EXHIBIT 1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of January 29th, 1996, is made
jointly and severally between Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx on the one
hand (collectively the "Purchasers"), and each individually a ("Purchaser"), and
The Seibels Xxxxx Group, Inc., a South Carolina corporation (the "Company").
WITNESSETH:
WHEREAS, the Company proposes to issue and sell 6.250 million shares
(the "Shares"), of the common stock par value $1.00 per share of the Company to
the Purchasers at a price of $1.00 per share;
WHEREAS, the Company proposes to issue to the Purchasers as additional
consideration for the purchase of the Shares, options to purchase an additional
6.250 million Shares (the "Additional Shares"), of the Company's common stock
upon the following terms and conditions;
1. Options for 3.125 million Shares exercisable at the greater of
either book value or $1.50 per share. These options shall expire on December 31,
1998.
2. Options for 3.125 million Shares exercisable at the greater of
either book value or $2.00 per share. These options shall expire on December 31,
2000. WHEREAS, the Company desires to sell the Shares and grant the Options to
the Purchasers and the Purchasers desire to purchase the Shares and receive
Options for the Additional Shares from the Company;
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NOW, THEREFORE, subject to the terms and conditions hereof and in
consideration of the premises and the promises, representations, warranties and
covenants contained herein, the Purchasers jointly and severally on one hand and
the Company on the other, hereto agree as follows:
SECTION 1
Purchase, Sale of Stock and Granting of Options
1.1 Purchase and Sale of Shares at the Closing. Upon the terms and
subject to the conditions of this Agreement, at the Closing, the Company will
sell to the Purchasers, and the Purchasers will purchase from the Company, the
Shares.
1.2 Granting of Options For the Additional Shares. At the Closing, the
Company will grant to the Purchasers, the Options for the Additional Shares.
1.3 Payment. Purchasers will be deemed to have paid for the Shares and
Options for the Additional Shares by having delivered to the Company,
$6,250,000.00 dollars cash in certified funds.
SECTION 2
Closing
2.1 Closing. The closing for the purchase and sale of the Shares and
the granting of the Options (the "Closing"), will be held at the offices of the
Company, 0000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000, at 10:00 a.m. local
time on January 30, 1996, and shall be completed and effective as of the Closing
date.
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2.2 Deliveries at the Closing.
(a) The Purchasers shall deliver $6,250,000.00 dollars in
certified funds, made payable to The Seibels Xxxxx Group, Inc.
(b) The Company shall deliver to Purchasers' attorney, stock
certificates for 6.250 million shares and options to purchase an additional
6.250 million shares.
(c) The Purchasers and the Company shall deliver to each
other, opinions of counsel, and such other documents as are usual in
transactions of the nature contemplated by this Agreement and as may be
reasonably required by counsel.
2.3 Escrow.
The Company shall hold the funds received at Closing in an
interest-bearing escrow account and Purchasers' attorney shall hold Certificates
and Options in Escrow until completion of the following: (a) Regulatory approval
of the Stock Purchase Agreement by the South Carolina Department of Insurance
and approval by the Department for the Company to resume writing "risk"
business; and (b) Approval by the shareholders at a special shareholders meeting
of a resolution in compliance with Section 35-2-109 of the South Carolina Code
of Laws, 1976 as amended, approving voting rights for all of the shares under
the South Carolina Control Share Acquisition Act; and (c) Approval by the
shareholders at a special shareholders meeting of resolutions required by the
Bylaws of the National Association of Securities Dealers, Inc.
Immediately upon completion of all of the above-named approvals, the
escrow account shall terminate and the Company shall have the right to use the
funds and accumulated interest contained
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therein to increase the capital and surplus of South Carolina Insurance Company.
If the South Carolina Department of Insurance fails to grant regulatory
approval of the Stock Purchase Agreement, fails to allow the Company to resume
writing "risk" business or the shareholders fail to approve at a Special
Shareholders Meeting, a resolution in compliance with Section 35-2-109 of the
South Carolina Code of Laws, 1976, as amended, approving voting rights for all
the shares under the South Carolina Control Share Acquisition Act, or the
shareholders fail to approve at a Special Shareholders Meeting, resolutions
required by the By-Laws of the National Association of Securities Dealers, Inc.,
then the Purchasers have the option to terminate this Agreement within ten (10)
days after receipt of notice by the Company of the disapproval of one or more of
the above-referenced matters, by delivering to the Company the duly endorsed
Certificates and Options and upon receipt of same, the Company shall return the
funds held in escrow with the accumulated interest to the Purchasers and this
Agreement shall become null and void.
SECTION 3
Representations, Warranties and Covenants by the Company
The Company represents, warrants and covenants to the Purchasers as follows:
3.1 Authority. The execution and delivery of this Agreement, the
issuance and sale of the Shares by the Company and compliance by the Company
with all of the other provisions of this Agreement: (a) are within the corporate
power and authority of the Company and (b) have been duly authorized by all
requisite proceedings of the Board of Directors of the Company, except that the
Board has only approved the purchase of 5.5 million Shares with corresponding
Options by the Purchasers. Management of the Company shall recommend to the
Board, at the next Board meeting,
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that the Board approve the increase in the number of Shares to be purchased from
5.5 million to 6.250 million with a corresponding increase in the number of
Options. However, if the Board fails to agree to said increase, Purchasers agree
to purchase the 5.5 million Shares as previously approved by the Board.
3.2 No Violation of Law or Default by Reason of Execution or
Performance of this Agreement. The execution, delivery and performance of this
Agreement by the Company will not: (a) violate any applicable law, rule or
regulation; or (b) constitute a default or result in a right of acceleration,
termination or similar right (i) by any party to any contract, agreement or
instrument to which the Company or a Subsidiary is a party (or would, but for
the passage of time or the giving of notice, constitute a default or result in
such a right of acceleration, termination or similar right) or (ii) under the
certificate (or articles) of incorporation or bylaws of the Company or its
Subsidiaries except, in each case, (A) with respect to matters requiring the
approvals referred to in subsection 3.4 hereof and (B) where the violation,
default, acceleration, termination or similar right would not have a material
adverse effect on the business, assets, properties or financial condition of the
Company and its Subsidiaries taken as a whole.
3.3 Approvals and Consents. Except as set forth on Schedule 3.3, the
Schedule of the Company's Required Approvals and Consents, no approval, consent
or authorization of, or declaration or filing with, any governmental or judicial
authority, or any third party is required in connection with the execution and
delivery of this Agreement by the Company or the performance of this Agreement
by the Company or the performance of this Agreement by the Company.
3.4 SEC Reports. The Company has furnished to the Purchasers copies of
its (a) Form 10-K filed with the Securities and Exchange Commission the (the
"SEC"), for the fiscal year ended
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on December 31, 1994, (b) its Quarterly Report on Form 10-Q filed with the SEC
for each quarter ended on or after September 30, 1995, and (c) its proxy
statement and Annual Report relating to the Company's 1995 Annual Meeting of
Shareholders (collectively, the "SEC Documents").
(a) Each of the SEC Documents has been filed, and when filed
the Company was in compliance in all material aspects with the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the SEC thereunder applicable to each
such SEC Document. Each of the SEC Documents was complete and correct in all
material respects as of its date and, as of its date, did not contain any untrue
statement of 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
light of the circumstances under which they were made, not misleading.
(b) After the Closing, for so long as the Purchasers own at
least 20% of the issued and outstanding shares of the Company, the Company will
promptly provide to the Purchasers each document filed with the SEC (except
preliminary materials, pre-effective registration statements or registration
statements relating to employee stock option or compensation plans), along with
all documents, reports and other information provided to its Shareholders
generally.
3.5 Financial Statements. The financial statements of the Company
included in the SEC Documents: (a) comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, (b) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis for the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by applicable SEC rules and
regulations and at the time of their filing, based on information then known to
the Company), (c) are presented fairly in all material respects (subject,
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in the case of the unaudited statements, to normal recurring interim audit
adjustments) and present (i) the consolidated financial position of the Company
and its consolidated Subsidiaries at the date thereof, (ii) the consolidated
results of their operations and (iii) their cash flows for the periods then
ended.
3.6 No Undisclosed Liabilities. As of the date of the latest financial
statement of the Company and its Subsidiaries contained in the most recent SEC
Document containing financial statements, neither the Company nor its
Subsidiaries had any liability or obligation of any nature, including contingent
liabilities or obligations, required to be disclosed by generally accepted
accounting principles or the rules and regulations of the SEC, including
liabilities for taxes (including any interest or penalties relating thereto), in
respect of or measured by the income of any such corporation for any period
prior to the date thereof, except (a) to the extent reflected or recorded in the
SEC Documents, (b) as disclosed in this Agreement or any Schedule hereto, or (c)
if such liability or obligation would not have a material adverse effect on the
business, assets, properties or financial condition of the Company and its
Subsidiaries taken as a whole.
3.7 No Material Adverse Changes. Since the date of the most recent SEC
Document, there has not been; (a) any material adverse change in the financial
or other condition, assets, liabilities or business of the Company and its
Subsidiaries, taken as a whole, except for (i) the establishment of additional
reserves for losses and claims on policies of insurance written or reinsured by
any of the Company's insurance company Subsidiaries, (ii) the increase of
existing reserves for losses and claims on policies of insurance written or
reinsured by any of the Company's insurance company Subsidiaries, and (iii)
changes occurring in the ordinary course of business, including, but not limited
to, claims made and losses paid or payable by the Company with regard
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to the rights of insureds under policies of insurance written or reinsured by
the Company or any of its Subsidiaries (b) any damage, destruction or loss
(whether or not covered by insurance) materially adversely affecting the
business, properties, assets or financial condition of the Company or its
Subsidiaries taken as a whole; (c) any declaration, setting aside or payment of
a dividend or other distribution in respect of any of the capital stock of the
Company or any direct or indirect redemption, purchase or other acquisition of
any of such stock; (d) any strike, lockout, organized labor trouble, or any
similar organized labor event or condition of any character involving employees
of the Company or its Subsidiaries materially adversely affecting the business,
assets, properties or financial condition of the Company and its Subsidiaries
taken as a whole; (e) a sale or transfer by the Company of any of its
Subsidiaries whether or not material in the aggregate as to which a contract for
the sale of substantially all its assets has been executed).
3.8 Compliance with Laws and Regulations. To the best knowledge of the
Chairman of the Board, the President and the Chief Financial Officer of the
Company (the "Management"), neither the Company nor any of its Subsidiaries has
been in violation of any law, ordinance, regulation, order or decree (including,
without limitation, any regulations of governmental agencies having jurisdiction
or supervision over its business or properties), the violation of which may have
a material adverse effect on the business, assets, properties or financial
condition of the Company and its Subsidiaries taken as a whole.
3.9 Cooperation with Filings. The Company covenants to provide the
Purchasers with information concerning the Company necessary to enable it to
make all required SEC, insurance regulatory and other filings as required in
connection with this Agreement.
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3.10 Due Execution; Binding Effect. This Agreement has been duly
executed by the Company and is a valid and binding obligation enforceable
against the Company in accordance with its terms, except as enforceability
therefor may be limited by the exercise of judicial discretion, the laws of
bankruptcy, insolvency, reorganization, moratorium, or other similar laws from
time to time in effect relating to or affecting generally the enforcement of
creditors' rights, and except as enforcement of remedies may be limited by
general principles of equity (regardless of whether which enforceability is
considered in a proceeding in equity or at law).
SECTION 4
Compliance with Laws
The Company and each of the Purchasers will use their best efforts to
duly comply with all applicable laws requiring compliance by them, respectively,
to complete validly the transactions provided for in this Agreement.
SECTION 5
Representation, Warranties and Covenants of the
Purchasers Each Purchaser jointly and severally represents, warrants
and covenants as follows:
5.1 Authority of and Actions by the Purchasers.
(a) Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx are citizens and
residents of the State of South Carolina. The execution and delivery of this
Agreement, the purchase of the Shares from the Company, the receipt of the
Options and compliance by the Purchasers with all of the other
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provisions of this Agreement are within the powers and capacity of each
Purchaser as an individual citizen and resident.
(b) Each Purchaser has entered into this Agreement on a joint
and several basis with the other. Each Purchaser is purchasing a portion of the
Shares in his own capacity. In each case in this Agreement where a right,
obligation to act or to forebear from acting, or any other provision is ascribed
to the Purchasers collectively, the Purchasers shall act collectively to
determine among themselves their relative rights and obligations and the
applicability to them of other provisions and advise the Company accordingly in
a timely manner. In the absence of such a determination, the Company may, within
a reasonable time after it has made a written request that such a determination
be made, ascribe such rights and obligations to the Purchasers on the basis of
their relative record ownership from time-to-time of the Shares.
(c) Each Purchaser acknowledges: (i) receipt of the SEC
Documents, (ii) that the Company has made available to the Purchasers or to the
Purchasers' counsel, accountants and other representatives such information and
documents as the Purchasers have requested and (iii) that he or his
representatives have had full opportunity to discuss the financial and other
conditions of the Company and its Subsidiaries with the management of the
Company and its Subsidiaries.
5.2 No Violation of Law or Default by Reason of Execution or
Performance of this Agreement. The execution, delivery and performance of this
Agreement by the Purchasers will not: (a) violate any applicable law of the
United States of America or any other applicable or relevant jurisdiction; or
(b) constitute a default or result in a right of acceleration, termination or
similar right (i) by any party to any contract, agreement or instrument to which
either of the Purchasers is a party (or would, but for the passage of time or
the giving of notice, constitute a default or result in such
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a right of acceleration, termination or similar right) or (ii) under any
contract, agreement or instrument to which either Purchaser is a party, except
where the violation, default, acceleration, termination or similar right would
not have a material adverse effect on the business, assets, properties or
financial condition of such Purchaser.
5.3 Approvals and Consents. Except as provided in Schedule 5.3, the
Schedule of Purchasers' Required Approvals and Consents, no approval, consent or
authorization of, or declaration or filing with, any governmental or judicial
authority is required in connection with the execution and delivery of this
Agreement by either Purchaser or the performance by either Purchaser hereunder.
5.4 Securities Act of 1933.
5.4.1 Unregistered Securities. The Purchasers understand that
the Shares acquired pursuant to this Agreement have not been registered under
the Securities Act of 1933 ("Securities Act") or under applicable state
securities laws, in reliance upon exemptions thereunder from such registration
requirements afforded by Section 4(2) of the Securities Act and Regulation D,
governing the offer and sale of securities to accredited investors, and other
applicable exemptions. The Purchasers agree that there shall be imprinted on the
face of the certificates of the Shares delivered under this Agreement a
restrictive legend substantially in the form set forth in Section 5.4.2 below.
5.4.2 Restrictive Legend. The Purchasers understand and agree
that any disposition of the Shares in violation of this Agreement, shall be null
and void, and that no transfer of the Shares shall be made by the Company's
transfer agent upon the Company's stock transfer books unless there has been
compliance with the terms of this Agreement. The Purchasers understand and agree
that
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there shall be imprinted on the certificates for the Shares a legend
substantially in the form as the following:
The shares of common stock represented by this certificate
have not been registered under the Securities Act of 1933, as
amended and may not be offered or sold unless the shares are
registered under the Securities Act of 1933 as amended, or an
exemption from the registration requirements under the
Securities Act of 1933, as amended, is available.
5.3 The Shares. The Purchasers acknowledge that the Shares have not
been registered under the Securities Act. The Purchasers are acquiring
beneficial ownership of the Shares for their own account for investment, and not
with a view to a distribution. Each Purchaser agrees not to transfer or
otherwise dispose of any of the Shares unless such transfer or other disposition
is registered under the Securities Act or is exempt from such registration. By
reason of the Purchasers' knowledge and experience in financial and business
matters, the Purchasers are capable of evaluating the merits and risks of their
acquisition hereunder of beneficial ownership of the Shares. The Purchasers have
had available such information with respect to Company as deemed necessary or
appropriate to make such evaluation. The Purchasers have the financial resources
to bear the risk of ownership of the Shares.
5.4 Cooperation With Filings. The Purchasers covenant to provide the
Company with all information concerning the Purchasers necessary to enable it to
make all required SEC, insurance regulatory, and other filings required in
connection with this Agreement.
5.5 Due Execution: Binding Effect. This Agreement has been duly
executed by or on behalf of each of the Purchasers and is a valid and binding
obligation enforceable against the
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Purchasers and each of them in accordance with its terms, except as
enforceability thereof may be limited by the exercise of judicial discretion,
the laws of bankruptcy, insolvency, reorganization, moratorium, or other similar
laws from time to time in effect relating to or affecting generally the
enforcement of creditors' rights, and except as enforcement of remedies may be
limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 6
Additional Covenants of the Company and the Purchasers
6.1 Appointments to the Board; Voting. Subject to the fiduciary duties
of the directors of the Company: The Purchasers will be entitled to designate up
to two persons for election to the Company's Board of Directors (the "Board").
(a) Prior to the filing by the Company of its preliminary
proxy materials for the Annual Meeting, the Purchasers shall notify the Company
in writing of the names of the persons they wish to have elected as directors
and shall provide to the Company sufficient biographical and other information
about such persons and their affiliates to allow the members of the Board to
determine, in the exercise of their fiduciary duties, whether such persons
should be elected to the Board. If any such persons are not reasonably
acceptable to the Board, the Purchasers may continue to name persons until a
complete slate of acceptable persons has been designated (the "Purchaser
Designees"). After Shareholder Approval and Regulatory Approval, the Board shall
promptly elect the Purchaser Designees to the Board to serve until the next
meeting of Shareholders of the Company (the "Shareholders") at which directors
are elected. Subject to the continuing fiduciary
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duties of the directors, from time-to-time thereafter, the Board shall nominate
Purchaser Designees determined in this fashion to the Shareholders for election
by the Shareholders. Purchaser Designees, once elected to the Board, shall
remain Purchaser Designee Directors for the entire term of their election, until
resignation or until their successor Purchaser Designee(s) have been duly
elected.
(b) The Purchasers shall have the right to designate two (2)
persons to the Board for election as Directors as long as the Purchasers'
percentage of ownership of the issued and outstanding common stock of the
Company is at least 10%. If the percentage falls to between 5% and 9.9%, then
the Purchasers shall have the right to designate one (1) person to the Board for
election as a Director. All rights to designate persons to the Board for
election as Directors shall terminate if the percentage of the ownership of the
Purchasers of the issued and outstanding common stock of the Company is less
than 5%. In the event that Purchasers' percentage falls below any of the minimum
requirements set forth in this section, Purchasers shall use their best efforts
to cause the appropriate designee(s) sitting on the Board to resign. In the
event the Purchasers' percentage of ownership of issued and outstanding common
stock declines below one or more of the minimum percentages, causing the
resignation of one or more of the Purchaser designee Directors, and subsequently
increases to above one or more of the minimum percentages, the Purchasers shall
again have the right to designate directors as set forth in this subsection.
6.2 Approvals of Certain State Insurance Regulators. The Purchasers and
the Company will use their best efforts to prepare and file such applications
and take all such other actions as may be reasonable and appropriate, from time
to time, to obtain the approvals and consents listed on Schedules 3.3 and 5.3
("Regulatory Approvals").
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6.3 Shareholders Approval; Shares Redemption. The Company shall: (a) at
the special meeting of the Shareholders (the "Special Meeting"), to be duly
called and held as soon as practicable, for the purpose of voting on (i)
resolutions, adopted pursuant to and in compliance with ss.35-2-109 of the Code
of Laws of South Carolina 1976 (the "SC Code"), granting to the Shares such full
and unlimited voting rights to which the holders of the Shares would be entitled
if such shares were not, upon their acquisition, "control shares" as
contemplated by in ss.35-2-101 and ss.35-2-102 of the SC Code, and (ii) such
other resolutions as are necessary or desirable in connection with the
transactions contemplated by this Agreement, including but not limited to,
resolutions required by the by-laws of the National Association of Securities
Dealers, Inc. (the "NASD"); (b) subject to the fiduciary duties of its Board,
recommend approval of such resolutions to the Company's shareholders' and (c)
subject to the fiduciary duties of its Board, use its best efforts to obtain
approval of such resolutions by the holders of at least a majority of the shares
of Common Stock entitled to vote at such meeting ("Shareholder Approval").
6.4 Restrictions on Resale. The Purchasers shall not sell, transfer,
assign or otherwise dispose of any Shares (including Shares purchased by
exercising Options granted by this Agreement or the Options themselves), other
than to a Controlled Corporation (as hereinafter defined) except as set forth
below. The Purchasers shall not sell, transfer, assign or otherwise dispose of
their beneficial interest in any Shares, except:
(1) to the Company or to any Person or Group approved in
a resolution adopted by a majority of the Board of
Directors of the Company (excluding for such purpose
any directors designated by the Purchasers pursuant
to Section 6.1);
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(2) subject to Section 7, pursuant to an underwritten
public offering of Shares managed by an investment
banking firm reasonably acceptable to the Company and
registered under the Securities Act;
(3) in one or more privately negotiated transactions
exempt from registration under the Securities Act;
provided that prior to making a transfer pursuant to
this clause (C), the Purchasers shall obtain a
representation from its transferee addressed to the
Purchasers and the Company that such Shares are being
acquired for investment only;
(4) pursuant to Rule 144 under the Securities Act;
(5) to a corporation of which the Purchasers own not less
than 80% of the voting power entitled to be cast in
the election of directors (a "Controlled
Corporation"); provided that such Controlled
Corporation shall expressly assume in a writing duly
executed by it and delivered to the Company all of
the obligations and restrictions contained in this
Agreement pertaining to the Purchasers and shall
agree to transfer such Shares to the Purchasers or
another Controlled Corporation of the Purchasers if
it ceases to be a Controlled Corporation of the
Purchasers;
(6) in a merger or consolidation in which the Company is
acquired, or a plan of liquidation of the Company; or
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(7) in response to an offer to purchase or exchange for
cash or other consideration any Shares (A) which is
made by or on behalf of the Company or (B) which is
made by or on behalf of any Person or Group and which
is approved by the Board of Directors of the Company
(excluding for such purpose any director designated
by the Purchasers pursuant to Section 6.1) by two
business days prior to the expiration of such offer.
Notwithstanding the foregoing, the Purchasers shall not sell in the aggregate
pursuant to clause (3) or (4) Shares representing more than 10% of the
Outstanding Voting Power of the Company to any Person or Group or sell any
Shares to any such Person or Group who shall have on file with the SEC a current
statement on Schedule 13D under the Exchange Act reporting its beneficial
ownership of 10% or more of the Outstanding Voting Power of the Company.
INTENTIONALLY LEFT BLANK
SECTION 7
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Registration of Shares
7.1 Certain Definitions. The following terms as used in this Section
shall have the meanings indicated therefor:
7.1.1 "Demand Registration" means a Registration of all or a portion of
the Shares pursuant to subsection
7.2, whether or not the registration statement becomes effective.
7.1.2 "Effective Date" means the date on which a Registration becomes
or is declared "effective" by the SEC.
7.1.3 "Piggy-back Registration" means a Registration of all or a
portion of the Shares pursuant to subsection 7.3, whether or not the
registration statement becomes effective.
7.1.4 "Registration" means preparing a registration statement under the
Securities Act and the taking of such other action as shall be reasonable and
appropriate to cause the registration provided for in such registration
statement to be filed and become effective under the Securities Act, such
registration to be filed on any registration statement form for which the
Company is eligible and which it elects to utilize.
7.1.5 "Registration Expenses" means all expenses, other than Selling
Expenses, incurred by the Company in effecting a Demand Registration or
Piggy-back Registration requested pursuant to and otherwise complying with the
Company's obligations under this Section, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company and of independent public accountants engaged by the
Company to conduct any special audits incident to or required to be included in
any such Registration.
7.1.6 "Selling Expenses" means all stock transfer taxes and
underwriters' discounts
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and commissions applicable to the sale of all or certain of the Shares by the
Purchasers.
7.2 Demand Registration.
7.2.1 Demand for Registration. Subject to the terms and
conditions of this Section and subsection 6.7, at any time after the filing with
the SEC of the Company's Form 10-K for the year ended December 31, 1995, and
before December 31, 1999 (the "Registration Period"), the Purchasers may demand
that the Company use its best efforts diligently to effect the Registration of
Shares requested by the Purchasers. Such demand shall specify the number of
Shares to be offered and by whom they will be offered, and shall describe the
method of offering and selling such Shares. The Purchasers will collectively be
entitled to one Demand Registration. The Company shall be entitled to include in
any Demand Registration (a) equity securities to be offered, issued, and sold by
the Company and (b) equity securities to be offered and sold by other
shareholders.
7.2.2 Limitations on Obligation to Effect Demand Registrations.
The Company will not be obligated to file a Demand Registration demanded by
Purchasers within 18 months after the Effective Date of a previous Piggy-Back
Registration by Purchasers.
7.2.3 The Company's Right to Postpone Registration. If any
Demand Registration shall be demanded on a date which is after the last day of
the fiscal year of the Company and prior to the date on which the Company's
auditor's shall certify the Company's financial statements for such year, the
Company may postpone the filing of a registration statement pursuant to such
request until such certified financial statements shall be available. In
addition, the Company may postpone the commencement of the preparation of such
registration statement for a Demand Registration if the Board of Directors of
the Company determines in good faith that such Demand
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Registration (a) might have a material adverse effect on (i) any proposal or
plan to engage in any acquisition or disposition of assets (other than in the
ordinary course of business) or any purchase of stock, merger, tender offer or
similar transaction or (ii) any proposed, contemplated or pending offering of
securities by the Company or any of its Subsidiaries or (b) might result in
disclosure of non-public information that would not be in the best interests of
the Company or its shareholders to disclose at that time. Provided that if the
Demand Registration is so postponed, it will not be counted as the Demand
Registration permitted by subsection 7.2.1.
7.3 Piggy-Back Registration.
7.3.1 Notice of Possible Registration of Shares. Each time
during the Registration Period that the Company proposes to effect a
Registration of any shares of the same class as the Shares, other than a
registration on Form S-4 or S-8, or other similar registration form hereafter
authorized or prescribed by the SEC, it will give written notice at least 30
days before the proposed filing date therefor to the Purchasers and, upon the
written request of the Purchasers given within 10 Business Days after the date
of such notice, the Company will, subject to the limitations set forth elsewhere
in this section, include in such Registration the Shares which the Purchasers
have so requested to be registered. The Purchasers shall collectively be
entitled to two Piggy-back Registrations.
7.4 Termination of Registration Rights. The rights of Purchasers to a
Demand Registration or a Piggy-back Registration will terminate when the
Purchasers no longer hold at least 20% of the Shares issued pursuant hereto,
adjusted to give effect to stock dividends, stock splits and other similar
changes to the capital structure of the Company.
7.5 Registration Procedure. Subject to the limitations set
forth elsewhere in this Section,
20
if the Company receives a demand or request to register any Shares pursuant to
subsections 7.2 or 7.3 which complies with the terms of this Section, the
Company will use its best efforts to:
(a) in the case of a Demand Registration, as promptly as possible,
and in any event within 90 days after receipt of such demand or
request, prepare and file with the SEC a registration statement
providing for the registration of the Shares which are the
subject of such request;
(b) keep any effective registration statement effective and current
until the earlier of (i) the completion of the distribution of
the Shares so registered or (ii) expiration of 90 days after
the Effective Date;
(c) furnish to the Purchaser such number of copies of a summary
prospectus, if any, or other prospectus, including a
preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents in such numbers as
the Purchasers may reasonably request in order to facilitate
the public sale or other disposition of the Shares registered;
(d) cooperate with the Purchasers and the Purchasers' counsel to
register or qualify the Shares covered by such Registration
under the securities or 'blue sky" laws of such states of the
United States as the Purchasers shall reasonably request not to
exceed five (5) states and, in any event, at the Purchasers'
expense;
(e) promptly advise the Purchasers as to the following: (i) the
time at which the registration statement or any post-effective
amendment thereto shall have become effective, the time at
which any amendment or supplement to the prospectus is filed
with the SEC and the time at which the offering and sale may
commence, (ii) any
21
request by the SEC for any amendment to such registration
statement or the prospectus or for additional information, and
the nature and substance thereof, and (iii) the issuance by the
SEC or any other federal or state governmental authority or
court of any order or similar process suspending the
effectiveness of such registration statement or the suspension
of the qualification of Shares for sale in any jurisdiction, or
the initiation (or threat thereof in writing) of any
proceedings for that purpose, and the Company will use its best
efforts to prevent the issuance of such order or process and,
if any such order or process shall be issued, to obtain the
withdrawal thereof at the earliest possible time.
7.6 Underwriting.
7.6.1 Underwritten Distribution May be Requested. If (a) the Purchasers make a
request for a Demand Registration by means of an underwriting, or (b) if the
Company proposes to offer, issue and sell securities of the same class as the
Shares in an underwritten distribution by the Company in a Registration covering
Shares (whether a Demand Registration or a Piggy-Back Registration) then, in
either case, the right of the Purchasers to Registration of the Purchasers'
Shares shall be conditioned, subject to the further terms and conditions hereof,
on the Company's best effort to effect the inclusion of the Shares of the
Purchasers requested to be so registered in such underwriting; provided,
however, that (i) if none of such Shares can be included in such underwriting,
the Demand Registration shall not count as the Purchasers' Demand Registration,
and (ii) if only a part of such Shares can be included, the Purchasers may
promptly withdraw their request for a Demand Registration and the Demand
Registration shall not count as the Purchasers'
22
Demand Registration.
7.6.2 Selection of Underwriters. The Company shall have the
sole right to select the managing underwriter to effect any underwritten
distribution of the Shares.
7.6.3 Underwriting Agreement. In the case of an underwritten
Registration, the Company and the Purchasers shall enter into an underwriting
agreement in customary form with the underwriter or underwriters selected in
accordance with this Section and shall agree not to effect any public sale or
distribution of securities of the same class as the Shares other than as part of
such underwriting within 90 days (or such other period as may be negotiated)
after the Effective Date of such registration statement.
7.6.4 Limitation on Shares to be Included in an Underwritten
Registration. If the managing underwriter advises the Company in writing that
marketing factors require a limitation of the number of Shares to be
underwritten, then the Company will provide a copy of such writing to the
Purchasers and the Purchasers shall be entitled to consult with the underwriters
concerning such advice. As to either a Demand Registration or a Piggy-back
Registration, the Purchasers shall be entitled to sell only the maximum number
of Shares that may, in the opinion of such underwriters after such consultation
with the Purchasers, be sold by the Purchasers.
7.7 Expenses.
7.7.1 Registration Expenses. Except as otherwise expressly
provided in this subsection, the Company will bear Registration Expenses for a
Registration commenced or completed pursuant to this Section; provided that the
Company shall not be required to pay Registration Expenses incurred in
connection with a Demand Registration which demand was subsequently withdrawn by
the Purchaser, except in the case of a withdrawal made (a) less than 20
23
Business Days after the submission of such demand for a Demand Registration, (b)
subsequent to a postponement pursuant to subsection 7.2.3, where such withdrawal
is made within 20 Business Days after notice of such postponement has been given
to the Purchasers, by the Company or the managing underwriter, (c) subsequent to
a failure to include Shares in an underwritten offering as provided in
subsection 7.6.1 where such withdrawal is made by the Purchasers within 20
business days after notice of such failure has been given to the Purchasers or
(d) subsequent to a limitation on the number of Shares to be underwritten
pursuant to subsection 7.6.4, where such withdrawal is made by the Purchasers
within 20 Business Days after notice of such limitations has been given to the
Purchaser by the Company or the managing underwriter. Such Registration Expenses
not to be borne by the Company pursuant to this subsection 7.7.1 will be borne
by the Purchasers; provided, however, that the Purchasers shall not bear such
expenses if, after withdrawal by the Purchasers, the Company shall continue the
Registration as to securities to be issued by it or to be sold by other existing
shareholders of the Company.
7.7.2 Selling Expenses. All Selling Expenses in connection with
any Registration commenced or completed pursuant to this Section will be borne
by the Purchaser.
7.7.3 Mitigation of Company's Obligations. (a) The Company
shall have no obligation to bear Registration Expenses if the Company is
informed by the South Carolina Insurance Department that it will not allow any
direct or indirect Subsidiary of the Company to pay a dividend or make a
distribution to the Company to provide funds for the payment of Registration
Expenses. The Company agrees to use its best efforts to cause such Department to
give its approval of such a dividend or distribution.
(b) If the Company is relieved from bearing any Registration
Expenses pursuant
24
to this subsection, the Purchasers may assume the obligation to pay such
Registration Expenses and the Company will proceed with the Registration.
(c) If, within three years of the Effective Date of a
Registration for which the Purchasers bore the Registration Expenses which
otherwise would have been borne by the Company, the Company has funds available
to it, it will upon request reimburse the Purchasers for such Registration
Expenses borne by them.
7.8 Indemnification.
7.8.1 Indemnification by the Company. In each case of a
Registration of Shares pursuant to the registration rights granted hereby, the
Company will indemnify, save and hold harmless the Purchasers, each underwriter
thereof, and each officer and director of any such underwriter from and against
any claim, damage, loss, settlement, or liability, arising out of or based on
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement, any summary prospectus, prospectus or preliminary
prospectus contained therein or any amendment or supplement thereto (including,
in each case, documents incorporated therein by reference) or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made, and
will reimburse each such person for all legal or other expenses reasonably
incurred in connection with the investigation or defense of any such claim,
damage, loss or liability; provided, however, that the Company will not be
liable in any such case to the extent that such claim, damage, loss or liability
arises out of or is based upon any untrue statement, alleged untrue statement,
omission or alleged omission, made in or omitted from such materials in reliance
upon and in conformity with written information in regard to the
25
person or entity seeking indemnification which information was furnished to the
Company specifically for use in the preparation of such registration statement,
summary prospectus, prospectus or preliminary prospectus or any amendment or
supplement thereto by the Purchasers, any underwriter or other person, or their
respective agents; and provided further that the foregoing indemnification with
respect to a preliminary prospectus shall not inure to the benefit of any
underwriter from whom the person asserting any such claim, damage, loss or
liability purchased any of Shares if a copy of the final prospectus had not been
sent or given to such person at or prior to written confirmation of the sale of
such Shares to such person and the untrue statement or omission of a material
fact contained in such preliminary prospectus was corrected in the final
prospectus.
7.8.2 Indemnification by the Purchasers. The Purchasers will
indemnify, save and hold harmless the Company, each officer and director of the
Company and each person who controls the Company within the meaning of the
Securities Act to the same extent (and subject to the same limitations) as the
foregoing indemnity from the Company to the Purchasers, but only with respect to
information relating to the Purchasers and furnished to the Company by the
Purchasers or their agents specifically for use in any registration statement,
any summary prospectus, prospectus, or preliminary prospectus contained therein
or any amendment or supplement thereto including, in each case, the documents
incorporated therein by reference.
7.8.3 Counsel Fees and Expenses: Settlements. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnification may be sought pursuant
to this Section (the "Indemnified Party"), such Indemnified Party shall promptly
notify the person from whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party, at its election, may retain
counsel reasonably
26
satisfactory to the Indemnified Party to represent both the Indemnifying Party
and the Indemnified Party in such proceeding. In any such proceeding, the
Indemnified Party shall have the right to retain counsel in addition to counsel
provided pursuant to the preceding sentence, but the fees and expenses of such
additional counsel shall be at the expense of such Indemnified Party unless (a)
the Indemnifying Party has agreed to the retention of such additional counsel at
its expense or (b) the named parties (including any impleaded parties) to any
such proceeding include both the Indemnifying Party and the Indemnified Party
(or another person), the Indemnifying Party proposes that the same additional
counsel represent both the Indemnifying Party and the Indemnified Party (or such
other person), and representation of both such persons by the same counsel would
be inappropriate due to actual or potential differing interests between them.
Except as provided in the preceding sentence, the Indemnifying Party will not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one firm
qualified in such jurisdiction to act as counsel for all such Indemnified
Parties. Such firm shall be approved as satisfactory in writing by the
Purchasers in the case of Indemnified Parties indemnified pursuant to subsection
7.8.1 and by the Company in the case of Indemnified Parties indemnified pursuant
to subsection 7.8.2. The Indemnifying Party shall not be liable for any
settlement of any litigation or proceeding effected without the Indemnifying
Party's written consent. The Indemnifying Party will not, without the
Indemnified Party's written consent, settle or compromise any proceeding or
consent to entry of any judgment which would impose an injunction or other
equitable relief upon such Indemnified Party or which does not include as an
unconditional term thereof the release of such Indemnified Party from all
liability in respect to such proceeding.
In the event that the Indemnifying Party, within a reasonable time
after notice of any such
27
proceeding, fails to provide counsel, the Indemnified Party shall have the right
(upon further notice to the Indemnifying Party) to retain counsel and undertake
the defense, compromise or settlement of such proceeding for the account of the
Indemnifying Party, subject to the right of the Indemnifying Party to assume the
defense of such proceeding at any time prior to settlement, compromise or final
determination thereof. The cost and expense of counsel so retained by the
Indemnified Party shall be borne by the Indemnifying Party, and the Indemnifying
Party shall be bound by, and shall pay the amount of, any settlement,
compromise, final determination, or judgment reached while the Indemnified Party
was represented by counsel retained by the Indemnified Party pursuant to this
Section.
7.8.4 Other Terms Required by Underwriters. The indemnification
pursuant to the foregoing provisions of this Section shall be on such other
terms and conditions as are at the time customary and reasonably required by
underwriters in public offerings, including providing for contribution in the
event indemnification provided for in this Section is unavailable or
insufficient, all as shall be set forth in an underwriting agreement between the
Company, the Purchasers and the underwriter.
7.9 Provision of Information by Purchasers. In connection with any
Registration to be effected pursuant to this Agreement, the Purchasers shall
furnish the Company such written information regarding the Purchasers as the
Company may request in writing, which information shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement for inclusion in the registration statement (and the prospectus
included therein).
7.10 Agreements of the Purchasers. If requested by the Company, the
Purchasers will
28
execute and deliver to the Company an agreement, in form reasonably satisfactory
to the Company, that the Purchasers will comply with all applicable prospectus
delivery requirements of the Securities Act and all anti-stabilization,
manipulation and similar provisions of the Securities Exchange Act and any rules
promulgated thereunder, and will furnish to the Company information about sales
made in such public offering. The Company's obligations to effect the
Registration of Shares of the Purchasers under this Agreement shall be
conditioned upon the Purchasers' complying with the foregoing provisions.
7.11 Market Standstill Agreement. In addition to the provisions of
subsection 7.6.3, if requested by the Company or by the managing underwriter in
respect of any Registration provided for in this Section, the Purchasers will
agree not to sell or otherwise transfer or dispose of any Shares (or other
securities of the Company) held by them during the ninety (90) day period
following the effective date of any registration statement filed in respect of
any Registration or such other period as may be negotiated with the underwriter.
Such agreement shall be in writing and in form reasonably satisfactory to the
Company and such managing underwriter. The Company may impose stop-transfer
instructions with respect to the Shares (or other securities) subject to the
foregoing restrictions until the end of such ninety (90) day or other period
SECTION 8
Indemnification by the Company
8.1 Indemnification. In addition to the provisions for indemnity by the
Company pursuant to subsection 7.8.1 and 7.8.3 and 7.8.4, the Company will
indemnify, save and hold the Purchasers harmless against any claim, damage,
loss, settlement, or liability resulting from any
29
material misrepresentation, breach of warranty or nonfulfillment of any covenant
or agreement on the part of the Company contained in this Agreement or in any
statement or certificate furnished or to be furnished to the Purchasers pursuant
hereto or in connection with the transactions contemplated hereby and any
actions, judgments, costs and expenses incident to the foregoing. The parties
agree that indemnification as set forth in this Section 8 shall be the exclusive
remedy for any such misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of the Company.
SECTION 9
Indemnification By The Purchasers
9.1 Indemnification. In addition to the provisions for indemnity by the
Purchasers pursuant to subsection 7.8.2, the Purchasers will indemnify, save and
hold the Company harmless against any damage resulting from any material
misrepresentation, breach of warranty or nonfulfillment of any covenant or
agreement on the part of the Purchasers contained in this Agreement or in any
statement or certificate furnished or to be furnished to the Company pursuant
hereto or in connection with the transactions contemplated hereby and any
actions, judgments, costs and expenses incident to the foregoing. The parties
agree that indemnification as set forth in this Section 9 shall be the exclusive
remedy for any such misrepresentation, breach of warranty or nonfulfillment of
any covenant or agreement on the part of the Company.
9.2 Payment of Indemnification Claim. The Purchasers shall indemnify
the Company
30
within 90 days of the final determination of the damage or sum subject to such
indemnification.
SECTION 10
Nature and Survival of Representations
All representations, warranties and covenants made by the Company or the
Purchasers, except covenants which by their terms extend beyond such date, will
survive the Closing hereunder until termination of the escrow account.
SECTION 11
Governing Law; Jurisdiction; Venue; Service of Process
(a) This Agreement will be construed in accordance with and governed by
the laws of the State of South Carolina. Both parties agree to submit to the
jurisdiction of the Court of Common Pleas for Richland County, Columbia, South
Carolina in settlement of any dispute or controversy arising under or in
connection with this Agreement.
SECTION 12
Parties in Interest; Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to each of their respective successors or permitted assigns,
but this Agreement and the rights and obligations under this Agreement shall not
be assignable by either the Company or any of the Purchasers without written
consent of the other party.
31
SECTION 13
Entire Agreement
This Agreement contains the entire agreement between the parties hereto
with respect to the purchase and sale of the Shares and the granting of Options
for the Additional Shares provided for herein and supersedes any prior
agreements or understandings between or among any of the parties hereto relating
to the subject matter hereof.
SECTION 14
Notices
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when received, and shall be given (i) in
person, (ii) by United States Certified Mail, Return Receipt Requested or (iii)
by an independent messenger service which obtains a receipt upon delivery to a
party at the following addresses or to such other address as a party may
hereafter specify by notice:
if to the Company:
The Seibels Xxxxx Group, Inc.
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, President and Chief Executive Officer
Fax#: 000-000-0000
with copies to:
Xxxx X. Xxxx, Xx., Esquire
X.X. Xxx 000
Xxxxxx, Xxxxx Xxxxxxxx 00000
Fax#: 000-000-0000
32
if to the Purchasers:
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
Fax#: 000-000-0000
SECTION 15
Modification
No amendment or modification of or supplement to this Agreement will be
effective unless it is in writing and duly executed by each party to be charged
thereunder.
SECTION 16
Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above- written.
THE SEIBELS XXXXX GROUP, INC.
By:_________________________________
00
Xxxxx X. Xxxxxxx
Xxxxxxxxx and Chief Executive Officer
THE PURCHASERS
By:___________________________________
Xxxxxxx X. Xxxxxx
By:_________________________________
Xxxxxx X. Xxxxxx
34
SCHEDULE 3.3
SCHEDULE OF THE SEIBELS XXXXX GROUP, INC'S
REQUIRED APPROVALS AND CONSENTS
1. Approval of the Stock Purchase Agreement by the South Carolina
Department of Insurance.
2. Approval by the South Carolina Department of Insurance for the Company
to resume writing "risk" business.
3. Approval by the shareholders of a resolution in compliance with Section
35-2-109 of the South Carolina Code of Laws, 1976, as amended, approving
voting rights for all of the shares under the South Carolina Control
Share Acquisition Act.
4. Approval by the shareholders of resolutions required by the By-Laws of
the National Association of Security Dealers, Inc.
35
SCHEDULE 5.3
SCHEDULE OF PURCHASERS REQUIRED
APPROVALS AND CONSENTS
1. Approval of the Stock Purchase Agreement by the South Carolina
Department of Insurance.
36
AMENDMENT TO STOCK PURCHASE AGREEMENT
This Amendment to the Stock Purchase Agreement of January 29, 1996, is
entered into as of January 30, 1996.
WHEREAS, on January 29, 1996, The Seibels Xxxxx Group, Inc., a
corporation organized and existing under the laws of South Carolina and
hereinafter referred to as (Company") and Xxxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxx, citizens and residents of the State of South Carolina and hereinafter
referred to as ("Purchasers"), entered into a Stock Purchase Agreement dated
January 29, 1996, for the purchase of shares of stock in the Company; and
WHEREAS, the Purchasers wish to amend the Stock Purchase Agreement.
NOW, THEREFORE, the parties do hereby agree as follows:
1. That the Agreement be amended to add Xxx X. and Xxxx X.
Xxxxxxx as Purchasers.
2. All other provisions of the Stock Purchase Agreement dated
January 29, 1996, are to remain in full force and effect.
THE COMPANY:
The Seibels Xxxxx Group, Inc.
By: ______________________________
Xxxxx X. Xxxxxxx
President
THE PURCHASERS:
By: _______________________________
Xxxxxxx X. Xxxxxx
By: ________________________________
Xxxxxx X. Xxxxxx
By: ________________________________
Xxx X. Xxxxxxx
By:________________________________
Xxxx X. Xxxxxxx
37
