STOCK PURCHASE AGREEMENT BY AND BETWEEN FAMILY LIFE CORPORATION AND THE MANHATTAN LIFE INSURANCE COMPANY Dated as of December 8, 2006
EXHIBIT
2.1
BY
AND BETWEEN
FAMILY
LIFE CORPORATION
AND
THE
MANHATTAN LIFE INSURANCE COMPANY
Dated
as of December 8, 2006
TABLE
OF CONTENTS
|
ARTICLE
1 DEFINITIONS
|
3
|
|
|
1.1
|
Definitions
|
3
|
|
ARTICLE
2 PURCHASE AND SALE OF SHARES
|
7
|
|
|
2.1
|
Closing
|
7
|
|
2.2
|
Transfer
of Shares
|
7
|
|
2.3
|
Purchase
Price
|
7
|
|
2.4
|
Preliminary
Purchase Price Adjustments
|
7
|
|
2.5
|
Closing
Deliveries
|
9
|
|
2.6
|
Wire
Transfers
|
10
|
|
ARTICLE
3 REPRESENTATIONS AND WARRANTIES OF SELLER
|
10
|
|
|
3.1
|
Corporate
Existence and Power
|
10
|
|
3.2
|
Authority
|
10
|
|
3.3
|
Governmental
Authorization
|
10
|
|
3.4
|
No
Conflict or Violation by Seller
|
11
|
|
3.5
|
Brokerage
and Financial Advisers
|
11
|
|
3.6
|
Shares
|
11
|
|
ARTICLE
4 REPRESENTATIONS AND WARRANTIES OF THE
PURCHASER
|
11
|
|
|
4.1
|
Corporate
Existence and Power
|
11
|
|
4.2
|
Authority
|
11
|
|
4.3
|
Governmental
Authorization
|
12
|
|
4.4
|
No
Conflict or Violation by Purchaser
|
12
|
|
4.5
|
Brokerage
and Financial Advisers
|
12
|
|
4.6
|
Investment
Intent
|
12
|
|
4.7
|
Licenses
and Franchises
|
12
|
|
4.8
|
Financial
Capability
|
12
|
|
ARTICLE
5 REPRESENTATIONS AND WARRANTIES CONCERNING THE
COMPANY
|
13
|
|
|
5.1
|
Corporate
Existence and Power
|
13
|
|
5.2
|
Capitalization
|
13
|
|
5.3
|
No
Conflict or Violation by Company
|
13
|
|
5.4
|
Permits
|
13
|
|
5.5
|
Financial
Statements
|
14
|
|
5.6
|
Actions
and Proceedings
|
14
|
|
5.7
|
Compliance
with Laws
|
14
|
|
5.8
|
Regulatory
Filings
|
15
|
|
5.9
|
Labor
and Benefit Matters
|
15
|
|
5.10
|
Tax
Returns
|
15
|
|
5.11
|
Title
to Assets
|
16
|
|
5.12
|
Real
Properties, Offices, Etc.
|
16
|
|
5.13
|
Personal
Property
|
16
|
|
5.14
|
Trademarks
and Copyrights
|
16
|
|
5.15
|
Conduct
of Business
|
16
|
|
5.16
|
Insurance
Policies
|
16
|
|
5.17
|
Bank
Accounts, Etc.
|
16
|
|
5.18
|
Books
and Records
|
16
|
|
5.19
|
Labor
Disagreements
|
17
|
|
5.20
|
Commercial
Domicile
|
17
|
|
5.21
|
Subsidiaries
|
17
|
|
5.22
|
Affiliate
Transactions
|
17
|
|
5.23
|
Agents
|
17
|
|
5.24
|
Material
Contracts
|
17
|
Table
of Contents
-i-
|
ARTICLE
6 COVENANTS
|
18
|
|
|
6.1
|
Related
Transactions
|
18
|
|
6.2
|
Investigations;
Pre-Closing Access
|
18
|
|
6.3
|
Filings;
Other Actions; Notifications
|
19
|
|
6.4
|
Expenses
|
20
|
|
6.5
|
Certain
Notices
|
20
|
|
6.6
|
Tax
Payments
|
20
|
|
6.7
|
Updating
Schedules
|
23
|
|
6.8
|
Certain
Transactions
|
23
|
|
6.9
|
Further
Assurances
|
23
|
|
6.10
|
Confidentiality
|
23
|
|
6.11
|
Non-Competition
and Non-Piracy
|
24
|
|
6.12
|
Preferred
Stock
|
25
|
|
6.13
|
FIC
Stock
|
25
|
|
6.14
|
Pension
Plan
|
25
|
|
6.15
|
Related
Transactions
|
25
|
|
6.16
|
Affiliate
Transactions
|
25
|
|
6.17
|
Examination
Reports
|
25
|
|
ARTICLE
7 CONDITIONS TO CLOSING
|
25
|
|
|
7.1
|
Conditions
to Obligations of Each Party
|
25
|
|
7.2
|
Conditions
to Obligations of Purchaser
|
26
|
|
7.3
|
Conditions
to Obligations of the Seller
|
26
|
|
7.4
|
Frustrations
of Conditions
|
27
|
|
ARTICLE
8 SURVIVAL
|
27
|
|
|
8.1
|
Survival
|
27
|
|
ARTICLE
9 INDEMNIFICATION
|
27 | |
|
9.1
|
Obligation
to Indemnify
|
27
|
|
9.2
|
Claims
Notice
|
28
|
|
9.3
|
Procedures
for Direct Claims
|
29
|
|
9.4
|
Indemnification
Payments
|
29
|
|
9.5
|
Limitations
on Indemnification Obligations
|
30
|
|
9.6
|
Exclusivity
and Equitable Relief
|
31
|
|
ARTICLE
10 TERMINATION PRIOR TO CLOSING
|
31
|
|
|
10.1
|
Termination
by Mutual Consent
|
31
|
|
10.2
|
Termination
by Either Seller or Purchaser
|
31
|
|
10.3
|
Termination
by Seller
|
31
|
|
10.4
|
Termination
by Purchaser
|
31
|
|
10.5
|
Procedure
Upon Termination
|
32
|
|
10.6
|
Effect
of Termination; Survival
|
32
|
|
ARTICLE
11 MISCELLANEOUS
|
32
|
|
|
11.1
|
Entire
Agreement
|
32
|
|
11.2
|
Waivers
and Amendments
|
33
|
|
11.3
|
Publicity
and Confidentiality
|
33
|
|
11.4
|
Assignment
|
33
|
|
11.5
|
Notices
|
33
|
|
11.6
|
Venue
and Jurisdiction
|
34
|
|
11.7
|
Governing
Law
|
34
|
|
11.8
|
Captions
|
34
|
|
11.9
|
Interpretation
|
34
|
|
11.10
|
Severability
|
35
|
|
11.11
|
Counterparts
|
35
|
|
11.12
|
No
Third Party Beneficiaries
|
35
|
|
11.13
|
Expenses
|
35
|
|
11.14
|
Date
of Execution
|
35
|
Table
of Contents
-ii-
THIS
STOCK PURCHASE AGREEMENT
(this
“Agreement”),
dated
as of December 8, 2006, is entered into by and between FAMILY LIFE
CORPORATION (“Seller”),
a
holding company incorporated under the laws of Washington, and THE MANHATTAN
LIFE INSURANCE COMPANY (“Purchaser”),
a
life insurance company organized under the laws of New York. Certain capitalized
terms used herein are defined in Section 1.1.
WHEREAS,
Seller
owns all of the issued and outstanding shares (the “Shares”)
of
common stock of Family Life Insurance Company, a Texas domiciled stock insurance
company (the “Company”);
and
WHEREAS,
Purchaser desires to purchase from Seller, and Seller desires to sell to
Purchaser, all of the Shares, on the terms and conditions set forth
herein.
NOW,
THEREFORE,
in
consideration of the respective representations, warranties, and covenants
set
forth herein, and for other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE
1
DEFINITIONS
1.1 Definitions.
The
following terms shall have the respective meanings set forth below throughout
this Agreement:
“Adjusted Closing
Policyholder Surplus” has
the
meaning set forth in Section 2.4(a).
“Adjusted
Closing Policyholder Surplus Statement” has
the
meaning set forth in Section 2.4(a).
“Affiliate”
means,
with respect to any Person, at any relevant time, any other Person controlling,
controlled by or under common control with such Person.
“Applicable
Law”
means
any domestic or foreign federal, state, or local statute, law, ordinance,
or
code, or any written rules, regulations, or administrative interpretations
issued by any Governmental Authority pursuant to any of the foregoing, and
any
order, writ, injunction, directive, judgment, or decree of a court of competent
jurisdiction applicable to the parties hereto.
Table
of Contents
-iii-
“Arbiter” shall
be
BDO ▇▇▇▇▇▇▇, LLP or such other person or entity mutually selected by the
parties.
“Basket”
has
the
meaning set forth in Section 9.5(a).
“Business
Day”
means
any day other than a Saturday, Sunday, a day on which banking institutions
in
the State of New York are permitted or obligated by Applicable Law to be
closed,
or a day on which the New York Stock Exchange is closed for
trading.
“Cap”
has
the
meaning set forth in Section 9.5(a).
“Claims
Notice”
has
the
meaning set forth in Section 9.2(a).
“Closing”
means
the closing of the transactions contemplated by this Agreement.
“Closing
Date”
means
the five (5) Business Days after the last of the conditions to Closing set
forth
in this Agreement are satisfied or waived in writing prior; provided,
however,
that if
such date is not a month end, the Closing Date shall be the immediately
succeeding month end; and provided further,
if such
month end is not on a Business Day, the Closing Date shall be the immediately
succeeding Business Day; and provided further,
that
the Closing may occur on such other date as the parties may agree to in
writing.
“Closing
Purchase Price”
has
the
meaning set forth in Section 2.3.
“Code” means
the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder.
“Company”
has
the
meaning set forth in the first recital of this Agreement.
“Company
SAP Statements” have
the
meanings set forth in Section 5.5.
“Confidential
Information” has
the
meaning set forth in Section 6.10.
“Consent”
means
any consent, approval, authorization, clearance, exemption, waiver, or similar
affirmation by any Person pursuant to any Contract or Applicable
Law.
“Contract”
means
any written contract, agreement, indenture, note, bond, mortgage, loan,
instrument, lease, or license.
“Control”
(including the terms “controlling,”
“controlled
by,”
and
“under
common control with”)
means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by Contract or
otherwise. Except as provided otherwise in this Agreement, control is presumed
to exist if any Person, directly or indirectly, owns, controls, or holds
with
the power to vote ten percent (10%) or more of the voting securities of any
other Person, or is entitled by Contract or otherwise to appoint or elect
the
majority of the board of directors or comparable governing body of any other
Person.
“Effective
Date”
has
the
meaning set forth in Section 11.14.
“Enforceability
Exceptions”
has
the
meaning set forth in Section 3.2.
“ERISA” has
the
meaning set forth in Section 5.9.
“Excluded
Taxes” has
the
meaning set forth in Section 6.6(a).
“FIC
Share Dividend” has
the
meaning set forth in Section 6.13.
“Governmental
Authority”
means
any court, administrative or regulatory agency or commission, or other federal,
state, or local governmental authority or instrumentality having jurisdiction
over any party hereto.
“Indemnified
Party”
has
the
meaning set forth in Section 9.2(a).
“Indemnifying
Party”
has
the
meaning set forth in Section 9.2(a).
“IRS”
means
the United States Internal Revenue Service.
“Knowledge
of Purchaser”
means
the actual knowledge of the Persons set forth on Schedule 1.1(a).
“Knowledge
of Seller” means
the
actual knowledge of the Persons set forth on Schedule 1.1(b).
“Lien” means
any
claim, charge, easement, encroachment, encumbrance, hypothecation, infringement,
lien, mortgage, pledge, security interest, or other security arrangement,
on or
with respect to any asset or property.
“Litigation”
means
any pending action, cause of action (whether at law or in equity), arbitration,
claim or complaint by any Person alleging potential liability, wrongdoing
or
misdeed of another Person (other than claims for policy benefits in the Ordinary
Course of Business), or any administrative or other similar proceeding, criminal
prosecution or investigation by any Governmental Authority alleging potential
liability, wrongdoing or misdeed of another Person.
“Loss”
and
“Losses”
means
all actions, claims, losses, liabilities, damages, costs, expenses (including
reasonable attorneys’ fees), interest, and penalties.
“Material
Contract”
has
the
meaning set forth in Section 5.24(a).
“Ordinary
Course of Business”
means
the ordinary and usual course of normal operations of the Company through
the
Effective Date consistent with past practice.
“Permits” means
any
licenses, permits, orders, approvals, registrations, authorizations, or
qualifications of Governmental Authority required under Applicable
Law.
“Permitted
Lien” means
(i) statutory liens for Taxes, assessments or other governmental charges
not yet due and payable or the amount or validity of which is being contested
in
good faith by appropriate proceedings and for which appropriate reserves
have
been established in accordance with Texas SAP, (ii) any minor imperfection
of title that does not materially interfere with the present use or continuation
of such present use by the Company, (iii) liens or obligations arising in
the Ordinary Course of Business securing accrued obligations not yet due
and
payable and which individually or in the aggregate would not be material
to the
Company and (iv) purchase money Liens arising in the Ordinary Course of
Business and which individually or in the aggregate would not be material
to the
Company.
“Person”
means
any individual, corporation, partnership, firm, joint venture, association,
joint-stock company, limited liability company, trust, unincorporated
organization, governmental, judicial or regulatory body, business unit,
division, or other entity.
“Policies”
means
all policies or insurance and annuity contracts, together with all related
binders, slips and certificates (including applications therefore and all
supplements, endorsements, riders and agreements in connection therewith)
which
have been issued or reinsured by the Company (in accordance with, and as
determined by reference to, the Company’s historical practices) before the
Effective Date.
“Purchase
Price”
has
the
meaning set forth in Section 2.4(d).
“Purchaser”
means
The Manhattan Life Insurance Company.
“Purchaser
Indemnified Parties”
has
the
meaning set forth in Section 9.1(a).
“Purchaser
Material Adverse Effect”
means
an event, change or occurrence that, individually or together with any other
event, change or occurrence, has a material adverse effect on (a) the
business, properties, assets, liabilities, operations or financial condition
of
Purchaser considered as a whole, or (b) the ability of Purchaser to perform
its obligations under this Agreement or to consummate the transactions
contemplated hereby.
“Securities
Act” means
the
Securities Act of 1933, as amended.
“Seller” means
Family Life Corporation.
“Seller
Indemnified Parties” has
the
meaning set forth in Section 9.1(b).
“Seller
Material Adverse Effect”
means
an event, change or occurrence that, individually or together with any other
event, change or occurrence, has a material adverse effect on (a) the
business, properties, assets, liabilities, operations or financial condition
of
the Company considered as a whole, or (b) the ability of Seller to perform
its obligations under this Agreement or to consummate the transactions
contemplated hereby, provided,
however,
that a
“Seller Material Adverse Effect” shall not include the effect of any event,
change or occurrence arising out of or attributable to an Excluded Matter.
“Excluded Matter” means any one or more of the following: (i) the effects
of changes that are generally applicable to any segment of the lines insurance
industry generally, (ii) the effect of any general economic, political or
market conditions, (iii) the effect of any outbreak or escalation of
hostilities, earthquakes, war (whether or not declared), acts of terrorism,
or
national emergency or other national or international calamity or crisis,
(iv) the effect of any general suspension of trading in securities or the
declaration of a banking moratorium or any suspension of payments on the
extension of credit by lending institutions, (v) the effect of any
accounting rules or Applicable Law or in the interpretation of any Applicable
Law by any Governmental Authority, (vi) the effect of any changes in Texas
SAP, (vii) the effect of any changes in prevailing interest rates,
(viii) financial or securities market fluctuations or conditions,
(ix) any change or effect resulting from the announcement of the pendency
of the transactions contemplated herein, and (x) the effects of a force
majeure event.
“Shares”
has
the
meaning set forth in the first recital to this Agreement.
“Straddle
Periods”
has
the
meaning set forth in Section 6.6(a).
“Sub-Basket”
has
the
meaning set forth in Section 9.5(a).
“Survival
Period”
has
the
meaning set forth in Section 8.1.
“Taxes”
(or
“Tax”
as
the
context may require) means all federal, state, county, local, foreign and
other
taxes (including, without limitation, income, profits, premium, estimated,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem, severance,
capital levy, production, transfer, withholding, employment and payroll related,
and property taxes).
“Texas
SAP”
means
the statutory accounting principles and practices prescribed or permitted
by the
Insurance Department of the State of Texas, as of the Effective
Date.
“Third
Party Claim” has
the
meaning set forth in Section 9.2(a).
ARTICLE
2
PURCHASE
AND SALE OF SHARES
2.1 Closing.
The
Closing shall take place on the Closing Date at 10:00 a.m. local time at
the
offices of Seller (or
such
other time and place as Purchaser and Seller may mutually agree in writing).
The
transactions contemplated hereby shall be deemed to have been consummated
and
become effective for all purposes as of the Closing Date.
2.2 Transfer
of Shares.
Subject
to the terms and conditions of this Agreement, Purchaser agrees to purchase
from
Seller, and Seller agrees to sell to Purchaser, all of the Shares for the
consideration specified below in this Article 2.
2.3 Closing
Purchase Price.
Purchaser agrees to pay to Seller Twenty-Eight Million Dollars ($28,000,000)
(the “Closing
Purchase Price”),
subject to adjustment as provided in Section 2.4.
2.4 Post-Closing
Purchase Price Adjustments.
(a) Closing
Policyholder Surplus.
Within
forty-five (45) days following the Closing Date, Purchaser shall deliver
to
Seller a statement of the Adjusted Closing Policyholder Surplus (the “Adjusted
Closing
Policyholder Surplus Statement”).
“Adjusted
Closing Policyholder Surplus”
means
the policyholder surplus (referenced on line 38 on page 3 of the statutory
financial statements) of the Company (plus
the
interest maintenance reserve and asset valuation reserve which are referenced
on
line 9.4 and 24.1, respectively, in the statutory financial statements) as
of
the Closing. The
Adjusted Closing Policyholder Surplus shall be prepared in accordance with
Texas
SAP applied using the same accounting methods, practices, principles, policies,
and procedures, with consistent classifications, judgments, and valuation
and
estimation methodologies that were used in the preparation of the Company’s SAP
Statements for the most recent fiscal year-end, as if such Adjusted Closing
Policyholder Surplus was as of a fiscal year-end, subject to the methodologies
set forth in Schedule
2.4.
(b) Acceptance
of Statements; Dispute Procedures.
The
Adjusted Closing Policyholder Surplus Statement (and the computation of Adjusted
Closing Policyholder Surplus indicated thereon) delivered by Purchaser to
Seller
shall be conclusive and binding upon the parties unless Seller, within thirty
(30) days after delivery to Seller of the Adjusted Closing Policyholder Surplus
Statement, notifies Purchaser in writing that Seller disputes any of the
amounts
set forth therein, specifying the nature of the dispute and the basis therefore.
The parties shall in good faith attempt to resolve any dispute and, if the
parties so resolve all disputes, the Adjusted Closing Policyholder Surplus
Statement (and the computation of Adjusted Closing Policyholder Surplus
indicated thereon), as amended to the extent necessary to reflect the resolution
of the dispute, shall be conclusive and binding on the parties. If the parties
do not reach agreement in resolving the dispute within twenty (20) days after
notice is given by Seller to Purchaser pursuant to the second preceding
sentence, the parties shall submit the dispute to the Arbiter for resolution.
Promptly, but no later than twenty (20) days after acceptance of his or her
appointment as Arbiter, the Arbiter shall determine (it being understood
that in
making such determination, the Arbiter shall be functioning as an expert
and not
as an arbitrator), based solely on written submissions by Purchaser and Seller,
and not by independent review, only those issues in dispute and shall render
a
written report as to the resolution of the dispute and the resulting computation
of the Adjusted Closing Policyholder Surplus, which shall be conclusive and
binding on the parties. All proceedings conducted by the Arbiter shall take
place in Austin, Texas, unless otherwise agreed by the parties. In resolving
any
disputed item, the Arbiter (x) shall be bound by the provisions of this
Section 2.4 and (y) may not assign a value to any item greater than the
greatest value for such items claimed by either party or less than the smallest
value for such items claimed by either party. The fees, costs, and expenses
of
the Arbiter shall be allocated to and borne by Purchaser and Seller based
on the
inverse of the percentage that the Arbiter’s determination (before such
allocation) bears to the total amount of the total items in dispute as
originally submitted to the Arbiter. For example, should the items in dispute
total in amount to $1,000 and the Arbiter awards $600 in favor of Seller's
position, 60% of the costs of its review would be borne by Purchaser and
40% of
the costs would be borne by Seller.
(c) Purchase
Price Adjustment.
Upon
final determination of the Adjusted Closing Policyholder Surplus, as provided
in
Section 2.4(b) above, the Closing Purchase Price shall be increased or
decreased, if at all, as follows:
(i) The
Closing Purchase Price shall be adjusted upward only by the amount by which
the
final Adjusted Closing Policyholder Surplus exceeds $ 18,500,000.
(ii) The
Closing Purchase Price shall be adjusted downward only by the amount by which
the amount of the final Adjusted Closing Policyholder Surplus is less than
$
17,500,000.
(d) Payment.
If the
amount of any adjustment pursuant to Section 2.4(c)
above
results in an increase in the Closing Purchase Price, then Purchaser shall,
within three (3) Business Days after the Adjusted Closing Policyholder Surplus
Statement being deemed final, pay to Seller the amount of such increase by
wire
transfer of immediately available funds to the account specified by Seller.
If
the amount of any adjustment pursuant to Section 2.4(c)
above
results in a decrease in the Closing Purchase Price, then Seller shall, within
three (3) Business Days after the Adjusted Closing Policyholder Surplus
Statement being deemed final, pay to Purchaser the amount of such decrease
by
wire transfer of immediately available funds to the account specified by
Purchaser. Any payment amount shall bear interest thereon from the Closing
Date
to the date of payment at the rate equal to the prime rate announced by The
Wall
Street Journal, Eastern Edition, on the Closing Date. The Closing Purchase
Price, as so adjusted by Section 2.4(c),
is
referred to herein as the “Purchase
Price.”
(e) Interest.
For the
purposes of Section 2.4, interest will be payable at the “prime” rate, as
announced by The Wall Street Journal, Eastern Edition, from time to time
to be
in effect, calculated based on a 365-day year and the actual number of days
elapsed.
2.5 Closing
Deliveries.
(a) At
the
Closing, Seller shall execute (where appropriate) and deliver to Purchaser
the
following:
(i) Certificate(s)
representing the Shares, duly endorsed in blank or accompanied by stock powers
or other instruments of transfer duly executed in blank, bearing or accompanied
by all requisite stock transfer stamps, and certificates representing the
ownership by the Company.
(ii) Evidence
of receipt of all Consents identified on Schedule 7.2(d).
(iii) Letters
of resignation of all the directors and officers of the Company.
(iv) Certificates
of compliance and good standing issued by the insurance departments of each
jurisdiction in which the Company is licensed or authorized to do business
and
dated no more than thirty (30) days prior to the Closing Date. Seller shall
not
be required to provide such certificates for any jurisdiction for which counsel
for Seller certifies such certificates are unavailable from the respective
insurance departments because the insurance department does not issue such
certificates with respect to the license status of any insurance company
under
its jurisdiction.
(v) Seller
shall also have available for delivery to representatives of Purchaser at
a
mutually agreeable location, all of the books and records of the Company:
the
original minute books and seals; all portfolio securities, or in the case
of
portfolio securities on deposit with various insurance departments, stock
certificate books and stock record books; and all other original corporate
records and documents.
(vi) A
certificate complying with the Code certifying that Seller is not a foreign
person for purposes of Section 1445 of the Code.
(vii) Any
other
deliveries contemplated by Article 7.
(b) At
the
Closing, Purchaser shall execute (where appropriate) and deliver to Seller
the
following:
(i) The
Closing Purchase Price.
(ii) Evidence
of receipt of all Consents identified on Schedule 7.3(d).
(iii) Any
other
deliveries contemplated by Article 7.
2.6 Wire
Transfers.
Any
payment of cash required by this Agreement shall be paid to the recipient
in
immediately available funds, United States Dollars, by means of a wire transfer
if the recipient provides to the payer appropriate wire transfer instructions
at
least one Business Day prior to the required date of payment.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF SELLER
Seller
hereby represents and warrants to Purchaser as follows:
3.1 Corporate
Existence and Power.
Seller
is organized, validly existing and in good standing under the laws of Washington
and has all requisite powers required to carry on its business as now
conducted.
3.2 Authority. Seller
has all requisite power and authority to execute and deliver, and to perform
its
obligations under this Agreement. The execution and delivery by Seller of
this
Agreement, and the performance of its obligations under this Agreement, have
been duly authorized by all necessary corporate action on the part of Seller.
This Agreement has been duly executed and delivered by Seller, and, subject
to
the due execution and delivery by the other parties to this Agreement, this
Agreement will, upon due execution and delivery, be the valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except (i) as the same may be limited by bankruptcy, insolvency,
rehabilitation, receivership, moratorium or other similar laws affecting
the
enforcement of creditors’ rights and remedies, generally, and (ii) for the
limitations imposed by equitable principles of general applicability (whether
considered in a proceeding at law or in equity). The foregoing exceptions
set
forth in clauses (i) and (ii) of this Section 3.2 are hereinafter
referred to as the “Enforceability
Exceptions.”
3.3 Governmental
Authorization.
Except
as set forth in Schedule 3.3,
the
execution, delivery, and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby do not require Seller
to
obtain any material Consent or give any material notice to, any Governmental
Authority.
3.4 No
Conflict or Violation by Seller
Except
as set forth on Schedule 3.4
hereto,
the execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby will not (a) violate
any provision of the charter, bylaws or any other organizational document
of
Seller, (b) violate, conflict with or result in the breach of any of the
material terms of, result in any modification of the effect of, otherwise
give
any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both, constitute) a material default under, any
Material Contract to which Seller is a party or by which any of its assets
or
properties may be bound, (c) violate any material order, judgment,
injunction, award or decree of any arbitrator or Governmental Authority,
or any
agreement with, or condition imposed by, any arbitrator or Governmental
Authority binding upon Seller in connection with the Company, (d) violate,
in any material respect, any agreement with, or condition imposed by, any
Governmental Authority specifically upon Seller with respect to the Company,
(e) violate, in any material respect, any Applicable Law, or
(f) result in a breach or violation of any of the terms or conditions of,
constitute a material default under, or otherwise cause a material impairment
or
a revocation of, any license or authorization related to the
Company.
3.5 Brokerage
and Financial Advisers. Except
as
set forth on Schedule 3.5,
no
broker, finder, or financial adviser has acted directly or indirectly as
such
for, or is entitled to any compensation from, Seller in connection with this
Agreement or the transactions contemplated hereby.
3.6 Shares.
Except
as set forth on Schedule 3.6,
Seller
holds of record and owns beneficially, free and clear of any and all Liens,
all
of the Shares. Seller is not a party to any option, warrant, purchase right,
or
other contract or commitment that would require it to sell, transfer, or
otherwise dispose of any capital stock of the Company, other than this
Agreement. Seller is not a party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any capital stock of the Company.
Upon the delivery of and payment for the Shares at the Closing as provided
for
in this Agreement, Purchaser will acquire good and valid title to all the
Shares, free and clear of any Lien other than any Lien created by Purchaser
and
be the sole shareholder of the Company.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
Purchaser
represents and warrants to Seller as follows:
4.1 Corporate
Existence and Power.
Purchaser is organized, validly existing and in good standing under the laws
of
the State of New York and has all requisite powers required to carry on its
business as now conducted.
4.2 Authority.
Purchaser has all requisite power and authority to execute and deliver, and
to
perform its obligations under, this Agreement. The execution and delivery
by
Purchaser of this Agreement, and the performance of its obligations under
this
Agreement, have been duly authorized by all necessary corporate action on
the
part of Purchaser. This Agreement has been duly executed and delivered by
Purchaser, and, subject to the due execution and delivery by the other parties
to this Agreement, this Agreement will, upon due execution and delivery,
be the
valid and binding obligation of Purchaser, enforceable against Purchaser
in
accordance with its terms, subject to the Enforceability
Exceptions.
Stock
Purchase Agreement
Family
Life Insurance Company
-11-
4.3 Governmental
Authorization.
Except
as set forth in Schedule 4.3,
the
execution, delivery, and performance by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby do not require Purchaser
to
obtain any material Consent or give any material notice to, any Governmental
Authority.
4.4 No
Conflict or Violation by Purchaser.
Except
as set forth on Schedule 4.4,
the
execution, delivery and performance by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby will not (a) violate
any provision of the charter, bylaws or any other organizational document
of
Purchaser, (b) violate, conflict with or result in the breach of any of the
material terms of, result in any modification of the effect of, otherwise
give
any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both, constitute) a material default under, any
material contract to which Purchaser is a party or by which any of its assets
or
properties may be bound,
(c) violate any material order, judgment, injunction, award or decree of
any arbitrator or Governmental Authority, or any agreement with, or condition
imposed by, any arbitrator or Governmental Authority binding upon Purchaser,
(d) violate, in any material respect, any agreement with, or condition
imposed by, any Governmental Authority specifically upon Purchaser,
(e) subject to the requirements referred to in Section 4.3 hereof,
violate, in any material respect, any Applicable Law, or (f) result in a
breach or violation of any of the terms or conditions of, constitute a material
default under, or otherwise cause a material impairment or a revocation of,
any
license or authorization related to Purchaser.
4.5 Brokerage
and Financial Advisers. Purchaser
will pay any broker, finder, or financial adviser that has acted directly
or
indirectly as such for, or is entitled to any compensation from, Purchaser
in
connection with this Agreement or the transactions contemplated
hereby.
4.6 Investment
Intent.
Purchaser is purchasing the Shares solely for investment, and not with a
view to
resale in connection with any distribution, within the meaning of the Securities
Act or other Applicable Law, of the Shares. Purchaser hereby acknowledges
that
the Shares have not been registered pursuant to the Securities Act and may
not
be transferred in the absence of such registration or an exemption therefrom
under the Securities Act.
4.7 Licenses
and Franchises. Purchaser
has all licenses and authorizations necessary to perform its obligations
under
this Agreement. All such licenses and authorizations are valid and in full
force
and effect and Purchaser is not operating under any formal or informal agreement
or understanding with any Governmental Authority that restricts its authority
to
do business or requires Purchaser to take, or refrain from taking, any action.
No violations exist in respect of any such license or authorization and no
investigation or proceeding is pending or, to the Knowledge of Purchaser,
threatened, that would be reasonably likely to result in the suspension,
revocation or material limitation or restriction of any such license or
authorization.
4.8 Financial
Capability. Purchaser
(i) has, and at the Closing will have, sufficient funds available to pay
the Closing Purchase Price and any expenses incurred by Purchaser in connection
with the transactions contemplated by this Agreement, (ii) has, and at the
Closing will have, the resources and capabilities (financial or otherwise)
to
perform its obligations hereunder, and (iii) has not incurred any material
obligation, commitment, restriction, or Liability of any kind, which would
materially impair or adversely affect such resources and
capabilities.
Stock
Purchase Agreement
Family
Life Insurance Company
-12-
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES CONCERNING THE COMPANY
Seller
hereby represents and warrants to Purchaser as follows:
5.1 Corporate
Existence and Power.
Company
is organized, validly existing and in good standing under the laws of the
State
of Texas and has all requisite powers required to carry on its business as
now
conducted.
5.2 Capitalization.
The
authorized capital stock of the Company consists of 500,000 shares of common
stock, par value $10 per share, of which 250,000 shares are issued and
outstanding as of the Effective Date and 225,000 shares of preferred stock,
par
value $15 per share, of which 202,564 shares are issued and outstanding as
of
the Effective Date. The 250,000 shares of common stock will be issued and
outstanding as of the Closing Date. All outstanding shares of preferred stock
will be recapitalized by exchange into common stock prior to the Closing
Date.
All of the issued and outstanding shares of capital stock of the Company
have
been duly authorized, are validly issued, fully paid, and non-assessable.
There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts
or
commitments that could require Company to issue, sell, or otherwise cause
to
become outstanding any of its capital stock. There are no outstanding or
authorized stock appreciations, phantom stocks, profit participations, or
similar rights with respect to the Company.
5.3 No
Conflict or Violation by the Company. Except
as
set forth on Schedule 5.3,
the
execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby will not (a) violate
any provision of the charter, bylaws or any other organizational document
of the
Company, (b) violate, conflict with or result in the breach of any of the
material terms of, result in any material modification of the effect of,
otherwise give any other contracting party the right to terminate, or constitute
(or with notice or lapse of time or both, constitute) a material default
under,
any Material Contract, (c) violate any material order, judgment,
injunction, award or decree of any arbitrator or Governmental Authority,
or any
material agreement with, or material condition imposed by, any arbitrator
or
Governmental Authority binding upon the Company, (d) violate, in any
material respect, any agreement with, or condition imposed by, any Governmental
Authority specifically upon Company, (e) subject to the requirements
referred to in Section 3.3 hereof, violate, in any material respect, any
Applicable Law, or (f) result in a breach or violation of any of the terms
or conditions of, constitute a material default under, or otherwise cause
a
material impairment or a revocation of, any license or authorization related
to
the Company.
5.4 Permits.
Schedule 5.4 hereto
identifies all material Permits issued to the Company. Except as identified
on
Schedule 5.4
hereto,
all such Permits are in full force and effect except where the absence of
which
would not reasonably be expected to interfere materially with the operation
of
the Company. No orders, agreements, or understandings between the Company
and
any Government Authority materially restrict the ability of the Company to
conduct the business for which it is licensed and, to the Knowledge of the
Seller, no violations exist in respect of any such material license or
authorization and no investigation or proceeding is pending or, to the Knowledge
of Seller, threatened, that would be reasonably likely to result in the
non-renewal, suspension, revocation or material limitation, or material
restriction of any such license or authorization.
Stock
Purchase Agreement
Family
Life Insurance Company
-13-
5.5 Financial
Statements.
(a) Seller
has made available to Purchaser true, complete, and correct copies of the
audited Statutory Basis Financial Statements of the Company at and for the
years
ended December 31, 2005 and 2004. Except as set forth therein or in the
notes thereto, these financial statements present fairly, in all material
respects, the admitted assets, liabilities and capital and surplus, results
of
operations and cash flows of the Company as of the respective dates and for
the
respective periods covered thereby in accordance with Texas SAP (and as more
fully described in Note 1 to those financial statements), applied on a
consistent basis throughout the periods indicated, except as otherwise noted
therein.
(b) Seller
has made available to Purchaser true, complete, and correct copies of
(i) the Annual Statement of the Company as filed with the Insurance
Department of the State of Texas at and for the year ended December 31, 2005,
together with all exhibits and schedules thereto and (ii) the Quarterly
Statements of the Company as filed with the Insurance Department of the State
of
Texas at and for the nine month period ended September 30, 2006 (the statements
described in (i) and (ii) are collectively referred to as, the “Company
SAP Statements”).
Except as set forth in Note 2 to the audited Statutory Basis Financial
Statements of the Company described above or on Schedule 5.5,
the
Company SAP Statements present fairly, in all material respects, the admitted
assets, liabilities and capital and surplus for the Company at the respective
dates thereof, and the summary of operations as of the respective dates and
for
the respective periods covered thereby in accordance with Texas SAP (and
as more
fully described in Note 1 to Company SAP Statements and Note 1 to the
audited Statutory Basis Financial Statements of the Company described above),
applied on a consistent basis throughout the periods indicated, except as
otherwise noted therein.
5.6 Actions
and Proceedings.
Except
as set forth on Schedule 5.6,
there
(a) are no outstanding orders, decrees, judgments, agreements, or
understandings by or with any Governmental Authority before which the Company
was a party that, individually or in the aggregate, would have a Seller Material
Adverse Effect, or (b) is no Litigation pending or, to the Knowledge of
Seller, threatened against the Company at law or in equity, or before or
by any
Governmental Authority or before any arbitrator of any kind which, individually
or in the aggregate, would have a Seller Material Adverse Effect.
5.7 Compliance
with Laws.
Except
as set forth on Schedule 5.7,
to the
Knowledge of Seller, the Company is in compliance with all Applicable Laws.
Neither Seller nor the Company has received any written notice alleging any
violation of any such Applicable Law by the Company or any Person providing
services to the Company.
Stock
Purchase Agreement
Family
Life Insurance Company
-14-
5.8 Regulatory
Filings.
Except
as identified on Schedule 5.8,
the
Company has filed all material reports, statements, documents, registrations,
filings or submissions required to be filed by such them with any Governmental
Authority. All such registrations, filings, and submissions were in compliance
in all material respects with Applicable Law when filed or as amended or
supplemented, and, to the Knowledge of Seller, no material deficiencies have
been asserted by any Governmental Authority with respect to such registrations,
filings, or submissions that have not been satisfied.
5.9 Labor
and Benefits Matters.
The
Company does not have any employees. There are no pending charges or complaints
against the Company involving any federal, state, or local civil rights
enforcement agency or court; complaints or citations under the Occupational
Safety and Health Act or any state or local occupational safety act or
regulation; or unfair labor practice charges or complaints with the National
Labor Relations Board. The Company will not be, as of Closing, a sponsoring
employer of any “employee welfare benefit plan” or “employee pension benefit
plan,” as those terms are defined in Sections 3(1) and 3(2) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”).
5.10 Tax
Returns.
Except
as set forth in Schedule 5.10:
(a) The
Company has been or will be included in the consolidated federal income Tax
returns filed by Seller's parent for all open tax years ending before or
on the
Closing Date. The Company has paid or there has been paid on its behalf all
federal income Taxes of the Company that are due (to the extent not provided
for
on the Company’s SAP Balance Sheets prepared as of the Closing
Date).
(b) The
Company has not waived any statute of limitations in respect of Taxes or
agreed
to any extension of time with respect to a Tax payment, assessment, deficiency,
or collection that is still pending (other than pursuant to extensions of
time
to file Tax returns in the Ordinary Course of Business).
(c) The
Company has never received written notice of any audit or of any proposed
deficiencies from the Internal Revenue Service (the “IRS”)
or any
other taxing authority concerning any Tax liability of the Company (other
than
audits or deficiencies which have been resolved).
(d) The
Company has no liability for Taxes of any other Person under Treasury
Regulations § 1.1502-6 (or any similar provision of foreign, state or local
law) other than with respect to any consolidated, combined or unitary Tax
group
of which it currently is a member.
(e) The
Company has not agreed to make any adjustment under Section 481(a) or
Section 807(f) of the Code.
(f) The
Company is not a party to any contract, agreement, plan or arrangement covering
any employee or former employee thereof, that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to Section 280G of the Code.
Stock
Purchase Agreement
Family
Life Insurance Company
-15-
(g) Seller
is
not a “foreign person” within the meaning of Section 1445 of the Code and
Treasury Regulations Section 1.1445-2.
5.11 Title
to Assets.
Except
as set forth on Schedule 5.11,
the
Company has good and marketable title to all of its non-leased assets and
properties, including, without limitation, all of the assets listed on its
balance sheet for the period ended June 30, 2006 (except property sold or
otherwise disposed of since that date in the Ordinary Course of Business)
and
none of such assets or properties is subject to Liens other than the Permitted
Liens.
5.12 Real
Properties, Offices, Etc.
The
Company does not own any real property or have a leasehold interest in any
real
property. The Company neither uses nor occupies any office other than its
current place of business.
5.13 Personal
Property.
Except
for books and records of Company and as set forth in Schedule 5.13,
Company
does not own, lease, or use any tangible personal property.
5.14 Trademarks
and Copyrights.
Except
as set forth on Schedule 5.14,
the
Company does not own any trademarks, trade names, or copyrights. There is
no
claim pending or, to the Knowledge of Seller, threatened against the Company
with respect to alleged material infringement of any trademark or trade name
owned by another, nor, to the Knowledge of Seller, does the operation of
the
Company in the manner in which it has heretofore operated give rise to any
such
action for or allegation of infringement.
5.15 Conduct
of Business.
Except
as set forth in Schedule 5.15,
since
January 1, 2006, there has not been any material, adverse change in the
financial condition, assets, or liabilities of the Company (other than changes
in the Ordinary Course of Business) which would have a Seller Material Adverse
Effect.
5.16 Insurance
Policies.
Except
as set forth in Schedule 5.16,
the
Company is, and will be until but not after the Closing Date, insured under
various liability, theft, fidelity, life, and fire insurance policies purchased
by Company, or Seller's parent, for the Company’s benefit and for the benefit of
Seller and other Affiliates of Seller. Such policies are in amounts that
are
deemed to be adequate by the Company and Seller, all such policies are in
full
force and effect until the Closing Date, and Seller is not in default under
any
of them (except where the failure to be in full force and effect would not
reasonably be expected to be material). To the Knowledge of Seller, there
is no
condition that would be a basis for termination or limitation or denial of
coverage under the insurance policies before the Closing Date.
5.17 Bank
Accounts, Etc. Schedule 5.17
sets
forth a correct and complete list of each bank account, safe deposit box,
brokerage account, trust account, depository account, or other custodial
account
of the Company, the number of each such account or box, and the name of all
persons authorized to draw thereon or to have access thereto. At Closing,
Seller
will deliver to Purchaser copies of all material records, including all
signature, and authorization cards pertaining to such accounts.
5.18 Books
and Records.
The
minute books, stock certificate books, and stock record books of Company
are
true and complete, in all material respects, and the signatures therein are
the
true signatures of the persons purporting to have signed them.
Stock
Purchase Agreement
Family
Life Insurance Company
-16-
5.19 Labor
Disagreements.
The
Company never has experienced any material work stoppage due to labor
disagreements.
5.20 Commercial
Domicile.
The
Company is not commercially domiciled in any state.
5.21 Subsidiaries.
Schedule
5.21
lists
the name of each subsidiary of the Company.
5.22 Affiliate
Transactions.
Schedule 5.22
lists
all Contracts between the Company and any of its Affiliates, including a
description of the agreement or transaction, and the date of approval or
acceptance by the Governmental Authority, if required by law.
5.23 Agents. Schedule 5.23
contains
a complete and correct list of all insurance agencies and agents authorized
to
write insurance on behalf of the Company as of the date shown on such list.
To
the Knowledge of Seller, all such agencies, agents, and counselors are duly
licensed with the insurance regulatory authority of the state or jurisdiction
in
which such agency, agent, or counselor writes insurance on behalf of the
Company. Schedule 5.23
contains
(i) the standard form of agency agreement (including commission schedule),
(ii)
the standard form of contingent commission agreement and (iii) a list of
all
agents who have agency or commission agreements, the material terms of which
vary from such standard agreement and the material non-standard terms thereof.
All such agency or commission agreements are cancelable upon no more than
180
days’ notice, unless otherwise required by Applicable Law to keep such agreement
in force. Except as set forth on Schedule 5.23,
to the
Knowledge of Seller, no agent, broker or counselor of the Company, (i) has
entered into any lease or other Contract (other than contracts of insurance)
which bind or purports to bind the Company or (ii) is in arrears with respect
to
premium remittances more than ninety (90) days from the end of the accounting
month in which the premium was billed (as shown by the most recent “90 day list”
which has been prepared in the Ordinary Course of Business). To the Knowledge
of
Seller, no agent, broker, or counselor of the Company has committed any act
or
omission that could result in any liability to the Company other than acts
lawfully taken by such agents, brokers, or counselors in compliance with
agreements between such persons and the Company.
5.24 Material
Contracts.
(a) Schedule 5.24(a) sets
forth all of the following Contracts to which the Company is a party or by
which
it is bound (collectively, the “Material
Contracts”):
(i) Contracts
with the Company or any current officer or director of the Company (other
than
Contracts made in the Ordinary Course of Business on terms generally available
to similarly situated non-affiliated parties).
(ii) Contracts
for the sale of any of the assets of the Company other than in the Ordinary
Course of Business, for consideration in excess of $10,000.
(iii)
Contracts
relating to any acquisition to be made by the Company of any operating business
or the capital stock of any other Person, in each case for consideration
in
excess of $10,000.
Stock
Purchase Agreement
Family
Life Insurance Company
-17-
(iv) Contracts
relating to the incurrence of indebtedness, or the making of any loans, in
each
case involving amounts in excess of $10,000.
(v) Contracts
that involve the expenditure of more than $10,000 in the aggregate.
(b) Except
as
set forth on Schedule 5.24(b),
the
Company has not received any written notice of any material default or event
that with notice or lapse of time, or both, would constitute a material default
by the Company under any Material Contract. Except as set forth on Schedule 5.24(b),
the
execution and performance of this Agreement will not result in a material
breach
of any such contract or require the consent of any party to such Material
Contract.
(c) There
are
no material contracts not reduced to writing and signed by the parties
thereto.
ARTICLE
6
COVENANTS
6.1 Related
Transactions.
Prior
to the Closing except (i) as set forth on Schedule 6.1,
(ii) as required by Applicable Law, (iii) as otherwise contemplated by
this Agreement, or (iv) with the prior written consent of Purchaser (which
consent shall not be unreasonably withheld, delayed or conditioned), Seller
shall cause the Company to:
(a) Not
to
enter into, engage in, or become a party, directly or indirectly, to any
transaction (other than in the Ordinary Course of Business).
(b) Not
enter
into any contract of employment with, or materially increase the compensation
paid or payable to, or enter into any new agreement with, any officer, director,
employee, or agent or become committed to pay, or pay, any material bonuses,
profit sharing, or other special compensation to any person or
agent.
(c) Operate
its business in the Ordinary Course of Business, including the preparation
of
financial statements in the manner described in Section 5.5.
(d) Comply
with, in all material respects, all material Applicable Laws and to maintain
its
books and records, in all material respects, in the Ordinary Course of
Business.
(e) Not
take
any of the actions prohibited in this Section 6.1.
6.2 Investigations;
Pre-Closing Access.
(a) Prior
to
the earlier of the Closing Date or termination of this Agreement, Purchaser
shall be entitled, through its employees and representatives, to make such
investigation of the assets and liabilities, business and operations of the
Company, and such examination of the related books and records of the Company,
as Purchaser may reasonably request. Any such investigation or examination
shall
be conducted at reasonable times upon reasonable prior notice.
Stock
Purchase Agreement
Family
Life Insurance Company
-18-
(b) Prior
to
the earlier of the Closing Date or termination of this Agreement, Seller
shall
be entitled, through its employees and representatives, to make such
investigation of the assets, liabilities, business and operations of Purchaser
as Seller may reasonably request. Any such investigation or examination shall
be
conducted at reasonable times upon reasonable prior notice.
(c) Notwithstanding
any other provisions of this Section 6.2, the parties shall cooperate in
implementing the provisions of this Section 6.2 in good faith with the
objective of not preventing or interfering with Seller's ability to comply
with
Section 6.1.
6.3 Filings;
Other Actions; Notifications.
(a) Seller
and Purchaser shall cooperate and use good faith efforts to promptly obtain
all
Consents, and to promptly give and make all notices and filings with any
Governmental Authorities necessary to authorize, approve or permit the
consummation of the transactions contemplated by this Agreement and the other
agreements contemplated hereby and thereby, including, without limitation,
the
Consents identified on Schedules 3.3
and
4.3.
Purchaser shall file a Form A with the Texas Department of Insurance and
any
other required filings to seek approval of the acquisition of the Control
of the
Company within fifteen (15) Business Days after the Effective Date. Seller
shall
use its commercially reasonable efforts to obtain promptly, and Purchaser
will
cooperate with Seller in promptly obtaining, all other Consents to the
transactions contemplated by this Agreement, including the items identified
on
Schedule 3.3
hereto.
Purchaser shall use its commercially reasonable efforts to obtain promptly,
and
Seller will cooperate with Purchaser in promptly obtaining, all other Consents
to the transactions contemplated by this Agreement, including the items
identified on Schedule 4.3
hereto.
Seller and Purchaser will each furnish to the other such reasonable information
and assistance as the other may reasonably request in connection with its
preparation of necessary filings or submissions to any Governmental
Authority.
(b) The
parties hereto agree that they will cooperate with each other with respect
to
the obtaining of all Consents of all third parties and Governmental Authorities
necessary to consummate the transactions contemplated by this Agreement and
each
party will keep the other reasonably apprised of the status of matters relating
to completion of the transactions contemplated herein. The form of any filings,
registrations or notifications required to be made by any party shall be
subject
to the prior approval of the other party or parties hereto, which approval
shall
not be unreasonably withheld or delayed, except that no party shall be obligated
to share confidential or proprietary information with the other parties in
connection with such filings. With respect to the Form A required under (a)
above, Purchaser shall allow Seller three (3) Business Days to review the
form.
The party responsible for a filing as set forth above shall promptly deliver
to
the other party evidence of the filing of all filings, registrations and
notifications relating thereto and any supplement, amendment or item of
additional information in connection therewith (excluding confidential and
proprietary information). The party responsible for a filing shall also promptly
deliver to the other party a copy of each material notice, order, opinion
and
other item of correspondence received by such filing party from any Governmental
Authority in respect of any such filings. In exercising the foregoing rights
and
obligations, Seller and Purchaser shall act reasonably and as promptly as
practicable. Seller and Purchaser shall promptly advise each other upon
receiving any communication from any Governmental Authority whose consent
or
approval is required for consummation of the transactions contemplated by
this
Agreement which causes such party to believe that there is a reasonable
likelihood that any required regulatory approval will not be obtained or
that
the receipt of any such approval will be materially delayed.
Stock
Purchase Agreement
Family
Life Insurance Company
-19-
6.4 Expenses.
Except
as otherwise specifically provided in this Agreement, the parties to this
Agreement shall bear their respective expenses incurred in connection with
the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including all fees and expenses of agents, representatives,
counsel, investment bankers, actuaries and accountants.
6.5 Certain
Notices.
From
the Effective Date through Closing Date, (a) Seller shall notify Purchaser
promptly of any event, condition or circumstance, to the Knowledge of Seller,
occurring from the Effective Date through the Closing Date that would
constitute, or is reasonably likely to constitute (with notice or lapse of
time
or both), a material violation or breach of this Agreement by Seller, and
(b) Purchaser shall notify Seller promptly of any event, condition or
circumstance, to the Knowledge of Purchaser, occurring from the Effective
Date
through the Closing Date that would constitute, or is reasonably likely to
constitute (with notice or lapse of time or both), a material violation or
breach of this Agreement by Purchaser
6.6 Tax
Payments.
(a) The
Tax
benefits and burdens of the Company for taxable periods ending on or prior
to
the Closing Date shall be for the account of Seller; and the Tax benefits
and
burdens of the Company for the periods beginning after the Closing Date shall
be
for the account of Purchaser, provided
that the
Tax benefits or burdens for periods that include (but do not end on) the
Closing
Date (“Straddle
Periods”)
shall
be allocated between Seller and Purchaser based on the principles in this
Section 6.6. Seller shall pay or cause to be paid to the relevant taxing
authorities, or shall reimburse or indemnify Purchaser and its Affiliates
for,
and shall hold Purchaser and its Affiliates harmless from and against,
(i) any liability for Taxes of the Company or any “affiliated group” (as
defined in the Code) of which the Company is or has been a member, or chargeable
as a Lien upon the assets of the Company, that is attributable to any period
or
a portion thereof ending on or prior to the Closing Date, and (ii) any Tax
of any Person for which the Company may be held liable pursuant to
Section 1.1502-6 of the Treasury Regulations (or any similar provision of
state, local or foreign law) or for which the Company may be liable as a
transferee, successor, indemnitor or guarantor, by contract or otherwise
that is
attributable to any period or portion thereof ending on or prior to the Closing
Date; provided, however, that Seller shall not be liable for and shall not
indemnify Purchaser and its Affiliates against any liability for Taxes resulting
from transactions or actions taken on the Closing Date by the Company after
the
effective time of the Closing that are outside the ordinary course of business
(other than transactions or actions contemplated by this Agreement) (Taxes
described in this proviso are referred to hereinafter as “Excluded
Taxes”).
For
purposes of this Section 6.6, any liability attributable to a Straddle
Period shall be apportioned between the portion of such period ending on
or
prior to the Closing Date and the portion beginning after the Closing Date
(1) in the case of real and personal property and ad valorem Taxes, by
apportioning such Taxes on a per diem basis and (2) in the case of all
other Taxes, on a closing of the books basis,
provided that exemptions, allowances or deductions that are calculated on
an
annual basis (including, but not limited to, depreciation and amortization
deductions) shall be apportioned on a per diem basis. For the avoidance of
doubt, all management or transaction bonuses, severance payments, transaction
fees and expenses, interest payments and deductible financing costs and other
expenses accrued or paid by the Company on or prior to the Closing Date shall
be
treated as incurred in the taxable period ending on the Closing Date or the
pre-Closing portion of the Straddle Period, as appropriate.
Stock
Purchase Agreement
Family
Life Insurance Company
-20-
(b) Purchaser
shall pay or cause to be paid to the relevant taxing authorities, or shall
reimburse or indemnify Seller for, and shall hold Seller harmless from and
against, any liability for Taxes of the Company or chargeable as a Lien upon
the
assets of the Company that is attributable to any period or a portion thereof
ending after the Closing Date.
(i) After
the
Closing, Purchaser shall prepare and timely file, or cause to be prepared
and
timely filed, with the relevant taxing authorities all Tax returns of the
Company due after the Closing Date, taking into account any extensions or
waivers with respect thereto, provided that Seller shall prepare and Seller
or
the Company, as applicable, shall timely file any Tax returns of the Company
for
all taxable periods ending on or before the Closing Date and all Straddle
Periods. Purchaser shall provide such assistance to Seller as Seller shall
reasonably request in preparing such Tax returns, including, without limitation,
providing Seller and its designated representatives with access to all related
books, records, personnel, and systems.
(ii) Any
refunds of Taxes paid with respect to Tax periods or portions thereof ending
on
or before the Closing Date that are received by Purchaser or the Company,
and
any such amounts credited against Tax to which Purchaser or the Company becomes
entitled, shall be for the account of Seller, and Purchaser shall pay over
to
Seller any such refund or the amount of any such credit within ten (10) Business
Days after receipt of any such refund or the filing of a Tax return reflecting
any such credit.
(iii) Except
as
required by Applicable Law, without the prior written consent of Seller (which
consent shall not be unreasonably withheld, conditioned or delayed), neither
Purchaser, the Company nor any of their Affiliates shall file any amended
Tax
return of the Company with respect to, or carry back any Tax attribute of
the
Company to, any taxable period ending on or before the Closing
Date.
(c) All
sales
or transfer taxes, including without limitation sales or gross receipts taxes,
use taxes, document recording fees, securities transfer taxes, property transfer
taxes, or motor vehicle excise taxes, arising out of or in connection with
the
consummation of the transactions contemplated hereby, if any, shall be paid
by
Purchaser.
(d) Following
the Closing Date, Seller shall be furnished by Purchaser or the Company,
as the
case may be, with powers of attorney, or any other document or authorization
necessary or appropriate, to enable Seller to control the conduct of all
stages
of any audit or other administrative or judicial proceeding with respect
to
Taxes of the Company that are reportable on any consolidated, combined or
unitary Tax return that included Seller and any of its Affiliates, or are
with
respect to any Tax period ending on or prior to the Closing Date or are with
respect to Straddle Periods. Purchaser shall control the conduct of all other
audits or administrative or judicial proceedings with respect to Taxes of
the
Company for any Tax period or portion thereof. Subject to such
control:
Stock
Purchase Agreement
Family
Life Insurance Company
-21-
(i) With
respect to any audit or other proceeding that it controls, Seller:
(1) shall give prompt notice to Purchaser of any Tax adjustment proposed in
writing pursuant to any audit or other proceeding controlled by Seller with
respect to the assets or activities of the Company, (2) upon Purchaser’s
reasonable request shall discuss with Purchaser and Purchaser’s Tax advisors the
position that Seller intends to take regarding any issue concerning such
assets
or activities, and (3) shall not, and shall not permit any of its
Affiliates to, enter into any settlement or agreement in compromise of any
proposed adjustment that purports to bind, and would have a material adverse
impact on, Purchaser or the Company with respect to any Tax period ending
after
the Closing Date without the express written consent of Purchaser, which
consent
shall not be unreasonably withheld, conditioned or delayed.
(ii) With
respect to any audit or other proceeding that it controls, Purchaser:
(1) shall give prompt notice to Seller of the commencement of any audit or
other proceeding which could give rise to a claim for payment against Seller
under this Agreement; (2) shall afford Seller and its Tax advisors a
reasonable opportunity to participate in the conduct of any administrative
or
judicial proceeding regarding a proposed adjustment described in clause (1)
above including, without limitation, the right to participate in conferences
with taxing authorities and submit pertinent material in support of Seller’s
position; and (3) shall not, and shall not permit any of its Affiliates to,
accept any proposed adjustment or enter into any settlement or agreement
in
compromise that would result in a claim for indemnification against Seller
pursuant to this Agreement without Seller’s express written consent which shall
not be unreasonably withheld, conditioned or delayed.
(iii) Purchaser,
the Company and Seller shall cooperate fully, as to and to the extent reasonably
requested by the other party and at the requesting party’s expense, in
connection with the filing of all Tax returns and any audit, litigation or
other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other party’s request) the provision of records and information
which are reasonably relevant to any such audit, litigation, or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
The
parties agree to retain all books and records with respect to Tax matters
pertinent to the Company relating to any Tax period beginning before the
Closing
Date until the expiration of the applicable statute of limitations of such
respective Tax period, and to abide by all record retention agreements entered
into with any taxing authority.
(iv) In
the
event of a conflict between any provision of this Section 6.6(e), on the
one
hand, and the provisions of Section 9.2, on the other hand, the provisions
of
this Section 6.6(e) shall control.
(e) Any
Tax
allocation or sharing contract that, prior to the Closing Date, may have
been
entered into between the Company on the one hand, and Seller or any Affiliate
thereof on the other hand, shall terminate with respect to the Company as
of the
Closing Date. Except as provided in this Section 6.6, the Company shall
have no claim against Seller or any Affiliate thereof, and Seller and any
Affiliate thereof shall have no claim against any of the Company for any
amount
that might be payable to or by, as the case may be, the Company with respect
to
Taxes.
Stock
Purchase Agreement
Family
Life Insurance Company
-22-
6.7 Updating
Schedules.
In
connection with the Closing, Purchaser and Seller will promptly supplement
or
amend the various disclosure Schedules to this Agreement to reflect any matter
that, if existing, occurring or known on the Effective Date, should have
been so
disclosed or that is necessary to correct any information in such Schedules
that
was or has been rendered inaccurate thereby.
6.8 Certain
Transactions.
From
the date of this Agreement through the earlier of the Closing Date or
termination of this Agreement, neither Seller nor any of its Affiliates,
officers, employees, representatives or agents will, directly or indirectly,
solicit, encourage or initiate any negotiations or discussions with, or provide
any information to, or otherwise cooperate in any other manner with, any
Person
or group (other than Purchaser and its Affiliates and representatives)
concerning any direct or indirect sale or other disposition of the
Company.
6.9 Further
Assurances.
On and
after the Closing Date, Seller (as reasonably requested from time to time
by
Purchaser), and Purchaser (as reasonably requested from time to time by Seller)
shall (i) take all reasonably appropriate action and execute any additional
documents, instruments or conveyances of any kind (not containing additional
representations and warranties) that may be reasonably necessary to carry
out
any of the provisions of this Agreement and (ii) cause the fulfillment at
the earliest practicable date of all of the conditions to their respective
obligations to consummate the transactions contemplated by this
Agreement.
6.10 Confidentiality.
(a) Each
party hereto will hold, and will cause their respective directors, officers,
shareholders, employees, Affiliates, agents, representatives, advisors and
consultants (including, without limitation, attorneys, investment bankers,
actuarial consultants and independent public accountants) to hold, in strict
confidence the Confidential Information (as defined herein) from any other
Person unless:
(i) a
party
is compelled to disclose the Confidential Information by judicial or
administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and transactions
contemplated hereby and thereby by Governmental Authorities) or by other
requirements of Applicable Law; provided,
however,
that
if,
in the course of any legal or administrative proceedings or as otherwise
required by Applicable Law or a Governmental Authority, either party is
requested or required to disclose Confidential Information, such party will,
prior to any disclosure and within two (2) calendar days, notify the other
party
in writing and provide the other party with copies of any such written request
or demand so that the other party may seek a protective order or other
appropriate remedy or waive in writing the provisions of this Section 6.10
to the extent necessary (provided that one or the other be done). The parties
shall cooperate with each other to obtain a protective order or other reliable
assurance that confidential treatment will be afforded to designated portions
of
the Confidential Information. If no protective order or other remedy is obtained
and the other party has not waived compliance with this Section 6.10, if
such party is of the opinion (based on advise of its counsel) that it is
legally
required to disclose Confidential Information under Applicable Law, such
party
may do so without liability to the other party, except that disclosure of
Confidential Information shall be limited to the information actually required
to be disclosed pursuant to Applicable Law.
Stock
Purchase Agreement
Family
Life Insurance Company
-23-
(ii) the
Confidential Information is disclosed in an action or proceeding brought
by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder.
(b) For
purposes of Section 6.10(a), “Confidential
Information”
is
defined as all documents and information concerning the other party or any
of
its Affiliates furnished to such party by the other party or such other party’s
representatives in connection with this Agreement or the transactions
contemplated hereby, except that Confidential Information shall not include
documents or information that can be shown to have (i) been already in the
possession of the party, provided that such information is not known by such
party to be subject to another confidentiality agreement with or other
obligation of secrecy to the other party or another party; or (ii) become
generally available to the public (other than as a result of a disclosure
by the
party) or become available to the party on a non-confidential basis from
a
source other than the other party or its directors, officers, shareholders,
employees, Affiliates, agents, representatives, advisors or consultants,
provided that such source is not known, after due inquiry, to be bound by
a
confidentiality agreement with or other obligation of secrecy to the other
party
or another party; provided,
however,
that
following the Closing the foregoing restrictions will not apply to Purchaser’s
use of documents and information concerning the Company furnished by Seller
hereunder.
6.11 Non-Competition
and Non-Piracy.
(a) Seller
agrees that, from and after the Closing Date:
(i) For
a
period of five (5) years from the Closing, neither Seller nor any of its
Affiliates shall, directly or indirectly, compete with the Company for the
accounts of any person who was a customer of the Company immediately prior
to
the Closing, of the transactions that are the subject of this Agreement.
The
term “compete” shall include, but not be limited to, canvassing, soliciting, or
accepting any insurance, directly or indirectly, or on behalf of any other
insurance agent or insurance agency, from any active account of the Company.
Neither Seller nor any of its Affiliates shall provide information to Affiliates
of Seller or insurance agents regarding the accounts of any person who was
a
customer of the Company immediately prior to the Closing.
(ii) The
parties recognize that after Closing some policyholders of the Company (who
were
policyholders of the Company immediately prior to the Closing) may be
inadvertently rewritten by agents of Affiliates after the Closing; however,
should the number of such policyholders rewritten after the Closing exceed
fifty
(50) in any calendar year, Seller shall pay the Company two hundred fifty
dollars ($250) for each such policy rewritten in excess of fifty
(50).
Stock
Purchase Agreement
Family
Life Insurance Company
-24-
(iii) The
parties agree that in the event of a breach of this Section 6.11, in
addition to any other remedies available to Purchaser, Purchaser may seek
injunctive relief to enforce its rights hereunder.
(b) Purchaser
agrees, from and after the Closing Date and through the first anniversary
of the
Closing, not to solicit on behalf of Purchaser or any affiliate of Purchaser
(including the Company) any currently producing agents of the Family Sales
Division of Investors Life Insurance Company of North America, who are listed
on
Schedule 6.11(b).
6.12 Preferred
Stock.
Seller
shall cause the Company to recapitalize all issued and outstanding preferred
stock into common stock prior to Closing without Liability or obligation
to the
Company.
6.13 FIC
Stock.
Seller
shall cause the Company to dividend out of the Company prior to Closing 324,320
shares of Financial Industries Corporation stock (the “FIC
Share Dividend”).
6.14 Pension
Plan.
Prior
to Closing, Seller shall cause the Company to transfer all liability of the
Company under its defined benefit pension plan, or any other employee benefit
plan, and all assets currently held in trust for such plans and $610,177
in cash
to Seller, or an Affiliate of Seller,.
6.15 Related
Transactions.
The
parties shall execute, or cause to be executed, a coinsurance agreement and
an
administrative services agreement between Purchaser and Investors Life Insurance
Company of North America in the form attached as Schedule 6.15.
6.16 Affiliate
Transactions.
Except
as set forth on Schedule
6.16,
Seller
agrees to terminate all Contracts between the Company and any of its Affiliates
without liability or further obligation of the Company.
6.17 Examination
Reports.
Seller
will cause the Company to deliver to Purchaser the market conduct and tri-annual
financial reports during the past three years reflecting the result of the
examination of the affairs of the Company by any applicable Governmental
Authority, including all material correspondence, memoranda, and other documents
relating to the current examination being conducted by the Texas Department
of
Insurance.
ARTICLE
7
CONDITIONS
TO CLOSING
7.1 Conditions
to Obligations of Each Party.
The
respective obligations of each party to consummate the transactions contemplated
hereby are not subject to an effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction,
directing that the transactions provided for herein not be consummated as
herein
provided.
Stock
Purchase Agreement
Family
Life Insurance Company
-25-
7.2 Conditions
to Obligations of Purchaser.
The
obligations of Purchaser to consummate the transactions contemplated hereby
are
subject to the fulfillment prior to or at Closing of the following conditions,
unless waived by Purchaser in writing:
(a) All
of
the covenants and obligations that Seller is required to perform or to comply
with pursuant to this Agreement at or prior to the Closing shall have been
duly
performed and complied with in all material respects.
(b) Each
of
Seller’s representations and warranties contained in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date
as
if made on the Closing Date (except as to any representation or warranty
that
specifically relates to an earlier date), provided that no breaches of
representations and warranties shall be deemed to excuse Purchaser’s obligations
to consummate the transactions contemplated hereby unless, individually or
in
the aggregate, such breaches would result in a Seller Material Adverse Effect
(ignoring, for this purpose, any materiality or material adverse effect
qualifications to such representations and warranties).
(c) Purchaser
shall have received a certificate signed by a duly elected officer of Seller
to
the effect that the foregoing conditions have been satisfied.
(d) All
Consents identified on Schedule 7.2(d)
hereto
shall have been obtained.
(e) Seller
shall have delivered to Purchaser: (a) a copy of the resolutions (in form
and substance reasonably satisfactory to Purchaser) duly adopted by the board
of
directors of Seller authorizing the execution, delivery and performance of
the
Agreement by Seller, certified by the Secretary or an Assistant Secretary
of
Seller and (b) certificates of the Secretary or an Assistant Secretary as
to the incumbency and signatures of the officers of Seller executing the
Agreement.
(f) Purchaser
shall have received the closing deliveries listed in Section 2.5(a)
hereof.
7.3 Conditions
to Obligations of Seller.
The
obligations of Seller to consummate the transactions contemplated hereby
are
subject to the fulfillment prior to or at Closing of the following conditions,
unless waived by Purchaser in writing:
(a) All
of
the covenants and obligations that Purchaser is required to perform or to
comply
with pursuant to this Agreement at or prior to the Closing shall have been
duly
performed and complied with in all material respects.
(b) Purchaser’s
representations and warranties contained in this Agreement shall be true
and
correct as of the date of this Agreement and as of the Closing Date as if
made
on the Closing Date (except as to any representation or warranty that
specifically relates to an earlier date), provided that no breaches of
representations and warranties shall be deemed to excuse Seller’s obligations to
consummate the transactions contemplated hereby unless, individually or in
the
aggregate, such breaches would result in a Purchaser Material Adverse Effect
(ignoring, for this purpose, any materiality or material adverse effect
qualifications to such representations and warranties).
Stock
Purchase Agreement
Family
Life Insurance Company
-26-
(c) Seller
shall have received a certificate signed by a duly elected officer of Purchaser
to the effect that the foregoing conditions have been satisfied.
(d) All
Consents identified on Schedule 7.3(d)
hereto
shall have been obtained.
(e) Purchaser
shall have delivered to Seller: (a) a copy of the resolutions duly adopted
by the board of directors of Purchaser authorizing the execution, delivery
and
performance of the Agreement by Purchaser, certified by the Secretary or
an
Assistant Secretary of Purchaser and (b) certificates (in form and
substance reasonably satisfactory to Seller) of the Secretary or an Assistant
Secretary as to the incumbency and signatures of the officers of Purchaser
executing the Agreement.
(f) Seller
shall have received the closing deliveries listed in Section 2.5(b)
hereof.
7.4 Frustration
of Conditions.
None of
the Company, Purchaser, or Seller may rely on the failure of any condition
set
forth in Sections 7.1, 7.2, or 7.3, as the case may be, if such failure was
caused by such party's failure to comply with any provision of this
Agreement.
ARTICLE
8
SURVIVAL
8.1 Survival.
All
representations, warranties, covenants and agreements made or undertaken
by the
parties in this Agreement shall survive the Closing; provided,
however,
that
(i) all covenants and agreements of the parties contained in this Agreement
shall survive until fully performed or fulfilled, unless and to the extent
only
that non-compliance with such covenants or agreements is waived by both Seller
and Purchaser and (ii) all such representations and warranties shall
terminate and expire eighteen (18) months after the Closing Date (the
“Survival
Period”),
except with respect to matters as to which a Claims Notice shall have been
given
conforming to the requirements of Section 9.2 or 9.3 by a party hereto
prior to the termination of the Survival Period.
ARTICLE
9
INDEMNIFICATION
9.1 Obligation
to Indemnify.
(a) Subject
to the limitations on survivability set forth in Article 8 and to the
limitations set forth in this Article 9, Seller agrees to indemnify, defend
and hold harmless Purchaser and its directors, officers, employees, agents,
representatives and Affiliates (collectively, the “Purchaser
Indemnified Parties”)
from
and against all Losses (as hereinafter defined) imposed upon or incurred
by any
Purchaser Indemnified Party arising, in whole or in part, from: (i) any
breach of or inaccuracy in the representations and warranties made by Seller
contained in Article 3 or Article 5 hereof, unless Purchaser knew or
had reason to know of any breach or inaccuracy prior to Closing; and
(ii) any breach, non-fulfillment or default in the performance of any of
the covenants and agreements of Seller contained in this Agreement.
Stock
Purchase Agreement
Family
Life Insurance Company
-27-
(b) Subject
to the limitations on survivability set forth in Article 8 and to the
limitations set forth in this Article 9, Purchaser agrees to indemnify,
defend and hold harmless Seller and its directors, officers, employees, agents,
representatives and Affiliates (collectively, the “Seller
Indemnified Parties”)
from
and against all Losses imposed upon or incurred by any Seller Indemnified
Party
arising, in whole or in part, from: (i) any breach of or inaccuracy in the
representations and warranties made by Purchaser contained in Article 4
hereof, unless Seller knew or had reason to know of any breach or inaccuracy
prior to Closing; (ii) any breach, non-fulfillment or default in the
performance of any of the covenants and agreements of Purchaser contained
in
this Agreement; and (iii) Excluded Taxes.
9.2 Claims
Notice.
(a) In
the
event that either Purchaser or Seller wishes to assert a claim for
indemnification hereunder (including, but not limited to, claims arising
from a
claim or demand made, or an action, proceeding or investigation instituted,
by
any Person not a party to this Agreement that may result in a Loss for which
indemnification is claimed under this Article 9) (a “Third
Party Claim”),
such
party seeking indemnification (the “Indemnified
Party”)
shall
give written notice (a “Claims
Notice”)
to the
other party (the “Indemnifying
Party”).
Such
Claims Notice shall be delivered to the Indemnifying Party as promptly as
practicable (but in any event, no later than ten (10) calendar days after
receiving notice or becoming aware of such claim), specifying in detail the
facts constituting the basis for, and the amount of, the claim asserted.
The
failure by any Indemnified Party so to notify the Indemnifying Party shall
relieve any Indemnifying Party from its indemnification obligations to the
extent such failure or other actions taken by the Indemnified Party in response
to such claim shall materially and actually prejudice an Indemnifying Party.
Such Claims Notices must be received prior to the expiration of the Survival
Period.
(b) Subject
to the provisions of Section 9.2(c), upon receipt of a Claims Notice the
Indemnifying Party shall at any time have the right to assume the defense
and
control of the Third Party Claim. In the event the Indemnifying Party exercises
such rights, the Indemnified Party shall have the right, but not the obligation,
to participate reasonably in (but not control) the defense of the Third Party
Claim with its own counsel and at its own expense. If the Indemnifying Party
elects to negotiate, settle or assume the defense of a Third Party Claim,
the
Indemnifying Party shall within ten (10) days notify the Indemnified Party
of
its intent to do so and select counsel and shall take all steps reasonably
deemed necessary by the Indemnifying Party in the defense, negotiation or
settlement of such Third Party Claim. If the Indemnifying Party elects not
to
defend against or negotiate, settle, or otherwise deal with any Third Party
Claim that relates to any Losses indemnified against hereunder, the Indemnified
Party may defend against, negotiate, settle, or otherwise deal with such
Third
Party Claim. The
Indemnified Party shall, and shall cause each of its directors, officers,
employees, agents, representatives, Affiliates and permitted assigns to,
cooperate fully with the Indemnifying Party in the defense of any Third Party
Claim defended by the Indemnifying Party, which cooperation shall include,
without limitation, designating a person to whom the Indemnifying Party may
direct notices and other communications, using commercially reasonable efforts
to make witnesses available, and providing records and documents to the extent
such witnesses, records and documents are relevant to the Third Party
Claim.
Stock
Purchase Agreement
Family
Life Insurance Company
-28-
(c) The
Indemnifying Party shall be authorized to consent to a settlement of, or
the
entry of any judgment arising from, any Third Party Claim as to which the
Indemnifying Party has assumed the defense in accordance with the terms of
Section 9.2(b), without the consent of any Indemnified Party, but only to
the extent that such settlement or entry of judgment (i) provides solely
for the payment of money by the Indemnifying Party, or (ii) provides a
complete release of, or dismissal with prejudice of claims against, the
Indemnified Party from all matters that were asserted in connection with
such
claims. Except as provided in the foregoing sentence, settlement or consent
to
entry of judgment shall require the prior approval of the Indemnified Party,
such approval not to be unreasonably withheld, conditioned, or delayed. If
requested by the Indemnifying Party, the Indemnified Party will cooperate
with
the Indemnifying Party and its counsel in contesting any Third Party Claim,
or,
if appropriate and related to the Third Party Claim in question, in making
any
counterclaim or cross-complaint against any Person (other than the Indemnified
Party or its directors, officers, employees, agents, representatives,
Affiliates, successors and permitted assigns). Unless and until the Indemnifying
Party elects to defend the Third Party Claim, the Indemnified Party shall
have
the right, at its option and at the Indemnifying Party’s expense, to do so in
such manner as it reasonably deems appropriate; provided,
however,
that the
Indemnified Party shall not settle or compromise any Third Party Claim for
which
it seeks indemnification hereunder without the prior written consent of the
Indemnifying Party (which shall not be unreasonably withheld). Notwithstanding
the above, if a settlement offer solely for money damages is made by the
applicable third party claimant, and the Indemnifying Party notifies the
Indemnified Party in writing of the Indemnifying Party’s willingness to accept
the settlement offer and, subject to the applicable limitations of Sections
9.4
and 9.5, pay the amount called for by such offer, and the Indemnified Party
declines to accept such offer, the Indemnified Party may continue to contest
such Third Party Claim, free of any participation by the Indemnifying Party,
and
the amount of any ultimate liability with respect to such Third Party Claim
that
the Indemnifying Party has an obligation to pay hereunder shall be limited
to
the lesser of (A) the amount of the settlement offer that the Indemnified
Party declined to accept or (B) the aggregate Losses of the Indemnified
Party with respect to such Third Party Claim.
9.3 Procedures
for Direct Claims.
In the
event any Indemnified Party shall have a claim for indemnity against any
Indemnifying Party that does not involve a Third Party Claim, the Indemnified
Party shall deliver written notice of such claim to the Indemnifying Party
as
promptly as practicable but in any event within thirty (30) calendar days
of
receiving notice of or becoming aware of such claim, specifying in detail
the
facts constituting the basis for, and the amount of, the claim asserted.
The
failure by any Indemnified Party to provide such notice to the Indemnifying
Party shall relieve the Indemnifying Party from its indemnification obligations,
it being understood that written notices for claims for indemnification
hereunder must in any event be received and delivered prior to the expiration
of
the Survival Period.
9.4 Indemnification
Payments.
(a) Any
payment required to be made under this Article 9 or Section 6.6 shall be
made by wire transfer of immediately available funds to such account or accounts
as the Indemnified Party shall designate to the Indemnifying Party in writing;
provided,
that,
such
payments shall be made, without duplication or double-counting, only to
Purchaser or Seller, respectively. Each Indemnified Party shall be obligated
to
use its reasonable good faith efforts to mitigate to the extent reasonably
practicable the amount of any Losses for which it is entitled to seek
indemnification hereunder.
Stock
Purchase Agreement
Family
Life Insurance Company
-29-
(b) Upon
making any indemnification payment, the Indemnifying Party will, to the extent
of such payment, be subrogated to all rights of the Indemnified Party against
any third party in respect of the Loss to which the payment relates;
provided,
however,
that
until the Indemnified Party recovers full payment of its Loss, any and all
claims of the Indemnifying Party against any such third party on account
of said
payment are hereby made expressly subordinated and subjected in right of
payment
to the Indemnified Party’s rights against such third party. Without limiting the
generality of any other provision hereof, each such Indemnified Party and
Indemnifying Party will duly execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights.
(c) The
amount of any Losses sustained by an Indemnified Party and owed by an
Indemnifying Party shall be reduced by any amount received by such Indemnified
Party with respect thereto under any insurance or reinsurance coverage or
from
any other party alleged to be responsible therefore. The Indemnified Party
shall
use commercially reasonable efforts to collect any amounts available under
such
insurance or reinsurance coverage and from such other party alleged to have
responsibility. If the Indemnified Party receives an amount under insurance
or
reinsurance coverage or from such other party with respect to Losses sustained
at any time subsequent to any indemnification actually paid pursuant to this
Article 9, then, subject to the immediately preceding sentence, such
Indemnified Party shall promptly reimburse the applicable Indemnifying Party
for
any such indemnification payment made by such Indemnifying Party up to the
actual amount so received by the Indemnified Party.
(d) Any
indemnification payments recoverable by an Indemnified Party pursuant to
this
Article 9 or Section 6.6 shall be net of any Tax benefits to such
Indemnified Party as a result of the Loss as to which the payment is made.
All
indemnification payments under this Article 9 or Section 6.6 shall be
deemed adjustments to the Purchase Price.
9.5 Limitations
on Indemnification Obligations.
(a) Notwithstanding
the provisions of Article 8 and this Article 9, neither the Purchaser
nor the Seller shall have any indemnification obligation for Losses under
Section 6.6, 9.1(a) or 9.1(b) (i) for any individual item, or group of
items arising out of the same event, where the Loss relating thereto is less
than $10,000 (the “Sub-Basket”)
and
(ii) in respect of each individual item, or group of items arising out of
the
same event, where the Loss relating thereto is equal to or greater than the
Sub-Basket, unless the aggregate amount of all such Losses exceeds $420,000
(the
“Basket”),
and
then only to the extent of such excess. In no event shall the total aggregate
dollar amount of all such Losses indemnified by Seller exceed $8,400,000
(the
“Cap”).
(b) In
no
event shall any party be entitled to consequential, special, indirect, punitive,
exemplary, or other similar damages.
Stock
Purchase Agreement
Family
Life Insurance Company
-30-
(c) In
no
event shall any party be liable for Losses suffered after the end of the
Survival Period.
(d) Purchaser
shall not make any claim for indemnification under this Article 9 or Section
6.6
in respect of any matter that is taken into account in the calculation of
the
Adjusted Closing Policyholder Surplus.
9.6 Exclusivity
and Equitable Relief.
Subject
to the right to enforce the indemnities provided for in this Article 9 and
to Section 9.6 hereof, the indemnities provided for in this Article 9
shall be the exclusive remedies of the parties hereto and their respective
officers, directors, employees, agents and Affiliates for any breach of or
inaccuracy in any representation or warranty or any breach, non-fulfillment
or
default in the performance of any of the covenants or agreements contained
in
this Agreement and the parties shall not be entitled to a rescission of this
Agreement or to any further indemnification rights or claims of any nature
whatsoever in respect thereof (including, without limitation, any common
law
rights of contribution), all of which the parties hereto hereby
waive.
ARTICLE
10
TERMINATION
PRIOR TO CLOSING
10.1 Termination
by Mutual Consent.
This
Agreement may be terminated and the transactions contemplated hereby may
be
abandoned at any time prior to the Closing Date by mutual written consent
of
Seller and Purchaser.
10.2 Termination
by Either Seller or Purchaser.
This
Agreement may be terminated and the transactions contemplated hereby may
be
abandoned by either Seller or Purchaser if (i) the Closing shall not have
occurred by March 31, 2007 (the “Termination
Date”);
or
(ii) any order, judgment, injunction, award or decree permanently
restraining, enjoining or otherwise prohibiting consummation of the transactions
contemplated by this Agreement shall become final and non-appealable;
provided,
that the
right to terminate this Agreement pursuant to clause (i) above shall not
be
available to any party that has breached in any material respect its obligations
under this Agreement in any manner that shall have primarily contributed
to the
failure of the transactions contemplated by this Agreement to be
consummated.
10.3 Termination
by Seller.
This
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing Date by Seller if there has been a material
breach by Purchaser of any representation, warranty, covenant or agreement
contained in this Agreement that, together with all such breaches, would
prevent
any of the conditions set forth in Article 7 from being satisfied (other
than by waiver) and that is not curable or, if curable, is not cured within
thirty (30) Business Days after written notice of such breach is given by
Seller
to Purchaser.
10.4 Termination
by Purchaser.
This
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing Date by Purchaser if there has been a material
breach by Seller of any representation, warranty, covenant or agreement
contained in this Agreement that, together with all such breaches, would
prevent
any of the conditions set forth in Article 7 from being satisfied (other
than by waiver) and that is not curable or, if curable, is not cured within
thirty (30) Business Days after written notice of such breach is given by
Purchaser to Seller.
Stock
Purchase Agreement
Family
Life Insurance Company
-31-
10.5 Procedure
upon Termination.
In the
event of termination of this Agreement and the abandonment of the transactions
by Purchaser or Seller, or both, pursuant to this Article 10, such party
shall give written notice to the other party, and this Agreement shall
terminate, and the purchase of the Shares hereunder shall be abandoned, without
further action by Purchaser or Seller.
10.6 Effect
of Termination; Survival.
In the
event of termination of this Agreement and the abandonment of the transactions
pursuant to this Article 10, this Agreement shall become void and of no
effect with no liability on the part of any party hereto (or of any of its
respective Affiliates or representatives); provided,
however,
in the
event of such a termination because of any willful breach (a) the breaching
party shall be liable to the other party for all actual damages arising directly
from such breach, including but not limited to, reasonable consultant and
attorneys’ fees and expenses, and (b) the obligations arising under
Sections 6.4, 6.10, 11.3, 11.6, and 11.7 shall remain in full force and effect.
In no event shall any party be entitled to consequential, special, indirect,
punitive exemplary or other similar damages including, but not limited to,
damages for lost profits, diminution of value or future revenue, following
a
termination of this Agreement.
ARTICLE
11
MISCELLANEOUS
11.1 Entire
Agreement.
This
Agreement (including the other agreements contemplated hereby and thereby,
the
Exhibits and the Schedules hereto and thereto) contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes
all
prior agreements, written or oral, with respect thereto. This Agreement,
the
Schedules, Exhibits and the attachments to it, and the other documents and
certificates delivered pursuant hereto, set forth the entire understanding
of
Purchaser and Seller and supersede all prior agreements, arrangements and
communications, whether oral or written, between Purchaser and Seller with
respect to the subject matter hereof. Without limiting the generality of
the
foregoing sentence, the only representations and warranties made by the parties
hereto with respect to the subject matter hereof are the representations
and
warranties contained in this Agreement and Schedules hereto. By way of example
but not limitation, no statements, information, projections, financial or
other
data relating to the Company and the Business (including any opinion,
information, projections or advice that may have been provided to Purchaser
by
any director, officer, employee, agent, consultant or representative of the
Company or Seller or any of their respective Affiliates) shall constitute
either
a representation or warranty of Seller or give rise to any liability or
obligation on the part of Seller. Any matter that is disclosed in any Schedule
or Exhibit is deemed to have been disclosed for the purposes of all relevant
provisions of this Agreement. The inclusion of any item in the Schedules
is not
evidence of the materiality of such item for the purposes of this Agreement
or
evidence that such item was required to be disclosed therein. Any matter
or item
disclosed on one Schedule shall be deemed to have been disclosed on each
other
Schedule. Captions appearing in this Agreement are for convenience of reference
only and shall not be deemed to explain, limit or amplify the provisions
hereof.
Stock
Purchase Agreement
Family
Life Insurance Company
-32-
11.2 Waivers
and Amendments.
This
Agreement may be amended, superseded, canceled, renewed, or extended, and
the
terms hereof may be waived, only by a written instrument signed by both parties
or, in the case of a waiver, by the party waiving compliance. No delay on
the
part of any party on exercising any right, power or privilege hereunder shall
operate as a waiver thereof, or shall any waiver on the part of any party
of any
right, power or privilege, or any single or partial exercise of any such
right,
power or privilege, preclude any further exercise thereof or the exercise
of any
other such right, power or privilege.
11.3 Publicity
and Confidentiality.
(a) Except
as
may otherwise be required by Applicable Law, no release or announcement
concerning this Agreement or the transactions contemplated hereby or thereby
shall be made without the prior written approval of the other party, which
approval shall not be unreasonably withheld or delayed; provided,
however,
that,
to the extent required by Applicable Law, the party intending to make such
release shall use its commercially reasonable efforts consistent with Applicable
Law to consult with the other parties with respect to the text thereof. The
parties hereto shall cooperate with each other in making any release or
announcement.
(b) In
addition and subject to the covenants and limitations contained in
Section 6.10 hereof, the parties agree that, other than as agreed or as
required to implement the transactions contemplated hereby or as a result
of
releases or announcements made in accordance with subsection (a) above, the
parties will keep confidential the terms and conditions of this Agreement,
including, without limitation, the Schedules hereto and thereto, except as
otherwise required by Applicable Law or court or judicial process (including,
without limitation, pursuant to any federal or state securities laws or the
rules of any stock exchange or self-regulatory organization or pursuant to
any
legal, regulatory or legislative proceedings).
11.4 Assignment.
Neither
this Agreement nor any of the rights, interests, or obligations hereunder
shall
be assigned by any party hereto (whether by operation of law or otherwise),
in
whole or in part, without the prior written consent of the other party. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the
benefit of and be enforceable by the parties and their respective successors
and
permitted assigns.
11.5 Notices.
All
notices or other communications that are required or permitted hereunder
shall
be in writing and sufficient if delivered by hand, by facsimile transmission,
by
certified mail postage pre-paid, or by courier or overnight carrier, to the
Persons at the addresses set forth below (or at such other address as may
be
provided hereunder), and shall be deemed given when delivered (if by hand
or by
courier), when transmitted (if sent by confirmed facsimile transmission),
three
(3) Business Days after the date of deposit in the United States mail (if
mailed), and one (1) Business Day after the date of deposit with an overnight
courier (if sent by overnight courier), as follows:
|
Seller:
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Family
Life Corporation
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||
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇. ▇
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|||
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▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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|||
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Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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|||
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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|||
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With
copy to counsel
|
Weil,
Gotshal & ▇▇▇▇▇▇ LLP
|
||
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(which
shall not
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▇▇▇
▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
|
||
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constitute
notice):
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▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
||
|
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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|||
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|||
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Purchaser:
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The
Manhattan Life Insurance Company
|
||
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▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
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|||
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▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|||
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Attention:
▇▇▇ ▇▇▇▇▇▇, President
|
|||
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|||
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With
copy to counsel
|
Long,
Burner, Parks & ▇▇▇▇▇▇▇, P.C.
|
||
|
(which
shall not
|
P.O.
Box 2212
|
||
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constitute
notice):
|
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
|
||
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Attention:
Burnie Burner
|
|||
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Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
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Stock
Purchase Agreement
Family
Life Insurance Company
-33-
11.6 Venue
and Jurisdiction.
Seller
and Purchaser hereby irrevocably submit to the exclusive jurisdiction of
any
county, state, or federal court of general and competent jurisdiction located
within the State of Texas with respect to any legal action or proceeding
arising
out of or connected with this Agreement.
11.7 Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE
STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
11.8 Captions.
The
captions contained in this Agreement are for reference purposes only and
are not
part of this Agreement. All references herein to Articles, Sections, and
Schedules shall be deemed references to such parts of this Agreement, unless
the
context shall otherwise require.
11.9 Interpretation.
(a) For
purposes of this Agreement, the words “hereof,” “herein,” “hereby,” and other
words of similar import refer to this Agreement as a whole unless otherwise
indicated. Whenever the singular is used herein, the same shall include the
plural, and whenever the plural is used herein, the same shall include the
singular, where appropriate. All dollar references in this Agreement are
to the
currency of the United States.
(b) No
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the drafter. The parties acknowledge and agree
that this Agreement has been reviewed, negotiated and accepted by all parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes
and
intentions of all parties hereto.
Stock
Purchase Agreement
Family
Life Insurance Company
-34-
11.10 Severability.
Any
term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in
any
other jurisdiction. If any provision of this Agreement is so broad as to
be
unenforceable, the provision shall be interpreted to be only as broad as
is
enforceable.
11.11 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one
and the
same instrument. Each counterpart may consist of a number of copies hereof
each
signed by less than all, but together signed by all, of the parties
hereto.
11.12 No
Third Party Beneficiaries.
Nothing
in this Agreement is intended or shall be construed to give any Person, other
than the parties hereto, their successors and permitted assigns, any legal
or
equitable right, remedy, or claim under or in respect of this Agreement or
any
provision contained herein or therein.
11.13 Expenses.
Except
as otherwise expressly stated herein, all legal and other costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses. All
negotiations relative to this Agreement and the transaction contemplated
hereby
have been carried out by the parties without the intervention of any person
on
their respective behalf (except legal and financial advisors engaged and
compensated solely by such party) in such manner as to not give rise to any
valid claim by any person against the other party for a finder’s fee, brokerage
commission or similar payment.
11.14 Date
of Execution.
This
Agreement shall be deemed to be executed on the latest date that each and
every
party hereto shall have signed this Agreement or a counterpart hereof which
shall be known as the “Effective Date” of this Agreement.
11.15 Access
to Records.
Purchaser agrees that it shall preserve and keep the records held by it relating
to the business of the Company for a period of seven (7) years from the Closing
Date and shall make such records and personnel available to Seller as may
be
reasonably required by Seller in connection with, among other things, any
insurance claims by, legal proceedings against or governmental investigations
of, Seller or any of its Affiliates or in order to enable Seller to comply
with
its obligations under this Agreement and each other agreement, document or
instrument contemplated hereby or thereby. In the event Purchaser wishes
to
destroy any such records within seven (7) years of the Closing Date, Purchaser
shall first give ninety (90) days’ prior written notice to Seller and Seller
shall have the right at its option and expense, upon prior written notice
given
to Purchaser within that ninety (90) day period, to take possession or make
copies of the records.
Stock
Purchase Agreement
Family
Life Insurance Company
-35-
IN
WITNESS WHEREOF,
the
parties have executed this Agreement.
|
FAMILY
LIFE CORPORATION
|
||||
|
Date:
|
By:
|
/s/▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, President
|
||||
|
THE
MANHATTAN LIFE INSURANCE COMPANY
|
||||
|
Date:
|
By:
|
/s/▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇,
President
|
||||
Stock
Purchase Agreement
Family
Life Insurance Company
-36-
The
schedules to this agreement have been omitted. FIC will furnish
supplementally a copy of any omitted schedule to the Commission upon request.
Stock
Purchase Agreement
Family
Life Insurance Company
-37-