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EXHIBIT C
(FORM OF INSIDER SUPPORT AGREEMENT)
November ___, 1998
United Financial Adjusting Company
000 Xxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Re: Insider Support Agreement
Ladies and Gentlemen:
The undersigned understands that United Financial Adjusting
Company, an Ohio corporation ("UFAC" or "you"), and Frontier Adjusters of
America, Inc. ("Frontier"), are entering into a Stock Purchase Agreement to be
dated on or about the date hereof (the "Purchase Agreement"), providing for,
among other things, UFAC's purchase of shares of preferred stock, $.01 par value
per share (the "Preferred Shares"), of Frontier, that are convertible into
shares of common stock, $.01 par value per share (the "Common Shares"), of
Frontier (the "Share Purchase"). Under the rules of the American Stock Exchange,
consummation of the Share Purchase will require the approval of the shareholders
of Frontier.
The undersigned is a shareholder of Frontier (the
"Shareholder") and acknowledges that UFAC would not enter into the Purchase
Agreement without the execution and delivery of this letter agreement. The
Shareholder is entering into this letter agreement to induce you to enter into
the Purchase Agreement and the transactions and agreements contemplated thereby,
including the Share Purchase and the issuance of Common Shares upon conversion
of the Preferred Shares (the Purchase Agreement, the Share Purchase and such
transactions and agreements collectively, the "Transactions").
The Shareholder confirms its agreement with you as follows:
1. The Shareholder represents and warrants that Schedule I
annexed hereto sets forth the Common Shares of which the Shareholder or any
affiliate (as defined under the Securities Exchange Act of 1934, as amended) of
the Shareholder controlled by the Shareholder (a "Controlled Affiliate") is the
beneficial owner (the "Shares") and that the Shareholder and the Controlled
Affiliates are on the date hereof the lawful owners of the number of Shares set
forth in Schedule I, free and clear of all liens, charges, encumbrances, voting
agreements and commitments of any kind, except as disclosed in Schedule I.
Except for the Shares set forth in Schedule I, neither the Shareholder nor any
Controlled Affiliate owns or holds any rights to acquire any additional Common
Shares (other than pursuant to options or conversion rights with regard to any
of the Shares, in each case as disclosed in Schedule I) or any interest therein
or any voting rights with respect to any such additional shares.
2. Until the termination of this letter agreement in
accordance with paragraph 12, the Shareholder agrees that he/she will not, and
will not permit any Controlled Affiliate to, contract to sell, sell or otherwise
transfer or dispose of any of the Shares or any interest therein or securities
convertible into Common Shares, or any voting rights with respect thereto,
without your prior written consent.
3. The Shareholder agrees that, during the term of this
letter agreement, neither he/she nor any Controlled Affiliate will take any
action that Frontier would be prohibited from taking under Section 5.4 of the
Purchase Agreement.
4. The Shareholder agrees that during the term of this
letter agreement all of the Common Shares beneficially owned by the Shareholder
or any Controlled Affiliate, or over which the Shareholder or any Controlled
Affiliate has voting power or control, directly or indirectly, including any
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United Financial Adjusting Company
November ___, 1998
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such shares acquired after the date hereof but prior to the record date for any
meeting of shareholders of Frontier called to consider and vote on Transactions
or any Acquisition Proposal (as defined in the Purchase Agreement), will be
voted by the Shareholder or such Controlled Affiliates, or any representative or
proxy thereof, as applicable, in favor of the approval of the Transactions and
for the election to the Board of Directors of Frontier (the "Board") of a
sufficient number of nominees selected by UFAC to constitute a majority of the
membership of the Board.
5. The Shareholder agrees that, if the Shareholder is a
member of the Board and he/she determines in his/her good faith judgment, after
consultation with legal counsel, that in the exercise of his/her fiduciary
obligations it is prudent to vote against any such individual nominated by UFAC,
the Shareholder shall provide written notice to UFAC at least ten (10) days
prior to the Closing Date (as defined in the Purchase Agreement), listing the
name of such individual and the reasons for such determination, and in such
event the Shareholder will vote in favor of a substitute nominee designated by
UFAC, subject to the Shareholder's rights under this paragraph 5. UFAC will
provide Frontier with a list of nominees, including summary biographical data,
at least twenty (20) days prior to the Closing Date.
6. The Shareholder agrees to execute, and to cause each
Controlled Affiliate to execute, such proxies and other instruments, and to take
and to cause each Controlled Affiliate to take such actions, as may be necessary
to cause all of the shares referred to in paragraph 4 to be so voted.
7. The Shareholder has all necessary power and authority to
enter into this letter agreement. This letter agreement is the legal, valid and
binding agreement of the Shareholder, and is enforceable against the Shareholder
in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity.
This letter agreement shall inure to the benefit of the parties hereto and the
successors and assigns of UFAC.
8. The Shareholder agrees that damages are an inadequate
remedy for the breach by the Shareholder of any term or condition of this letter
agreement and that you shall be entitled to a temporary restraining order and
preliminary and permanent injunctive relief in order to enforce our agreements
herein.
9. Except to the extent that the laws of the jurisdiction
of organization of any party hereto, or any other jurisdiction, are mandatorily
applicable to matters arising under or in connection with this letter agreement,
this letter agreement shall be governed by the laws of the State of Arizona. All
actions and proceedings arising out of or relating to this letter agreement
shall be heard and determined in any United States District Court located in the
Arizona District.
10. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of any United States District Court located in the
Arizona District, for the purpose of any action or proceeding arising out of or
relating to this letter agreement and each of the parties hereto irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined exclusively in such court. Each of the parties hereto 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.
The Shareholder hereby irrevocably appoints Frontier, at the
address set forth in the Purchase Agreement, as its lawful agent in and for the
State of Arizona, for and in its behalf, to accept and acknowledge service of,
and upon whom may be served, all necessary processes in any action, suit, or
proceeding arising under this Agreement that may be had or brought against it in
any United States District Court located in the Arizona District, such service
of process or notice, or the acceptance thereof by said agent endorsed thereon,
to have the same force and effect as if served upon such corporation or
individual. Nothing in this paragraph 10 shall affect the right of any party
hereto to serve legal process in
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United Financial Adjusting Company
November ___, 1998
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any other manner permitted by law. The Shareholder hereby waives all defenses of
improper venue and forum non conveniens with respect to any action, suit, or
proceeding brought in the any such court and arising under this letter
agreement.
11. This letter agreement constitutes the entire agreement
between the parties hereto with respect to the matters covered hereby and
supersedes all prior agreements, understandings or representations between the
parties, written or oral, with respect to the subject matter hereof.
12. This letter agreement shall become effective as of
December 4, 1998. This letter agreement shall remain in effect until, and shall
terminate automatically without the need for any notice or other action by
either party upon, the later of (i) the completion of the Share Purchase, and
(ii) the date on which the Board consists of a majority of members designated by
UFAC in accordance with Section 6.2(a) of the Purchase Agreement.
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United Financial Adjusting Company
November ___, 1998
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Please confirm that the foregoing correctly states the
understanding between us by signing and returning to me a counterpart hereof.
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(Shareholder Name)
Confirmed on the date
first above written
United Financial Adjusting Company,
an Ohio corporation
By:___________________________________
Name:_________________________________
Title:________________________________
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Schedule I
Ownership of Common Shares
OWNED BENEFICIALLY (INCLUDING OPTIONS TO PURCHASE COMMON SHARES)
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LIST OF VOTING PERSONS AND NUMBER OF SHARES
BENEFICIALLY OWNED BY EACH VOTING PERSON
Xxxxxx X. Xxxx
Direct: 155,000
Xxxxxxx X. XxXxxxx and Xxxxx X. Xxxxxxxx, his wife
Direct 20,000
Brokerage Account 2,000
Stock Options 69,564
Xxxxx X. Xxxxxx and Xxx X. Xxxxxx, his wife
Family Trust 183,180
Xx. Xxxxxx' XXX 23,523
Xxxxx X. Xxxxx and Xxxxx Xxxxx, his wife
Xx. Xxxxx Direct 128,000
Stock Options 48,653
Xx. Xxxxx'x Profit Sharing Plan 3,150
Xx. Xxxxx'x Brokerage Account 2,000
Xxxxxx X. Xxxxx and Xxxxxx Xxxxx, his wife
Xxx. Xxxxx'x Profit Sharing Plan 10,364
Xx. Xxxxx'x Profit Sharing Plan 83,150
Mr. Xxxxx'x XXX 30,000
Stock Options 48,654
Xx. Xxxxx'x Brokerage Account 000
Xxxx X. Xxxxxx
Direct 48,694
Profit Sharing Plan 40,548
Stock Options 51,347
Xxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx, his wife
Xx. Xxxxxxxx Direct 884
Mr. Xxxxxxxx'x XXX 12,530
Mrs. Xxxxxxxx'x XXX 6,700
Xxxxxxx X. Xxxxxxxxx, Xx. and Xxxxxxxx X. Xxxxxxxxx, his wife
Xx. Xxxxxxxxx Direct 222,069
Xxx. Xxxxxxxxx Direct 222,069
R. Xxxxx Xxxxxxx
Brokerage Account 58,819
Total 1,740,998
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