EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
By and Among
NELX, INC.
(the "Buyer")
and
THE CELINA MUTUAL INSURANCE COMPANY
(the "Seller")
Dated as of July 31, 2005
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of the 31st
day of July, 2005, is entered into by and between NELX, INC., a corporation
organized and existing under the laws of the State of Kansas ("Buyer"), and THE
CELINA MUTUAL INSURANCE COMPANY, a corporation organized and existing under the
laws of the State of Ohio ("Seller").
WHEREAS, Seller owns all of the issued and outstanding stock of WEST
VIRGINIA FIRE AND CASUALTY COMPANY, a West Virginia Corporation (the "Company");
WHEREAS, Seller deems the sale of 100% of the issued and outstanding
stock of the Company to Buyer in accordance with the applicable laws of the
State of West Virginia (the "Transaction"), to be desirable and in the best
interests of the Company and it as shareholder of the Company; and
WHEREAS, Buyer deems its acquisition of 100% of the issued and
outstanding stock of the Company from Seller in accordance with the applicable
laws of the State of West Virginia in the Transaction, to be desirable and in
its best interests.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
1. DEFINITIONS
"Affiliate" means any individual, partnership, corporation, limited
liability company, trust or other entity or association which, directly or
indirectly, through one or more intermediaries, controls is controlled by, or is
under common control with a party.
"Agreement" means this Stock Purchase Agreement.
"Audited Financial Statements" means the audited financial statements
of the Celina Insurance Group companies (which includes the Company) as of
December 31, 2004, 2003 and 2002, including the balance sheet and the related
statements of operations and policyholders' surplus, and cash flows for the
years then ended, with the accompanying report thereon from Ernst & Young LLP.
"Claim" means any demand, assessment, judgment, action or proceeding,
judicial or administrative (including arbitration and other alternative dispute
resolution mechanisms), made or instituted by any third party against a party
hereto.
"Closing" shall have the meaning set forth in Section 2.2 below.
"Closing Assets" means the Licenses, the Portfolio Investments,
Statutory Deposits, if any, and the Corporate Records.
"Closing Date" shall have the meaning set forth in Section 2.2 below.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company Shares" means all of the shares of capital stock of the
Company that are issued and outstanding immediately prior to the Closing.
"Confidential Information" shall have the meaning set forth in Section
10.2 below.
"Corporate Records" means the corporate records of the Company,
including, without limitation, articles of incorporation, by-laws, corporate
seal, stock book and stock transfer ledger, minutes of meetings of the
shareholders and directors and other records of corporate actions, books of
account, ledgers, copies of Returns, all filings, correspondence and
communications with insurance regulatory authorities, business records and
documents reflecting the qualifications, assets, liabilities, commitments,
obligations, rights and entitlements of the Company of whatever nature, but
specifically excluding all such records relating to Insurance Policies or
necessary to Seller's preparation of Taxes relating to the Company's business
prior to Closing.
"Employee Benefit Plan" means any benefit plan or arrangement of the
Company for its employees, including but not limited to employee pension benefit
plans, as defined in Section 3(2) of ERISA, Multiemployer Plans, if any, as
defined in Section 3(37) of ERISA, employee welfare benefit plans, as defined in
Section 3(1) of ERISA, deferred compensation plans, stock option plans, bonus
plans, stock purchase plans, hospitalization, disability and other insurance
plans, severance or termination pay plans and policies, whether or not described
in Section 3(3) of ERISA, in which employees of the Company, their spouses or
dependents participate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exclusivity Agreement" means that certain agreement dated May 28,
2004, between the parties hereto, as subsequently amended, providing Buyer with
the exclusive right for the period of time provided therein to negotiate with
Seller for the purchase of the stock of the Company from Seller consistent with
the terms thereof.
"Fair Market Value" shall mean, as at any applicable time, the values
for Portfolio Investments as prescribed by the Securities Valuation Office of
the National Association of Insurance Commissioners.
"Financial Statements" means, collectively, the Audited Financial
Statements and the Unaudited Financial Statements.
"GAAP" means those generally accepted accounting principles set forth
in Statements of the Financial Accounting Standards Board and in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants or which have other substantial authorities support in the United
States of America and are applicable in the circumstances, as applied on a
consistent basis, as distinct from accounting practices prescribed or permitted
by the Insurance Departments of Ohio and West Virginia. The term "consistent
basis" shall, however, mean (here and in the definition of Statutory Accounting)
not only that the accounting principles observed in the current period are
comparable in all material respects to those applied in the preceding period,
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but that, in the case of financial statements furnished to Buyer, the methods of
calculation, aggregation and presentation of the balance sheet, statements of
income and retained earnings and statements of cash flows shall be substantially
the same.
"Insurance Policies" means all fire, theft, casualty, general
liability, reinsurance, stop-loss, professional liability, business
interruption, product liability, automobile and other insurance policies issued
by the Company prior to Closing.
"Licenses" means the Company's licenses or certificates of authority to
transact insurance in the States of Indiana, Ohio and West Virginia.
"Losses" means any loss, liability, deficiency, damage, expense or cost
(including reasonable attorneys' fees) incurred by a party.
"Portfolio Investments" means the portfolio of government securities
owned by the Company and, if government securities are not alone sufficient,
corporate equity securities that will be included in the Closing Assets, with
such securities having a Fair Market Value of no less than $2,750,000 nor more
than $2,850,000 (in each case less the amount of any Statutory Deposits) at
Closing and the unrealized appreciation in which is fairly representative of the
unrealized appreciation in the readily marketable securities held by the Company
as of the date of this Agreement.
"Purchase Price" means One Hundred Fifty Thousand Dollars ($150,000),
plus, the Fair Market Value of the Portfolio Investments at the close of
business on the day immediately preceding the Closing Date, plus any Statutory
Deposits, minus, $40,000, being the sum of the payments made under the
Exclusivity Agreement, and minus any payments made under Section 7.6 which are
to be credited toward the Purchase Price.
"Returns" means any returns, reports or statements (including any
information returns) required to be filed for purposes of a particular Tax.
"Statutory Accounting" means the accounting practices prescribed or
permitted by the Insurance Departments of Ohio and West Virginia, which are
distinct from GAAP and provide the basis for the Financial Statements, as
applied on a consistent basis.
"Statutory Deposits" means any financial deposits required to be
maintained by the Company by the Commissioners or Departments of Insurance (or
other governmental or regulatory authority), as a condition of the Company's
conduct of business in the States of West Virginia, Ohio and Indiana.
"Tax" or "Taxes" means all federal, state, county or local net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
deed, stamp, alternative or add-on minimum, environmental or other taxes,
assessments, duties, fees, levies or other governmental charges of any nature
whatsoever, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
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"Transaction" shall have the meaning set forth in the premises to this
Agreement.
"Unaudited Financial Statements" means the unaudited interim financial
statements of the Celina Insurance Group companies (including the Company) for
the monthly periods since the date of the most recent Audited Financial
Statements.
2. THE TRANSACTION
2.1 Sale and Purchase of the Company's Capital Stock. At the Closing,
Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Company
Shares; and, in consideration for Seller's sale of the Company Shares, Buyer
shall pay to Seller, in cash by wire transfer pursuant to Seller's instructions,
an amount equal to the Purchase Price, all on the terms and conditions set forth
herein.
2.2 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Transaction contemplated by this Agreement (the "Closing")
shall take place, at the offices of Xxxxxxx, Xxxxxx & Battle, PLLC, 300 Kanawha
Boulevard, East, Charleston, West Virginia, or at such other location as the
parties may agree, on the seventh business day following satisfaction or waiver
of the conditions set forth in Articles 6 and 7 of this Agreement (the "Closing
Date"). At the Closing, Seller and Buyer shall make the deliveries to one
another set forth in Article 8.
2.3 Purchase Price. At least five business days prior to the Closing
Date, Seller shall provide Buyer with a tentative statement of the Purchase
Price and the elements thereof, and shall deliver to Buyer a schedule of the
Portfolio Investments to be included in the Closing Assets, together with a
statement of the Fair Market Value thereof as of the close of business on the
immediately preceding business day. It is intended that the parties will discuss
the particular securities of the Company that will be included in the Portfolio
Investments, but Buyer acknowledges that the final selection of such securities
shall be made by Seller in a manner consistent with the definition of Portfolio
Investments included in this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and warrants to
Buyer that:
3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company is
duly incorporated, validly existing and in good standing under the laws of the
State of West Virginia and is duly licensed or qualified to transact business as
a foreign corporation and is in good standing in Ohio and Indiana. The Company
has all the requisite corporate power and authority to own and hold its
properties and to carry on its business as now being conducted. The copies of
the Company's current Articles of Incorporation and Bylaws that have been
furnished to Buyer reflect all amendments made thereto and are correct and
complete as of the Closing Date.
3.2 AUTHORIZED CAPITAL. The authorized capital stock of the Company
consists of One Thousand (1,000) shares of common stock, par value of $1,000 per
share, of which, as of the date hereof, One Thousand (1,000) shares are issued
and outstanding, all of which are owned by Seller. There are no stock
appreciation rights, subscriptions, warrants, options, preemptive rights,
convertible securities, offers, commitments or other rights (contingent or
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otherwise) to purchase or otherwise acquire equity securities of the Company.
All of the shares of the Company's common stock have been duly authorized and
are validly issued, fully paid and non-assessable. The Company has no other
equity securities or securities containing any equity features authorized,
issued or outstanding. No shares of the common stock of the Company are in
escrow or held as security for any obligation of the Company or any beneficial
owner thereof. None of the securities of the Company are subject to any voting
trust or any other agreement pertaining to the voting of such securities.
3.3 VALIDITY. Seller has the full legal power and authority to execute
and deliver this Agreement and all other agreements and documents necessary to
consummate the Transaction. All corporate action of Seller necessary to
authorize such execution and delivery and the performance thereof has been duly
taken. This Agreement has been duly executed and delivered by Seller and, when
duly executed and delivered by Buyer, will constitute the legal, valid and
binding obligation of Seller, enforceable in accordance with its terms, subject
as to enforcement of remedies to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally. Any other agreement
contemplated to be entered into by the Company and Seller in connection with
this Transaction prior to Closing, when duly executed and delivered by the
Company and/or Seller and the other parties thereto, will constitute the legal,
valid and binding obligation of the Company and Seller, respectively,
enforceable in accordance with its respective terms (subject as to enforcement
of remedies to the discretion of courts in awarding equitable relief and to
applicable bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting the rights of creditors generally).
3.4 NO BREACH. None of the execution and delivery of this Agreement and
related agreements contemplated herein, compliance with their respective terms,
or performance of any obligation hereunder or thereunder will result in the
breach or violation of the Articles of Incorporation or Bylaws of the Company or
Seller, or any provision of law or any provision of any agreement, indenture,
mortgage, lease or other obligation or instrument, or any judgment, or any order
or decree of any court or other agency of government, to or by which the
Company, Seller or any of its respective properties or assets are bound, or
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge, restriction, claim
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company or result in a violation by the Company or Seller of any federal,
state or local laws or regulations, except in any of the foregoing instances for
minor breaches, violations, conflicts, defaults or liens, none of which will
have a material adverse effect, singly or in the aggregate, on the Company.
3.5 ASSETS AND LIABILITIES AT CLOSING. On the Closing Date, the
Company's assets shall consist exclusively of the Closing Assets and the Company
shall have no liabilities, absolute or contingent (including claims incurred but
not reported), no obligations and no contractual commitments of any nature
except for continuing reporting obligations to the West Virginia Insurance
Commissioner and any liabilities, obligations or commitments caused by the acts
or omissions of Buyer. The Closing Assets shall be free and clear of all claims,
assessments, security interests, liens, restrictions and encumbrances, except
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for minor or correctable defects of title, none of which will have a material
adverse effect, singly or in the aggregate, on the Company.
3.6 COMPLIANCE WITH LAW.
3.6.1 Except for matters disclosed in Schedule 3.6.2, the
Company has the lawful authority and all state, federal, special or local
governmental authorizations, licenses or permits (including, but not limited to
the Licenses) required to conduct its businesses, and such businesses presently
are being conducted in compliance with all applicable laws, ordinances, rules
and regulations of all governmental authorities related to its businesses,
except for minor or correctable failings, none of which will have a material
adverse effect, singly or in the aggregate, on the Company. Except for matters
disclosed in Schedule 3.6.2, there are no pending or, to the best knowledge of
Seller (after making due inquiry of Company management), threatened actions,
notices or proceedings by any state, federal, special or local government or any
subdivision thereof or any public or private group which would have the effect
of changing the operation of such businesses. Schedule 3.6 contains a list and
brief description of the Licenses and all other material licenses, permits,
franchises, certificates, authorizations, approvals, accreditations, consents
and rights, including those granted or derived from governmental sources, issued
or granted to the Company. Except for matters disclosed in Schedule 3.6.2,
neither the Company's operations, nor any of the assets owned, leased, occupied
or used by the Company in the operation of its businesses, violates or fails to
comply in any material respect with applicable federal, state or local laws,
regulations or ordinances. Except for matters disclosed in Schedule 3.6.2, the
Company's activities (as currently conducted), the conduct of its businesses,
the use of its properties and assets and all premises occupied by it, are in
compliance in all material respects with all requirements of all governmental
bodies or agencies having jurisdiction over it. Seller has delivered to Buyer
true and correct copies of the Licenses and all other such material licenses,
permits, certificates and authorizations. Except for matters disclosed in
Schedule 3.6.2, there is no act or omission on the part of the Company or Seller
that would subject the Company to any fine or suspension, which fine or
suspension would have a material adverse effect, singly or in the aggregate, on
the Company. Except for matters disclosed in Schedule 3.6.2, neither Seller nor
the Company have received any notice not heretofore complied with, from any
federal, state or other governmental authority or agency having jurisdiction
over their properties or activities, or any insurance or inspection body, that
the Company's operations or any of its properties, facilities, equipment or
business procedures (whether leased or owned) or practices fail to materially
comply with any applicable law, ordinance or regulation or requirement of any
public authority or body.
3.6.2 Schedule 3.6.2 attached hereto contains a complete list
of all violations, consent orders and regulatory enforcement actions entered or
issued by any Commissioner or Department of Insurance with respect to the
Company since January 1, 1999 or that are still in effect.
3.7 GOVERNMENTAL AUTHORITIES; CONSENTS. Except as set forth on Schedule
3.7 attached hereto and for the consents of the Insurance Commissioners of West
Virginia, Ohio and Indiana, to the best of Seller's knowledge, neither the
Company, Seller, nor any of their Affiliates is required to obtain any approval,
consent, qualification, order or authorization, or to submit any notice, report
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or other filing with any governmental authority in connection with the execution
or delivery by Seller of this Agreement or the consummation of the Transaction
contemplated by this Agreement.
3.8 TAXES. The Company has timely filed all Returns required to be
filed by it, and such Returns, when filed, were (and continue to be) true,
correct and complete in all material respects. All Taxes due by reason of the
operations of the Company have been paid, including, without limitation, all
Taxes which the Company is obligated to pay pursuant to any Tax sharing
agreement with members of a group filing a consolidated or combined Return or to
withhold from amounts owing to employees, creditors and third parties. Any Tax
liability of the Company resulting from the operations of the Company, including
the Transaction contemplated hereby, prior to Closing shall be paid or provided
for by Seller. The federal income tax returns of the Company have never been
audited by the Internal Revenue Service. No deficiency assessment with respect
to any proposed adjustment of the Company's federal, state, county or local
taxes is pending or, to the best of Seller's knowledge, threatened. There is no
tax lien, whether imposed by any federal, state, county or local taxing
authority outstanding against the assets, properties or businesses of the
Company, except for liens arising by operation of law for accrued taxes not yet
due. There is no pending examination or proceeding by any authority or agency
relating to the assessment or collection of any such Taxes, interest or
penalties thereon, nor to the best of Seller's knowledge do there exist any
facts that would provide a basis for any such assessment. The Company has not
executed or filed any consent or agreement to extend the period for assessment
or collection of any such Taxes. As of the Closing Date, the Company will not be
a party to any tax sharing agreement and will have no liability with respect to
any such agreement to which it was previously a party. All federal, state, local
and foreign Tax Returns filed by the Company with respect to periods commencing
after December 31, 2001, are listed on Schedule 3.8. Copies of all such Returns
have been delivered to Buyer.
3.9 FINANCIAL STATEMENTS. The Company has furnished to Buyer (i) the
Audited Financial Statements, including any management letters regarding the
internal operations of the Company with respect to such fiscal year that have
been delivered to the Company's Board of Directors, and (ii) the Unaudited
Financial Statements. The Financial Statements have not been prepared in
accordance with GAAP, but instead in conformity with Statutory Accounting,
consistently applied (except, in the case of the Unaudited Financial Statements,
for the absence of footnotes and year end adjustments which will not be
material, individually or in the aggregate) and fairly present in all material
respects the financial position of the Company and the results of operations and
changes in financial position as of the dates and for the periods specified.
Since December 31, 2004, except as specifically contemplated by this Agreement,
(a) there has been no material change in the assets, liabilities or financial
condition of the Company from that reflected in the most recent Audited
Financial Statement, except for changes in the ordinary course of business and
consistent with past practice which, in the aggregate, have not been materially
adverse to the business, prospects, financial condition, operations, property or
affairs of the Company, and (b) none of the business, prospects, financial
condition, operations, property or affairs of the Company has been materially
adversely affected by any occurrence or development, individually or in the
aggregate, whether or not insured against, except respecting all of the
foregoing for notifications to the West Virginia Department of Insurance
relating to the Transaction.
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3.10 SUBSIDIARIES. As of the Closing, except for the Portfolio
Investments, the Company will not (i) own of record or beneficially, directly or
indirectly, any shares of capital stock or securities convertible into capital
stock of any other corporation or have any participating interest in any
partnership, limited liability company, joint venture or other business
enterprise; or (ii) control, directly or indirectly, any other entity.
3.11 LITIGATION AND INVESTIGATIONS. Except as listed on Schedule 3.11,
there is no: (i) action, suit, claim, proceeding or investigation pending or, to
the best of Seller's knowledge (after due inquiry of Company management),
threatened against or affecting the Company, by any private party or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign; (ii) arbitration
proceeding relating to the Company pending under collective bargaining
agreements or otherwise; or (iii) governmental or professional inquiry pending
or, to the best of Seller's knowledge (after due inquiry of Company management),
threatened against or directly or indirectly affecting the Company (including
without limitation any inquiry as to the qualification of the Company to hold or
receive the Licenses or any other material license or permit), and to the best
of Seller's knowledge there is no basis for any of the foregoing as to the
Company. The Company has not received any opinion, memorandum or legal advice
from legal counsel to the effect that the Company is exposed, from a legal
standpoint, to any liability which may be material to the business of the
Company as now conducted. There is no action or suit by the Company pending or
threatened against others. Except as listed on Schedule 3.11, the Company is not
subject to any order, writ, injunction or decree known to (or served upon) it by
any court, or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.
3.12 EMPLOYEES AND BENEFIT PLANS. Effective as of the Closing, the
Company shall have (i) no employees, (ii) no Employee Benefit Plans, (iii) no
liability or responsibility with respect to any person who was previously an
employee of the Company or with respect to any Employee Benefit Plan previously
maintained by the Company, and (iv) no liability or responsibility with respect
to any employee or any Employee Benefit Plan sponsored or maintained by Seller
or any other Affiliate of the Company. The Company shall have complied in all
material respects with all applicable laws, rules, regulations and agreements
with respect to its termination of employees and Employee Benefit Plans.
3.13 AGENTS. Effective as of the Closing, the Company will have
terminated all agency relationships and will have no liability or responsibility
with respect to any person or entity with whom it has had an agency relationship
(including licensed insurance agents and brokers); provided, however, that such
representation is conditioned upon the understanding that Seller will cause the
Company to transfer all current insurance lines and business prior to the
Closing, and that after the Closing Buyer shall cause the Company to engage only
in unrelated insurance lines for a period of not less than two (2) years. The
Company shall have complied in all material respects with the terms of all
applicable laws, rules, regulations and agreements with respect to its
termination of its agency relationships, including providing its agents with not
less than 90 days' notice of termination.
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3.14 INSURANCE.
3.14.1 Seller has caused the Company to provide Buyer with
access to all Insurance Policies issued by the Company, for which records are
reasonably available. No Insurance Policies still in force have been issued in
Ohio or Indiana.
3.14.2 Prior to or effective at Closing, all Insurance
Policies shall have been satisfied, eliminated, transferred, assigned, conveyed
or otherwise divested from the Company.
3.14.3 Seller shall have obtained all necessary or desirable
governmental and regulatory approvals necessary to effect the satisfaction,
elimination, transfer, assignment, conveyance or divestiture of the Insurance
Policies.
3.14.4 Except for continuing reporting responsibilities to the
West Virginia Insurance Commissioner with respect to Insurance Policies, the
Company shall have no liability or responsibility with respect to any Insurance
Policies.
3.14.5 Prior to or effective at Closing, all contracts with or
appointments of agencies, agents, brokerages, brokers and the like shall have
been terminated by the Company.
3.15 BOOKS AND RECORDS. The books of account, ledgers, and other
Corporate Records of the Company accurately and completely reflect in all
material respects all information relating to the business of the Company, the
nature and location and the collection of its assets, and the nature of all
liabilities, commitments and obligations of the Company, subject to those items
excluded from the definition of Corporate Records in this Agreement.
3.16 INSURANCE AGREEMENTS. Prior to the Closing, the following
agreements shall have been executed: (a) an agreement eliminating the Company
from the Celina Group Reinsurance Pooling Agreement for shared losses; and (b)
an agreement that assigns all Insurance Policies issued by the Company to Celina
or an Affiliate of Celina and by which liability with respect to such policies
is assumed by the assignee.
3.17 FEES AND COMMISSIONS. The Company has not agreed to pay or become
liable to pay any broker's, finder's or originator's fees or commissions by
reason of services alleged to have been rendered for, or at the instance of, the
Company in connection with this Agreement and the transactions contemplated
hereby.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Buyer is validly
existing and in good standing under the laws of the State of Kansas and is duly
licensed or qualified to transact business as a foreign corporation and is in
good standing in the State of West Virginia and in each jurisdiction in which
the nature of the business to be transacted by it, or the character of the
properties owned by it or leased by it, requires such licensing or
qualification. Buyer has all the requisite corporate power and authority to own
and hold its properties and to carry on its business as now being conducted.
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4.2 VALIDITY. Buyer has the full legal power and authority to execute
and deliver this Agreement and all other agreements and documents necessary to
consummate the contemplated Transaction, and all corporate action of Buyer
necessary for such execution and delivery and the performance thereof has been
duly taken. This Agreement and all agreements related to the Transaction to
which Buyer is a party have been duly executed and delivered by Buyer and, when
duly executed by the other parties thereto, constitute the legal, valid and
binding obligation of Buyer, enforceable in accordance with their terms, subject
as to enforcement of remedies to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally. Any other agreement
contemplated to be entered into by Buyer in connection with this Agreement or
the Transaction, when duly executed and delivered by Buyer and the other parties
thereto, will constitute the legal, valid and binding obligation of Buyer,
enforceable in accordance with its respective terms (subject as to enforcement
of remedies to the discretion of courts in awarding equitable relief and to
applicable bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting the rights of creditors generally).
4.3 NO BREACH. None of the execution and delivery of this Agreement and
related agreements contemplated herein, compliance with their respective terms,
or performance of any obligation hereunder or thereunder will result in the
breach or violation of the Articles of Incorporation or Bylaws of Buyer, of any
provision of law, or of any provision of any agreement, indenture, mortgage,
lease or other obligation or instrument, any judgment, or any order or decree of
any court or other agency of government, or cause any acceleration thereof, to
which Buyer or any of its properties or assets are bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the properties or assets of
Buyer. The execution of this Agreement and any other agreements contemplated
hereby and, upon receipt of required state, local and/or federal governmental
approvals, the consummation of the Transaction provided herein will not result
in a violation by Buyer of any federal, state or local laws or regulations.
4.4 GOVERNMENTAL AUTHORITIES; CONSENTS. To the best of Buyer's
knowledge, except for the consents of the Insurance Commissioners of West
Virginia, Ohio and Indiana, Buyer is not required to obtain any approval,
consent, qualification, order or authorization, or to submit any notice, report
or other filing with any governmental authority in connection with the execution
or delivery by Buyer of this Agreement or the consummation of the Transaction.
4.5 FEES AND COMMISSIONS. Except for a finder's fee of $7500 payable to
Xxxx Consulting, which shall be Buyer's sole responsibility, Buyer has not
agreed to pay or become liable to pay any broker's, finder's or originator's
fees or commissions by reason of service alleged to have been rendered for, or
at the instance of, Buyer in connection with this Agreement and the Transaction.
4.6 INVESTMENT REPRESENTATION. Buyer is purchasing the Company Shares
for its own account for the purpose of investment and has no present intention
of selling, transferring or otherwise distributing or disposing of any of such
shares.
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5. OBLIGATIONS OF THE PARTIES BETWEEN THE DATE OF THIS AGREEMENT AND THE CLOSING
DATE
Between the date of this Agreement and the Closing Date:
5.1 Assets and Liabilities of Company.
5.1.1 Seller shall cause all assets of the Company, of
whatever nature, excepting only the Closing Assets, to be transferred from the
Company so that effective at Closing the only assets owned by the Company shall
be the Closing Assets.
5.1.2 Seller shall cause all liabilities of the Company to be
paid or satisfied and shall cause the Company to satisfy or to be released from
all commitments and obligations, to the extent necessary so that effective at
Closing the representation and warranties of Seller respecting such matters are
true and correct.
5.1.3 Seller shall cause the Company to conduct its activities
so as to maintain compliance with any statutory requirements and rating
requirements imposed upon the Company by West Virginia, Ohio or Indiana laws,
rules or regulations and to maintain the validity and value of the Licenses.
5.2 MAINTENANCE OF STATUS QUO.
Seller shall not cause or allow the Articles of Incorporation or Bylaws
of the Company to be amended, and shall not transfer or sell, or cause or allow
the Company to issue or sell, any shares of, or grant any options, warrants,
conversion privileges or rights of any kind to acquire any share of, any of the
capital stock of the Company, except with the prior written consent of Buyer.
5.3 ACCESS TO BOOKS AND RECORDS. Seller shall permit, and cause the
Company to permit, Buyer and its counsel, accountants and other representatives
reasonable access during normal business hours to all of the properties, books,
contracts, commitments and records of the Company, and Seller shall cause
Company to furnish such statements (financial and otherwise), records, reports,
documents and other information concerning its operations as Buyer and its
counsel reasonably request from time to time. To the extent reasonably requested
by Buyer, Seller shall request the Company's accountants, attorneys and other
representatives to cooperate with the representatives of Buyer in connection
with the right of access granted herein.
5.4 REGULATORY FILINGS; CONSENTS. As promptly as practicable after the
execution of this Agreement, Buyer and Seller shall make or cause to be made all
filings and submissions required under the laws of the States of West Virginia,
Ohio and Indiana, and any other filings or submissions required by the laws,
rules or regulations applicable to Buyer, Seller and the Company with respect to
the consummation of the Transaction contemplated by this Agreement, including
the filing of a withdrawal plan in West Virginia for the Company's private
passenger automobile Insurance Policies. The parties shall coordinate and
cooperate with each other in exchanging such information, and will provide such
reasonable assistance to each other, as the parties may request in connection
with the any of the foregoing. Buyer and Seller will each use their best efforts
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to obtain all licenses, consents or other approvals required to be obtained by
the Buyer or Seller from any appropriate governmental or regulatory agency or
authority or other person in connection with the consummation of the Transaction
contemplated by this Agreement. The parties to this Agreement will promptly
advise each other of all communications they receive from governmental agencies
or authorities pertaining to the Transaction.
5.5 EXCLUSIVITY IN FAVOR OF BUYER. Neither the Company, Seller, nor any
of their Affiliates will, directly or indirectly, through any officer, director,
agent or otherwise, take any action to solicit, initiate, seek, entertain,
encourage, support or respond to any inquiry, proposal or offer from, furnish
any information to, or participate in any negotiations with, any third party
regarding any acquisition of the Company, any merger or consolidation with or
involving the Company, or any acquisition of any material portion of the capital
stock of the Company, including the sale or transfer of the Licenses. The
Company and Seller acknowledge that no such negotiations (other than
negotiations with Buyer) are in progress as of the date hereof and that the
Company will not accept or enter into any agreement, arrangement or
understanding regarding any such third party acquisition transaction prior to
the termination hereof.
5.6 EXCLUSIVITY IN FAVOR OF SELLER. Neither Buyer nor any of its
Affiliates will, directly or indirectly, through any officer, director, agent or
otherwise, take any action to solicit, initiate, seek, entertain, encourage,
support or respond to any inquiry, proposal or offer from, furnish any
information to, or participate in any negotiations with, any third party
regarding any acquisition of a property and casualty insurance company, any
merger or consolidation with or involving any property and casualty insurance
company, or any acquisition of any material portion of the capital stock of any
property and casualty insurance company, until the Transaction has proceeded to
Closing or the Transaction has been abandoned in accordance with the provisions
of Article XI of this Agreement.
5.7 COOPERATION. Each of the parties to this Agreement agrees to
cooperate with each other party and to use its best efforts to consummate the
Transaction in accordance herewith.
5.8 NOTICE OF DEVELOPMENTS. Seller and Buyer shall each keep the others
advised of developments with respect to (i) Seller's and the Company's actions
to remove assets, other than the Closing Assets, and liabilities from the
Company, (ii) regulatory submissions and responses with respect to the
Transaction, and (iii) Buyer's efforts with respect to obtaining financing for
the Transaction.
5.9 SCHEDULE UPDATES. Prior to the Closing, as and when matters come to
its attention, Seller shall supplement its various schedules delivered with this
Agreement, including any additional or different disclosures necessitated by
intervening events or any due diligence review by Seller or Buyer.
6. CONDITIONS TO THE OBLIGATION OF BUYER
The obligations of Buyer to consummate this Agreement and any other
transaction contemplated by this Agreement are, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
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6.1 REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of Seller contained in Article 3, as
supplemented, shall be true, complete and correct in all material respects on
and as of the Closing Date with the same effect as though such representations
and warranties had been made by Seller on and as of such date, and Seller shall
have certified to such effect to Buyer in writing.
6.2 PERFORMANCE. Seller shall have performed and complied, and have
caused the Company to perform and comply, in all material respects with all
agreements contemplated herein that are required to be performed or complied
with by them prior to or at the Closing Date. All corporate and other action and
governmental filings necessary to effectuate the terms of this Agreement and the
other agreements and instruments executed and delivered by the Company and
Seller in connection herewith will have been made or taken.
6.3 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Company and Seller in connection with the
Transaction contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to Buyer and its counsel, and
Buyer and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they reasonably may request.
6.4 APPROVALS. All necessary corporate, governmental, regulatory and
third party consents and approvals for the Transaction contemplated by this
Agreement shall have been obtained, including, but not limited to: (i) the
approval of the Board of Directors of Seller; and (ii) approvals (if and then
only to the extent required) of the Commissioners or Departments of Insurance of
the States of West Virginia, Ohio and Indiana; and (iii) any other approval
required by the laws, rules or regulations applicable to Buyer, Seller or the
Company in connection with the consummation of the Transaction contemplated by
this Agreement.
6.5 ABSENCE OF REGULATORY PROCEEDINGS. No materially adverse
proceeding, action or litigation shall have been instituted, threatened or
proposed, and no order shall have been issued by any governmental, regulatory or
judicial body, agency or authority to enjoin, restrain or prohibit the
Transaction contemplated herein.
6.6 DUE DILIGENCE. Buyer shall have completed all of its due diligence
to its reasonable satisfaction. Buyer shall have received Seller's updated
schedules and be reasonably satisfied therewith.
6.7 FINANCING. Buyer shall have obtained financing for the Transaction
on terms and conditions acceptable to Buyer in its sole discretion.
7. CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of the Seller to consummate this Agreement and any
other transactions contemplated by this Agreement are, at their option, subject
to the satisfaction, on or before the Closing Date, of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of Buyer contained in Article 4 shall be true,
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complete and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made by
Buyer on and as of such date, and Buyer shall have certified to such effect to
Seller in writing.
7.2 PERFORMANCE. Buyer shall have performed and complied in all
material respects with all agreements contemplated herein that are required to
be performed or complied with by it prior to or at the Closing Date. Buyer will
have obtained any consents or waivers necessary to execute and deliver this
Agreement and the other agreements and instruments executed and delivered by
Buyer in connection herewith. All corporate and other action and governmental
and regulatory filings necessary to effectuate the terms of this Agreement and
the other agreements and instruments executed and delivered by Buyer in
connection herewith will have been made or taken.
7.3 ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by Buyer in connection with the Transaction contemplated
hereby and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Seller and its counsel, and the Seller and its counsel
shall have received all such counterpart originals or certified or other copies
of such documents as they reasonably may request.
7.4 APPROVALS. All necessary corporate, governmental and regulatory
approvals for the transactions contemplated by this Agreement shall have been
obtained, including, but not limited to: (i) the approval of Buyer; and (ii) the
approvals of the Commissioners or Departments of Insurance of the States of West
Virginia, Ohio and Indiana; and (iii) any other approvals required by the laws,
rules or regulations applicable to Buyer, Seller, or the Company in connection
with the consummation of the Transaction contemplated by this Agreement.
7.5 ABSENCE OF REGULATORY PROCEEDINGS. No materially adverse
proceeding, action or litigation shall have been instituted, threatened or
proposed, and no order shall have been issued by any governmental, regulatory or
judicial body, agency or authority to enjoin, restrain or prohibit the
Transaction contemplated herein or materially adversely affect Buyer's ability
to perform its obligations under this Agreement prior to the Closing Date.
7.6 REMOVAL OF FINANCING CONTINGENCY. Buyer shall have obtained its
financing and removed the financing contingency, by written certification to
Seller, on or before sixty (60) days after the date of this Agreement. Buyer may
extend the period for removing such contingency for an additional thirty (30)
days by paying Seller an extension fee of $10,000, which shall be applied
against the Purchase Price in the same fashion as payments under the Exclusivity
Agreement, and otherwise forfeited to Seller if there is no Closing.
8. CLOSING DELIVERIES
8.1 SELLER'S DELIVERIES.
At Closing, Seller shall deliver to Buyer:
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8.1.1 a certificate of Seller that the representations and
warranties of Seller set forth in Article 3 of this Agreement are true, complete
and correct in all material respects on and as of the Closing Date as though
made by Seller on and as of such date;
8.1.2 a certificate signed by an executive officer of Seller
attesting to the satisfaction in all material respects or waiver of the Seller's
conditions of Closing;
8.1.3 a certificate of each of the Secretary of State of the
States of West Virginia, Ohio and Indiana as to the good standing of the Company
in West Virginia, Ohio and Indiana, respectively;
8.1.4 stock certificates representing the Company Shares, duly
endorsed for transfer to the Buyer;
8.1.5 the Corporate Records;
8.1.6 a statement issued by the custodian reflecting the
Portfolio Investments and a statement of their Fair Market Value as of the last
market date immediately prior to the Closing Date; and
8.1.7 resignations of all officers and directors of the
Company, effective as at Closing.
8.2 BUYER'S DELIVERIES.
At Closing, Buyer shall deliver to Seller:
8.2.1 a certificate of Buyer that the representations and
warranties of Buyer set forth in Article 4 of this Agreement are true, complete
and correct in all material respects on and as of the Closing Date as though
made by Buyer on and as of such date;
8.2.2 a certificate of an executive officer of Buyer attesting
to the satisfaction in all material respects or waiver of the Buyer's conditions
of Closing;
8.2.3 a certificate of the Secretary of State of Kansas as to
the good standing of Buyer; and
8.2.4 the Purchase Price, by wire transfer to the account or
accounts designated by Seller.
8.3 FURTHER ASSURANCES. If at any time after the Closing, Buyer shall
consider or be advised that any documents, assurances or acts are necessary,
desirable or proper (i) to vest, perfect or confirm, of record or otherwise, in
the Company, its right, title or interest in, to or under any of the Closing
Assets, or (ii) otherwise to carry out the purposes of this Agreement, Seller
and its proper officers and directors or their designees shall cooperate
reasonably with the Buyer, at Buyer's sole expense, to execute and deliver, in
the name and on behalf of either of the Company or Seller, all such documents
and assurances and do, in the name and on behalf of the Company, all other acts
16
and things necessary, desirable or proper to vest, perfect or confirm the
Company's right, title or interest in, the Closing Assets or otherwise to carry
out the purposes of this Agreement.
9. INDEMNIFICATION
9.1 SELLER'S INDEMNIFICATION. Seller agrees to indemnify and hold Buyer
and the Company harmless from and against any and all of the following:
9.1.1 Any and all Losses incurred by Buyer or the Company and
their respective directors, officers, employees and agents, and each of their
heirs, executors, successors and assigns, because of any inaccuracy in, or
breach or violation of, the representations, warranties or covenants made by
Seller in this Agreement, including, but not limited to any and all Losses
arising from any misrepresentation in or omission from any certificate or other
instrument furnished or to be furnished by Seller (or its officers) under this
Agreement.
9.1.2 Any and all Losses, including, without limitation, any
Losses arising in connection with a Claim brought against Buyer or the Company,
incurred by Buyer or the Company, their respective directors, officers,
employees and agents, and each of their heirs, executors, successors and
assigns, arising out of the activities or omissions of the Company, or any of
its officers, directors, employees, agents or representatives, prior to the
Closing.
9.1.3 Any payments required to be made pursuant to any
judgment, order, decree or determination of any court or other government
agency, related to any arrangements or actions of the Company prior to Closing.
9.1.4 All Losses related to or resulting from any Claim
incident to any of the foregoing.
9.2 BUYER'S INDEMNIFICATION. Buyer agrees to indemnify and hold Seller
harmless from and against any and all of the following:
9.2.1 Any and all Losses incurred by Seller or its directors,
officers, employees and agents, and each of their heirs, executors, successors
and assigns, because of any inaccuracy in, or breach or violation of, the
representations, warranties and covenants made by Buyer in this Agreement,
including, but not limited to, any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished by Buyer (or its
officers) under this Agreement.
9.2.2 Any and all Losses incurred by Seller or its respective
directors, officers, employees and agents, and each of their heirs, executors,
successors and assigns, arising out of the activities of the Company, or any of
its officers, directors, employees, agents or representatives, after the
Closing.
9.2.3 Any payments required to be made pursuant to any
judgment, order, decree or determination of any court or other government
agency, relating to any arrangements or actions of the Company after the
Closing.
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9.2.4 All Losses related to or resulting from any Claim
incident to any of the foregoing.
9.3 NOTICE OF CLAIM OR LOSS.
9.3.1 Whenever indemnification is sought under this Article 9
with respect to a Claim, the party seeking indemnification (the "Indemnified
Party") shall notify in writing the party from whom indemnification is sought
(the "Indemnifying Party") of all information concerning the underlying Claim
within thirty (30) calendar days after the Indemnified Party receives notice of
such Claim. The Indemnifying Party shall have the right and obligation to defend
the Indemnified Party, including the right to retain counsel on behalf of the
Indemnified Party, which counsel is reasonably acceptable to the Indemnified
Party, and to enter into any settlement which includes the Indemnified Party, so
long as such settlement is payable by the Indemnifying Party. Nothing contained
herein shall be construed as prohibiting the Indemnified Party from retaining
its own counsel at its sole expense.
9.3.2 In the event any Indemnified Party should incur a Loss
that does not involve a Claim instituted by a third party, the Indemnified Party
shall promptly deliver a written notice of such Loss to the Indemnifying Party.
9.4 PAYMENT OF INDEMNIFICATION OBLIGATION.
9.4.1 The Indemnifying Party shall pay, as incurred, all
expenses (other than for independent counsel) of the Indemnified Party arising
out of a Claim or Loss for which indemnification is provided hereunder.
9.4.2 Upon a final determination of Losses, the amount of the
Losses agreed to or awarded, as the case may be, shall be paid by the
Indemnifying Party to the Indemnified Party within thirty (30) days of such
final determination or upon such earlier date as payment may be required.
9.4.3 If an Indemnifying Party fails to advance amounts
payable as expenses or Losses with respect to a Claim for which indemnification
is provided hereunder, the Indemnified Party that is required to pay such
amounts shall be entitled to full reimbursement from the Indemnifying Party,
plus interest at the prime rate (as published in the Wall Street Journal) in
effect on the date such amounts become due.
9.5 LIMITATION OF INDEMNIFICATION OBLIGATIONS.
9.5.1 All representations, warranties, covenants, agreements
and indemnities in this Agreement, or in any instrument or document furnished in
connection with this Agreement or the Transaction contemplated hereby, shall
survive the Closing but subject to the following limitations:
(a) In order to be valid, any claim for indemnification
pursuant to this Article 9 must be timely made by the Indemnified Party in a
writing delivered to the Indemnifying Party on or before the second anniversary
of this Agreement; and
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(b) In no event shall any Indemnifying Party's obligations of
indemnification under this Article 9 exceed in the aggregate the amount of the
Purchase Price.
The foregoing limitations shall not apply to any indemnification
obligations of Seller relating to any Claim or Loss arising out of a breach of
the warranty in Section 3.8 respecting Taxes of the Company for periods prior to
the Closing or a breach of the warranty in Section 3.14 respecting Insurance
Policies.
9.5.2 Notwithstanding the foregoing, no party shall be
obligated to indemnify a party where the latter's act(s) or omission(s)
(including without limitation an untimely notice of Claim) cause or materially
prejudice the party's defenses to the Claim or Loss.
10. ADDITIONAL AGREEMENTS
10.1 ANNOUNCEMENTS. Except as may be required by law and with prior
notice to the other party, no party to this Agreement shall, without prior
agreement of the other parties, make any announcement to the public concerning
the transactions contemplated by this Agreement. The timing and content of any
such announcement, press release or other public statement concerning the
Transaction contemplated by this Agreement will occur upon, and be determined
by, the mutual agreement and consent of the parties.
10.2 CONFIDENTIALITY OF BUSINESS INFORMATION. The parties heretofore
have received and hereafter may receive various financial and other information
that is not otherwise available to the general public concerning their
respective activities, businesses, business plans, assets, liabilities and
properties ("Confidential Information"). The parties agree that:
10.2.1 all Confidential Information thus received by the
parties shall not at any time, or in any way or manner, be utilized by the
parties for their respective advantage or be disclosed by the parties to others
for any purpose whatsoever;
10.2.2 the parties shall take all reasonable measures to
assure that no employee or agent under their respective control shall at any
time use or disclose any Confidential Information;
10.2.3 Confidential Information shall not include information
that was known to the parties prior to its disclosure to the parties in relation
to this Agreement and the transactions contemplated hereby or was, is or becomes
generally available to the public other than by disclosure by the parties or any
of their respective employees or agents in violation of this Section; and
10.2.4 If this Agreement is terminated under Article 11, each
party shall deliver to the other party, or destroy, all tangible repositories of
Confidential Information relating to the other party and, if Buyer, relating to
the Company.
10.3 CONFIDENTIALITY OF THIS AGREEMENT. The existence, terms and
contents of this Agreement and its schedules and exhibits and the nature and
status of the Transaction described herein and therein are confidential. Without
the prior written consent of the other party, no party will disclose to any
19
person, other than to its respective directors, officers and key employees,
prospective investors in Buyer, Affiliates and accounting, investment banking
and legal advisers, any such confidential information unless, in the written
opinion of counsel to the party seeking to make the disclosure, such a
disclosure is required by law and then only following notice to the other party.
The parties acknowledge that this Agreement will be included in filings with
applicable regulatory authorities. Notwithstanding the foregoing, Seller shall
be free to give the Company's agents statutory notice of termination.
10.4 TAX MATTERS.
10.4.1 Seller shall, or shall cause the Company to, timely
prepare and file with the relevant Tax authorities all Returns of the Company
required to be filed on or prior to the Closing Date, and the Sellers shall (or
shall cause the Company to) timely pay all Taxes shown as due on such Returns.
All such Returns will be made and filed by the Company in a manner consistent
with the prior practice of the Company (and shall be furnished to the Buyer for
review and approval prior to the filing thereof). Buyer shall file, or cause to
be filed, all Returns of the Company required to be filed after the Closing
Date. In connection with a Return filed in respect of a taxable period (or
portion thereof) that begins before, but ends after, the Closing Date (a
"Straddle Period"), Seller and Buyer shall jointly cause such Returns to be
prepared and filed, and shall agree on a fair and equitable allocation of the
tax burdens and benefits between the Straddle Period ending on, and the Straddle
Period beginning on, the Closing Date.
10.4.2 Seller, the Company, and Buyer shall reasonably
cooperate, and shall cause their respective Affiliates, officers, employees,
agents, auditors and representatives to reasonably cooperate, in preparing and
filing all Returns, including maintaining and making available to each other all
records necessary in connection with Taxes, and in resolving all disputes and
audits with respect to all taxable periods relating to Taxes. Buyer shall cause
the Company (i) to retain all books and records with respect to Tax matters
pertinent to the Company relating to any taxable period beginning before the
Closing Date until the expiration of the applicable statute of limitations,
including any extensions thereof, (ii) to abide by all record retention
agreements entered into with any Tax authority, (iii) to give Seller reasonable
written notice prior to transferring, destroying or discarding any such books
and records and (iv) if Seller so requests, to permit Seller to take possession
of such books and records. Seller shall extend the same privileges and
courtesies to Buyer respecting any Company records retained by Seller for Tax
preparation purposes.
10.4.3 Any stock transfer, real property transfer,
documentary, registration, value-added and other similar Taxes (including
interest, penalties and additions thereto) incurred in connection with the
Transaction contemplated by the Agreement shall be paid by Buyer or the Company
when due, and the Buyer will, at its or the Company's expense, file all
necessary Returns and other documentation with respect to all such Taxes, fees
and charges.
10.5 INSURANCE POLICIES: REPORTING INFORMATION.
From and after the Closing, Seller shall provide Buyer and the Company
with information relating to the Insurance Policies necessary for the Company to
20
fulfill its continuing reporting obligations to the West Virginia Insurance
Commissioner. Such information will be provided in such form and at such times
as will allow the Company to fulfill its reporting obligations, and Seller and
Buyer shall cooperate fully in said information exchange.
10.6 INSURANCE POLICIES: CLAIMS INFORMATION.
From and after the Closing, Buyer shall cause the Company to provide
Seller timely notice of any and all policyholder claims, demands or requests for
information in timely fashion, so as to enable Seller or its ceding entities to
fulfill its or their contractual obligations under the Insurance Policies. Buyer
and Seller shall cooperate fully in said information exchange.
10.7 INSURANCE BUSINESS POST-CLOSING.
After the Closing, Buyer shall cause the Company to engage in the
insurance business so that, for a period of not less than two (2) years, it only
offers insurance lines unrelated to the insurance lines offered by the Company
prior to the Closing.
10.8 INSURANCE COVERAGES.
Notwithstanding any time or other limitations on indemnification set
forth in Article 9, Seller shall cooperate with Buyer in assuring that the
benefits of insurance coverages of the Company's property, business operations
and business risks relating to pre-Closing occurrences are made available to the
Company, as its interests may appear. Insurance proceeds from such coverages,
paid over to the Company, shall result in a corresponding reduction in any
related Claim or Loss of Buyer arising out of the Transaction or under this
Agreement, whether or not subject to indemnification.
11. TERMINATION
11.1 TERMINATION. This Agreement may be terminated by mutual consent of
Buyer and Seller, or by any party, upon notice to the other parties hereto, in
the event of any of the following:
11.1.1 in the event that any of the conditions precedent to
the performance of the obligations of the party giving such notice shall not
have been fulfilled in any material respect and cannot be fulfilled and shall
not have been waived by such party, or if a material default shall be made by
the other party in the observance or in the due and timely performance of any of
the covenants and agreements herein contained that cannot be cured and shall not
have been waived by the party giving such notice;
11.1.2 in the event of the institution by any governmental
authority of litigation or proceedings against Buyer, Seller or the Company to
enjoin the transactions contemplated herein;
11.1.3 if any consent or approval which is necessary to the
Transaction or the continuing business properties or prospects of the Company
shall have been refused or withdrawn by any governmental authority having
jurisdiction, including, but not limited to, the West Virginia, Ohio and Indiana
21
Insurance Commissioners or Departments of Insurance, unless such consent or
approval is waived by Buyer;
11.1.4 by Seller if Buyer has not timely removed its financing
contingency as required in Section 7.6; or
11.1.5 by Seller if the Closing does not occur before December
31, 2005.
In the event the Closing does not occur before December 31, 2005, (i)
all deposits made by Buyer to Seller under the Exclusivity Agreement shall be
deemed earned and shall be the sole and exclusive property of Seller; and (ii)
if Buyer makes an additional payment to Seller of $25,000.00, which shall
likewise be deemed immediately earned, the deadline for the Closing shall be
extended until March 31, 2006. If the Closing has not occurred by such extended
date, then Seller shall once again have the right to terminate this Agreement.
All deposits described in item (i) above shall be credited against the Purchase
Price upon Closing, while the payment in item (ii) shall not be so credited but
shall be deemed additional compensation to Seller.
The foregoing shall not be construed to terminate or otherwise affect
any claims any party may have against another party for breach of any obligation
arising out of this Agreement.
11.2 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to this Article 11, all of the provisions of this Agreement shall be
null and void and of no further force or effect, except for Sections 10.2 and
10.3.
12. MISCELLANEOUS
12.1 AMENDMENT. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all of the parties hereto or as otherwise provided herein.
12.2 WAIVER. No failure to exercise and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of such or any other right, power or privilege. No waiver
of any breach of any provision of this Agreement shall be deemed to be a waiver
of any preceding or succeeding breach of the same or any other provision, nor
shall any waiver be implied from any course of dealing between the parties. No
extension of time for performance of any obligations or other acts hereunder or
under any other agreement shall be deemed to be an extension of the time for
performance of any other obligations or any other acts.
12.3 NOTICE. All notices, requests, demands, claims and other
communications hereunder shall be in writing and shall be deemed given if
delivered by certified mail (first class postage pre-paid), guaranteed overnight
delivery or facsimile transmission, if such transmission is confirmed by
delivery by certified mail (first class postage pre-paid) or guaranteed
overnight delivery, to the following addresses and telecopy numbers (or to such
other addresses or telecopy numbers which such party shall designate by like
notice to the other parties):
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If to:
The Celina Mutual Insurance Company
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Telecopy Number: 000-000-0000
With a copy to:
Xxxxx X. Xxxxxxx
Xxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
00 X. Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, XX 00000
Telecopy Number: 000-000-0000
If to:
NELX, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxx Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, President
Telecopy Number: 000-000-0000
With a copy to:
T. Xxxxxxxx Xxx
Xxxxxxx Xxxxxx & Battle, PLLC
000 Xxxxxxx Xxxxxxxxx, Xxxx
Xxxxxxxxxx, XX 00000
Telecopy Number: 000-000-0000
12.4 SEVERABILITY. In the event any provision of this Agreement or
portion thereof is found to be wholly or partially invalid, illegal or
unenforceable in any proceeding, then such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render the
same valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted or as if such provision had not
been originally incorporated herein, as the case may be.
12.5 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto, and other documents delivered at the Closing pursuant
23
hereto), contains the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understanding (oral or
written) between or among the parties with respect to such subject matter. The
Exhibits and Schedules constitute a part of this Agreement as though set forth
in full herein.
12.6 BINDING EFFECT; ASSIGNMENt. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and permitted assigns. Nothing expressed or implied herein
shall be construed to give any other individual or entity any legal or equitable
rights hereunder. The rights and obligations of this Agreement may not be
assigned or assumed by any party without the prior written consent of the other
parties; provided, however, that Seller does hereby acknowledge and consent to
the possible reorganization of the Buyer as a corporation organized in the State
of Delaware prior to Closing conditioned upon Seller receiving suitable written
assurances that said Delaware corporation (a) shall have succeeded to all the
assets and liabilities of Buyer, and (b) succeeds to the interest and assumes
the obligations of Buyer under this Agreement.
12.7 HEADINGS AND INTERPRETATION. The headings used in this Agreement
have been inserted as a matter of convenience and reference only and shall not
control or affect the meaning or construction of this Agreement. All references
to the singular shall include the plural, and vice versa, where applicable.
12.8 THIRD PARTY BENEFICIARIES. Except as specifically provided herein,
this Agreement does not and is not intended to create any rights in any person
or entity which is not a party to this Agreement.
12.9 EXPENSES. Each party hereto will pay its own legal, accounting and
other fees and expenses incident to the Transaction contemplated hereby, whether
or not such Transaction shall be consummated. Each party will be responsible for
its own costs relative to the negotiations of such agreements and the
preparation of any schedules or ancillary documents and agreements applicable to
such party and required by this Agreement, and each party shall be responsible
for its own costs relative to its applications and filings with any regulatory
authority required to effect the Transaction.
12.10 SURVIVAL. All covenants, agreements, representations and
warranties made herein or in any other agreement, certificate or instrument
delivered to either party pursuant to or in connection with this Agreement shall
survive the execution and delivery of this Agreement but only to the extent set
forth in Section 9.5 of this Agreement. All statements contained in any
certificate or other instrument delivered by a party hereunder or in connection
herewith shall be deemed to constitute representations and warranties made by
such party hereunder and shall be subject to the provisions of Section 9.5 of
this Agreement. Such representations and warranties shall survive in full force
and effect notwithstanding any investigation by the other party.
12.11 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of West Virginia.
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12.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signatures appear on the following page]
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INTENDING TO BE LEGALLY BOUND, the parties have duly executed this
agreement on the day and year first above written.
THE CELINA MUTUAL INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
---------------------
Title: President & CEO
---------------
NELX, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------
Name: Xxxx X. Xxxxxx
--------------
Title: President
---------
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