto, if such transfer is not made pursuant to an
effective Registration Statement under the Securities Act or an
opinion of counsel to Warner (or other counsel reasonably
acceptable to Warner and its counsel) that the Settlement Shares
may be sold publicly without registration under the Securities
Act, the respective Releasee will, if requested by Warner,
deliver to Warner (i) an agreement by such transferee to the
impression of the restrictive legends set forth above on the
Settlement Shares and (ii) an agreement by such transferee that
Warner may place a "stop transfer" order with Warner's transfer
agent and registrar.
7. Covenants of Warner.
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7.1 Election of Director to Board of Directors. For
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a period of three years after the Closing Date, Warner shall
elect to its Board of Directors one designee selected by the
holders of a majority in amount of the Settlement Shares issued
pursuant to this Agreement. Such designee shall be elected as a
director in the Class of 1998 (due to the staggered director
provisions contained in Warner's By-Laws, as amended), such
designee will be subject to reelection at the 1998 Annual Meeting
of Stockholders of Warner called for the election of directors
(the "1998 Annual Meeting") on the Closing Date, or as soon
thereafter as Warner is notified in writing of such designation.
Beginning with the 1998 Annual Meeting, Warner shall include such
designee, or any successor designee selected as described in the
preceding sentence, as a nominee in management's slate of
directors for election at such annual meeting, and Warner shall
recommend to its stockholders the election of such designee or
successor, as a director at the 1998 Annual Meeting. In the
event that said designee shall not be elected as a director at
the 1998 Annual Meeting, Warner shall, following said meeting,
elect said designee to its Board of Directors and amend its By-
Laws to create any vacancy, if required, to serve for a period
equal to the remainder of the three-year term contained herein.
Warner agrees that if such designee dies or resigns, his
successor shall be designated as herein provided.
7.2 Registration Rights.
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7.2.1 Demand Registration. (a) At any time following
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the filing with the United States Securities and Exchange
Commission (the "Commission") by Warner of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, upon
receipt by Warner of a written request executed by one or more of
the Releasees receiving Settlement Shares (the "Initiating
Holder") requesting registration of a number of shares of Common
Stock at least equal to (i) thirty percent (30%) or more of the
Settlement Shares and the shares of Common Stock underlying the
Warrants (the "Warrant Shares") then held by the Holders or (ii)
the entire remaining number of Settlement Shares and the Warrant
Shares owned by the Initiating Holder, Warner will give notice of
such request to each other Holder (the "Other Holders") and give
them the right to participate therein in accordance with this
Section 7.2.1.
(b) Upon receipt of the request given pursuant to
Subsection (a) above, Warner shall promptly prepare and file with
the Commission a registration statement (the "Registration
Statement") under the Securities Act covering the Settlement
Shares and/or the Warrant Shares requested to be sold under a
Registration Statement by the Initiating Holder and by the Other
Holders who elect to have their Settlement Shares and/or Warrant
Shares included in a Registration Statement by providing written
notice of its election to Warner within 30 days from receipt by
such Other Holders of notice from Warner pursuant to Section
7.2.1(a) (the "Registered Shares") and shall otherwise comply
with its obligations under Section 7.2.1.
(c) Warner's obligations under Section 7.2.1 shall be
limited to two (2) effective Registration Statements under the
Securities Act; provided, however, that if the Settlement Shares
and/or Warrant Shares may be registered by means of a
Registration Statement on Form S-3 or a successor form thereto,
the Holders of Settlement Shares and/or Warrant Shares shall be
entitled to exercise their rights under Section 7.2 on an
unlimited number of occasions, but not more than once every
fiscal quarter, until all of the Settlement Shares and/or Warrant
Shares are either subject to an effective Registration Statement
under the Securities Act or have been sold.
7.2.2 Piggy Back Registration Rights. (a) At any
------------------------------
time after the receipt by the Holders of any Settlement Shares,
Warner will send written notice to the Holders then owning
Settlement Shares and/or Warrant Shares, at least twenty (20)
days prior to the filing of each and every Registration Statement
filed by Warner, whether or not pursuant to this Agreement (other
than a Registration Statement covering exclusively securities
under an employee option or stock purchase plan, a merger,
acquisition or similar transaction) and give to such Holders the
right to have included therein any Settlement Shares and/or
Warrant Shares then held by the Holders. Such notice must
specify the proposed offering price and the plan of distribution.
Warner must receive written notice from such Holders within
fifteen days after the date of Warner's written notice,
indicating the full name and address of each Holder desiring to
have Settlement Shares and/or Warrant Shares included for sale in
such Registration Statement and the number of Settlement Shares
or Warrant Shares requested to be covered.
(b) If the registration of which Warner gives notice
is for a registered public offering involving an underwriting,
Warner shall so advise the Holders as a part of the written
notice given pursuant to Section 7.2.2(a).
To the extent Holders propose to distribute their
Settlement Shares or Warrant Shares through such underwriting,
such Holders shall, together with Warner, enter into an
underwriting agreement in customary form with the managing
underwriter selected for such underwriting by Warner which
underwriting agreement shall also be reasonably acceptable to the
Holders. Warner shall use its reasonable best efforts to cause
the managing underwriter of such proposed underwritten offering
to permit the Settlement Shares or Warrant Shares proposed to be
included in such registration to be included in the registration
statement for such offering on no less than the most favorable
terms and conditions as any similar securities of Warner included
therein. Notwithstanding any other provision of this Section
7.2.2, the Holders shall be entitled to include in the
registration all of the shares which they desire to sell for
their own account, and if the managing underwriter determines
that general marketing conditions are such that the inclusion of
all of the shares to be sold by the Holders for their own
accounts would jeopardize the sale of shares for the account of
Warner, the managing underwriter may reduce the similar
securities to be included in such registration for the accounts
of the Holders, pro rata among the Holders whose shares are
included in the registration, but only after the shares of Warner
to be included in the registration for the account of persons
other than Warner and the Holders are first reduced, to zero if
necessary.
If any Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by
written notice to Warner and the managing underwriter. Any
Settlement Shares or Warrant Shares excluded or withdrawn from
such underwriting shall not be transferred prior to sixty (60)
days after the effective date of the registration statement
relating thereto, or such other shorter period of time as the
underwriters may require.
7.2.3 Miscellaneous Registration Provisions. (a) In
-------------------------------------
connection with any Registration Statement filed pursuant to
Sections 7.2.1 or 7.2.2 hereof:
(i) Warner's obligation under this Agreement to
include Settlement Shares or Warrant Shares in a Registration
Statement shall mean shares of Common Stock or any security
received by a Holder in exchange or upon reclassification of the
present Common Stock or the securities then owned by a Holder by
reason of a prior exchange or reclassification of or on account
of present Common Stock;
(ii) the Holders of Settlement Shares or Warrant
Shares (herein "Registering Holders") shall furnish to Warner in
writing such information as shall be required by the Securities
Act or the rules and regulations promulgated thereunder in
respect of the Holder or the Settlement Shares or Warrant Shares
to be included in the Registration Statement;
(iii) the Registering Holders and Warner shall
enter into the usual and customary form of underwriting agreement
agreed to by Warner and any underwriter with respect to any such
offering, if required, and such underwriting agreement shall
contain the customary reciprocal rights of indemnity and
contribution between Warner, the underwriters, and the selling
shareholder, including the Registering Holders, to the extent the
obligations of the Registering Holders do not exceed those set
forth in Subsections (f) and (g) herein; provided, however, that
no Registering Holder shall be obligated to refrain from selling
or otherwise disposing of such Registering Holder's shares for a
period of in excess of sixty (60) days from the effective date of
the Registration Statement;
(iv) the Registering Holders shall agree that they
shall execute, deliver and/or file with or supply to Warner, any
underwriters, the Commission and/or any state or other regulatory
authority such information, documents, representations,
undertakings and/or agreements necessary to carry out the
provisions of the registration covenants contained in this
Agreement and/or to effect the registration or qualification of
their Settlement Shares or Warrant Shares under the Securities
Act and/or any of the laws and regulations of any state or
governmental instrumentality; and
(v) the Registering Holders shall furnish Warner
with such questionnaires and other documents regarding their
identity and background as may be necessary to permit the offer
and sale of the Settlement Shares and/or Warrant Shares in those
jurisdictions requested by the Registering Holders.
(b) if and whenever Warner is required to effect the
registration of any Settlement Shares or Warrant Shares pursuant
to Section 7.2.1 or 7.2.2, Warner will use its best efforts to
effect such registration to permit the sale of such Settlement
Shares or Warrant Shares in accordance with the intended method
or methods of disposition thereof, and pursuant thereto it will,
as promptly as is practicable:
(i) prepare and file with the Commission such
amendments (including post-effective amendments) and supplements
to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Settlement Shares or Warrant Shares covered by such
Registration Statement until such time as all of such Settlement
Shares or Warrant Shares have been disposed of in accordance with
the intended methods of disposition set forth in such
Registration Statement;
(ii) furnish to the Holders and to any underwriter
of Settlement Shares or Warrant Shares such number of conformed
copies of such Registration Statement and of each such amendment
and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in such
Registration Statement (including each preliminary prospectus and
any summary prospectus) and any amendment or supplement thereto,
in conformity with the requirements of the Securities Act, such
documents incorporated by reference in such Registration
Statement or prospectus, and such other documents, as the Holders
or such underwriter may reasonably request, and, if requested, a
copy of any and all transmittal letters or other correspondence
to, or received from, the Commission or any other governmental
agency or self-regulatory body or other body having jurisdiction
(including any domestic or foreign securities exchange) relating
to such offering;
(iii) use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of such
Registration Statement at the earliest possible moment;
(iv) use its best efforts to list all such
Settlement Shares or Warrant Shares covered by such Registration
Statement on the principal securities exchange and inter-dealer
quotation system on which a class of common equity securities of
Warner is then listed, and to pay all fees and expenses in
connection therewith;
(v) cooperate and assist in any filings required
to be made and with any performance of any due diligence
investigation by any underwriter; and
(c) Warner shall pay all out-of-pocket expenses and
disbursements incurred by Warner and the Holders in connection
with the Registration Statements filed by it pursuant to Sections
7.2.1 and 7.2.2 or, including, without limitation, all legal and
accounting fees, Commission filing fees, exchange filing fees,
printing costs, registration or qualification fees and expenses
to comply with state Blue Sky or other state securities laws, the
fees of other experts, and any expenses or other compensation
paid to the underwriters; provided, however, that such
registration expenses shall not include underwriting commissions
and discounts and transfer taxes, if any.
(d) Warner shall be obligated to keep any Registration
Statement filed by it under Sections 7.2.1 and 7.2.2 effective
under the Securities Act until such time as all of the Settlement
Shares or Warrant Shares covered by such Registration Statement
have been disposed of in accordance with the intended methods of
disposition set forth in such Registration Statement and to
prepare and file such supplements and amendments necessary to
maintain an effective Registration Statement for such period. As
a condition to Warner's obligation under this Subsection (d), the
Registering Holders will take all actions as shall be necessary
to comply with the relevant provisions of the Securities Act.
(e) Warner shall use its best efforts to register or
qualify the Registered Shares under such securities or Blue Sky
laws in such jurisdictions within the United States as the
Registering Holders may reasonably request; provided, however,
that Warner reserves the right, in its sole discretion, not to
register or qualify such Registered Shares in any jurisdiction
where such Registered Shares do not meet with the requirements of
such jurisdiction after having taken reasonable steps to meet
such requirements or where Warner is required to qualify as a
foreign corporation to do business in such jurisdiction and is
not so qualified therein.
(f) The Registering Holders agree that upon notifi-
cation by Warner that, in the opinion of its counsel, the
prospectus contains an untrue statement of a material fact or
omits to state a fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances in
which they were made, not misleading, they shall immediately upon
receipt of such notification (i) cease to offer or sell any
securities of Warner which must be accompanied by such
prospectus; (ii) return all such prospectuses in their hands to
Warner; and (iii) shall not offer or sell any securities of
Warner until they have been provided with a current prospectus
and Warner has given them notification permitting them to resume
offers and sales. Warner covenants to promptly correct such
prospectus and file with the Commission such amended prospectus
or supplement and shall use its best efforts to cause such
amended prospectus or supplement to be declared effective by the
Commission.
(g) As a condition to the filing of a Registration
Statement pursuant to this Agreement, Warner shall indemnify and
hold harmless each Registering Holder and each underwriter and
each of such Registering Holder's and underwriter's officers,
directors, employees, agents and counsel and each other person,
if any, who controls such Registering Holder or underwriter
within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended from and against any and all
losses, claims, damages, expenses or liabilities whatsoever
caused by any failure of Warner to comply with the Securities Act
or any rule or regulation promulgated thereunder in connection
with the registration in which the Settlement Shares or Warrant
Shares have been included or any untrue statement of a material
fact contained in the Registration Statement, any post-effective
amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of
this Agreement or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused
by any such untrue statements or alleged untrue statements or
omissions based upon information furnished or required to be
furnished in writing to Warner by the party seeking
indemnification expressly for use therein; provided, however,
that Warner shall not be obligated to so indemnify the
Registering Holders or any such underwriter or other person
referred to above unless the Registering Holders or underwriter
or other person, as the case may be, shall at the same time
indemnify Warner, its directors, each officer signing the
Registration Statement and each person, if any, who controls
Warner within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any registration
statement or any prospectus required to be filed or furnished by
reason of this Agreement or caused by any omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, insofar
as such losses, claims, damages or liabilities are caused by any
untrue statement or alleged untrue statement or omission based
upon information furnished in writing to Warner by the Holder or
underwriter expressly for inclusion therein; provided, however,
that the extent of any Registering Holder's indemnification
obligation hereunder shall be limited to the aggregate net
proceeds received by such Registering Holder upon the sale of the
Settlement Shares and/or the Warrant Shares included in such
Registration Statement.
(h) Each party entitled to indemnification under
paragraph (g) above (the "Indemnified Party") shall, promptly
after receipt of notice of any claim or the commencement of any
action against such Indemnified Party in respect of which
indemnity may be sought, notify the party required to provide
indemnification (the "Indemnifying Party") in writing of the
claim or the commencement thereof; provided that the failure of
the Indemnified Party to notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability which it may
have to an Indemnified Party pursuant to the provisions of
paragraph (g), unless the Indemnifying Party was materially
prejudiced by such failure, and in no event shall such failure
relieve the Indemnifying Party from any other liability which it
may have to such Indemnified Party. If any such claim or action
shall be brought against an Indemnified Party, it shall notify
the Indemnifying Party thereof and the Indemnifying Party shall
be entitled to participate therein, and, to the extent that it
wishes, jointly with any other similarly notified Indemnifying
Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or action, the Indemnifying
Party shall not be liable (except to the extent the proviso to
this sentence is applicable, in which event it will be so liable)
to the Indemnified Party under paragraph (g) for any legal or
other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof other than reasonable costs
of investigation: provided that each Indemnified Party shall have
the right to employ separate counsel to represent it and assume
its defense (in which case, counsel to the Indemnifying Party
shall not represent it) if (i) upon the advice of counsel, the
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party will not have the right to assume the defense
of such claim or action on behalf of such Indemnified Party), or
(ii) in the event the Indemnifying Party has not assumed the
defense thereof within ten (10) days of receipt of notice of such
claim or commencement of action, in which case the fees and
expenses of one such separate counsel shall be paid by the
Indemnifying Party. If any Indemnified Party employs such
separate counsel it will not enter into any settlement agreement
which is not approved by the Indemnifying Party, such approval
not to be unreasonably withheld. If the Indemnifying Party so
assumes the defense thereof (and by so assuming shall be solely
responsible for liabilities relating to such claim or action, and
shall release the Indemnified Party from such liabilities to the
extent permitted by law, except to the extent the Indemnified
Party is not entitled to be indemnified pursuant to paragraph
(g), it may not agree to any settlement of any such claim or
action as the result of which any remedy or relief, other than
monetary damages for which the Indemnifying Party shall be
responsible hereunder, shall be applied to or against the
Indemnified Party, without the prior written consent of the
Indemnified Party. No Indemnified Party will consent to entry of
any judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or action. In any action
hereunder as to which the Indemnifying Party has assumed the
defense thereof with counsel satisfactory to the Indemnified
Party, the Indemnified Party shall continue to be entitled to
participate in the defense thereof, with counsel of its own
choice, but, except as set forth above, the Indemnifying Party
shall not be obligated hereunder to reimburse the Indemnified
Party for the costs thereof.
(i) If for any reason the indemnification provided for
above is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss,
claim, damage, liability or expense referred to therein, then the
Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable
by the Indemnified Party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not
only the relative benefits received by the Indemnified Party and
the Indemnifying Party, but also the relative fault of the
Indemnified Party and the Indemnifying Party, as well as any
other relevant equitable considerations, subject in all events,
to the limitations described in the last proviso set forth in
Subsection 7.2(g).
7.3 Rule 144 Reporting. With a view to making
------------------
available the benefits of certain rules and regulations of the
Commission which may permit the sale of the Settlement Shares and
the Warrant Shares to the public without registration, Warner
agrees to:
(a) Make and keep public information available, as
those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after the issuance of the
Settlement Shares and the Warrant Shares;
(b) Not take any action which would cause Warner to no
longer be registered under Section 12(g) of the Exchange Act;
(c) File with the Commission in a timely manner all
reports and other documents required of Warner under the
Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and
(d) Furnish to the Holders forthwith upon request: a
written statement by Warner as to its compliance with the
reporting requirements of Rule 144 and of the Securities Act and
the Exchange Act; a copy of the most recent annual or quarterly
report of Warner filed under the Exchange Act; and such other
reports and documents so filed as the Holder shall be required to
have in order to avail itself of any rule or regulation of the
Commission allowing the Holder to sell any of the Settlement
Shares and the Warrant Shares without registration.
7.4 Access to Records and Operations Of Warner. (a)
------------------------------------------
Pending the Closing of the transactions contemplated by this
Agreement, each Customer shall have the right to designate a
representative who shall have access to the premises of Warner
for the purpose of reviewing records and operations of Warner
with respect to such Customer. Further, in the event that Warner
shall, pending the Closing, cease operations, commence a
bankruptcy or insolvency proceeding or commit a performance
default under an existing service contract, such designated
representative shall have the right to communicate, independently
of Warner, with Micro Graphics Corporation, regarding graphic
imaging record retrieval.
(b) From and after the Closing Date the Customers
shall have reasonable access to the books and records of Warner
relating to the details of Warner's performance under the
Services Contracts from and before the Closing Date.
7.5 Escrow of Portion of Proceeds from Sale or
------------------------------------------
Liquidation of Alerion Insurance Company. On the date hereof,
----------------------------------------
Warner agrees to deposit into an escrow account with Reid &
Priest LLP, as escrow agent, pursuant to the terms and conditions
of an escrow agreement in the form annexed hereto as Exhibit F, a
portion of the proceeds to be received by Warner upon the
liquidation of its wholly-owned insurance company, Alerion
Insurance Company ("Alerion"), in the amount of $920,000 for the
purpose of paying certain due and unpaid legal and administrative
expenses ("ALE") of Warner, as well as accrued but unbilled ALE
obligations of Warner, in connection with insurance services
performed by Warner under existing Services Contracts with the
Customers. SCHEDULE 11 annexed hereto contains an updated list
prepared by Warner of ALE accrued expenses through February 19,
1996. After the Closing Date, such escrowed funds will be
released in payment of such ALE in accordance with the procedures
set forth in Exhibit F. The balance of the funds received from
the liquidation of Alerion have been used to pay the expenses
outlined in SCHEDULE 11.
7.6 Covenant to Maintain Certain Insurance. Warner
--------------------------------------
covenants and agrees to maintain its current third party
administrators professional liability insurance coverage of up to
$5 million in the aggregate, as contained in Policy Number 243-
30-95 issued by Lexington Insurance Company, through the
expiration date of such policy on December 31, 1996.
7.7 Employee Compensation. Warner covenants for a
---------------------
period of two years from the Closing Date that it will not renew
the employment contracts currently in effect with Harvey Krieger,
Theodore I. Botter or Bradley J. Hughes and that beginning August
1, 1996, the aggregate annual compensation payable to such
persons shall not exceed $250,000.
7.8 Covenant to Execute the Related Agreements.
------------------------------------------
Warner covenants and agrees to execute the Related Agreements on
the Closing Date.
8. Covenants of Each Releasee.
--------------------------
8.1 Control of Warner. Each Releasee covenants and
-----------------
agrees that, for a period of two (2) years from the Closing Date,
such Releasee, or any of its affiliates as such term is defined
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), will not, without the prior approval of Warner's
Board of Directors, initiate or otherwise participate in any
activity in a manner the intent of which would require such
Releasee or affiliate to file with the Commission a Schedule 13D,
either individually or as a member of a group, to report the
occurrence of any of the events described in Item 4 of Schedule
13D; provided, however, that nothing herein shall prevent
Releasee or its affiliates from: (i) acquiring additional
securities of Warner, or from selling securities of Warner, in
each case in the ordinary course which would require such
Releasee or affiliate to file or amend a previously filed
Schedule 13D solely due to an increase or decrease in such
Releasee's or affiliates' beneficial ownership of securities of
Warner; (ii) voting its shares of Warner on any matter as it
determines in its sole discretion, or (iii) tendering its shares
of Warner in connection with any tender, exchange or similar
offer made by a third party.
8.2 Right of First Refusal.
----------------------
(a) Bona Fide Offer. Except as provided in Section
---------------
8.2(b) below, until July 31, 1996 each Releasee covenants and
agrees that it shall not sell, assign, transfer, pledge, encumber
or in any other manner dispose of thirty-five percent (35%) or
more of the Settlement Shares of Warner acquired by each such
Releasee pursuant to the terms and conditions of this Agreement,
except upon receipt by such Releasee of a bona fide offer in
writing from an unrelated third party (hereinafter referred to as
a "Bona Fide Offer") to purchase such Settlement Shares. The
Bona Fide Offer shall specify the name and background of the
third party, the number of Settlement Shares subject to the Bona
Fide Offer, the amount to be paid for the Settlement Shares and
the terms of payment, and all other material conditions of such
offer. Upon receipt of a Bona Fide Offer, such Releasee shall
promptly offer in writing (hereinafter referred to as the
"Reoffer") to sell such Settlement Shares to Warner or to a third
party acceptable to Warner (the "Selected Purchaser"), upon the
same terms and conditions contained in the Bona Fide Offer. The
Reoffer may be accepted by Warner or the Selected Purchaser at
any time within fifteen (15) business days next following its
receipt and shall expire on the close of business on such 15th
business day. Acceptance of a Reoffer must be made
unconditionally by notice to such Releasee prior to its
expiration, which notice shall set forth a time and place for
closing no earlier than the day after the expiration date of the
Reoffer and no later than thirty (30) days thereafter.
Upon the expiration of the Reoffer, such Releasee shall
be free to accept the Bona Fide Offer provided that the third
party offeror agrees to hold such Settlement Shares subject to
all terms, conditions and restrictions of this Agreement. Any
Bona Fide Offer shall be deemed to have expired ninety (90) days
after it was made unless accepted in accordance with its original
terms and may not thereafter be accepted. If the amount of a
Bona Fide Offer should be reduced, or if any of its terms or
provisions should be changed, then it shall be treated as a new
Bona Fide Offer and may not be accepted unless the provisions of
this subsection shall have been complied with and a Reoffer made
with respect to it.
(b) Unrestricted Transfers. The restrictions
----------------------
specified in this Section 8.2 shall not apply to the sale or
transfer of the Settlement Shares held by a Releasee to a wholly-
owned subsidiary, partnership or affiliate of such Releasee;
provided, however, that such sale or transfer shall not relieve
such Releasee of its obligations hereunder. Prior to such
transfer, such wholly-owned subsidiary, partnership or affiliate,
shall agree in writing to be bound by the terms and conditions of
this Agreement.
8.3 Payment of All Amounts Under Services Contracts.
-----------------------------------------------
Pending the Closing of the transactions contemplated by this
Agreement, each Customer covenants and agrees to continue to make
all regularly required payments under existing Services Contracts
with Warner consistent with past billing practices in order to
enable Warner to continue to perform its obligations in
accordance with the terms of such contracts. The amount of such
payments which are or will be due and payable on or prior to the
Closing Date are set forth on SCHEDULE 12 hereto. At the
Closing, Warner shall deliver to the Customers a Certificate of
the President and Chief Executive Officer of Warner certifying
that the amounts set forth on SCHEDULE 12 are true and correct
and have been calculated in accordance with Warner's past,
ordinary billing practices and procedures. The parties agree
that, upon payment of such amounts as reflected in said Schedule,
no other amounts will be required to be paid by each Customer
and/or Warner in accordance with the terms of their respective
Services Contracts.
8.4 Option of Warner to Purchase Settlement Shares and
--------------------------------------------------
Warrants. (a) For a period of six months after the Closing
--------
Date, Warner shall have the option to acquire from the Releasees
50% of the Settlement Shares at a cash price equal to the greater
of $3.00 or 50% of the then market price of a share of Warner
Common Stock. For purposes of this subsection, market price
shall mean the average closing price for a share of Warner Common
Stock on such market which is or may become the major trading
market for Warner Common Stock for the five (5) business days
immediately prior to the notice of exercise of such option, as
provided for in subsection (c) below.
(b) For a period of six months after the Closing Date
Warner shall have the option to acquire from the Releasees 50% of
the Warrants at a cash price equal to $1.00 per Warrant.
(c) The options granted hereunder shall be exercisable
by written notice by Warner to the Releasees, which notice shall
set a date and time and place of closing, which closing date
shall be no earlier than five (5) business days after the date of
such notice and no later than ten (10) business days after the
date of such notice, at which closing Warner shall deliver the
consideration by certified check payable to the order of each
Releasee, and each Releasee shall deliver the securities being
acquired by Warner duly endorsed for transfer. The options
granted hereunder shall be exercised pro rata as to each Releasee
based upon the original number of Settlement Shares and/or
Warrants issued to such Releasee. The certificates for such
securities will be appropriately legended to reflect the options
granted hereunder.
(d) Warner shall have the right to assign the options
granted herein in its sole discretion subject to such assignee
agreeing in writing to be bound by the provisions of this Section
8.4.
8.5 Covenant As To Related Agreements. Each Releasee
---------------------------------
agrees to execute and deliver any Related Agreement which is
required to be executed by it on the Closing Date.
9. Covenant and Indemnification Among Warner, RPC and
--------------------------------------------------
MDA.
---
The agreements among Warner, RPC, NCIC and MDA relating
to the RPC lawsuits and the settlements thereof are contained in
the Stipulation, the Mutual General Release and the CWP
Assignment annexed hereto as Exhibits C, D and E, respectively.
10. Conditions to Obligations of Warner. This
-----------------------------------
Agreement and the obligations of Warner to perform hereunder are
subject to the satisfaction by each Releasee, or a waiver in
writing by Warner, of the following conditions, each of which is
individually hereby deemed material, at or prior to the Closing:
10.1 Concurrent Agreements. Each Releasee will execute
---------------------
and deliver its respective Services Contract Release and its
respective Revised Newco Service Agreement and any Related
Agreements referred to in this Agreement.
10.2 Wausau Services Contract Release. Employees
--------------------------------
Insurance of Wausau, a Mutual Company, a Wisconsin corporation,
Wausau Underwriters Insurance Company, a Wisconsin corporation,
and Providian Auto and Home Insurance Company (formerly Worldwide
Underwriters Insurance Company), a Missouri corporation
(collectively "Wausau") shall each execute a Services Contract
Release, such release to be substantially in the form annexed
hereto as Exhibit B.
10.3 Representations, Warranties and Obligations. All
-------------------------------------------
representations and warranties of each Releasee contained in this
Agreement and in the Exhibits hereto shall be true and correct
commencing as of the date hereof and ending with and on the
Closing Date as though made on and as of such Closing Date. Each
Releasee shall have performed and complied with all of their
respective covenants and obligations under this Agreement in all
material respects.
11. Conditions to Obligations of Releasees. This
--------------------------------------
Agreement and the obligations of each Releasee to perform
hereunder are subject to the satisfaction by Warner, or a waiver
in writing by the all of the Releasees, of the following
conditions, each of which is individually hereby deemed material,
at or prior to the Closing:
11.1 Concurrent Agreements. Warner will have entered
---------------------
into the Asset Purchase Agreement on the date hereof, and on the
Closing Date, will execute and deliver all the Related Agreements
and each Releasee will have executed and delivered its Revised
Newco Service Agreement and any Related Agreement related to it.
11.2 Corporate Authorization. On the Closing Date,
-----------------------
Warner shall have delivered to each Releasee certified copies of
the resolution(s) of the Board of Directors of Warner authorizing
the execution, delivery and performance by Warner of this
Agreement and the Related Agreements and the consummation of the
transactions contemplated hereby and thereby.
11.3 Representations, Warranties and Obligations. All
-------------------------------------------
representations and warranties of Warner contained in this
Agreement and in the Exhibits hereto shall be true and correct in
all material respects commencing as of the date hereof and ending
with and on the Closing Date as though made on and as of such
Closing Date. Warner shall have performed and complied with all
of their respective covenants and obligations under this
Agreement in all material respects.
11.4 Issuance and Delivery of Settlement Shares and
----------------------------------------------
Warrants to the Releasees. Warner shall issue and deliver
-------------------------
certificates to the Releasees representing all of the Settlement
Shares and Warrants.
11.5 Payment of a Portion of the Cash Collateral.
-------------------------------------------
Warner shall direct the Escrow Agent to release from escrow to
the Releasees $887,500 of the Cash Collateral in accordance with
the terms of Section 1.2 hereof.
11.6 Legal Opinion. On the Closing Date, Reid & Priest
-------------
LLP, counsel to Warner, shall deliver an opinion of counsel dated
as of the Closing Date and addressed to the Releasees, in the
form set forth in Exhibit G annexed hereto.
12. Survival; Indemnification. The representations,
-------------------------
warranties, covenants and agreements of Warner on the one hand,
and each Releasee on the other hand, contained in this Agreement,
and the Exhibits hereto, shall survive and remain operative and
in full force following the execution and delivery of this
Agreement and the Related Agreements. The following provisions
are applicable to claims made under these Agreement(s):
12.1 Obligation of Warner to Indemnify. Warner hereby
---------------------------------
agrees to indemnify, defend and hold harmless each Releasee (and
its directors, officers, employees, affiliates and assigns) from
and against all claims, losses, suits, proceedings, demands,
judgments, damages, expenses and costs (including reasonable
attorneys' fees and disbursements) (collectively, "Losses") which
any Releasee may incur relating to (i) any material inaccuracy
in, or any material breach of, any representation, warranty,
covenant or agreement of Warner contained in this Agreement or
the Exhibits hereto or (ii) any claim by a third party who is a
creditor or shareholder of Warner or any of its subsidiaries
relating to damages caused to such third party by the transfer of
assets by Warner pursuant to the provisions of the Asset Purchase
Agreement.
12.2 Obligation of Each Releasee to Indemnify. Each
----------------------------------------
Releasee hereby agrees to indemnify, defend and hold harmless
Warner (and its directors, officers, employees, affiliates and
assigns) from and against any Losses which it may incur arising
from any material inaccuracy in, or any material breach of, any
representation, warranty, covenant or agreement of such Releasee
contained in this Agreement.
12.3 Notice to Indemnitor. Promptly after any party
--------------------
hereto (i) receives notice of any claim or the commencement of
any action or proceeding against it, (ii) has knowledge of any
claim, action or proceeding against it, or (iii) has knowledge of
any matter for which it intends to seek indemnification
hereunder, the party seeking indemnification (the "Indemnitee")
shall, if a claim for indemnity with respect thereto is to be
made against any party hereto obligated to provide indemnifica-
tion under Sections 12.1 or 12.2 hereof (the "Indemnitor"), give
the Indemnitor written notice of such claim or the commencement
of such action or proceeding, in all cases within sufficient time
to respond to such claim or to answer or otherwise plead in any
such action. Such notice shall be a condition precedent to the
Indemnitor's obligation to provide indemnification under this
Section 12.
12.4 Right to Defend; Compromise of Claims. The
-------------------------------------
Indemnitor shall have the duty to defend and right to compromise,
at its own expense and by its own counsel, any matter involving
the asserted liability of any Indemnitee; provided, however, that
-------- -------
no compromise of any claim shall be made without the consent of
the Indemnitee unless such compromise results in the full and
unconditional release of all claims against the Indemnitee by the
party asserting such claim. The opportunity to compromise or
defend as herein provided shall be a condition precedent to any
liability of an Indemnitor under the provisions of this Section
12.4. If any Indemnitor shall undertake to compromise or defend
any such asserted liability, it shall promptly notify the
Indemnitee of its intention to do so and provide the Indemnitee
with reasonable assurance as to the ability of the Indemnitor to
defend and/or compromise such matter, which, in the case of
Warner, as Indemnitor, shall include documentation evidencing the
ability of Warner to pay any judgment with regard to any such
asserted liability. The Indemnitee at Indemnitor's expense shall
cooperate with the Indemnitor and its counsel in the defense
against any such asserted liability and in any compromise
thereof. Such cooperation shall include, but not be limited to,
furnishing the Indemnitor with any books, records or information
reasonably requested by the Indemnitor and taking such action as
the Indemnitor may reasonably request to mitigate or reduce any
claim. After an Indemnitor has notified an Indemnitee of its
intention to defend any asserted liability, the Indemnitor shall
not be liable for any additional legal expenses incurred by the
Indemnitee unless the Indemnitor fails to prosecute the defense
of such claim. If the Indemnitor shall desire to compromise any
such asserted liability by the payment of a liquidated amount
which the party asserting such liability is willing to accept in
exchange for fully and unconditionally releasing all claims
against the Indemnitee, and the Indemnitee shall refuse to
consent to such compromise, then the Indemnitor's liability under
this Section 12 with respect to such asserted liability shall be
limited to the amount so offered in compromise. Under no
circumstances shall the Indemnitee compromise any asserted
liability without the written consent of the Indemnitor.
13. Miscellaneous.
-------------
13.1 Entire Agreement. This Agreement and the Related
----------------
Agreements and the Exhibits and Schedules annexed hereto and made
a part hereof, contain the entire agreement between Warner and
each Releasee with respect to the matters set forth herein and
supersede all prior agreements and understandings among them as
to the subject matter thereof. No party shall be bound by nor
shall be deemed to have made any representations, warranties or
covenants except those contained herein.
13.2 Benefits. All of the terms and provisions of
--------
this Agreement and the Related Agreements shall bind and inure to
the benefit of Warner and each Releasee and their respective
successors and assigns.
13.3 Notices, Etc. All notices, requests, consents
------------
and other communications hereunder shall be in writing and shall
be deemed to be duly given (i) upon receipt, if personally
delivered with receipt acknowledged, (ii) not less than three (3)
business days after mailing, if mailed by registered or certified
mail, first class, postage prepaid, and (iii) on the next
business day, if delivered by a nationally recognized overnight
courier service or if transmitted by facsimile machine addressed
as follows:
(i) if to Warner:
Warner Insurance Services, Inc.
17-01 Pollitt Drive
Fair Lawn, New Jersey 07410
Tel: (201) 794-4800
Fax: (201) 791-9113
Attention: President
with a copy to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Leonard Gubar, Esq.
Tel: (212) 603-2000
Fax: (212) 603-2001
or to such other address or such other person(s) as Warner may
designate by written notice to the other parties hereto.
(ii) if to the Releasees, at the addresses set forth on
SCHEDULE 13 annexed hereto.
or to such other address or such other person(s) as each Customer
may designate by written notice to the other parties hereto.
13.4 Governing Law; Submission to Jurisdiction. (i)
-----------------------------------------
This Agreement shall be construed in accordance with and governed
by the internal laws of the State of New York.
(ii) The parties hereto (A) submit for themselves
in any legal action or proceeding relating to the enforcement of
the rights of and the obligations under this Agreement to the
jurisdiction of the New York State Supreme Court, New York
County, Commercial Part and the appellate courts therefrom, (B)
consent that any such action or proceeding shall be brought in
such courts, and waive any objection each may have now or
hereafter have to the venue of any such action or proceeding in
any such court, (C) agree that service of process of any such
action or proceeding may be effected by certified mail (or
substantially similar form of mail), postage prepaid, to the
appropriate party at its address as set forth herein and service
made shall be deemed to be completed upon the earlier of actual
receipt or five (5) days after the same shall have been posted as
aforesaid, and (D) agree that nothing herein shall affect the
right to effect service of process in any other manner permitted
by law.
13.5 Severability. If any provision of this Agreement
------------
shall be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall
not in any manner affect or render invalid or unenforceable any
other severable provision of this Agreement, and this Agreement
shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
13.6 Modification, Waivers, Etc. Neither this
--------------------------
Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally but only by an instrument in
writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
13.7 Captions. The captions of sections and
--------
subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.
13.8 Further Assurances. At any time and from time to
------------------
time, upon the reasonable request of any party hereto, the
requested party shall execute, deliver and acknowledge, or cause
to be executed, delivered and acknowledged, such further
documents and instruments and do such other acts and things as
the requesting party may reasonably request in order to fully
effect this Agreement.
<PAGE>
13.9 Counterparts. This Agreement may be executed in
------------
several counterparts, each of which shall be deemed an original,
but all of which, when taken together, shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto either
individually or by their duly authorized representatives have
caused this Agreement to be executed and delivered in their
respective names as of the date and year first above written.
WARNER INSURANCE SERVICES, INC. ELECTRIC INSURANCE COMPANY
By: /s/ Alfred J. Moccia By: /s/ Laurence J. Cohen
-------------------------- --------------------------
Name: Alfred J. Moccia Name: Laurence J. Cohen
Title: President and Chief Title: Vice President &
Executive Officer Treasurer
ATLANTIC EMPLOYERS INSURANCE COMPANY THE ROBERT PLAN CORPORATION
By: /s/ John A. Murphy, Jr. By: /s/ Carl Hollander
-------------------------- --------------------------
Name: John A. Murphy, Jr. Name: Carl Hollander
Title: Vice President Title: Secretary
PACIFIC EMPLOYERS INSURANCE COMPANY MATERIAL DAMAGE ADJUSTMENT
CORPORATION
By: /s/ John A. Murphy, Jr. By: /s/ Philbert A. Nezamoondeen
-------------------------- ----------------------------
Name: John A. Murphy, Jr. Name: Philbert A. Nezamoondeen
Title: Senior Vice President Title: Executive Vice President
NATIONAL CONSUMER INSURANCE LION INSURANCE COMPANY
COMPANY
By: /s/ Philbert A. Nezamoodeen By: /s/ Philbert A. Nezamoondeen
--------------------------- ----------------------------
Name: Philbert A. Nezamoodeen Name: Philbert A. Nezamoondeen
Title: Secretary Title: Secretary
Exhibit 10.2
THIS WARRANT AND THE UNDERLYING COMMON STOCK HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS THEREOF.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON FEBRUARY 28, 2001, OR IF
NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK
TIME, ON THE NEXT FOLLOWING BUSINESS DAY.
WARRANT TO PURCHASE
_________ Shares of Common Stock
WARRANT TO PURCHASE COMMON STOCK
OF
WARNER INSURANCE SERVICES, INC.
TRANSFER RESTRICTED -- SEE SECTION 6.02
This certifies that, for good and valuable
consideration, pursuant to that certain Restructuring Agreement
dated as of March 1, 1996 among WARNER INSURANCE SERVICES, INC.,
a Delaware corporation (the "Company") and the Releasees listed
therein (the "Restructuring Agreement"),_______________________
________________________________________ and its registered,
permitted assigns (collectively, the "Warrantholder" or
"Holder"), is entitled to purchase from the Company, subject to
the terms and conditions hereof, at any time before 5:00 P.M.,
New York time, on February 28, 2001 (or, if such day is not a
business day, at or before 5:00 P.M., New York time on the next
following business day), the number of fully paid and
non-assessable shares of Common Stock, par value $.01 per share,
of the Company (the "Common Stock") stated above at the exercise
price of $2.00 per share (the "Exercise Price"). The Exercise
Price and the number of shares purchasable hereunder are subject
to adjustment as provided in Article II hereof. Pursuant to
Section 8.4(b) of the Restructuring Agreement, for a period of
six months after the issuance of this Warrant, the Company has
the right to acquire up to one half of the Warrants at a cash
price equal to $1.00 per Warrant. This Warrant is being issued
to the Holder in accordance with Section 1.1 of the Restructuring
Agreement and is one in a series of Warrants being similarly
issued with the Restructuring Agreement. Capitalized terms used
and not otherwise defined herein shall have the meanings ascribed
to them in the Restructuring Agreement.
THIS WARRANT IS ONE OF A SERIES OF WARRANTS WITH LIKE PROVISIONS
TO PURCHASE, IN THE AGGREGATE, 1,553,125 SHARES OF COMMON STOCK.
THE COMPANY HAS THE RIGHT, PURSUANT TO SECTION 8.4(b) OF THE
RESTRUCTURING AGREEMENT TO ACQUIRE ONE HALF OF THE WARRANTS ON A
PRO RATA BASIS AT A CASH PRICE EQUAL TO $1.00 PER WARRANT FOR A
PERIOD ENDING ON AUGUST 31, 1996, 1996
ARTICLE I
Duration and Exercise of Warrant
--------------------------------
Section 1.01: Duration of Warrant.
------------ ------------------- Subject to the terms
contained herein, this Warrant may be exercised at any time
before 5:00 P.M., New York time, on February 28, 2001 (the
"Expiration Date"), (or, if such day is not a business day, at or
before 5:00 P.M., New York time, on the next following business
day). If this Warrant is not exercised at or before 5:00 P.M.,
New York time, on the Expiration Date, it shall become void, and
all rights hereunder shall thereupon cease.
Section 1.02: Exercise of Warrant.
------------ -------------------
(a) The Warrantholder may exercise this Warrant, in
whole or in part, upon surrender of this Warrant with the
Subscription Form hereon duly executed, to the Company at its
corporate office at 17-01 Pollitt Drive, Fair Lawn, New Jersey
07410, or to such office as duly designated by the Company to the
Warrantholder, together with the full Exercise Price for each
Warrant Share to be purchased by tendering in lawful money of the
United States, or by certified check or bank draft payable in
United States Dollars to the order of the Company.
(b) Upon receipt of this Warrant with the Subscription
Form duly executed and accompanied by payment of the aggregate
Exercise Price for the Warrant Shares for which this Warrant is
then being exercised, the Company will promptly cause to be
issued certificates for the total number of whole shares of
Common Stock for which this Warrant is being exercised (adjusted
to reflect the effect of the provisions contained in Article II
hereof, if any, and as provided in Section 4.04 hereof) in such
denominations as are required for delivery to the Warrantholder,
and the Company shall thereupon deliver such certificates to the
Warrantholder. If at the time this Warrant is exercised a
registration statement is not in effect to register under the
Securities Act, the Warrant Shares issuable upon exercise of this
Warrant, the Company may place such legends on certificates
representing the Warrant Shares to indicate that the Warrant
Shares have not been registered and may not be transferred except
upon compliance with the registration requirements of the
Securities Act of 1933, as amended, and applicable state
securities laws or an opinion of counsel to the Company or of
counsel reasonably satisfactory to the Company that such
registration is not required, or such other legends as may be
reasonably required in the opinion of counsel to the Company to
permit the Warrant Shares to be issued without such registration.
From and after receipt by the Company of the duly executed
Subscription Form and the aggregate exercise prices and
notwithstanding that certificates in respect of the Warrant
Shares may not have been delivered, the Warrantholder shall be
considered a shareholder of the Company in respect of the Warrant
Shares for all intents and purpose.
(c) In case the Warrantholder shall exercise this
Warrant with respect to less than all of the Warrant Shares that
may be purchased under this Warrant, the Company will execute a
new warrant in the form of this Warrant for the balance of such
Warrant Shares and deliver such new warrant to the Warrantholder.
(d) The Company covenants and agrees that it will pay
when due and payable any and all costs, expenses, charges and
stock transfer and similar taxes which may be payable in respect
of the issue of this Warrant or in respect of the issue of any
Warrant Shares. The Company shall not, however, be required to
pay any tax imposed on income or gross receipts or any tax which
may be payable in respect of any transfer involved in the
issuance or delivery of this Warrant or at the time of surrender.
ARTICLE II
Adjustment of Warrant Shares
Purchasable and of Exercise Price
---------------------------------
The Exercise Price and the number and kind of Warrant
Shares shall be subject to adjustment from time to time upon the
happening of certain events as provided in this Article II.
Section 2.01: Mechanical Adjustments.
------------ ----------------------
(a) Anti-Dilution Provisions; Adjustment of Exercise
-------------------------------------------------------
Price.
----- The Exercise Price shall be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of
the Exercise Price, the Warrantholder shall thereafter be
entitled to purchase, at the Exercise Price resulting from such
adjustment, the number of Warrant Shares obtained by multiplying
the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Exercise Price Adjustment Formulas.
---------------------------------- If and
whenever after the date of this Warrant, the Company shall issue
or sell any shares of Common Stock (except as provided in
subsection 2.01(h)) for a consideration per share less than 95%
of the Market Price on the date of such issuance or sale, then
forthwith the Exercise Price shall be reduced to the prices
(calculated to the nearest tenth of a cent) determined by
multiplying the Exercise Price in effect immediately prior to the
time of such issuance or sale by a fraction, the numerator of
which shall be (i) the sum of (A) the number of shares of Common
Stock outstanding immediately prior to such issuance or sale
(assuming the conversion of all securities convertible into
shares of Common Stock) multiplied by the Market Price
immediately prior to such issuance or sale, and (B) the
consideration, if any, received and deemed received by the
Company upon such issuance or sale, divided by (ii) the total
number of shares of Common Stock outstanding and deemed
outstanding immediately after such issuance or sale, and the
denominator of which shall be the Market Price immediately prior
to such issuance or sale.
No adjustment of the Exercise Price, however, shall be made in an
amount less than $.01 per share, but any such lesser adjustment
shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with
any adjustments so carried forward shall amount to $.01 per share
or more.
(c) Constructive Issuances of Stock; Convertible
--------------------------------------------
Securities; Rights and Options; Stock Dividends.
----------------------------------------------- For the
purposes of subsection 2.01(b) above, the following provisions
(i) to (viii), inclusive, shall also be applicable:
(i) In case at any time subsequent to the date
hereof, the Company shall in any manner grant any
rights to subscribe for or to purchase, or any options
for the purchase of, shares of Common Stock or any
stock or securities convertible into or exchangeable
for shares of Common Stock (such convertible or
exchangeable stock or securities being hereinafter
called "Convertible Securities"), whether or not such
rights or options or the right to convert or exchange
any such Convertible Securities are immediately
exercisable, and the consideration per share for which
shares of Common Stock are issued or sold upon the
exercise of such Convertible Securities (determined by
dividing (A) the total amount, if any, received or
receivable by the Company as consideration for the
granting of such rights or options, plus the minimum
aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of such rights
or options, plus, in the case of any such rights or
options which relate to such Convertible Securities,
the minimum aggregate amount of additional
consideration, if any, payable upon the issuance or
sale of such Convertible Securities (and, if such
convertible securities constitute obligations of the
Company, the principal amount of such obligations so
converted) and upon the conversion or exchange thereof,
by (B) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or
options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of
such rights or options) shall be less than 95% of the
Market Price determined as of the date of granting such
price or options, as the case may be, then the total
maximum number of shares of Common Stock issuable upon
the exercise of such rights or options (or upon
conversion or exchange of the total maximum amount of
such Convertible Securities issuable upon the exercise
of such rights or options) shall be deemed to be
outstanding and to have been issued for such price per
share. Except as provided in subsection 2.01(c)(iii)
below, no further adjustments of the Exercise Price
shall be made upon the actual issuance of such shares
of Common Stock or of such Convertible Securities upon
exercise of such rights or options or upon the actual
issuance of such shares of Common Stock upon conversion
or exchange of such Convertible Securities.
(ii) In case at any time the Company shall in any
manner issue or sell any Convertible Securities,
whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price
per share for which shares of Common Stock are issuable
upon such conversion or exchange (determined by
dividing (A) the total amount received or receivable by
the Company as consideration for the issuance or sale
of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange
thereof, by (B) the total maximum number of shares
which would be issuable upon the conversion or exchange
of all such Convertible Securities) shall be less than
95% of the Market Price determined as of the date of
such issuance or sale, then the total maximum number of
shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as
of the date of the issuance or sale of such Convertible
Securities) be deemed to be outstanding and to have
been issued for such price per share; except as
otherwise specified in subsection 2.01(c)(iii) below,
no further adjustments of the Exercise Price shall be
made upon the actual issuance of such shares of Common
Stock upon conversion or exchange of such Convertible
Securities.
(iii) If the purchase price provided for in
any right or option referred to in subsection
2.01(c)(i), or the additional consideration, if any,
payable upon the conversion or exchange of any
Convertible Securities referred to in subsection
2.01(c)(ii), or the rate at which any Convertible
Securities referred to in subsections 2.01(c)(i) or
(ii) are convertible into or exchangeable for shares of
Common Stock, shall change or a different purchase
price or rate shall become effective at any time or
from time to time (other than under or by reason of
provisions designed to protect against dilution) then,
upon such change becoming effective, the Exercise Price
then in effect at the time of such event shall
forthwith be increased or decreased to such Exercise
Price as would have been obtained had the rights,
options or Convertible Securities still outstanding
provided for such changed purchase price, additional
compensation or rate of commission or exchange, as the
case may be, at the time initially granted, issued or
sold. On the expiration of any such option or right or
the termination of any such right to convert or
exchange such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be
increased to such Exercise Price as would have been
obtained at the time of such expiration or termination
had such option, right or convertible securities never
been issued. If the purchase price provided for in any
right or option referred to in subsection 2.01(c)(i),
or the additional consideration payable upon the
exchange or conversion of any Convertible Securities
referred to in subsections 2.01(c)(i) or (ii), or the
rate at which any Convertible Securities referred to in
subsections 2.01(c)(i) or (ii) are convertible into or
exchangeable for shares of Common Stock, shall decrease
at any time under or by reason of provisions with
respect thereto designed to protect against dilution,
then, in the case of the delivery of shares of Common
Stock upon the exercise of any such right or option or
upon conversion or exchange of any such right or option
or upon conversion or exchange of any such Convertible
Securities, the Exercise Price then in effect hereunder
shall forthwith be decreased to such Exercise Price as
would have been obtained had the adjustments made upon
issuance of such right or option or Convertible
Securities been made upon the basis of the issuance of
(and the total consideration computed in accordance
with subsections 2.01(c)(i) or (ii), as the case may
be, received for) the shares of Common Stock delivered
as aforesaid.
(iv) In case of the issuance of shares of Common
Stock or Convertible Securities of the Company as a
dividend or distribution upon any shares of Common
Stock of the Company, such shares of Common Stock or
Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be
deemed to have been issued or sold without
consideration.
(v) In case at any time any shares of Common
Stock or Convertible Securities or any rights or
options to purchase any such shares of Common Stock or
Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be
deemed to be the amount payable to the Company
therefor, without deduction therefrom of any expenses
incurred or any underwriting or selling commissions or
concessions paid by the Company in connection therewith
or any underwriting or selling discounts allowed by the
Company in connection therewith. In case any shares of
Common Stock or Convertible Securities or any rights or
options to purchase any such shares of Common Stock or
Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the
consideration other than cash payable to the Company
shall be deemed to be the fair value of such
consideration as determined by the Board of Directors
of the Company, without deduction therefrom of any
expenses incurred or any underwriting or selling
commissions or concessions paid by the Company in
connection therewith or any underwriting or selling
discounts allowed by the Company in connection
therewith. In case any shares of Common Stock or
Convertible Securities shall be issued in connection
with any merger of another corporation into the
Company, the amount of consideration therefor shall be
deemed to be the fair value, as determined by the Board
of Directors of the Company, of such portion of the
assets of such merged corporation as such Board shall
determine to be attributable to such shares of Common
Stock, Convertible Securities, rights or options, as
the case may be.
(vi) In case at any time the Company shall take a
record of the holders of its Common Stock for the
purpose of entitling them (A) to receive a dividend or
other distribution payable in shares of Common Stock or
in Convertible Securities, or (B) to subscribe for or
purchase shares of Common Stock or Convertible
Securities, then such record date shall be deemed to be
the date of the issuance or sale of the shares of
Common Stock deemed to have been issued or sold upon
the declaration of such dividend or the making of such
other distribution or the date of the granting of such
right or subscription or purchase, as the case may be.
(vii) "Market Price" shall mean, as of any
day, the closing sale price of the shares of Common
Stock on such day on the New York Stock Exchange or the
American Stock Exchange (or if the Common Stock shall
not then be listed on either such exchange, the closing
sale price on the principal (determined by the highest
volume averaged for a period of twenty consecutive
business days prior to the day as to which "Market
Price" is being determined) national securities
exchange (as defined in the Securities Exchange Act of
1934, as amended) on which the Common Stock may then be
listed) or, if there shall have been no sales on such
exchange or exchanges on such day, the averages of the
high and low sales prices of the Common Stock on such
day on the NASDAQ National Market System or, if the
Common Stock is not included in the NASDAQ National
Market System, the average of the bid and asked prices
at the end of such day or, if the Common Stock shall
not be so listed, the average of the bid and asked
prices at the end of the day in the over-the-counter
market as reported by NASDAQ or, if the Common Stock is
not included on NASDAQ, as reported by the National
Quotation Bureau, Inc. or any successor organization,
in each such case, averaged for a period of twenty
consecutive business days prior to the day as to which
"Market Price" is being determined.
(viii) The number of shares of Common Stock
outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered
an issuance or sale of shares of Common Stock for the
purposes of subsection 2.01(b).
(d) Effect of Certain Dividends.
--------------------------- In case at any time
the Company shall declare a dividend upon the shares of Common
Stock payable otherwise than out of earnings or earned surplus
(other than in a partial or total liquidation or dissolution of
the Company) and otherwise than in shares of Common Stock or
Convertible Securities, the Exercise Price in effect immediately
prior to the declaration of such dividend shall be reduced by an
amount equal, in the case of a dividend in cash, to the amount
thereof payable per share of Common Stock or, in the case of any
other dividend, to the fair value thereof per share of Common
Stock as determined by the Board of Directors of the Company.
For the purposes of the foregoing, a dividend other than in cash
shall be considered payable out of earnings or earned surplus
only to the extent that such earnings or earned surplus are
charged an amount equal to the fair value of such dividend as
determined by the Board of Directors of the Company. Such
reductions shall take effect as of the date on which a record is
taken for the purpose of such dividend, or if a record is not
taken, the date as of which the holders of record of shares of
Common Stock entitled to such dividends are to be determined. As
used in this subsection 2.01(d), the term "dividend" shall mean
any distribution to the holders of shares of Common Stock.
Except as provided in this subsection 2.01(d), no adjustment in
the Exercise Price and no change in the number of Warrant Shares
so purchasable shall be made pursuant to this Section 2.01 as a
result of or by reason of any such dividend.
(e) Stock Splits and Reverse Splits.
------------------------------- In case at any
time the Company shall subdivide its outstanding shares of Common
Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be
proportionately reduced and the number of shares purchasable
pursuant to this Warrant immediately prior to such subdivision
shall be proportionately increased, and conversely, in case at
any time the Company shall combine its outstanding shares of
Common Stock into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Common
Stock purchasable upon the exercise of this Warrant immediately
prior to such combination shall be proportionately reduced.
Except as provided in this subsection 2.01(e), no adjustment in
the Exercise Price and no exchange in the number of Warrant
Shares so purchasable shall be made pursuant to this Section 2.01
as a result of or by reason of any such subdivision or
combination.
(f) Effect of Reorganization and Assets Sales.
----------------------------------------- If any
capital reorganization or reclassification of the capital stock
of the Company, or consolidation of the Company with or merger of
the Company into another corporation, or the sale of all or
substantially all of its assets to another corporation, shall be
effected in such a way that holders of shares of Common Stock
shall be entitled to receive stock, securities or assets with
respect to or in exchange for shares of Common Stock, then, as a
condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision
shall be made whereby each holder of Warrants shall thereafter
have the right to receive upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common
Stock of the Company immediately theretofore receivable upon the
exercise of such Warrants, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange
for a number of outstanding stock of Common Stock equal to the
number of shares of such stock immediately theretofore so
receivable upon exercise had such reorganization,
reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provision shall be made with
respect to the rights and interests of such holder to the end
that the provisions hereof (including, without limitation,
provisions for adjustment of the Exercise Price and of the number
of shares issuable upon exercise) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise of
such Warrants. The Company shall not effect any such
consolidation, merger or sale unless prior to or simultaneously
with the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger, or
of the corporation purchasing such assets shall assume by written
instrument executed and mailed or delivered to each
Warrantholder, the obligation to deliver to such Warrantholder
such shares of stock, securities or assets as, in accordance with
the foregoing provisions such Warrantholder may be entitled to
receive, and containing the express assumption of such successor
corporation of the performance and observance of the provisions
of this Warrant to be performed and observed by the Company and
of all liabilities and obligation of the Company hereunder.
(g) Accountants' Certificate.
------------------------ Upon each adjustment of
the Exercise Price and upon each change in the number of Warrant
Shares, then and in each such case, the Company will promptly
obtain a certificate of a firm of independent certified public
accountants of recognized standing selected by the Company's
Board of Directors, who may be the regular auditors of the
Company, stating the adjusted Exercise Price and the new number
of Warrant Shares so issuable, or specifying the other shares of
stock, securities or assets and the amount thereof receivable as
a result of such change in rights, and setting forth in
reasonable detail the method of calculation and the facts upon
which such calculation is based. The Company will promptly mail
a copy of such accountant's certificate to the Warrantholders,
which certificate shall be conclusive evidence of the correctness
of the computation with respect to any such adjustment of the
Exercise Price and any such change in the number of such Warrant
Shares so issuable.
(h) No Adjustments Required.
----------------------- Notwithstanding anything
herein to the contrary, there shall be no adjustment in the
Exercise Price in connection with (i) the grant of any option, or
the exercise of any option granted under any employee benefit
plan or stock option plan or (ii) upon the exercise of any
Convertible Security outstanding on the date of this Warrant
including this Warrant.
Section 2.02: Notice of Adjustment.
------------ -------------------- Whenever the number
of Warrant Shares or the Exercise Price is adjusted as herein
provided, the Company shall prepare and deliver to the
Warrantholder a certificate signed by its Chairman of the Board,
President, any Vice President, Treasurer or Secretary, setting
forth the adjusted number of Warrant Shares purchasable upon the
exercise of this Warrant and the Exercise Price of such Shares
after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation
by which adjustment was made.
Section 2.03: No Adjustment for Dividends.
------------ --------------------------- Except as
provided in Section 2.01 of this Agreement, no adjustment in
respect of any cash dividends payable out of earnings or earned
surplus shall be made during the term of this Warrant or upon the
exercise of this Warrant.
Section 2.04: Form of Warrant After Adjustments.
------------ --------------------------------- The form
of this Warrant need not be changed because of any adjustments in
the Exercise Price or the number or kind of the Warrant Shares,
and any Warrant theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are
stated in this Warrant, as initially issued.
ARTICLE III
Compliance with the Securities Act
----------------------------------
The Holder acknowledges that the Warrant Shares, in its
hands, will be restricted securities which may not be sold or
offered for sale in the absence of an effective registration
statement under the Securities Act or an opinion of counsel
satisfactory to the Company that such registration is not
required. With respect to any offer, sale or other disposition
of any Warrant Shares, the Holder will give written notice to the
Company prior thereto, describing briefly the manner thereof,
together with a written opinion of such Holder's counsel, to the
effect that such offer, sale or other distribution may be
effected without registration or qualification (under federal law
and applicable state law then in effect). Promptly upon
receiving such written notice and reasonably satisfactory
opinion, if so requested, the Company, as promptly as
practicable, shall notify such Holder that such Holder may sell
or otherwise dispose of the Warrant Shares, all in accordance
with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Article III that the
opinion of counsel for the Holder is not reasonably satisfactory
to the Company, the Company shall so notify the Holder promptly
after such determination has been made. Each certificate
representing the Warrant Shares thus transferred shall bear a
legend as to the applicable restrictions on transferability in
order to ensure compliance with the Securities Act, unless in the
opinion of counsel for the Company such legend is not required,
in order to ensure compliance with the Securities Act. The
Company may issue stop transfer instructions to its transfer
agent and registrar in connection with such restrictions. The
Warrant Shares are entitled to certain rights of registration as
provided in Section 7.2 of the Restructuring Agreement.
ARTICLE IV
Other Provisions Relating
to Rights of Warrantholder
--------------------------
Section 4.01: No Rights as Shareholder; Notice to
-----------------------------------
Warrantholder.
------------- Nothing contained in this Warrant shall be
construed as conferring upon the Warrantholder or his transferees
the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or of
any other matter or any rights whatsoever as shareholders of the
Company, except to the extent specifically provided for herein;
provided, however that the Warrantholder shall be delivered all
notices and other communications sent by the Company to its
shareholders. Without limiting the foregoing, in case at any
time: (1) the Company shall declare any dividend payable in
Common Stock or any distribution (other than cash dividends) to
the holders of the Common Stock; (2) the Company shall make an
offer for subscription pro rata to the holders of its Common
--- ----
Stock of any additional shares of stock of any class or other
rights; (3) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation; or (4)
there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in any one or
more of such cases, the Company shall give notice to the
Warrantholder of the date on which (a) the books of the Company
shall close or a record shall be taken for such dividend,
distribution or subscription rights, or (b) such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be.
Such notice shall also specify the date as of which the holders
of Common Stock of records shall participate in such dividend,
distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding
up as the case may be. Such written notice shall be given not
less than 10 days and not more than 90 days prior to the record
date on which the Company's transfer books are closed in respect
thereto and such notice may state that the record date is subject
to the effectiveness of a registration statement under the
Securities Act, or to a favorable vote of stockholders, if either
is required.
Section 4.02: Lost, Stolen, Mutilated or Destroyed Warrant.
------------ --------------------------------------------
If this Warrant is lost, stolen, mutilated or destroyed, the
Company may, on such terms as to indemnity or otherwise as it may
in its reasonable discretion impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as, and in substitution
for, this Warrant.
Section 4.03: Reservation of Shares.
------------ ---------------------
(a) The Company covenants and agrees that at all times
it shall reserve and keep available for the exercise of this
Warrant such number of authorized shares of Common Stock or other
securities as are sufficient to permit the exercise in full of
this Warrant.
(b) The Company shall use its best efforts to maintain
or secure the listing of the Warrant Shares upon the securities
exchange or automated quotation system, if any, upon which shares
of its Common Stock are then listed.
(c) The Company covenants that all shares of Common
Stock issued on exercise of this Warrant will be validly issued,
fully paid, non-assessable and free of preemptive rights.
Section 4.04: No Fractional Shares.
------------ -------------------- Anything contained
herein to the contrary notwithstanding, the Company shall not be
required to issue any fraction of a share in connection with the
exercise of this Warrant. In any case where the Warrantholder
would, except for the provisions of this Section 4.04, be
entitled under the terms of this Warrant to receive a fraction of
a share upon exercise of this Warrant and receipt of the Exercise
Price, the Company shall not be required to issue any fraction of
a share, but rather, will adjust the aggregate Exercise Price for
such fraction of a share to which the Warrantholder would
otherwise be entitled.
ARTICLE V
Treatment of Warrantholder
--------------------------
Prior to due presentment for registration or transfer
of this Warrant, the Company may deem and treat the Warrantholder
as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for the purpose of
any exercise hereof and for all other purposes of the Company
shall not be affected by any notice to the contrary.
ARTICLE VI
Split-Up, Combination,
Exchange and Transfer of Warrant
--------------------------------
Section 6.01: Split-Up, Combination, Exchange and Transfer
------------ ---------------------------------------------
of Warrant.
---------- Subject to and limited by the provisions of
Section 6.02 hereof, this Warrant may be split up, combined or
exchanged for another Warrant or Warrants containing the same
terms to purchase a like aggregate number of Warrant Shares. If
the Warrantholder desires to split up, combine or exchange this
Warrant, he shall make such request in writing delivered to the
Company and shall surrender to the Company this Warrant and any
other Warrants to be so split up, combined or exchanged. Upon
any such surrender for a split-up, combination or exchange, the
Company shall execute and deliver to the person entitled thereto
a Warrant or Warrants, as the case may be, as so requested. The
Company shall not be required to effect any split-up, combination
or exchange which will result in the issuance of a Warrant
entitling the Warrantholder to purchase upon exercise a fraction
of a share of Common Stock or a fractional Warrant. The Company
may require such Warrantholder to pay a sum sufficient to cover
any tax or governmental charge that may be imposed in connection
with any split-up, combination or exchange of Warrants.
Section 6.02: Restrictions on Transfer.
------------ ------------------------ This Warrant may
be exercised and this Warrant and the Warrant Shares may not be
sold, hypothecated, assigned or transferred (a "Transfer"),
except only in accordance with and subject to the provisions of
the Securities Act and the rules and regulations promulgated
thereunder. The Warrantholder shall have the benefit of the
certain registration rights for the Warrant Shares as provided in
the Restructuring Agreement.
ARTICLE VII
Other Matters
-------------
Section 7.01: Successors and Assigns.
------------ ---------------------- All the covenants
and provisions of this Warrant shall be binding upon and inure to
the benefit of the Company and the Holder and their respective
successors and assigns.
Section 7.02: Amendments and Waivers.
------------ ---------------------- The provisions of
this Warrant, including the provisions of this sentence, may not
be amended, modified or supplemented, and waiver or consents to
departures from the provisions hereof may not be given unless the
Company has obtained the written consent of the Holder. The
Warrantholder shall be bound by any consent authorized by this
Section whether or not certificates representing his Warrant have
been marked to indicate such consent.
Section 7.03: Counterparts.
------------ ------------ This Warrant may be executed
in any number of counterparts and by the parties hereto in
separate counterparts, each of which so executed shall be deemed
to be an original and all of which taken together shall
constitute one and the same agreement.
Section 7.04: Governing Law.
------------ ------------- This Warrant shall be
governed by and construed in accordance with the laws of the
State of Delaware.
Section 7.05: Severability.
------------ ------------ In the event that any one or
more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any
such provisions in every other respect and of the remaining
provisions contained herein shall not be affected or impaired
thereby.
Section 7.06: Integration/Entire Agreement.
------------ ---------------------------- This Warrant
is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement
of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein other than as to
registration rights set forth in the Restructuring Agreement as
to which the Warrant Shares shall be entitled. This Warrant
supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
Section 7.07: Notices.
------------ ------- Any notice, request or other
communication required or permitted hereunder shall be in writing
and shall be deemed to have been duly given if personally
delivered or mailed by registered or certified mail or overnight
courier, postage prepaid, at the respective addresses of the
parties as set forth herein. Any party hereto may by notice so
given change its address for future notice hereunder. Notice
shall conclusively be deemed to have been given when delivered in
the manner set forth above and shall be deemed to have been
received when delivered. Copies of all notices to the Company
shall be given to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Leonard Gubar
and all notices to the Warrantholder shall be given to:
Notice or demand pursuant to this Warrant to be given or made by
the Warrantholder to or on the Company shall be sufficiently
given or made if sent by first class mail or overnight courier,
postage prepaid, to the Warrantholder at his last known address
as it shall appear on the books of the Company.
Section 7.08: Headings.
------------ -------- The Article and Section headings
herein are for convenience only and are not part of this Warrant
and shall not affect the interpretation thereof.
<PAGE>
IN WITNESS WHEREOF, this Warrant has been duly executed
by the Company under its corporate seal as of the 1st day of
March, 1996.
WARNER INSURANCE SERVICES, INC.
By:____________________________
Name: Alfred J. Moccia
Title: President and Chief
Executive Officer
(Corporate Seal)
ATTEST:
________________________________
Secretary
<PAGE>
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ____________________________ hereby
sells, assigns and transfers unto ________________________ the
within Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint _____ ____________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company with
respect to the number of Warrants set forth below, with full
power of substitution in the premises:
Name(s) of No. of
Assignee(s) Address Warrants
---------- ------- --------
And if said number of Warrants shall not be all the Warrants
represented by the Warrant Certificate, a new Warrant Certificate
is to be issued in the name of said undersigned for the balance
remaining of the Warrants represented by said Warrant
Certificate.
Dated: ________________, _____.
________________________________________
Note: The above signature should
correspond exactly with the
name on the face of this
Warrant Certificate.
<PAGE>
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant)
WARNER INSURANCE SERVICES, INC.
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the within Warrant Certificate
for, and to purchase thereunder, shares of Common
Stock, as provided for therein, and tenders herewith payment of
the purchase price in full in the form of cash or a certified or
official bank check in the amount of $ .
Please issue a certificate or certificates for such Common
Stock in the name of, and pay any cash for any fractional share
to:
Name_______________________________
(Please Print Name, Address and
Social Security No.)
Signature__________________________
_
Note: The above signature should
correspond exactly with the name on
the first page of this Warrant
Certificate or with the name of the
assignee appearing in the
assignment form below.
And if said number of shares shall not be all the shares
purchasable under the within Warrant Certificate, a new Warrant
Certificate is to be issued in the name of said undersigned for
the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash.
Exhibit 10.3
ASSET PURCHASE AGREEMENT
BY AND AMONG
WARNER INSURANCE SERVICES, INC.,
THE ROBERT PLAN CORPORATION
AND
MDA SERVICES, INC.
DATED AS OF MARCH 1, 1996
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of this 1st
day of March, 1996, by and among WARNER INSURANCE SERVICES, INC.,
a Delaware corporation ("Seller"), MDA SERVICES, INC., a New
Jersey corporation ("Purchaser"), and THE ROBERT PLAN
CORPORATION, a Delaware corporation ("Robert Plan").
W I T N E S S E T H:
WHEREAS, Seller owns and operates an insurance services
business which provides underwriting, policy maintenance, claims
adjustment and other administrative services to the automobile
insurance industry (the "Business") known as the Insurance
Services Group of Seller ("ISG"); and
WHEREAS, Seller desires to sell and transfer to
Purchaser, a wholly-owned subsidiary of Robert Plan, and
Purchaser desires to purchase and acquire from Seller, all of
Seller's right, title and interest in and to the tangible and
intangible assets of Seller relating to the Business, and
Purchaser desires to enter into new insurance services contracts
with certain of the customers of Seller, all upon the terms and
conditions herein set forth; and
WHEREAS, contemporaneously herewith Seller is entering
into a Restructuring Agreement (the "Restructuring Agreement")
with Atlantic Employers Insurance Company, Pacific Employers
Insurance Company, Electric Insurance Company (sometimes
individually herein referred to as a "Customer" or collectively
as the "Customers"), Robert Plan, Material Damage Adjustment
Corporation, Lion Insurance Company and National Consumer
Insurance Company (sometimes herein individually called a
"Releasee" or collectively, the "Releasees") pursuant to which
Seller is inducing the Customers (i) to release Seller from
existing insurance services contracts between Seller and each
such Customer (the "Services Contracts"), and (ii) to enter into
new insurance services contracts with Purchaser on revised terms
(the "New Services Contracts"), and pursuant to which Seller and
the Releasees are settling certain lawsuits among them.
NOW, THEREFORE, in consideration of the covenants and
agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets.
--------------------------- Subject to the terms
and conditions hereof, on the Closing Date (as hereinafter
defined), Seller agrees to and shall sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser agrees to and
shall acquire from Seller, all of Seller's right, title and
interest in and to the properties, assets and rights comprising,
relating to or used in the Business (said properties, assets and
rights being referred to collectively as the "Purchased Assets"),
said Purchased Assets being listed below:
(a) all tangible personal property, equipment and
computer hardware (collectively, the "Equipment") as listed and
described on Schedule 1.1(a) hereto;
(b) all books, records and files or other
documentation as listed and described on Schedule 1.1(b) hereto;
(c) all methods of operation and manuals, patents,
trademarks, trade names, trade secrets, know-how and all other
intellectual property of Seller, and all applications for the
same, as listed and described on Schedule 1.1(c) hereto;
(d) all technology, computer programs, computer
software, source codes and master disks containing such codes,
licenses, permits and other proprietary information of Seller,
and all technology and know-how agreements, and licensing
arrangements, as listed and described on Schedule 1.1(d) hereto;
(e) the lease for real property (the "Lease") and the
leases for personal property ("Personal Property Leases") as
listed and described on Schedule 1.1(e) hereto (collectively the
"Leases");
(f) all customer contracts, franchise agreements, as
listed on Schedule 1.1(f) hereto, the Personal Property Leases,
as listed and described on Schedule 1.1(e) hereto, those certain
data processing contracts set forth and described on Exhibit A
hereto (the "Data Processing Contracts"), and all permits (all of
which contracts and agreements are hereinafter collectively
referred to as the "Assigned Contracts"); and
(g) all customer lists and vendor lists as listed on
Schedule 1.1(g) hereto, including all goodwill related to the
Business.
1.2 Excluded Assets.
--------------- The Purchased Assets shall
exclude all other assets of Seller not identified in Section 1.1
hereof or on the Schedules referred to therein, and Seller shall
retain all of its right, title and interest in and to all of, and
shall not transfer to Purchaser, such assets, rights and
properties, including, without limitation, the following (said
assets being referred to collectively as the "Excluded Assets"):
(a) all investments and cash on hand or in transit and
in the bank accounts of Seller;
(b) Seller's right to any refund of any tax, charge,
fee, duty, levy or other assessment, including income, gross
receipts, net proceeds, ad valorem, turnover, real and personal
property, sales, use, franchise, excise, value added, stamp,
leasing, lease, user, equalization, windfall profits, severance,
employees' income withholding, unemployment and Social Security
taxes and other withholding taxes, which are imposed by any
Governmental Authority (as defined in Section 3.1(b) herein), and
including any interest, penalties or additions to tax
attributable thereto;
(c) all billed and unbilled costs and accounts, notes,
fees, commissions, and all other receivables payable to Seller in
respect of insurance services rendered by Seller prior to the
Closing Date, including, but not limited to, those accounts and
receivables listed on Schedule 1.2(c) hereto;
(d) all of Seller's right to the LAD Servicing Carrier
security deposit in the amount of $250,000 required by the State
of New Jersey Department of Insurance, including any interest
thereon;
(e) all of Seller's rights in COVER-ALL Systems, Inc.,
Warner Information Technologies, Inc., Alerion Insurance Company
and all insurance policies; and
(f) all of the furniture, fixtures and equipment
listed and described on Schedule 1.2(f) hereto.
1.3 Assumption of Liabilities and Obligations by
--------------------------------------------
Purchaser.
--------- On the Closing Date, Purchaser shall (i) pursuant to
the Assignment and Assumption Agreement in, or substantially in,
the form annexed hereto as Exhibit C (the "Assignment and
Assumption Agreement"), assume and agree to pay, perform and
discharge when due the liabilities and obligations of Seller
under the Assigned Contracts and the liability of Seller to pay
the accrued vacation pay in an aggregate amount of $167,000 with
respect to the employees listed on Schedule 1.3 hereto (the
"Additional Liability"); and (ii) pursuant to the Assignment and
Assumption of Lease, in, or substantially in, the form annexed
hereto as Exhibit D (the "Assignment and Assumption of Lease"),
assume and agree to pay, perform and discharge when due the
liabilities and obligations of Seller under the real property
Lease listed and described on Schedule 1.1(e) hereto; provided,
--------
however, that Purchaser shall not be obligated to assume on the
-------
Closing Date, the Lease or any Assigned Contract or other
obligation of Seller, which, in Purchaser's reasonable opinion
(i) requires by agreement or law the written consent of any party
thereto for assignment and assumption to be fully effective, if
such written consent has not been duly obtained and delivered, or
(ii) is not the subject of a written "estoppel letter" of each
party thereto other than Seller stating that there is no material
default by Seller thereunder or with respect thereto known to
such party or believed by such party to exist, or waiving the
same. Seller agrees that on the Closing Date, Seller shall make
a cash payment to Purchaser in the amount of $67,000 which sum
shall be applied by Purchaser towards its obligation to pay the
full amount of the Additional Liability as the same shall become
due and payable by Purchaser from time to time following the
Closing Date.
1.4 Liabilities and Obligations not Assumed by
------------------------------------------
Purchaser.
--------- Except as specifically and expressly provided for in
this Agreement, Purchaser shall not, by any agreement,
circumstance or operation of law, become primarily or secondarily
obligated or liable for, nor will it assume or be required to
pay, perform, or discharge any obligation of Seller (whether or
not disclosed, contingent, material or otherwise, and whether or
not incidental to or associated with any asset, the Business, or
any other business of Seller). Without limiting the generality
of the foregoing, Purchaser shall not be liable for or assume (i)
any federal, state or local tax imposed upon or payable by Seller
as a result of any sale or transaction, or with respect to any
period or the income earned therein; (ii) any obligation of
Seller based upon events occurring, acts taken, or services
performed prior to the Closing Date (notwithstanding the date of
claim therefor or thereon); (iii) any obligation to make any
refund, payment or adjustment relating to or retroactive to any
period prior to the Closing Date; and (iv) any obligation for
employment or related acts, omissions, policies or practices of
Seller prior to or after the Closing Date. Seller shall pay and
file any returns for any sales, use, or similar transaction tax,
imposed upon any sale, assignment or assumption contemplated
hereunder. Except as expressly and specifically provided for in
this Agreement, there are no third party beneficiaries of this
Agreement or of any instrument delivered to Seller hereunder.
Seller further agrees that, following the Closing Date, it shall
incur and pay all moving costs and refurbishing expenses relating
to the relocation of furniture, fixtures, related equipment and
employees of COVER-ALL Systems, Inc. and of Seller not related to
the Business from the leasehold premises located at 17-01 Pollitt
Drive, which premises are being taken over by Purchaser on the
Closing Date, to the leasehold premises located at 18-01 Pollitt
Drive; provided, however, that in no event shall Seller be liable
-------- -------
for the payment of any moving or other related costs and expenses
in connection with establishing Purchaser's ISG operation at the
leasehold premises located at 17-01 Pollitt Drive including, but
not limited to, relocating the ISG employees hired by Purchaser
and related furniture, fixtures and equipment from the leasehold
premises located at 18-01 Pollitt Drive and the leasehold
premises located in Somerset, New Jersey to the leasehold
premises located at 17-01 Pollitt Drive.
ARTICLE 2
CLOSING; CONSIDERATION FOR TRANSFER OF PURCHASED ASSETS
2.1 Closing Date.
------------ The closing of the transactions
provided for herein (the "Closing") will take place on March 1,
1996 at 10:00 A.M. at the offices of Reid & Priest LLP, 40 West
57th Street, New York, New York 10019 or on such other date and
at such other time as the parties may mutually agree upon (the
"Closing Date").
2.2 Consideration for Transfer of Purchased Assets.
----------------------------------------------
In consideration of the execution and delivery of the
Restructuring Agreement by Seller, Robert Plan and the other
parties thereto, of the Mutual General Release by each of the
Releasees, in the form annexed to the Restructuring Agreement as
Exhibit D, of the settlement and dismissal of certain Lawsuits
among Seller and the Releasees, pursuant to the Stipulation, in
the form annexed to the Restructuring Agreement as Exhibit C, of
Purchaser and Customers entering into the New Service Contracts,
and in consideration of the Purchaser and Robert Plan executing
and delivering this Agreement and performing its obligations
hereunder, Seller shall transfer and deliver the Purchased Assets
to the Purchaser.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller.
---------------------------------------- In
order to induce Purchaser to enter into and perform this
Agreement, Seller hereby represents and warrants to Purchaser, as
of the date of this Agreement and as of the Closing Date, as
follows:
(a) Due Incorporation; Authority.
---------------------------- Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Seller has all
requisite power and authority to own, lease and operate its
properties and to conduct its business as currently conducted,
and to execute, deliver and perform this Agreement and all of the
other agreements to be executed by it in connection with or
pursuant to this Agreement, including the assumption and transfer
documents required hereunder (all collectively, the "Related
Agreements"). Seller is qualified to do business and is in good
standing as a foreign corporation in the jurisdictions set forth
on Schedule 3.1(a) hereto, which are the jurisdictions in which
the character and location of the Purchased Assets, or the nature
of the Business transacted by it, or both, require such
qualification.
Seller's execution, delivery, and performance of this
Agreement and the Related Agreements have been duly and validly
authorized by all necessary corporate action on the part of
Seller. This Agreement has been duly executed and delivered by
Seller and this Agreement constitutes, and when executed and
delivered by Seller, each of the Related Agreements will
constitute, the legal, valid and binding obligations of Seller,
enforceable in accordance with their respective terms against
Seller, except to the extent that such validity, binding effect
or enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and by
general equitable principles.
(b) No Restrictions Against Performance.
----------------------------------- Except as
set forth on Schedule 3.1(b) hereto, neither the execution and
delivery of this Agreement or the Related Agreements by Seller,
nor the performance of the obligations of Seller hereunder or
thereunder, nor the consummation of the transactions contemplated
in this Agreement or in the Related Agreements will, with or
without the giving of notice or the passage of time, or both,
violate any provisions of, conflict with, result in a breach of,
constitute a default under, or result in the creation or
imposition of any Lien or condition under, (i) Seller's
Certificate of Incorporation, as amended, or By-Laws, as amended;
(ii) any federal, state or local law, statute, ordinance,
regulation or rule, which is or may be applicable to Seller or to
any of the Purchased Assets; (iii) any contract, indenture,
instrument, agreement, mortgage, lease, right or other obligation
or restriction to which Seller is a party or by which Seller or
any of the Purchased Assets is or may be bound; or (iv) any
order, judgment, writ, injunction, decree, license, franchise,
permit or other authorization of any federal, state or local
court, arbitration tribunal or governmental agency (collectively,
a "Governmental Authority") by which Seller or any of the
Purchased Assets is or may be bound. The execution and delivery
of this Agreement and the Related Agreements by Seller and the
performance by Seller of the transactions contemplated herein and
therein will not constitute an act of bulk sale, bankruptcy,
preference, insolvency or fraudulent conveyance under any
bankruptcy act or other law for the protection of debtors or
creditors.
(c) Third-Party and Governmental Consents.
------------------------------------- Except as
set forth on Schedule 3.1(c) hereto, no approval, consent,
waiver, order or authorization of, or registration,
qualification, declaration, or filing with, or notice to, any
Governmental Authority or other third party is required on the
part of Seller in connection with the execution and delivery of
this Agreement or the Related Agreements, or the consummation of
the transactions contemplated hereby or thereby.
(d) Validity of Lease and Assigned Contracts.
---------------------------------------- The
Lease and the Assigned Contracts are valid and in full force and
effect and constitute the legal, valid and binding obligations of
Seller and the other parties thereto, enforceable against the
other parties thereto in accordance with their respective terms,
and there are no existing violations or defaults by Seller and no
event, act or omission has occurred which (with or without notice
or lapse of time or both) would result in a violation or default
thereunder. No other party to the Lease or any Assigned Contract
has asserted the right, and no basis exists for the assertion of
any enforceable right, to renegotiate, or cancel or terminate
prior to the full term thereof, any of the terms or conditions of
the Lease or any of the Assigned Contracts, nor does Seller have
any knowledge that any party to the Lease or any of the Assigned
Contracts intends not to renew such Lease or Assigned Contract
upon termination of its current term. Except as set forth on
Schedule 3.1(d) hereto, all of Seller's rights to and under the
Lease and the Assigned Contracts are fully and freely assignable
by Seller to Purchaser and no consent of any party to the Lease
or any of the Assigned Contracts is required for the execution,
delivery or performance by Seller of this Agreement or the
consummation by Seller of the transactions contemplated hereby.
Seller has heretofore delivered to Purchaser true, correct and
complete copies of the Lease and all of the Assigned Contracts.
Seller has not failed to perform any Assigned Contract in such a
prudent, timely, systematic and workmanlike manner as would cause
Purchaser in its performance thereof and as contemplated by this
Agreement, to incur material, unusual or extraordinary
obligations to cure or rectify such failure.
(e) Title to the Purchased Assets.
----------------------------- Except as
otherwise identified on Schedule 3.1(e) hereto, Seller has, and
pursuant to this Agreement will convey, sell, transfer, assign
and deliver to Purchaser, all Seller's title, and good, valid,
marketable, legal and beneficial title to all of the Purchased
Assets, free and clear of all liens, liabilities, claims,
security interests, mortgages, pledges, agreements, obligations,
restrictions, options or other encumbrances of any nature
whatsoever, whether absolute, legal, equitable, accrued,
contingent or otherwise, including, without limitation, any
rights of first refusal as to any of the Purchased Assets
(collectively, "Liens"). There are no outstanding options,
warrants, commitments, agreements or any other rights of any
character, entitling any person or entity other than Purchaser to
acquire any interest in all, or any part of, the Purchased
Assets. All Seller's leasehold or other executory interests in
and to the Purchased Assets are fully and freely assignable,
except as set forth in Schedule 3.1(e) hereto.
(f) Trademark Rights; Proprietary Information.
-----------------------------------------
Schedule 1.1(c) and Schedule 1.1(d) hereto contain a true,
correct and complete list of all patents, trademarks, trade
names, service marks, copyrights (including any registrations of
or pending applications for any of the foregoing), methods of
operation and manuals, trade secrets, customer lists, computer
programs, computer software, master disk of source codes,
licenses, royalty or other agreements relating thereto and all
other intangible assets, properties and rights used by Seller in
the conduct of the Business or any part of the Purchased Assets
(collectively, the "Intellectual Property"). Except as disclosed
on Schedule 3.1(f) hereto:
(i) all of the Intellectual Property is owned by Seller
free and clear of all Liens, and is not subject to any license,
royalty or other agreement;
(ii) none of the Intellectual Property has been or is the
subject of any pending or threatened litigation or claim of
infringement;
(iii) the Purchased Assets do not infringe any patent,
trademark, service mark, trade name, copyright, trade secret or
confidential or proprietary rights of another, and Seller has not
received any notice contesting Seller's right to use any
Intellectual Property;
(iv) Seller has not granted any license or agreed to pay or
receive any royalty in respect of any Intellectual Property; and
(v) Seller owns or possesses adequate rights in perpetuity
in and to all Intellectual Property necessary to conduct the
Business.
(g) Litigation.
---------- Except as set forth on Schedule
3.1(g), there is no judicial or administrative action, suit or
proceeding pending or threatened against or relating to Seller,
the Purchased Assets or the transactions contemplated hereby,
before any federal, state or local court, arbitration tribunal or
Governmental Authority, which could or might, individually or in
the aggregate, materially adversely affect Seller, the Purchased
Assets or the transactions contemplated hereby, and Seller is not
aware of any facts or circumstances which may give rise to any of
the foregoing. There are no claims, actions, suits, proceedings
or investigations pending or threatened by or against Seller with
respect to this Agreement or the Related Agreements, or in
connection with the transactions contemplated hereby or thereby,
and Seller has no reason to believe there is a valid basis for
any such claim, action, suit, proceeding or investigation.
Seller is not the subject of any order, judgment, decree,
injunction or stipulation of any court or other Governmental
Authority.
(h) Compliance with Laws; Permits.
----------------------------- During the three
(3) year period preceding the date hereof, Seller has complied in
all material respects with all applicable federal and state
domestic and foreign laws, rules, regulations, judgments, orders
and other legal requirements (including, but not limited to,
those relating to environmental, safety and labor matters)
affecting the Business. Schedule 3.1(h) hereto sets forth a
true, correct and complete list of all permits, licenses,
franchises, orders, certificates and approvals (collectively, the
"Permits") of any federal, state or local regulatory or
Governmental Authority relating to the Purchased Assets or the
Business. The Permits constitute all permits, licenses,
franchises, orders, certificates and approvals which are required
for the lawful operation of the Business and the operation of the
Purchased Assets. Seller is in compliance in all material
respects with all such Permits and Seller owns or has owned or
had valid Permits to use all properties, tangible or intangible,
necessary for the conduct of the Business and the operation of
the Purchased Assets in the manner in which they are presently
conducted and operated. Except for the LAD Servicing Carrier
security deposit in the amount of $250,000, required by the State
of New Jersey Department of Insurance in connection with
performing services as a LAD Servicing Carrier, which is an
Excluded Asset pursuant to Section 1.2(d) hereof, and except as
otherwise disclosed on Schedule 3.1(h) hereto, all such Permits,
if any, are freely assignable by Seller to Purchaser and will
continue as valid Permits to allow the continuation of the
Business by Purchaser as it is now conducted by Seller, without
interruption, following the Closing and that, to the best of
Seller's knowledge, assignment of such Permits would not require
any bonding or financial qualification of Purchaser nor does
Seller know of any reason why Purchaser would not qualify for
assignment thereof.
(i) Conduct of Business through the Closing Date.
-------------------------------------------- For
the period commencing on the date hereof and ending on the
Closing Date, Seller (i) will conduct the Business in its
ordinary course, but will not increase the rate of salary or
benefits to any employee of ISG or make any unusual or
unnecessary commitments or enter into any leases relating to the
Business, or enter into any data processing or policy or claims
servicing contracts relating to the Business, and will endeavor
to maintain the Business substantially as it is on the date
hereof, and (ii) will not effect any transaction materially
adversely affecting its ability to effect the transactions
contemplated by this Agreement.
(j) Condition and Sufficiency of Purchased Assets.
---------------------------------------------
All of the tangible assets and properties of Seller, whether
owned or leased, relating to the Business or constituting a
portion of the Purchased Assets have been well maintained and are
in good operating condition and repair (with the exception of
normal wear and tear), and are free from defects other than such
minor defects as do not interfere with the intended use thereof
in the conduct of normal operations or adversely affect the
resale value thereof. The Purchased Assets as listed in the
schedules annexed hereto constitute all of the tangible and
intangible assets comprising, related to, or used in the
Business, and all the assets required for the operation of the
Business as presently conducted, except for the LAD Servicing
Carrier security deposit in the amount of $250,000 required by
the State of New Jersey Department of Insurance, which is an
Excluded Asset pursuant to Section 1.2(d) hereof, and except to
the extent of certain real estate leases used in the operation of
the Business which are not being assumed by Purchaser and certain
employees of the Business who will not be offered employment by
Purchaser.
(k) Employees.
--------- Schedule 3.1(k) hereto contains a
true, correct and complete list of all of the employees related
to the Business which Seller currently employs, listing, with
respect to each such employee, the employee number, title and
division.
(l) Solvency of Seller.
------------------ Seller represents and
warrants that it is receiving fair and adequate consideration, as
a result of arms length negotiations, for the transfer of the
Purchased Assets as set forth in Section 2.2 hereof. Seller
further represents and warrants that its current net worth
deficit should be decreased as a result of the consummation of
the transactions contemplated by this Agreement and the
Restructuring Agreement, and that Seller currently intends and
believes it will be able to pay its retained liabilities in
accordance with their terms as they mature.
(m) No Misstatements or Omissions.
----------------------------- No representation
or warranty made in this Agreement or on any Schedule hereto by
Seller is false or misleading as to any material fact, or omits
to state a material fact required to make any of the statements
made herein or therein not misleading in any material respect.
All of the Schedules hereto applicable to Seller will constitute
representations and warranties by Seller herein. All
representations, covenants and warranties made by or on behalf of
Seller in this Agreement will be deemed to have been relied upon
by Purchaser (notwithstanding any investigation by Purchaser).
3.2 Representations and Warranties of Purchaser.
------------------------------------------- In
order to induce Seller to enter into and perform this Agreement,
Purchaser hereby represents and warrants to Seller, as of the
date of this Agreement and as of the Closing Date, as follows:
(a) Due Incorporation; Authority.
---------------------------- Purchaser is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey. Purchaser
has all requisite power and authority to own, lease and operate
its properties and to conduct its business as currently
conducted, and to execute, deliver and perform this Agreement
and, as appropriate, the Related Agreements.
Purchaser's execution, delivery, and performance of
this Agreement and the Related Agreements have been duly and
validly authorized by all necessary corporate action on the part
of Purchaser. This Agreement has been duly executed and
delivered by Purchaser and this Agreement constitutes, and each
of the Related Agreements when executed and delivered by
Purchaser, will constitute, the legal, valid and binding
obligations of Purchaser, enforceable in accordance with their
respective terms against Purchaser, except to the extent that
such validity, binding effect or enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting creditors' rights generally from time to
time in effect and by general equitable principles.
(b) No Restrictions Against Performance.
----------------------------------- Neither the
execution and delivery of this Agreement or, as appropriate, the
Related Agreements by Purchaser, nor the performance of the
obligations of Purchaser hereunder or thereunder, nor the
consummation of the transactions contemplated in this Agreement
or in the Related Agreements will, with or without the giving of
notice or the passage of time, or both, violate any provisions
of, conflict with, result in a breach of, constitute a default
under, or result in the creation or imposition of any Lien or
condition under, (i) Purchaser's Certificate of Incorporation or
By-Laws; (ii) any federal, state or local law, statute,
ordinance, regulation or rule, which is or may be applicable to
Purchaser; (iii) any contract, indenture, instrument, agreement,
mortgage, lease, right or other obligation or restriction to
which Purchaser is a party or by which Purchaser is or may be
bound; or (iv) any order, judgment, writ, injunction, decree,
license, franchise, permit or other authorization of any
Governmental Authority by which Purchaser is or may be bound.
(c) No Misstatements or Omissions.
----------------------------- No representation
or warranty made in this Agreement or on any Schedule hereto by
Purchaser is false or misleading as to any material fact, or
omits to state a material fact required to make any of the
statements made herein or therein not misleading in any material
respect. Schedule 4.2(d) hereto constitutes representations and
warranties by Purchaser herein. All representations, covenants
and warranties made by or on behalf of Purchaser in this
Agreement will be deemed to have been relied upon by Seller
(notwithstanding any investigation by Seller).
ARTICLE 4
COVENANTS
4.1 Covenants of Seller.
-------------------
(a) Implementing Agreement.
---------------------- Subject to the terms and
conditions hereof, Seller shall use its best efforts to take all
actions required of it to fulfill its obligations under the terms
of this Agreement and to consummate the transactions contemplated
hereby.
(b) Further Assurances.
------------------ Seller shall, without further
consideration, execute and deliver following the execution and
delivery of this Agreement such other instruments of transfer and
take such other actions as Purchaser may reasonably request in
order to put Purchaser in possession of, and to vest in
Purchaser, the warranted title to the Purchased Assets in
accordance with this Agreement and to consummate the transactions
contemplated hereby.
(c) Consents and Approvals.
---------------------- Seller shall, prior to
the Closing Date, obtain all consents, approvals, certificates
and other documents required in connection with the performance
by Seller of this Agreement and the consummation of the
transactions contemplated hereby, including all such consents and
approvals referred to in Schedule 3.1(d) as required under the
Lease or any of the Assigned Contracts. Seller shall make all
filings, applications, statements and reports to all Governmental
Authorities and other persons which are required to be made prior
to the Closing Date by or on behalf of Seller pursuant to any
applicable law, contract or lease in connection with this
Agreement and the transactions contemplated hereby.
(d) Concurrent Execution.
-------------------- Seller covenants and agrees
to enter into the Restructuring Agreement, and pursuant to the
Restructuring Agreement and as required thereby, on the Closing
Date, to execute the Stipulation, the Mutual General Release, the
CWP Assignment and the Services Contract Releases.
(e) Employees of Seller.
------------------- Seller covenants and agrees
that it will not offer continued employment on terms and
conditions more favorable than those offered by Purchaser to any
current employees of Seller selected by Purchaser for hire by
Purchaser for the purpose of enabling Purchaser to carry on the
Business as previously carried out by Seller.
(f) Relocation of Premises.
---------------------- Seller covenants and
agrees, promptly following the Closing Date, to move certain
furniture, fixtures, equipment and employees from the leasehold
premises located at 17-01 Pollitt Drive to the leasehold premises
located at 18-01 Pollitt Drive and to cooperate with Purchaser as
to the time and manner in which said relocation is accomplished.
4.2 Covenants of Purchaser and Robert Plan.
--------------------------------------
(a) Implementing Agreement.
---------------------- Subject to the terms and
conditions hereof (i) Purchaser shall take all actions required
of it to fulfill its obligations under the terms of this
Agreement and to consummate the transactions contemplated hereby,
and (ii) Robert Plan shall use its best efforts to take all
actions required of it pursuant to the terms hereof, to cause
Purchaser to execute and deliver this Agreement, to perform its
obligations at the Closing as provided in the Agreement, and to
extend its employee benefits to employees of ISG which are hired
by Purchaser pursuant to the provisions of Section 4.2(e) hereof.
(b) Further Assurances.
------------------ Each of Purchaser and Robert
Plan shall, without further consideration, execute and deliver,
following the Closing Date, such other instruments of transfer
and take such other actions as Seller may reasonably request in
order to put Purchaser in possession of, and to vest in
Purchaser, good, valid, and unencumbered title to the Purchased
Assets in accordance with this Agreement and to consummate the
transactions contemplated hereby; provided, however, that nothing
-------- -------
herein shall require that Robert Plan guarantee or otherwise
undertake any financial or operating obligations of Purchaser.
(c) Concurrent Execution.
-------------------- Robert Plan covenants and
agrees to enter into the Restructuring Agreement and to cause its
affiliated companies, Material Damage Adjustment Corporation,
Lion Insurance Company and National Consumer Insurance Company,
to enter into the Restructuring Agreement, and pursuant to the
Restructuring Agreement and as required thereby, on the Closing
Date, to execute, and to cause said affiliated companies to
execute, the Stipulation, the Mutual General Release and the CWP
Assignment.
(d) New Service Contracts.
--------------------- Purchaser covenants and
agrees to enter into the New Services Contracts with the
Customers of Seller on or before the Closing Date.
(e) Employees of Seller.
------------------- Purchaser agrees, for
Seller's benefit only, that each individual who is offered and
accepts an offer of employment from Purchaser (a "Transferred
Employee") shall, subject to good conduct, (i) for the six (6)
month period following the Closing Date be entitled to be paid a
salary equal to no less than the rate of salary paid to such
individual by Seller immediately prior to the Closing Date; and
(ii) for the six (6) month period following the Closing Date,
each Transferred Employee shall be eligible to participate in any
now existing employee benefit plan of Purchaser and/or Robert
Plan for similarly situated employees of a subsidiary of Robert
Plan, in substantially the same manner and to the same extent as
such Transferred Employee participates in a similar plan of
Seller as of the date hereof. For purposes of eligibility to
participate in, calculation of, and vesting of benefits under,
such employee benefit plans sponsored by Purchaser and/or Robert
Plan for its employees, service performed by a Transferred
Employee for Seller prior to the Closing Date shall be considered
as performed for Purchaser to the extent allowed by such employee
benefit plan.
(f) Access to Records.
----------------- For a period of six (6) years
from the Closing Date, Purchaser shall allow Seller access to all
records related to the Business or the Purchased Assets in
periods prior to the Closing which are transferred to Purchaser
by Seller at the Closing and Purchaser further agrees to maintain
and not to destroy such records for said six (6) year period
until specifically instructed to do such by Seller, including
without limitation, (i) inventory, maintenance and asset history
records, (ii) all customer lists and telephone numbers with
respect to past or present customers of Seller in the Business
and all related sales and credit records, (iii) all employee
lists and telephone numbers used in the Business and all other
documentation relating to the Purchased Assets and (iv) all
records, documentation, computer tapes, cartridges, microfilm and
imaging records containing data relating to policy processing
work and claims work performed by Seller prior to the Closing
Date for the former customers of Seller listed on Schedule 4.2(f)
hereto. The parties hereto acknowledge that the access to
records provided herein by Purchaser to Seller is (i) for income
tax purposes of Seller and (ii) for the purpose of enabling
Seller to perform residual requests for documentation by former
customers of Seller in respect of services performed by Seller
prior to the Closing Date and to allow Seller to represent itself
with respect to claims of former customers, relating to services
performed by Seller prior to the Closing Date, and not for the
transfer thereof to Seller or for any other use by Seller.
(g) Relocation of Premises.
---------------------- Purchaser covenants and
agrees, promptly following the Closing Date, to move the ISG
operation to the leasehold premises located at 17-01 Pollitt
Drive and to cooperate with Seller so that the relocation of said
ISG operation is undertaken at such time and accomplished in such
manner so as to cause a minimum of disruption to the operations
of Seller.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to Obligations of Purchaser.
------------------------------------------------
This Agreement and the obligations of Purchaser to perform
hereunder at the Closing are subject to the satisfaction by
Seller, or the waiver in writing by Purchaser, of the following
conditions at or prior to the Closing Date:
(a) Corporate Authorization.
----------------------- Seller shall have
delivered to Purchaser certified copies of the resolution(s) of
the Board of Directors of Seller authorizing the execution,
delivery and performance of this Agreement, the Related
Agreements and the consummation of the transactions contemplated
hereby and thereby.
(b) Representations and Warranties True; Covenants
----------------------------------------------
Satisfied.
---------. All representations and warranties of Seller
contained in this Agreement and in the Schedules hereto shall be
true and correct in all material respects commencing as of the
date hereof and ending with and on the Closing Date as though
made on and as of the Closing Date. Seller shall have performed
and complied with all of its respective covenants and obligations
under this Agreement in all material respects.
(c) Third-Party Consents.
-------------------- Seller shall have obtained
and delivered to Purchaser all necessary consents and approvals
of Governmental Authorities or third parties to permit Seller to
sell the Purchased Assets, including such consents of parties to
the Leases, the Assigned Contracts and the Data Processing
Contracts as required under Section 3.1(d) hereof.
(d) Execution of New Services Contracts with
----------------------------------------
Customers.
--------- The Customers of Seller shall have entered into the
New Services Contracts pursuant to the provisions of the
Restructuring Agreement.
(e) Restructuring Agreement.
----------------------- A closing with respect
to the Restructuring Agreement shall have been held, in all
material respects, as provided therein, and all parties thereto
shall, in all material respects, have performed all acts required
thereby to be performed at such closing and to the closing date.
(f) Deliveries.
---------- Seller shall have delivered to
Purchaser each of the documents specified in Section 6.1 hereof.
(g) Concurrent Execution.
-------------------- Robert Plan shall have
entered into the Restructuring Agreement of even date herewith,
and shall have, pursuant to the Restructuring Agreement and as
required thereby, on the Closing Date, execute the Stipulation
and the Mutual General Release.
5.2 Conditions Precedent to Obligations of Seller.
---------------------------------------------
This Agreement and the obligations of Seller to perform hereunder
are subject to the satisfaction by Purchaser and Robert Plan, or
waiver in writing by Seller, of the following conditions at or
prior to the Closing Date:
(a) Corporate Authorization.
----------------------- Purchaser shall have
delivered to Seller certified copies of the resolution(s) of the
Board of Directors of Purchaser authorizing the execution,
delivery and performance of this Agreement and the Related
Agreements and the consummation of the transactions contemplated
hereby and thereby.
(b) Representations and Warranties True; Covenants
----------------------------------------------
Satisfied.
--------- All representations and warranties of Purchaser and
Robert Plan contained in this Agreement and in the Schedules
hereto shall be true and correct in all material respects
commencing as of the date hereof and ending with and on the
Closing Date as though made on and as of the Closing Date.
Purchaser and Robert Plan shall have performed and complied with
all of their respective covenants and obligations under this
Agreement in all material respects.
(c) Execution of New Services Contracts with
----------------------------------------
Customers.
--------- Purchaser shall have entered into the New Services
Contracts with certain of the Customers of Seller pursuant to the
provisions of the Restructuring Agreement.
(d) Restructuring Agreement.
----------------------- A closing with respect
to the Restructuring Agreement shall have been held, in all
material respects, as provided therein, and all parties thereto
shall, in all material respects, have performed all acts required
thereby to be performed at such closing and to the closing date.
(e) Deliveries.
---------- Purchaser shall have delivered to
Seller each of the documents specified in Section 6.2 hereof.
ARTICLE 6
DELIVERIES
6.1 Seller's Deliveries.
------------------- In addition to any other
documents or agreements required under this Agreement, on or
before the Closing Date, Seller shall deliver to Purchaser the
following:
(a) the Bill of Sale in, or substantially in, the form
annexed hereto as Exhibit B;
(b) the Assignment and Assumption Agreement, in, or
substantially in, the form annexed hereto as Exhibit C, pursuant
to which Seller will assign to Purchaser all of Seller's rights
in and under each Assigned Contract being assigned to Purchaser
as provided for herein;
(c) the Assignment and Assumption of Lease, in, or
substantially in, the form annexed hereto as Exhibit D, pursuant
to which Seller will assign to Purchaser all of Seller's rights
in and under the real property Lease being assigned to Purchaser
as provided for herein;
(d) such other assignments and other instruments of
transfer and conveyance, in form and substance reasonably
satisfactory to Purchaser's counsel, as shall be effective to
vest in Purchaser the warranted title to all of the Purchased
Assets;
(e) all of the Purchased Assets as described in
Section 1.1 hereto and the Schedules thereto;
(f) a certificate dated the Closing Date, executed by
an executive officer of Seller, certifying as to the accuracy of,
or compliance by Seller with, all representations, warranties and
covenants of Seller as set forth herein;
(g) copies of all consents and approvals obtained, and
registrations, qualifications, declarations, filings and notices
made by Seller pursuant to Section 5.1(c) hereto;
(h) a certificate dated the Closing Date, executed by
the secretary or assistant secretary of Seller, certifying
resolutions of the Board of Directors approving and authorizing
the execution, delivery and performance by Seller of this
Agreement, the Related Agreements, and the consummation of the
transactions contemplated hereby and thereby; and
(i) a legal opinion, dated as of the Closing Date, of
Reid & Priest LLP, counsel to Seller, and addressed to Purchaser,
in the form set forth in Exhibit E annexed hereto.
6.2 Purchaser's/Robert Plan's Deliveries.
------------------------------------ In addition
to any other documents or agreements required under this
Agreement, on or before the Closing Date, Purchaser and/or Robert
Plan shall deliver to Seller the following:
(a) the Assignment and Assumption Agreement, in, or
substantially in, the form annexed hereto as Exhibit C;
(b) a certificate dated the Closing Date, executed by
an executive officer of each of Purchaser and Robert Plan,
certifying as to the accuracy of, or compliance by each of
Purchaser and Robert Plan with, the respective representations,
warranties and covenants of Purchaser and Robert Plan as set
forth herein; and
(c) a certificate dated the Closing Date, executed by
the secretary or assistant secretary of Purchaser, certifying
resolutions of the Board of Directors approving and authorizing
the execution, delivery and performance by Purchaser of this
Agreement, and as appropriate, the Related Agreements, and the
consummation of the transactions contemplated hereby.
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Seller.
------------------------- Seller agrees to
defend, indemnify and hold Purchaser and any subsidiary or
affiliate thereof, (the "Indemnified Purchaser Group"), harmless
from and against any and all losses, liabilities, damages,
claims, suits, costs or expenses (including reasonable attorneys'
fees, penalties and interest) actually, or asserted by a third-
party to be, resulting from, arising out of, or incurred as a
result of (a) the breach of any representation made by Seller
herein or in accordance herewith; (b) the breach of any warranty
or covenant made by Seller herein or in accordance herewith; (c)
any claim, whether made before or after the date of this
Agreement, or any litigation, proceeding or governmental
investigation, whether commenced before or after the date of this
Agreement, arising out of the Business prior to the Closing Date,
or otherwise arising out of any act or occurrence prior to, or
any state of facts existing as of, the Closing Date (regardless
of whether or not referred to on a Schedule to this Agreement or
otherwise disclosed or known to Purchaser or any of the
Customers); or (d) the failure of Seller to pay, perform or
discharge any of Seller's obligations, liabilities, agreements or
commitments not assumed by Purchaser pursuant to the provisions
of this Agreement.
7.2 Indemnification by Purchaser.
---------------------------- Purchaser agrees to
defend, indemnify and hold Seller and any subsidiary or affiliate
thereof (the "Indemnified Seller Group") harmless from and
against any and all losses, liabilities, damages, claims, suits,
costs, or expenses (including reasonable attorneys' fees,
penalties and interest) actually, or asserted by a third-party to
be, resulting from, arising out of, or incurred as a result of
(a) the breach of any representation made by Purchaser herein or
in accordance herewith; (b) the breach of any warranty or
covenant made by Purchaser herein or in accordance herewith; (c)
any claim or any litigation, proceeding or governmental
investigation, commenced after the date of this Agreement arising
out of the operations of the Business by Purchaser; or (d) the
failure of Purchaser to pay, perform or discharge the Lease, any
of the Assigned Contracts or any Additional Liability assumed by
Purchaser pursuant to Section 1.3 hereof.
7.3 Survival of Covenants and Warranties.
------------------------------------
Notwithstanding anything to the contrary set forth herein, the
representations, warranties, covenants and agreements made by
Seller, on the one hand, and Purchaser, on the other hand, shall
survive the execution of this Agreement.
7.4 Notice of Claims.
---------------- Each of Purchaser and Seller
agrees to give prompt written notice to the other of any claim
against the party giving notice which might give rise to a claim
by it or them against the other party hereto based upon the
indemnity provisions contained herein, stating the nature and
basis of the claim and the actual or estimated amount thereof;
provided, however, that failure to give such notice will not;
-------- -------
affect the obligation of the indemnifying party to provide
indemnification in accordance with the provisions of this Article
7 unless, and only to the extent that, such indemnifying party is
actually prejudiced thereby. In the event that any action, suit
or proceeding is brought against any member of the Indemnified
Seller Group or the Indemnified Purchaser Group with respect to
which any party hereto may have liability under the
indemnification provisions contained herein, the indemnifying
party shall have the duty, at his or its sole cost and expense,
to defend such action in the name or on behalf of the indemnified
party and, in connection with any such action, suit or
proceeding, the parties hereto agree to render to each other such
assistance as may reasonably be required in order to ensure the
proper and adequate defense of any such action, suit or
proceeding; provided, however, that an indemnified party shall
-------- -------
have the right to retain its own counsel, with the fees and
expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate because of actual or
potential differing interests between such indemnified party and
any other party represented by such counsel. If the indemnifying
party shall undertake to defend such action, suit or proceeding,
or to compromise any such asserted liability, it shall promptly
notify the indemnified party of its intention to do so and
provide the indemnified party with reasonable assurance as to the
ability of the indemnifying party to defend or compromise, as the
case may be, such matter which, with respect to Seller as
indemnifying party, shall include reasonable assurance that
Seller has and will have the financial capability to pay any
judgment or compromise resulting from such asserted liability.
Neither party hereto shall make any settlement of any claim which
might give rise to liability of the other party under the
indemnification provisions contained herein without the written
consent of such other party, which consent such other party
covenants shall not be unreasonably withheld.
ARTICLE 8
GENERAL PROVISIONS
8.1 Successors and Assigns. This Agreement shall be
---------------------- This Agreement shall be
binding upon and inure to the benefit of Seller, Purchaser, and
Robert Plan and their respective successors, representatives and
assigns.
8.2 Waiver.
------ No provision of this Agreement shall be
deemed waived by course of conduct, unless such waiver is made in
a writing signed by all parties hereto stating that it is
intended specifically to modify this Agreement, nor shall any
course of conduct operate or be construed as a waiver of any
subsequent breach of this Agreement, whether of a similar or
dissimilar nature.
8.3 Entire Agreement.
---------------- This Agreement (together with
the Schedules and Exhibits hereto) supersedes any other
agreement, whether written or oral, that may have been made or
entered into by Purchaser, Seller and Robert Plan (or by any
director, officer, agent, or other representative of such
parties) relating to the matters contemplated hereby. This
Agreement, together with the Schedules and Exhibits hereto and
together with the Related Agreements, constitutes the entire
agreement by and among the parties and there are no agreements or
commitments except as expressly set forth herein.
8.4 Notices.
------- Any notice, demand, request, or other
communication required or permitted hereunder shall be in writing
and shall be deemed to have been duly given if delivered by hand,
or sent by certified or registered United States mail, postage
prepaid and return receipt requested, or by prepaid overnight
express service to the respective addresses of the parties as set
forth herein. Any party hereto may by notice so given change its
address for future notice hereunder. Notice shall conclusively
be deemed to have been given when delivered in the manner set
forth above and shall be deemed to have been received when
delivered. Notices shall be sent to the parties at the following
addresses:
(a) If to Seller:
Warner Insurance Services, Inc.
17-01 Pollitt Drive
Fair Lawn, New Jersey 07410
Tel: (201) 794-4800
Fax: (201) 791-9113
Attention: President
with a copy (which shall not constitute notice)
to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Tel: (212) 603-2000
Fax: (212) 603-2001
Attention: Leonard Gubar, Esq.
(b) If to Purchaser:
MDA Services, Inc.
100 Charles Lindbergh Blvd.
Uniondale, New York 11553
Tel: (516) 228-3204
Fax: (516) 228-8211
Attention: Mr. Robert Wallach
If to Robert Plan:
The Robert Plan Corporation
100 Charles Lindbergh Blvd.
Uniondale, New York 11553
Tel: (516) 228-3204
Fax: (516-222-8211
Attention: Mr. Robert Wallach
with a copy (which shall not constitute notice)
to:
Murray & Hollander
400 Park Avenue
New York, New York 10022
Tel: (212) 753-7640
Fax: (212) 753-7113
Attention: Carl Hollander, Esq.
8.5 Amendments, Supplements, Etc.
----------------------------- This Agreement may
be amended or modified only by a written instrument executed by
all parties hereto which states specifically that it is intended
to amend or modify this Agreement.
8.6 Severability.
------------ If any provision of this Agreement
shall be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall
not in any manner affect or render invalid or unenforceable any
other severable provision of this Agreement, and this Agreement
shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
8.7 Applicable Law.
-------------- This Agreement and the legal
relations between the parties hereto shall be governed by and
construed in accordance with the substantive laws of the State of
New York, without giving effect to the principles of conflicts of
law thereof.
8.8 Titles and Headings.
------------------- Titles and headings to
sections hereof are inserted for convenience of reference only
and are not intended to be a part of, or to affect the meaning or
interpretation of, this Agreement.
8.9 Execution in Counterparts.
------------------------- This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
WARNER INSURANCE SERVICES, INC.
By: /s/ Alfred J. Moccia
------------------------------
Name: Alfred J. Moccia
Title: President and Chief Executive
Officer
MDA SERVICES, INC.
By: /s/ Philber A. Nezamoodeen
------------------------------
Name: Philbert A. Nezamoondeen
Title: Executive Vice President
THE ROBERT PLAN CORPORATION
By: /s/ Carl Hollander
------------------------------
Name: Carl Hollander
Title: Secretary
Exhibit 99
"FOR IMMEDIATE RELEASE"
FOR INFORMATION CONTACT:
ALFRED J. MOCCIA
PRESIDENT
WARNER INSURANCE SERVICES, INC.
FOR: WARNER INSURANCE SERVICES, INC.
WARNER INSURANCE SERVICES, INC. ANNOUNCES
THE SETTLEMENT OF LAWSUITS AND CONTRACT DISPUTES WITH
CERTAIN CUSTOMERS OF ITS INSURANCE SERVICES DIVISION AND THE
TRANSFER OF CERTAIN ASSETS OF THAT DIVISION AND NYSE DELISTING
Fair Lawn, NJ - March 4, 1996 -- Warner Insurance Services, Inc.
(NYSE-WCP) today announced that it has entered into a series of
agreements relating to its Insurance Services Division ("ISD")
resulting in the settlement and dismissal of lawsuits with
certain affiliates of The Robert Plan Corporation and the release
of Warner from continuing obligations under certain contracts for
the provision of insurance services to ISD customers. Warner had
been suffering losses and has operated under considerable
uncertainty as a result of the pendency of such lawsuits.
As a part of the transactions, Warner has transferred certain
assets, employees, contracts and leased premises relating to the
ISD to a subsidiary of The Robert Plan Corporation, which is
replacing Warner as the provider of insurance services to the ISD
customers. In exchange for settling the lawsuits, terminating
the contracts and executing the mutual releases, Warner has
issued to certain of the ISD customers and certain parties to the
litigation a total of 3,256,201 shares of Warner Common Stock as
well as five-year Warrants to purchase up to an additional
aggregate of 1,553,125 shares of Warner Common Stock at $2.00 per
share. As a result of the transactions, certain of the ISD
customers and The Robert Plan Corporation currently own
approximately 27.55% of the 11,817,105 shares of Warner Common
Stock now outstanding. Warner has the option, exercisable for a
period of six months, to (i) purchase 50% of the 3,256,201 shares
at a cash price equal to the greater of $3.00 or 50% of the then
market price of a share of Warner Common Stock and (ii) acquire
50% of the 1,553,125 Warrants at a cash price equal to $1.00 per
Warrant.
The settlement does not include the contracts Warner has with one
of its customers, Clarendon National Insurance Company. Warner
hopes to negotiate a satisfactory settlement of this relationship
in the near future.
The effect of the transactions should be to significantly improve
Warner's balance sheet by causing Warner to move from a negative
net worth to a positive net worth position and by putting an end
to the continuing losses resulting from the ISD operations and
the maintenance of the now settled lawsuits.
Warner will now focus on its COVER-ALL software operations, which
management believes has a very favorable outlook for 1996 and
beyond. COVER-ALL, a wholly-owned subsidiary of Warner Insurance
Services, Inc., is a provider of state-of-the-art computer
products for the property casualty insurance industry
specializing in strategic insurance software solutions and
development tools for rating, coding, and issuing policies, as
well as administering clients, claims, direct billing, agency
billing, client billing, agencies, general ledger, and
statistical and financial reporting utilizing the latest client-
server, relational database technology. COVER-ALL continues to
receive strong interest in its newly developed client-server
based administration modules and tools that have been developed
utilizing ORACLE-based products.
Although Warner's financial condition should significantly
improve as a result of the transactions and despite Warner's
efforts to persuade the New York Stock Exchange to the contrary,
the New York Stock Exchange has determined to delist the shares
of Warner Common Stock from trading on the exchange based upon
Warner currently being below New York Stock Exchange continued
listing criteria for net tangible assets and three year average
net income. The first step toward delisting will be the
suspension of trading in Warner Common Stock. Warner has made
application for the listing of its Common Stock on the Nasdaq
SmallCap Market, which may take a number of weeks. In the
interim, Warner is in the process of arranging for market makers
to make a market for its shares in the Nasdaq "pink sheets" so as
to provide a marketplace for investors to trade securities of
Warner. These arrangements may require a few days to complete.
Warner reported losses of $0.98 per share for the nine months
ended September 30, 1995 and expects to report losses for the
fourth quarter of 1995 of approximately $0.23 per share or
approximately $1.21 for the year. The expected 1995 fourth
quarter and 1995 fiscal year results do not reflect certain
adjustments resulting from the transactions announced today. The
transactions announced today will be recognized in the first
quarter of 1996. Current projections for COVER-ALL indicate that
it should break even for the 1996 fiscal year and have an ongoing
positive cash flow.
