AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER BY AND AMONG FMG ACQUISITION CORP., UNITED SUBSIDIARY CORP. AND UNITED INSURANCE HOLDINGS LC Dated as of August 15, 2008
Exhibit
1.2
AMENDED
AND RESTATED
BY
AND AMONG
UNITED
SUBSIDIARY CORP.
AND
UNITED
INSURANCE HOLDINGS LC
Dated
as of August 15, 2008
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AMENDED
AND RESTATED AGREEMENT AND PLAN OF MERGER
This
Amended and Restated Agreement and Plan of Merger (this “Agreement”)
is
made and entered into as of August 15, 2008 by and among United Insurance
Holdings LC, a Florida limited liability company (the “Company”),
FMG
Acquisition Corp., a Delaware corporation (“Parent”),
and
United Subsidiary Corp., a Florida corporation and wholly owned subsidiary
of
Parent (“Merger
Sub”). Parent,
Merger Sub and the Company are sometimes referred to herein as a “Party”
and
collectively as the “Parties.”
WITNESSETH:
A. Parent,
Company, and Merger Sub intend to effect the merger of Merger Sub with and
into
the Company (the “Merger”),
with
the Company continuing as the surviving entity in the Merger, as a result of
which the entire issued and outstanding membership interest of the Company
(the
“Membership
Interest”)
will
automatically be exchanged into the right to receive the Merger Consideration
(as defined herein), without interest, upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the Florida
Business Corporation Act (the “FBCA”)
and
the Florida Limited Liability Company Act (the “Florida
Act”),
each
as amended.
B. The
individuals constituting the board of managers or directors of the Company
(each
a “Director”
and
collectively the “Board”)
and
the members of the Board of Directors of each of Parent and Merger Sub have
unanimously approved this Agreement and the Merger and each of them have
determined that this Agreement, the Merger and the other transactions
contemplated hereby are advisable and in the respective best interests of the
Company, Parent and Merger Sub.
C.
The
Board
has resolved to recommend that its members adopt this Agreement, and the Board
of Directors of Parent has resolved to recommend that its stockholders adopt
this Agreement.
D. The
Parties have previously entered into an Agreement and Plan of Merger dated
as of
April 2, 2008 with respect to the Merger (the “Prior
Agreement”).
E. As
an
inducement to the Parent and Company to agree to certain changes to the Prior
Agreement, (a) Parent shall conduct a private placement (the “Private
Placement”)
pursuant to which it shall enter into a Note Purchase Agreement with the parties
thereto (the “Note
Purchase Agreement”)
and
issue promissory notes (the “Notes”)
having
an aggregate face value of $18,279,570 to various investors for: (1) cash
consideration of $10,000,000 (for Notes having a face value of $10,752,688)
and
(2) the exchange of up to 869,565 shares of Common Stock currently held by
certain stockholders of Parent (for Notes having a face value of $7,526,882)
(collectively, the “Exchange
Offer”),
(b) Parent has agreed to conduct a tender offer to buy up to 3,320,672
shares of
Parent
common stock, par value $0.0001 per share (the “Common
Stock”)
at a
price of $8.05 per share (the “Tender
Offer”),
(c)
and FMG Investors LLC (“FMG
Investors”)
has
agreed to surrender for cancellation up to: (1) 213,000 shares of Common Stock
owned by it (the “Affiliate
Shares”)
and
(2) warrants
owned by FMG Investors in an amount equal to the number of Affiliate Shares
surrendered (the “Affiliate
Warrants”).
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F. This
Agreement amends and restates the Prior Agreement in its entirety.
NOW,
THEREFORE, in consideration of the premises set forth above, which are
incorporated in this Agreement as if fully set forth below, and the
representations, warranties, covenants and agreements contained in this
Agreement, and intending to be legally bound hereby, the Parties hereto agree
that the Prior Agreement is amended and restated in its entirety as
follows:
ARTICLE
I
TERMS
OF THE MERGER
1.1 The
Merger.
Upon
the
terms and subject to the conditions of this Agreement and in accordance with
the
Florida Act and the FBCA, at the Effective Time, Merger Sub shall be merged
with
and into the Company. Upon consummation of the Merger, the separate existence
of
Merger Sub shall thereupon cease, and the Company, as the surviving company
in
the Merger (the “Surviving
Company”),
shall
continue its limited liability company existence under the laws of the State
of
Florida as a wholly owned subsidiary of Parent. It is not intended
that the Merger shall be a tax free purchase and sale of the Membership Interest
for federal, state and local Tax purposes.
1.2 The
Closing; Effective Time; Effect.
(a) Unless
this Agreement shall have been terminated and the transactions contemplated
hereby shall have been abandoned pursuant to Section 7.1, and subject to the
satisfaction or waiver of the conditions set forth in Article VI hereof, the
closing of the Merger (the “Closing”)
shall
take place by the exchange of original or facsimile or electronic copies of
the
respective Closing documents at 10:00 a.m. local time no later than the third
Business Day after the date that all of the closing conditions set forth in
Article VI have been satisfied or waived, unless another time, date or place
is
agreed upon in writing by the Parties hereto. The date on which the
Closing occurs is herein referred to as the “Closing
Date.”
(b) Subject
to the terms and conditions hereof, concurrently with the Closing, the Parties
shall file with the Secretary of State of the State of Florida (the
“Secretary
of State”)
articles of merger in accordance with the Florida Act and the FBCA (referred
to
collectively herein as the “Articles
of Merger”)
executed in accordance with the relevant provisions of the Florida Act and
the
FBCA and shall make all other filings or recordings required under the Florida
Act, the FBCA and the General Corporation Law of the State of Delaware, as
amended (the “DGCL”),
in
order to effect the Merger. The Merger shall become effective upon
the filing of the Articles of Merger or at such other time as is agreed by
the
Parties hereto and specified in the Articles of Merger. The time when
the Merger shall become effective is herein referred to as the “Effective
Time.”
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(c)
From and
after the Effective Time, except as otherwise expressly set forth herein, the
Surviving Company shall possess all properties, rights, privileges, powers
and
franchises of the Company and Merger Sub, and all of the claims, obligations,
liabilities, debts and duties of the Company and Merger Sub shall become the
claims, obligations, liabilities, debts and duties of the Surviving
Company.
1.3 Exchange
of Securities.
At
the
Effective Time, by virtue of the Merger and without any action on the part
of
the Company, Merger Sub or the holders of any securities of Merger Sub or the
Company:
(a) All
of
the Membership Interest issued and outstanding immediately prior to the
Effective Time (other than Dissenting Membership Interest) shall automatically
be converted into the right to receive an aggregate of:
(i) Twenty
Five Million Dollars ($25,000,000) in cash (the “Cash
Consideration”)
payable, without interest, to the holders of Membership Interest of the Company
(individually, a “Member”
and
collectively, the “Members”)
in
accordance with the allocation set forth in Exhibit A;
(ii) In
addition to Section 1.3(a)(i), Eight Million Seven Hundred Fifty Thousand
(8,750,000) shares of Common Stock, issuable to the Members in accordance with
the allocation set forth in Exhibit A (the “Stock
Consideration”);
(iii) In
addition to Sections 1.3(a)(i)-(ii), 1,093,750 newly issued common stock
purchase warrants which shall be identical to the IPO Warrants in all respects
and subject to the terms and conditions of a Warrant Agreement, dated as of
October 4, 2007 between Parent and Continental Stock Transfer & Trust
Company, the form of which is filed as an Exhibit 4.5 to Parent’s registration
statement on Form S-1 (SEC File No. 333-143466) (the “IPO
Warrant Agreement”),
issuable to the Members in accordance with the allocation set forth in Exhibit
A
(the “Warrant
Consideration”)
(the
Cash Consideration, Stock Consideration and Warrant Consideration, collectively,
the “Initial
Consideration”);
(iv) In
addition to Sections 1.3(a)(i)-(iii) and subject to Section 1.4, up to Five
Million Dollars ($5,000,000) in cash (the “Additional
Consideration”)
payable, without interest, to the Members in accordance with the allocation
set
forth in Exhibit A;
(v) In
addition to Sections 1.3(a)(i)-(iv), a number of shares of Common Stock equal
to
the quotient obtained by dividing (A) by (B), in accordance with the allocation
set forth in Exhibit A. For the purposes of this subsection, (A) is the product
obtained by multiplying (1) the percentage of Common Stock which will be owned
by the Members in the aggregate immediately following the Closing, after giving
effect to the Tender Offer and Exchange Offer and (2) the amount of the original
issue discount (“OID”)
of the
Notes and (B) is $8.00;
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(vi) In
addition to Sections 1.3(a)(i)-(v), a number of shares of Common Stock equal
to
the quotient obtained by dividing (A) by (B), in accordance with the allocation
set forth in Exhibit A. For the purposes of this subsection, (A) is the product
obtained by multiplying (1) the percentage of Common Stock which will be owned
by the Members in the aggregate immediately following the Closing, after giving
effect to the Tender Offer and Exchange Offer and (2) ten percent (10%) of
the
amount of cash required for the Tender Offer above the sum of $11,232,884 (being
the amount reserved for the conversion rights of the public stockholders) and
the cash proceeds received from the sale of Notes and (B) is $8.00;
(vii) In
addition to Sections 1.3(a)(i)-(vi), a number of shares of Common Stock equal
to
the product obtained by multiplying (A) and (B) and dividing the resulting
product by (C), in accordance with the allocation set forth in Exhibit A. For
purposes of this subsection, (A) is the percentage of Common Stock which will
be
owned by the Members in the aggregate immediately following the Closing, on
a
fully diluted basis, after giving effect to the Tender Offer and Exchange Offer
and (B) is the product obtained by multiplying $0.05 and the sum of (1) the
number of shares of Common Stock received by the Company in the Exchange Offer
and (2) the number of shares of Common Stock purchased in the Tender Offer
and
(C) is $8.00; and
(viii) In
addition to Sections 1.3(a)(i)-(vii), a number of common stock purchase warrants
identical to the IPO Warrants equal to the number of shares of Common Stock
granted pursuant to Sections 1.3(a)(v), (vi) and (vii) in accordance with the
allocation as determined immediately prior to the Effective Time.
(ix) The
consideration set forth in Sections 1.3(a)(v), (vi), (vii) and (viii) is
referred to herein as the “Additional
Share and Warrant Consideration”
and
the
Initial Consideration, Additional Consideration and Additional Share and Warrant
Consideration are referred to collectively herein as the “Merger
Consideration”.
FMG
Investors hereby covenants and agrees to surrender a number of Affiliate Shares
and a number of Affiliate Warrants for cancellation immediately prior to the
Closing in an amount equal to the Additional Share and Warrant Consideration.
The Additional Share and Warrant Consideration shall be subject to the terms
and
conditions of an escrow agreement (the “Escrow
Agreement”),
the
form of which is filed as Exhibit 10.2 to Parent’s registration statement on
Form S-1 (SEC File No. 333-143466).
(b) Each
issued and outstanding share of common stock, par value $0.001 per share, of
Merger Sub shall be exchanged into membership interests of the Surviving
Company, and all such membership interests shall constitute the only outstanding
membership interests of the Surviving Company following the Effective
Time. From and after the Effective Time, any certificate representing
the common stock of Merger Sub shall be deemed for all purposes to represent
membership interests of the Surviving Company into which such shares of common
stock of Merger Sub represented thereby were exchanged in accordance with the
immediately preceding sentence.
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(c) All
Membership Interests (except the Dissenting Membership Interest) shall, by
virtue of the Merger and without any action on the part of the Members, be
automatically cancelled and shall cease to exist, and each Member shall cease
to
have any rights with respect thereto, except the right to receive the Merger
Consideration.
(d) It
is
expressly understood and agreed by the parties that the Merger Consideration
shall be reduced on a pro rata basis with respect to those Membership Interests
that constitute Dissenting Membership Interests. By way of example, in the
event
there are Dissenting Membership Interests equal to 3% of all Membership
Interests, the Merger Consideration shall be reduced by 3%.
1.4 Additional
Consideration.
Parent
shall pay to the Paying Agent (as defined below) as part of the Exchange Fund
(as defined below) for distribution to the Members Two Dollars ($2.00) in cash
for each dollar exceeding the Net Income Target of the Surviving Company during
either of the period of (i) July 1, 2008 through June 30, 2009 (“Period
One”),
and
(ii) January 1, 2009 through December 31, 2009 (“Period
Two”).
In no
event shall the Additional Consideration exceed $5,000,000 in aggregate. For
purposes of this Section 1.4, “Net
Income Target”
shall
mean the Net Income of the Surviving Company equal to Twenty Five Million
Dollars ($25,000,000) and “Net
Income”
shall
mean the sum of (a) the net income achieved by Surviving Company for the
applicable period computed according to United States generally accepted
accounting principles (“GAAP”)
applied in a manner consistent with the Company’s past practices (but excluding
(i) costs and expenses associated with this Agreement and the Merger and (ii)
revenue associated with bonuses paid to the Company under any “take-out”
transactions completed before January 1, 2008) plus (b) an amount equal to
the
after-tax amount incurred by Parent by adding (1) interest expense payable
during such period on the Notes plus (2) the value of any original issue
discount recorded as an expense in connection with such Notes during such
period. The Additional Consideration, if any, shall be payable to the Members
within forty five (45) days after the end of Period One and/or Period Two,
respectively, and shall be allocated among the Members as set forth on Exhibit
A. For illustration purposes, in the event the Surviving Company achieves a
Net
Income of $27,500,000 for Period One, the Additional Consideration shall equal
$5,000,000. For illustration purposes, in the event the Surviving Company does
not achieve the Net Income Target for Period One and achieves a Net Income
of
$27,500,000 for Period Two, the Additional Consideration shall equal $5,000,000.
For further illustration purposes, in the event the Surviving Company achieves
a
Net Income of $25,500,000 for Period One and achieves a Net Income of
$26,000,000 for Period Two, the Additional Consideration shall equal $3,000,000,
of which $1,000,000 will be paid for Period One and $2,000,000 for Period Two.
For further illustration purposes, in the event the Surviving Company does
not
achieve the Net Income Target for Period One or Period Two, no Additional
Consideration shall be payable to the Members.
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1.5 Tender
and Payment.
(a) Paying
Agent; Deposit of Exchange Fund. Prior
to the Effective Time, Parent and Company shall execute a Paying Agent Agreement
designating Continental Stock Transfer & Trust Company as the paying agent
for the Merger Consideration (the “Paying
Agent”). No
later than the Effective Time, Parent shall deposit with the Paying Agent the
Cash Consideration by wire transfer of immediately available funds and shall
deliver to the Paying Agent certificates representing the Stock Consideration
and Warrant Consideration and such portion of the Additional Share and Warrant
Consideration to which they are entitled, to be held for the benefit of the
Members (other than holders of Dissenting Membership Interests). No later than
(a) forty five (45) days after the end of Period One, and (b) as soon as
practicable (but no later than five (5) days) after the filing of Parent’s Form
10-K with the Securities and Exchange Commission (the “SEC”)
for
Period Two, Parent shall deposit with the Paying Agent Additional Consideration,
if any, by wire transfer of immediately available funds (collectively with
the
Initial Consideration and Share Consideration, the “Exchange
Fund”). The
Exchange Fund shall be held by the Paying Agent pursuant to the Paying Agent
Agreement. Pursuant to the Paying Agent Agreement, the Paying Agent
shall distribute the Exchange Fund to the holders of the Membership Interests
pursuant to the allocation set forth in Exhibit A.
(b) Distribution
Procedures. Promptly
after the Effective Time, Parent and the Surviving Company shall cause the
Paying Agent to mail to each Member of record, as of the Effective Time, a
letter of transmittal in such form attached to the Paying Agent Agreement which
shall set forth instructions for distributing the Merger Consideration in
respect of the Membership Interests pursuant to Section 1.3(a)
hereof. Upon delivery to the Paying Agent of the letter of
transmittal (which such letter shall contain an agreement to be bound by the
terms and conditions of the IPO Warrant Agreement and the Escrow Agreement
with
respect to the Warrant Consideration and the Additional Share and Warrant
Consideration), properly completed and duly executed by each Member in
accordance with the instructions thereto, and such other documents as may be
reasonably required pursuant to such instructions, the holder of such Membership
Interests shall be entitled to receive in exchange therefore its allocable
share
of the Merger Consideration, to be mailed promptly following the Paying Agent’s
receipt of such letter of transmittal. No interest shall be paid or
accrued for the Cash Consideration or any Additional Consideration payable
hereunder. If payment of the Merger Consideration is to be made to a
Person other than the Person in whose name the Membership Interest is
registered, it shall be a condition of payment that the letter of transmittal
be
in proper form for such transfer and that the Person requesting such payment
shall have paid all transfer and other Taxes required by reason of the issuance
to a Person other than the registered holder of the Membership Interest or
such
Person shall have established to the satisfaction of the Surviving Company
that
such Tax either has been paid or is not applicable. Until receipt from a Member
of a duly executed letter of transmittal as contemplated by this Section 1.5
(which such letter shall contain such (i) customary representations and
warranties, including, but not limited to, such Members’ right, title and
interest in their Membership Interest; their acceptance of the terms and
conditions of the proposed transaction; and acknowledgement by each Member
that
any and all rights, preferences, privileges and obligations owed by the Company
to the Members, whether contained in the Member’s Agreement or otherwise, shall
cease and be of no further force or effect and (ii) the lock-up provisions
contained in Exhibit C, if applicable to such member), each Membership Interest
shall be deemed at all times after the Effective Time to represent only the
right to receive its allocable share of the Merger Consideration as contemplated
by Section 1.3(a) hereof, without interest thereon. The Paying Agent
shall accept such letters of transmittal upon compliance with such reasonable
terms and conditions as the Paying Agent may impose to effect an orderly
exchange thereof in accordance with normal exchange practices.
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(c) Transfer
Books; No Further Ownership Rights in the Membership Interest. At
the Effective Time, the transfer books of the Company shall be closed, and
thereafter there shall be no further registration of transfers of Membership
Interest on the records of the Company. From and after the Effective
Time, the Membership Interest outstanding immediately prior to the Effective
Time shall cease to have any rights, except as otherwise provided for herein
or
by applicable Law.
(d) Termination
of Exchange Fund; No Liability. Any
portion of the Exchange Fund (including any interest received with respect
thereto) that remains undistributed to the Members following the one year
anniversary of the end of Period Two shall be delivered to the Surviving Company
upon demand, and any Members who have not theretofore complied with this Section
1.5 shall thereafter be entitled to look only to the Surviving Company (subject
to abandoned property, escheat or other similar Laws) only as general creditors
thereof with respect to the Merger Consideration, payable without any interest
thereon. Notwithstanding the foregoing, none of Parent, Merger Sub,
the Company, the Surviving Company or the Paying Agent shall be liable to any
Person in respect of any cash held in the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
Law. If any Merger Consideration shall not have been collected prior
to one year (1) year after the end of Period Two (or immediately prior to such
earlier date on which any cash would otherwise escheat to or become the property
of any Governmental Authority), any such cash in respect of such unclaimed
Merger Consideration shall, to the extent permitted by applicable Law, become
the property of Parent, free and clear of all claims or interest of any Person
previously entitled thereto.
(f) Fractional
Shares.
No
certificates or scrip representing fractional shares of Common Stock or
book-entry credit of the same shall be issued upon the surrender of the
Membership Interest for exchange and such fractional share interests will not
entitle the owner thereof to vote or to have any rights of a stockholder of
Parent. Notwithstanding any other provision of this Agreement, each Member
who
exchanged Membership Interest pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Common Stock shall receive,
in
lieu thereof, cash (without interest) in an amount equal to the product of
(i)
such fractional part of a share of Common Stock multiplied by (ii) the closing
price for a share of Common Stock on the over the counter bulletin board, or
such other public market on the date of the Effective Time or, if such date
is
not a Business Day, the Business Day immediately before the date on which the
Effective Time occurs.
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(g) Withholding
Taxes. Parent
and the Surviving Company shall be entitled to deduct and withhold, or cause
the
Paying Agent to deduct and withhold, from the Merger Consideration payable
to a
Member pursuant to the Merger any such amounts as are required under the
Internal Revenue Code of 1986, as amended (the “Code”),
or
any applicable provision of state, local or foreign Tax Law. To the
extent that such amounts are so withheld by Parent or the Surviving Company,
or
caused to be withheld by the Paying Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the Members
in
respect of which such deduction and withholding was made by Parent, the
Surviving Company or the Paying Agent, as the case may be.
Notwithstanding
any provision of this Agreement to the contrary, to the extent that Members
are
entitled to appraisal rights under Chapter 608.4352 of the Florida Act,
Membership Interest issued and outstanding immediately prior to the Effective
Time with respect to which the holder thereof has properly exercised and
perfected the right to dissent from the Merger and to be paid fair value in
accordance with the Florida Act and as to which, as of the Effective Time,
the
holder thereof has not failed to timely perfect or shall have not effectively
withdrawn or lost dissenters’ rights under the Florida Act (the “Dissenting
Membership Interest”),
shall
not be exchanged into or represent a right to receive the Merger Consideration
into which Membership Interest are exchangeable pursuant to Section 1.3(a)
hereof, but the holder thereof shall be entitled only to such rights as are
granted by the Florida Act. Notwithstanding the immediately preceding
sentence, if any Member who demands appraisal rights with respect to his, her
or
its Membership Interest under the Florida Act effectively withdraws or loses
(through failure to perfect or otherwise) his, her or its appraisal rights,
then
as of the Effective Time or the occurrence of such event, whichever later
occurs, such Member’s Membership Interest shall thereupon be deemed to have been
exchanged as of the Effective Time into the right to receive the Merger
Consideration as provided in Section 1.3(a) hereof, without interest thereon,
and such Membership Interest shall no longer be Dissenting Membership
Interest. At the Effective Time, any holder of Dissenting Membership
Interest shall cease to have any rights with respect thereto, except the rights
provided under the Florida Act and as provided in this Section
1.6. The Company shall give Parent (i) prompt written notice of any
notice of intent to demand fair value for any Membership Interest, withdrawals
of such notices, and any other instruments served pursuant to the Florida Act
and received by the Company, and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for fair value of Membership Interest
under the Florida Act. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any
demands for fair value of Membership Interest or offer to settle or settle
any
such demands.
At
and
after the Effective Time and by virtue of the Merger, and until the same have
been duly amended, (i) the Articles of Organization of the Company (the
“Articles”),
as in
effect immediately prior to the Effective Time, shall be the articles of
organization of the Surviving Company and (ii) the Member Agreement, as amended,
of the Company (“Member
Agreement”)
shall
be amended and restated in its entirety in substantially the form set forth
in
Exhibit B (the “Amended
Member Agreement”)
and
such Amended Member Agreement shall be the governing document of the Surviving
Company.
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(a) At
and
after the Effective Time, the board of managers of the Surviving Company and
the
board of directors of Parent shall each consist of six (6) members and each
comprised of three (3) members appointed by Parent (who initially will be
Messrs. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇) and three
(3)
members appointed by the Company (who initially will be Messrs. ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇). ▇▇. ▇▇▇▇▇▇ shall
initially serve as the Chairman of the Board of the Surviving Company and Parent
and ▇▇. ▇▇▇▇▇ shall initially serve as Vice Chairman of the Board of the
Surviving Company and Parent, in each case until their respective successors
are
duly elected or appointed and qualify. Each of the Parties hereto
shall take all necessary action to effectuate the forgoing
sentence. At the Effective Time, the board of managers of the
Surviving Company and the board of directors of Parent each shall appoint and
designate as officers of the Surviving Corporation and Parent respectively:
(i)
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as President & Chief Executive Officer, (ii) ▇▇.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Chief Financial Officer, and (iii) ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, II as Chief Underwriting Officer. If, at the Effective Time, a vacancy
shall exist on the board of directors, board of managers or in any office of
the
Surviving Company or Parent, such vacancy may thereafter be filled in the manner
provided by the Parent Organizational Documents, the Company’s Articles, the
Member Agreement or the Law.
(b) Certain
officers and directors of Parent set forth below (“Parent
Executives”),
and
certain entities set forth below (“Entity
Equity Holders”)
shall
enter into “lock-up” agreements substantially in the form set forth in Exhibit C
(each an “Executive Lock
Up Agreement”
or
“Entity Lock
Up Agreement”)
pursuant to which such Parent Executives or Entity Equity Holders, as the case
may be, shall agree, for a period of 90 days from the Effective Time, that
such
Parent Executives or Entity Equity Holders shall neither, on their own behalf
or
on behalf of entities, family members or trusts affiliated with or controlled
by
them, offer, issue, grant any option on, sell or otherwise dispose of any Stock
Consideration or Warrant Consideration issued to such Parent Executives and
Entity Equity Holders, as the case may be, pursuant to Section 1.3(a)
hereinabove, without the prior consent of Parent. Initially, the Parent
Executives shall include Messrs. Branch, Pointevint, Whittemore, Cronin,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ and any other new officer or director of
Parent. The Entity Equity Holders shall include Synovus Financial Corp. and
Minova Enterprises Ltd.
The
Merger shall have all further effects as specified in the applicable provisions
of the Florida Act.
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If,
at
any time after the Effective Time, the Surviving Company shall consider or
be
advised that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Company its right, title or interest in,
to
or under any of the rights, properties or assets of Merger Sub or the Company
or
otherwise carry out this Agreement, the officers and directors of the Surviving
Company shall be authorized to execute and deliver, in the name and on behalf
of
Merger Sub or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Merger Sub or the
Company, all such other actions and things as may be necessary or desirable
to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Company or otherwise to
carry
out this Agreement.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
following representations and warranties by the Company to Parent and Merger
Sub
are qualified by the Company disclosure schedule, which sets forth certain
disclosures concerning the Company, its subsidiaries (each a “Company
Subsidiary”
and
collectively, the “Company
Subsidiaries”)
and
its business (the “Company
Disclosure Schedule”).
The
Company hereby represents and warrants to Parent and Merger Sub as
follows:
Each
of
the Company and the Company Subsidiaries is a corporation or limited liability
company duly organized, validly existing and in good standing under the Laws
of
the jurisdiction of its organization and has all requisite corporate power
and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of the Company and the Company
Subsidiaries is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the character of the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not reasonably be expected
to
have a Company Material Adverse Effect. The Company has heretofore
made available to Parent accurate and complete copies of the Company’s Articles
and Member Agreement and the certificate of incorporation, articles of
organization, by-laws, operating agreements and the equivalent organizational
documents of each of the Company Subsidiaries, each as currently in
effect. None of the Company or any Company Subsidiary is in violation
of any provision of the Articles, certificate of incorporation, Member
Agreement, the by-laws or its equivalent organizational documents as the case
may be.
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11
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For
purposes of this Agreement, the term “Company
Material Adverse Effect”
shall
mean any occurrence, state of facts, change, event, effect or circumstance
that,
individually or in the aggregate, has, or would reasonably be expected to have,
a material adverse effect on the assets, liabilities, business, results of
operations or financial condition of the Company and the Company Subsidiaries,
other than any occurrence, state of facts, change, event, effect or circumstance
to the extent resulting from (i) political instability, acts of terrorism or
war, changes in national, international or world affairs, or other calamity
or
crisis, including without limitation as a result of changes in the international
or domestic markets but only to the extent such events are deemed to have a
direct impact on the existing operations of the Company and its future operating
prospects, (ii) any change affecting the United States economy generally or
the
economy of any region in which such entity conducts business that is material
to
the business of such entity but only to the extent such events are deemed to
have a direct impact on the existing operations of the Company and its future
operating prospects, (iii) the announcement of the execution of this Agreement,
or the pendency of the consummation of the Merger, (iv) any change in GAAP
or
interpretation thereof after the date hereof, or (v) the execution and
performance of or compliance with this Agreement.
(a) Except
for the Membership Interest held by the Members as set forth in Exhibit A,
no
Membership Interest are issued and outstanding. All of the outstanding
Membership Interest are duly authorized, validly issued, fully paid and
non-assessable and not subject to any preemptive or similar
rights. None of the outstanding securities of the Company has been
issued in violation of any foreign, federal or state securities
Laws. Except as set forth above, no Membership Interest, or other
equity or voting interests in the Company, or options, warrants or other rights
to acquire any such Membership Interest or securities were issued, reserved
for
issuance or outstanding. The Company has not granted any restricted
Membership Interest, warrants or other rights to purchase Membership Interest
or
entered into any other agreements or commitments to issue any Membership
Interest and has not split, combined or reclassified any Membership
Interest.
(b) The
Company directly or indirectly owns all of the capital stock of, or other equity
interests in, the Company Subsidiaries. There are no (i) outstanding options,
warrants, puts, calls, convertible securities, preemptive or similar rights,
(ii) bonds, debentures, notes or other indebtedness having general
voting rights or that are convertible or exchangeable into securities having
such rights, or (iii) subscriptions or other rights, agreements, arrangements,
contracts or commitments of any character, relating to the issued or unissued
Membership Interest of, or other equity interests in, the Company or any of
the
Company Subsidiaries or obligating the Company or any of the Company
Subsidiaries to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered, sold or repurchased any options or Membership Interest
of, or other equity interest in, the Company or any of the Company Subsidiaries
or securities convertible into or exchangeable for such shares or equity
interests, or obligating the Company or any of the Company Subsidiaries to
grant, extend or enter into any such option, warrant, call, subscription or
other right, agreement, arrangement or commitment for such equity interest.
There are no outstanding obligations of the Company or any of the Company
Subsidiaries to repurchase, redeem or otherwise acquire any Membership Interest,
capital stock of, or other equity interests in, the Company or any of the
Company Subsidiaries or to provide funds to make any investment (in the form
of
a loan, capital contribution or otherwise) in any other entity.
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(c) There
are
no stockholders or members agreements, voting trusts or other agreements or
understandings to which the Company or any Company Subsidiary is a party with
respect to the voting of the Membership Interest or the capital stock or equity
interests of any Company Subsidiary.
(d) No
Indebtedness of the Company or any of the Company Subsidiaries contains any
restriction upon (i) the prepayment of any of such Indebtedness, (ii) the
incurrence of Indebtedness by the Company or any of the Company Subsidiaries,
or
(iii) the ability of the Company or any of the Company Subsidiaries to grant
any
Encumbrance on its properties or assets. As used in this Agreement,
“Indebtedness”
means
(A) all indebtedness for borrowed money or for the deferred purchase price
of
property or services (other than Expenses and current trade liabilities incurred
in the ordinary course of business and payable in accordance with customary
practices), (B) any other indebtedness that is evidenced by a note, bond,
debenture, credit agreement or similar instrument, (C) all obligations under
financing leases, (D) all obligations in respect of acceptances issued or
created, (E) all liabilities secured by an Encumbrance on any property and
(F)
all guarantee obligations.
(e) Since
January 1, 2005, the Company has not declared or paid any distribution or
dividend in respect of the Membership Interest and has not repurchased, redeemed
or otherwise acquired any Membership Interest, and the Board has not authorized
any of the foregoing.
(a) The
Company has provided to Parent true, complete and correct list of all Company
Subsidiaries and their respective jurisdictions of organization. Each
Company Subsidiary is wholly owned, directly or indirectly, by the
Company. All of the capital stock and other equity interests of the
Company Subsidiaries are owned, directly or indirectly, by the Company free
and
clear of any Encumbrance with respect thereto. All of the outstanding
shares of capital stock or other equity interests in each of the Company
Subsidiaries are duly authorized, validly issued, fully paid and non-assessable
and were issued free of preemptive rights and in compliance with applicable
Laws. No capital stock or other equity interests of any of the
Company Subsidiaries are or may become required to be issued or purchased by
reason of any options, warrants, rights to subscribe to, puts, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of any capital stock of, or other
equity interests in, any Company Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Company Subsidiary
is
bound to issue additional shares of its capital stock or other equity interests,
or options, warrants or rights to purchase or acquire any additional shares
of
its capital stock or other equity interests or securities convertible into
or
exchangeable for such shares or interests. Neither the Company nor
any Company Subsidiary owns any shares of capital stock or other equity or
voting interests in (including any securities exercisable or exchangeable for
or
convertible into capital stock or other equity or voting interests in) any
other
Person other than publicly traded securities constituting less than five percent
of the outstanding equity of the issuing entity, other than capital stock or
other equity interest of the Company Subsidiaries owned by the Company or
another Company Subsidiary.
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13
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(b) Section
2.3(b)
of the
Company Disclosure Schedule lists the jurisdiction of domicile of each Company
Subsidiary conducting insurance operations and all jurisdictions in which each
such Company Subsidiary is licensed to write insurance
business. Neither the Company nor any Company Subsidiary is or has
been since January 1, 2005 “commercially
domiciled” in any jurisdiction other than its jurisdiction of organization or is
or since January 1, 2005 otherwise has been treated as domiciled in a
jurisdiction other than its jurisdiction of organization. Each of the Company
Subsidiaries conducting insurance operations is (i) duly licensed or authorized
as an insurance company in its state of organization, (ii) duly licensed or
authorized as an insurance company in each other jurisdiction where it is
required to be so licensed or authorized and (iii) duly authorized in its
jurisdiction of incorporation and each other applicable jurisdiction to write
each line of business reported as being written in the Company SAP
Statements. All of the Company Permits of such Company Subsidiaries
conducting insurance operations are in full force and effect and there is no
proceeding or, to the knowledge of the Company, investigation to which the
Company or any Company Subsidiary is subject before a Governmental Authority
that is pending or, to the knowledge of the Company, threatened that would
reasonably be expected to lead to the revocation, amendment, failure to renew,
limitation, suspension or restriction of any such Company
Permits.
The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger,
(i)
have been duly and validly authorized by the Board of the Company, and (ii)
no
other corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement or to consummate the
transactions contemplated hereby, other than receipt of the Required Company
Vote. The affirmative vote of the Members of the Company holding at least 66
2/3% of the issued and outstanding Membership Interest (the “Required
Company Vote”)
is
necessary to approve and adopt this Agreement and to consummate the transactions
contemplated hereby (including the Merger). This Agreement has been duly
and validly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company
in
accordance with its terms, except to the extent that enforceability thereof
may
be limited by applicable bankruptcy, insolvency, reorganization and moratorium
laws and other laws of general application affecting the enforcement of
creditors’ rights generally, and the fact that equitable remedies or relief
(including, but not limited to, the remedy of specific performance) are subject
to the discretion of the court from which such relief may be sought
(collectively, the “Enforceability
Exceptions”).
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14
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No
consent, approval, waiver, authorization or permit of, or notice to or
declaration or filing with (each, a “Consent”),
any
nation or government, any state or other political subdivision thereof, any
entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
any governmental or regulatory authority, agency, department, board, commission,
administration or instrumentality, any court, tribunal or arbitrator or any
self-regulatory organization, other than the Florida Office of Insurance
Regulation (each, a “Governmental
Authority”),
on
the part of the Company or any of the Company Subsidiaries is required to be
obtained or made in connection with the execution, delivery or performance
by
the Company of this Agreement or the consummation by the Company of the
transactions contemplated hereby (including the Merger), other than (i) the
filing of the Articles of Merger with the Secretary of State in accordance
with
the Florida Act, (ii) such filings as may be required in any jurisdiction where
the Company or any Company Subsidiary is qualified or authorized to do business
as a foreign corporation in order to maintain such qualification or
authorization, and (iii) pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and any other Laws that are designed
to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (“Antitrust
Laws”).
The
execution and delivery by the Company of this Agreement, the consummation by
the
Company of the Merger and the other transactions contemplated hereby, and
compliance by the Company with any of the provisions hereof, will not (i)
conflict with or violate any provision of the Articles, Member Agreement,
certificate of incorporation, operating agreement, by-laws or equivalent
organizational documents of the Company or any of the Company Subsidiaries,
(ii)
require any Consent under or result in a material violation or breach of, or
constitute (with or without due notice or lapse of time or both) a material
default (or give rise to any right of termination, cancellation, amendment
or
acceleration) under, any Company Material Contract to which the Company or
any
of the Company Subsidiaries is a party or by which the Company’s or any of the
Company Subsidiaries’ assets are bound, (iii) result (immediately or with the
passage of time or otherwise) in the creation or imposition of any liens,
claims, mortgages, pledges, security interests, equities, options, assignments,
hypothecations, preferences, priorities, deposit arrangements, easements,
proxies, voting trusts or charges of any kind or restrictions (whether on
voting, sale, transfer, disposition or otherwise) or other encumbrances or
restrictions of any nature whatsoever, whether imposed by agreement, Law or
equity, or any conditional sale contract, title retention contract or other
contract to give or refrain from giving any of the foregoing (the “Encumbrances”)
upon
any of the properties, rights or assets of the Company or any of the Company
Subsidiaries causing a Company Material Adverse Effect, or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in Section
2.5
hereof, conflict with, contravene or violate in any material respect any
foreign, federal, state or local Order, statute, law, rule, regulation,
ordinance, writ, injunction, arbitration award, directive, judgment, decree,
principle of common law, constitution, treaty or any interpretation thereof
enacted, promulgated, issued, enforced or entered by any Governmental Authority
(each, a “Law”
and
collectively, the “Laws”)
to
which the Company or any of the Company Subsidiaries or any of their respective
assets or properties is subject.
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15
-
(a) As
used
herein, the term “Company
Financials”
means
the Company’s audited consolidated financial statements (including, in each
case, any related notes thereto), consisting of the Company’s balance sheets,
statements of income and statements of cash flow, as of December 31, 2005,
December 31, 2006 and December 31, 2007 and the unaudited consolidated financial
statements as of June 30, 2008 and any subsequent quarter. The Company has
made
or will make available to Parent true and complete copies of the Company
Financials. The Company Financials (i) in all material respects accurately
reflects or will reflect the Company’s books and records as of the times and for
the periods referred to therein, (ii) were prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved (except
for the absence of footnotes and year-end audit adjustments in the case of
unaudited Company Financials),
(iii)
fairly present in all material respects the consolidated financial position
of
the Company as of the respective dates thereof and the consolidated results
of
the Company’s operations and cash flows for the periods indicated and (iv) to
the extent required for inclusion in the Proxy Statement, comply in all material
respects with the Securities Act of 1933, as amended (the “Securities
Act”),
Regulation S-X and the published general rules and regulations of the SEC.
(b) The
Company has disclosed to Parent and the Company’s outside auditors and the Board
(i) all significant deficiencies or material weaknesses in the design or
operation of the Company’s internal controls over financial reporting that are
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information and (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company’s internal controls over financial reporting.
(c) None
of
the Company, any Company Subsidiary, or any manager, director, officer, or
to
the Company’s knowledge, any auditor or accountant of the Company or any Company
Subsidiary or any employee of the Company or any Company Subsidiary has received
any complaint, allegation, assertion or claim, whether or not in writing,
regarding the accounting or auditing practices, procedures, methodologies or
methods of the Company or any Company Subsidiary or their respective internal
accounting controls, including any complaint, allegation, assertion or claim
that the Company or any Company Subsidiary has engaged in questionable
accounting or auditing practices. No attorney representing the Company or any
Company Subsidiary, whether or not employed by the Company or any Company
Subsidiary, has reported evidence of any violation of consumer protection,
insurance (including regulations and Orders promulgated by the Florida Office
of
Insurance Regulation) or securities Laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, Directors, employees or agents
to the Board or any committee thereof or to any Director or executive officer
of
the Company.
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16
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(d) As
used
herein, the term “Company
SAP Statements”
means
the statutory statements of the Company and each of the Company Subsidiaries
as
filed with the Florida Office of Insurance Regulation for the years ended
December 31, 2005, December 31, 2006 and December 31, 2007 and any such
quarterly statutory statements filed subsequent to the date
hereof. The Company has made available to Parent true and complete
copies of the Company SAP Statements filed as of the date of this Agreement
with
respect to the Company and with respect to the Company Subsidiaries required
to
file such Company SAP Statements. The Company and each of the Company
Subsidiaries has filed or submitted, or will file or submit, all Company SAP
Statements required to be filed with or submitted to the Florida Office of
Insurance Regulation on forms prescribed or permitted by the Florida Office
of
Insurance Regulation. The Company SAP Statements were, and any
Company SAP Statements filed after the date hereof will be, prepared in all
material respects in conformity with statutory accounting principles
(“SAP”)
consistently applied for the periods covered thereby, and the Company SAP
Statements present, and any Company SAP Statements filed after the date hereof
will present, in all material respects the statutory financial position of
the
Company and such Company Subsidiaries as of the respective dates thereof and
the
results of operations of the Company and such Company Subsidiaries for the
respective periods then ended. The Company SAP Statements complied,
and the Company SAP Statements filed after the date hereof will comply, in
all
material respects with all applicable Laws when filed, and no deficiency has
been asserted with respect to any Company SAP Statements filed prior to the
date
hereof by the Florida Office of Insurance Regulation or any other Governmental
Authority. The annual statutory balance sheets and income statements
included in the Company SAP Statements as of the date hereof have been, where
required by applicable Law, audited by ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.A. and
the Company has made available to Parent true and complete copies of all audit
opinions related thereto. Except as indicated therein, all assets
that are reflected as admitted assets on the Company SAP Statements comply
in
all material respects with all applicable Laws. The Company and
Company Subsidiaries use only prescribed (and no permitted) practices in the
preparation of the Company SAP Statements.
(e) The
policy reserves and other actuarial amounts carried on the Company SAP
Statements of the Company and each Company Subsidiary, as of the respective
dates of such Company SAP Statements, (i) were in compliance in all material
respects with the requirements for reserves established by the Florida Office
of
Insurance Regulation, (ii) have been computed in all material respects in
accordance with the requirements for reserves established by the Florida Office
of Insurance Regulation, (iii) were determined in all material respects in
accordance with generally accepted actuarial principles in effect at such time,
consistently applied and prepared in accordance with applicable SAP, (iv) were
computed on the basis of methodologies consistent in all material respects
with
those used in computing the corresponding reserves in prior fiscal years, except
as otherwise noted in the Company SAP Statements, (v) have been computed on
the
basis of assumptions consistent with those used to compute the corresponding
items in such financial statements, (vi) were fairly stated in all material
respects in accordance with sound actuarial principles, and (vii) include
provisions for all actuarial reserves and related items which ought to be
established in accordance with applicable Laws and in accordance, in all
material respects, with prudent insurance practices generally followed in the
insurance industry. To the knowledge of the Company, there are no
facts or circumstances that could reasonably necessitate any material change
in
such reserves above those reflected in the Company SAP Statements (other than
increases or decreases consistent with past experience, computed in a manner
consistent with past practice, and resulting from the ordinary course of
business).
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17
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(f) Except
for assessments of state mandated funds and associations, no claim or assessment
is pending or, to the knowledge of the Company, threatened against any Company
Subsidiary.
(a) Except
as
consented to in writing by Parent (and excluding the Merger), since December
31,
2007, the Company and the Company Subsidiaries have conducted their respective
businesses in the ordinary course of business consistent with past practice
and
there has not occurred any action that would constitute a breach of Section
4.1
if such action were to occur or be taken after the date of this
Agreement.
(b) Since
December 31, 2007, there has not been any fact, change, effect, occurrence,
event, development or state of circumstances that has had or would reasonably
be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Except
as
and to the extent reflected or reserved against in the Company Financials,
neither the Company nor any of the Company Subsidiaries has incurred any
liabilities or obligations of the type required to be reflected on a balance
sheet in accordance with GAAP that is not adequately reflected or reserved
on or
provided for in the Company Financials, other than liabilities of the type
required to be reflected on a balance sheet in accordance with GAAP that have
been incurred since June 30, 2008 in the ordinary course of
business.
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18
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Neither
the Company nor any of the Company Subsidiaries is in conflict with, or in
default or violation of, nor since January 1, 2005 has it received any notice
of
any conflict with, or default or violation of, (A) any applicable Law by which
it or any property or asset of the Company or any Company Subsidiary is bound
or
affected, or (B) any Company Material Contract to which the Company or any
Company Subsidiary is a party or by which the Company or any Company Subsidiary
or any property, asset or right of the Company or any Company Subsidiary is
bound or affected, except, in each case, for any such conflicts, defaults or
violations that would not reasonably be expected to be material to the Company
or any of its Subsidiaries. Notwithstanding the generality of the
foregoing, (x) the Company and each Company Subsidiary and, to the knowledge
of
the Company, their respective agents, have marketed, sold and issued insurance
products in compliance in all material respects with all Laws applicable to
the
business of the Company and such Company Subsidiary and in the respective
jurisdictions in which such products have been sold, (y) since January 1, 2005,
the Company and each Company Subsidiary have given or made all required notices,
submissions, reports or other filings under applicable Law, including insurance
holding company statutes, and (z) all contracts, agreements, arrangements and
transactions in effect between the Company, any Company Subsidiary and any
affiliate are in compliance in all material respects with the requirements
of
all applicable insurance holding company statutes. There is no pending or,
to
the knowledge of the Company, threatened proceeding or investigation to which
the Company or a Company Subsidiary is subject before any Governmental Authority
regarding whether the Company or any of the Company Subsidiaries has violated
in
any material respect (and none of the Company or any Company Subsidiary has
received notice since January 1, 2005 of any material violation of or
noncompliance with any Law applicable to the Company or any Company Subsidiary,
or directing the Company or any Company Subsidiary to take any remedial action
with respect to such applicable Law or otherwise, and no material deficiencies
of the Company or any Company Subsidiary have been asserted to the Company
or
any Company Subsidiary by any Governmental Authority with respect to possible
violations of) any applicable Laws. Since January 1, 2005, the Company and
the
Company Subsidiaries have filed all material reports, statements, documents,
registrations, filings or submissions required to be filed with any insurance
regulatory authority or Governmental Authority, and all such reports,
registrations, filings and submissions are in compliance (and complied at the
relevant time) with applicable Law and no material deficiencies have been
asserted by any such Governmental Authority since January 1, 2005 with respect
to any reports, statements, documents, registrations, filings or submissions
required to be filed with respect to the Company or the Company Subsidiaries
with any Governmental Authority that have not been remedied. Since
January 1, 2005, the businesses of the Company and each Company Subsidiary
are
and have been conducted in compliance in all material respects with any
applicable Laws.
(a) There
are
no (1) written agreements, consent agreements, memoranda of understanding,
commitment letters, cease and desist orders, or similar undertakings to which
the Company or any Company Subsidiary is a party, on the one hand, and any
Governmental Authority is a party or addressee, on the other hand, (2) Orders
or
directives of or supervisory letters from a Governmental Authority specifically
with respect to the Company or any Company Subsidiary, or (3) resolutions or
policies or procedures adopted by the Company or a Company Subsidiary at the
request of a Governmental Authority, that (A) limit in any material respect
the ability of the Company or any of the Company Subsidiaries to issue insurance
policies, (B) in any manner impose any requirements on the Company or any of
the
Company Subsidiaries in respect of risk-based capital requirements that
materially add to or otherwise materially modify in any respect the risk-based
capital requirements imposed under applicable Laws, (C) require the Company
or any of its affiliates to make capital contributions, purchase surplus notes
or make loans to a Company Subsidiary, or (D) in any manner relate to the
ability of the Company or any of the Company Subsidiaries to pay dividends
or
otherwise materially restrict the conduct of business of the Company or any
of
the Company Subsidiaries in any respect.
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19
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(b) The
Company and the Company Subsidiaries hold all permits, licenses, franchises,
grants, authorizations, consents, exceptions, variances, exemptions, orders
and
other governmental authorizations, certificates, consents and approvals
necessary to lawfully conduct their businesses as presently conducted and
contemplated to be conducted, and to own, lease and operate their assets and
properties (collectively, the “Company
Permits”),
all
of which are in full force and effect, and no suspension or cancellation of
any
of the Company Permits is pending or, to the knowledge of the Company,
threatened, except where the failure of any Company Permits to have been in
full
force and effect, or the suspension or cancellation of any of the Company
Permits, would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Section
2.11(b)
of the
Company Disclosure Schedule sets forth each Company Permit. The Company and
the
Company Subsidiaries are not in violation in any material respect of the terms
of any Company Permit.
(c) No
investigation, review or market conduct examination by any Governmental
Authority with respect to the Company or any Company Subsidiary is pending
or,
to the knowledge of the Company, threatened, nor does the Company have knowledge
of any Governmental Authority’s intention to conduct any such investigation or
review.
There
is
no private, regulatory or governmental inquiry, action, suit, proceeding,
litigation, claim, arbitration or investigation (each, an “Action”)
pending before any arbitrator, agency, court or tribunal, foreign or domestic,
or, to the knowledge of the Company, threatened against the Company, any of
the
Company Subsidiaries or any of their respective properties, rights or assets
or
any of their respective managers, officers or directors (in their capacities
as
such) that would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. There is no decree,
directive, order, writ, judgment, stipulation, determination, decision, award,
injunction, temporary restraining order, cease and desist order or other order
by, or any capital plan, supervisory agreement or memorandum of understanding
with any Governmental Authority (each, an “Order”)
binding against the Company, any of the Company Subsidiaries or any of their
respective properties, rights or assets or any of their respective managers,
officers or directors (in their capacities as such) that would prohibit,
prevent, enjoin, restrict or materially alter or delay any of the transactions
contemplated by this Agreement (including the Merger), or that would reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect. The Company and the Company Subsidiaries are in
material compliance with all Orders. There is no material Action
that the Company or any of the Company Subsidiaries has pending against other
parties.
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20
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There
is
no agreement or Order binding upon the Company or any of the Company
Subsidiaries that has or could reasonably be expected to have the effect of
prohibiting, preventing, restricting or impairing in any respect any business
practice of the Company or any of the Company Subsidiaries as their businesses
are currently conducted, any acquisition of property by the Company or any
of
the Company Subsidiaries, the conduct of business by the Company or any of
the
Company Subsidiaries as currently conducted, or restricting in any material
respect the ability of the Company or any of the Company Subsidiaries from
engaging in business as currently conducted or from competing with other
parties.
(a) Section
2.14
of the
Company Disclosure Schedule sets forth a list of, and the Company has made
available to Parent, true, correct and complete copies of, each written
contract, agreement, commitment, arrangement, lease, license, permit or plan
and
each other instrument to which the Company or any Company Subsidiary is a party
or by which the Company or any Company Subsidiary is bound as of the date hereof
(each, a “Company
Material Contract”)
that:
(ii) contains
covenants that materially limit the ability of the Company or any Company
Subsidiary (or which, following the consummation of the Merger, could materially
restrict the ability of the Surviving Company or any of its affiliates) (A)
to
compete in any line of business or with any Person or in any geographic area
or
to sell, supply, price, develop or distribute any service, product or asset,
including any non-competition covenants, exclusivity restrictions, rights of
first refusal or most-favored pricing clauses or (B) to purchase or acquire
an
interest in any other entity, except, in each case, for any such contract that
may be canceled without any penalty or other liability to the Company or any
Company Subsidiary upon notice of 60 days or less;
(iii) involves
any joint venture, partnership, limited liability or other similar agreement
or
arrangement relating to the formation, creation, operation, management or
control of any partnership or joint venture that is material to the business
of
the Company and the Company Subsidiaries, taken as a whole;
(iv) involves
any exchange traded, over-the-counter or other swap, cap, floor, collar, futures
contract, forward contract, option or other derivative financial instrument
or
contract, based on any commodity, security, instrument, asset, rate or index
of
any kind or nature whatsoever, whether tangible or intangible, including
currencies, interest rates, foreign currency and indices;
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21
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(v) relates
to indebtedness (whether incurred, assumed, guaranteed or secured by any asset)
having an outstanding principal amount in excess of $50,000;
(vi) was
entered into after January 1, 2005 or has not yet been consummated, and involves
the acquisition or disposition, directly or indirectly (by merger or otherwise),
of assets or capital stock or other equity interests of another
Person;
(vii) by
its
terms calls for aggregate payments by the Company or the Company Subsidiaries
under such contract of more than $50,000 per year;
(viii) with
respect to any material acquisition, pursuant to which the Company or any
Company Subsidiary has (A) any continuing indemnification obligations or (B)
any
“earn-out”
or other contingent payment obligations;
(ix)
involves
any managers, directors or executive officers of the Company or any Company
Subsidiary that cannot be cancelled by the Company (or the applicable Company
Subsidiary) within 60 days’ notice without liability, penalty or
premium;
(x) obligates
the Company or any Company Subsidiary to provide indemnification or a guarantee
in excess of $50,000;
(xi) obligates
the Company or any Company Subsidiary to make any capital commitment or
expenditure (including pursuant to any joint venture);
(xii) relates
to the development, ownership, licensing or use of any Intellectual Property
material to the business of the Company or any of its subsidiaries, other than
“shrink
wrap,” “click
wrap,” and “off
the
shelf” software agreements and other agreements for software commercially
available on reasonable terms to the public generally with license, maintenance,
support and other fees of less than $50,000 per year (collectively,
“Off-the-Shelf
Software Agreements”);
or
(xiii) provides
for any confidentiality or standstill arrangements.
(b) With
respect to each Company Material Contract: (i) the Company Material
Contract is legal, valid, binding and enforceable in all material respects
against the Company or the Company Subsidiary party thereto and, to the
Company’s knowledge, the other party thereto, and in full force and effect; (ii)
except as set forth in Section 2.14 of the Disclosure Schedule, the consummation
of the transactions contemplated by the Agreement will not affect the terms,
validity or enforceability of the Company Material Contract against the
Surviving Company or such Company Subsidiary and, to the Company’s knowledge,
the other party thereto; (iii) neither the Company nor any of the Company
Subsidiaries is in breach or default in any material respect, and no event
has
occurred that with the passage of time or giving of notice or both would
constitute such a breach or default by the Company or any of the Company
Subsidiaries, or permit termination or acceleration by the other party, under
the Company Material Contract; and (iii) to the Company’s knowledge, no other
party to the Company Material Contract is in breach or default in any material
respect, and no event has occurred that with the passage of time or giving
of
notice or both would constitute such a breach or default by such other party,
or
permit termination or acceleration by the Company or any of the Company
Subsidiaries, under such Company Material Contract.
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(a) Section
2.15(a)
of the
Company Disclosure Schedule contains a list of (A) all registered Intellectual
Property, Intellectual Property that is the subject of a pending application
for
registration, and material unregistered Intellectual Property, in each case
that
is, owned by the Company or any of the Company Subsidiaries and (B) all material
Intellectual Property, other than Off-the-Shelf Software Agreements, licensed,
used or held for use by the Company or any of the Company Subsidiaries in the
conduct of its business (“Licensed
Intellectual Property”). Except
where failure to own, license or otherwise possess such rights has not had
and
would not reasonably be expected to result in a Company Material Adverse Effect,
each of the Company and the Company Subsidiaries has (i) all right, title and
interest in and to all Company Intellectual Property owned by it, (the
“Company
Intellectual Property”)
free
and clear of all Encumbrances, other than Permitted Encumbrances and (ii) all
necessary proprietary rights in and to all of its Licensed Intellectual
Property, free and clear of all Encumbrances, other than Permitted
Encumbrances. Neither the Company nor any of the Company Subsidiaries
has received any notice alleging that it has infringed, diluted or
misappropriated, or, by conducting its business as proposed, would infringe,
dilute or misappropriate, the Intellectual Property rights of any Person, and
to
the knowledge of the Company there is no valid basis for any such
allegation. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will impair or
materially alter the Company’s or any Company Subsidiary’s rights to any Company
Intellectual Property or Licensed Intellectual Property. To the
knowledge of the Company, there is no unauthorized use, infringement or
misappropriation of the Company Intellectual Property or Licensed Intellectual
Property by any third party. All of the rights within the Company
Intellectual Property and Licensed Intellectual Property are valid, enforceable
and subsisting, and there is no Action that is pending or, to the Company’s
knowledge, threatened that challenges the rights of the Company or any of the
Company Subsidiaries in respect of any Company Intellectual Property or Licensed
Intellectual Property or the validity, enforceability or effectiveness
thereof. The Company Intellectual Property and the Licensed
Intellectual Property constitute all material Intellectual Property used in
or
necessary for the operation by the Company and the Company Subsidiaries of
their
respective businesses as currently conducted. Neither the Company nor
any of the Company Subsidiaries is in breach or default in any material respect
(or would with the giving of notice or lapse of time or both be in such breach
or default) under any license to use any of the Licensed Intellectual
Property.
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23
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(b) For
purposes of this Agreement, “Intellectual
Property”
means
(A) United States, international and foreign patents and patent applications,
including divisionals, continuations, continuations-in-part, reissues,
reexaminations and extensions thereof and counterparts claiming priority
therefrom; utility models; invention disclosures; and statutory invention
registrations and certificates; (B) United States and foreign registered,
pending and unregistered trademarks, service marks, trade dress, logos, trade
names, corporate names and other source identifiers, domain names, Internet
sites and web pages; and registrations and applications for registration for
any
of the foregoing, together with all of the goodwill associated therewith; (C)
United States and foreign registered and unregistered copyrights, and
registrations and applications for registration thereof; rights of publicity;
and copyrightable works; (D) all inventions and design rights (whether
patentable or unpatentable) and all categories of trade secrets as defined
in
the Uniform Trade Secrets Act, including business, technical and financial
information; and (E) confidential and proprietary information, including
know-how.
(a) Section
2.16(a)
of the
Company Disclosure Schedule lists, with respect to the Company and the Company
Subsidiaries and any trade or business (whether or not incorporated) that is
treated as a single employer with the Company and the Company Subsidiaries
within the meaning of Section 414(b), (c), (m) or (o) of the Code (an
“ERISA
Affiliate”),
(i)
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)),
(ii)
loans to managers, officers and directors other than advances for expense
reimbursements incurred in the ordinary course of business and any securities
option, securities stock purchase, phantom securities, securities appreciation
right, equity-related, supplemental retirement, severance, sabbatical, medical,
dental, vision care, disability, employee relocation, cafeteria benefit (Code
Section 125) or dependent care (Code Section 129), life insurance or accident
insurance plans, programs, agreements or arrangements, (iii) all bonus, pension,
retirement, profit sharing, savings, deferred compensation or incentive plans,
programs, policies, agreements or arrangements, (iv) other fringe, perquisite,
or employee benefit plans, programs, policies, agreements or arrangements and
(v) any current or former employment, consulting, change of control, retention
or executive compensation, termination or severance plans, programs, policies,
agreements or arrangements, written or otherwise, as to which unsatisfied
liabilities or obligations (contingent or otherwise) remain for the benefit
of,
or relating to, any present or former employee, consultant, manager or director,
or which could reasonably be expected to have any liabilities or obligations
(together, the “Benefit
Plans”).
(b) Any
Company Benefit Plan intended to be qualified under Section 401(a) of the Code
has either obtained from the Internal Revenue Service (“IRS”)
a
current favorable determination letter as to its qualified status under the
Code, including all amendments to the Code effected by the Tax Reform Act of
1986, or has applied to the IRS for such a determination letter prior to the
expiration of the requisite period under applicable Treasury Regulations or
IRS
pronouncements in which to apply for such determination letter and to make
any
amendments necessary to obtain a favorable determination or has been established
under a standardized prototype plan for which an IRS opinion letter has been
obtained by the plan sponsor and is valid as to the adopting
employer.
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24
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(c) There
has
been no “prohibited
transaction,” as such term is defined in Section 406 of ERISA and Section 4975
of the Code, by the Company or, to the knowledge of the Company, by any trusts
created thereunder, any trustee or administrator thereof or any other Person,
with respect to any Company Benefit Plan. Each Company Benefit Plan
has been administered in accordance with its terms and in material compliance
with the requirements prescribed by any and all applicable Laws (including
ERISA
and the Code), and the Company and each ERISA Affiliate have performed in all
material respects all obligations required to be performed by them under, are
not in any respect in default under or violation of, and have no knowledge
of
any default or violation by any other party to, any of the Company Benefit
Plans. All contributions and premiums required to be made by the
Company or any ERISA Affiliate to any Company Benefit Plan have been made on
or
before their due dates, including any legally permitted
extensions. No Action has been brought, or to the knowledge of the
Company is threatened, against or with respect to any such Company Benefit
Plan,
including any audit or inquiry by the IRS, United States Department of Labor
(the “DOL”)
or
other Governmental Authority (other than as would not result in a Company
Material Adverse Effect). To the knowledge of the Company, each
Company Benefit Plan that is a “nonqualified
deferred compensation plan” within the meaning of Section 409A of the Code and
any awards thereunder, in each case that is subject to Section 409A of the
Code,
has been operated in good faith compliance, in all material respects, with
Section 409A of the Code since January 1, 2005.
(d) Except
as
otherwise provided in this Agreement, the consummation of the transactions
contemplated by this Agreement will not, either alone or in combination with
any
other event or events, (i) entitle any current or former employee, manager,
director or consultant of the Company or any of the Company Subsidiaries to
any
payment (whether of severance pay, unemployment compensation, golden parachute,
bonus or otherwise), (ii) accelerate, forgive indebtedness, vest, distribute,
or
increase benefits or obligation to fund benefits with respect to any employee
or
director of the Company or any of the Company Subsidiaries, or (iii) accelerate
the time of payment or vesting of Company Options, or increase the amount of
compensation due any such employee, director or consultant.
(e) No
amounts payable under any of the Company Benefit Plans or any other contract,
agreement or arrangement with respect to which the Company or any of the Company
Subsidiaries may have any liability will not be deductible for federal income
Tax purposes by virtue of Section 162(m) or Section 280G of the
Code. None of the Company Benefit Plans contains any provision
requiring a gross-up pursuant to Section 280G or 409A of the Code or similar
Tax
provisions.
(f) No
Company Benefit Plan maintained by the Company or any of the Company
Subsidiaries provides benefits, including death or medical benefits (whether
or
not insured), with respect to current or former employees of the Company or
any
of the Company Subsidiaries after retirement or other termination of service
(other than (i) coverage mandated by applicable Laws, (ii) death benefits or
retirement benefits under any “employee
pension benefit plan,” as that term is defined in Section 3(2) of ERISA, or
(iii) benefits, the full direct cost of which is borne by the current or former
employee (or beneficiary thereof)).
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(g) Neither
the Company nor any ERISA Affiliate has any liability with respect to any (i)
employee pension benefit plan (within the meaning of Section 3(2) of ERISA)
which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA
or Section 412 of the Code , (ii) “multiemployer
plan” as defined in Section 3(37) of ERISA or (iii) “multiple
employer plan” within the meaning of Sections 4063 and 4064 of ERISA or Section
413(c) of the Code.
(h) Neither
the Company nor any of its ERISA Affiliates has (i) used the services or workers
provided by third party contract labor suppliers, temporary employees,
“leased
employees” (as that term is defined in Section 414(n) of the Code), or
individuals who have provided services as independent contractors to an extent
that would reasonably be expected to result in the disqualification of any
of
the Company Benefit Plans or the imposition of penalties or excise taxes with
respect to the Company Benefit Plans by the IRS or the DOL.
(a) The
Company has or will have timely filed, or caused to be timely filed, all
material federal, state, local and foreign Tax returns and reports required
to
be filed by it or the Company Subsidiaries (taking into account all available
extensions) (collectively, “Tax
Returns”),
which
such Tax Returns are true, accurate, correct and complete, and has paid,
collected or withheld, or caused to be paid, collected or withheld set forth
on
such Tax Returns, all material Taxes required to be paid, collected or withheld,
other than such Taxes for which adequate reserves in the Company Financials
have
been established in accordance with GAAP. Section
2.17
of the
Company Disclosure Schedule sets forth each jurisdiction where the Company
and
each Company Subsidiary files or is required to file a Tax Return. There are
no
claims, assessments, audits, examinations, investigations or other proceedings
pending against the Company or any of the Company Subsidiaries in respect of
any
Tax, and neither the Company nor any of the Company Subsidiaries has been
notified in writing of any proposed Tax claims or assessments against the
Company or any of the Company Subsidiaries (other than, in each case, claims
or
assessments for which adequate reserves in the Company Financials have been
established in accordance with GAAP or are immaterial in amount). There are
no
material liens with respect to any Taxes upon any of the Company’s or its
Subsidaries’ assets, other than (i) Taxes, the payment of which is not yet due,
or (ii) Taxes or charges being contested in good faith by appropriate
proceedings and for which adequate reserves in the Company Financials have
been
established in accordance with GAAP. Neither the Company nor any of the Company
Subsidiaries has any outstanding waivers or extensions of any applicable statute
of limitations to assess any material amount of Taxes. There are no
outstanding requests by the Company or any of the Company Subsidiaries for
any
extension of time within which to file any Tax Return or within which to pay
any
Taxes shown to be due on any Tax Return. There are no Encumbrances
for material amounts of Taxes on the assets of the Company or any of the Company
Subsidiaries, except for statutory liens for current Taxes not yet due and
payable or Taxes that are being contested in good faith and for which adequate
reserves in the Company Financials have been established in accordance with
GAAP.
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26
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(b) Neither
the Company nor any of the Company Subsidiaries has constituted either a
“distributing
corporation” or a “controlled
corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of securities (to any Person or entity that is not a member of
the
consolidated group of which the Company is the common parent corporation)
qualifying for, or intended to qualify for, Tax-free treatment under Section
355
of the Code (i) within the two-year period ending on the date hereof or (ii)
in
a distribution which could otherwise constitute part of a “plan”
or
“series
of
related transactions” (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(c) Neither
the Company nor any of the Company Subsidiaries is or (i) has been at any time
within the five-year period ending on the date hereof a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code
and (ii) has ever been a member of any consolidated, combined, unitary or
affiliated group of corporations for any Tax purposes other than a group of
which the Company is or was the common parent corporation.
(d) Neither
the Company nor any of the Company Subsidiaries has made any change in
accounting method or received a ruling from, or signed an agreement with, any
taxing authority that would reasonably be expected to have a Company Material
Adverse Effect following the Closing.
(e) As
of the
date hereof, neither the Company nor any of the Company Subsidiaries is being
audited by any taxing authority or has been notified by any Tax authority that
any such audit is contemplated or pending.
(f) Neither
the Company nor any of the Company Subsidiaries participated in, or sold,
distributed or otherwise promoted, any “reportable
transaction,” as defined in Treasury Regulation section
1.6011-4.
(g) Neither
the Company nor any of the Company Subsidiaries has taken any action that would
reasonably be expected to give rise to (i) a “deferred
intercompany transaction” within the meaning of Treasury Regulation section
1.1502-13 or an “excess
loss account” within the meaning of Treasury Regulation section 1.1502-19, or
(ii) the recognition of a deferred intercompany transaction.
(h) Since
December 31, 2005, neither the Company nor any of the Company Subsidiaries
have
(i) changed any Tax accounting methods, policies or procedures except as
required by a change in Law, (ii) made, revoked, or amended any material Tax
election, (iii) filed any amended Tax Returns or claim for refund, or (iv)
entered into any closing agreement affecting or otherwise settled or compromised
any material Tax liability or refund.
(i) For
purposes of this Agreement, the term “Tax”
or
“Taxes”
shall
mean any tax, custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, imposed by any Governmental Authority (including any
federal, state, local, foreign or provincial income, gross receipts, property,
sales, use, net worth, premium, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, transfer or excise tax) together
with
any interest, addition or penalty imposed thereon.
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Except
for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc., the fees of which will be borne by the
Company, no broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the Company.
(a) Section
2.19(a)
of the
Company Disclosure Schedule contains a correct and complete list of all real
property and interests in real property leased or subleased by the Company
or
any of the Company Subsidiaries from or to any Person (collectively, the
“Company
Real Property”). The
list set forth in Section
2.19(a)
of the
Company Disclosure Schedule contains, with respect to each of the Company Real
Properties, all existing leases, subleases, licenses or other occupancy
contracts to which the Company or any of the Company Subsidiaries is a party
or
by which the Company or any of the Company Subsidiaries is bound, and all
amendments, modifications, extensions and supplements thereto (collectively,
the
“Tenant
Leases”),
the
terms of which have been complied with by the Company and any Company Subsidiary
in all material respects. The Company Real Property set forth in
Section
2.19(a)
of the
Company Disclosure Schedule comprises all of the real property necessary and/
or
currently used in the operations of the business of the Company and the Company
Subsidiaries. The Company does not own any real
property. Except as would not have a Company Material Adverse Effect,
the Company or a Company Subsidiary has good and valid title to all of its
personal property, assets and rights, free and clear of all Encumbrances other
than Permitted Encumbrances.
(b) A
correct
and complete copy of each Tenant Lease has been furnished to Parent prior to
the
date hereof. The Company or the Company Subsidiary party thereto has
a valid, binding and enforceable leasehold interest under each of the Tenant
Leases, free and clear of all Encumbrances other than Permitted Encumbrances,
and each of the Tenant Leases is in full force and effect. Neither
the Company or any of the Company Subsidiaries nor, to the knowledge of the
Company, any other party to any Tenant Lease is in breach of or in default
under, in any material respect, any of the Tenant Leases. The Company
and the Company Subsidiaries enjoy peaceful and undisturbed possession under
all
such Tenant Leases, have not received notice of any material default,
delinquency or breach on the part of the Company or any Company Subsidiary,
and
there are no existing material defaults (with or without notice or lapse of
time
or both) by the Company or any Company Subsidiary or, to the knowledge of the
Company, any other party thereto. For purposes of this Agreement, the
term “Permitted
Encumbrances”
means
(i) Encumbrances with respect to Taxes either not yet due or being contested
in
good faith in appropriate proceedings (and for which adequate reserves in the
Company Financials have been established in accordance with GAAP); and (ii)
mechanics’, materialmen’s or similar statutory Encumbrances for amounts not yet
due or being contested in good faith in appropriate proceedings; (iii) the
terms
and conditions of the lease creating the leaseholds.
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(a) There
are
no Actions pending or, to the knowledge of the Company, threatened involving
the
Company or any of the Company Subsidiaries and any of their employees or former
employees, including any harassment, discrimination, retaliatory act or similar
claim. There has been: (i) no labor union organizing or attempting to
organize any employee of the Company or any of the Company Subsidiaries into
one
or more collective bargaining units; and (ii) no labor dispute, strike, work
slowdown, work stoppage or lock out or other collective labor action by or
with
respect to any employees of the Company or any of the Company Subsidiaries
pending or, to the Company’s knowledge, threatened against the Company or any of
the Company Subsidiaries. Neither the Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement
or
other agreement with any labor organization applicable to the employees of
the
Company or any of the Company Subsidiaries and no such agreement is currently
being negotiated.
(b) The
Company and the Company Subsidiaries (i) are in compliance in all material
respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, health and safety and wages
and
hours, including Laws relating to discrimination, disability, labor relations,
hours of work, payment of wages and overtime wages, pay equity, immigration,
workers compensation, working conditions, employee scheduling, occupational
safety and health, family and medical leave, and employee terminations, and
have
not received written notice, or to the knowledge of the Company any other form
of notice, that there is any unfair labor practice charge or complaint against
the Company or any of the Company Subsidiaries pending, (ii) are not liable
for
any material arrears of wages or any material penalty for failure to comply
with
any of the foregoing, and (iii) are not liable for any material payment to
any
trust or other fund or to any Governmental Authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for employees (other than routine payments to be made in the
ordinary course of business and consistent with past
practice). Except as would not result in any material liability to
the Company or any Company Subsidiary, there are no complaints, lawsuits,
arbitrations, administrative proceedings, or other Actions pending or, to the
knowledge of the Company, threatened against the Company or any Company
Subsidiary brought by or on behalf of any applicant for employment, any current
or former employee, any Person alleging to be a current or former employee,
any
class of the foregoing, or any Governmental Authority, relating to any such
Law
or regulation, or alleging breach of any express or implied contract of
employment, wrongful termination of employment, or alleging any other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship.
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29
-
(a) Neither
the Company nor any of the Company Subsidiaries is the subject of any federal,
state, local or foreign Order, judgment or claim, and neither the Company nor
any of the Company Subsidiaries has received any notice or claim, or entered
into any negotiations or agreements with any Person, that would impose a
material liability or obligation under any Environmental Law;
(b) To
the
knowledge of the Company, the Company and the Company Subsidiaries are in
compliance with all applicable Environmental Laws;
(c) Neither
the Company nor any of the Company Subsidiaries has manufactured, treated,
stored, disposed of, arranged for or permitted the disposal of, generated,
handled or released any Hazardous Substance, or owned or operated any property
or facility, in a manner that has given or would reasonably be expected to
give
rise to any liability under all applicable Environmental Laws;
(d) Each
of
the Company and the Company Subsidiaries holds and is in compliance with all
Company Permits required to conduct its business and operations under all
applicable Environmental Laws; and
(e) Neither
the Company, any Company Subsidiary nor any of their respective properties
are
subject to any Order, judgment or written claim asserted or arising under any
Environmental Law.
“Environmental
Laws”
means
any Law relating to (a) the protection, preservation or restoration of the
environment (including air, water vapor, surface water, groundwater, drinking
water supply, surface land, subsurface land, plant and animal life or any other
natural resource) or (b) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of Hazardous Substances, in each case as in
effect at the date hereof.
“Hazardous
Substance”
means
any substance listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous or as a pollutant or contaminant under any
Environmental Law. Hazardous Substances include any substance to
which exposure is regulated by any Governmental Authority or any Environmental
Law, including (a) petroleum or any derivative or byproduct thereof, toxic
mold,
asbestos or asbestos containing material or polychlorinated biphenyls and (b)
all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants
in the National and Hazardous Substances Contingency Plan, 40 C.F.R. Section
300.5.
Section
2.22
of the
Company Disclosure Schedule sets forth a true, correct and complete list of
the
contracts or arrangements that are in existence as of the date of this Agreement
under which there are any existing or future liabilities or obligations between
the Company or any of the Company Subsidiaries, on the one hand, and, on the
other hand, any (i) present manager, officer or director of either the Company
or any of its subsidiaries, or (ii) record or beneficial owner of more than
5%
of the outstanding Company Capital Stock as of the date hereof (each, an
“Affiliate
Transaction”).
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30
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(a) Examinations. The
Company has made available to Parent copies of all draft and final financial
examination reports and market conduct examination reports of state insurance
departments with respect to any Company Subsidiary that have been issued since
January 1, 2005.
(b) Policy
Materials. To
the extent required under applicable Laws, all policies, binders, slips or
other
agreements of insurance and other agreements and materials that are issued
or
used in connection with the Company or Company Subsidiaries’ business, including
applications, brochures and marketing materials, premium rates and reinsurance
agreements, are, in all material respects, on forms approved by applicable
insurance regulatory authorities or filed and not objected to by such
authorities within the period provided for objection, and, in either case,
not
subsequently disapproved or required to be withdrawn or retired from issuance
or
use which have not been so withdrawn or retired. Any rates or rating
plans of the Company or Company Subsidiaries required to be filed with or
approved by any applicable Governmental Authority have in all material respects
been so filed or approved and the rates applied by each of the Company or the
Company Subsidiaries to the contracts of insurance conform in all material
respects to the relevant filed or approved rates.
(c) Agents
and Producers. No
Person performing the duties of insurance producer, reinsurance intermediary,
agency, agent, managing general agent, wholesaler or broker with respect to
the
Company or any of the Company Subsidiaries who has generated more than two
percent of the Company’s premium revenues as reflected in the Company Financial
Statements (collectively, “Company
Producers”)
has
indicated to the Company or any Company Subsidiary that such Company Producer
will be unable or unwilling to continue its relationship as a Company Producer
with the Company or any Company Subsidiary within 12 months after the date
hereof. To the knowledge of the Company, at the time any Company
Producer wrote, sold, or produced business, or performed such other act for
or
on behalf of the Company or any Company Subsidiary that may require a license
under applicable Insurance Laws, such Company Producer was duly licensed and
appointed as required by applicable Insurance Law, in the particular
jurisdiction in which such Company Producer wrote, sold, produced, solicited,
or
serviced such business, and each of the agency agreements and appointments
between the Company Producers, including as subagents under the Company’s
affiliated insurance agency, and the Company and any Company Subsidiary, is
valid, binding and in full force and effect in accordance with its terms. To
the
knowledge of the Company, no Company Producer has been since January 1, 2005,
or
is currently, in material violation (or with or without notice or lapse of
time
or both, would be in violation) of any term or provision of any Law applicable
to the writing, sale or production of insurance or other business of the Company
or any Company Subsidiary. The contracts and other agreements
pursuant to which Company Producers act on behalf of the Company or any Company
Subsidiary are valid, binding and in full force and effect in accordance with
their terms, and none of the parties to such contracts and agreements are in
default thereunder in any material respect. The Company has made
available to Parent a true and complete copy of each standard form agency
agreement used by the Company or any Company Subsidiary.
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(d) Reinsurance. Section
2.23(d) of the Company Disclosure Schedule sets forth a list of all ceded
reinsurance treaties and agreements, including retrocessional agreements, to
which the Company or any Company Subsidiary is a party or under which the
Company or any Company Subsidiary has any material existing rights, obligations
or liabilities (the “Company
Reinsurance Agreements”). Copies
of all Company Reinsurance Agreements that are in effect on the date of this
Agreement have been made available to Parent. Neither the Company
nor any Company Subsidiary, nor, to the knowledge of the Company, any other
party to a reinsurance treaty, binder or other agreement to which the Company
or
any Company Subsidiary is a party, is in default in any material respect as
to
any provision thereof. The Company has no knowledge that the financial
condition of any party to any Company Reinsurance Agreement is impaired to
the
extent that a default thereunder may be reasonably anticipated. The
Company Subsidiaries are entitled under applicable Law to take full credit
on
the applicable Company SAP Statement with respect to any Company Reinsurance
Agreement pursuant to which such subsidiary has ceded
reinsurance. Neither the Company nor any Company Subsidiary have
received any notice from any party to any reinsurance agreement or treaty of
any
dispute or default with respect to such reinsurance agreement or
treaty. Assuming no default by any party other than any subsidiary of
the Company, all such Company Reinsurance Agreements are in full force and
effect to the respective dates noted thereon. There are no entities,
other than the Company and the Company Subsidiaries, that have rights to access
coverage under any such Company Reinsurance Agreements.
(e) Finite
Risk Insurance or Reinsurance. With
respect to any Company Reinsurance Agreement for which the Company or any
Company Subsidiary is taking credit on its most recent statutory financial
statements or has taken credit on any statutory financial statements from and
after January 1, 2005, (i) there has been no separate written or oral agreement
between the Company or any Company Subsidiary and the assuming reinsurer that
would under any circumstances reduce, limit, mitigate or otherwise affect any
actual or potential loss to the parties under any such Company Reinsurance
Agreement, other than inuring contracts that are explicitly defined in any
such
Company Reinsurance Agreement, (ii) for each such Company Reinsurance Agreement
under which the Company or any Company Subsidiary has or may have recoverables,
and for which risk transfer is not reasonably considered to be self-evident,
documentation concerning the economic intent of the transaction and the risk
transfer analysis evidencing the proper accounting treatment, as required by
Statement of Statutory Accounting Principles No. 62 (“SSAP
No. 62”),
is
available for review by the domiciliary state insurance departments for the
Company and the Company Subsidiaries, (iii) each of the Company and the Company
Subsidiaries complies and has complied in all material respects from and after
January 1, 2005 with all of the requirements set forth in SSAP No. 62 and (iv)
each of the Company and the Company Subsidiaries has and has had from and after
January 1, 2001 appropriate controls in place to monitor the use of reinsurance
and comply with the provisions of SSAP No. 62.
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(f) Actuarial
Reports. Prior
to the date of this Agreement, the Company has made available to Parent a true
and complete copy of all actuarial reports prepared by independent actuaries,
with respect to the Company or any Company Subsidiary since January 1, 2005,
and
all attachments, addenda, supplements and modifications thereto (the
“Company
Actuarial Analyses”). There
have been no actuarial reports of a similar nature covering any of the entities
referred to in those reports in respect of any period subsequent to the latest
period covered in such actuarial reports. The information and data
furnished by the Company or any Company Subsidiary to its independent actuaries
in connection with the preparation of any Company Actuarial Analysis was
accurate in all material respects for the periods covered in such
reports. Each Company Actuarial Analysis was based upon an accurate
inventory of policies in force for the Company and the Company Subsidiaries,
as
the case may be, at the relevant time of preparation and was prepared in
conformity with generally accepted actuarial principles in effect at such time,
consistently applied (except as may be noted therein).
(g) Policy
Dividends. There
are no insurance policies issued, reinsured or assumed by the Company or any
of
the Company Subsidiaries that are currently in force under which the Company
or
any of the Company Subsidiaries may be required to pay dividends to the holders
thereof.
The
Company and each Company Subsidiary is covered by valid and currently effective
insurance policies issued in favor of the Company or one or more of the Company
Subsidiaries that are customary for companies of similar size in the industry
and locales in which the Company and the Company Subsidiaries
operate. Section
2.24
of the
Company Disclosure Schedule sets forth a true, correct and complete list of
all
material insurance policies issued in favor of the Company or any Company
Subsidiary, or pursuant to which the Company or any Company Subsidiary is a
named insured or otherwise a beneficiary, as well as any historic
incurrence-based policies still in force. With respect to each such
insurance policy, (i) the policy is in full force and effect and all premiums
due thereon have been paid, (ii) neither the Company nor any Company Subsidiary
is in any material respect, in breach of or default under, and neither the
Company nor any Company Subsidiary have taken any action or failed to take
any
action which, with notice or the lapse of time or both, would constitute such
a
breach or default, or permit termination or modification of, any such policy,
and (iii) to the knowledge of the Company, no insurer on any such policy has
been declared insolvent or placed in receivership, conservatorship or
liquidation, and no notice of cancellation or termination has been received
with
respect to any such policy.
All
of
the books and records of the Company and the Company Subsidiaries are complete
and accurate in all material respects and have been maintained in the ordinary
course and in accordance with applicable Laws and standard industry practices
with regard to the maintenance of such books and records.
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2.26 Information
Supplied.
None
of
the information supplied or to be supplied by Company or its Members for
inclusion or incorporation by reference in the Proxy Statement will, at the
date
the Proxy Statement is first mailed to Parent’s stockholders or at the time of
the Special Meeting, contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
are
made, not misleading. None of the information supplied or to be supplied by
Company or its Members for inclusion in the Registration Statement shall, at
the
time such document is filed, at the time amended or supplemented, or at the
time
the Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. Notwithstanding
the foregoing, Company and its Members make no representation, warranty or
covenant with respect to any information supplied by the Parent which is
contained in the Registration Statement or Proxy Statement.
REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB
The
following representations and warranties by Parent and Merger Sub to the Company
are qualified by the Parent Disclosure Schedule, which sets forth certain
disclosures concerning Parent and Merger Sub (the “Parent
Disclosure Schedule”). Parent
and Merger Sub hereby jointly and severally represent and warrant to the Company
as follows:
Each
of
Parent and Merger Sub is a corporation duly organized, validly existing and
in
good standing under the Laws of the jurisdiction of its organization and has
all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of Parent and Merger
Sub is duly qualified to do business in each jurisdiction where the nature
of
its business or its ownership or leasing of properties its properties make
such
qualification necessary. Parent has heretofore made available to Company
accurate and complete copies of Parent’s Certificate of Incorporation, as
amended (the “Certificate
of Incorporation”)
and
bylaws (the “Parent
Organization Documents”)
and
the equivalent organizational documents of Merger Sub (the “Merger
Sub Organizational Documents”,
each
as currently in effect. Neither Parent nor Merger Sub is in violation of any
provision of the Certificate of Incorporation, by-laws ors its equivalent
organizational documents as the case may be.
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3.2 Capitalization.
(a) The
authorized capital stock of Parent consists of 20,000,000 shares of Common
Stock
and 1,000,000 shares of preferred stock, par value $0.0001 per
share. As of the date hereof, (i) 5,917,031 shares of Common Stock
were issued and outstanding and no shares of preferred stock were issued and
outstanding, and (ii) 14,082,969 shares of Common Stock are authorized but
unissued. As of the date hereof, warrants issued pursuant to the IPO Warrant
Agreement to purchase 4,733,625 shares of Common Stock (the “IPO
Warrants”),
and
1,250,000 warrants owned by FMG Investors, were issued and outstanding. As
of
the date hereof, options to purchase 450,000 shares of Common Stock and 450,000
warrants (convertible into 450,000 shares of Common Stock), in the aggregate,
were issued and outstanding (collectively, the “Option
Securities”).
Except as set forth above, no shares of capital stock or other voting securities
of Parent are issued, reserved for issuance or outstanding. All outstanding
shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable and not subject to or issued in violation of any purchase option,
right of first refusal, preemptive right, subscription right or any similar
right under any provision of the DGCL, the Certificate of Incorporation,
Parent’s by-laws or any contract to which Parent is a party.
(b) Except
for the IPO Warrants, the Option Securities, the Affiliate Warrants and the
Notes, and other than the conversion rights set forth in the Prospectus, there
are no (i) outstanding options, warrants, puts, calls, convertible securities,
preemptive or similar rights, (ii) bonds, debentures, notes or other
indebtedness having general voting rights or that are convertible or
exchangeable into securities having such rights, or (iii) subscriptions or
other
rights, agreements, arrangements, contracts or commitments of any character,
relating to the issued or unissued Common Stock or obligating Parent to issue,
transfer, deliver or sell or cause to be issued, transferred, delivered, sold
or
repurchased any options or Common Stock or securities convertible into or
exchangeable for such shares, or obligating the Company to grant, extend or
enter into any such option, warrant, call, subscription or other right,
agreement, arrangement or commitment for such common stock. Other than the
conversion rights set forth in the Prospectus, the Tender Offer and the Exchange
Offer, there are no outstanding obligations of Parent to repurchase, redeem
or
otherwise acquire any shares of Common Stock of Parent or Merger
Sub.
3.3 Merger
Sub.
(a) All
the
outstanding shares of common stock in Merger Sub have been validly issued and
are fully paid and nonassessable and owned by Parent, free and clear of all
Encumbrances.
(b) Except
for 100% of the common stock of Merger Sub, Parent does not as of the date
hereof own, directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity interest in any
Person.
(c) Since
the
date of its formation, Merger Sub has not carried on any business or conducted
any operations other than the execution of this Agreement, and the performance
of its obligations hereunder.
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3.4 Authorization;
Binding Agreement.
Parent
and Merger Sub have all requisite corporate power and authority to execute
and
deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and by the Note Purchase
Agreement, including the Merger, Tender Offer and Exchange Offer (i) have been
duly and validly authorized by the Board of Directors of Parent and Merger
Sub,
and (ii) no other corporate proceedings on the part of Parent or Merger Sub
are
necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby, other than receipt of the
Required Parent Vote (as defined below). The affirmative vote of the
stockholders of Parent holding at least a majority of the issued and outstanding
Common Stock of Parent (the “Required
Parent Vote”)
is
necessary to approve and adopt this Agreement and to consummate the transactions
contemplated hereby (including the Merger), provided,
further,
that
stockholders of Parent holding thirty percent (30%) or more of the shares of
Common Stock sold in Parent’s initial public offering shall not have voted
against the Merger and exercised their conversion rights under the Certificate
of Incorporation to convert their shares of Common Stock into a cash payment
from the Trust Fund. This Agreement has been duly and validly executed and
delivered by each of Parent and Merger Sub and (assuming the due authorization,
execution and delivery hereof by the Company) constitutes the legal, valid
and
binding obligation of each of Parent and Merger Sub, enforceable against each
of
Parent and Merger Sub in accordance with its terms, subject to the
Enforceability Exceptions.
No
Consent of or with any Governmental Authority on the part of Parent or Merger
Sub is required to be obtained or made in connection with the execution,
delivery or performance by Parent or Merger Sub of this Agreement or the
consummation by Parent or Merger Sub of the transactions contemplated hereby
(including the Merger) other than (i) the filing of the Articles of Merger
with
the Secretary of State in accordance with the Florida Act, (ii) such filings
as
may be required with the SEC and foreign and state securities Laws
administrators, (iii) pursuant to Antitrust Laws, (iv) the filing of the Proxy
Statement and Registration Statement and the Schedule TO with respect to the
Tender Offer with the SEC, and (v) those consents, approvals, authorizations,
waivers, permits, filings or notices set forth in Section
3.5
of the
Parent Disclosure Schedule, which schedule includes all such consents,
approvals, authorizations, waivers, permits, filings or notices with the Florida
Office of Insurance Regulation, and (vi) those Consents that, if they were
not
obtained or made, would not reasonably be expected to have, individually or
in
the aggregate, a Parent Material Adverse Effect.
For
purposes of this Agreement, “Parent
Material Adverse Effect”
shall
mean any occurrence, state of facts, change, event, effect or circumstance
that,
individually or in the aggregate, has, or would reasonably be expected to have,
a material adverse effect on the assets, liabilities, business, results of
operations or financial condition of Parent and Merger Sub on an aggregate
basis, other than any occurrence, state of facts, change, event, effect or
circumstance to the extent resulting from (i) political instability, acts of
terrorism or war, changes in national, international or world affairs, or other
calamity or crisis, including without limitation as a result of changes in
the
international or domestic markets but only to the extent such events are deemed
to have a direct impact on the existing operations of Parent and Merger Sub
and
their future operating prospects, (ii) any change affecting the United States
economy generally or the economy of any region in which such entity conducts
business that is material to the business of such entity, (iii) the announcement
of the execution of this Agreement, or the pendency of the consummation of
the
Merger, (iv) any change in GAAP or interpretation thereof after the date hereof,
or (v) the execution and performance of or compliance with this
Agreement.
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The
execution and delivery by Parent and Merger Sub of this Agreement and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
(including the Merger, Private Placement, Tender Offer and Exchange Offer)
and
compliance by Parent and Merger Sub with any of the provisions hereof will
not
(i) conflict with or violate any provision of the certificate of incorporation
or by-laws or other governing instruments of Parent or Merger Sub, (ii) require
any Consent under or result in a violation or breach of, or constitute (with
or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any note, bond,
mortgage, indenture, contract, lease, license, agreement or instrument to which
Parent or Merger Sub is a party or by which its assets are bound, (iii) result
(immediately or with the passage of time or otherwise) in the creation or
imposition of any Encumbrance upon any of the properties, rights or assets
of
Parent or Merger Sub or (iv) subject to obtaining the Consents from Governmental
Authorities referred to in Section
3.5
hereof,
and the waiting periods referred to therein have expired, and any condition
precedent to such consent, approval, authorization or waiver has been satisfied,
conflict with, contravene or violate in any respect any Law to which Parent
or
Merger Sub or any of their respective assets or properties is subject, except,
in the case of clauses (ii), (iii) and (iv) above, for any deviations from
the
foregoing that would not reasonably be expected to have, individually or in
the
aggregate, a Parent Material Adverse Effect.
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3.7 SEC
Filings and Parent Financial Statements.
(a) Parent
has filed all forms, reports, schedules, statements and other documents required
to be filed or furnished by the Company with the SEC since October 4, 2007
under
the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)
or the
Securities Act, together with any amendments, restatements or supplements
thereto, and will file all such forms, reports, schedules, statements and other
documents required to be filed subsequent to the date of this
Agreement. Section
3.7
of the
Parent Disclosure Schedule lists and Parent has delivered to the Company copies
in the form filed with the SEC of all of the following, except to the extent
available in full without redaction on the SEC’s web site through ▇▇▇▇▇ for at
least two (2) days prior to the date of this Agreement: (i) Parent’s Annual
Reports on Form 10-K for each fiscal year of Parent beginning with the first
year Parent was required to file such a form, (ii) Parent’s Quarterly Reports on
Form 10-QSB for each fiscal quarter that Parent was required to file a Quarterly
Report on Form 10-QSB in each of the fiscal years of Parent referred to in
clause (i) above, (iii) all proxy statements relating to Parent’s meetings of
stockholders (whether annual or special) held, and all information statements
relating to stockholder consents, since the beginning of the first fiscal year
referred to in clause (i) above, (iv) its Current Reports on Form 8-K filed
since the beginning of the first fiscal year referred to in clause (i) above,
(v) all other forms, reports, registration statements and other documents (other
than preliminary materials if the corresponding definitive materials have been
provided to the Company pursuant to this Section
3.7)
filed
by Parent with the SEC since the beginning of the first fiscal year referred
to
in clause (i) above (the forms, reports, registration statements and other
documents referred to in clauses (i), (ii), (iii), (iv) and (v) above, whether
or not available through ▇▇▇▇▇, are, collectively, the “Parent
SEC Reports”)
and
(vi) all certifications and statements required by (x) Rule 13a-14 or 15d-14
under the Exchange Act, or (y) 18 U.S.C. §1350 (Section 906) of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)
with
respect to any report referred to in clause (i) or (ii) above (collectively,
the
“Certifications”).
The
Parent SEC Reports (x) were prepared in all material respects in accordance
with
the requirements of the Securities Act and the Exchange Act, as the case may
be,
and the rules and regulations thereunder and (y) did not at the time they were
filed with the SEC (except to the extent that information contained in any
Parent SEC Report has been revised or superseded by a later filed Parent SEC
Report) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were
made, not misleading. The Certifications are each true and correct. Parent
and
Merger Sub maintain disclosure controls and procedures required by Rule
13a-15(e) or 15d-15(e) under the Exchange Act; such controls and procedures
are
effective to ensure that all material information concerning Parent and Merger
Sub is made known on a timely basis to the individuals responsible for the
preparation of Parent’s filings with the SEC and other public disclosure
documents. Each director and executive officer of Parent has filed with the
SEC
on a timely basis all statements required by Section 16(a) of the Exchange
Act
and the rules and regulations thereunder since the date of Parent’s formation.
As used in this Section
3.7,
the
term “file” shall be broadly construed to include any manner in which a document
or information is furnished, supplied or otherwise made available to the
SEC.
(b) The
financial statements and notes contained or incorporated by reference in the
Parent SEC Reports (“Parent
Financials”)
fairly
present the financial condition and the results of operations, changes in
stockholders’ equity, and cash flow of Parent and Merger Sub as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with (i) GAAP and (ii) Regulation S-X or
Regulation S-B, as applicable, subject, in the case of interim financial
statements, to normal recurring year-end adjustments (the effect of which will
not, individually or in the aggregate, be materially adverse) and the omission
of notes to the extent permitted by Regulation S-X or Regulation S-B, as
applicable. No financial statements other than those of Parent and Merger Sub
are required by GAAP to be included in the consolidated financial statements
of
Parent. Section
3.7
of the
Parent Disclosure Schedule contains a description of all non-audit services
performed by the Parent’s auditors for Parent and Merger Sub since the date of
Parent’s formation and the fees paid for such services; further, all such
non-audit services were approved by the Board of Directors of Parent. Parent
has
no off-balance sheet arrangements.
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(c) Neither
Parent nor Merger Sub, or any manager, director, officer or employee of Parent
or Merger Sub has received any complaint, allegation, assertion or claim,
whether or not in writing, regarding the accounting or auditing practices,
procedures, methodologies or methods of Parent or Merger Sub or their respective
internal accounting controls, including any complaint, allegation, assertion
or
claim that Parent or Merger Sub has engaged in questionable accounting or
auditing practices. No attorney representing Parent or Merger Sub, whether
or
not employed by Parent or Merger Sub, has reported evidence of any violation
of
consumer protection, insurance or securities Laws, breach of fiduciary duty
or
similar violation by Parent or any of its officers, Directors, employees or
agents to the Board or any committee thereof or to any Director or executive
officer of Parent.
(d) Merger
Sub has never been subject to the reporting requirements of Sections 13(a)
and
15(d) of the Exchange Act.
3.8 Absence
of Undisclosed Liabilities.
Except
as
and to the extent reflected or reserved against in the Parent Financials, or
as
set forth in the financial statements neither the Parent nor Merger Sub has
incurred any liabilities or obligations of the type required to be reflected
on
a balance sheet in accordance with GAAP that is not adequately reflected or
reserved on or provided for in the Parent Financials, other than liabilities
of
the type required to be reflected on a balance sheet in accordance with GAAP
that have been incurred since December 31, 2007 in the ordinary course of
business.
3.9 Information
Supplied.
None
of
the information supplied or to be supplied by Parent or Merger Sub for inclusion
or incorporation by reference in the Proxy Statement will, at the date it is
first mailed to Parent’s stockholders or at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation is made by Parent with respect to
statements made or incorporated by reference therein based on information
supplied by the Company in writing for inclusion or incorporation by reference
in the Proxy Statement. None of the information supplied or to be supplied
by
Parent or Merger Sub for inclusion in the Registration Statement shall, at
the
time such document is filed, at the time amended or supplemented, or at the
time
the Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The Registration
Statement and all filings made under Schedule TO will comply as to form in
all
material respects with the provisions of the Securities Act. Notwithstanding
the
foregoing, Parent makes no representation, warranty or covenant with respect
to
any information supplied by the Company which is contained in the Registration
Statement, Proxy Statement or in any filing made under Schedule TO.
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3.10 Absence
of Certain Changes.
(a) Except
as
set forth in the Parent Disclosure Schedule or as consented to in writing by
Company (and excluding the Merger), since October 4, 2007, Parent and Merger
Sub
have conducted their respective businesses in the ordinary course of business
consistent with past practice and there has not occurred any action that would
constitute a breach of Section
4.6
if such
action were to occur or be taken after the date of this Agreement.
(b) Since
October 4, 2007, there has not been any fact, change, effect, occurrence, event,
development or state of circumstances that has had or would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
3.11 Taxes
and Returns.
(a) Except
as
set forth on the Parent Disclosure Schedule, Parent has or will have timely
filed, or caused to be timely filed, all Tax Returns and has paid, collected
or
withheld, or caused to be paid, collected or withheld, all material Taxes
required to be paid, collected or withheld, other than such Taxes for which
adequate reserves, as disclosed in the Parent SEC Reports, have been established
in accordance with GAAP. Section
3.11
of the
Parent Disclosure Schedule sets forth each jurisdiction where the Parent and
Merger Sub files or is required to file a Tax Return. There are no material
liens with respect to any Taxes upon any of the Parent’s or Merger Sub’s assets,
other than (i) Taxes, the payment of which is not yet due, or (ii) Taxes or
charges being contested in good faith by appropriate proceedings. Neither Parent
nor Merger Sub has any outstanding waivers or extensions of any applicable
statute of limitations to assess any material amount of Taxes. There
are no outstanding requests by Parent or Merger Sub for any extension of time
within which to file any Tax Return or within which to pay any Taxes shown
to be
due on any Tax Return.
(b) Neither
Parent nor Merger Sub has made any change in accounting method or received
a
ruling from, or signed an agreement with, any taxing authority that would
reasonably be expected to have a Parent Material Adverse Effect following the
Closing.
(c) As
of the
date hereof, neither Parent nor Merger Sub is being audited by any taxing
authority or has been notified by any Tax authority that any such audit is
contemplated or pending.
(d) Since
their respective dates of incorporation, neither Parent nor Merger Sub has
(i)
changed any Tax accounting methods, policies or procedures except as required
by
a change in Law, (ii) made, revoked, or amended any material Tax election,
(iii)
filed any amended Tax Returns or claim for refund, or (iv) entered into any
closing agreement affecting or otherwise settled or compromised any material
Tax
liability or refund.
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3.12 Employee
Benefit Plans.
Parent
does not maintain, and has no liability under, any Benefit Plan, and neither
the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any director or employee of Parent, or (ii) result in the
acceleration of the time of payment or vesting of any such
benefits.
3.13 Employee
Matters.
Neither
Parent nor Merger Sub has ever had any current or former employees.
3.14 Material
Contracts.
(a) Except
as
set forth in the Parent SEC Reports filed prior to the date hereof or in the
Prospectus, or on Schedule 3.14 hereto, there are no contracts, agreements,
leases, mortgages, indentures, notes, bonds, liens, license, permit, franchise,
purchase orders, sales orders or other understandings, commitments or
obligations (including without limitation outstanding offers or proposals)
of
any kind, whether written or oral, to which Parent is a party or by or to which
any of the properties or assets of Parent may be bound, subject or affected,
which either (i) creates or imposes a liability greater than $50,000, or (ii)
may not be cancelled by Parent on less than 60 days’ or less prior notice (the
“Parent
Material Contracts”).
All
Parent Material Contracts have been made available to the Company, and are
set
forth in Section
3.14(a)
of the
Parent Disclosure Schedule other than those that are exhibits to the Parent
SEC
Reports.
(b) With
respect to each Parent Material Contract: (i) the Parent Material Contract
was
entered into at arms’ length and in the ordinary course of business; (ii) the
Parent Material Contract is legal, valid and enforceable in all material
respects (except as such enforcement may be limited by the Enforceability
Exceptions); (iii) neither Parent nor Merger Sub is in breach or default in
any
material respect, and no event has occurred that with the passage of time or
giving of notice or both would constitute such a breach or default by Parent
or
Merger Sub, or permit termination or acceleration by the other party, under
the
Parent Material Contract; and (iv) to the Parent’s knowledge, no other party to
the Parent Material Contract is in breach or default in any material respect,
and no event has occurred that with the passage of time or giving of notice
or
both would constitute such a breach or default by such other party, or permit
termination or acceleration by Parent or Merger Sub, under any Parent Material
Contract.
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There
is
no Action pending before any arbitrator, agency, court or tribunal, foreign
or
domestic, or, to the knowledge of Parent, threatened against Parent, Merger
Sub,
any of their respective subsidiaries or any of their respective properties,
rights or assets or, any of their respective officers, directors, partners,
managers or members (in their capacities as such) that would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect. There is no Order against Parent, Merger Sub, any of their
respective subsidiaries or any of their respective properties, rights or assets
or any of their respective officers, directors, partners, managers or members
(in their capacities as such) that would prohibit, prevent, enjoin, restrict
or
materially alter or delay any of the transactions contemplated by this Agreement
(including the Merger), or that would reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. There is
no
material Action that Parent or Merger Sub has pending against other
parties.
3.16 Transactions
with Affiliates.
Other
than as set forth in the Parent SEC Reports, there are no contracts or
arrangements that are in existence as of the date of this Agreement under which
there are any existing or future liabilities or obligations between Parent
or
Merger Sub, on the one hand, and on the other hand, any (i) director, officer,
employee or affiliate of either Parent or Merger Sub, or (ii) record or
beneficial owner of more than 5% of the Parent’s outstanding Common Stock as of
the date hereof.
3.17 Trust
Fund.
(a) Since
October 11, 2007, Parent has had at least $37,452,930 in the trust fund
established by Parent for the benefit of its public stockholders (the
“Trust
Fund”),
invested in U.S. government securities in a trust account at Deutsche Bank
Trust
Company Americas (the “Trust
Account”),
held
in trust by Continental Stock Transfer & Trust Company (the “Trustee”)
pursuant to the Investment Management Trust Account Agreement, dated as of
October 4, 2007, between Parent and Trustee (the “Trust
Agreement”).
Upon
consummation of the Merger and notice thereof to the Trustee and disbursement
from the Trust Account by the Trustee, the Trust Account will terminate and
the
Trustee shall thereupon be obligated to release as promptly as practicable
to
Parent the Trust Fund held in the Trust Account and, after taking into account
any funds paid (1) to stockholders of Parent holding shares of Common Stock
sold
in Parent’s initial public offering who shall have voted against the Merger and
demanded that Parent convert their shares of Common Stock into cash pursuant
to
the Certificate of Incorporation and (2) to stockholders of Parent pursuant
to
the Tender Offer, which Trust Fund will be free of any Encumbrances whatsoever,
and will be available for use in the businesses of Parent and the
Company.
(b) As
of the
Effective Time, those obligations of Parent to dissolve or liquidate within
a
specified time period as contained in the Certificate of Incorporation will
terminate, and effective as of the Effective Time Parent shall have no
obligation whatsoever to dissolve and liquidate the assets of Parent by reason
of the consummation of the Merger, and following the Effective Time no Parent
stockholder shall be entitled to receive any amount from the Trust Account
except to the extent (1) such stockholder votes against the approval of this
Agreement and demands, contemporaneous with such vote, that Parent convert
such
stockholder’s shares of Common Stock into cash pursuant to the Certificate of
Incorporation or (2) any Parent stockholder participates in the Tender
Offer.
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3.18 Investment
Company Act.
Parent
is
not an “investment company” or a person directly or indirectly “controlled” by
or acting on behalf of an “investment company”, in each case within the meaning
of the Investment Company Act of 1940, as amended.
Except
for Pali Capital, Inc. and ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Parent or Merger Sub.
3.20 Disclaimer.
Parent
and Merger Sub each acknowledges and agrees that, other than to the extent
set
forth in, or otherwise relied on for use in, the Proxy Statement or Registration
Statement, neither the Company nor any other person is making any
representations or warranties in connection with, or will have or be subject
to
any claim, liability, or indemnification obligation (under Section 5.3 hereof
or
otherwise) to Parent, Merger Sub, or any other person resulting from, any
projections, forecasts, or any other information made available to Parent or
Merger Sub in certain data rooms or in management presentations (formal or
informal) or in any other manner prior to the execution of this Agreement,
unless any such information is expressly included in a representation or
warranty contained in Article II hereof.
COVENANTS
(a) Unless
Parent shall otherwise consent in writing (such consent not to be unreasonably
withheld), during the period from the date of this Agreement to the Effective
Time, except as expressly contemplated by this Agreement or as set forth on
Section 4.1 of the Company Disclosure Schedule (i) the Company and the Company
Subsidiaries shall conduct their business, in all material respects in the
ordinary course of business consistent with past practice and (ii) the Company
shall use its commercially reasonable efforts consistent with the foregoing
to
preserve intact, in all material respects, its business organization, to keep
available the services of its and the Company Subsidiaries’ managers, directors,
officers, key employees, Company Producers and consultants, to maintain, in
all
material respects, existing relationships with all Persons with whom it and
the
Company Subsidiaries do significant business, and to preserve the possession,
control and condition of its and the Company Subsidiaries’ assets.
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(b) Without
limiting the generality of the foregoing clause (a), except as set forth on
Section 4.1 of the Company Disclosure Schedule, during the period from January
1, 2008 to the Effective Time, neither the Company nor any of the Company
Subsidiaries has or will (except as specifically contemplated by the terms
of
this Agreement), without the prior written consent of Parent (such consent
not
to be unreasonably withheld):
(A) amend,
waive or otherwise change, in any respect, its articles of organization, Member
Agreement, certificate of incorporation, operating agreement or by-laws (or
comparable governing instruments);
(B) authorize
for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant,
sell, pledge or dispose of any Membership Interest, or any options, warrants,
commitments, subscriptions or rights of any kind to acquire or sell Membership
Interest, any shares of capital stock or other securities or equity interests,
including any securities convertible into or exchangeable for Membership
Interest or equity interest of any class and any other equity-based
awards;
(C) split,
combine, recapitalize or reclassify any of its equity interests or issue any
other securities in respect thereof, or declare, pay or set aside any
distribution or other dividend (whether in cash, equity or property or any
combination thereof) in respect of its equity interests, or directly or
indirectly redeem, purchase or otherwise acquire or offer to acquire any of
its
capital equity or other securities or equity interests, provided, however,
the
Company may declare, pay or set aside any (i) distributions in an amount equal
to the Company’s accrual for Taxes as computed consistently with past practices
and presented on the Company Financials dated December 31, 2007, (ii)
distributions not to exceed $2,000,000 in the aggregate and (iii) distributions
to Directors of the Company in an amount not to exceed $500,000 in the
aggregate; provided, however, that the Company shall notify Parent within seven
(7) days of such distributions;
(D) incur,
create, assume, prepay or otherwise become liable for any indebtedness
(directly, contingently or otherwise), make a loan or advance to or investment
in any third party, or guarantee or endorse any indebtedness, liability or
obligation of any Person;
(E) increase
the wages, salaries or compensation exceeding 10% of current wages, salaries
or
compensation of any of its current or former consultants, officers, managers,
directors or employees, or increase bonuses for the foregoing individuals
exceeding 120% in the aggregate of the aggregate bonuses paid for fiscal year
2006 (provided, however, that the Company shall notify Parent within seven
(7)
days of such increase), or increase other benefits of any of the foregoing
individuals, or enter into, establish, amend or terminate any Company Benefit
Plan or any other employment, consulting, retention, change in control,
collective bargaining, bonus or other incentive compensation, profit sharing,
health or other welfare, stock option or other equity or equity-related,
pension, retirement, consulting, vacation, severance, separation, termination,
deferred compensation, fringe, perquisite, or other compensation or benefit
plan, policy, program, agreement, trust, fund or other arrangement with, for
or
in respect of any current or former consultant, officer, manager, director
or
employee, in each case other than as required by applicable Law or pursuant
to
the terms of any Company Benefit Plan in effect on the date of this
Agreement;
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(F) make
or
rescind any material election relating to Taxes, settle any claim, action,
suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, file any amended Tax Return or claim for refund, or make
any
change in its accounting or Tax policies or procedures, in each case except
as
required by applicable Law or GAAP;
(G) transfer
or license to any Person or otherwise extend, materially amend or modify, permit
to lapse or fail to preserve any of the Company Intellectual Property or
Licensed Intellectual Property, other than nonexclusive licenses in the ordinary
course of business consistent with past practice, or disclose to any Person
who
has not entered into a confidentiality agreement any trade secrets;
(H) terminate
or waive or assign any material right under any Company Material Contract or
enter into any (i) contract involving amounts potentially exceeding $50,000
or
(ii) that would be a Company Material Contract or (iii) with a term longer
than
one year that cannot be terminated without payment of a material penalty and
upon notice of 60 days or less;
(I) fail
to
maintain its books, accounts and records in all material respects in the
ordinary course of business consistent with past practice;
(J) establish
any subsidiary or enter into any new line of business;
(K) fail
to
use commercially reasonable efforts to keep in force insurance policies or
replacement or revised policies providing insurance coverage with respect to
the
assets, operations and activities of the Company and the Company Subsidiaries
in
an amount and scope of coverage as are currently in effect;
(L) revalue
any of its material assets or make any change in accounting methods, principles
or practices, except as required by GAAP and approved by the Company’s outside
auditors;
(M) waive,
release, assign, settle or compromise any claim, action or proceeding (including
any suit, action, claim, proceeding or investigation relating to this Agreement
or the transactions contemplated hereby, including the Merger), other than
waivers, releases, assignments, settlements or compromises that involve only
the
payment of monetary damages (and not the imposition of equitable relief on,
or
the admission of wrongdoing by, the Company or any of the Company Subsidiaries)
not in excess of $50,000 individually or in the aggregate, or otherwise pay,
discharge or satisfy any claims, liabilities or obligations other than in the
ordinary course of business consistent with past practice, unless such amount
has been reserved in the Company Financial Statements;
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(N) close
or
materially reduce the Company’s or any Company Subsidiary’s activities, or
effect any layoff or other Company-initiated personnel reduction or change,
at
any of the Company’s or any Company Subsidiary’s facilities;
(O) acquire,
including by merger, consolidation, acquisition of stock or assets, or any
other
form of business combination, any corporation, partnership, limited liability
company, other business organization or any division thereof, or any material
amount of assets;
(P) make
capital expenditures in excess of $150,000;
(Q) adopt
a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
(R) voluntarily
incur any material liability or obligation (whether absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice;
(S) sell,
lease, license, transfer, exchange or swap, mortgage or otherwise pledge or
encumber (including securitizations), or otherwise dispose of any material
portion of its properties, assets or rights;
(T) enter
into any agreement, understanding or arrangement with respect to the voting
of
the Membership Interest or the capital equity of any Company
Subsidiary;
(U) take
any
action that would reasonably be expected to delay or impair the obtaining of
any
consents or approvals of any Governmental Authority to be obtained in connection
with this Agreement;
(V) enter
into, amend, waive or terminate (other than terminations in accordance with
their terms) any Affiliate Transaction; or
(W)
enter
into any new reinsurance transaction as assuming or ceding insurer (i) which
does not contain market cancellation, termination and commutation provisions
or
(ii) which adversely changes the existing reinsurance profile of the Company
and
the Company Subsidiaries on a consolidated basis outside of the ordinary course
of business consistent with past practice;
(X) alter
or
amend in any material respect any existing underwriting, claims handling, loss
control, investment, actuarial, financial reporting or accounting practices,
guidelines or policies (including compliance policies) or any material
assumption underlying an actuarial practice or policy, except as may be required
by GAAP, applicable SAP, any Governmental Authority or applicable Law,
or
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(Y) authorize
or agree to do any of the foregoing actions.
(c) In
the
event the Company enters into any reinsurance agreement or a new lease for
its
office space, the Company shall: (i) notify Parent in writing that it has done
so and (ii) provide a copy of the reinsurance agreement or lease, as applicable,
together with any analysis or comments of the Company on such agreement or
lease. Within three business days after confirming receipt of same, Parent
may
send the Company a written objection to the reinsurance contract and lease,
at
which point the Parties shall negotiate in good faith for ten days to resolve
such Parent objections, at which time if the Parties are unable to resolve
Parent’s objections, Parent may terminate the Agreement as provided in Section
7.1(d). If Parent does not provide Company with written notice of its intent
to
terminate the Agreement pursuant to Section 7.1(d) within ten days of receiving
notice of an agreement or lease described above, then Parent shall be deemed
to
have waived any objection to such agreement or lease and its related right
to
terminate the Agreement pursuant to Section 7.1(d). In the event Parent sends
no
such objection, Parent shall be deemed to have approved such agreement(s) or
such lease.
(a) Between
the date of this Agreement and the Effective Time, each Party shall give the
other Party, and shall direct its accountants and legal counsel to give, the
other Party and its Representatives, at reasonable times and upon reasonable
intervals and notice, access to all offices and other facilities and to all
employees, properties, contracts, agreements, commitments, books and records
of
or pertaining to such Party and its subsidiaries (including Tax Returns,
internal work papers, client files, client contracts and director service
agreements) and such financial and operating data and other information, all
of
the foregoing as the requesting Party or its Representatives may reasonably
request regarding such Party’s business, assets, liabilities, employees and
other aspects (including unaudited quarterly financial statements, including
a
consolidated quarterly balance sheet and income statement, in the form such
financial statements have been delivered to the other Party prior to the date
hereof) and instruct such Party’s Representatives to cooperate with the
requesting Party in its investigation (including by reading available
independent public accountant’s work papers), and a copy of each material
report, schedule and other document filed or received pursuant to the
requirements of applicable securities Laws; provided
that the
requesting Party shall conduct any such activities in such a manner as not
to
interfere unreasonably with the business or operations of the Party providing
such information.
(b) All
information obtained by the Company or any Company Subsidiary, on one hand,
and
Parent or Merger Sub, on the other hand, pursuant to this Agreement shall be
kept confidential in accordance with and subject to the Confidentiality
Agreement, dated November 20, 2007, between Parent and the Company (the
“Confidentiality
Agreement”).
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(a) For
purposes of this Agreement, “Acquisition
Proposal”
means
(other than the Merger) any inquiry, proposal or offer, or any indication of
interest in making an offer or proposal, from any Person or group at any time
relating to a merger, reorganization, recapitalization, consolidation, share
exchange, business combination or similar transaction, including any single
or
multi-step transaction or series of related transactions involving the Company,
the Company Subsidiaries or Parent on the one hand and any third party on the
other hand or acquisition or purchase of assets of the Company and the Company
Subsidiaries or Parent representing 50% or more of such Person’s assets or
business.
(b) From
and
after the date hereof, in order to induce the Company and the Parent to continue
to commit to expend management time and financial resources in furtherance
of
the transactions contemplated hereby, from the date hereof until the earlier
of
(i) the date that is seven months from the date hereof or (ii) the date that
is
six months from the date of filing the Registration Statement (the “Exclusivity
Period”),
neither the Company, any Company Subsidiary nor the Parent shall, directly
or
indirectly, and shall not, directly or indirectly, authorize or permit any
officer, manager, director, employee, accountant, consultant, legal counsel,
financial advisor, agent or other representative of such Person (collectively,
the “Representatives”)
to,
(i) solicit, encourage, assist, initiate or facilitate the making, submission
or
announcement of any Acquisition Proposal, (ii) furnish any non-public
information regarding the Company, any Company Subsidiary, the Parent or the
Merger to any Person or group (other than a Party to this Agreement or their
Representatives) in connection with or in response to an Acquisition Proposal,
(iii) engage or participate in discussions or negotiations with any Person
or
group with respect to, or that could be expected to lead to, an Acquisition
Proposal, (iv) withdraw, modify or qualify, or propose publicly to withdraw,
modify or qualify, in a manner adverse to Parent, the approval of this Agreement
or the Merger or the Board’s recommendation that holders of Membership Interest
adopt this Agreement, (v) approve, endorse or recommend, or publicly propose
to
approve, endorse or recommend, any Acquisition Proposal, (vi) discuss, negotiate
or enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement related to any Acquisition Proposal, or
(vii) release any third party from, or waive any provision of, any
confidentiality agreement to which the Company, any Company Subsidiary or Parent
is a party (except as permitted pursuant to Section 4.2(a)
hereof). Without limiting the foregoing, each Party agrees that it
shall be responsible for the actions of its Representatives that would
constitute a violation of the restrictions set forth in this Section 4.3 if
done
by such Party. Each Party shall promptly inform its Representatives
of the obligations undertaken in this Section 4.3.
(c) Each
Party shall notify the other Party hereto as promptly as practicable (and in
any
event within 48 hours) orally and in writing of the receipt by such Party or
any
of its Representatives of (i) any bona fide inquiries, proposals or offers,
requests for information or requests for discussions or negotiations regarding
or constituting any Acquisition Proposal or any bona fide inquiries, proposals
or offers, requests for information or requests for discussions or negotiations
that could be expected to result in an Acquisition Proposal, and (ii) any
request for non-public information relating to such Party, specifying in each
case the material terms and conditions thereof (including a copy thereof if
in
writing) and the identity of the party making such inquiry, proposal, offer
or
request for information. Each Party shall keep the other Party hereto
promptly informed of the status of any such inquiries, proposals, offers or
requests for information. From and after the date of this Agreement,
each Party shall immediately cease and cause to be terminated any solicitations,
discussions or negotiations with any parties with respect to any Acquisition
Proposal and shall direct, and use its reasonable best efforts to cause, its
Representatives to cease and terminate any such solicitations, discussions
or
negotiations.
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Notwithstanding
any other provision in this Agreement, if any “fair price”, “business
combination”, “moratorium”, “control share acquisition” or similar anti-takeover
Law (collectively, “Takeover
Law”)
may
become, or may purport to be, applicable to the transactions contemplated by
this Agreement, the Company and the members of its Board will grant such
approvals and take such actions as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable
on
the terms and conditions contemplated hereby and otherwise act to eliminate
the
effect of any Takeover Law on any of the transactions contemplated by this
Agreement.
The
Company shall give Parent the opportunity to participate in, subject to a
customary joint defense agreement, any Member litigation against the Company
or
its managers, directors or officers relating to the Merger or any other
transactions contemplated hereby; provided,
however,
that no
settlement of any such litigation shall be agreed to without Parent’s
consent.
4.6
Conduct
of Business of Parent.
(a) Unless
the Company shall otherwise consent in writing (such consent not to be
unreasonably withheld), during the period from the date of this Agreement to
the
Effective Time, except as specifically contemplated by the terms of this
Agreement, (i) Parent and Merger Sub shall conduct their business in, and shall
not take any action other than in, the ordinary course of business consistent
with past practice, (ii) Parent shall use commercially reasonable efforts to
continue to maintain, in all material respects, its assets, properties, rights
and operations in accordance with present practice in a condition suitable
for
their current use, (iii) Parent shall use commercially reasonable efforts
consistent with the foregoing to conduct the business of Parent in compliance
with applicable Laws in all material respect, including without limitation
the
timely filing of all reports, forms or other documents with the SEC required
to
be filed with the SEC by Parent pursuant to the Securities Act, the Exchange
Act
and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and to preserve intact the business organization
of
Parent.
(b) Without
limiting the generality of the foregoing clause (a), during the period from
the
date of this Agreement to the Effective Time, neither Parent or Merger Sub
will
(except (1) as specifically contemplated by this Agreement and (2) that Parent
may commence the Private Placement, Exchange Offer and Tender Offer), without
the prior written consent of the Company (such consent not to be unreasonably
withheld):
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49
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(i) authorize
for issuance, issue, grant, sell, pledge, dispose of or propose to issue, grant,
sell, pledge or dispose of any shares of, or any options, warrants, commitments,
subscriptions or rights of any kind to acquire or sell Common Stock (including
upon exercise of any outstanding option, warrant or similar right to acquire
such Common Stock), any shares of capital stock or other securities or equity
interests, including any securities convertible into or exchangeable for Common
Stock or equity interest of any class and any other equity-based awards or
alter
in any way its outstanding securities or make any changes in outstanding shares
of capital stock or its capitalization, whether by means of a reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares, stock dividend or otherwise or agree to register under the Securities
Act any capital stock of Parent or Merger Sub, except as contemplated in the
Prospectus;
(ii)
declare,
pay or set aside any dividend;
(iii) incur,
create, assume, prepay or otherwise become liable for any indebtedness
(directly, contingently or otherwise), make a loan or advance to or investment
in any third party, or guarantee or endorse any indebtedness, liability or
obligation of any Person or subject any of its assets, properties or rights,
or
any part thereof to any mortgage, pledge, security interest, encumbrance, claim,
charge, lien (statutory or other), or other limitation or restriction, except
as
contemplated in the Prospectus;
(iv) make
any
change in any Parent Organizational Documents or Merger Sub Organizational
Documents (other than as contemplated by the Proxy);
(v) redeem,
retire, purchase or otherwise acquire, directly or indirectly, any shares of
the
capital stock, membership interests or other ownership interests of Parent
or
Merger Sub;
(vi) acquire,
lease or sublease any material tangible assets, raw material or properties
(including real property);
(vii) enter
into any Benefit Plan or any employment, severance, or change of control
agreement;
(viiii) contractually
commit to make capital expenditures for any period following the Effective
Time;
(ix) make
or
rescind any material election relating to Taxes, settle any claim, action,
suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, file any amended Tax Return or claim for refund, or make
any
change in its accounting or Tax policies or procedures, in each case except
as
required by applicable Law or GAAP;
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50
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(x) enter
into any agreement or contract that would be a Parent Material
Contract;
(xi) fail
to
maintain its books, accounts and records in all material respects in the
ordinary course of business consistent with past practice;
(xii) establish
any subsidiary (other than as contemplated hereby) or enter into any new line
of
business;
(xiii) fail
to
use commercially reasonable efforts to keep in force insurance policies or
replacement or revised policies providing insurance coverage with respect to
the
assets, operations and activities of the Parent and the Merger Sub in an amount
and scope of coverage as are currently in effect;
(xiv) revalue
any of its material assets or make any change in accounting methods, principles
or practices, except as required by GAAP and approved by the Parent’s outside
auditors;
(xv) waive,
release, assign, settle or compromise any claim, action or proceeding (including
any suit, action, claim, proceeding or investigation relating to this Agreement
or the transactions contemplated hereby, including the Merger), other than
waivers, releases, assignments, settlements or compromises that involve only
the
payment of monetary damages (and not the imposition of equitable relief on,
or
the admission of wrongdoing by, the Parent or Merger Sub) not in excess of
$50,000 individually or in the aggregate, or otherwise pay, discharge or satisfy
any claims, liabilities or obligations other than in the ordinary course of
business consistent with past practice, unless such amount has been reserved
in
the Parent financial statements included in the Parent SEC Reports;
(xvi) acquire,
including by merger, consolidation, acquisition of stock or assets, or any
other
form of business combination, any corporation, partnership, limited liability
company, other business organization or any division thereof, or any material
amount of assets;
(xvii) make
capital expenditures in excess of $150,000;
(xviii) adopt
a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization;
(xix) voluntarily
incur any material liability or obligation (whether absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice;
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(xx) sell,
lease, license, transfer, exchange or swap, mortgage or otherwise pledge or
encumber (including securitizations), or otherwise dispose of any material
portion of its properties, assets or rights;
(xxi) take
any
action that would reasonably be expected to delay or impair the obtaining of
any
consents or approvals of any Governmental Authority to be obtained in connection
with this Agreement;
(xxii) enter
into, amend, waive or terminate (other than terminations in accordance with
their terms) any Affiliate Transaction; or
(xxiii)
authorize
or agree to do any of the foregoing actions.
ADDITIONAL
COVENANTS OF THE PARTIES
Each
of
Parent and the Company shall give prompt notice to the other (and, if in
writing, furnish copies of) if any of the following occurs after the date of
this Agreement: (i) there has been a material failure on the part of the Party
providing the notice to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; (ii) receipt of
any
notice or other communication in writing from any third party alleging that
the
Consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement, (including the Merger); (iii)
receipt of any notice or other communication from any Governmental Authority
in
connection with the transactions contemplated by this Agreement (including
the
Merger); (iv) the discovery of any fact or circumstance that, or the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which, would
reasonably be expected to cause or result in any of the conditions to the Merger
set forth in Article VI not being satisfied or the satisfaction of those
conditions being materially delayed; or (v) the commencement or threat, in
writing, of any Action against any Party or any of its affiliates, or any of
their respective properties or assets, or, to the knowledge of the Company
or
Parent, as applicable, any officer, director, partner, member or manager, in
his
or her capacity as such, of the Company or Parent, as applicable, or any of
their affiliates with respect to the consummation of the Merger. No
such notice to any Party shall constitute an acknowledgement or admission by
the
Party providing notice regarding whether or not any of the conditions to Closing
or to the consummation of the Merger have been satisfied or in determining
whether or not any of the representations, warranties or covenants contained
in
this Agreement have been breached.
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(a) Subject
to the terms and conditions of this Agreement, prior to the Effective Time,
each
Party shall use reasonable best efforts, and shall cooperate fully with the
other Parties, to take, or cause to be taken, all actions and to do, or cause
to
be done, all things necessary, proper or advisable under applicable Laws and
regulations to consummate the Merger and the other transactions contemplated
by
this Agreement and the Proxy Statement (including the receipt of all Requisite
Regulatory Approvals), and to comply as promptly as practicable with all
requirements of Governmental Authorities applicable to the transactions
contemplated by this Agreement. In furtherance and not in limitation
of the foregoing, to the extent required by the Florida Office of Insurance
Regulation, each Party hereto agrees to make required filing or application
required by the Florida Office of Insurance Regulation with respect to the
transactions contemplated hereby, which shall include filing a Form A, as
promptly as practicable (but no later than 30 days after the date of this
Agreement) and to supply as promptly as reasonably practicable any additional
information and documentary material that may be requested by the Florida Office
of Insurance Regulation.
(b) In
furtherance and not in limitation of the covenants of the Parties contained
in
Section 5.2(a), (i) as soon as reasonably practicable following the date of
this
Agreement, the Company and Parent shall cooperate in all respects with each
other and use (and shall cause their respective subsidiaries to use) their
respective reasonable best efforts to prepare and file with the relevant
insurance regulators requests for approval of the transactions contemplated
by
this Agreement (including the Merger) and shall use all reasonable efforts
to
have such insurance regulators approve the transactions contemplated by this
Agreement, and (ii) each of Parent and Merger Sub, on the one hand, and the
Company, on the other hand, shall give prompt written notice if such Party
receives any notice from any insurance regulator in connection with the
transactions contemplated by this Agreement, and, in the case of any such
written notice, shall promptly furnish the other Party with a copy
thereof. If an insurance regulator requires that a hearing be held in
connection with its approval of the transactions contemplated hereby, each
Party
shall use its reasonable best efforts to arrange for such hearing to be held
promptly. At Parent’s request, the Company shall obtain from
applicable regulatory authorities written assurances in form reasonably
satisfactory to Parent with respect to the applicability to the Company and/or
any of the Company Subsidiaries of orders, decrees or pronouncements of such
regulatory authorities.
(c) In
furtherance and not in limitation of the covenants of the Parties contained
in
Section 5.2(a) and Section 5.2(b), if any objections are asserted with respect
to the transactions contemplated hereby under any applicable Law or if any
suit
is instituted (or threatened to be instituted) by any applicable Governmental
Authority or any private party challenging any of the transactions contemplated
hereby as violative of any applicable Law or which would otherwise prevent,
materially impede or materially delay the consummation of the transactions
contemplated hereby, each of Parent, Merger Sub and the Company shall use its
reasonable best efforts to resolve any such objections or suits so as to permit
consummation of the transactions contemplated by this Agreement, including
in
order to resolve such objections or suits which, in any case if not resolved,
could reasonably be expected to prevent, materially impede or materially delay
the consummation of the transactions contemplated hereby (including the
Merger).
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(d) In
the
event any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) by a Governmental Authority or private party
challenging the Merger or any other transaction contemplated by this Agreement,
or any other agreement contemplated hereby, each of Parent, Merger Sub and
the
Company shall cooperate in all respects with each other and use its respective
reasonable best efforts to contest and resist any such action or proceeding
and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement.
(e) Prior
to
the Effective Time, the Company shall use its commercially reasonable efforts
to
obtain any Consents of third parties with respect to any contracts to which
the
Company or any Company Subsidiary is a party as may be necessary or appropriate
for the consummation of the transactions contemplated hereby or required by
the
terms of any contract as a result of the execution, performance or consummation
of the transactions contemplated hereby (including the Merger).
(f) Notwithstanding
anything to the contrary contained in this Agreement, nothing in this Agreement
shall obligate Parent, Merger Sub or any of their respective affiliates to
take
any action or commit to take any action, or consent or agree to any condition,
restriction or undertaking requested or imposed by any Governmental Authority,
whether in connection with obtaining any Requisite Regulatory Approval or
otherwise, if, in the good faith determination of Parent, such action,
condition, restriction or undertaking, individually or in the aggregate, with
all other such actions, conditions, restrictions or undertakings, would
materially adversely affect the benefits, taken as a whole, that Parent
reasonably expects to derive from the transactions contemplated by this
Agreement (a “Burdensome
Condition”);
including, without limitation, that any requirement that Parent, the Surviving
Company or any of its or their subsidiaries (i) provide or commit to provide
additional capital to the Company or any Company Subsidiary or (ii) provide
any
surplus maintenance, guarantee, keep-well or similar agreements or commitments
that are more burdensome than currently required of the Company by such
Governmental Authority shall each be deemed to be a Burdensome
Condition.
(g) Notwithstanding
anything herein to the contrary, neither Parent nor the Company shall be
required to agree to any term, condition or modification with respect to
obtaining any Consents in connection with the Merger and consummation of the
transactions contemplated by this Agreement that would result in, or would
be
reasonably likely to result in, (i) either individually or in the aggregate,
a
Company Material Adverse Effect or a Parent Material Adverse Effect or (ii)
Parent, Merger Sub, the Company or Company Subsidiaries having to cease, sell
or
otherwise dispose of any assets or business (including the requirement that
any
such assets or business be held separate).
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(a) Indemnification
by the Company.
From
the date of this Agreement through the Closing Date, the Company shall indemnify
and hold harmless each of Parent, Merger Sub, their affiliates and each of
their
respective successors and assigns, and their respective officers, directors,
employees and agents (each, a “Parent
Indemnified Party”)
from
and against any liabilities, claims (including claims by third parties),
demands, judgments, losses, costs, damages or expenses whatsoever (including
reasonable attorneys’, consultants’ and other professional fees and
disbursements of every kind, nature and description) (collectively,
“Damages”)
that
such Parent Indemnified Party may sustain, suffer or incur and that result
from,
arise out of or relate to (i) any breach by the Company or any Company
Subsidiary of any of their representations, warranties, covenants or agreements
contained in this Agreement, and/ or (ii) any fraud committed by or the willful
breach of this Agreement by the Company or any Company Subsidiary.
(b)
Indemnification
by Parent and Merger Sub.
From
the date of this Agreement through the Closing Date, Parent and Merger Sub
shall
jointly and severally indemnify and hold harmless the Company, its successors
and assigns, and their respective managers, officers, directors, employees
and
agents (each, a “Company
Indemnified Party”)
from
and against any Damages that such Company Indemnified Party may sustain, suffer
or incur and that result from, arise out of or relate to (i) any breach by
either Parent or Merger Sub of any of their representations, warranties,
covenants or agreements contained in this Agreement, and/ or (ii) any fraud
committed by or the willful breach of this Agreement by Parent or Merger Sub.
(c) Indemnification
Procedures.
A
Person seeking indemnification under this Section 5.3 (the “Indemnitee”)
must
give timely written notice to the Person from whom indemnification is sought
(the “Indemnitor”)
as
soon as practical after the Indemnitee becomes aware of any condition or event
that gives rise to Damages for which indemnification is sought under this
Section 5.3. The failure of the Indemnitee to give timely notice shall not
affect the Indemnitee’s rights to indemnification hereunder except to the extent
that the Indemnitor demonstrates that it was materially prejudiced by such
failure. In
the
event a claim or demand is made by a party against an Indemnitee, the Indemnitee
shall promptly notify the Indemnitor of such claim or demand, specifying the
nature and the amount (the “Claim
Notice”).
The
Indemnitor shall notify the Indemnitee within fifteen (15) days after receipt
of
the Claim Notice whether the Indemnitor will undertake, conduct, and control,
through counsel of its own choosing (subject to the consent of Indemnitee,
such
consent not to be unreasonably withheld or delayed) and at its expense, the
settlement or defense thereof, and Indemnitee shall cooperate with Indemnitor
in
connection therewith, provided that if Indemnitor undertakes such defense:
(i)
Indemnitor shall not thereby permit to exist any Encumbrance or other adverse
charge upon any asset of Indemnitee or settle such action without first
obtaining the consent of Indemnitee, except for settlements solely covering
monetary matters for which Indemnitor has acknowledged responsibility for
payment; (ii) Indemnitor shall permit Indemnitee (at Indemnitee’s sole cost and
expense) to participate in such settlement or defense through counsel chosen
by
Indemnitee; and (iii) Indemnitor shall agree promptly to reimburse Indemnitee
for the full amount of any loss resulting from such claim and all related
expenses incurred by Indemnitee, except for those costs expressly assumed by
the
Indemnitee hereunder. The Indemnitee agrees to preserve and provide access
to
all evidence that may be useful in defending against such claim and to provide
reasonable cooperation in the defense thereof or in the prosecution of any
action against a third party in connection therewith. The Indemnitor’s defense
of any claim or demand shall not constitute an admission or concession of
liability therefor or otherwise operate in derogation of any rights Indemnitor
may have against Indemnitee or any third party. So long as Indemnitor is
reasonably contesting any such claim in good faith, Indemnitee shall not pay
or
settle any such claim. If Indemnitor does not notify Indemnitee within fifteen
(15) days after receipt of Indemnitee’s Claim Notice that it elects to undertake
the defense thereof, Indemnitee shall have the right to contest, settle or
compromise the claim in the exercise of its exclusive discretion at the expense
of the Indemnitor (provided that the Indemnitor shall not be required to pay
Indemnitee's expenses for the defense, settlement or compromise of claims which
are not covered by Indemnitor’s obligations this
Section 5.3).
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(d)
Limitations
on Indemnification.
The
Parties’ rights to indemnification hereunder are subject to the following
limitations:
(i) The
maximum aggregate amount of Damages that may be recovered from the Company
on
the one hand or the Parent and Merger Sub on the other hand pursuant to this
Section 5.3 shall not exceed $1,000,000.
(ii) Any
claim
for indemnification hereunder may not be pursued and is hereby irrevocably
waived upon and after the Closing Date.
(iii) The
Company and its Members may only seek indemnification hereunder against Parent
and Merger Sub and Parent and Merger Sub may only seek indemnification hereunder
against the Company. The Parties hereby irrevocably waive in perpetuity any
and
all claims for indemnification hereunder against the officers, directors and
affiliated entities of the other Party hereto, as well as any and all claims
for
indemnification hereunder against the Trust Fund and all other entities
controlled by Parent, Company or their officers and directors.
(e)
Exclusive
Remedy.
The
rights of the Parties for indemnification relating to this Agreement or the
transactions contemplated hereby shall be strictly limited to those contained
in
this Section 5.3, and, except as specifically set forth in Section 9.10, such
indemnification rights shall be the exclusive remedies of the Parties with
respect to any matter arising under or in connection with this Agreement. To
the
maximum extent permitted by applicable Law, the Parties hereby waive all other
rights and remedies with respect to any matter arising under or in connection
with this Agreement, whether under any applicable Law, at common law or
otherwise. Neither Company nor any of its affiliates, successors or permitted
assigns, make any representation, warranty or covenant to Parent or Merger
Sub
or any of their affiliates, successors or permitted assigns, except as set
forth
in this Agreement. Consequently, neither Parent nor Merger Sub nor any of their
affiliates, successors or permitted assigns may bring or otherwise maintain
any
claim, action or remedy against the Company or any of its affiliates, successors
or permitted assigns, and no recourse shall be brought against any of them,
by
virtue of any claim or allegation of any representation, warranty or covenant
not set forth in this Agreement.
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Parent
and the Company agree that no public release or announcement concerning this
Agreement or the Merger shall be issued by either Party or any of their
affiliates without the prior consent of the other Party (which consent shall
not
be unreasonably withheld or delayed), except as such release or announcement
may
be required by applicable Law or the rules or regulations of any securities
exchange, in which case the applicable Party shall use reasonable best efforts
to allow the other Party reasonable time to comment on such release or
announcement in advance of such issuance; provided,
however,
that
either Parent or the Company may make any public statement in response to
specific questions by the press, analysts, investors or those attending industry
conferences or financial analyst conference calls, so long as any such
statements are not inconsistent with previous public releases or announcements
made by Parent or the Company in compliance with this Agreement.
As
promptly as practical following the date of this Agreement, and in any event
within ten (10) Business Days, and in compliance with applicable Law, Parent
and
the Company shall develop a joint plan for the communication by the Company
regarding the transactions contemplated by this Agreement (including the Merger)
with the Company Producers. Each Party must get the written consent
of the other Party (such consent not to be unreasonably withheld, conditioned
or
delayed) prior to initiating any communication with any Company Producers
regarding the transactions contemplated by this Agreement (including the
Merger).
5.6
Registration
Statement and Tender Offer.
(a)
The
Parties acknowledge the filing with the SEC of a registration statement/proxy
statement on Form S-4 (or other appropriate form) for the purpose of registering
the Stock Consideration, Warrant Consideration and Additional Share and Warrant
Consideration (and any shares issuable upon exercise of the warrants comprising
the Warrant Consideration and Additional Share and Warrant Consideration) in
the
Merger (the “Registration
Statement”),
which
includes proxy materials for the purpose of, among other things, soliciting
proxies
from current holders of Parent Common Stock to approve and adopt this Agreement
and the transactions contemplated
hereby (the “Proxy
Statement”).
The
Parties further acknowledge the requirement to make filings pursuant to Schedule
TO with respect to the Tender Offer. Parent, with the assistance of the Company,
shall promptly file the fourth amendment to the Registration Statement or any
subsequent amendment thereto and respond to any SEC comments and shall use
reasonable best efforts to cause such Proxy Statement/Registration Statement
to
be declared effective by the SEC as soon after filing as practicable. Parent,
with the assistance of the Company, shall promptly file all documents required
to be filed under Schedule TO. Parent shall bear all expenses of the
Registration Statement and the filings of information pursuant to Schedule
TO,
including fees and expenses, if any, of a counsel or other advisors. In
connection with the Registration Statement, each Member will furnish to Parent
in writing such information with respect to the name and address of such Member
and such other information as may be reasonably required for use in connection
with the Registration Statement.
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(b)
Parent shall make all necessary filings with respect to the Merger and the
transactions contemplated thereby under the Securities Act and the Exchange
Act
and applicable “blue sky” laws and the rules and regulations thereunder. Parent
will advise the Company, promptly after it receives notice thereof, of the
time
when the Registration Statement has been declared effective by the SEC or any
supplement or amendment to the Registration Statement or Proxy Statement has
been filed, or any request by the SEC for amendment of the Registration
Statement or Proxy Statement or comments thereon and responses thereto or
requests by the SEC for additional information. No amendment or supplement
to
the Registration Statement or Proxy Statement shall be filed without the
approval of the Company, which approval shall not be unreasonably withheld.
If
at any time prior to the Effective Time, any information relating to Parent
or
the Company, or any of their respective affiliates, officers or directors,
should be discovered by Parent or the Company that should be set forth in an
amendment or supplement to the Registration Statement or Proxy Statement, so
that such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the
party
which discovers such information shall promptly notify the other Party hereto
and an appropriate amendment or supplement describing such information shall
be
promptly filed with the SEC and, to the extent required by law, disseminated
to
the stockholders of the Parent.
5.7 Reservation
of Stock and Warrant Consideration.
Parent
hereby agrees there shall be, or Parent shall cause to be, reserved for issuance
and/ or delivery such number of shares of Common Stock as shall be required
for
issuance and delivery of the Stock Consideration and Warrant Consideration.
The
Company covenants that it will authorize or cause to be authorized such number
of shares of Common Stock as shall from time to time sufficient to issue the
Stock Consideration and the Warrant Consideration.
5.8 Special
Meetings; Proxy.
As
promptly as practicable following the execution of this Agreement, Parent,
acting through its board of directors, shall, in accordance with applicable
Law:
(a) duly
call, give notice of, convene and hold a special meeting of its stockholders
(the “Special
Meeting”)
for
the purposes of considering and taking action upon the approval and adoption
of
this Agreement and the Merger, including adjourning such meeting for up to
thirty (30) Business Days to obtain such approval. Parent shall (i)
use reasonable best efforts to solicit the approval of this Agreement by the
stockholders of Parent and (ii) include in the Proxy Statement (x) the board
of
directors’ declaration of the advisability of this Agreement and its
recommendation to the stockholders of Parent that they adopt this Agreement
and
approve the Merger and (y) all other requests or approvals necessary to
consummate the transactions contemplated by this Agreement. Notwithstanding
the
foregoing, Parent may adjourn or postpones the Special Meeting as and to the
extent required by applicable Law. Parent shall use its commercially reasonable
efforts to cause the Proxy Statement to be mailed to its stockholders as
promptly as practicable after the Registration Statement, of which the Proxy
Statement is a part, is declared effective by the SEC. The Company shall
cooperate and assist Parent and its counsel in preparing the Proxy Statement
and
acknowledges that a substantial portion of the Proxy Statement shall include
disclosure regarding the Company, any Company Subsidiary and their respective
management, operations and financial condition. The Company shall make its,
and
cause each Company Subsidiary to make its, managers, directors, officers and
employees available to Parent and its counsel in connection with the drafting
of
the Proxy Statement and responding in a timely manner to comments from the
SEC.
Prior to the filing of the Proxy Statement with the SEC and each amendment
thereto, the Company shall confirm in writing to Parent and its counsel that
it
has reviewed the Proxy Statement (and each amendment thereto) and approved
any
information provided by the Company and its Members. If, prior to the Effective
Time, any event occurs with respect to the Company or any Company Subsidiary,
or
any change occurs with respect to other information supplied by the Company
or
any Company Subsidiary for inclusion in the Proxy Statement, the Company shall
promptly notify Parent of such event, and the Company and Parent shall cooperate
in the prompt filing with the SEC of any necessary amendment or supplement
to
the Proxy Statement and, as required by Law, in disseminating the information
contained in such amendment or supplement to Parent’s stockholders.
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(b) promptly
transmit any amendment or supplement to its stockholders, if at any time prior
to the Special Meeting there shall be discovered any information that should
be
set forth in an amendment or supplement to the Proxy Statement.
CONDITIONS
The
obligations of each Party to consummate the Merger shall be subject to the
satisfaction or waiver (where permissible), at or prior to the Effective Time,
of the following conditions:
(a) Stockholder
Approval.
The
Required Parent Vote shall have been obtained in accordance with the DGCL and
the stockholders of Parent holding thirty percent (30%) or more of the shares
of
Common Stock sold in Parent’s initial public offering shall not have voted
against the Merger and exercised their conversion rights under Parent’s
Certificate of Incorporation, as amended, to convert their shares of Common
Stock into a cash payment from the Trust Fund.
(b) Antitrust
Laws. The
applicable waiting period (and any extension thereof) under any Antitrust Laws,
if any, shall have expired or been terminated.
(c) Requisite
Regulatory Approvals and Consents. All
authorizations, approvals and permits required to be obtained from or made
with
any Governmental Authority in order to consummate the transactions contemplated
by this Agreement (the “Requisite
Regulatory Approvals”),
and
all Consents from third parties that are required in connection with the
transactions contemplated by this Agreement, shall have been obtained or made,
including, without limitation, the consent of Columbus Bank and Trust
Company.
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(d) No
Law. No
Governmental Authority shall have enacted, issued, promulgated, enforced or
entered any Law (whether temporary, preliminary or permanent) or Order that
is
then in effect and has the effect of making the Merger illegal or otherwise
preventing or prohibiting consummation of the Merger.
(e) Effective
Registration Statement.
The
Registration Statement shall have been declared effective by the SEC and no
stop
order suspending the effectiveness of the Registration Statement shall be in
effect and no proceedings for that purpose shall be pending before or threatened
by the SEC.
(f) Company
Member Approval.
This
Agreement and the transactions contemplated hereby shall have been duly approved
by the Required Company Vote.
(g) Private
Placement, Exchange Offer and Tender Offer.
The
Notes shall have been issued for an aggregate purchase price of not less than
$17,000,000. The Private Placement, Exchange Offer and Tender Offer shall each
have been consummated.
The
obligations of Parent and Merger Sub to consummate the Merger are subject to
the
satisfaction or waiver by Parent, at or prior to the Effective Time, of the
following additional conditions:
(a) Representations
and Warranties.
Each of
the representations and warranties of the Company and any Company Subsidiary
set
forth in this Agreement that are qualified by materiality shall be true and
correct and those not so qualified shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time as though
made as of the Effective Time (except to the extent that any of such
representations and warranties expressly speaks only as of an earlier date,
in
which case such representation and warranty that is qualified by materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects, as of such earlier date).
(b) Agreements
and Covenants. The
Company shall have performed, in all material respects, all of its obligations
and complied with, in all material respects, all of its agreements and covenants
to be performed or complied with by it under this Agreement at or prior to
the
Effective Time.
(c) Officer
Certificate. The
Company shall have delivered to Parent a certificate, dated the Closing Date,
signed by the chief executive officer or chief financial officer of the Company,
certifying in such capacity as to the satisfaction of the conditions specified
in Sections 6.2(a), 6.2(b) and 6.2(e).
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(d) Secretary’s
Certificate.
The
Company shall have delivered to Parent a true copy of the resolutions of the
Board of the Company authorizing the execution of this Agreement and the
consummation of the Merger and transactions contemplated herein, certified
by
the Secretary of the Company or similar officer.
(e) Company
Material Adverse Effect. No
Company Material Adverse Effect shall have occurred since the date of this
Agreement.
(f) Burdensome
Condition. The
Requisite Regulatory Approvals shall not have included or contained, or resulted
in the imposition of, any Burdensome Condition.
(g) Required
Company Vote and Dissenting Membership Interest. The
Required Company Vote shall have been obtained. No more than ten percent (10%)
of the outstanding Membership Interest shall constitute Dissenting Membership
Interest.
(h) Legal
Opinion.
Parent
shall have received an opinion of the Company’s counsel, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ or
▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., in form and substance reasonably satisfactory to
Parent, addressed to Parent and Merger Sub, and dated as of the Closing
Date.
(i) Lock
Up Agreements.
Parent
shall have received Executive Lock Up Agreements and Entity Lock Up Agreements
from each Parent Executive and Entity Equity Holder set forth in Section
1.8(b).
(j) Conversion.
The
stockholders of Parent holding thirty percent (30%) or more of the shares of
Common Stock sold in Parent’s initial public offering shall not have voted
against the Merger and exercised their conversion rights under Parent’s
Certificate of Incorporation, as amended, to convert their shares of Common
Stock into a cash payment from the Trust Fund.
(k) Board
of Directors.
The
officers and the Board of Directors of Parent and the Surviving Corporation
shall be constituted as set forth in Section 1.8 hereof, effective as of the
Effective Time.
(l) Waiver
of Right of First Refusal.
(i) The
Company shall have waived, in writing, its right of first option to purchase
all
of the Membership Interests being sold pursuant hereto, including, without
limitation, its rights pursuant to Section 5.3 of the Member’s Agreement of the
Company (the “Member’s
Agreement”);
and
(ii) All
Members, including, without limitation, the holders of Dissenting Membership
Interests, shall each have waived, in writing, their respective rights of first
option to purchase all of the Membership Interests being sold pursuant hereto,
including, without limitation, its rights pursuant to Section 5.4 of the
Member’s Agreement of the Company or the relevant provision in the Member’s
Agreement shall not be applicable with respect to the Merger or the transactions
contemplated in connection therewith and such non-applicability has been agreed
to in writing by such percentage of Membership Interests as is necessary to
amend such provision of the Member’s Agreement.
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(m) Waiver
of Chairman Purchase Right.
The
Chairman of the Company shall have waived its right to purchase Membership
Interests pursuant to Section 8.1 of the Member’s Agreement.
The
obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver by the Company, at or prior to the Effective Time, of
the
following additional conditions:
(a) Representations
and Warranties. Each
of the representations and warranties of the Parent and Merger Sub set forth
in
this Agreement that are qualified by materiality shall be true and correct
and
those not so qualified shall be true and correct in all material respects as
of
the date of this Agreement and as of the Effective Time as though made as of
the
Effective Time (except to the extent that any of such representations and
warranties expressly speaks only as of an earlier date, in which case such
representation and warranty that is qualified by materiality shall be true
and
correct, and those not so qualified shall be true and correct in all material
respects, as of such earlier date).
(b) Agreements
and Covenants. Each
of Parent and Merger Sub shall have performed, in all material respects, its
obligations and complied with, in all material respects, its agreements and
covenants to be performed or complied with by it under this Agreement at or
prior to the Effective Time, including, without limitation, the resignation
from
the Board of Parent of those persons currently on the Board of Parent who are
not named as directors following the Effective Time in the Proxy
Statement.
(c) Officer
Certificate. Parent
shall have delivered to the Company a certificate, dated the Closing Date,
signed by the chief executive officer or chief financial officer of Parent,
certifying in such capacity as to the satisfaction of the conditions specified
in Sections 6.3(a) and 6.3(b).
(d) Secretary’s
Certificate.
The
Parent shall have delivered to the Company a true copy of the resolutions of
the
Board of Directors of the Parent authorizing the execution of this Agreement
and
the consummation of the Merger and transactions contemplated herein, certified
by the Secretary of the Company or similar officer.
(e) Parent
Material Adverse Effect. No
Parent Material Adverse Effect shall have occurred since the date of this
Agreement.
(f) Legal
Opinion.
The
Company shall have received an opinion of the Parent’s and Merger Sub’s counsel,
Ellenoff ▇▇▇▇▇▇▇▇ & Schole, LLP, in form and substance reasonably
satisfactory to the Company, addressed to the Company, and dated as of the
Closing Date.
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(g) Board
of Directors.
The
officers and the Board of Directors of Parent and the Surviving Corporation
shall be constituted as set forth in Section 1.8 hereof, effective as of the
Effective Time.
Neither
Parent nor the Company may rely on the failure of any condition set forth in
this Article VI to be satisfied if such failure was caused by such Party’s
failure to comply with or perform any of its covenants or obligations set forth
in this Agreement.
TERMINATION
AND ABANDONMENT
This
Agreement may be terminated and the Merger and the other transactions
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding any approval of the matters presented in connection with the
Merger by the stockholders of Parent and Members of the Company (the date of
any
such termination, the “Termination
Date”),
as
follows:
(a) by
mutual
written consent of each of the Company and Parent, as duly authorized by the
Board of Directors of Parent and the Board of the Company;
(b) by
written notice by either Parent or the Company if the Closing conditions set
forth in Section 6.1 have not been satisfied by the Company or Parent, as the
case may be (or waived by Parent or the Company as the case may be) by the
date
that is the earlier of (A) six months from filing of the Registration Statement
or (B) seven months from date of the Agreement; provided,
however,
that
the right to terminate this Agreement under this Section 7.1(b) shall not be
available to Parent or the Company due to failure by Parent or Merger Sub,
on
one hand, or the Company or any Company Subsidiary, on the other hand, to
fulfill any obligation under this Agreement;
(c) by
written notice by either Parent or the Company, if any Governmental Authority
shall have enacted, issued, promulgated, enforced or entered any Order or Law
that is, in each case, then in effect and is final and nonappealable and has
the
effect of permanently restraining, enjoining or otherwise preventing or
prohibiting the transactions contemplated by this Agreement (including the
Merger); provided,
however,
that
the right to terminate this Agreement under this Section 7.1(c) shall not be
available to any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, any such Order or Law to have
been enacted, issued, promulgated, enforced or entered;
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(d) by
written notice by Parent, if after following the procedures set forth in Section
4.1(c), Parent and Company are unable to resolve Parent’s objections to the
reinsurance contract and lease.
(e) by
written notice by Parent, if there has been a breach by the Company of any
of
its representations, warranties, covenants or agreements contained in this
Agreement, or if any representation or warranty of the Company shall have become
untrue or inaccurate, in either case that would result in a failure of a
condition set forth in Section 6.2 (a “Terminating
Company Breach”);
(f) by
written notice by the Company, if there has been a breach by Parent or Merger
Sub of any of its representations, warranties, covenants or agreements contained
in this Agreement, or if any representation or warranty of Parent or Merger
Sub
shall have become untrue or inaccurate, in either case that would result in
a
failure of a condition set forth in Section 6.3 (a “Terminating
Parent Breach”);
(g) by
written notice by either Parent or Company, if, at the Special Meeting
(including any adjournment or postponement thereof at which this Agreement
is
voted upon), the Required Parent Vote is not obtained; provided,
however,
that
the right to terminate this Agreement under this Section 7.1(f) shall not be
available to Parent where the failure to obtain the Required Parent Vote shall
have resulted from Parent’s breach of this Agreement;
(h)
by
written notice by either Parent or Company, if the stockholders of Parent
holding thirty percent (30%) or more of the shares of Common Stock sold in
Parent’s initial public offering shall have voted against the Merger and
exercised their conversion rights under Parent’s Certificate of Incorporation,
as amended, to convert their shares of Common Stock into a cash payment from
the
Trust Fund;
(i) by
written notice by either Parent or Company if the Required Company Vote is
not
obtained, provided, that in the event of termination pursuant to this
subsection, Company shall be obligated to pay Parent for all costs, expenses
and
fees incurred in connection with the transactions contemplated hereby, up to
a
maximum of $500,000 cash within three (3) business days of the date of such
written notice from either Parent or Company;
(j) by
written notice by either Parent or Company in the event more than five percent
(5%) of Membership Interests are Dissenting Membership Interests;
(k) by
written notice by Parent if the Closing conditions set forth in Section 6.2
have
not been satisfied by the Company (or waived by Parent) by the date that is
the
earlier of (A) six months from filing of the Registration Statement or (B)
seven
months from date of the Agreement; provided,
however,
that
the right to terminate this Agreement under this Section 7.1(k) shall not be
available to Parent if Parent is in material breach of any representation,
warranty or covenant contained in this Agreement; or
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(l) by
written notice by Company if the Closing conditions set forth in Section 6.3
have not been satisfied by Parent (or waived by Company) by the date that is
the
earlier of (A) six months from filing of the Registration Statement or (B)
seven
months from date of the Agreement; provided,
however,
that
the right to terminate this Agreement under this Section 7.1(l) shall not be
available to Company if Company is in material breach of any representation,
warranty or covenant contained in this Agreement.
In
the
event of the termination of this Agreement pursuant to Section 7.1, this
Agreement shall forthwith become void, and there shall be no liability on the
part of any Party hereto or any of their respective affiliates or the directors,
officers, partners, members, managers, employees, agents or other
representatives of any of them, and all rights and obligations of each Party
hereto shall cease, except (i) as set forth in this Section 7.2 and in Section
7.3 and Article VIII and (ii) subject to Section 5.3, nothing herein shall
relieve any Party from liability for any fraud or willful breach of this
Agreement prior to termination. Without limiting the foregoing,
Section 4.2(b), Section 5.3, this Section 7.2, Section 7.3 and Article VIII
shall survive the termination of this Agreement.
(a) Except
as
otherwise set forth in this Agreement, including this Section 7.3, all Expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the Party incurring such expenses, whether or not the
Merger or any other related transaction is consummated. As used in
this Agreement, “Expenses”
shall
include all out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, financing sources, experts and consultants
to a
Party hereto and its affiliates) incurred by a Party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution or performance of this Agreement, the preparation, printing, filing
or
mailing of the Proxy Statement and Registration Statement, the solicitation
of
the Required Parent Vote and all other matters related to the consummation
of
the Merger. Each Party shall, upon the request of the other Party, disclose
the
costs that such Party has incurred or anticipates to incur with respect to
the
Merger and the transactions contemplated herein.
(b) Notwithstanding
the foregoing Section 7.3(a), Parent will reimburse the Company, up to and
not
to exceed $25,000, for audit expenses relating to the audit of 2007 Company
Financials that exceed the amount of expense the Company incurred for its 2006
audit by ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
This
Agreement may be amended by the Parties hereto by action taken by or on behalf
of their respective boards of directors and managers at any time prior to the
Effective Time. This Agreement may only be amended pursuant to a
written agreement signed by each of the Parties hereto.
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At
any
time prior to the Effective Time, subject to applicable Law, any Party hereto
may in its sole discretion (i) extend the time for the performance of any
obligation or other act of any other Party hereto, (ii) waive any inaccuracy
in
the representations and warranties by such other Party contained herein or
in
any document delivered pursuant hereto and (iii) waive compliance by such other
Party with any agreement or condition contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the Party or Parties to be bound thereby. Notwithstanding
the foregoing, no failure or delay by the Company, Parent or Merger Sub in
exercising any right hereunder shall operate as a waiver thereof nor shall
any
single or partial exercise thereof preclude any other or further exercise of
any
other right hereunder.
TRUST
FUND WAIVER
8.1 Trust
Fund Waiver.
Reference is made to the final prospectus of Parent, dated October 4, 2007
(the
“Prospectus”).
The
Company understands that, except for a portion of the interest earned on the
amounts held in the Trust Fund, Parent may disburse monies from the Trust Fund
only: (a) to its public stockholders in the event of the redemption of their
shares or the dissolution and liquidation of Parent, (b) to Parent and the
underwriters listed in the Prospectus (with respect to such underwriters’
deferred underwriting compensation only) after Parent consummates a business
combination (as described in the Prospectus) or (c) as consideration to the
sellers of a target business with which Parent completes a business combination.
The Company agrees that the Company does not now have, and shall not at any
time
prior to the Closing have, any claim to, or make any claim against, the Trust
Fund or any asset contained therein, regardless of whether such claim arises
as
a result of, in connection with or relating in any way to, the business
relationship between the Company, on the one hand, and Parent, on the other
hand, this Agreement, or any other agreement or any other matter, and regardless
of whether such claim arises based on contract, tort, equity or any other theory
of legal liability. The Company hereby irrevocably waives any and all claims
it
may have, now or in the future (in each case, however, prior to the consummation
of a business combination), and will not seek recourse against, the Trust Fund
for any reason whatsoever in respect thereof. In the event that the Company
commences any action or proceeding based upon, in connection with, relating
to
or arising out of any matter relating to Parent, which proceeding seeks, in
whole or in part, relief against the Trust Fund or the public stockholders
of
Parent, whether in the form of money damages or injunctive relief, Parent shall
be entitled to recover from the Company the associated legal fees and costs
in
connection with any such action. This Section 8.1 shall not limit any covenant
or agreement of the Parties that by its terms contemplates performance after
the
Effective Time.
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ARTICLE
IX
MISCELLANEOUS
The
respective representations and warranties of the Company and Parent contained
herein or in any certificates or other documents delivered prior to or at the
Closing shall terminate at the Effective Time. Any indemnity claim arising
under
Section 5.3 hereof shall expire and be waived in perpetuity as of the Effective
Time. None of the covenants set forth in Article IV and Section 5.2 shall
survive the Effective Time. The Confidentiality Agreement shall survive
termination of this Agreement in accordance with its terms.
All
notices, consents, waivers and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person,
by
facsimile, receipt confirmed, or on the next Business Day when sent by reliable
overnight courier to the respective Parties at the following addresses (or
at
such other address for a Party as shall be specified by like
notice):
(i) if
to the Company, to:
United
Insurance Holdings LC
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
Facsimile:
___________
with
a
copy to (but which shall not constitute notice to the Company):
▇▇▇▇▇
& Lardner
▇▇▇
▇.
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇,
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
(ii) if
to Parent or Merger Sub, to:
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
with
a
copy to (but which shall not constitute notice to Parent or Merger
Sub):
Ellenoff
▇▇▇▇▇▇▇▇ & Schole, LLP
▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the Parties hereto and their respective successors and permitted
assigns. This Agreement shall not be assigned by operation of Law or
otherwise without the prior written consent of the other Parties, and any
assignment without such consent shall be null and void, except that Parent
and
Merger Sub may assign any or all of their rights and obligations hereunder
to
any direct or indirect wholly owned subsidiary of Parent; provided
that no
such assignment shall relieve the assigning Party of its obligations
hereunder.
This
Agreement shall be governed by, construed and enforced in accordance with the
Laws of the State of Delaware without regard to the conflict of laws principles
thereof. All Actions arising out of or relating to this Agreement
shall be heard and determined exclusively in any state or federal court located
in New York, New York. The Parties hereto hereby (A) submit to the
exclusive jurisdiction of any Delaware state or federal court for the purpose
of
any Action arising out of or relating to this Agreement brought by any Party
hereto and (B) irrevocably waive, and agree not to assert by way of motion,
defense or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property
is
exempt or immune from attachment or execution, that the Action is brought in
an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated hereby may not be enforced in or
by
any of the above-named courts. Each of Parent, Merger Sub and the
Company agrees that a final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or
in any other manner provided by Law. Each of Parent, Merger Sub and
the Company irrevocably consents to the service of the summons and complaint
and
any other process in any other action or proceeding relating to the transactions
contemplated by this Agreement, on behalf of itself or its property, by personal
delivery of copies of such process to such Party. Nothing in this
Section 9.4 shall affect the right of any Party to serve legal process in any
other manner permitted by Law.
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9.5 Waiver
of Jury Trial.
Each
of
the Parties hereto hereby waives to the fullest extent permitted by applicable
Law any right it may have to a trial by jury with respect to any Action directly
or indirectly arising out of, under or in connection with this Agreement or
the
transactions contemplated hereby. Each of the Parties hereto (A)
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of any Action, seek to enforce that foregoing waiver and (B) acknowledges
that it and the other Parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in
this
Section 9.5.
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different Parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but
all of which taken together shall constitute one and the same
agreement.
The
article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the Parties and shall
not
in any way affect the meaning or interpretation of this Agreement. As
used in this Agreement, (i) the term “Person”
shall
mean and include an individual, a partnership, a joint venture, a corporation,
a
limited liability company, a trust, an association, an unincorporated
organization, a Governmental Authority and any other entity, (ii) unless
otherwise specified herein, the term “affiliate,”
with
respect to any Person, shall mean and include any Person, directly or
indirectly, through one or more intermediaries controlling, controlled by or
under common control with such Person, (iii) the term “subsidiary”
of
any
specified Person shall mean any corporation a majority of the outstanding voting
power of which, or any partnership, joint venture, limited liability company
or
other entity a majority of the total equity interests of which, is directly
or
indirectly (either alone or through or together with any other subsidiary)
owned
by such specified Person, (iv) the term “knowledge,”
when
used with respect to the Company, shall mean the actual knowledge after due
inquiry of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, II, and, when used with respect
to
Parent, shall mean the knowledge of the executive officers of Parent after
due
inquiry, and (v) the term “Business
Day”
means
any day on which the principal offices of the SEC in Washington, D.C. are open
to accept filings, or, in the case of determining a date when any payment is
due, any day on which banks are not required or authorized to close in the
City
of New York. Whenever the words “include,”
“includes”
or “including”
are used in this Agreement, they shall be deemed to be followed by the words
“without
limitation.” The words “hereof,”
“herein,”
“hereby”
and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement. The Parties have participated jointly in the negotiation
and drafting of this Agreement. Consequently, in the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties hereto, and no presumption
or
burden of proof shall arise favoring or disfavoring any party by virtue of
the
authorship of any provision of this Agreement.
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This
Agreement and the documents or instruments referred to herein, including any
exhibits attached hereto and the Company Disclosure Schedule referred to herein,
which exhibits and Company Disclosure Schedule are incorporated herein by
reference and the Confidentiality Agreement embody the entire agreement and
understanding of the Parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth
or
referred to herein. This Agreement and such other agreements
supersede all prior agreements and understandings among the Parties with respect
to such subject matter, including, without limitation, the Prior
Agreement.
In
case
any provision in this Agreement shall be held invalid, illegal or unenforceable
in a jurisdiction, such provision shall be modified or deleted, as to the
jurisdiction involved, only to the extent necessary to render the same valid,
legal and enforceable, and the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired thereby
nor shall the validity, legality or enforceability of such provision be affected
thereby in any other jurisdiction. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the
Parties hereto shall negotiate in good faith to modify this Agreement so as
to
effect the original intent of the Parties as closely as possible in a mutually
acceptable manner in order that the Merger be consummated as originally
contemplated to the fullest extent possible.
The
Parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed by the Company or the
Parent or the Merger Sub in accordance with their specific terms or were
otherwise breached. Accordingly, the Parties further agree that prior
to the termination of this Agreement pursuant to Article VI, each Party shall
be
entitled to seek an injunction or restraining order to prevent breaches of
this
Agreement and to seek to enforce specifically the terms and provisions hereof,
this being in addition to any other right or remedy to which such Party may
be
entitled under this Agreement, at law or in equity.
Nothing
contained in this Agreement or in any instrument or document executed by any
party in connection with the transactions contemplated hereby shall create
any
rights in, or be deemed to have been executed for the benefit of, any Person
that is not a party hereto or thereto or a successor or permitted assign of
such
a party other than Sections 1.4 and 5.3 hereof (which is intended to be for
the
benefit of the Persons covered thereby and may be enforced by such
Persons). Without limiting the foregoing, Section 1.4 hereof is
intended to be for the benefit of the Members and may be brought by any Members
or their representatives.
[SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement and Plan of
Merger to be signed and delivered by their respective duly authorized officers
as of the date first above written.
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UNITED
INSURANCE HOLDINGS LC
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By:
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Name:
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Title:
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By:
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Name:
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Title:
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UNITED
SUBSIDIARY CORP.
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By:
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Name:
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Title:
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SOLELY
WITH RESPECT TO
SECTIONS
1.3(a)(ix):
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FMG
INVESTORS, LLC
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By:
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Name:
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Title:
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[SIGNATURE
PAGE TO AGREEMENT AND PLAN OF MERGER]
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