STOCK PURCHASE AGREEMENT
Effective Date: August 7, 2006
This is an agreement ("Agreement") between UTG, Inc. ("Purchaser") and the
"Sellers" (defined below) regarding the purchase and sale of shares of common
stock of Acap Corporation ("Acap").
1. DEFINITIONS
Unless the context clearly requires otherwise, in addition to certain other
defined terms used in this Agreement, the following terms used in this Agreement
shall have the following respective meanings:
1.1 "Acap" means Acap Corporation, a Delaware corporation with its principal
office in Houston, Texas, which owns 100% of the issued and outstanding
stock of American Capitol Insurance Company, which in turn owns 100% of the
issued and outstanding stock of Texas Imperial Life Insurance Company and
Imperial Plan, Inc.
1.2 "Acap Common Stock" means shares of common stock of Acap, which has 5,000
shares of common stock authorized, $.10 par value per share, of which 2,744
shares are issued and outstanding on the Effective Date and no more than
2,898 shares will be issued and outstanding on the Closing Date.
1.3 "Acap Preferred Stock" means the 74,000 shares of Cumulative Exchangeable
Preferred Stock, Series A $2.50 (Adjustable) issued and outstanding which
are redeemable at the option of Acap for $27.50 per share plus accumulated
dividends to date of redemption.
1.4 "Acap Stock Put Options" means the options granted pursuant to this
Agreement by Purchaser to certain individual owners of Acap Common Stock to
sell, at their respective elections, their Acap Common Stock to Purchaser
during a defined period of time.
1.5 "Agreement" means this Stock Purchase Agreement as the same may be amended
or supplemented in accordance with this Agreement.
1.6 "American Capitol Stock Option" means, in each individual case, an option
to purchase from American Capitol certain shares of Acap Common Stock which
is evidenced by a grant dated May 13, 2002, issued by American Capitol to
the affected individual officers and directors of American Capitol.
1.7 "American Capitol" means American Capitol Insurance Company, a Texas life
insurance corporation, a wholly-owned subsidiary of Acap, with its
principal office in Houston, Texas.
1.8 "Asserted Liability" shall have the meaning ascribed to such term in
Section 11 hereof.
1.9 "Business Day" means any day other than a Saturday, Sunday or a nationally
observed holiday.
1.10 "Claim Notice" shall have the meaning ascribed to such term in Section 11
hereof.
1.11 "Closing" means the event that consummates the purchase by Purchaser and
the sale by Sellers, including the Come-Along Acap Shareholders and the
Guest Trust to the extent they become Sellers hereunder, of the Acap Common
Stock, and the grant by Purchaser of certain Acap Stock Put Options
pursuant to this Agreement, as more specifically set forth in Section 3.
1.12 "Closing Date" means December 8, 2006, or such other date agreed to in
writing by the Parties.
1.13 "Come-Along Acap Shareholders" means certain individuals who own Acap
Common Stock to whom Guest has a contractual duty to allow to "come along"
with any sale that he makes of his Acap Common Stock (that is, if Guest
sells his Acap Common Stock, these individuals may elect to sell their Acap
Common Stock at the same price and upon the same terms and conditions as
the sale by Guest).
1.14 "▇▇▇▇▇▇▇" means ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual resident of Houston, Texas,
one of the two Sellers who are parties to this Agreement.
1.15 "▇▇▇▇▇▇▇ Shares" means the 120 shares of Acap Common Stock owned by ▇▇▇▇▇▇▇
to be purchased by Purchaser at Closing as set forth herein.
1.16 "Date Hereof" means the Effective Date of this Agreement.
1.17 "Deductible Amount" shall have the meaning ascribed to such term in
Subsection 11.4.
1.18 "Documents and Records" means all documents, data and records used or
useful in connection with the ownership, operation, administration and
servicing of Acap and its subsidiaries, including but not limited to, all
documentation and computer-based files and programs relating to processes,
systems, files, plans, and active and inactive policyholders, whose
policies and contracts are included in the Insurance Contracts; any other
files and records for the policyholders described above; all premium,
claims and other transaction history files and records; reinsurance
records, and relevant records relating to regulatory and corporate matters,
correspondence and relevant financial and tax information.
1.19 "Effective Date" means August 7, 2006.
1.20 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.21 "Escrow Agent" means Guest.
1.22 "Escrow Fund" means the amount of $200,000 to be paid to Escrow Agent and
disbursed in accordance with this Agreement.
1.23 "Frost Bank" means Frost Bank, a Texas-based banking corporation doing
business in Houston, Texas, as well as other locations.
1.24 "Frost Loan" means that certain loan made by Frost Bank to Acap pursuant to
a line of credit evidenced by a promissory note dated July 19, 2005, with a
balance due by Acap to Frost Bank in the amount of $1,304,050 as of this
date, which bears interest at a rate based on Frost Bank's prime rate.
1.25 "Guest" means ▇▇▇▇▇▇▇ ▇. Guest, an individual resident of Houston, Texas,
one of the two Sellers who are parties to this Agreement.
1.26 "Guest Shares" means the 1,372 shares of Acap Common Stock owned by Guest
to be purchased by Purchaser at Closing as set forth herein.
1.27 "Guest Trust" means that certain ▇▇▇▇▇▇▇ ▇. Guest Life Insurance Trust that
owns 44 shares of Acap Common Stock, the Trustee of which is ▇▇▇▇▇▇ ▇▇▇
Guest, Guest's wife.
1.28 "Guest Trust Shares" means the 44 shares of Acap Common Stock owned by the
Guest Trust.
1.29 "Individual" means any person, trust, partnership or any other legal
entity.
1.30 "Holders of Acap Stock Put Options" means the individual Acap shareholders
listed on Exhibit 3.3.1 who are granted the right by Purchaser to sell
their Acap Common Stock to Purchaser as set forth in Subsection 3.3.
1.31 "Imperial Plan, Inc." means that certain Texas-domiciled corporation which
is 100% owned by American Capitol and holds a license issued by the Texas
Banking Department to market pre-need funeral contracts.
1.32 "Indemnitee" shall have the meaning ascribed to such term in Subsection
11.6 hereof.
1.33 "Indemnitor" shall have the meaning ascribed to such term in Subsection
11.6 hereof.
1.34 "Insurance Contracts" means the (i) insurance and annuity policies and
contracts of American Capitol and Texas Imperial, (ii) contracts and
treaties of reinsurance of American Capitol and Texas Imperial and (iii)
contracts and treaties of coinsurance of American Capitol and Texas
Imperial.
1.35 "Lien" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge or other obligation or
encumbrance of any kind, or any conditional sale contract, title retention
contract, or other contract to give or to refrain from giving any of the
foregoing.
1.36 "Loss" and/or "Losses" shall have the meaning ascribed to such term in
Section 11.
1.37 "Option Stock" means the Acap Common Stock that is the subject of the
related American Capitol Stock Option.
1.38 "Party" means UTG, Inc. or ▇▇▇▇▇▇▇ ▇. Guest, or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or, in the
plural number, all of them.
1.39 "Purchaser" means UTG, Inc., a Delaware corporation with its principal
office in Springfield, Illinois.
1.40 "Sellers" means Guest and ▇▇▇▇▇▇▇, as well as the Guest Trust and any
Come-Along Acap Shareholders who join in this Agreement by executing an
Addendum hereto as provided in Subsection 3.2.2.
1.41 "Shares" means the shares of issued and outstanding common stock of Acap
owned by Sellers to be purchased by Purchaser at Closing as set forth
herein.
1.42 "Stock Purchase Agreement" means this Agreement.
1.43 "Texas Imperial" means Texas Imperial Life Insurance Company, a Texas life
insurance corporation, a wholly-owned subsidiary of American Capitol, with
its principal office in Houston, Texas.
1.44 "Subsidiary" and "Affiliate" mean the following: "subsidiary" means, with
respect to any person any other person that is, directly or indirectly
through one or more intermediaries, controlled by such person; "affiliate"
means, with respect to any person, any other person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by
or is under common control with such person; "control" as used in the
preceding sentence means (i) with respect to a person that is a
corporation, the right to exercise, directly or indirectly, more than fifty
percent of the voting rights attributable to the shares of capital stock of
the controlled corporation and (ii) with respect to a person that is not a
corporation, the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of the controlled
person.
1.45 "UTG, Inc." means UTG, Inc. a Delaware corporation with its principal
office in Springfield, Illinois.
2. RECITALS:
2.1 Acap has only two kinds of stock authorized and/or issued: Acap Common
Stock and Acap Preferred Stock.
2.2 Acap is authorized to issue a total of 5,000 shares of common stock (being
the Acap Common Stock), $.10 par value per share, of which 2,744 shares are
issued and outstanding. American Capitol owns 154 shares of Acap Common
Stock as a non-admitted asset, which are classified as treasury stock, but
upon the exercise of certain American Capitol Stock Options discussed
below, if exercised as discussed below, when the subject shares of the
Option Stock are transferred to the Holders of the Acap Stock Put Options
they will become issued and outstanding shares, thereby increasing the
total number of issued and outstanding shares of Acap Common Stock from
2,744 to 2,898.
2.3 Acap is authorized to issue a total of 74,000 shares of Cumulative
Exchangeable Preferred Stock, Series A $2.50 (Adjustable) (being the Acap
Preferred Stock), of which 74,000 shares are issued and outstanding. By its
terms, the Acap Preferred Stock are redeemable by Acap, at its election, at
any time upon the payment of $27.50 per share plus accrued but unpaid
dividends to date of redemption.
2.4 Certain officers and directors of American Capitol (consisting of seven
individuals) own options (being the American Capitol Stock Options) to
purchase shares of Acap Common Stock owned by American Capitol. Each
American Capitol Stock Option is evidenced by an "Option Grant" dated May
13, 2002 for 45 shares of Acap Common Stock at a price of $400 per share.
As a result of an interim 1-for-2 reverse stock split, each holder of an
American Capitol Stock Option is entitled to receive 22 shares (plus an
entitlement to a cash payment of $485 in lieu of a fractional share), upon
payment at the time of exercise of such American Capitol Stock Option of
$800 per share (plus $400 related to the fractional share). Among other
provisions, each Option Grant provides that the American Capitol Stock
Option may be exercised at any time between the fifth anniversary of the
grant and the tenth anniversary of the grant, if certain conditions exist.
Assuming that American Capitol's Board of Directors modifies each grant, it
is expected that the affected officers and directors will exercise their
American Capitol Stock Options respectively and sell their stock to
Purchaser pursuant to the Acap Stock Put Options granted in accordance with
this Agreement, although none of them has any obligation to do so. Upon the
exercise of all such American Capitol Stock Options, the issued and
outstanding common stock of Acap will increase from 2,744 to 2,898, as
described in Subsection 2.2 above. Whether or not such American Capitol
Stock Options will be exercised depends also on certain steps that must be
taken to enable the exercise of the American Capitol Stock Options. If
exercised, the Holders of Acap Stock Put Options will, following the
Closing, have the election to sell, or not sell, their Acap Common Stock to
Purchaser, and therefore the availability of the shares of Option Stock for
sale to Purchaser cannot be assured. In addition to the grant of Acap Stock
Put Options by Purchaser to the holders of American Capitol Stock Options
as aforesaid, Acap Stock Put Options will be granted by Purchaser at
Closing to certain officers of American Capitol, including Guest and
▇▇▇▇▇▇▇, who own shares of Acap Common Stock that are not included in the
Shares to be purchased by Purchaser at Closing. The owners of the Acap
Common Stock who will receive Acap Stock Put Options from Purchaser at
Closing, and the number of shares owned in each case, (or to be owned, if
all American Capitol Stock Options are exercised), are listed in an Exhibit
3.3.1.
2.5 Guest was a party to certain shareholder agreements involving former
shareholders of InsLife Corporation which was dissolved and liquidated in
2005. Four such shareholders have current agreements to "come along" with
any sale that Guest makes of his Acap Common Stock, meaning that if Guest
sells his Acap Common Stock, each such shareholder has the right, but not
the obligation, to sell his/her Acap Common Stock to the same Purchaser at
the same price and upon the same terms and conditions as the sale by Guest.
In addition, two former InsLife shareholders who own 16 shares and 3 shares
of Acap Common Stock, respectively, may desire to be included in the sale
contemplated by this Agreement. While it is expected that all of said
shareholders of Acap Common Stock will elect to sell their stock to
Purchaser as contemplated by this Agreement, the availability of the said
shares of Acap Common Stock for sale to Purchaser cannot be assured. The
individuals referred to in this subsection, along with the number of shares
of Acap Common Stock owned by them respectively, are listed in Exhibit 3.2.
2.6 Except as aforesaid, there are no outstanding options to purchase Acap
Common Stock or Acap Preferred Stock, and neither Acap nor its subsidiaries
has/have any obligation to issue or sell any shares of stock of Acap or its
subsidiaries. None of the stock of Acap's subsidiaries is pledged or
otherwise subject to any Lien, except that all of the stock of American
Capitol is pledged to Frost Bank to secure the Frost Loan.
2.7 Sellers are acting in their capacities, respectively, as shareholders of
Acap Common Stock, and not as officers or directors of Acap or any of its
subsidiaries (noting that Guest is a director of Acap and its subsidiaries
and ▇▇▇▇▇▇▇ is a director of Acap's subsidiaries but not Acap).
2.8 Guest is the legal and beneficial owner of all of the Guest Shares and the
Guest Trust is the legal owner of the Guest Trust Shares to be purchased
from him and the Guest Trust pursuant to this Agreement, free and clear of
all Liens and other restrictions of any kind as to transfer, voting or
otherwise. There are no outstanding subscriptions, options, warrants,
proxies, rights or other agreements, commitments or obligations issued or
granted by, or binding upon, either Guest or the Guest Trust with respect
to the Guest Shares or the Guest Trust Shares. Guest and the Guest Trust
have the power and authority to sell to, and transfer to, Purchaser legal
and beneficial ownership of, and good and marketable title to, the Guest
Shares and the Guest Trust Shares, respectively, free and clear of all
Liens and other restrictions of any kind, as of the Closing Date. In
addition, Guest owns 22 shares of Acap Common Stock, to be the subject of a
grant by Purchaser of an Acap Stock Put Option at Closing.
2.9 ▇▇▇▇▇▇▇ is the legal and beneficial owner of all of the ▇▇▇▇▇▇▇ Shares to
be purchased from him pursuant to this Agreement, free and clear of all
Liens and other restrictions of any kind as to transfer, voting or
otherwise. There are no outstanding subscriptions, options, warrants,
proxies, rights or other agreements, commitments or obligations issued or
granted by, or binding upon, ▇▇▇▇▇▇▇ with respect to the ▇▇▇▇▇▇▇ Shares.
▇▇▇▇▇▇▇ has the power and authority to sell to, and transfer to, Purchaser
legal and beneficial ownership of, and good and marketable title to, the
▇▇▇▇▇▇▇ Shares, free and clear of all Liens and other restrictions of any
kind, as of the Closing Date. In addition, ▇▇▇▇▇▇▇ owns 50 shares of Acap
Common Stock, and has an American Capitol Stock Option to purchase 22
shares of Acap Common Stock, and said 72 shares of Acap Common Stock are to
be the subject of a grant by Purchaser of an Acap Stock Put Option at
Closing.
3. GENERAL AGREEMENTS
The Parties hereby agree as follows:
3.1 True and Correct Recitals. The Sellers represent to the Purchaser that, to
the best of their belief and knowledge, all of the above recitals are true
and correct in all material respects.
3.2 Purchase and Sale of Shares. Subject to the fulfillment, satisfaction and
performance of all material terms, conditions, and covenants set forth
herein, at Closing:
3.2.1 Sellers shall sell, convey, transfer and deliver full legal and
beneficial ownership of, and good and marketable title to, the Shares
to Purchaser, free and clear of any Liens, and Purchaser shall
purchase and accept, 1,372 Shares from Guest and 120 Shares from
▇▇▇▇▇▇▇; and
3.2.2 if the Come-Along Acap Shareholders and the Guest Trust elect to join
in this Agreement and be bound hereby as Sellers, by executing the
Addendum hereto and delivering it to Purchaser prior to or at Closing,
Purchaser shall purchase and accept from them up to 352 shares of Acap
Common Stock in the same manner and at the same price as Purchaser
purchases and accepts the Shares from Sellers pursuant to Subsection
3.2.1. Exhibit 3.2 is a list of the Guest Trust and the individuals
and the number of shares of Acap Common Stock owned by the Guest Trust
and the Come-Along Acap Shareholders respectively that Purchaser can
be called upon to purchase and accept at Closing as set forth above.
3.3 Grant of Acap Stock Put Options. Subject to the fulfillment, satisfaction
and performance of all material terms, conditions, and covenants set forth
herein, at Closing Purchaser shall grant an Acap Stock Put Option to each
of the individuals listed on Exhibit 3.3.1 by executing and delivering a
stock option agreement in the form attached in Exhibit 3.3.2 to evidence
the Acap Stock Put Option. Pursuant to the Acap Stock Put Option, each such
individual may tender to Purchaser up to the number of shares of Acap
Common Stock owned by each individual as shown on said Exhibit, and
Purchaser shall purchase and accept all such shares so tendered (up to an
aggregate of 266 shares of Acap Common Stock [the "Post Closing Shares"]),
on the terms and conditions set out therein. Purchaser shall not have any
obligation hereunder to any Holder of an Acap Stock Put Option who does not
execute and deliver to Purchaser a stock option agreement in the form
attached in Exhibit 3.3.2 at Closing.
3.4 Closing. The Closing shall take place at the offices of Acap, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ at 10:00 a.m., local time on the Closing
Date.
3.5 Purchase Price and Payment. The purchase price of each of the shares of
Acap Common Stock to be purchased from Sellers and accepted by Purchaser at
Closing shall be NINE THOUSAND SEVEN HUNDRED FORTY TWO DOLLARS ($9,742) per
share of Acap Common Stock (the "Per Share Purchase Price"). The purchase
price of each of the shares of Acap Common Stock to be purchased and
accepted by Purchaser pursuant to the Acap Stock Put Options shall be equal
to the Per Share Purchase Price increased for each day between the Closing
and the date the respective Post Closing Shares are purchased by an annual
rate of 5% compounded daily, all in accordance with said Acap Stock Put
Options. All payments to be made by Purchaser shall be in the form of
immediately available funds.
3.6 $200,000 Escrow Fund. Simultaneously with the execution of this Agreement,
and in consideration of the agreements by Sellers set forth herein,
Purchaser will pay to Guest as Escrow Agent $200,000 in cash as an Escrow
Fund, to be held in a segregated interest bearing escrow account at Frost
Bank, and disbursed to Sellers or to Purchaser as required by this
Agreement. The Escrow Fund, together with all interest and other income
thereon, will be returned to Purchaser by Guest immediately upon the first
to occur of the following:
3.6.1 The receipt at Closing by Sellers and others entitled to have their
Acap Common Stock purchased by Purchaser at Closing as set forth in
this Agreement of the Per Share Purchase Price; or
3.6.2 The termination of this Agreement pursuant to Section 13 (other than
Subsection 13.1.3 or 13.1.7); or
3.6.3 The termination of this Agreement pursuant to Subsection 13.1.3 or
13.1.7, provided the failure to consummate the Closing by December 8,
2006 is not due to a breach by Purchaser of its obligations under this
Agreement.
If, either (i) Purchaser terminates this Agreement other than in accordance with
Section 13, or (ii) Sellers terminate this Agreement in accordance with
Subsection 13.1.3 or 13.1.7 and, in either case, the failure to consummate the
Closing by December 8, 2006 is due to a breach by Purchaser of its obligations
under this Agreement, Guest will be entitled to retain the Escrow Fund, together
with all interest and other income thereon (for the benefit of Sellers) as the
exclusive remedy of Sellers, subject to Subsection 13.2(c) and Subsection
13.2(d).
3.7 Frost Loan. Subject to the fulfillment, satisfaction and performance of all
material terms, conditions, and covenants set forth herein, at Closing
Purchaser agrees to make a loan to Acap to pay to Frost Bank the amount
required to pay off in full the Frost Loan and obtain the release and
return of the American Capitol stock held by Frost Bank as collateral, as
follows: Sellers will arrange for Frost Bank (i) to deliver to Purchaser at
least five business days prior to Closing a pay-off letter stating the
amount required to pay in full the Frost Loan on the Closing Date and (ii)
to be present at the Closing with the note evidencing the Frost Loan and
the American Capitol stock in hand for the purpose of receiving the payment
in full of the Frost Loan amount and delivering the American Capitol stock
to Acap. The Parties acknowledge that Purchaser plans to borrow funds from
a third party to finance (at least in part) its obligations hereunder and
agree that Purchaser's loan to Acap will be on the same terms and
conditions (including interest rate and payment schedule) as that third
party financing and will be contingent on Acap's due authorization,
execution and delivery of loan documentation reasonably acceptable to
Purchaser at or prior to Closing.
3.8 Acap Preferred Stock. At Closing Purchaser agrees to make a loan to Acap to
provide the funds required by Acap to redeem all of the outstanding shares
of Acap Preferred Stock, as follows:
3.8.1 The Parties' obligations under this Subsection 3.8 are contingent on
the approval of redemption of the Acap Preferred Stock by the Board of
Directors of Acap prior to the Closing Date.
3.8.2 At least five business days before the Closing Date, Sellers will
deliver to Purchaser written notice stating the aggregate amount that
will be required to consummate the redemption of the Acap Preferred
Stock on the Closing Date (being $27.50 per share plus accrued but
unpaid dividends thereon).
3.8.3 Sellers will bring to Closing envelopes (to be open for inspection by
Purchaser) addressed, in each case, to holders of Acap Preferred Stock
(whose identity, address and number of shares of Acap Preferred Stock
are listed on Exhibit 3.8). The letters shall be alike except for the
identity of the holders, their addresses, number of shares and amount
payable for redemption, communicating, in effect, that the subject
stock is being redeemed by Acap. Each envelope shall contain a check
issued by Acap payable to each such holder of Acap Preferred Stock in
the amount required for redeeming such shares in each case. Sellers
shall also deliver to Purchaser at Closing certified resolutions of
Acap's Board of Directors, evidencing the taking of the corporate
action required to approve and effect, as of the Closing Date, the
subject redemption upon consummation of the purchase of Shares as
provided in this Agreement.
3.8.4 The Parties acknowledge that Purchaser plans to borrow funds from a
third party to finance (at least in part) its obligations hereunder
and agree that Purchaser's loan to Acap will be on the same terms and
conditions (including interest rate and payment schedule) as that
third party financing and will be contingent on Acap's due
authorization, execution and delivery of loan documentation reasonably
acceptable to Purchaser at or prior to Closing. The parties
acknowledge that the loan to Acap will not be made, and therefore the
loan documentation will not be effective, until the consummation of
the purchase of Shares as provided in this Agreement on the Closing
Date.
3.8.5 Subject to the foregoing, at Closing, Purchaser will deposit the
proceeds of the loan made to Acap pursuant to this Subsection 3.8 in
Acap's Frost Bank account to pay the aggregate redemption price of the
Acap Preferred Stock as aforesaid. It is the Parties' intent that said
funds will be maintained in said account such that all checks issued
to the holders of Acap Preferred Stock to redeem the Acap Preferred
Stock will be paid upon presentment, and each of the Parties commit
not to take any action to the contrary.
3.9 Release. Effective at the Closing, upon consummation of the purchase and
sale of the Shares contemplated by this Agreement, each Seller, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, for Seller and his or her heirs, legal representatives,
successors and assigns, agrees to and does hereby release and forever
discharge Purchaser, Acap and their respective subsidiaries and affiliates
(collectively, the "Released Parties"), from any and all rights (including
without limitation any indemnification rights), claims, demands, actions
and causes of action at law and in equity, known or unknown, contingent or
direct, which Seller ever had or has on the Closing Date and that anyone
claiming through or under the Seller may have as of the Closing Date or
claim to have as of the Closing Date against the Released Parties, except
for any claims arising under this Agreement or the Acap Stock Put Options
and the transactions contemplated hereby or thereby, and, to the extent the
Seller is an employee of a Released Party pursuant to an employment
agreement disclosed to Purchaser prior to execution of this Agreement
(specifically, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇), except for compensation and
benefits to which such Seller is entitled under such employment agreement
as of the Closing Date, and, to the extent the Seller is an employee of a
Released Party but does not have such an employment agreement, except for
salary and benefits earned to and including the Closing Date. Each Seller
agrees to reaffirm in writing this release at Closing.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Parties agree and understand that, as a part of the negotiations of all
matters leading up to the consummation of this Agreement, Sellers have not made,
and do not make in this Agreement, any representations or warranties to
Purchaser, express or implied, except as expressly set forth herein. In this
connection, the Parties agree that (i) Purchaser is knowledgeable regarding the
acquisition of life insurance holding companies and life insurance companies
such as Acap and its subsidiaries and the due diligence investigation,
assessments and judgments that are appropriate for purposes of such
acquisitions, (ii) the Shares have been offered to Purchaser, and (subject to
the representations and warranties of the Sellers in this Agreement and the
provisions set forth in this Agreement regarding subsequent due diligence
investigation, covenants, conditions to Closing and indemnities) Purchaser
accepts the Shares "as is," (iii) Purchaser has elected to rely entirely on its
own due diligence investigation, assessments and judgments (to the exclusion of
representations and warranties by Sellers not expressly set forth herein) and
(iv) there are risks that both beneficial and detrimental developments and
events occur in the ordinary course of business of life insurance holding
companies and life insurance companies such as Acap and its subsidiaries, which
risks are fully assumed by Purchaser (subject to the terms and conditions of
this Agreement). Each Seller and Purchaser acknowledge and agree that this
Agreement reflects the agreements reached by the parties through arm's length
negotiations, and that neither Purchaser, on the one hand, nor Sellers, on the
other, is relying on any advice, representations, warranties or covenants by the
other, other than the representations, warranties and covenants set forth in
this Agreement.
Each of the Sellers hereby represents and warrants to Purchaser as follows:
4.1 Title to Shares. Such Seller will sell and transfer to Purchaser legal and
beneficial ownership of and good and marketable title to the Shares to be
sold by such Seller at the Closing free and clear of all Liens. The Shares
to be sold constitute all of the shares of capital stock or securities of
Acap and its subsidiaries and affiliates which Seller, directly or
indirectly, owns or has the right (contingent or otherwise) to acquire,
except as disclosed in this Agreement. Neither such Seller nor the Guest
Trust is subject to or bound by any obligation, contractual or otherwise,
to sell, assign or otherwise transfer all or any portion of the Shares or
the Guest Trust Shares to any person or entity other than the Purchaser
pursuant to this Agreement.
4.2 Validity. This Agreement constitutes the legal, valid and binding
obligations of such Seller, enforceable against such Seller in accordance
with its terms, except as may be limited by bankruptcy, insolvency, or
other similar laws affecting the enforcement of creditors' rights generally
and except as enforcement thereof may be subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4.3 No Conflicting Agreements. Neither the execution, delivery or performance
of this Agreement nor the consummation of the transactions contemplated
hereby will (i) conflict with, or result in a violation or breach of the
terms, conditions or provisions of, or constitute a default under, any
agreement, indenture or other instrument under which such Seller or any of
such Seller's properties is bound or to which any of the Shares to be sold
by such Seller are subject, or result in the creation or imposition of any
Lien against such Shares, or (ii) violate, conflict with or require any
consent under any judgment, injunction, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or
body having jurisdiction over such Seller or Acap or any of its
subsidiaries or affiliates or any of their respective assets. To the extent
any agreement of a Seller exists in respect of which a consent or waiver is
required, such consent or waiver will be obtained or accomplished at or
before the Closing.
4.4 Consents and Approvals. No authorization, consent or approval of, or filing
with, any public body or authority is necessary for such Seller or Acap or
any subsidiary or affiliate of Acap to obtain for the consummation of the
purchase and sale and redemption contemplated by this Agreement, except
that such transaction requires the filings, approvals, authorizations and
clearances contemplated by Subsection 7.1 hereof. To the best knowledge of
such Seller, except as set forth in Subsection 7.1, no authorization,
consent or approval of any other person or entity is necessary for such
Seller or Acap or any subsidiary or affiliate of Acap to obtain for the
consummation of the purchase and sale contemplated by this Agreement or for
any other transaction contemplated hereby.
4.5 Litigation. As of the date of this Agreement, a final order has been
entered in the so called "▇▇▇▇▇" case adopting the settlement proposed by
the parties thereto, and except for the pending case known as
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇, and except for any lawsuit that has been filed but has not
yet been served, and as to which Sellers have no knowledge, there are no
other claims, actions, suits, investigations or administrative, arbitration
or other proceedings pending against Sellers or Acap or any of its
subsidiaries or affiliates, or to the knowledge of Sellers, threatened
against Sellers or Acap or any of its subsidiaries or affiliates, that
individually or in the aggregate have or reasonably may be expected to have
a material adverse effect (a) on Acap or any of its subsidiaries, (b) on
the validity or enforceability of this Agreement or (c) on the ability of
Acap to redeem the Acap Preferred Stock as contemplated hereby.
4.6 Brokers. All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Sellers directly with
Purchaser, without the intervention of any person engaged by or on behalf
of Sellers in such manner as to give rise to any claims by any such person
against Purchaser for a finder's fee, brokerage commission or similar
payment.
4.7 Disclosure. As of the Date Hereof, neither this Agreement nor any
certificate furnished by Sellers to Purchaser in connection with this
Agreement or the transactions contemplated hereby contains any untrue
statement of material fact or, to the knowledge of Seller, omits to state a
material fact necessary to make the statements herein or therein not
misleading in light of the circumstances in which they were made.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
5.1 Organization and Qualification. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with corporate power to own and lease its properties and carry on
its business as presently conducted.
5.2 Authority Relative to Agreement. Purchaser has the corporate power and
authority to enter into this Agreement and the other agreements
contemplated hereby and to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement by Purchaser and
the execution and delivery of the other agreements contemplated hereby by
Purchaser, and the consummation of the transactions contemplated herein and
therein have been duly authorized by the Board of Directors of Purchaser
and no other corporate proceedings on the part of Purchaser or any
subsidiary or affiliate of Purchaser are necessary to authorize this
Agreement and such other agreements and the purchase and sale of the Acap
Common Stock contemplated hereby. This Agreement constitutes, and the other
agreements contemplated hereby, upon execution and delivery, will
constitute, valid and binding obligations of Purchaser enforceable in
accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights generally and except as enforcement thereof may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3 No Conflicting Agreements. The execution and delivery of this Agreement by
Purchaser do not, and the execution and delivery of the other agreements
contemplated hereby by Purchaser, the consummation by Purchaser of the
purchase and sale contemplated herein and the compliance by Purchaser with
the terms and provisions of this Agreement and such other agreements will
not:
5.3.1 conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) any of the terms,
provisions or conditions of the charter or by-laws of Purchaser or any
of its subsidiaries or affiliates;
5.3.2 conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under, or
give to any person or entity the right of or result in termination,
cancellation, acceleration under or modification of, any agreement,
lease, contract, policy, treaty, commitment, mortgage, indenture,
document, instrument, governmental permit or license to which
Purchaser or any of its subsidiaries or affiliates is a party or by
which any of their respective assets are bound, and as to which any
such conflicts, violations, breaches, defaults, terminations,
cancellations, accelerations or modifications individually or in the
aggregate have or may be reasonably expected to have a material
adverse effect on the validity or enforceability of this Agreement or
on the ability of Purchaser to perform its obligations under this
Agreement;
5.3.3 subject to obtaining the approvals, authorizations and clearances
contemplated by Subsection 7.1 hereof, violate any law, administrative
regulation, arbitration order, writ, injunction, award, judgment,
decree, court order, governmental permit or license to which Purchaser
or any of its subsidiaries or affiliates is subject; or
5.3.4 result in the creation or imposition of any Lien in favor of any
third person or entity with respect to Purchaser, any of Purchaser's
subsidiaries or affiliates or any of their respective assets that
individually or in the aggregate have or may be reasonably expected to
have a material adverse effect on the validity or enforceability of
this Agreement or on the ability of Purchaser to perform its
obligations under this Agreement.
5.4 Consents and Approvals. No authorization, consent or approval of, or filing
with, any public body or authority is necessary for Purchaser or any
subsidiary or affiliate of Purchaser to obtain for the consummation of the
purchase and sale contemplated by this Agreement, except that such
transaction requires the filings, approvals, authorizations and clearances
contemplated by Subsection 7.1 hereof. Neither Purchaser nor Sellers is/are
required to make any filings with the Justice Department or Federal Trade
Commission under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended, for the consummation of the purchase and sale contemplated by
this Agreement. To the best knowledge of Purchaser, except as set forth in
Subsection 7.1, no authorization, consent or approval of any other person
or entity is necessary for Purchaser or any subsidiary or affiliate of
Purchaser to obtain for the consummation of the purchase and sale
contemplated by this Agreement or for any other transaction contemplated
hereby.
5.5 Litigation. There are no claims, actions, suits, investigations or
administrative, arbitration or other proceedings pending against Purchaser
or any of its subsidiaries or affiliates, or to the knowledge of Purchaser,
threatened against Purchaser or any of its subsidiaries or affiliates, that
individually or in the aggregate have or reasonably may be expected to have
a material adverse effect on the validity or enforceability of this
Agreement or on the ability of Purchaser to perform its obligations under
this Agreement.
5.6 Brokers. All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Purchaser directly with
Sellers, without the intervention of any person engaged by or on behalf of
Purchaser in such manner as to give rise to any claims by any such person
against Sellers for a finder's fee, brokerage commission or similar
payment.
5.7 Investment Representation. The shares of Acap Common Stock to be acquired
under the terms of this Agreement will be acquired by Purchaser for its own
account for the purpose of investment. Purchaser will not transfer or
otherwise dispose of any of such shares, or any interest therein, in such
manner as to violate any registration provision of the Securities Act of
1933, as amended, or of any applicable state securities laws regulating the
disposition thereof. Purchaser agrees that the certificates representing
the Shares may bear legends to the effect that such Shares have not been
registered under the Securities Act of 1933, as amended, or such other
state securities laws and that no interest therein may be transferred or
otherwise disposed of in violation of the provisions thereof.
5.8 Disclosure. As of the Date Hereof, neither this Agreement nor any
certificate furnished by Purchaser to Sellers in connection with this
Agreement or the transactions contemplated hereby contains any untrue
statement of material fact or, to the knowledge of Purchaser, omits to
state a material fact necessary to make the statements herein or therein
not misleading in light of the circumstances in which they were made.
6. COVENANTS OF SELLERS
Sellers covenant and agree with Purchaser that, between the Date Hereof and
the Closing Date, except to the extent Purchaser may otherwise consent in
writing or to the extent otherwise required or permitted by this Agreement, in
addition to the obligations of Guest under Subsection 3.6, Sellers will comply
with all covenants and provisions of this Section.
6.1 Regulatory Approvals. To the best of their ability in their capacity as
shareholders of Acap, and in a manner that does not conflict with their
duties as directors and officers of Acap and its subsidiaries, Sellers
will, and will request Acap and its subsidiaries to, assist Purchaser in
its obtaining, as promptly as practicable, all approvals, authorizations
and clearances of governmental and regulatory authorities required of them
to consummate the transactions contemplated hereby, including without
limitation the Texas Department of Insurance, and for that purpose (i) will
take all commercially reasonable steps and proceed diligently and in good
faith and use all commercially reasonable efforts to assist Purchaser, (ii)
will provide such information and communications to such governmental and
regulatory authorities as Purchaser or such authorities may reasonably
request and (iii) will cooperate with Purchaser in obtaining, as soon as
practicable, all approvals, authorizations and clearances of governmental
or regulatory authorities required of Purchaser to consummate the
transactions contemplated hereby. Without limiting the foregoing, Sellers
will provide Purchaser access to all information it needs about Acap and
its subsidiaries in order to complete on a timely basis any regulatory
approval process applicable to the transactions contemplated by this
Agreement.
6.2 Conduct of Business. Except as otherwise expressly agreed in writing by the
Purchaser, during the period between the Date Hereof and the Closing, Acap
and its subsidiaries will, and the Sellers, to the best of their ability in
their individual capacities and in their capacity as shareholders of Acap,
and in a manner that does not conflict with their duties as directors and
officers of Acap and its subsidiaries, will use their best efforts to cause
Acap and its subsidiaries (the "companies") to be operated in the "ordinary
course of business," the meaning of which is expanded and/or supplemented,
as the case may be, as follows:
6.2.1 The companies will be operated in a manner such that Acap's life
insurance company subsidiaries will continue to be in good standing
and to be licensed, qualified or admitted to do business in each state
or other jurisdiction as they are currently licensed, qualified or
admitted to do business.
6.2.2 The insurance business of such subsidiaries will be administered,
serviced, conserved and otherwise maintained in the ordinary course of
business in a manner consistent with past practices and in compliance
in all material respects with all applicable legal and contractual
requirements.
6.2.3 The companies will not (i) declare, set aside or pay any dividends
on, or make any other distributions in respect to a company's capital
stock, (ii) split, combine or reclassify the capital stock of any
company or authorize the issuance of any other securities in respect
to their capital stock, (iii) purchase, redeem or otherwise acquire
any shares of capital stock of any of the companies (except for the
redemption of the Acap Preferred Stock as herein provided), (iv) pay
or set aside a "sinking fund" for the payment of any principal amount
of outstanding debt (except for the payment of the Frost Loan as
herein provided), (v) issue or commit to issue any of its shares or
other debt or equity securities, or (vi) recapitalize any of the
companies (except that American Capitol may pay quarterly dividends to
Acap for the purpose of debt management and to enable Acap to pay
quarterly dividends on its Acap Preferred Stock [which Acap may
declare and pay in keeping with its Acap Preferred Stock dividend
policy, as in effect on the Date Hereof]).
6.2.4 The companies will not incur any indebtedness or make any loans,
advances or capital contributions to any other person or individual,
provided this restriction shall not prevent a company from making
routine advances to its agents in the ordinary course of its insurance
business, consistent with past practices, routine intercompany
advances, consistent with past practices, or short-term borrowings
under existing lines of credit that will be repaid prior to Closing.
6.2.5 The companies will not transfer any Intellectual Property of the
companies (except American Capitol may transfer its interest in that
certain Pending Patent application dated March 13, 2006).
6.2.6 The companies will not change the employment contracts of any of its
employees or contract personnel, or change the compensation of any of
its employees (except that American Capitol may change the terms of
the American Capitol Stock Options solely for the purpose of advancing
the date on which they may be exercised to be a date that is on or
before the Closing Date and, with the prior consent of Purchaser, may
make routine compensation adjustments for its employees who are not
the five most highly paid, provided Purchaser's prior consent shall
not be required for routine annual compensation increases not
exceeding 3%).
6.2.7 American Capitol will pursue, in co-operation with Purchaser,
policies and practices regarding American Capitol employees designed
to maintain the employment of its current employees, subject to
ordinary course of business reviews, evaluations, hiring and
termination practices, and subject to consultations with Purchaser on
matters affected by Purchaser's announcements to employees regarding
Purchaser's plans for the post-Closing operations of the companies.
(The timing and content of any communication to American Capitol
employees of severance pay or other inducement offered for the purpose
of retaining such employees for the duration needed by Purchaser
beyond the Closing Date shall be Purchaser's responsibility, subject
to American Capitol's cooperation.)
6.2.8 The companies will make and maintain the investments made by the
insurance subsidiaries in accordance with the investment plans adopted
by each such company's Board of Directors "in the ordinary course of
business" (and changes in the market value of the investments of such
companies also shall be deemed to be "in the ordinary course of
business.")
6.2.9 The settlement cost of so-called "▇▇▇▇▇" litigation will be limited
to an aggregate amount that does not exceed the cost of settlement
encompassed in the settlement agreement heretofore entered into
between American Capitol and the plaintiffs in said litigation. Any
excess settlement cost will reduce the purchase price for the Shares.
6.2.10 The companies will exercise all commercially reasonable efforts to
preserve their business organizations intact and to preserve the
goodwill of their customers and others having business relations with
them.
6.2.11 The companies will give all notices required to terminate,
contingent upon the Closing, all employment agreements to which they
are parties effective December 31, 2006, subject to the following two
exceptions: the employment agreements with ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇ existing on the Date Hereof, the terms of which have
previously been disclosed to Purchaser.
For purposes of this Subsection 6.2, an action shall be deemed to be "in the
ordinary course of business" if (i) such action, or failure to take an action,
under the circumstances, is consistent with the manner in which the subject
company has conducted its business within the past few years, or (ii) such
action, or the failure to take an action, is, under the circumstances,
reasonable, routine, ordinary, or usual, compared to what a comparable-level
manager of a comparable life insurance company or life insurance holding
company, as the case may be, would take or fail to take, as the case may be,
under like or similar circumstances. Nothing in this Subsection 6.2 shall
prevent the Board of Directors of Acap or its subsidiaries from causing Acap or
its subsidiaries to take any action or fail to take an action such Board of
Directors deems appropriate, in the sole discretion in the exercise of its
fiduciary duties that is not in the ordinary course of business for such
company, provided that the Sellers will promptly provide written notice to
Purchaser of such action (or inaction), so that Purchaser may evaluate the same.
Any action taken, or failure to take an action, by Acap or its subsidiaries that
is not in the ordinary course of business (within the meaning used in this
Section 6.2) shall be grounds for Purchaser to terminate this Agreement in
accordance with Subsection 13.1.6.
In order to resolve contemporaneously any question, if any, regarding whether or
not an action, or the failure to take an action, is "in the ordinary course of
business," Sellers, or either of them, may provide written notice to Purchaser
of any action taken or to be taken, or decision not to take any action, and
Purchaser must provide written notice of its objection, if any, to Sellers
within five business days after receiving such notice from Sellers, or either of
them, as the case may be. Upon receipt of any such notice, or if Purchaser
becomes aware of any information concerning facts that Purchaser deems to be the
basis for an objection by Purchaser to an action or failure to take an action
that Purchaser deems not to be material but not "in the ordinary course of
business," Purchaser must provide written notice of its objection to Sellers
within five business days after receiving such notice from Sellers, or either of
them, or promptly after becoming aware of an action or failure to take an action
that Purchaser deems to be material but not in the ordinary course of business,
as the case may be. Failure to provide such notice of objection to Sellers as
aforesaid will constitute waiver by Purchaser of any right to claim that such
action was not in the ordinary course of business, and, further, any such
objection by Purchaser must not be unreasonably made.
6.3 Due Diligence Investigation by Purchaser. Until the expiration of four
weeks from the Date Hereof or, if earlier, the termination of this
Agreement pursuant to Section 13, Purchaser, through its employees and
other representatives, will be provided full access to the Documents and
Records of Acap and its subsidiaries as well as any other documents,
instruments, agreements and other books, records and properties of Acap and
its subsidiaries as Purchaser shall from time to time request. Any
investigation shall be conducted in a manner which does not unreasonably
interfere with the operation of the business of Acap and its subsidiaries.
Purchaser will also be provided access to the attorneys, accountants or
actuaries who, as third-party service providers, have performed services
for Acap and its subsidiaries, provided prior arrangements are made for
compensation by Purchaser required by such attorneys, accountants or
actuaries and the granting of permission to them, as needed, to share with
Purchaser the information reasonably requested from them by Purchaser. In
the event of termination of this Agreement prior to the consummation of
Closing, Purchaser shall deliver to Sellers all documents, work papers and
other material obtained by Purchaser from Sellers or Acap and its
subsidiaries, and shall not disclose to any third party, and shall not use,
directly or indirectly, or through any subsidiary or affiliate, any
information so obtained or otherwise obtained in connection herewith, and
shall keep all such information confidential except (i) as required by
court order or applicable law or any regulatory application or notice filed
in connection with this Agreement or the transactions contemplated herein,
(ii) as lawfully obtained from others and (iii) to the extent that such
information is then in the public domain (provided Purchaser or its
representative were not responsible for such information entering the
public domain without the consent of Sellers).
6.4 Satisfaction of Conditions. Sellers shall make all commercially reasonable
efforts in good faith to cause all conditions precedent to Sellers'
obligations hereunder to be satisfied on or before the Closing Date and
shall exercise all commercially reasonable efforts and cooperate fully with
Purchaser in accomplishing the satisfaction of all conditions precedent to
Purchaser's obligations hereunder on or prior to the Closing Date.
6.5 No Negotiations. From and after the Date Hereof to the termination of this
Agreement by Purchaser or the rightful termination of this Agreement by
Sellers pursuant to Section 13, Sellers, individually and as shareholders
of Acap and, as applicable, holders of American Capitol Stock Options, will
not take, directly or indirectly, any action to seek, entertain, discuss or
negotiate, or vote any Shares in favor of any offer or proposal from any
person or entity to acquire the Shares or any other shares of Acap or any
of its subsidiaries or, outside the ordinary course of business, any assets
of Acap or any of its subsidiaries (a "Conflicting Transaction"). Nothing
in this Subsection 6.5 shall prevent Sellers, in their capacity as
directors of Acap and its subsidiaries, from taking any action required by
law in the exercise of their fiduciary duties, provided, however, that if a
Conflicting Transaction occurs or there is any offer or proposal regarding
a Conflicting Transaction that is accepted and such Conflicting Transaction
will or is reasonably likely to materially and adversely affect either
Seller's ability to consummate the sale of the Shares, the consummation of
the transactions contemplated by this Agreement or Purchaser's ability to
acquire a majority of the outstanding shares of Acap, then, at the time of
such Conflicting Transaction or acceptance of such proposal or offer
(whichever first occurs), Guest, on behalf of Sellers, will pay Purchaser
Two Million Dollars ($2,000,000). The Parties acknowledge and agree that
this sum is reasonable in light of the expense and time Purchaser has and
will incur in connection with this Agreement and the transactions
contemplated hereby and the damages it will sustain.
6.6 Defend, Hold Harmless and Indemnify Purchaser. Sellers agree to defend
Purchaser against, and hold Purchaser harmless from, and to reimburse
Purchaser for, any actual financial Loss or Losses (as defined in
Subsection 11.1) resulting from or arising out of any claim or claims
described in Subsection 11.3.2 hereof. Other shareholders of Acap Common
Stock who sell shares of Acap Common Stock to Purchaser pursuant to this
Agreement shall make the same agreement as it relates to such shares which
they sell to Purchaser pursuant to this Agreement.
6.7 Invitation to Purchaser. After the expiration of four weeks from the Date
Hereof and the receipt by Purchaser of all approvals, authorizations and
clearances of governmental and regulatory authorities required of it to
consummate the transactions contemplated hereby, including without
limitation the Texas Department of Insurance and, if required in connection
with the acquisition of Imperial Plan, appropriate bank regulatory
authorities, provided this Agreement has not been terminated, Sellers will
arrange for Purchaser through its designated employees and representatives
to visit Acap and its subsidiaries on their premises for the sole purpose
of studying operations and planning and preparing for any transition of
operations that Purchaser may choose, on the condition that such
visitations shall not materially interfere with the normal operations of
Acap or its subsidiaries.
6.8 Notification of Certain Matters.
6.8.1 If, prior to the Closing or termination of this Agreement, Sellers
learn that any event or condition has had, or is reasonably expected
to have, a material adverse effect on the condition (financial and
otherwise), business, assets, liabilities, results of operations or
prospects of Acap or any of its subsidiaries, individually or as a
whole, which, unless waived by Purchaser, will prevent the condition
set out in Subsection 9.11 from being satisfied at Closing, Sellers
must, within five business days thereafter, notify Purchaser of such
event or condition.
6.8.2 Until the Closing or termination of this Agreement, Sellers will give
prompt written notice to Purchaser of (a) the occurrence, or failure
to occur, of any event that has caused any representation or warranty
of Sellers contained in this Agreement to be untrue or (b) the
occurrence of any failure of Sellers to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by
Sellers under this Agreement.
7. COVENANTS OF PURCHASER
Purchaser covenants and agrees with Sellers that, between the Date Hereof
and the Closing Date, except to the extent Guest, on behalf of Sellers, may
otherwise consent in writing or to the extent otherwise required or permitted by
this Agreement, Purchaser will comply with all covenants and provisions of this
Section 7.
7.1 Regulatory Approvals and Filings. Purchaser will (i) take all commercially
reasonable steps necessary or desirable, and proceed diligently and in good
faith and use all commercially reasonable efforts to obtain, as promptly as
practicable, all approvals, authorizations and clearances of governmental
and regulatory authorities required of it to consummate the transactions
contemplated hereby, including without limitation the Texas Department of
Insurance and, if required in connection with the acquisition of Imperial
Plan, appropriate bank regulatory authorities, (ii) provide such other
information and communications to such governmental and regulatory
authorities as Sellers or such authorities may reasonably request, (iii)
cooperate with Sellers in obtaining, as soon as practicable, all approvals,
authorizations and clearances of governmental and regulatory authorities
required of Sellers to consummate the transactions contemplated hereby and
(iv) satisfy all filing requirements of Purchaser required with respect to
the purchase and sale contemplated by this Agreement under the Securities
Exchange Act of 1934 and applicable state securities laws.
7.2 Satisfaction of Conditions. Purchaser shall make all commercially
reasonable efforts in good faith to cause all conditions precedent to
Purchaser's obligations hereunder to be satisfied on or before the Closing
Date and shall exercise all commercially reasonable efforts and cooperate
fully with Sellers in accomplishing the satisfaction of all conditions
precedent to Sellers' obligations hereunder on or prior to the Closing
Date.
7.3 Notification of Certain Matters.
7.3.1 If, prior to the Closing or termination of this Agreement, Purchaser
learns that any event or condition has had, or is reasonably expected
to have, a material adverse effect on the condition (financial and
otherwise), business, assets, liabilities, results of operations or
prospects of Acap or any of its subsidiaries, individually or as a
whole, which will prevent the condition set out in Subsection 9.11
from being satisfied at Closing, Purchaser must, within five business
days thereafter, notify Guest and ▇▇▇▇▇▇▇, on behalf of Sellers, of
such event or condition, or else be deemed to accept such event or
condition as not objectionable under Subsection 9.11 or under
Subsection 13.1.5.
7.3.2 Until the Closing or termination of this Agreement, Purchaser will
give prompt written notice to Sellers of (a) the occurrence, or
failure to occur, of any event that has caused any representation or
warranty of Purchaser contained in this Agreement to be untrue or (b)
the occurrence of any failure of Purchaser to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement.
8. CONDITIONS TO THE OBLIGATIONS OF BOTH PARTIES
The obligations of each of the Parties hereto to proceed with the Closing
are subject to the fulfillment (unless waived by each party in writing), prior
to or at the Closing, of each of the following conditions:
8.1 Legal Proceedings. No suit, action or other judicial or regulatory
proceeding shall have been initiated or shall be pending or threatened by
any governmental agency in which it is sought to restrain, prohibit,
invalidate, modify or condition, or set aside, the transactions
contemplated by this Agreement, and no statute, rule or regulation having
such effect shall have been promulgated or enacted, nor shall any such
suit, action or proceeding have been initiated by any other third party not
affiliated with the Parties hereto in which such third party shall have
obtained preliminary or permanent injunctive relief or which, in the
opinion of counsel to either party, has a reasonable likelihood of success;
provided, however, that each party shall use reasonable efforts in good
faith to cause such suit, action or proceeding, or the threat thereof, to
be dismissed or withdrawn, to cause such injunction to be dissolved or
vacated or to cause such statute, rule or regulation to be repealed or
rescinded.
8.2 Governmental Approvals. The purchase and sale of the Shares and the other
transactions described in the Form A to be filed with the Texas Department
of Insurance (i) shall have been approved in all respects by the Texas
Department of Insurance and shall be subject to no conditions other than
conditions for the protection of policyholders or other purposes as are
customarily imposed by insurance regulatory authorities in approving
similar transactions and (ii) Purchaser and Sellers shall have been
furnished with appropriate evidence, satisfactory to them and their
respective counsel, of the granting of such approval; and any other
regulatory approvals required to be obtained by Purchaser or Acap for the
consummation of the transactions contemplated by this Agreement shall have
been obtained on terms and conditions satisfactory to Purchaser, and all
applicable regulatory waiting period shall have expired or been terminated.
9. CONDITIONS TO THE OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to proceed with the Closing are
subject to the fulfillment (unless waived by Purchaser in writing), prior to or
at the Closing, of each of the following conditions:
9.1 Performance. Sellers shall have performed and complied in all material
respects with all covenants, agreements, obligations, commitments and
conditions required by this Agreement to be performed or complied with by
Sellers prior to or at the Closing.
9.2 Sellers' Certificate. Sellers shall have delivered to Purchaser a
certificate, dated the Closing Date and signed by Sellers, certifying to
the fulfillment of the conditions specified in Sections 8 and 9.
9.3 Share Certificates. Sellers shall have delivered to Purchaser certificates
representing the Shares duly endorsed in blank or with stock powers
attached, together with such other instruments or documents as Purchaser
may reasonably request, to transfer legal and beneficial ownership and
control of the Shares to Purchaser upon Purchaser's payment for such Shares
as provided in this Agreement.
9.4 Resignations. Sellers shall have caused to be delivered to Purchaser at
Closing the signed resignation of each of the directors of Acap and its
subsidiaries whose resignation has been requested by Purchaser prior to the
Closing Date, provided, however, any such resignation in each case shall be
the voluntary election by each such director, respectively. (In this
connection, such directors who elect to resign as requested by Purchaser as
aforesaid are entitled to recognize that, upon acquiring the Shares,
Purchaser will be able, as the majority shareholder of Acap, to effect any
changes in the composition of the Boards of Directors of Acap and its
subsidiaries permitted under applicable law.)
9.5 Releases. Sellers shall have caused to be delivered to Purchaser at Closing
a release agreement of each of the Sellers, the Come-Along Acap
Shareholders and the Holders of Acap Stock Put Options in form and
substance satisfactory to Purchaser, providing for the release of
Purchaser, Acap and their respective subsidiaries from any and all
obligations or liabilities, including without limitation any
indemnification obligations (other than obligations owed to them to the
extent they arise under this Agreement or the Acap Stock Put Options and,
to the extent they are employees of Acap or its subsidiaries under any
employment agreement disclosed to Purchaser prior to execution of this
Agreement (specifically, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇), compensation and benefits
to which they are entitled under such employment agreements as of the
Closing Date, or, to the extent they are employees of Acap or its
subsidiaries without such an employment agreement, salary and benefits
earned to the Closing Date).
9.6 Appointment of Directors. As of the Closing, Sellers shall cause to be
delivered to Purchaser a resolution of the remaining members of the Board
of Directors of Acap and its subsidiaries as of the Closing Date, pursuant
to which such remaining directors shall elect directors selected by
Purchaser prior to the Closing to fill the vacancies in the Board created
by the resignations of the directors of Acap and its subsidiaries as of the
Closing Date.
9.7 Other Documents. Sellers shall have delivered to Purchaser at the Closing
such other documents as Purchaser may reasonably request.
9.8 Representations. The recitals contained in this Agreement and the
representations and warranties of Sellers contained in Section 4 of this
Agreement shall be true and correct in all material respects at and as of
the Closing, as if each such recital, representation and warranty had been
made as of the Closing.
9.9 Conduct of Business. Acap and its subsidiaries shall have operated and
conducted their businesses in the manner described in Subsection 6.2.
9.10 Litigation. Except for the ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ case, and except for any lawsuit
that has been filed but has not yet been served, and as to which the
Parties have no knowledge, as of the Closing Date, there shall be no
claims, actions, suits, investigations or administrative, arbitration or
other proceedings pending against Seller or Acap or any of its subsidiaries
or affiliates, or to the knowledge of the Parties, threatened against
Seller or Acap or any of its subsidiaries or affiliates, that individually
or in the aggregate have or reasonably may be expected to have a material
adverse effect (a) on Acap or any of its subsidiaries, (b) on the validity
or enforceability of this Agreement or on the ability of Seller to perform
his obligations under this Agreement or (c) on the ability of Acap to
redeem the Acap Preferred Stock as contemplated hereby.
9.11 No Material Adverse Change. After the date of this Agreement, no event or
condition shall occur or exist and Purchaser shall not obtain knowledge of
any event or condition (whenever it occurred) which has, or is reasonably
expected to have, a material adverse effect on the condition (financial and
otherwise), business, assets, liabilities, results of operations or
prospects of Acap or any of its subsidiaries, individually or as a whole.
The following events or conditions are excepted from this Subsection 9.11:
(a) any changes in laws, rules or regulations or regulatory accounting
principles that apply to both Acap (and its subsidiaries) and Purchaser
(and its subsidiaries), (b) any change, circumstance, development,
condition, occurrence or effect relating to the United States economy or
financial markets in general, and (c) any change, circumstance,
development, condition, occurrence or effect relating to the insurance
industry in general to the extent not affecting Acap and its subsidiaries
to a materially greater extent than it affects others parties in the
insurance industry.
10. CONDITIONS TO THE OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder to proceed with the Closing are
subject to the fulfillment (unless waived by Sellers in writing), prior to or at
the Closing, of each of the following conditions:
10.1 Representations. The representations and warranties of Purchaser contained
in Section 5 of this Agreement shall be true and correct in all material
respects at and as of the Closing, as if each such representation and
warranty had been made as of the Closing.
10.2 Performance. Purchaser shall have performed and complied in all material
respects with all covenants, agreements, obligations, commitments and
conditions required by this Agreement to be performed or complied with
prior to or at the Closing.
10.3 Purchaser's Certificate. Purchaser shall have delivered to Sellers a
certificate, dated the Closing Date and signed by the president or a vice
president of Purchaser, certifying to the fulfillment of the conditions
specified in Sections 8 and 10.
10.4 Other Documents. Purchaser shall have delivered to Sellers at the Closing
such other documents as Sellers may reasonably request.
11. INDEMNIFICATION
The Parties agree as follows:
11.1 Losses. As used in this Section 11, "Loss" and/or "Losses" shall mean any
loss, liability, claim, damage, expense (including costs of investigation
and defense, reasonable attorneys' fees and expert witness fees),
including, without limitation, all expenses reasonably incurred by an
Indemnitee as a result of any actions, lawsuits, proceedings,
investigations, claims, demands, assessments, and damages, penalties,
interest, judgments or settlements resulting therefrom, including, without
limitation, costs and expenses of litigation and reasonable attorneys'
fees. In instances in which the Indemnitee is Purchaser and/or its
subsidiaries and affiliates, the term "Loss" and/or "Losses" shall include
all Losses sustained by Acap and its subsidiaries.
11.2 Indemnity by Purchaser. Purchaser shall indemnify, defend and hold harmless
Sellers from and against Losses that arise out of:
11.2.1 the non-performance of any covenants, agreements, obligations or
commitments contained in this Agreement or in any exhibit, schedule,
certificate or other document delivered pursuant hereto required to be
performed by Purchaser; or
11.2.2 the fact that any representation or warranty made by Purchaser
contained in this Agreement or in any exhibit, schedule, certificate
or other document delivered pursuant hereto was untrue as of the
Closing Date (determined as if such representation or warranty had
been made as of the Closing Date).
11.3 Indemnity by Sellers. Sellers, jointly and severally, shall indemnify,
defend and hold harmless Purchaser and Purchaser's subsidiaries and
affiliates including, without limitation, its officers, directors,
employees and shareholders and those of its subsidiaries and affiliates
from and against Losses that arise out of:
11.3.1 the non-performance of any covenants, agreements, obligations or
commitments contained in this Agreement or in any exhibit, schedule,
certificate or other document delivered pursuant hereto required to be
performed by Sellers; or
11.3.2 any claim or claims by any current or former Acap shareholder or
shareholders or any governmental authority against Purchaser, Acap or
any of their subsidiaries or affiliates relating to any action or
actions taken by Acap prior to the Closing; or
11.3.3 the fact that any representation or warranty made by Sellers
contained in this Agreement or in any exhibit, schedule, certificate
or other document delivered pursuant hereto was untrue as of the
Closing Date (determined as if such representation or warranty had
been made as of the Closing Date), provided that a Seller who has not
breached any such representation or warranty is not required to
provide indemnification pursuant to this Subsection 11.3 for another
Seller's breach of a such representation or warranty.
In respect to any shares of Acap Common Stock purchased or to be purchased by
Purchaser pursuant to this Agreement, Purchaser shall be entitled to require the
same agreement to indemnify, defend and hold harmless Purchaser and Purchaser's
subsidiaries and affiliates from the shareholder selling the shares of Acap
Common Stock (subject to limitations comparable to those set out in Subsection
11.4.2).
11.4 Limitation of Claims and Amount.
11.4.1 Except as hereinafter provided, neither party shall have any right
to indemnification hereunder until the Losses suffered or incurred by
such party which (except for this Subsection 11.4) would otherwise be
indemnifiable pursuant to Subsection 11.1, 11.2 or 11.3, as the case
may be, exceed in the aggregate the base amount of $50,000 (the "Base
Amount"); provided that at such time as the Losses of a party
otherwise indemnifiable pursuant to Subsection 11.1, 11.2 or 11.3, as
the case may be, exceed in the aggregate the Base Amount, then such
party shall be entitled to indemnification to the extent such Losses
in the aggregate exceed the deductible amount of $20,000 (the
"Deductible Amount").
11.4.2 To the extent any indemnification obligation under Section 11.3
relates to Acap Losses [defined as Losses that are suffered by Acap
and its subsidiaries, and includes Losses Purchaser or any of
Purchaser's subsidiaries (other than Acap and its subsidiaries) or
affiliates elect to incur in the defense of Acap and its
subsidiaries], then the liability of Sellers therefor (i) shall be
limited to the fraction of such Loss that matches the fractional
relationship that the Sellers' Shares bear to the issued and
outstanding shares of Acap at time of Closing (the aggregate number of
the Shares being the numerator and the number of issued and
outstanding shares of Acap at time of Closing being the denominator)
and (ii) shall not exceed the aggregate purchase price paid for such
Shares. However, to the extent any indemnification under Section 11.3
relates to Purchaser or any of Purchaser's subsidiaries (other than
Acap and its subsidiaries) or affiliates, or Purchaser's officers,
directors, employees and shareholders and those of its subsidiaries
and affiliates (apart from Acap Losses as stated in the immediately
preceding sentence), then the limitations stated in the immediately
preceding sentence do not apply.
11.5 Payment. Payment required to be made to any party entitled to
indemnification hereunder shall be made within ten days after receipt of an
invoice therefor from a party seeking indemnification. If any payment is
not made within the aforesaid time, the amount thereof shall bear interest,
compounded annually, at the prime rate of interest reflected in the Wall
Street Journal on the day on which such payment was due, until paid. In the
event of any dispute with respect to a party's obligation to make any such
payment, the Parties shall use their best efforts to resolve such dispute
as promptly as practicable.
11.6 Notice. Any person, corporation or other legal entity entitled to
indemnification under Subsection 11.2 or 11.3, as the case may be, making a
claim under this Section 11 is hereinafter referred to as the "Indemnitee"
and the party against whom such claim is asserted under this Section 11 is
hereinafter referred to as the "Indemnitor." All claims by any Indemnitee
under this Section 11 shall be asserted by Indemnitee delivering or causing
to be delivered, to Indemnitor, a written notice (the "Claim Notice")
describing in reasonable detail the facts or circumstances which may result
in a claim of Loss. (Such claim of Loss is hereinafter referred to as an
"Asserted Liability.") Indemnitee shall use reasonable efforts to give the
Claim Notice not later than the earlier of:
11.6.1 One month after the time at which Indemnitee is notified in writing,
actually becomes aware of or otherwise obtains actual knowledge of any
action, proceeding, investigation, demand or claim (whether actual or
threatened) or any other circumstance or state of facts which could
give rise to an Asserted Liability, or
11.6.2 With respect to any Asserted Liability which has become the subject
of proceedings before any court or tribunal or in which Indemnitee has
been served with legal process within such time as would allow
Indemnitor to timely file responsive pleadings in such proceeding or
action.
If a Claim Notice is not given by the Indemnitee as herein provided, the
Indemnitee shall nevertheless be entitled to indemnification hereunder to the
extent that the Indemnitee can establish that the Indemnitor has not been
prejudiced by such time elapsed.
The Parties agree that a Claim Notice may be delivered to Guest and ▇▇▇▇▇▇▇ on
behalf of any Indemnitor who is a Seller.
11.7 Defense of Claims.
11.7.1 Subject to the limitations hereinafter set forth, Indemnitor shall
have the right to control the contest of any Asserted Liability and
shall defend, at its own expense and by its own counsel, any Asserted
Liability. If Indemnitor does not notify Indemnitee in writing within
one month after receipt of the Claim Notice, or within the time period
prior to the date on which responsive pleadings must be filed,
whichever is less, that it elects to undertake the defense thereof,
Indemnitee shall have the right to defend the Asserted Liability with
counsel of its choosing reasonably satisfactory to Indemnitor. Even in
the event that Indemnitor does not notify Indemnitee that it elects to
undertake the defense of an Asserted Liability within the applicable
time periods set forth in this Section 11, Indemnitor shall have the
right to assume the defense of such Asserted Liability, and to select
counsel reasonably satisfactory to Indemnitee, at any time prior to
settlement or final determination thereof; provided, however, that in
such event Indemnitor shall be responsible for and shall pay (or
reimburse Indemnitee for) the fees and expenses of counsel employed by
Indemnitee prior to Indemnitor's assumption of the defense of any such
Asserted Liability.
11.7.2 In the event that Indemnitor commences or thereafter assumes the
defense of any Asserted Liability as provided in Section 11,
Indemnitee shall have the right to employ separate counsel with
respect to such claim and to participate in the defense thereof,
provided that the fees and expenses of counsel employed by Indemnitee
shall be at the expense of Indemnitee unless the employment of such
counsel has been specifically authorized in writing by Indemnitor.
11.7.3 Indemnitor will not compromise or settle any Asserted Liability
without the prior written consent of Indemnitee (which consent will
not be unreasonably withheld or delayed), unless such settlement or
compromise does not subject any Indemnitee to any monetary liability,
does not affect the operations of any Indemnitee or Acap, American
Capitol, Texas Imperial or Imperial Plan or any of their respective
subsidiaries and includes a complete, unconditional release of all
Indemnitees from all liability with respect to such Asserted
Liability.
11.8 Cooperation. After the Closing Date, Sellers and Purchaser shall each
cooperate fully with the other (including, without limitation, affording
the other an opportunity to participate in the defense) as to all Asserted
Liabilities, shall make available to the other as reasonably requested all
information, records and documents relating thereto and shall preserve all
such information, records and documents until the termination of any claim.
Sellers and Purchaser shall each also make available to the other, as
reasonably requested, its personnel, agents and other representatives who
are responsible for preparing or maintaining information, records or other
documents, or who may have particular knowledge with respect to any such
Asserted Liability.
11.9 No Insurance. The indemnifications provided in this Agreement shall not be
construed as a form of insurance and shall be binding upon and inure to the
benefit of Purchaser, Sellers and their respective affiliates; and the
indemnification provisions shall apply with full force and effect
notwithstanding the fact the Indemnitee has insurance covering all or a
portion of the Losses provided that an Indemnitor shall be subrogated to
any right an Indemnitee may have to receive any insurance proceeds payable
in respect of any Losses for which indemnification has been provided.
11.10 Single Claims. It is expressly agreed that, where the provisions of this
Section 11entitle more than one entity to indemnification in respect of the
same Loss, Indemnitor shall only be liable once under this Section 11 for
the full amount of such Loss notwithstanding that more than one Indemnitee
might have sought indemnification in respect of that Loss.
12. SURVIVAL OF OBLIGATIONS
Unless otherwise specifically set forth in this Agreement or in any of the
exhibits, schedules, certificates or other agreements delivered pursuant hereto,
all representations and warranties and all covenants, agreements, obligations
and commitments to be performed on or prior to the Closing Date contained in
this Agreement or in any such exhibit, schedule, certificate or other agreement
delivered pursuant hereto, shall terminate two years from the Closing Date
(without prejudice to any then pending claims) and no party shall be entitled to
submit a claim for indemnification with respect to any possible Loss resulting
from or arising out of the non-performance of any such covenant, agreement,
obligation or commitment or of any representation or warranty being untrue as of
the Closing Date unless notice of such claim has been delivered within two years
from the Closing Date. Any obligation resulting from or arising out of the
non-performance of any such covenant, agreement, obligation or commitment or of
any representation or warranty being untrue as of the Closing Date as to which a
written notice of possible Loss shall have been given to the indemnifying party
in accordance with the requirements of Section 11 hereof shall survive, as to
matters identified in such notice, until the resolution of the matters referred
to therein. Unless otherwise specifically set forth herein or in any of the
exhibits, schedules, certificates or other agreements delivered pursuant hereto,
in case of any representation or warranty being untrue as of the Closing Date or
any non-performance of any covenant, agreement, obligation or commitment
contained in this Agreement, or in any exhibit, schedule, certificate or other
agreement delivered pursuant hereto, the exclusive remedy therefor shall be
indemnification pursuant to Section 11 hereof.
Notwithstanding the foregoing, the obligation of Sellers to provide
indemnification under Subsection 11.3.2 shall survive the Closing and continue
so long as any claim by any current or former Acap shareholder may be asserted
against Purchaser or Acap (or its successor) with respect to any action or
actions taken by Acap prior to the Closing, provided the party seeking
indemnification hereunder must provide notice of any such indemnification claim
within six years of the Closing Date.
13. TERMINATION OF AGREEMENT
13.1 Termination. This Agreement may be terminated at any time prior to Closing
as follows:
13.1.1 by mutual written consent of Sellers and Purchaser;
13.1.2 by Sellers or Purchaser if the conditions set forth in Section 8
have not been satisfied or waived in writing by Sellers or Purchaser,
as the case may be, on or before the Closing Date (other than through
the failure of the Party seeking to terminate to comply with its or
his obligations under this Agreement);
13.1.3 by Sellers if the conditions set forth in Section 10 have not been
satisfied or waived in writing by Sellers on or before the Closing
Date (other than through the failure of Party seeking to terminate to
comply with its or his obligations under this Agreement);
13.1.4 by Purchaser if the conditions set forth in Section 9 have not been
satisfied or waived in writing by Purchaser on or before the Closing
Date (other than through the failure of Party seeking to terminate to
comply with its or his obligations under this Agreement);
13.1.5 by Purchaser on or before the date that is four weeks from the date
hereof, if Purchaser, in the course of its due diligence investigation
since June 30, 2006, learns or obtains information that it believes
has, will or is reasonably expected to have, a material adverse impact
on the condition (financial and otherwise), business, assets,
liabilities, results of operations, prospects or value of Acap or any
of its subsidiaries, individually or as a whole, or the value of the
Shares or otherwise concludes, based on information available to it,
that the condition (financial and otherwise), business, assets,
liabilities, results of operations, prospects or value of Acap or any
of its subsidiaries, individually or as a whole, or the value of the
Shares is materially different from what it understands them to be as
of the Date Hereof;
13.1.6 by Purchaser by written notice to Sellers if Purchaser reasonably
concludes that action was taken or there was a failure to take action
that was not "in the ordinary course of business" as set forth in
Subsection 6.2 hereof; or
13.1.7 by either Purchaser or Sellers upon written notice to the other
Party of Parties, as the case may be, if the Closing is not
consummated on or before the Closing Date, unless the failure to
consummate the Closing by such date shall be due to the action or
failure to act of the Party seeking to terminate this Agreement or the
non-satisfaction of any condition to Closing.
13.2 Effect of Termination. In the event of any rightful termination of this
Agreement in accordance with this Section, no party to this Agreement will
have any liability to the other, except (a) Sellers shall be entitled to
retain the Escrow Fund as set forth in Section 3.6, (b) Purchaser shall be
entitled to payment of the sum of Two Million Dollars as set forth in
Section 6.5, (c) if, prior to the expiration of four weeks from the Date
Hereof, such rightful termination results from the other Party's
intentional or reckless breach of this Agreement, the terminating Party
shall have all remedies available to it at law or in equity, and (d) if,
after the expiration of four weeks from the Date Hereof, such rightful
termination results from a Party's breach of this Agreement, the
terminating Party shall have all remedies available to it at law or in
equity. In the event of any wrongful termination of this Agreement, the
Parties shall have all remedies available to them at law or in equity
subject, in the case of a termination within four weeks of the Date Hereof,
to any limitation set forth in Subsection 3.6. This Subsection (and the
subsections referred to herein) shall survive the termination of this
Agreement.
14. MISCELLANEOUS
14.1 Applicable Law, Venue and Jurisdiction. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, excluding
any conflicts-of-law rule or principle that might refer construction of
such provisions to the laws of another jurisdiction. The Parties agree that
this Agreement was made and entered into in Houston, ▇▇▇▇▇▇ County, Texas.
In the event of a dispute concerning this Agreement, the Parties agree that
venue lies in a court of competent jurisdiction in ▇▇▇▇▇▇ County, Texas.
14.2 Benefit. This Agreement shall be binding upon, and enforceable against, the
Parties hereto and shall inure to the exclusive benefit of the Parties
hereto, and their successors or permitted assigns, except as enforceability
may be limited by applicable bankruptcy laws or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
14.3 Third Parties. Except for the Guest Trust, any Come-Along Acap Shareholders
who join in this Agreement as Sellers hereunder and Holders of Acap Stock
Put Options who execute a stock option agreement as expressly set forth
herein, this Agreement is not intended to, and shall not, convey or provide
any right or benefit to any person, individual or entity that is not a
party hereto. Nothing in this Agreement is intended to relieve or discharge
the obligation or liability of any third person or entity to any Party or
give any third person or entity any right of subrogation or action against
any party to this Agreement.
14.4 Waiver. Except as otherwise expressly provided herein, neither the failure
nor any delay on the part of any party hereto in exercising any rights,
power or remedy hereunder shall operate as a waiver thereof, or of any
other right, power or remedy; nor shall any single or partial exercise of
any right, power or remedy preclude any further or other exercise thereof,
or the exercise of any other right, power or remedy.
14.5 Interpretation. It is acknowledged by the Parties that this Agreement has
undergone several drafts with the negotiated suggestions of both and,
therefore, no presumptions shall arise favoring any party by virtue of the
authorship of any of its provisions.
14.6 Gender and Number. Where appropriate, words that may be gender specific
shall apply equally to either the masculine or feminine forms, as the
context requires, and words that may be number specific shall apply equally
to the singular and plural forms, as the context requires.
14.7 Entire Agreement and Amendment. This Agreement, the schedules, exhibits and
any Addendum hereto, each of which is deemed to be a part hereof, and any
certificates or other agreements executed and delivered by the Parties
pursuant to this Agreement, constitute the entire agreement and
understanding between the Parties hereto, and it is understood and agreed
that all undertakings, negotiations and agreements heretofore had between
the Parties are merged herein and no longer of any force or effect. This
Agreement may not be modified orally, but only by an agreement in writing
signed by Purchaser and Sellers, and delivered each to the other. Except as
expressly provided herein, no waiver of any of the provisions of this
Agreement shall be valid unless it is in writing and signed by the Party
against whom it is sought to be enforced, and delivered to the other Party
or Parties, as the case may be.
14.8 Notices. Any notice made pursuant to this Agreement shall be in writing and
signed by an authorized representative of the Party giving said notice, and
shall be deemed to have been duly given on the date of delivery if
delivered personally (including overnight delivery service actually
delivered during regular business hours of the Party addressed) or on the
date when actually received, or by a completed facsimile transmission to
the Party to whom notice is given, or on the third day after mailing if
mailed to the Party to whom notice is to be given by certified U. S. mail,
return receipt requested, and properly addressed as follows:
If to Purchaser:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
UTG, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Sellers:
▇▇▇▇▇▇▇ ▇. Guest
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
And
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Each of Guest and ▇▇▇▇▇▇▇ are authorized to receive any notices hereunder on
behalf of all Sellers
Any Party to this Agreement may change the address and/or facsimile number to
which notice is to be delivered to such Party under this Section by delivering
written notice to that effect to the other Party in accordance with this
Section. Any document delivered via facsimile transmission shall be treated as
the original for all purposes unless the original is substituted therefor.
14.9 No Assignment. This Agreement shall be assignable by any Party hereto only
with the written consent of the other Party or Parties, as the case may be.
14.10 Severability. If any provision of this Agreement is invalid, illegal or
unenforceable, the balance of this Agreement shall remain in full force and
effect and this Agreement shall be construed in all respects as if such
invalid, illegal or unenforceable provision were omitted. If any provision
is inapplicable to any person or circumstance, it shall, nevertheless,
remain applicable to all other persons and circumstances.
14.11 Headings. Any paragraph headings in this Agreement are for convenience of
reference only, and shall be given no effect in the construction or
interpretation of this Agreement or any provisions thereof.
14.12 Counterparts. This Agreement may be executed simultaneously in two or more
counterparts (including execution by facsimile transmission), each of which
shall be deemed an original, and which together shall constitute but one
and the same instrument.
14.13 Publicity. To the extent consistent with reporting and disclosure
requirements under applicable law, prior to the Closing, all publicity and
announcements by the Parties concerning the transactions contemplated
hereby shall be jointly planned and coordinated, and no Party shall act
unilaterally in this regard without the prior approval of the other Party
or Parties, as the case may be, which approval shall not be unreasonably
withheld. Nothing in this Section shall prevent a Party from discharging
its legally required obligations regarding announcements and/or
disclosures.
14.14 Expenses. Unless otherwise provided herein, Purchaser and Sellers shall
each bear all expenses incurred by it in connection with the preparation,
performance and consummation of the transactions contemplated by this
Agreement.
14.15 Cooperation After Closing.
14.15.1 Sellers will, at any time and from time to time following the
Closing, upon the reasonable request of Purchaser and without further
consideration, take such actions and execute and deliver such further
documents and instruments as may be reasonably necessary and proper to
effectively transfer the Shares to Purchaser and to effectively carry
out the other terms and provisions of this Agreement and the other
transactions contemplated hereby.
14.15.2 Purchaser will, at any time and from time to time following the
Closing, upon the reasonable request of Sellers and, without further
consideration, take such actions and execute and deliver, or cause to
be executed and delivered, to Sellers such further documents and
instruments as may reasonably be necessary and proper to effectively
carry out the terms and provisions of this Agreement and the
transactions contemplated hereby.
14.15.3 From and after the Closing, (i) Purchaser shall promptly transfer
and deliver to Sellers from time to time any cash or other property,
including mail, which it may receive which belongs to Sellers, and
(ii) Sellers shall promptly transfer and deliver to Purchaser from
time to time, any cash or other property, including mail, that Sellers
may receive which belong to Purchaser or Acap or its subsidiaries.
14.15.4 Purchaser and Sellers shall cooperate in good faith with one
another in connection with the defense or presentation by any of them
of each lawsuit or claim against Acap or its subsidiaries arising out
of this transaction, if any. Such cooperation shall include (i)
supplying, at the expense of the other, such factual and technical
information as it shall possess and the other may reasonably require
in connection with any such defense, (ii) making available, at the
expense of the other, appropriate persons employed by it to testify as
fact or expert witnesses at trial and on deposition in connection with
such suit and (iii) providing, at the expense of the other, such
information as may be required by it to respond to discovery
proceedings in any such lawsuits. Payment of expenses hereunder shall
be limited to reasonable out-of-pocket expenses and reimbursement of
salaries or wages for the time of employees.
14.16 Equitable Remedies. The Parties recognize that the subject matter of this
Agreement is unique and that irreparable harm could result in the event of
a breach or threatened breach of this Agreement for which money damages
would be inadequate. In addition to the remedies expressly provided
elsewhere in this Agreement, a Party shall be entitled to equitable
remedies, including specific performance and injunctive relief, in the
event of any breach or threatened breach of this Agreement by another Party
hereto.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement, and made
delivery thereof, as of the Effective Date.
UTG, Inc., PURCHASER
By:_/s/ ▇▇▇▇▇▇▇▇ ▇. Miller____________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
SELLERS:
By: _/s/ ▇▇▇▇▇▇▇ ▇. Guest_____________
▇▇▇▇▇▇▇ ▇. Guest
By:_/s/ ▇▇▇▇ ▇. Cornett_______________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ADDENDUM TO STOCK PURCHASE AGREEMENT
dated August 7, 2006
Among UTG, Inc. and Certain Individual Shareholders of Acap Corporation
The undersigned is a "Come-Along Acap Shareholder" under the above
referenced Stock Purchase Agreement (herein so called) and executes this
Addendum to join in the Stock Purchase Agreement as a "Seller" thereunder in
order to sell the shares of common stock of Acap Corporation owned of record and
beneficially by the undersigned and set out below to UTG, Inc. at the Closing of
the Stock Purchase Agreement, in accordance with its terms.
The undersigned agrees to be bound by the Stock Purchase Agreement as a
Seller thereunder, and makes, adopts, assumes and agrees to perform all of the
representations, warranties, covenants and indemnities of a Seller thereunder to
the same extent as if the undersigned had initially signed the Stock Purchase
Agreement as a party thereto. The Stock Purchase Agreement is incorporated
herein by reference.
IN WITNESS WHEREOF, the undersigned has duly executed this Addendum, and
made delivery thereof, as of the date set out below.
Date:_________________
Number of shares of Acap Corporation common stock:______________
_________________________
[Signature]
_________________________
[Printed name]