Assurant 2005 Annual Report Download - page 28

Shareholders’ Agreement and Corporate Governance Arrangements
We entered into a Shareholders’ Agreement with Fortis dated as of February 10, 2004 (the “Shareholders’ Agreement”) in connection with
our initial public offering which provided that, among other things, so long as Fortis owned at least 10% of our Common Stock, Fortis would
have the right to nominate two designees to our Board of Directors. The Fortis director designees are Michel Baise and Gilbert Mittler, both of
whom are Class III directors.
On January 10, 2005, we entered into the Termination and Amendment Agreement with Fortis that officially terminated the Shareholders’
Agreement. We also entered into a Letter Agreement with Fortis dated January 10, 2005, which triggered the other corporate governance
arrangements described under “CORPORATE GOVERNANCE — Corporate Governance Arrangements” in this proxy statement to come into
effect.
Cooperation Agreement
On February 10, 2004 we entered into a Cooperation Agreement with Fortis and its affiliates relating to our separation from the Fortis
Group and the ongoing relationship between our Company and the Fortis Group. Pursuant to this agreement, the Fortis Group has granted us
non-exclusive, royalty-free rights to use the Fortis name and marks for various transition periods ranging from one to two years depending on
the usage of such name or mark.
In addition, we are required to permit the Fortis Group’s internal audit group to inspect our books and records and to discuss affairs,
finances and accounts with our officers and auditors as long as Fortis owns shares representing 10% or more of the voting power of our
outstanding shares of Common Stock.
The Cooperation Agreement contains provisions relating to, among other things:
We are entitled to indemnification from Fortis for losses arising out of any breach by Fortis of the Cooperation Agreement. We will be
required to indemnify Fortis for any losses arising out of any breach by us of the Cooperation Agreement or any material untrue statement or
omission contained in any Fortis regulatory or other governmental filing relating to information about us provided by us to Fortis for use in the
filing and which is or would be required to be included in any filing by us.
SERP Guarantee
Our SERP program provides that if the payments to a participant or beneficiary will be made over a period of more than one year and if at
the time payments commence, we are not subject to pending proceedings as a debtor under the U.S. Bankruptcy Code, then Fortis will
guarantee the payment of SERP benefits to such participant or beneficiary. The SERP further provides that if Fortis ceases to be the beneficial
owner of our Common Stock, then such guarantee will be limited to the actuarially equivalent value of the participant’s SERP benefit
immediately following the cessation of its beneficial ownership.
Guarantee of 1997 Capital Securities
In May 1997, Fortis Capital Trust, a trust established by us, issued 150,000 of 8.40% capital securities (the “1997 Capital Securities I”) to
investors and 4,640 of 8.40% common securities (the “1997 Common Securities I”) to us, in each case with a liquidation amount of $1,000 per
security. Fortis Capital Trust used the proceeds from the sale of the 1997 Capital Securities I and the 1997 Common Securities I to purchase
$154,640,000 of our 8.40% junior subordinated debentures due 2027 (the “1997 Junior Subordinated Debentures I”). These debentures were
the sole asset of Fortis Capital Trust.
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cooperation between us and the Fortis Group on various matters, including the timing of completion of audit reports and regulatory
filings; and
existing vendor purchasing arrangements pursuant to which we purchase products and services also used by Fortis, which to the extent
permitted by the underlying arrangement will continue for their term.